Health Net 2009 Annual Report Download - page 527

Section 3.2. Systems and Personnel. The Administrator shall provide and maintain necessary facilities, including physical space,
systems and trained personnel in sufficient numbers and with sufficient experience, skill and expertise, to perform its obligations
under this Administrative Services Agreement in accordance with the Service Standards set forth herein. Prior to the Expiration Date,
Administrator shall not sunset, decommission or otherwise eliminate any Claims payment, financial or other systems or databases
holding information primarily related to the Business, if such sunset, decommission or elimination would materially impair the
Administrator’s ability to meet the Service Standards, without the prior written consent of United (which consent will not be
unreasonably withheld or delayed). Notwithstanding the foregoing, nothing in this Section 3.2 shall prohibit the Administrator from
migrating the portion or components of existing Claims payment, financial or other systems or databases holding information related
to the Medicare Business to other systems or databases maintained by Parent or its Affiliates as of the Effective Date; provided, that
following such migration, the Administrator shall still be subject to the Service Standards. Following the Expiration Date, the
Administrator may, in its sole discretion, sunset, decommission or otherwise eliminate any Claims payment, financial or other
systems or databases holding information primarily related to the Business without the consent of United, in each case, subject to the
Administrator’s ability (a) to provide Claims administration services under a Claims Servicing Agreement following the Expiration
Date under Section 16.1; (b) to comply with records retention Laws and other applicable Laws; (c) to comply with any continuing
obligations under the Administered Contracts; and (d) to respond adequately to Governmental Entity requests and other Legal
Proceedings. Notwithstanding anything in this Section 3.2, after any such sunset, decommission or elimination, the Administrator
shall maintain back-up of such records, data or other information in a manner as is necessary to comply with any ongoing obligation
under the Administered Contracts or as required by applicable Law.
Section 3.3. Compliance; Licensure.
(a) The Administrator shall comply, in all material respects, with all applicable Laws in connection with the performance
of its duties hereunder and shall act consistently in all material respects with, and not cause the Company to be out of material
compliance with, the terms of the Administered Contracts. Should the Administrator violate any Law relating to the subject matter of
this Administrative Services Agreement that results in a fine, penalty or other monetary payment, or settlement imposed (including
expense reimbursement) on United or its Affiliates (other than the Company), the Administrator shall bear the expense of such fine,
penalty, monetary payment or settlement, unless such expense is identified as a Buyer Cost pursuant to the terms of the Stock
Purchase Agreement. The Administrator shall communicate promptly to the Company upon knowledge of the non-renewal, lapse,
suspension or termination of any material licenses required by applicable Law in connection with the administration of the
Administered Contracts. If, in the ordinary course of operations, the Administrator determines that there exists any material
operational concerns or failures with respect to any of the Administered Contracts, the Administrator shall notify the Company and, in
consultation with the Company, take all reasonable actions necessary to bring such Administered Contracts into operational
compliance.
(b) The Administrator shall use commercially reasonable efforts to ensure that it or any of its Affiliates that is
subcontracted to provide any Administrative Services continue to be, and their respective employees, agents and representatives are,
or shall become and remain, licensed, in whatever capacity is required, including without limitation utilization review and third-party
administrator licenses, by the Governmental Entity of all jurisdictions in which the Company is licensed as of the Effective Date. The
Administrator shall bear all costs and expenses relating to its own licensing and the licensing of its employees, agents and
representatives.
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