EXHIBIT 8(t)
MASTER ADMINISTRATION AGREEMENT
between
XxXxxxxx Systems, L.L.C.
and
Farmers New World Life Insurance Company
dated as of April 1, 2001
TABLE OF CONTENTS
SECTION 1 DEFINITIONS................................................................... 1
1.01 Books and Records................................................................... 1
1.02 Effective Date...................................................................... 2
1.03 Initial Term........................................................................ 2
1.04 Policy Administration Services...................................................... 2
1.05 Contract Administration Services.................................................... 2
1.06 Policies............................................................................ 2
1.07 Change in Control................................................................... 2
1.08 Contracts........................................................................... 3
1.09 Products............................................................................ 3
1.10 System.............................................................................. 3
SECTION 2 TERM.......................................................................... 3
SECTION 3 POLICY OR CONTRACT ADMINISTRATION............................................. 3
3.01 Administration Services............................................................. 3
3.02 Performance Criteria................................................................ 3
3.03 Authorized Personnel................................................................ 4
3.04 Books and Records................................................................... 4
SECTION 4 FEES AND EXPENSES............................................................. 5
4.01 Administration Fees................................................................. 5
4.02 Expenses............................................................................ 5
4.03 System Enhancements................................................................. 7
4.04 Payment............................................................................. 7
SECTION 5 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX.................................... 7
SECTION 6 REPRESENTATIONS AND WARRANTIES OF COMPANY..................................... 9
SECTION 7 ADDITIONAL COVENANTS.......................................................... 9
7.01 Independent Contractor.............................................................. 9
7.02 Confidentiality and Disclosure...................................................... 10
7.03 Indemnification..................................................................... 12
7.04 Break In A Service Standard......................................................... 13
7.05 Dispute Resolution.................................................................. 16
7.06 Actions............................................................................. 17
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7.07 Company Inspections/Visits.......................................................... 18
7.08 Company Audits...................................................................... 19
7.09 Regulatory Audits................................................................... 19
7.10 Security of Operations.............................................................. 19
7.11 Insurance Coverage.................................................................. 19
7.12 Payments and Collection of Premiums................................................. 19
7.13 Delivery of Materials............................................................... 20
7.14 Financial Statements................................................................ 20
7.15 Processing and Administration....................................................... 20
7.16 Regulatory Changes.................................................................. 21
7.17 Migration........................................................................... 21
7.18 Advertising......................................................................... 22
7.19 Conduct............................................................................. 22
7.20 Performance......................................................................... 22
7.21 SAS 70 Type II Report............................................................... 22
7.22 Paramount Provision................................................................. 23
SECTION 8 TERMINATION OF AGREEMENT...................................................... 23
8.01 By Mutual Agreement................................................................. 23
8.02 By Non-Renewal...................................................................... 23
8.03 For Breach or Default............................................................... 23
8.04 For XxXxxxxx'x Financial Problems or Cessation of Operations........................ 24
8.05 Options to Terminate................................................................ 24
8.06 Responsibilities Upon Termination................................................... 25
8.07 Buyout Provision.................................................................... 26
SECTION 9 ASSIGNMENT.................................................................... 26
9.01 Assignment by Company............................................................... 26
9.02 Assignment by XxXxxxxx.............................................................. 26
SECTION 10 MISCELLANEOUS................................................................. 27
10.01 Governing Law....................................................................... 27
10.02 Notices............................................................................. 27
10.03 Entire Agreement.................................................................... 28
10.04 Binding Effect...................................................................... 28
10.05 Severability........................................................................ 28
10.06 No Third Party Beneficiaries........................................................ 28
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10.07 Headings............................................................................ 28
10.08 Counterparts........................................................................ 28
10.09 Waiver.............................................................................. 29
10.10 Construction........................................................................ 29
10.11 Taxes............................................................................... 29
10.12 Software Escrow Agreement........................................................... 29
10.13 Software License in Escrow.......................................................... 29
10.14 Force Majeure....................................................................... 30
SECTION 11 YEAR 2000 COMPLIANCE.......................................................... 30
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TABLE OF EXHIBITS
A Administration Services
B Buyout Provision
C Performance Criteria
D Fee Schedule
E Products
F Company Schedule of Authorized Personnel
XxXxxxxx Schedule of Authorized Personal
G Insurance Coverage
H Software Escrow Agreement
I Software License Agreement
J Nevada Addendum
K. License and Remote Support Agreement
L. Tennessee Addendum
M. Error Resolution Representatives
N Idaho Addendum
O Florida Addendum
P Montana Addendum
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Q Indiana Addendum
R Disaster Recovery Plan
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MASTER ADMINISTRATION AGREEMENT
This MASTER ADMINISTRATION AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of April, 2001, by and between XxXxxxxx Systems,
L.L.C., a Georgia limited liability company, having its principal address and
place of business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx,
00000 (hereinafter referred to as "XxXxxxxx"); and Farmers New World Life
Insurance Company, a stock company registered under the laws of the State of
Washington, having its principal place of business at 0000 00xx Xxxxxx X.X.,
Xxxxxx Xxxxxx, XX, 00000 (hereinafter referred to as "Company").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Agreement to provide
for the provision by XxXxxxxx, as an independent contractor, of variable
insurance policy and variable annuity contract administration services to
Company on the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and other good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
SECTION 1 DEFINITIONS.
As used in this Agreement, the following terms shall have the meaning set
forth:
1.01 Books and Records. "Books and Records" means all books and records
that contain information related to the Policies (defined in Section 1.06 below)
and Contracts (defined in Section 1.08 below), including without limitation, to
the extent any of the following exist, (i) hard copy and microfiche records;
(ii) all paper files; (iii) all electronic images: (iv) all computer data files;
(v) all correspondence between XxXxxxxx and owners of Policies or Contracts;
(vi) administrative records; (vii) claim records; (viii) sales records; (ix)
reinsurance records, (x) underwriting records (xi) accounting records; (xii)
Policy holder and Contract holder account records, and (xiii) records pertaining
to transactions in a Policy or Contract, provided, however, that Books and
Records shall not include any of XxXxxxxx'x or Company's internal documentation
of its own programs, systems and procedures or any of XxXxxxxx'x or Company's
books and records which are not related to the Policies or Contracts.
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1.02 Effective Date. "Effective Date" means the date stated in the first
paragraph of this Agreement.
1.03 Initial Term. "Initial Term" means the five (5) year period
commencing on the Effective Date of this Agreement and ending at 11:59 p.m. on
the day prior to the fifth anniversary of the Effective Date.
1.04 Policy Administration Services. "Policy Administration Services"
means the services set forth in [EXHIBIT A] attached hereto and designated as
"Policy Administration Services".
1.05 Contract Administration Services. "Contract Administration Services"
means the services set forth in [EXHIBIT A] attached hereto and designated as
"Contract Administration Services".
1.06 Policies. "Policies" means, collectively, the variable insurance
policies included within one of the Products and "Policy" means any one of the
Policies.
1.07 Change of Control. "Change of Control" shall mean (a) the occurrence
of any transaction or series of transactions (including without limitation, a
merger or consolidation of a party hereto with one or more entities, a sale of
the outstanding shares, membership interests, voting interest or other interest
(collectively, the "Equity")) by a party hereto or the issuance of additional
Equity of a party hereto as a result of which the owners of all of the
outstanding Equity of such party immediately prior to such transaction(s) own in
the aggregate less than fifty (50%) percent of the outstanding Equity of such
party or any other entity into which such party shall be merged or consolidated,
immediately following the consummation thereof; (b) the power to elect a
majority of the members of the board of directors or other governing body of
such entity shall pass to a person or persons which did not hold such power as
of the date hereof; or (c) the sale, transfer or other disposition of all or
substantially all of the assets of a party hereto as a going concern in a
single, or series of related, transactions. A Change of Control shall not
include, however, any reorganization or series of reorganizations of an entity
if, after the reorganization(s), all of the shareholders, members or equity
holders of such entity prior to such reorganization(s) own more than 50% of the
equity interest and voting rights of the resulting entity. A Change of Control
shall not be deemed to occur by reason of (i) a public offering of securities by
a party hereto, (ii) a change in its business structure or (iii) the transfer of
equity interests due to the death of any current shareholder, member or other
equity owner of such entity.
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1.08 Contracts. "Contracts" means, collectively, the variable annuity
contracts included within one of the Products, and "Contract" means any one of
the Contracts.
1.09 Products. "Products" means the Policies or Contracts described in
[EXHIBIT E] attached hereto. A "Product" is limited to a single insurance policy
form or a single annuity contract form of an insurance company. [EXHIBIT E] may
be amended during the Term by mutual written agreement of the parties hereto.
1.10 System. "System" means VPAS(R) Life, a group of computer programs,
associated database dictionaries, utilities, and integrated third-party software
utilized by XxXxxxxx in the discharge of XxXxxxxx'x obligations under the Master
Administration Agreement and such modifications, enhancements, improvements,
updates, corrections, or changes made for Company.
SECTION 2 TERM.
This Agreement shall commence on the Effective Date and shall continue in
effect for the Initial Term; thereafter this Agreement may continue in full
force and effect from year to year until terminated as herein provided, each
such additional year being an "Additional Term" of this Agreement. The Initial
Term and any Additional Terms hereunder are herein collectively referred to as
the "Term".
SECTION 3 POLICY OR CONTRACT ADMINISTRATION.
3.01 Administration Services. During the Term, XxXxxxxx shall perform
Policy Administration Services and Contract Administration Services
(collectively, "Administration Services") as set forth in [EXHIBIT A].
3.02 Performance Criteria. The manner and method and the standards by
which the Administration Services shall be performed is set forth in [EXHIBIT
C]. In this regard, the FNWL/BPO Business Process Outsourcing Operations Manual
for the Farmers Variable Universal Life Product dated January 2002 and the
FNWL/BPO Business Process Outsourcing Operations Manual for the Farmers Variable
Annuity Product dated January 2002, and any mutually agreed upon changes made to
these manuals in the future (each a "BPO Operations Manual"), are hereby
incorporated by reference into this Agreement.
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3.03 Authorized Personnel. At any time XxXxxxxx may apply to a person
indicated on the "Company Schedule of Authorized Personnel", attached hereto as
[EXHIBIT F], as a person authorized to give instructions or directions to and
receive instructions or directions from XxXxxxxx under this section with respect
to any matter arising in connection with this Agreement, other than matters that
are governed by Section 7.04 of this Agreement. XxXxxxxx shall not be liable
for, and shall be indemnified and held harmless by Company against any loss,
cost, damage or expense arising from any action taken or omitted by XxXxxxxx to
the extent XxXxxxxx can demonstrate that the action or omission was directed by
a person listed in the Company Schedule of Authorized Personnel in [EXHIBIT F].
Company may at any time provide XxXxxxxx with written notice of any change
of authority of persons authorized and enumerated in [EXHIBIT F] to provide
instructions or directions to and receive instructions or directions from
XxXxxxxx relating to services to be performed by XxXxxxxx under this Agreement.
At any time Company may apply to a person indicated on the "XxXxxxxx
Schedule of Authorized Personnel", attached hereto as [EXHIBIT F], as a person
authorized to give instructions or directions to and receive instructions or
directions from Company under this section with respect to any matter arising in
connection with this Agreement, other than matters that are governed by Section
7.04 of this Agreement. Company shall not be liable for, and shall be
indemnified and held harmless by XxXxxxxx against any loss, cost, damage or
expense arising from any action taken or omitted by Company to the extent
Company can demonstrate that the action or omission was directed by a person
listed in the XxXxxxxx Schedule of Authorized Personnel in [EXHIBIT F].
XxXxxxxx may at any time provide Company with written notice of any change
of authority of persons authorized and enumerated in [EXHIBIT F] to provide
instructions or directions to and receive instructions or directions from
Company relating to services to be performed by Company under this Agreement.
3.04 Books and Records. During the Term, XxXxxxxx shall, as agent of
Company, keep true and correct Books and Records relating to the performance of
all Administration Services hereunder in compliance with applicable law
including, but not limited to, the Investment Company Act of 1940, and the rules
promulgated thereunder. XxXxxxxx shall promptly return the Books and Records to
Company upon termination of this Agreement; provided, however, XxXxxxxx may keep
copies of the Books and Records for a period of seven years following such
termination. Any expenses incurred by XxXxxxxx in generating
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such copies shall be borne by XxXxxxxx. It is expressly understood and agreed
that the Books and Records are Company's sole property, and that such property
shall be held by XxXxxxxx as an agent, during the Term. It is also acknowledged
and agreed that any such Books and Records may be maintained on photographic
film, magnetic tape, disk, or other computer storage medium, if maintained in
accordance with applicable law including, but not limited to, the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder. The BPO
Operations Manuals attached hereto and made a part hereof reflect XxXxxxxx'x
record keeping requirements under this Agreement. Said Manuals shall be amended
and modified, from time to time, to reflect any amendments to the Investment
Company Act of 1940 or the rules thereunder or any interpretation by the
Securities and Exchange Commission.
SECTION 4 FEES AND EXPENSES.
4.01 Administration Fee.
(a) During the Initial Term of this Agreement, Company shall pay to
XxXxxxxx, as compensation for all Administration Services rendered pursuant to
this Agreement, the amounts set forth in [EXHIBIT D]. The fees payable by
Company to XxXxxxxx hereunder shall not be less than the fees determined by the
application of the minimum charges set forth in [EXHIBIT D], except as such fees
may be offset by any credits that arise in accordance with the provisions in
Section 7.04.
(b) For each Additional Term of this Agreement, Company shall pay to
XxXxxxxx, as compensation for all Administration Services rendered pursuant to
this Agreement, such fees and charges as shall be agreed to by the parties and
attached hereto as an amended [EXHIBIT D] prior to commencement of such
Additional Term; notwithstanding the foregoing, however, such fees may be offset
by any credits that arise in accordance with the provisions in Section 7.04.
4.02 Expenses. Company will promptly reimburse XxXxxxxx for all reasonable
out-of-pocket expenses incurred by XxXxxxxx in the performance of this
Agreement. Out-of-pocket expenses include, but are not limited to the following:
(a) Reasonable and customary travel expenses incurred by XxXxxxxx that are
pre-approved by Company.
(b) Postage, forms, mailings, stationery and shipping costs requested by
Company.
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(c) Charges for telephone line(s), long distance telephone calls and
remote access dedicated to service of Company and Company customers,
agents and brokers.
(d) Charges for the acquisition, installation and maintenance of any
hardware, software and telecommunication lines required for remote
system connectivity.
(e) Charges for supplies and maintenance of dedicated Company hardware
and equipment including but not limited to printers, faxes, modems,
etc.
(f) Charges for Company dedicated U.S. Post Office boxes.
(g) Monthly access charge of one hundred fifty dollars ($150) for
internet connection plus monthly per kilobyte charge for Company's
actual band width usage based on the internet service provider's
then current rates.
XxXxxxxx shall not make expenditures for any out-of-pocket expenses not
listed above, without the prior written consent of Company.
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4.03 System Enhancements. Requests by Company for enhancements to systems
or procedures for support of new products or new functional capabilities will be
performed and billed by XxXxxxxx to Company pursuant to the then current
Consulting Services Agreement between XxXxxxxx and Company in the following
manner: If Company requests changes or modifications that have not been provided
by XxXxxxxx to any of its other customers, such changes or modifications shall
be treated as a Work Order pursuant to the Consulting Services Agreement (the
"Customized Change"); provided, however, that should any Customized Change(s)
paid for by Company be provided by XxXxxxxx to any other then-existing or future
customer(s) of XxXxxxxx, without material changes or modifications thereto,
within fifteen (15) months of its completion for Company, XxXxxxxx will repay
("rebate") to Company an amount equal to twenty percent (20%) of the amount
charged by XxXxxxxx to (each) such other customer(s) for the Customized Change.
The Customized Change will be considered to have undergone material changes or
modifications if the cost of implementing such change(s) for another customer
exceeds twenty-seven (27%) of the cost paid for the Customized Change by
Company, assuming equivalent billing rates. In connection with each customer of
XxXxxxxx other than Company that implements the Customized Change without
material change or modification, XxXxxxxx shall pay the rebate which is
accordingly due within ten business days of the date it receives payment from
such customer. The rebate is not intended to and shall not under any
circumstances apply to any Customized Change(s) that are added to the base
VPAS(R) Life system.
4.04 Payment. During the Term of this Agreement, subject to the following
provisions of this Section 4.04, Company shall pay XxXxxxxx within thirty (30)
days of the date of receipt of any invoice from XxXxxxxx. Invoices will be
delivered by facsimile and by regular mail and shall identify the charges due
pursuant to [EXHIBIT D], the expenses due pursuant to Section 4.02 and any
charges due pursuant to the Consulting Services Agreement described in Section
4.03. If, in reviewing an invoice, Company in good faith believes there is a
mistake with the invoice, it shall notify XxXxxxxx within ten (10) days of
receipt of the invoice. Once Company has so notified XxXxxxxx, its obligation to
pay the disputed portion of the invoice shall be suspended. Within ten (10) days
of receiving such a notice from Company, XxXxxxxx shall respond to Company's
notice. Thereafter, the parties shall work together in good faith to resolve the
issue. Upon resolution of the issue by the parties, Company shall make any
payment due on the invoice within ten (10) days after such resolution. Time is
of the essence with respect to the provisions of this Section 4.04. Failure of
Company to fully pay any undisputed invoiced amount within sixty (60) days after
the date of the invoice shall be deemed a material breach of this Agreement.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX.
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XxXxxxxx hereby represents and warrants to Company as follows:
(a) It is a limited liability company duly organized and validly existing
and in good standing under the laws of the State of Georgia.
(b) It is empowered under applicable law and by its articles of
association and operating agreement to enter into and perform the services
contemplated in this Agreement.
(c) All requisite proceedings have been taken to authorize it to enter
into and perform the services contemplated herein and to execute and deliver the
Agreement, and when so executed and delivered, this Agreement will be the valid
and binding obligation of XxXxxxxx enforceable in accordance with its terms.
(d) It has duly executed and delivered this Agreement and neither such
execution and delivery nor the performance by it of any of its obligations under
this Agreement will (i) violate any provision of its article of association or
operating agreement, (ii) result in a violation or breach of, or constitute a
default or an event of default under, any indenture, mortgage, bond or other
contract, license, agreement, permit, instrument or other commitment or
obligation to which it is a party or by which it is bound or (iii) violate any
law, rule, regulation, order or interpretation of any governmental body, writ,
judgment, injunction or court decree (collectively, "Laws") applicable to it or
its business.
(e) It has all licenses, permits, registrations and other governmental
approvals necessary or advisable for the performance of its obligations under
this Agreement. XxXxxxxx is registered as a third party administrator in each
state where such registration is required under applicable Law, and will provide
evidence of such registration to Company upon request.
(f) Its business operations have been conducted, are now, and will
continue to be in compliance in all material respects with all Laws.
(g) In its reasonable business judgment, it has the equipment, facilities,
systems, and staff necessary to perform the Administration Services and its
duties and obligations under this Agreement.
(h) It owns and has all rights to use the System and has the right to use
any other programs, systems, or software needed to perform its duties and
obligations under this Agreement.
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(i) It has tested and found its disaster recovery capability (see Section
7.10 below) to be in conformity with the Disaster Recovery Plan attached hereto
as [EXHIBIT R].
(j) It is not subject to any current or pending litigation which would
impair its ability to carry out its responsibilities and obligations under this
Agreement.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company hereby represents and warrants to XxXxxxxx as follows:
(a) It is a registered stock company organized and existing and in good
standing under the laws of the State of Washington.
(b) It is empowered under the applicable laws and regulations and by its
governing documents to enter into and perform this Agreement.
(c) All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement, and when so executed and delivered, this
Agreement will be the valid and binding obligation of Company enforceable in
accordance with its terms.
(d) It has duly executed and delivered this Agreement and neither such
execution and delivery nor the performance by it of any of its obligations under
this Agreement will (i) violate any provision of its governing documents, (ii)
result in a violation or breach of, or constitute a default or an event of
default under, any indenture, mortgage, bond or other contract, license,
agreement, permit, instrument or other commitment or obligation to which it is a
party or (iii) violate any Law applicable to it or its business.
(e) It is not subject to any current or pending litigation which would
impair its ability to carry out its responsibilities and obligations under this
Agreement.
SECTION 7 ADDITIONAL COVENANTS.
7.01 Independent Contractor. It is understood and agreed that all
Administration Services performed hereunder by XxXxxxxx shall be performed
solely for Company by XxXxxxxx in the capacity of
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an independent contractor of Company. Nothing contained herein shall be
construed to create between XxXxxxxx and Company a partnership, joint venture,
association or other legal entity or relationship other than that of independent
contractor.
7.02 Confidentiality and Disclosure.
(a) Each Party to this Agreement ("Disclosing Party") acknowledges that
all information disclosed pursuant to this Agreement to the other party
("Recipient") constitutes proprietary and confidential information including,
without limitation, Policy holder or Contract holder information, procedures,
Company customer information, prospect information, contracted broker and agent
information, and material related to Policy/Contract design, pricing, filings,
marketing and sales administration and systems information (collectively,
"Information").
(b) Recipient agrees to maintain during the Term and thereafter, the
Information received from the Disclosing Party in confidence and not to copy
(except as is necessary to perform the functions in Section 3.04), reproduce,
sell, assign, license, market, transfer or otherwise dispose of, give, or
disclose such Information to third parties. XxXxxxxx shall not contact any
client, prospect, lead, agent, account executive or employee of Company except
in the course of normal customer servicing of the Policies or Contracts or if
required by law. In any event, XxXxxxxx shall not knowingly do anything to
undermine or adversely affect the relationship between Company and any such
person and shall not knowingly use any Information, including but not limited
to, its knowledge of Company or its employees, agents, procedures, systems,
operations, processes, Policies, Contracts, Policy holders, Contract holders,
leads or prospects, except to perform its obligations hereunder. Company shall
not knowingly do anything to undermine or adversely affect the relationship
between XxXxxxxx and any client, prospect, lead, agent, account executive or
employee of XxXxxxxx and shall not knowingly use any Information, including but
not limited to, its knowledge of XxXxxxxx or its employees, agents, procedures,
systems, operations, processes, leads or prospects, except for its own internal
purposes consistent with this Agreement.
(c) Disclosing Party agrees that Recipient shall have no obligation under
the provisions of this Section 7.02 with respect to any Information which:
1. is now or hereafter becomes publicly known other than through
a breach hereof,
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2. is known by Recipient prior to its receipt of the Information,
without any obligation of confidentiality with respect
thereto,
3. subject to Section (g) below, is disclosed with the Disclosing
Party's written consent,
4. is disclosed by the Disclosing Party to a third party without
the same or similar restrictions as set forth herein,
5. is required to be disclosed by Recipient by a court of
competent jurisdiction, administrative agency or governmental
body, or by law, rule or regulation, or by applicable
regulatory or professional standards, or
6. is disclosed by Recipient in connection with any judicial or
other legal proceeding involving the Agreement.
(d) Recipient shall limit access to Information received from the
Disclosing Party to only those personnel of Recipient who have need of such
access for the performance of any obligation of Recipient under this Agreement
and shall advise such employees of their obligations to keep such Information
confidential. Recipient shall use its commercially reasonable efforts and take
whatever steps are necessary to assure the integrity and security of all
Information including, but not limited to, the Books and Records, disclosed or
made available to it pursuant to this Agreement.
(e) Recipient shall use Information only for purposes of fulfilling its
obligations under the Agreement.
(f) Except as expressly provided in the Agreement, Disclosing Party grants
no license, right or interest to Recipient under any copyrights, patents,
trademarks, trade secrets or other property rights of Disclosing Party by reason
of the disclosure of the Information.
(g) Each party acknowledges that some Information may, under applicable
law, be deemed to be confidential information of third parties (such as natural
persons whose lives are insured under a Policy or Contract) and agrees to
preserve the confidentiality of all Information, which under applicable Law must
be treated as confidential.
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(h) XxXxxxxx shall not use Company's logos, trademarks or service marks,
whether registered or unregistered, in any written, oral or electronic material
or communication without the prior written consent of Company. Any material
containing any such information shall be furnished to Company for such consent
prior to its use. Company shall use its best efforts to respond to any request
for written consent within 10 calendar days; provided, however, that failure to
respond shall not relieve XxXxxxxx of the obligation to obtain Company's prior
written consent. After receiving Company's consent to the use of any such
material, no changes may be made to such material without obtaining Company's
consent to such changes. Company may at any time in its sole discretion revoke
its written consent, and upon notification of such revocation XxXxxxxx shall no
longer use the material subject to such revocation.
The parties each agree that breach of Section 7.02 could result in
irreparable injury for which monetary damages may be an inadequate remedy, and
that the appropriate party shall be entitled to enforce the provisions of this
section by obtaining an injunction or an order for specific performance. The
terms and conditions of Section 7.02 shall survive the termination of this
Agreement.
7.03 Indemnification. Each party to this Agreement shall indemnify,
defend, and hold harmless the other party and its officers, directors, partners,
principals, controlling persons, agents, independent contractors, employees,
subcontractors and affiliates and their respective personnel from and against
any and all liabilities, losses, damages, costs, expenses (including, without
limitation, reasonable attorneys' fees and court costs), interest, penalties or
other loss directly or indirectly arising out of, in connection with or with
respect to any breach of this Agreement including, but not limited to, breach of
any covenant, representation or warranty herein or violation of applicable law
or any fraudulent, criminal, negligent and/or bad faith act or omission by such
party or its officers, directors, partners, principals, independent contractors,
employees, subcontractors and affiliates and their respective personnel under
this Agreement.
If a party is named in any lawsuit or other proceeding for which such
party believes it may be entitled to indemnification hereunder, such party shall
promptly give notice thereof to the other party, such notice to include a
description in reasonable detail of such lawsuit or proceeding and the basis for
such party's belief that it may be entitled to indemnification hereunder. The
party being indemnified shall not settle any such lawsuit or proceeding without
the written consent of the indemnifying party. The party being indemnified shall
have the right, but not the obligation, to participate in such defense and to
review all documents prepared in connection therewith. Notwithstanding the
above, no person shall be entitled to indemnification if the liabilities,
losses, damages, costs, expenses, interest, penalties or other losses are due to
the willful
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misfeasance, bad faith, or negligence of the person seeking indemnification. The
parties shall cooperate in all reasonable respects with each other in defending
such lawsuit or proceeding. XxXxxxxx agrees not to settle any such lawsuit or
proceeding without the written consent of Company. The terms and conditions of
Section 7.03 shall survive the termination of this Agreement.
7.04 Break In A Service Standard
(a) If during the Term, Company encounters a problem that it believes
constitutes a "Break In A Service Standard," as defined in Section 7.04(k)
below, and it believes the problem is caused by XxXxxxxx, Company shall promptly
notify XxXxxxxx in writing, and XxXxxxxx shall promptly respond. If the problem
is not immediately resolved between the parties, the designated representative
of XxXxxxxx and the designated representative of Company, as specified in
Exhibit M, (collectively, the "Error Resolution Representatives") shall, before
the end of the first full business day following such notice, consult with each
other concerning the existence, cause and remediation of such problem.
(b) If it is mutually determined by the Error Resolution Representatives
that the problem constitutes a Break In A Service Standard and that it is caused
by XxXxxxxx'x (or one or more of its contractor's) personnel, systems, methods,
operations, equipment or processes, XxXxxxxx shall immediately take such actions
and make any modifications and/or payments to correct the problem, without
charge to Company and shall be liable to credit for the account of Company or
pay to Company the amounts specified below as full and complete compensation for
the liabilities, losses, damages, costs, or expenses Company has incurred as a
result of the Break In A Service Standard.
(c) If it is mutually determined by the Error Resolution Representatives
that the problem does not constitute a Break In A Service Standard or is the
result of faulty information, faulty specifications, human error, system or
process errors caused by Company, or a contractor of Company, or any other third
party, then Company shall pay XxXxxxxx for the services rendered by XxXxxxxx in
researching, analyzing and correcting the problem at XxXxxxxx'x normal hourly
rates then effect for such services.
(d) If it is mutually determined by the Error Resolution Representatives
that the problem is the result of errors caused by both XxXxxxxx and Company or
neither XxXxxxxx nor Company, then the Error Resolution Representatives mutually
shall decide what further recourse, action and/or payments, if any, are
justified by the particular facts and circumstances surrounding the problem;
provided, however, that if it is
13
determined that XxXxxxxx had no fault with regard to the problem, it shall be
reimbursed for its time in researching and investigating such error at its
normal hourly rates then in effect for such services.
(e) If it cannot be mutually determined by the Error Resolution
Representatives that the problem or error is the result of a Break in Service
Standard as defined in Section 7.04(k), then any adverse impact to the Company
and any applicable remedies will be subject to terms and conditions of section
7.03 (Indemnification) and 7.05 (Dispute Resolution).
(f) If any mutually determined Break In A Service Standard caused by
XxXxxxxx, as described in Section 7.04(b) above:
(1) materially impacts the Administration Services (as defined in
Section 3.01 herein) as determined by the Error Resolution Representatives;
(2) causes a violation of law including, but not limited to, a
violation of the federal securities laws, state insurance law, or state
securities law (as labeled in Exhibit A, Exhibit C and the BPO Operations
Manuals) which has a material adverse effect on Company or the Policies or
Contracts; or
(3) breaches an "Essential Company Standard," as defined in Section
7.04(l) below, and is not resolved (including the correction of all material
repercussions of the error) within 30 days of the date XxXxxxxx is given notice
of the Break In A Service Standard, as described in Section 7.04(a) above, or
within 30 days of the date XxXxxxxx discovers or otherwise learns of the Break
In A Service Standard, whichever is sooner, Company shall be entitled, as its
sole remedy and as payment in full for all such damages, to a credit against the
following month's Administration Fee (discussed in Section 4.01 herein) in an
amount not to exceed 25% of the fee. The precise amount of the credit is to be
jointly determined by the Error Resolution Representatives, taking into account
the severity of the Break In A Service Standard and the adverse impact on
Company.
(g) If any mutually determined Break In A Service Standard caused by
XxXxxxxx, as described in Section 7.04(b) above:
(1) materially impacts the Administration Services (as defined in
Section 3.01 herein) as determined by the Error Resolution Representatives;
(2) causes a violation of law including, but not limited to, a
violation of the federal securities laws, state insurance law, or state
securities law (as labeled in Exhibit A, Exhibit C and the BPO Operations
Manuals) which has a material adverse effect on Company or the Policies or
Contracts; or
14
(3) breaches an "Essential Company Standard," as defined in Section
7.04(l) below, and is not resolved (including the correction of all material
repercussions of the error) within 60 days of the date XxXxxxxx is given notice
of the Break In A Service Standard, as described in Section 7.04(a) above, or
within 60 days of the date XxXxxxxx discovers or otherwise learns of the Break
In A Service Standard, whichever is sooner, Company shall be entitled, as its
sole remedy and as payment in full for all such damages, to a credit against the
following month's Administration Fee (discussed in Section 4.01 herein) in an
amount not to exceed 50% of the fee. The precise amount of the credit is to be
jointly determined by the Error Resolution Representatives, taking into account
the severity of the Break In A Service Standard and the adverse impact on
Company.
(h) If any mutually determined Break In A Service Standard caused by
XxXxxxxx, as described in Section 7.04(b) above:
(1) materially impacts the Administration Services (as defined in
Section 3.01 herein) as determined by the Error Resolution Representatives;
(2) causes a violation of law including, but not limited to, a
violation of the federal securities laws, state insurance law, or state
securities law (as labeled in Exhibit A, Exhibit C and the BPO Operations
Manuals) which has a material adverse effect on Company or the Policies or
Contracts; or
(3) breaches an "Essential Company Standard," as defined in Section
7.04(l) below, and is not resolved (including the correction of all material
repercussions of the error) within 90 days of the date XxXxxxxx is given notice
of the Break In A Service Standard, as described in Section 7.04(a) above, or
within 90 days of the date XxXxxxxx discovers or otherwise learns of the Break
In A Service Standard, whichever is sooner, Company shall be entitled, as its
sole remedy and as payment in full for all such damages, to a credit against the
following month's Administration Fee (discussed in Section 4.01 herein) in an
amount not to exceed 90% of the fee. The precise amount of the credit is to be
jointly determined by the Error Resolution Representatives, taking into account
the severity of the Break In A Service Standard and the adverse impact on
Company.
(i) If it is mutually determined that a Break In A Service Standard is a
benign error, XxXxxxxx shall correct such Break In A Service Standard within a
reasonable time and at its expense but no financial or monetary remedy shall
apply and such Break In A Service Standard shall not be considered grounds for
termination of this Agreement.
15
(j) XxXxxxxx shall report actual service results no less than monthly to
Company management in an Operations Report in a format agreeable to both
XxXxxxxx and Company.
(k) For purposes of this Agreement, a "Break In A Service Standard" shall
mean the failure of XxXxxxxx to comply with any of the material performance
criteria set forth in Exhibit A, Exhibit C or any material standards of service
described in either BPO Operations Manual. A Break In A Service Standard shall
not include any hardware failure or malfunction, force majeure or any failure
caused by Company, Company's fund managers, any other third party not within the
control of XxXxxxxx or any third party software.
(l) For purposes of this Agreement, "An Essential Company Standard" shall
mean those performance criteria mutually designated by Company and XxXxxxxx as
such in Exhibit A or Exhibit C and those standards of service mutually
designated as such in either BPO Operations Manual.
(m) Anything in this Agreement to the contrary notwithstanding, the
remedies provided herein shall be the sole remedies available to Company for any
trading or investment losses incurred with respect to any Policy ("Negative
Breakage") by reason of any mutually determined Break In A Service Standard or
breach of An Essential Company Standard. The parties acknowledge that the
remedies for Negative Breakage are limited to the monetary remedies imposed
under this Section 7.04. Notwithstanding the foregoing, the parties further
acknowledge that in the event a Break in Service Standard or a breach of An
Essential Company Standard generates trading or investment gains with respect to
any Policy or Contract ("Positive Breakage"), the remedies provided herein will
be offset by the cumulative net Positive Breakage as of the date any such
remedies are imposed.
(n) Notwithstanding the provisions of Section 7.03 hereof, the parties
agree that the remedies set forth herein shall be exclusive with respect to any
mutually determined Break in Service Standard or breach of an Essential Company
Standard.
7.05 Dispute Resolution. In the event of breach or dispute, the parties
hereby specifically stipulate to arbitration. If a dispute or controversy arises
in connection with the interpretation or performance of this Agreement,
including its formation, interpretation, or validity or any transaction under
this Agreement whether arising before or after termination, and any such dispute
or controversy is not resolved in the normal course of business, the parties
will resolve the dispute or controversy, not by litigation or other judicial
means; but through dispute resolution process consisting of a progression of the
following:
16
Direct negotiations between designated personnel of XxXxxxxx and Company
Mediation, and Binding arbitration.
Either party may initiate a dispute resolution process by delivering
written notices to the other party. Thereafter, the parties may mutually develop
and agree upon the specific procedures and guidelines which govern the dispute
resolution process. Except as otherwise agreed by the parties, any mediation or
arbitration proceedings shall be conducted in accordance with the applicable
rules and procedures of the Center for Public Resources (CPR) Institute for
Dispute Resolutions.
All mediators and arbitrators shall consider this Agreement an honorable
engagement rather than merely a legal obligation. Mediators and arbitrators
shall consider this Agreement a binding Agreement and mediators and arbitrators
are relieved from all judicial formalities and may abstain from following strict
rules of law. The decision of an arbitrator or panel of arbitrators shall be
final and binding upon both XxXxxxxx and Company and may be entered in any court
having appropriate jurisdiction. The parties shall each bear one-half the
expense of a dispute resolution process; provided, however, that each party
shall bear its own attorney's fees and expenses, unless otherwise provided by
the arbitration award or determination. In no event shall the arbitrators' award
damages be inconsistent with the rules of the CPR. This Section shall remain in
full force and effect in the event that any other provision of this Agreement is
found invalid or non-binding.
The terms and conditions of Section 7.05 shall survive the termination of
this Agreement.
7.06 Actions.
(a) Each party to this Agreement (the "Notifying Party") shall promptly
notify the other party of any threatened or pending lawsuit or governmental or
regulatory agency inquiry or complaint relating to Policies or Contracts of
which the Notifying Party has actual knowledge and shall promptly transmit to
such other party a copy of any applicable service of process or other instrument
related to a court proceeding or any correspondence or other document
transmitted to or from any governmental or regulatory agency relating to the
Policies or Contracts which shall be actually received by the Notifying Party.
(b) XxXxxxxx shall make no response to any governmental or regulatory
agency's inquiry or complaint relating to Policies or Contracts without first
obtaining Company's approval and consent to the
17
response to such inquiry or complaint; provided, however, that if Company fails
to give its approval or consent after being notified of any such inquiry or
complaint by XxXxxxxx or delays its approval or consent and such failure or
delay would subject XxXxxxxx to any fine, penalty, liability or sanction, then
XxXxxxxx may make a response.
(c) Company reserves the right to control the defense of any litigation,
threatened or pending, by or against it, or to respond on its own behalf to any
governmental or regulatory agency's inquiry or complaint; provided, however,
that if Company shall exercise this right in such a manner as shall subject
XxXxxxxx to any fine, penalty, liability or sanction for failure to follow
procedure, or otherwise in a manner which, in the reasonable opinion of XxXxxxxx
or its legal counsel may have a material adverse effect on XxXxxxxx, then
XxXxxxxx shall have the right to defend itself with counsel of its choice at its
own expense.
(d) XxXxxxxx reserves the right to control the defense of any litigation,
threatened or pending, by or against it, or, subject to subsection (b) above, to
respond on its own behalf to any governmental or regulatory agency's inquiry or
complaint; provided, however, that if XxXxxxxx shall exercise this right in such
a manner as shall subject Company to any fine, penalty, liability or sanction
for failure to follow procedure, or otherwise in a manner which, in the
reasonable opinion of Company or its legal counsel may have a material adverse
effect on Company, then Company shall have the right to defend itself with
counsel of its choice at its own expense.
(e) The parties shall cooperate with each other in responding to or
defending any such regulatory lawsuit or action, threat, demand, inquiry,
complaint, administrative or regulatory investigation or proceeding, except if
the parties' interests are adverse to each other.
The terms and conditions of Section 7.06 shall survive the termination of
this Agreement.
7.07 Company Inspections/Visits. During the Term of this Agreement,
Company and its agents have the right, upon prior written notice of at least
five (5) business days, to periodically visit XxXxxxxx during ordinary business
hours; provided that such inspections/visits do not exceed four (4) times per
calendar year or one (1) time per calendar quarter. During such visits, Company
and its agents shall be given: (i) reasonable access to XxXxxxxx'x systems,
operations, procedures, personnel, and manuals that relate to the services
provided under this Agreement, as is necessary to ensure that XxXxxxxx and
Company fulfill their respective obligations under this Agreement (including the
obligations set forth in the BPO Operations Manuals) and (ii) the right to
perform on-site inspection and analyses of the Books and Records in accordance
with reasonable procedures. Each notice shall state with specificity the agenda
for the visit and
18
the goals to be accomplished. XxXxxxxx shall only be required to provide such
items and assistance as shall be consistent with the agenda set forth in the
notice.
7.08 Company Audits. During the Term of this Agreement, Company and its
agents have the right to perform an annual audit of XxXxxxxx each year upon five
(5) business days notice. XxXxxxxx shall provide full access to all of the Books
and Records and full access to such of its systems, operations, procedures,
personnel, and manuals that relate to the services provided under this Agreement
so that Company and its agents may perform such audits. XxXxxxxx may request
that any agents of Company execute a confidentiality agreement as a condition to
such audit. Each notice shall state with specificity the agenda for the visit
and the goals to be accomplished. XxXxxxxx shall only be required to provide
such items and assistance as shall be consistent with the agenda set forth in
the notice.
7.09 Regulatory Audits. XxXxxxxx shall make available to representatives
of the appropriate regulatory agencies, including the Securities and Exchange
Commission, all requested Books and Records and access to its operating
procedures.
7.10 Security of Operations. XxXxxxxx shall maintain off-site backup files
on a daily basis of its systems, procedures, Books and Records, documents,
files, and other materials relating to the Agreement. XxXxxxxx shall maintain at
all times during the Term a disaster recovery capability consistent with the
Disaster Recovery Plan in [EXHIBIT R]. Company may review the current procedures
regarding the disaster recovery ability. XxXxxxxx will cause its offsite storage
facility provider to allow Company to inspect the storage facility upon two (2)
business days prior notice.
7.11 Insurance Coverage. XxXxxxxx shall use commercially reasonable
efforts to continue in effect the insurance coverages described in [EXHIBIT G]
attached hereto. XxXxxxxx shall not voluntarily cause any termination,
reduction, or alteration of these coverages. XxXxxxxx shall also comply with any
bond, deposit, and insurance requirements of applicable state law.
7.12 Payments and Collection of Premiums.
(a) The payment to XxXxxxxx of any premiums or charges for a Policy or
Contract, by or on behalf of a Policy holder or Contract holder, shall be deemed
to have been received by Company, and the deposit of return premiums on behalf
of an insured by Company to an account maintained by XxXxxxxx shall not be
deemed payment to the insured until such payments are received by such insured.
XxXxxxxx
19
agrees that all such premiums and charges shall remain the property of Company.
Subject to Section 7.19 below, Company hereby authorizes XxXxxxxx to sign and
endorse any checks representing premiums, Policy charges or Contract charges;
however, Company reserves the right to change, modify or withdraw the
authorization at any time.
(b) All premiums, loan repayments and other receipts shall be payable to
the order of Company. XxXxxxxx shall collect, receive and deposit all checks or
other funds collected on behalf of Company in the bank accounts opened and
maintained by Company for such purposes. Any funds held by XxXxxxxx in
connection with this Agreement shall be held in trust for Company and shall not
be commingled by XxXxxxxx with any other funds. XxXxxxxx shall immediately remit
such funds to the person or persons entitled thereto or shall promptly deposit
them in the bank accounts established by Company for purposes of this Agreement.
XxXxxxxx shall keep copies of all records provided by such bank or banks
pertaining to such bank accounts and shall furnish Company with copies thereof.
(c) XxXxxxxx shall not be responsible for any claims determination or
approval. Company shall produce all checks for claims, loans, surrenders, and
return of premium or cash value based on information passed to Company from
XxXxxxxx.
7.13 Delivery of Materials. Any Policies, Contracts, booklets,
advertising, sales literature, notices or other written communications delivered
by Company or an affiliate to XxXxxxxx for delivery to a Policy holder or
Contract holder shall be delivered by XxXxxxxx promptly after receipt of
instructions from Company or an affiliate to do so. Company will reimburse
XxXxxxxx for the out-of-pocket expenses borne by XxXxxxxx in making such
deliveries, as detailed in Section 4.02 and in [EXHIBIT D] to this Agreement.
7.14 Financial Statements. While this Agreement is in effect, upon request
by Company, XxXxxxxx shall provide Company with audited annual financial
statements within ten business days of their receipt by XxXxxxxx and unaudited
quarterly financial statements regarding its financial operations forty five
(45) days following the end of a calendar quarter.
7.15 Processing and Administration. XxXxxxxx shall process and administer
the Policies and Contracts in accordance with all Laws applicable to the
Administration Services provided under this Agreement and shall make any
filings, statements and reports as are or may be required by any such applicable
Law.
20
7.16 Regulatory Changes. During the Term, XxXxxxxx will make, in a timely
manner, all modifications to the System that are required to conform to, and
comply with, changes in any Law(s) that affect the Policies or Contracts or the
Administration Services to be performed pursuant to this Agreement, on the
following basis: Any changes in any Laws(s) that affect the Policies or
Contracts or XxXxxxxx'x performance of the Administration Services will be
implemented by XxXxxxxx if approved in writing by Company. Company shall give
such approval in a timely manner or specify any custom modifications it desires
sufficiently in advance of the date by which such regulatory changes take effect
so that XxXxxxxx is not prevented from performing the Administration Services in
compliance with any such change; company shall indemnify XxXxxxxx for any damage
it may incur as a result of Company's failure to provide written approval or
specify custom modifications. Any modification(s) to the System that are
generally provided to any other customers of XxXxxxxx shall be implemented at no
additional cost to Company.
7.17 Migration. During the Term, XxXxxxxx may make modifications,
improvements, enhancements, additions, or updates (that are not made pursuant to
a Regulatory Change or a request by Company) to the System used in performing
the Administration Services (collectively, the "Updates"). Whenever XxXxxxxx
releases Updates to the System which are generally applicable to all of its
customers who use the System for administration services, XxXxxxxx shall make
the same available for use in the performance of the Administration Services for
Company, at no additional charge; provided, however, that prior to
implementation, such Updates will be customized, if necessary, to reflect, and
be incorporated into, any customized modules used in connection with
Administration Services performed for Company. Such customization will be billed
to Company at XxXxxxxx'x then published standard hourly rates, and will be
subject to a Work Order and all other procedures outlined in the Consulting
Services Agreement previously entered into by the parties hereto. Company
acknowledges that should it fail or refuse to authorize XxXxxxxx to implement
each such Update within a twenty one (21) month period, XxXxxxxx shall be
entitled to implement an increase in the Administration Fees payable hereunder
to offset the additional cost it will incur as a result of Company's failure or
refusal to accept any Update. Should Company disagree with any proposed increase
in the Administration Fee as proposed hereunder, such disagreement shall be
submitted to arbitration pursuant to Section 7.05 hereof. Once finally
determined, such increase in the Administration Fee, if any, shall be
retroactive to the effective date of the proposed increase by XxXxxxxx.
21
7.18 Advertising. Subject to that certain Letter Agreement by and between
XxXxxxxx and Company dated the 20th day of January, 2000 (a copy of which is
attached hereto and made a part hereof), XxXxxxxx may use only such advertising
pertaining to Policies or Contracts or the business underwritten by the Company
as has been approved in writing by the Company in advance of its use. The terms
and conditions of this Section 7.18 shall survive the termination of this
Agreement.
7.19 Conduct. Each party to this Agreement shall conduct itself, at all
times, so as not to affect adversely the business, good standing or reputation
of itself or the other party hereto. In this regard, each party shall establish,
maintain and implement procedures for screening job applicants that are designed
to achieve compliance with the requirements of this Agreement.
7.20 Performance. Each party hereto will conduct its business and will
take such actions as are required to fulfill the covenants contained in this
Section 7 and to ensure that the warranties and representations contained in
Section 5 are true on the date hereof and throughout the term of this Agreement.
7.21 SAS 70 Type II Report. Company and XxXxxxxx acknowledge that
obtaining a SAS70 Type II report is not a requirement imposed upon XxXxxxxx
pursuant to this Agreement. However, the Company and XxXxxxxx agree to review
the third party administration operations environment no less frequently than
annually and to consider, in light of the results of such review and the
anticipated costs involved, whether a SAS 70 Type II Report should be pursued.
The Company and XxXxxxxx agree to enter into good faith discussions regarding
the course of action. XxXxxxxx and Company shall mutually determine whether a
SAS 70 Type II Report will be pursued for any particular years and how the cost
of such report will be allocated between XxXxxxxx and Company.
If it is mutually determined that a SAS 70 Type II Report will be pursued,
XxXxxxxx shall provide to Company a SAS 70 Type II Report regarding the results
of tests conducted by an outside independent auditor of XxXxxxxx'x procedures,
systems and operations. If any of XxXxxxxx'x procedures, systems or operations
have a material deficiency, do not meet those standards existing in the variable
products industry, or are deemed materially inadequate in the report, XxXxxxxx
shall correct all material deficiencies, mistakes, problems, errors, or
inadequacies within ninety (90) days of the date it receives the report and send
notice to the Company that such deficiencies, mistakes, problems, errors, or
inadequacies have been corrected. After receiving such notice of the
correction(s), Company shall have the right to re-audit XxXxxxxx'x procedures,
systems, and operations within five (5) days. XxXxxxxx shall provide access to
all of the Books and Records,
22
and all of its systems, operations, procedures and personnel, and manuals that
apply to the Policies or Contracts so that Company may perform such audit.
7.22 Paramount Provision. Company acknowledges that XxXxxxxx may be
considered a third party administrator with respect to the Policy Administration
Services contemplated hereunder as such term is defined in various statutes and
regulations enacted in different states of the United States (collectively, the
"TPA Rules"). Company agrees that the terms and conditions set forth in this
Agreement shall be subject to, and modified by, any of the TPA Rules which may
apply to XxXxxxxx or Company with respect to the Policies subject to this
Agreement. If any such TPA Rules are in conflict with any provision of this
Agreement, this Agreement shall be modified to comply with the TPA Rules to the
extent applicable, subject to conformity to the 1940 Act and other Federal
regulation. If the TPA Rules require the inclusion of language regarding an
issue covered in the TPA rules which is not so covered in this Agreement,
Company agrees to amend this Agreement to include such language. In the event of
any such changes, the parties shall negotiate in good faith to minimize any
adverse effect of such change on either party hereto. To that end, attached
hereto as Exhibits J, L, N, O, P and Q are various addenda setting forth the TPA
Rules applicable with respect to each of the States of Nevada, Tennessee, Idaho,
Florida, Montana and Indiana, respectively. Such addenda are incorporated herein
and shall be a part hereof and shall be implemented hereunder to the extent
applicable. If required by any addenda, the parties agree to execute one or more
counterparts thereof.
SECTION 8 TERMINATION OF AGREEMENT.
8.01 By Mutual Agreement. This Agreement may be terminated or amended by
mutual written agreement of the parties at any time.
8.02 By Non-Renewal. At least one hundred and eighty (180) days prior to
the end of the Initial Term and any Additional Term hereof, either party may
give the other notice if the party delivering such notice desires to change the
Agreement. If XxXxxxxx and Company do not agree in writing with respect to the
matters described in such notice before the end of the Term during which a party
gives such notice, this Agreement shall terminate at the end of such Term.
8.03 For Breach or Default. If (a) Company materially breaches this
Agreement or is materially in default hereunder or (b) if XxXxxxxx materially
breaches this Agreement or is materially in default hereunder (together with
(a), the "Defaulting Party"), the other party hereto may give written notice
thereof
23
to the Defaulting Party and if such default or breach shall not have been
remedied within thirty (30) days after such written notice is given, then the
party giving such written notice may terminate this Agreement immediately by
sending notice of termination to the Defaulting Party, such termination to be
effective upon the sending of such notice. Termination of this Agreement by
default or breach by a party shall not constitute a waiver of any rights of the
other party in reference to services performed prior to such termination, rights
to be reimbursed for out-of-pocket expenditures or any other rights such other
party might have under this Agreement at law, in equity or otherwise.
8.04 (a) For XxXxxxxx'x Financial Problems or Cessation of Operations.
Company shall have the option to terminate this Agreement immediately if
XxXxxxxx has suffered an assignment for the benefit of creditors, becomes
insolvent, files a voluntary petition in bankruptcy, is subject to an
involuntary petition in bankruptcy, has a receiver, liquidator, or trustee
appointed over its affairs, becomes subject to a delinquency or rehabilitation
proceeding or a similar proceeding, or effectively ceases to operate. This
option may be exercised by Company at any time while such conditions continue to
exist.
(b) For Company's Financial Problems or Cessation of Operations. XxXxxxxx
shall have the option to terminate this Agreement immediately if Company has
suffered an assignment for the benefit of creditors, becomes insolvent, files a
voluntary petition in bankruptcy, is subject to an involuntary petition in
bankruptcy, has a receiver, liquidator, or trustee appointed over its affairs,
becomes subject to a delinquency or rehabilitation proceeding or a similar
proceeding or effectively ceases to operate. This option may be exercised by
XxXxxxxx at any time while such conditions continue to exist.
8.05 Options to Terminate.
(a) Company's Option. Company shall have the option to terminate this
Agreement, without penalty or cost, at any time beginning one (1) year after
there is a Change of Control involving XxXxxxxx; provided, however, that such
option to terminate shall become immediately exercisable, upon giving written
notice to XxXxxxxx, if the acquiring entity or owners do not acknowledge in
writing, to Company, that they remain bound by, and subject to, all of the terms
and conditions of this Agreement within thirty (30) days of the Change of
Control involving XxXxxxxx. The option to terminate described herein shall be
exercisable by written notice from Company to XxXxxxxx or its successor in
interest given within ninety (90) days from the date the option to terminate
arises hereunder.
24
(b) XxXxxxxx' Option. XxXxxxxx shall have the option to terminate this
Agreement, without penalty or cost at any time beginning one (1) year after
there is a Change of Control involving Company; provided, however, that such
option to terminate shall become immediately exercisable, upon giving written
notice to Company, if the acquiring entity or owners do not acknowledge in
writing, to XxXxxxxx, that they remain bound by, and subject to, all of the
terms and conditions of this Agreement within thirty (30) days of the Change of
Control involving Company. The option to terminate described herein shall be
exercisable by written notice from XxXxxxxx to Company or its successor in
interest given within ninety (90) days from the date the option to terminate
arises hereunder.
8.06 Responsibilities Upon Termination.
(a) Termination Not for Cause. In the event that this Agreement is
terminated pursuant to Section 8.01, 8.02, 8.03(b), 8.04(a) or 8.05(a), in order
to assist in providing uninterrupted service to Company, XxXxxxxx shall, at
Company's election, offer reasonable assistance to Company, for a maximum of
twelve (12) months after any such termination, to:
(i) convert all of the records of Company including, but not
limited to the Books and Records, from VPAS(R) Life to
whatever new service or system is selected by Company, or
(ii) implement VPAS(R) Life at an in-house site selected by
Company, which help shall include assisting in implementing
and reinstalling VPAS(R) Life at the Company's designated
in-house site, a condition precedent of which shall be Company
entering into the license for VPAS(R) Life for the fee
provided pursuant to [EXHIBIT K] attached hereto,
during which time XxXxxxxx shall continue to perform the Administration Services
subject, in either case, to reimbursement by Company to XxXxxxxx for such
assistance at its standard rates and fees in effect at that time.
(b) Termination For Cause. In the event of a termination of this Agreement
by Company for Cause under Section 8.03(b) or 8.04(a) above, the Company may, in
addition to all other rights and remedies it has at law, in equity, or
otherwise, elect to pursue its remedies pursuant to the terms and conditions of
the Software License Agreement and the Software Escrow Agreement attached hereto
as [EXHIBITS H -- PARTS I AND II AND I -- PARTS I AND II] or it may elect,
within thirty (30) days after the termination of this Agreement, to purchase a
license for VPAS(R) Life for the fee provided pursuant to [EXHIBIT K] attached
hereto.
25
(c) Termination by XxXxxxxx. If XxXxxxxx elects to terminate this
Agreement for any reason other than nonpayment of fees and/or expenses, and if
Company requests in writing, XxXxxxxx shall continue to provide the services
described herein to Company for a period of six (6) months following termination
of this Agreement, such services to be provided in accordance with the terms of
this Agreement.
8.07 Buyout Provision. Notwithstanding Section 1.03 or Section 8.05 or any
other provision of this Agreement, beginning upon the first to occur of (i):
twenty-four (24) months after the Effective Date of this Agreement or (ii) a
Change of Control with respect to XxXxxxxx, Company shall have the option to
terminate this Agreement for any reason, and at any time; in the event Company
elects to terminate this Agreement as provided herein, Company shall give
XxXxxxxx at least ninety (90) days prior written notice. Within thirty (30) days
of such notice, Company shall pay XxXxxxxx the amount set forth in [EXHIBIT B]
attached hereto, which payment shall be in lieu of all future monthly charges
due under this Agreement. XxXxxxxx acknowledges that if Company terminates this
Agreement pursuant to Section 8.05(a) after the one (1) year period specified
therein or if there is a Change of Control involving XxXxxxxx and the acquiring
entity or owners do not acknowledge in writing, to Company, that they remain
bound by, and subject to, all of the terms and conditions of this Agreement
within thirty (30) days of the Change of Control involving XxXxxxxx, Company
shall not be liable to XxXxxxxx for payment of the amounts set forth on [EXHIBIT
B]. If this Agreement is terminated pursuant to this Section 8.07, then Company
may exercise an option to license VPAS(R) Life for a fee pursuant to the terms
of [EXHIBIT K] attached hereto within thirty (30) days of the date of such
election to terminate.
SECTION 9 ASSIGNMENT.
9.01 Assignment by Company. Company shall not, directly or indirectly, in
whole or in part, assign its rights or delegate its duties hereunder without
ninety (90) days prior written notice to XxXxxxxx. In the event of such
assignment pursuant to a Change in Control, Section 8.05(b) shall apply.
9.02 Assignment by XxXxxxxx. XxXxxxxx shall not directly or indirectly, in
whole or in part, delegate its duties or assign its rights under this Agreement
without the prior written consent of Company; provided, however, that if such
assignment is pursuant to a Change in Control, XxXxxxxx shall not be required to
obtain the consent of Company and Section 8.05(a) shall apply. The Company's
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the parties acknowledge and agree that certain printing and design
services under this Agreement may be performed by Forms South, certain storage
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and recovery services under this Agreement may be performed by SunGard, and
certain printing, stuffing, sorting and mailing services may be performed by
Dove Mailing, Inc.
SECTION 10 MISCELLANEOUS.
10.01 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Georgia, without giving effect to the
principles of conflicts of laws thereof.
10.02 Notices. Any notice, consent, approval or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by facsimile transmission, overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, and
addressed as follows:
(a) If to XxXxxxxx:
XxXxxxxx Systems, L.L.C.
0000 Xxxxxx Xxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President & CEO
Facsimile Number: (000) 000-0000
(b) If to Company:
Farmers New World Life Insurance Company
Attention: Assistant Vice President -- Management
Information Systems
0000 00xx Xxxxxx X.X.
Xxxxxx Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Copy to:
Farmers New World Life Insurance Company
Attention: General Counsel
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0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Any such notice shall be deemed given when so delivered (in the case of
personal delivery or overnight courier service) or sent by facsimile
transmission or, if mailed, upon receipt as evidenced by the return receipt. If
the address of any party hereunto is changed, written notice of such change
shall be given to the other party, in accordance with this Section, and said new
address shall be used for purposes of this Agreement.
10.03 Entire Agreement. This Agreement, the Exhibits which are attached
hereto and made a part hereof, and the documents executed pursuant hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and thereof and no representation, warranty, covenant or agreement
not embodied herein or therein, oral or otherwise, shall be of any force or
effect whatsoever with respect to the subject matter hereof or thereof. Further,
no change, amendment or modification of this Agreement shall be effective unless
in writing and signed by both parties hereto.
10.04 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.05 Severability. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
10.06 No Third Party Beneficiaries. Nothing in this Agreement is intended
or shall be construed to give any person, other than the parties hereto, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
10.07 Headings. The Section headings of this Agreement are for convenience
only and shall not affect the construction or interpretation of this Agreement.
10.08 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which will
constitute one and the same document.
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10.09 Waiver.
(a) A waiver of any default or breach hereunder granted by any party
hereto shall not constitute a waiver by such party of any other default or
breach or a waiver by such party of the same default or breach at a later time.
Further, to be effective, any such waiver must be in writing and be signed by
the party granting such waiver.
(b) Subject to the last sentence of Section 10.09(a), the forbearance or
neglect by Company or XxXxxxxx to insist upon strict compliance with any
provision of this Agreement, or to declare a forfeiture or termination, shall
not be construed as a waiver of any right or privilege hereunder. No waiver of
any right or privilege arising from any default or failure of performance
hereunder shall affect the rights or privileges of either party in the event of
a further default or failure of performance hereunder.
10.10 Construction. Both parties hereto have participated, directly or
indirectly, in the negotiations and preparation of this Agreement. In no event
shall this Agreement be construed more or less stringently against any party
hereto by reason of either party being construed as the principal drafting party
hereto.
10.11 Taxes. All sales, use or excise taxes which may be or become payable
on account of goods or services provided hereunder shall be payable by Company
to XxXxxxxx upon the receipt by Company of XxXxxxxx'x invoice therefore. In lieu
of paying such taxes, Company may provide XxXxxxxx with a tax exemption
certificate acceptable in form and substance to the appropriate taxing
authorities.
10.12 Software Escrow Agreement. Concurrent with execution of this
Agreement (i) the parties hereto have executed and delivered an Escrow Agreement
in the form of [EXHIBIT H PARTS I & II] attached hereto (the "Escrow Agreement")
for the purpose of protecting Company in the event (1) of a material breach or
default of this Agreement by XxXxxxxx pursuant to Section 8.03(b) hereof or (2)
XxXxxxxx has a financial problem described in Section 8.04(a) or ceases
operations as described and (ii) XxXxxxxx shall deposit with the Escrow Agent
(as defined in the Escrow Agreement) the Deposit Copies (as defined in the
Escrow Agreement), to be held in accordance with the terms and conditions of the
Escrow Agreement.
10.13 Software License in Escrow. Concurrent with execution of the Escrow
Agreement, the parties hereto have executed and delivered to the Escrow Agent,
to be held in accordance with the terms and
29
conditions of the Escrow Agreement, a License Agreement in the form of [EXHIBIT
I PARTS I & II] attached hereto (the "License Agreement"), which provides that
in the event the Deposit Copies are released by the Escrow Agent to Company,
upon the occurrence of a Release Event (as defined in the Escrow Agreement), but
only in such event, XxXxxxxx grants to Company and its affiliates a license to
use the Deposit Copies, including the Software (as defined in the Escrow
Agreement), and such modifications, enhancements, improvements, updates,
corrections or changes as Company shall elect to make thereto, for a period of
time ending on the earlier of (i) the date on which no Policies or Contracts
remain in effect, (ii) a material breach of the License Agreement by Company or
(iii) the later of the expiration of the Term or six (6) months following the
release of the Deposit Copies pursuant to Section 6.2 of the Escrow Agreement,
on the terms and conditions of the License Agreement.
10.14 Force Majeure. Neither party shall be in default of this Agreement
to the extent that the performance of its obligations under this Agreement is
delayed or prevented by reason of an act of God, fire, natural disaster,
accident, act of government, riot, act of war, restricting legislation, embargo,
or blockade. In the event either party is unable to perform its obligations
under this Agreement because of any such causes, such party shall use its
commercially reasonable best efforts to assist the other party in obtaining an
alternate source(s) for performing the services such party is obligated to
perform under this Agreement.
SECTION 11 YEAR 2000 COMPLIANCE.
XxXxxxxx hereby represents and warrants that the VPAS(R) Life Administration
System software is Year 2000 Compliant. For these purposes, Year 2000 Compliant
is defined to mean that this software:
(a) uses date data century recognition, and as appropriate, same
century and multi-century formulas and date values in each instance for all
calculations for which a date is used;
(b) will not abnormally end or provide invalid or incorrect results
as a result of date data, specifically including date data which represents or
references different centuries or more than one century; and otherwise conforms
with the current industry standards in order that it will fully perform without
any errors or other problems due to the year being greater than 1999;
(c) will correctly manage and manipulate data involving dates,
including, but not limited to: single-century formulas and multi-century
formulas, century recognition and calculations that accommodate
30
same century and multi-century formulas, comparing and sequencing, and leap year
calculations; and will operate without any time or Year 2000 related defects or
abnormalities; and
(d) to the extent that the software will accept data from other
systems and sources that are not Year 2000 Compliant, the software will properly
recognize, calculate, sort, store output, and otherwise process such data in a
manner that eliminates any century ambiguity so that the software remains Year
2000 Compliant.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized partners and officers, all as of
the date first above written.
XxXxxxxx Systems, L.L.C. Farmers New World Life Insurance Company
By: By:
-------------------------------- -------------------------------------
J. Xxxxxx Xxxxxxx, Jr. Xxxx X. Xxxx
President & CEO Assistant Vice President, MIS
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