EXHIBIT 10.4
TERM SHEET
FOR
TRANSITION SERVICES AGREEMENT
Parties
Aetna (or an Affiliate) and Spinco (or an Affiliate)
Definitions
Capitalized terms used without definition in this Term Sheet have the
respective meanings assigned to them in the Distribution Agreement.
Terms and Conditions
1. Spinco-Provided Services.
A. Information Technology, Computing and Telecommunication Services.
Spinco shall provide to the Aetna Group the following information
technology, computing and telecommunications services ("IT
Services"): (i) the services set forth on Schedule 1A, as such may be
amended by the parties; (ii) any other IT Services that (a) the Aetna
Business, as conducted in the ordinary course prior to the
Distribution Date, received in whole or part from the Spinco Group or
in reliance upon or in connection with the Spinco Assets (but, in the
case of a service provided only in part by the Spinco Group, only to
the extent such service was provided in the ordinary course prior to
the Distribution Date by the Spinco Group), (b) are identified in
writing by Aetna to Spinco within forty-five (45) calendar days
following the Distribution Date and (c) are reasonably needed in
order to conduct the operations of the Aetna Business, as conducted
in the ordinary course prior to the Distribution Date, and the
reasonable growth thereof, consistent with the historical provision
of such services and the other terms of the TSA, or otherwise upon
pricing and other terms and conditions reasonably acceptable to
Spinco and Aetna; and (iii) reasonable additional incidental IT
Services as Aetna needs to conduct its business, as conducted in the
ordinary course prior to the Distribution Date, and the reasonable
growth therof, provided, that such IT Services (a) were provided by
Spinco to Aetna in the ordinary course prior to the Distribution Date
and (b) are provided upon pricing and other terms and consistent with
the historical provision of such services and the other terms of the
TSA as agreed upon by the parties.
B. Other Transition Services. Spinco shall provide to the Aetna Group the
following services (together with the IT Services, the
"Spinco-Provided Services"): (i) the services set forth on Schedule
1B, as such may be amended by the parties; (ii) any other services
that (a) the Aetna Business, as conducted in the ordinary course prior
to the Distribution Date, received in whole or part from the Spinco
Group or in reliance upon or in connection with the Spinco Assets
(but, in the case of a service
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provided only in part by the Spinco Group, only to the extent such
service was provided in the ordinary course prior to the Distribution
Date by the Spinco Group), (b) are identified in writing by Aetna to
Spinco within forty-five (45) calendar days following the Distribution
Date and (c) are reasonably needed in order to conduct the operations
of the Aetna Business, as conducted in the ordinary course prior to
the Distribution Date, and the reasonable growth thereof, consistent
with the historical provision of such services and the other terms of
the TSA, or otherwise upon pricing and other terms and conditions
reasonably acceptable to Spinco and Aetna; and (iii) reasonable
additional incidental services as Aetna needs to conduct its business,
as conducted in the ordinary course prior to the Distribution Date,
and the reasonable growth thereof; provided, that such Services (a)
were provided by Spinco to Aetna to in the ordinary course prior to
the Distribution Date and (b) are provided upon pricing and other
terms and consistent with the historical provision of such services
and the other terms of the TSA as agreed upon by the parties.
2. Aetna-Provided Services. Aetna shall provide to the Spinco Group the
following services (the "Aetna-Provided Services" and, together with the
Spinco-Provided Services, the "Services"): (A) the services set forth on
Schedule 2, as such may be amended by the parties; (B) any other services
that (i) the Spinco Group, as conducted in the ordinary course prior to
the Distribution Date, received in whole or part from the Aetna Group or
in reliance upon or in connection with the Aetna Assets (but, in the case
of a service provided only in part by the Aetna Group, only to the extent
such service was provided in the ordinary course prior to the Distribution
Date by the Aetna Group), (ii) are identified in writing by Spinco to
Aetna within forty-five (45) calendar days following the Distribution Date
and (iii) are reasonably needed in order to conduct the operations of the
business of the Spinco Group, as conducted in the ordinary course prior to
the Distribution Date, and the reasonable growth thereof, and otherwise
upon pricing and other terms and consistent with the historical provision
of such services and the other terms of the TSA, or conditions reasonably
acceptable to Spinco and Aetna; and (C) reasonable additional incidental
services as Spinco needs to conduct its business, as conducted in the
ordinary course prior to the Distribution Date, and the reasonable growth
thereof; provided, that such Services (i) were provided by Aetna to Spinco
in the ordinary course prior to the Distribution Date and (ii) are
provided upon pricing and other terms and consistent with the historical
provision of such services and the other terms of the TSA as agreed upon
by the parties.
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3. Term.
A. The period during which any Service is being provided by Spinco or
Aetna shall be referred to as the "Transition Period" for such
Service. The party providing a Service shall be referred to as the
"Service Provider", and the party for whose benefit the Service is
provided the "Service Recipient". Subject to Section 2B, below, the
Service Provider will provide each Service for the period specified in
the applicable Schedule or, if no time period is specified, then for a
period not to exceed twelve (12) months after the Distribution Date.
The Transition Period for any Service may be modified by mutual
consent of Spinco and Aetna.
B. Notwithstanding anything to the contrary in Section 2A, above, the
Transition Period shall be deemed to be extended, as and for the
period needed but in any event not to exceed six (6) months, on
account of: (i) a requirement by a Governmental Entity; (ii) at the
discretion of the non-breaching party, any failure by Aetna or
Spinco, as the case may be, to perform any action required on its
part under the TSA, including any Schedules thereto, but only to the
extent of such failure; or (iii) the inability of the Parties to
achieve the timetables set forth in an applicable Conversion Plan,
after applying reasonable best efforts; provided, that to the extent
the Transition Period is extended pursuant to clause (i) or (iii), in
addition to the amounts otherwise due pursuant to Section 4 of the
TSA the Service Recipient shall pay all costs actually incurred by
reason of the extension including, without limitation, incremental
software licensing costs. The Service Provider shall make
commercially reasonable efforts (which shall not require it to incur
any out of pocket costs) to minimize the costs referred to in the
preceding sentence.
C. The Service Recipient, may, without cause, upon sixty (60) calendar
days written notice terminate the purchase of any or all Services;
provided that any partial termination of Services shall be of a
category of Services as specified in a line item in any Schedule to
Section 1 or 2, or as otherwise agreed to by Spinco and Aetna; and
provided, that the Service Recipient shall pay for all expenses
(other than the Service Provider's internal costs) incurred as a
result of such early termination of Services. If the Service
Recipient elects to terminate the purchase of less than all Services,
the Service Provider shall continue to be obligated to provide the
remaining Services.
D. Spinco and Aetna shall work in good faith and in a commercially
reasonable fashion to eliminate the Service Recipient's need to
receive the Services from the Service Provider. Spinco and Aetna each
acknowledge that mutual efforts will be needed in order to enable the
Service Recipient to conduct its business in the ordinary course
without receiving the Services from the Service Provider. The parties
will employ reasonable best efforts so that by the Distribution Date,
and in any event not later than forty-five (45) calendar days
following the Distribution Date (or within forty-five (45) calendar
days following identification of additional Services under Section 1
or 2, as applicable), Spinco and Aetna shall jointly submit to the
Operating Committee (as defined below) one or more plans (each a
"Conversion Plan") for eliminating the need for each Service. Spinco
and Aetna thereafter may jointly amend a Conversion Plan, which
amended plan shall become the operative
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Conversion Plan when it is transmitted to the Operating Committee.
Each Conversion Plan shall state in reasonable detail the actions and
performance schedule required of the Service Provider and Service
Recipient. Each Conversion Plan shall specify a target date for
completing all actions needed to allow the Service Recipient to
conduct its business in the ordinary course without receiving from the
Service Provider the Services that are the subject of such Conversion
Plan.
4. Pricing/Sales Tax.
A. Pricing of Services. For each period in which it receives a Service,
the Service Recipient shall pay the Service Provider its actual
out-of-pocket cost for such Service, including a proportionate share
of its overhead (if applicable), computed in accordance with internal
charge-back methodologies historically used by the Service Provider
(but excluding profit), or, to the extent the pricing for such
service is specified on a Schedule to the TSA, the amount specified
in or calculated in accordance with the method applicable to such
Service in the applicable Schedule. For any Service priced on a
monthly basis, the monthly charge will be equitably prorated if the
Distribution Date or the date on which a Service is terminated is not
the first calendar day or the last calendar day, respectively, of a
calendar month. Notwithstanding the foregoing, in no event shall the
amount paid by the Service Recipient to the Service Provider in
respect of a Service be less than the Service Provider's actual
out-of-pocket cost attributable to the provision of such Service
calculated in accordance with the method applicable to such Service
in the applicable Schedule. It is the intent of the parties to the
TSA that no party thereto shall realize a gain or loss as a result of
the provision or receipt of the Services under the TSA.
B. Sales Tax.
(i) For state and local sales tax purposes, Spinco and Aetna will
cooperate in good faith to segregate amounts payable under the
Transition Services Agreement (the "TSA") into the following
categories: (a) taxable Services; (b) non-taxable Services; and
(c) payments made by Spinco or Aetna, as applicable, merely as a
payment agent for the Service Recipient in procuring goods,
supplies or Services that otherwise are non-taxable or that have
previously been subject to sales tax.
(ii) The Service Provider shall collect from the Service Recipient
all state and local sales tax and shall timely remit such taxes
to the appropriate state and local tax authorities. The Service
Recipient shall pay such taxes to the Service Provider
monthly, or as otherwise required by the Service Provider. The
Service Provider shall be responsible for any interest or
penalties imposed as a result of its failure to timely collect
and remit taxes. The Service Recipient shall be responsible for
any additional taxes, interest or penalties imposed as a result
of a sales tax audit by any taxing authority.
(iii) Within thirty (30) calendar days of receiving notification of
the commencement of any sale or use tax audit by a taxing
authority which involves any Services provided hereunder or any
purchases made as purchasing agent pursuant hereto, the Service
Provider or the Service Recipient, as applicable (hereinafter,
the
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"Affected Party") shall notify the other party (hereinafter, the
"Other Party") of such audit. Thereafter, the Affected Party
shall take reasonable steps to keep the Other Party informed of
the progress of any such audit. The Other Party shall have the
right (but not the duty) to participate in any proceeding brought
by the Affected Party to contest sales or use tax liability, and
shall have the right to retain tax advisers or counsel at its own
expense.
5. Other Service Specifications.
A. Volume. The Service Provider shall cause the Services to be made
available at levels sufficient to permit operation of the businesses
or functions to which such Services relate consistent with the
ordinary volume and other aspects of such businesses or functions in
the twelve (12) months prior to the Distribution Date as well as a
reasonable level of growth in the Service Recipient's operations but
excluding (i) the addition of any products or product features not
being offered by the Service Recipient on the Distribution Date,
except that the Service Recipient may add products or features in an
amount and manner consistent with its ordinary operations (including,
without limitation, normal business introduction cycles) during the
twelve (12) months prior to the Distribution Date; and (ii) volumes
associated with any entity that is not an Existing Affiliate.
B. Service Levels; Cures; Remedies Upon Default
(i) Except to the extent otherwise expressly provided in any Schedule
to the TSA, the service levels for any Services shall be
equivalent to those provided to the Service Provider's ongoing
operations or, if the Service Provider and Service Recipient do
not have comparable operations with respect to a Service, then
the service level shall be equivalent to the standards provided
to the Service Recipient for the twelve (12) months prior to the
Distribution Date. The TSA shall contain appropriate
representations by each Service Provider as to such levels of
service, which shall be fully specified in schedules to the TSA.
Compliance with such service level standards shall be contingent
upon receipt by the Service Provider of all information
reasonably required from the Service Recipient in order for the
Service Provider to render such Service.
(ii) If the Service Recipient becomes aware of a material deficiency
in the Service Provider's performance (a "Service Level
Breach"), the Service Recipient may deliver a written notice
thereof to the Service Provider. Upon receipt of such notice,
the Service Provider shall use its reasonable best efforts to
remedy the Service Level Breach as soon as reasonably possible.
For any Service that a schedule to the TSA identifies as
critical to the Service Recipient's operations (a "Critical
Operation" with respect to such Service), if the Service Level
Breach is not (or the Operating Committee determines that in all
probability such Service Level Breach will not be) remedied
within a reasonable period of time, then the Service Recipient
may outsource the provision of such Service to a third party and
the Service Provider shall reimburse the Service Recipient for
any increase in the cost of such Service (offset by any amounts
that, absent such
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breach, the Service Recipient would have paid pursuant to the
applicable Conversion Plan). For each Critical Service, the
applicable schedule to the TSA shall define a Service Level
Breach in reasonable detail. The remedy specified above in this
clause (ii) shall be in addition to the remedies otherwise
specified herein.
(iii) (a) Except to the extent that a schedule to the TSA specifies a
different period, if the Service Provider fails to cure a
Service Level Breach within thirty (30) calendar days (or
such shorter period as the Operating Committee may
determine is appropriate as to a particular service, taking
into account the importance of such Service to the Service
Recipient's operations) after receipt of written notice
thereof, the Service Provider shall forfeit (and, if
previously collected from the Service Recipient, refund)
the fees or charges otherwise due with respect to such
Service from the date that the Service Level Breach
commenced, and the Service Level Provider shall not be
entitled to collect fees with respect to such Service until
it has cured such Service Level Breach; or
(b) If a Service Level Breach causes an immediate and
significant harm to the Service Recipient (including,
without limitation, significant adverse publicity, customer
dissatisfaction or monetary loss), then the Service
Recipient shall be entitled to such equitable remedy as may
be determined by the Operating Committee, which remedy may
include a forfeiture or refund of fees otherwise payable for
such Service or actual costs incurred or actual damages
suffered by the Service Recipient as a result of such
breach.
C. Personnel. At the Service Provider's sole expense, the Service
Provider will employ and retain staff, and contract with third party
subcontractors and other vendors, with a level of experience, skill,
diligence and expertise, consistent with the Service Provider's
normal business practices, needed to perform the Services the Service
Provider is obligated to perform. The delegation of performance to a
subcontractor shall not relieve the Service Provider of any of its
duties or obligations under the TSA. Except with the prior written
consent of the Service Recipient (which shall not be unreasonably
withheld), the Service Provider shall not contract with a third party
subcontractor for a Service if (i) the Service Provider is providing
such solely for the benefit of the Service Recipient; and (ii) the
anticipated aggregate fees for the portion of the Service being
subcontracted exceeds Fifty Thousand Dollars ($50,000) per month. The
provisions of this paragraph shall not apply to contracts which shall
have been entered into prior to the Distribution Date.
D. System Support. In each instance where the Service Provider provides
application or infrastructure support to the Service Recipient under
Schedule 1A or Schedule 2, "Systems Support" shall include the
following, where applicable:
(i) Database Administration - Monitoring of database size and
performance; implementation of database expansions and
housekeeping as required; installation support for changes to
database structures.
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(ii) Technical Support - Answering questions concerning applications
and functionality; support to production; coordination for job
setup.
(iii) Emergency Fixes - Modification and installation of applications
as required to resolve production problems or change
functionality.
(iv) Production Problem Solving - Research and problem solving during
production processing.
(v) Production Monitoring - Monitoring of production performance
(e.g., nightly table update processing, backups and reporting
during critical periods - month end).
(vi) Security - Support additions and deletions of security access;
maintenance of user profiles in accordance with the Service
Provider's standards.
6. Billing and Cash Settlement Procedures
A. Services. Billing and cash settlement for Services shall occur
monthly. Each Service Provider shall send bills in a format and
containing a level of detail sufficient to identify the Services that
are the subject of such bill in a form attached as an exhibit to the
TSA. Spinco and Aetna shall settle amounts so due within fourteen
(14) calendar days following the receipt of a monthly bill in good
order and supported by proper documentation. Any billing or payment
errors shall be corrected promptly after discovery thereof.
B. Payroll Reimbursements. On each payroll issue date, Aetna shall
reimburse Spinco for amounts Spinco (i) paid or will pay to Aetna
Group employees on such payroll issue date and (ii) withheld or will
withhold from such employees' earnings and paid on their behalf to
Governmental Entities, benefit providers or other third parties.
C. Vendor Reimbursements. Aetna shall establish an account in its name
from which Spinco shall be authorized to draw funds for the purpose
of making payments to vendors on behalf of Aetna. Aetna shall ensure
that at all times the account contains sufficient funds to meet such
payment obligations and shall reimburse Spinco for any costs
(including, without limitation, interest or other cost of funds)
incurred by Spinco arising from any insufficiency of funds in such
account. Any monies received by Spinco in respect of such payments
for the benefit of Aetna shall be promptly deposited into such
account and shall not be commingled with Spinco funds.
D. Other Reimbursements. Except as specified in Sections 6B and 6C,
Aetna shall reimburse Spinco bimonthly for any amounts paid by Spinco
on Aetna's behalf.
E. Other Settlements
(i) Pass Through Charges. Pass through expenses and chargebacks
(e.g., postage and express mail fees) identified on the
Schedules hereto and not otherwise provided for herein shall be
separately billed to and promptly paid by the Service Recipient.
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(ii) Misdirected Payments. Any payment received by one party that
properly belongs to the other party shall be rerouted by the
receiving party to the other party promptly after such
misdirected payment is identified.
F. Form of Settlement. Settlement for amounts due under this Section 6
shall be made by wire transfer of immediately available funds. If any
amount remains unsettled after the date when due, such amount shall
bear interest at the [90-Day Treasury Rate] from the date due until
the full settlement thereof.
7. Operating Committee
A. Organization of the Operating Committee. Spinco and Aetna each will
appoint three (3) employees, at least one of whom shall be a senior
executive, to the "Operating Committee". The Operating Committee will
oversee the implementation and ongoing operation of the TSA and shall
attempt in good faith to resolve disputes between the parties. Each
of Spinco and Aetna shall have the right to replace one or more of
its Operating Committee members with employees or officers with
comparable knowledge, expertise and decision-making authority.
B. Decision Making. The Operating Committee shall act by a majority vote
of its members. If the Operating Committee fails to make a decision,
resolve a dispute, agree upon any necessary action, or if the Service
Recipient so requests in the event of a material breach significantly
and adversely affecting a Critical Operation, a senior officer of
Spinco and Aetna or his or her designee, shall attempt in good faith
within a period of fifteen (15) (or, in the event of a significant
and adverse impairment of a Critical Operation, seven (7)) calendar
days to conclusively resolve any such unresolved matter.
C. Meetings. During the Transition Period, the Operating Committee shall
meet, in person or via teleconference, at least once every other
calendar month; provided, however, that the Operating Committee may,
by majority vote of its members, elect to meet more or less
frequently as it deems necessary. In addition, the Operating
Committee shall meet as necessary to promptly resolve any disputes
submitted to it.
D. Disputes. Any dispute arising out of or relating to the TSA will be
submitted for resolution pursuant to Section 7B before any party may
bring any legal proceeding in connection therewith. A party's failure
to comply with the preceding sentence shall constitute cause for the
dismissal without prejudice of any such legal proceeding.
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8. Other Terms and Conditions.
A. Security. The Service Provider shall provide physical and data
security for the businesses or functions to which the Services relate
including, without limitation, code asset management practices at
levels equal to or greater than the Service Provider's applicable
standards during the twelve (12) month period prior to the
Distribution Date, such levels to be specified in a schedule to the
TSA. Each party agrees to comply with the other party's systems
security procedures and shall not circumvent such procedures. Each
party retains the right to monitor and audit the other party's
compliance with such systems security procedures. If either party
reasonably determines that personnel from the other party have
attempted to circumvent its systems security procedures, that party
may immediately terminate such personnel's access to its systems and
shall immediately advise the other party of such incident and
termination.
B. Systems Security Requirements.
(i) Spinco's Systems Security Requirements. Spinco's current systems
security requirements will be set forth on a Schedule to the
TSA. Spinco may amend such requirements from time to time in its
sole discretion, and shall provide 30 calendar days prior
written notice to Aetna of any such amendments. In addition,
Aetna agrees to comply with any written instructions or written
policies communicated to Aetna by Spinco in connection with the
use of or access to any of Spinco's systems or to software.
Aetna further agrees to execute any document reasonably required
by Spinco or required by its licensors in order to retain
software and/or data in confidence.
(ii) Aetna's Systems Security Requirements. Aetna's current systems
security requirements will be set forth on a Schedule to the
TSA. Aetna may amend such requirements from time to time in its
sole discretion, and shall provide 30 calendar days prior
written notice to Spinco of any such amendments. In addition,
Spinco agrees to comply with any written instructions or written
policies communicated to Spinco by Aetna in connection with the
use of or access to any of Aetna's systems or to software.
Spinco further agrees to execute any document reasonably
required by Aetna or required by its licensors in order to
retain software and/or data in confidence.
C. Confidentiality.
(i) Definition of Confidential Information. For purposes of the TSA,
"Confidential Information" shall have a meaning consistent with
the agreements contained in the Distribution Agreement and shall
include, without limitation, the following: (a) information
relating to planned or existing computer systems and systems
architecture and security, including, without limitation,
computer hardware, computer software, source code, object code,
documentation, methods of processing and operational methods;
(b) policyholder data, customer lists, sales, customer
information, profits,
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organizational restructuring, new business initiatives and
financial information; (c) information that describes insurance
and financial products, including, without limitation, actuarial
calculations, product designs, and how such products are
administered and managed; (d) information that describes product
strategies, tax interpretations, and the tax positions and
treatment of any item; and (e) confidential information of third
parties with which a party conducts business.
(ii) The TSA will contain restrictions on the use of Confidential
Information substantially similar to Section 6.06 of the
Distribution Agreement. In addition, each party shall use
commercially reasonable efforts to restrict access to the other
party's Confidential Information to those employees of such
party requiring access for the purpose of providing Services to
the other party hereunder. Subject to its obligations under
Section 6.05 of the Distribution Agreement (Retention of
Records) each party shall destroy all Confidential Information
obtained from the other party in connection with the TSA in
accordance with the receiving party's normal document retention
policies but, in any event, immediately following the expiration
of the TSA. Notwithstanding the foregoing, Spinco and Aetna and
their respective Affiliates may share Confidential Information
with any subcontractor utilized to provide Services, provided
that the party sharing such Confidential Information shall
remain responsible for compliance with the provisions of this
Section.
(iii) Fulfillment and Confidentiality of Vendor Contracts and
Software. Spinco and Aetna respectively shall (a) comply with
the terms of, and keep confidential and, except as required by
law, not disclose, reveal or duplicate (x) any information
related to any of their respective vendor contracts to which the
other party is provided access in connection with the TSA and/or
(y) the other party's or any third party's computer systems,
software, information and/or data to which they are provided
access and/or use in connection with the TSA and (b) take such
other actions and execute such additional documentation required
by any vendor in order to access and/or use such vendor's
software in connection with such vendor's contracts with the
Aetna Group or the Spinco Group, as applicable.
D. Limitation of Remedies. Except if and to the extent arising out of a
Service Provider's willful misconduct, in no event shall a Service
Provider be obligated to pay to the Service Recipient in respect of
breaches or alleged breaches of the TSA any amount in excess of the
amount received by such Service Provider for the Services it renders.
This cumulative limitation shall apply to all monetary remedies
provided for in the TSA or any Schedule thereto, regardless of
whether they are characterized as damages, indemnification
(including, without limitation, indemnification for defense costs),
refund of fees or otherwise.
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9. Other Transitional Arrangements and Payments.
A. As of the date hereof, a Spinco Group member owns or leases certain
information technology equipment, furniture, fine art and vehicles
which are used for the business of the Aetna Group ("Aetna Used
Assets"). Spinco shall take all actions necessary on its part to
cause Aetna or an Affiliate to become the owner or lessor of all such
assets as follows:
(i) Spinco shall provide to Aetna an inventory in reasonable detail
of Aetna Used Assets that are owned by a Spinco Group entity.
Upon execution of the TSA, Aetna shall pay Spinco the net book
value of such assets as of the Distribution Date. Spinco
concurrently shall deliver a bill of sale and/or other
documentation reasonably evidencing such transfer of ownership
including a list of assets purchased at a level of detail
reasonable in relation to the types of assets being transferred.
For the purposes of TSA, net book value shall be determined as
Spinco's cost less accumulated depreciation calculated in
accordance with generally accepted accounting principles
consistently applied.
(ii) For Aetna Used Assets that are leased by a Spinco Group entity,
Aetna and Spinco shall jointly employ reasonable best efforts to
cause the Leases to be assigned to Aetna or an Affiliate and, if
such efforts are unsuccessful, Aetna shall purchase such assets
and shall pay all costs incurred in connection therewith
including, without limitation, prepayment penalties or similar
charges, each as set forth in the relevant lease or on terms
that Aetna may agree to with the lessor.
B. The Service Recipient shall be solely responsible for all expenses
(other than the Service Provider's internal costs) associated with
eliminating the Service Recipient's need to receive Services from the
Service Provider including, without limitation, costs of transferring
data from the Service Provider's information technology environment
and of acquiring any computer hardware or software associated with
implementation of any Conversion Plan.
C. Upon execution of the TSA, Aetna shall reimburse Spinco for all
amounts it has paid for goods or services ordered or received after
March 31, 2000 for: (i) purchase of information technology equipment,
or licensing of information technology software, primarily for use in
the Aetna Group Business; and (ii) tenant improvements on properties
leased primarily for use in the Aetna Group Business, in the case of
each of clause (i) and (ii) to the extent permitted under the Merger
Agreement or the Distribution Agreement.
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D. Spinco and Aetna each shall bear fifty percent (50%) of the costs of
physically separating the premises at 151 Farmington Avenue,
Hartford, Connecticut.
E. Upon execution of the TSA, in addition to the amount payable pursuant
to Section 9C, above, Aetna shall pay Spinco the net book value as of
the Distribution Date of the building improvements in the Tower
Building and the tenant improvements on State House Square and field
office properties primarily used in the Aetna Group Business.
F. Aetna shall bear the entire expense (other than Spinco's internal
costs or any out of pocket expenses or other charge paid to Spinco's
advisors or representatives, if any) of (i) transferring, or
obtaining new licenses with respect to, software used primarily in
the Aetna Group Business; (ii) additional licensing or similar fees
paid by Spinco to third party vendors by reason of Spinco providing
any Transition Service pursuant to the TSA; and (iii) any other fees
or costs associated with terminating, assigning or transferring to
the Aetna Group any contract made use of by the Aetna Group Business.
Other Terms and Provisions
With regard to indemnification, the parties hereto agree as set forth in the
Distribution Agreement. In addition, the TSA shall contain such other terms and
provisions as are customary for an agreement of this type, including
assignability to an affiliate.
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SCHEDULE 1A
Infrastructure
o Production control/application availability
o Desktop engineering
o Desktop support
o Access Control (NT)
- Emergency access
- Problem tickets
- ID requests
- Groups/shared directories
- Emergency termination requests
- Pre server check out
- Post server check out
o Access Control (mainframe/mid-range)
- Emergency data set access
- Problem tickets
- General MF and Unix (SP2) access requests
- New users/terminations/N ID requests
- Short term data set access
- Long term data set access
- Emergency termination requests
o Server Management
o Network operations
- Problem resolution (data/voice/NT server interruptions)
- Manage chronic issues
o Switchboard (incoming calls)
Business Applications
o Integrated Benefit Service System
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o Integrated Tax Reporting Facility
o Recon 2
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SCHEDULE 1B
o Employee reimbursement processing for business
o Accounts payable
o Payroll processing
o General ledger support
o Benefits administration for any "cloned" employee benefits plans of the
Spinco Group
- Medical
- Dental
- Group term life
- Dependent life
- Survivor income benefit
- Employee and dependent accidental death and dismemberment
- Flexible spending accounts
- Long term care
- Other welfare
- Retirement
o Field office lease administration (including efforts to cause leases held
in the name of a Spinco Group entity to be conveyed to a Aetna Group
entity)
o Purchasing
o [Travel services]
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SCHEDULE 2
o Information technology business applications/systems:
- Producer Administration Information System
- DSS Producer Payroll
- Repetitive Payment System
