Health Net 2010 Annual Report Download - page 186

Final Execution Copy
(ii) The Transitioned Employee component of the AD Charge is determined by multiplying the volume of Productive Work
(as measured in hours) during the Minimum Retention Period(s) (as defined in Section 3.6 of Schedule E) of the Transitioned
Employees assigned solely to perform Applications Development Services for an In-Scope Application (as set forth in Exhibit C-5)
by ***, subject to COLA as required hereunder. Upon completion of the Minimum Retention Period of a Transitioned Employee and
in the event such person continues to perform Application Development services, he or she shall be deemed an Onshore Personnel or
Offshore Personnel, as the case may be, and charged at rates in accordance with such designation.
(b) The Applications Development Charge includes a pool of Productive Hours of Applications Development Services for each
In-Scope Application (“Baseline AD Hours”). The Baseline AD Hours for each In-Scope Application shall equal:
(i) The volume of Productive Hours for Onshore Personnel (excluding Transitioned Employees) and Offshore Personnel
for the In-Scope Application set forth in Exhibit C-4 for the applicable month, plus
(ii) *** Productive Hours during the Minimum Retention Period for each Transitioned Employee assigned to perform
Applications Development Services for the In-Scope Application (as set forth in Exhibit C-4), plus
(iii) Any additional Productive Hours within the *** described in Section 5.3.
(c) Beginning in November 2008, Supplier shall invoice Health Net on a monthly basis in arrears for the Baseline AD Hours, as
they may be adjusted each month under Section 5.2, through the Applications Development Charge in accordance with Section 10.1
of the Terms and Conditions.
(d) Supplier will make available the Baseline AD Hours specified in Exhibit C-4, as they may be adjusted by Health Net on a
monthly basis pursuant to Section 5.2(b). If Health Net does not request sufficient work to fully utilize Baseline AD Hours for a
particular In-Scope Application in a month, then Supplier shall use reasonable efforts to redeploy the Supplier Personnel assigned to
provide such Baseline AD Hours for such In-Scope Application to work on other In-Scope Applications that require similar skills
(and such work shall not be considered Incremental AD Hours under Section 5.3(b)). For the avoidance of doubt, Health Net shall not
be entitled to a credit or carry-over of Baseline AD Hours in a month that are unused due to Health Net’s failure to request sufficient
work to utilize such Baseline AD Hours in the month.
(e) Health Net and Supplier shall each use Commercially Reasonable Efforts to prioritize, manage and coordinate Applications
Development Projects to stay within the Baseline AD Hours allocation each month.
(f) Hours spent by Supplier in performing Cross Functional Services described in Schedule A shall not be counted as Productive
Hours or applied against Baseline AD Hours except to the extent (i) they are spent performing activities described in Sections 2.3,
2.4, 2.8, 2.9 2.10, 2.11 and 2.13 of Schedule A directly relating to performing Application Development Projects, and (ii) they are not
precluded from being chargeable under Exhibit A-6 (Project Framework).
(a) In connection with the Joint Capacity Planning Process, the Parties shall work together to develop and maintain a rolling 12-
month forecast of AD Projects and associated resource requirements (“AD Project Forecast”). Each month, and as otherwise
requested by Health Net, the Parties shall meet to (i) update the AD Project Forecast as necessary to remain current with Health Net’s
estimated AD
5.2 Adjustments to the Baseline AD Hours
Schedule C (Char
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es) C - 7 Health Net / Co
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nizant Confidential