EXHIBIT (8)(B)(i)
MASTER SERVICES AGREEMENT
BY AND AMONG
SUNAMERICA ANNUITY AND LIFE ASSURANCE COMPANY, AMERICAN GENERAL LIFE INSURANCE
COMPANY OF DELAWARE AND THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF
NEW YORK
AND
SE/2/, INC.
DATED _________, 2011
TABLE OF CONTENTS
Page
1. SERVICES 1
1.1. General 1
1.2. Scope of Services 1
1.3. Payments and Collections 3
1.4. Service Levels 5
1.5. Error Detection and Correction 6
1.6. Other State TPA Requirements 7
1.7. Notice to Contract Holders 7
1.8. Further Cooperation 7
1.9. Data Backup 7
1.10. Excused Obligations 8
1.11. Additional Services and Change Procedures 9
2. CUSTOMER RESPONSIBILITIES 10
2.1. Performance of Other Functions 10
2.2. Operating Guidelines; Changes 10
2.3. Customer Modifications 11
2.4. Compliance with Applicable Law 11
2.5. Interpretations of and Changes to Applicable Law 12
2.6. Cooperation 13
2.7. Policies and Procedures; Changes 13
2.8. Benefits, Premiums and Underwriting Criteria; Underwriting and
Claims Payment Procedures; Reinsurance 13
2.9. Additional Information 14
2.10. Direction; Authorized Personnel 14
2.11. Customer Personnel 14
2.12. Control and Supervision of Customer Personnel 14
3. RECORDKEEPING AND AUDIT RIGHTS 14
3.1. Recordkeeping - Contract Related Information 14
3.2. Return of Contract Accounting Books and Records 15
3.3. Historical (Pre-Statement of Work) Hard Copy Records 15
3.4. Back-up Storage Location 16
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3.5. Segregation 16
3.6. Recordkeeping - Other Records 16
3.7. Litigation Holds 16
3.8. Audits - General 17
3.9. Access 17
3.10. Cooperation 17
3.11. Audit Support Expenses and Charges 18
3.12. Scope of Audits 18
3.13. Overcharges 18
3.14. No Interference 18
3.15. Exit Conference 19
3.16. Undercharges 19
3.17. SAS 70 Audits 19
4. ADMINISTRATOR RESOURCES AND SECURITY 19
4.1. Facilities, Equipment, and Software 19
4.2. System Modifications 20
4.3. Security 20
4.4. Personnel 21
5. PROPRIETARY RIGHTS 22
5.1. Ownership of Administrator Materials 22
5.2. Ownership of Customer Materials 22
5.3. Other Developed Materials 23
5.4. Administrator License 23
5.5. Customer License 24
5.6. Ownership of Consumer Confidential Information and Contract
Holder Data 24
6. CONFIDENTIALITY / PRIVACY 24
6.1. General 24
6.2. Permitted Use and Disclosures 25
6.3. Confidential Information 26
6.4. Exceptions 26
6.5. Separation 27
6.6. Additional Exceptions 27
(ii)
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6.7. Return or Destruction of Confidential Information 29
6.8. Unauthorized Acts 29
6.9. Action by Parties 30
6.10. GLB Compliance; Information Security Management Procedures 30
7. FEES AND PAYMENT 31
7.1. General 31
7.2. Proration 31
7.3. Increases 31
7.4. Estimates 31
7.5. Pass-Through Expenses 32
7.6. Expenses Reimbursement 32
7.7. Payment Disputes 32
7.8. Taxes 32
7.9. Invoices 34
7.10. Payment Terms 35
7.11. Interest 35
8. REPRESENTATIONS, WARRANTIES AND COVENANTS 35
8.1. Administrator 35
8.2. Mutual 36
9. INDEMNIFICATION AND REIMBURSEMENT FOR DATA ERRORS 36
9.1. Administrator Indemnity 36
9.2. Customer's Indemnity 37
9.3. Special Indemnification Relating to Infringement 37
9.4. Acts of Employees and Subcontractors 38
9.5. Indemnification Procedures 38
9.6. Variances 40
10. DISCLAIMERS, LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES 41
10.1. Disclaimer of Implied Warranties 41
10.2. Certain Damages Excluded 41
10.3. Limitation on Liability 41
10.4. Exceptions 42
(iii)
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11. OTHER RIGHTS AND OBLIGATIONS 43
11.1. Independent Contractor 43
11.2. Subcontracting 43
11.3. Service Locations 44
12. DISPUTE RESOLUTION 44
12.1. Informal Dispute Resolution 44
12.2. Formal Dispute Resolution 45
12.3. Continued Performance 45
12.4. Payment Dispute 45
13. TERM AND TERMINATION 46
13.1. Term 46
13.2. Termination by Customer 46
13.3. Termination for Insolvency 48
13.4. Termination by Administrator 48
13.5. Termination Pursuant to a Statement of Work 49
14. INSURANCE 49
14.1. Required Insurance 49
14.2. Evidence of Coverage 50
14.3. Additional Insured 50
14.4. Waiver of Subrogation 50
14.5. Non-Limitation of Insurance 50
14.6. Contravention of Insurance 50
15. FORCE MAJEURE 50
15.1. Force Majeure Event 50
15.2. No Payment for Unperformed Services 51
15.3. Disaster Recovery Plan And Crisis Management 51
16. TERMINATION ASSISTANCE 52
16.1. Termination Assistance Services 52
16.2. Exit Rights 55
16.3. Termination of License to Customer Software 57
17. GENERAL 57
17.1. Divestiture Rights 57
17.2. Separation 58
17.3. No Publicity 59
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17.4. No Waiver; Remedies 59
17.5. Certain Acknowledgments 59
17.6. Severability 59
17.7. Assignment 60
17.8. Governing Law 60
17.9. Forum 60
17.10. Waiver of Trial by Jury 61
17.11. Notices 61
17.12. Survival 62
17.13. EEO Requirements 62
17.14. Non-Solicitation 62
17.15. Services Provided Prior to Effective Date 62
17.16. Legal Fees 62
17.17. Headings 63
17.18. Governing Order; Subsequent Modifications 63
17.19. Construction 63
17.20. Counterparts 63
17.21. Third Party Beneficiaries 64
17.22. Entire Agreement 64
(v)
MASTER SERVICES AGREEMENT
This MASTER SERVICES AGREEMENT (this "Agreement") is made this ____ day of
_________, 2011 (the "Effective Date") by and among SunAmerica Annuity and Life
Assurance Company ("SAAL"), American General Life Insurance Company of Delaware
("AGL DE"), The United States Life Insurance Company in the City of New York
("AI Life") and se2, inc. ("Administrator"). Capitalized terms used in this
Agreement are defined in the Glossary attached as Appendix A to this Agreement
hereto and incorporated herein by reference. References throughout this
Agreement to "Customer" shall refer to each SAAL, AGL DE and AI Life, with
respect to the Services provided or to be provided under each Statement of Work
hereto, to which each is a party, as to be stated more fully in each such
applicable SOW.
RECITALS
1. Customer issued annuity contracts and administers such policies.
2. Administrator provides certain business process outsourcing services
with respect to annuity contracts.
3. Administrator agrees to perform the services described in this Agreement
and in mutually acceptable Statements of Work executed by Customer and
Administrator and incorporated by reference into this Agreement (collectively,
the "Statements of Work" or "SOWs" and each, a "Statement of Work" or "SOW").
4. Pursuant to the Letter Agreement, Administrator commenced providing
Services on approximately April 1, 2010 and the Parties intend for this
Agreement to govern all such services which may have been provided prior to the
Effective Date.
5. The parties acknowledge that Administrator's Affiliate, Security
Distributors, Inc., ("SDI") may provide to Customer under one or more SOWs
certain "Brokerage Services", as that term will be defined in each applicable
SOW, in which case SDI shall become a party to this Agreement with respect to
only such SOW and the applicable Brokerage Services.
1. SERVICES
1.1. General.
(a) Administrator will provide the Services to Customer for the fees
or compensation set forth in this Agreement and as stated in the
applicable Statement of Work, in a form similar to the form
attached hereto as Exhibit 12.
(b) As more fully described in the Agreement, Customer shall have
the rights and duties under this Agreement only to the extent of
the Services described or provided in the Statement of Work
executed by Customer, except as may be expressly stated otherwise
in this Agreement.
1.2. Scope of Services. Administrator shall be obligated to provide only
those Services, expressly listed as such in a Statement of Work; there
shall be no implied Services except for tasks reasonably necessary to
complete the Services within the scope of services specifically
listed.
(a) Underwriting and Claims. Administrator shall not be called upon
to (and shall have no responsibility to) establish any
underwriting criteria, benefits, or premium rates, to perform or
conduct any actuarial or other services related to underwriting,
or to establish any claims payment criteria or policies, other
than to the extent expressly set forth in a Statement of Work.
Administrator will perform only such underwriting and claims
related services as are contained in detailed written procedures
provided to it by Customer; provided that: (i) in no event shall
Administrator be called upon in such procedures to provide any
underwriting or claims services that would require Administrator
to be registered with any Governmental Authority other than such
registration or licensure as is otherwise required to perform the
administrative Services otherwise described herein, (ii)
Administrator may refuse to perform a service set forth in such
procedures if it reasonably concludes that performing such
service would require additional registration or licensure, and
(iii) such procedures must effectively render Administrator's
provision of underwriting or claims related services ministerial
in nature and do not require Administrator to exercise judgment
or discretion.
(b) Transition Services - General. Administrator will perform those
Services relating to transitioning the Contracts from Customer or
its current service provider to Administrator (the "Transition
Services") described in the Statement of Work for such services,
if applicable, which will incorporate by reference therein the
Transition Plan.
(i) Each Party will appoint a "Project Manager" for each
Statement of Work for Transition Services to coordinate
the Transition Services.
(ii) The Parties acknowledge that the Transition Plan will
be modified regularly as the Project Managers for the
Parties mutually agree. Each Party will perform those
activities described in the Transition Plan as being
assigned to the particular Party.
(iii)Customer is responsible for assuring that the
activities described in the Transition Plan assigned to
Customer Designees and any other third parties, other
than Administrator and its Affiliates, are completed
accurately and timely.
(iv) As part of the Transition Services, the
Administrator's Project Manager will confer regularly
with the Customer's Project Manager regarding the
progress, status and risks of Transition Plan. Promptly
upon receiving information indicating that a Party has
not performed its responsibilities or met the timetable
set forth in the Transition Plan or may not be able to
perform its responsibilities or meet the timetable set
forth in the Transition Plan, Administrator's Project
Manager will review such information with Customer's
Project Manager to consider specific measures to
address such delay and mitigate the risks associated
therewith.
(v) As a regular part of performing the Transition
Services, Administrator will request Customer to review
and approve the accuracy and completeness of certain
information and the
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modeling of other information. Where information provided by
Customer or the prior administrator may not be complete or
accurate, Administrator may request Customer to review and
approve certain assumptions or work-arounds relating to such
information. In any case, where Administrator requests
Customer to review and approve information and Customer does
approve such information, Administrator may rely on such
approvals and shall not be liable for the inaccuracy of
information presented to and approved by Customer unless
such inaccuracy of information is due to the acts or
omissions of the Administrator.
1.3. Payments and Collections.
(a) Premium and Other Deposit Accounts. As applicable:
(i) Establishment; No Withdrawals by Administrator. Customer
shall establish and maintain, as determined in consultation
with Administrator in connection with transfer of the
administration of the Contracts to Administrator, one bank
account upon which the Parties shall agree into which
Administrator shall deposit, or cause to be deposited, all
premiums, contributions, investments, and charges and other
moneys collected or received by it on behalf of, for or as
agent of Customer with respect to the Contracts.
Administrator shall not have any right under any
circumstance to make any disbursements or withdrawals from
any such deposit account, except to the extent that any
account(s) contemplated to receive moneys as a result of the
settlement of fund trades may also be designated by Customer
as disbursement accounts for purposes of the making of
payments in connection with the settlement of fund trades.
For the avoidance of doubt, the return of deposits to
Administrator because the related check did not clear shall
not be regarded as withdrawals or disbursements from deposit
accounts by Administrator.
(ii) Fiduciary Accounts. In the event Customer for any
reason requests Administrator to establish, and
Administrator agrees to and does establish, a fiduciary
deposit bank account for Customer, Administrator shall
withdraw funds from such account only for the following
purposes: (1) remittance to Customer of funds to which
Customer is entitled; (2) deposit in an account maintained
in the name of Customer; (3) transfer to and deposit in a
claims paying account with claims to be paid as required
under Applicable Law and Section 1.3(c) of this Agreement;
(4) payment to a group policyholder for remittance to the
insurer entitled to the funds; or (5) remittance of return
premiums to the persons entitled to the funds.
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(b) Disbursement Accounts. As applicable:
(i) Establishment. Customer shall establish and maintain, as
determined in consultation with Administrator, one or more
bank accounts with such bank(s) upon which the Parties shall
agree from which Administrator shall be authorized to, and
shall (insofar as such accounts are funded by Customer),
make disbursements and withdrawals, according to such
written account guidelines as shall be reasonably agreed by
Administrator, and Customer in connection with transfer of
the administration of the Contracts to Administrator for
purposes of performing the Services, including paying claims
as directed by Customer pursuant to written instructions
furnished by Customer or as Customer may otherwise direct,
and to return premium overpayments for and on behalf of
Customer (the "Account Guidelines") and otherwise as
Customer may instruct in writing.
(ii) Funding. Administrator shall from time to time instruct
Customer regarding the funding of such disbursement accounts
as necessary to ensure that sufficient funds are in the
appropriate accounts to pay claims and other disbursements
in respect of the Contracts. Customer shall fund such
accounts as reasonably instructed by Administrator. Such
instructions shall be furnished by Administrator, and such
funding shall be effected by Customer, according to such
procedures, including advance notice requirements, as
Administrator, and Customer shall reasonably agree in
connection with transfer of the administration of the
Contracts to Administrator. Administrator shall not be
obligated to cover on behalf of Customer any disbursement
account funding shortfalls that result from Customer's
failure sufficiently to fund a disbursement account in
accordance with its reasonable and timely funding
instructions to Customer; provided that Customer shall, upon
request, immediately reimburse, by wire, in accordance with
wiring instructions furnished for such purpose,
Administrator for any moneys it may elect to advance to
cover a disbursement account funding shortfall, without
interest if reimbursement is made the same day, with
interest at the Fed Funds overnight rate if payment is made
the next business morning, or otherwise with interest at the
prime rate of interest as published in The Wall Street
Journal on the day the advance is extended.
(c) Form of Payments. All claims, disbursements, or payments paid by
Administrator on behalf of a Customer shall be paid only on
checks, drafts or wire transfers of and as authorized in
accordance with the Account Guidelines.
(d) Operation of Accounts. Administrator shall operate all
disbursement accounts in accordance with the Account Guidelines.
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(e) Records of Receipts. Administrator shall maintain a cash
receipts register of all premiums or contributions or investments
received. The minimum detail required in the register shall be
the date received and the amount deposited, the mode of payment,
the Contract number, the name of Contract Holder, individual
premium or other consideration, other contributions or investment
amounts, and agent or other selling representative.
(f) Records of Disbursements. The description of a disbursement
shall be in sufficient detail to identify the source document
substantiating the purpose of the disbursement, and shall include
all of the following: (i) the date of disbursement; (iii) the
person to whom the disbursement was made; (iv) the amount
disbursed; and (v) ledger account number. If the amount disbursed
does not agree with the amount processed in the policy
administration system, Administrator shall prepare a written
record as to the discrepancy.
(g) Daily Accounting. Administrator shall send daily files of cash
activity for deposits to Customer detailing all Contract-related
transactions processed in the policy administration system and GL
feed and unit activity and unit ending balances.
(h) Currency. All transactions will be paid and reported in U.S.
dollars. Administrator is under no obligation to accept premium
or annuity payments, fees, or charges in any currency other than
U.S. dollars.
1.4. Service Levels.
(a) Adjustment of Service Levels and Redefinition of Adjustment
Formulae. Exhibit 9 hereto sets forth the "Service Levels" and
"Service Level Credits" for the Services. The Service Levels will
be subject to adjustment in accordance with the terms of Exhibit
9. The Service Credits and other express remedies stated in
Exhibit 9 shall be Customer's sole remedy for Administrator's
failure to attain the Performance Standards with respect only to
the timeliness of such Services. Otherwise, this Section shall
not (a) relieve Administrator from its obligations to perform all
Services in accordance with this Agreement and (b) shall not
prejudice Customer's rights to pursue any other remedies
expressly stated in this Agreement with respect to Services which
Administrator failed to provide in accordance with this
Agreement.
(b) Root-Cause Analysis. Upon Administrator's failure to provide the
Services in accordance with the applicable Service Levels,
Administrator will promptly: (i) perform a root-cause analysis to
identify the cause of such failure; (ii) provide Customer with a
report detailing the cause of, and procedure for correcting, such
failure; (iii) provide to Customer the proposed procedure for
correcting such failure; (iv) correct such failure in accordance
with such procedure; (v) provide weekly (or more frequent, if
appropriate) reports on the status of the correction efforts; and
(vi) upon completion of the remedial steps, provide Customer with
such confirmation. In addition, Administrator shall provide to
Customer access to review Administrator's compliance with the
remedial steps or otherwise monitor Administrator's performance
as otherwise described in Section 3 of the Agreement.
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(c) Measurement and Monitoring Tools. Prior to the Commencement
Date, Administrator will implement the measurement and monitoring
tools and procedures required to measure and report
Administrator's performance of the Services against the
applicable Service Levels. Such measurement and monitoring tools
and procedures will: (i) permit reporting at a level of detail
sufficient to verify compliance with the Service Levels; and (ii)
be subject to audit by Customer in accordance with the terms of
the Agreement.
(d) Default Performance Standards. If Administrator is liable for
failing to meet the "Default Performance Standards" as set forth
in Exhibit 9, in addition to any other remedies available to
Customer, Customer may terminate this entire Agreement in whole
or in part under Section 13.2(a)(iv) provided that Customer
provides notice to Administrator within one year after the
failure to meet the Default Performance Standards. In addition,
Customer may revoke its consent(s) provided under Sections 11.3
with respect to a particular subcontractor (other than an
Affiliate of Administrator) and with respect to any Services if
the subcontractor's involvement contributed to the Faults that
make up the Default Performance Standards, by providing
Administrator thirty (30) days prior written notice.
1.5. Error Detection and Correction.
(a) If either Party discovers any error or mistake in any record,
report, data, information, or output related to this Agreement,
that Party will promptly inform the other Party, including, to
the extent practicable, the details of such error or mistake
necessary for Administrator or Customer, as the case may be, to
identify the scope of such error or mistake. The Parties will
reasonably cooperate to correct such error or mistake to mitigate
the harm caused.
(b) To the extent Customer was the cause of such error or mistake,
including errors or mistakes based on inaccurate or incomplete
information provided or approved during the Transition Services,
Administrator shall be entitled to reasonable compensation at its
then-applicable time and materials rates for its efforts relating
to investigating and resolving such error or mistake as well as
for correcting all related data. To the extent Administrator was
the cause of such error or mistake, Administrator will not be
entitled to any compensation for assisting in investigating and
resolving such error or mistake and Customer, subject to the
other provisions of this Agreement, including those in Article 10
below, shall be entitled to reasonable compensation for its
efforts relating to investigating and resolving such error or
mistake. Such compensation paid or owed by Administrator shall be
considered as damages for purposes of calculating the limitations
of liability in Article 10.
(c) From time to time, Administrator may provide reports to Customer
for the express purpose of asking Customer to verify the accuracy
and completeness of such reports and the supporting data. The
Parties will cooperate on a reasonable basis to evaluate such
reports. Customer acknowledges the need for Administrator to rely
on the information contained in such reports to perform the
Services under this Agreement and that if Customer does not
respond on a timely basis to Administrator's reasonable
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requests for verification, Administrator will be excused from
performing Services dependent on such timely verification until
such time verification is provided.
1.6. Other State TPA Requirements. The Parties acknowledge and understand
that Applicable Law may provide additional rights to, and/or impose
additional duties and obligations on, the Parties arising from the
Applicable Law governing third party administrators ("Applicable TPA
Laws"). Exhibit 1 describes those provisions required by the
Applicable TPA Laws to be in an agreement between a third party
service provider and an insurance company with respect to the Services
provided under this Agreement, as determined by Administrator, which
provisions are not otherwise in this Agreement. The provisions of
Exhibit 1 are incorporated herein by reference. To the extent that an
Applicable TPA Law in Exhibit 1 conflicts with an actual Applicable
TPA Law, then the actual Applicable TPA Law shall govern to the extent
of such conflict. To the extent that an Applicable TPA Law is not
identified on Exhibit 1 or is modified, amended or subsequently
enacted or applicable to the Administrator, then such law shall be
deemed to be included in Exhibit 1. Administrator shall notify
Customer of any changes in Applicable TPA Laws that become effective
after the Effective Date where such change in law relates to the
provisions required to be in an agreement between a third party
service provider and an insurance company, by providing an updated
Exhibit 1, with a reasonable explanation of the basis for such changes
and if any such change in Applicable TPA Laws conflicts with the
provisions, or otherwise impacts the terms and conditions, of this
Agreement, a detailed description of such conflicts and/or impacts
shall also be provided. To the extent the Applicable TPA Laws impose
obligations on Administrator which Administrator believes may conflict
with Administrator's obligations expressly stated in this Agreement,
Administrator shall notify Customer's designated authorized officer in
writing of such conflicts and such changes shall be considered a
change in Applicable Law as described in Section 2.5 below.
1.7. Notice to Contract Holders. To the extent Applicable TPA Laws require
Administrator to provide written notice to each Contract Holder
advising them of the identity of and the applicable relationship among
Administrator, the Contract Holder and Customer, Administrator shall
do so at Administrator's expense. If Customer will be sending to the
Contract Holders any other communication within the time required for
Administrator to send such notice, the Parties will mutually agree
upon the form of notice to be sent in lieu of Administrator sending a
separate notice to Contract Holders as contemplated above.
1.8. Further Cooperation. Administrator will cooperate with Customer in
connection with assistance outside the scope of the Services under
this Agreement, but to the extent such cooperation requires material
additional effort or resources by Administrator for which
Administrator seeks additional compensation, such services or
resources shall be provided in accordance with the Change Procedures.
1.9. Data Backup. Administrator will implement and comply with (a)
generally accepted industry practices for data and system backup, and
(b) Customer's backup requirements set forth in the applicable
Statement of Work (and if there are any inconsistencies, Customer's
requirements will control). The foregoing
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policies, practices and requirements may be updated pursuant to the
Change Procedures.
1.10. Excused Obligations.
(a) Subject to Section 1.10(b), Administrator's failure to perform its
obligations under this Agreement, including failure to attain any
Service Levels, will be excused to the extent caused by any of the
following:
(i) The failure of Customer, a Customer Designee or their
respective employees or agents, to perform their respective
obligations under this Agreement or the applicable Statement
of Work;
(ii) violations of Applicable Law by Customer, a Customer
Designee, the issuer of a Contract, any broker-dealer,
agent, representative or other person on behalf of Customer
in connection with a Contract, or the failure of any
Contract to comply with the terms of Applicable Law to
achieve the intended purpose of such Contract;
(iii) failure of the Operating Guidelines as approved by Customer
in accordance with this Agreement to comply with Applicable
Law;
(iv) Administrator's reliance upon Operating Guidelines
approved by Customer or upon any additional policies,
processes, interpretations of applicable laws and
regulations, unique to administering the Contracts as
provided in writing by Customer to the extent such policies,
processes and interpretations were not, at the time of
Administrator's reliance, superseded by a later version of
the Operating Guidelines approved by Customer, all in
accordance with this Agreement;
(v) actions or omissions by any previous administrator of the
Contracts;
(vi) any action taken by Administrator, its Affiliate or
any Permitted Subcontractor, at the request or direction
of Customer or a Customer Designee or action not taken by
Administrator, its Affiliate or any Permitted
Subcontractor as a result of Customer not providing the
appropriate written direction to act;
(vii) errors in the Customer Software other than those caused by
Administrator, its Affiliates, or its Permitted
Subcontractors;
(viii) failures to meet any Service Level as a result of a
decision by Customer or a Customer Designee;
(ix) any matters for which Administrator is expressly excused
under this Agreement from the Service Level Defaults;
(x) Customers or its agents' (including Customer Designees'),
breach of the terms of any Contract or any other agreement
relating to a
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Contract, including any agreement relating to the sale of
the Contract, commissions paid or payable relating to such
Contract, the reinsurance of such Contract, provided that
Administrator otherwise performed in all material respects
with this Agreement; or
(xi) failures caused by inaccurate or incomplete information or
data provided to Administrator, including such information
provided by Customer or a Customer Designee or a Contract
Holder.
(b) Upon learning of the occurrence or likely occurrence of any of
the foregoing, such Party will inform the other and the Parties
will cooperate to develop and implement a mutually acceptable
plan to minimize the adverse effects caused by such
circumstances, in accordance with the Change Procedures.
1.11. Additional Services and Change Procedures.
(a) During the term of a Statement of Work, Customer may wish to
obtain additional services from Administrator, to change the
Services or Service Levels, or to enhance or reduce the level of
Services. Likewise, Administrator may wish to change the Services
or Service Levels or to reduce the level of Services or Service
Levels. Any and all requests for additional services or changes
or reductions in services or Service Levels, shall be made in
writing to the other Party on a Change Request Form substantially
in the format set forth as Attachment A to Exhibit 7 to this
Agreement.
(b) Promptly upon receiving a written request from Customer for the
performance of additional or an enhanced level of services
pursuant to a Statement of Work, Administrator shall respond in
writing to Customer regarding its ability and willingness to
perform such additional or enhanced level of services, the
schedule pursuant to which it could perform any or all such
additional or an enhanced level of services, any impact to the
Services, the additional fees and/or personnel, facilities,
equipment, software, or other assets required to perform the
additional or enhanced level of services, any relevant additional
Service Levels, and any other matters relevant to the request for
the performance of additional or enhanced level of services.
(c) Promptly upon receiving a request for a change or reduction of
the level of Services or Service Levels, the receiving Party
shall respond to the requesting Party in writing regarding its
ability and willingness to agree to the change or reduction
requested, the effect of such change or reduction on, in the case
of Administrator, it or its ability to perform the Services or,
in the case of Customer, its ability to meet its needs and its
obligations, an estimate of the charges (increased or decreased)
for the Services as proposed to be changed or reduced insofar as
the receiving Party is agreeable to the proposed change or
reduction, and other relevant matters.
(d) No proposed additional services by Customer, or change in or
enhancement or reduction of Services or Service Levels to be
provided or met by Administrator shall be effective unless and
until the Parties shall agree in a
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written amendment to a Statement of Work, or a change order,
executed and delivered by each Party, and no Party shall be
obligated for additional services or to any change or reduction
of the Services or Service Levels to be provided; provided that
Administrator and Customer shall negotiate in good faith in
respect of any and all such requests by Customer or
Administrator, particularly so if and to the extent any such
requests are necessitated by any changes to Applicable Law.
(e) The services to be provided by Administrator, if and as amended
and changed, shall thereupon be the "Services" for the remainder
of the term of the Statement of Work, unless and until such
Statement of Work is further amended in a manner that amends or
changes the Services.
2. CUSTOMER RESPONSIBILITIES
2.1. Performance of Other Functions. Customer shall, and shall cause its
personnel, agents, suppliers, clients and its other representatives to
perform the functions and tasks as set forth herein and set forth in
the applicable Statement of Work, if any. Furthermore, Customer
acknowledges that Administrator's performance of Services may be
dependent on Customer's personnel, agents, suppliers, clients and its
other representatives to continue to perform all functions and tasks,
if any, with respect to the Contracts that are not among the functions
to be performed by Administrator. Customer shall maintain computer
hardware and software capable of interfacing with Administrator's
systems (insofar as contemplated for purposes of a Statement of Work),
maintain telephone lines, network access and other equipment and
services necessary to transmit data to and to receive data from
Administrator electronically.
2.2. Operating Guidelines; Changes.
(a) As part of the Transition Services, Customer and, with
assistance as directed by Customer, Administrator shall prepare
the first version of the Operating Guidelines. All changes to the
Operating Guidelines shall be made in accordance with the Change
Procedures. Each of the Parties agrees to comply with the
Operating Guidelines approved in writing as the same may be
updated in writing during the Term of the applicable Statement of
Work.
(b) Subject to compliance with the Change Procedures, the Parties
will implement such additional policies, procedures, and updates
to the Operating Guidelines that: (i) are mandated by law, rule,
regulation, or changes thereto for Administrator properly and
legally to perform the Services; (ii) relate to additional
interpretations or directions provided by Customer in writing; or
(iii) so long as they are lawful and would not impose incremental
cost on Customer, are requested by Administrator to enable
Administrator to more efficiently perform the Services.
(c) Administrator shall comply with and, in accordance with the
Change Procedures, incorporate promptly into the Operating
Guidelines such interpretations and directions provided by
Customer in writing. Administrator shall provide Customer a
reasonable opportunity to review such revised
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Operating Guidelines. If Customer does not approve such revisions
to the Operating Guidelines in writing by the time reasonably set
by Administrator, such revisions shall be deemed rejected by
Customer, in which case the then-current version of the Operating
Guidelines shall govern until and unless revisions to the
Operating Guidelines are approved by Customer in writing.
Administrator shall consult with Customer to determine the most
efficient means to implement such interpretations and directions
into the Operating Guidelines.
(d) In performing the Services, Administrator shall be entitled to
rely upon such documented Operating Guidelines approved by
Customer.
2.3. Customer Modifications.
(a) Customer may modify its facilities, equipment, software, or
other resources accessed which are used by Administrator in
connection with performing the Services. Customer shall use
reasonable efforts to consult with Administrator in advance about
any such modifications that may materially impact Administrator's
performance hereunder. Administrator shall use reasonable efforts
to identify promptly the level of impact on the Services of
Customer's proposed modifications.
(b) To the extent Administrator would be required to incur
additional time or resources as a result of modifications
proposed by Customer as described above, Administrator shall, via
the Change Procedures, inform Customer of the estimated costs in
connection with such modifications reasonably incurred by
Administrator as soon as practical in light of the nature of the
proposed change. If Customer implements such proposed
modifications, Customer shall reimburse Administrator for the
reasonable costs identified in writing by Administrator within
such time of being notified by Customer in advance of Customer
initiating such changes.
(c) To the extent Customer materially modifies such facilities,
equipment, software, or other resources accessed and used by
Administrator in connection with performing the Services and does
not inform Administrator in writing in advance as stated above,
Customer shall pay Administrator on a time and materials basis at
the rates set forth in the applicable Statement of Work for the
reasonable costs incurred by Administrator modifying its software
or other resources to the extent reasonably necessary to conform
to Customer's modifications and Administrator shall be excused
from performing in accordance with this Agreement to the extent
caused by Customer's changes.
2.4. Compliance with Applicable Law.
(a) In connection with performing the Services, Administrator shall
comply with all Applicable Law. Administrator shall not be
responsible for any violation of, or failure to comply with, such
Applicable Law if Administrator's acts or omissions result from
relying on information provided by Customer or a Customer
Designee. If Administrator has any specific requests for legal
and regulatory information from Customer, such requests shall be
submitted to
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Customer via a designated representative of Customer and Customer
will respond within a commercially reasonable time.
(b) The Parties acknowledge and agree that this Section is not
intended to create an attorney-client relationship between the
Parties.
2.5. Interpretations of and Changes to Applicable Law.
(a) Administrator shall use commercially reasonable efforts to
monitor Applicable Law relating to the Services and changes to
such laws. Administrator shall inform Customer of any changes in
Applicable Law which may relate to the Services promptly after
Administrator identifies such changes.
(b) Customer shall be ultimately responsible for identifying,
interpreting and complying with the requirements of Applicable
Law that apply to the Services (other than Applicable TPA Laws),
including those activities performed for Customer by
Administrator and shall provide appropriate written direction to
Administrator with respect to Administrator's compliance with
such requirements. Customer shall provide to Administrator
Customer's written interpretations of such Applicable Law as
requested by Administrator or as determined to be appropriate by
Customer. Administrator shall comply with any such direction and
interpretation provided by Customer in writing to Administrator.
(c) Administrator and Customer shall work together, via the Change
Procedures, to identify the impact of changes in Applicable Law
on how Customer receives, and Administrator provides, the
Services to determine the most efficient means to implement such
changes into the Operating Guidelines and other procedures used
by Administrator.
(d) Administrator shall perform the Services regardless of changes
in Applicable Law. If such changes prevent Administrator from
performing its obligations under this Agreement, Administrator
shall develop and, upon Customer's written approval, implement
suitable alternative arrangements that will enable Administrator
to perform its obligations under this Agreement.
(e) Administrator shall implement Normal Changes into
Administrator's procedures and into the Operating Guidelines for
no additional charges.
(f) Administrator shall implement Extraordinary Changes into
Administrator's procedures and into the Operating Guidelines at
the then applicable time and materials rates based upon a
reasonable allocation of costs to incorporate such changes into
Administrator's policies, processes, workflows, procedures and
into the Operating Guidelines, as the parties shall negotiate
expeditiously and in good faith. In negotiating such allocation
of expenses, the following factors are to be considered: (i) the
relative benefit each party receives from incorporating such
changes; (ii) the marginal costs Administrator would incur to
make such changes taking into account amounts received and to be
received from other users, customers or licensees; (iii) the
re-usability or leveragability of such changes by each
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party; and (iv) the amount each party would be required to incur
in the absence of this Agreement, to make such changes and
incorporate such changes into its policies, processes, workflows,
procedures and other systems. Notwithstanding the foregoing, to
the extent other customers of Administrator benefit from such
changes, Customer shall pay not more than a pro-rata share of the
costs of the Extraordinary changes, using a reasonable method of
allocation, based on the nature of the change.
(g) As used in this Section, the following defined terms shall
apply: A "Normal Change" is a change in the Applicable Law as
described in writing by Customer governing Services which: (i)
when combined with other Normal Changes during a given calendar
year, require not more than one-hundred and twenty (120) person
hours to implement into the workflows, procedures and Operating
Guidelines or into the Services; (ii) applies equally to
Administrator's Affiliates or other customers; or (iii) is a
change to the Applicable TPA Laws. An "Extraordinary Change" is a
change in the Applicable Law as described in writing by Customer
governing Services which: (i) when combined with other Normal
Changes during a given calendar year, require more than
one-hundred and twenty (120) person hours to implement into the
workflows, procedures and Operating Guidelines or into the
Services; (ii) requires Administrator to devote additional
personnel on a permanent basis to perform the Services following
such a change; (iii) is specific to the Services to be provided
under this Agreement; or (iv) is not a Normal Change.
2.6. Cooperation. Customer shall, in addition, cooperate and cause its
personnel to cooperate with Administrator as reasonably necessary or
requested by Administrator in order to enable Administrator to perform
the Services as and when contemplated herein, including by provision
of reasonable remote or onsite access to Customer's facilities,
personnel, hardware, and/or software.
2.7. Policies and Procedures; Changes. Customer agrees to implement any
policies, procedures, and updates that (a) are mandated by law, rule,
regulation, or changes thereto for Administrator to properly and
legally to perform the Services; or (b) so long as they are lawful and
would not impose a material cost on Customer regardless of whether
monetary or in time and effort relative to the benefits to be realized
under this Agreement and all affected Statement of Work, are requested
by Administrator to enable Administrator to more efficiently perform
the Services. Such policies and procedures or changes shall be
implemented by Customer promptly after Administrator's request, or
such longer period as shall be reasonable under the circumstances. If
Customer objects to any policies, procedures, or updates as requested
by Administrator, or believes it needs more than sixty (60) days to
implement such policies and procedures or changes, Customer shall,
after receiving Administrator's request, so inform Administrator and
the Parties shall work promptly and in good faith to resolve
Customer's objections taking into consideration the bases for
Administrator's request and Customer's objections, the costs and
benefits of adherence or non-adherence to the request, and potential
alternatives.
2.8. Benefits, Premiums and Underwriting Criteria; Underwriting and Claims
Payment Procedures; Reinsurance. Customer acknowledges and agrees that
it is solely
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responsible for determining the benefits, premium rates, underwriting
criteria, and underwriting and claims payment procedures that apply to
the Contracts. Customer further acknowledges that it is solely
responsible for securing reinsurance and for the competent
administration of its benefit programs.
2.9. Additional Information. Customer shall, from time to time,
provide Administrator with current forms of the Contracts,
prospectuses, applications, and other documents and information
relating to the Contracts, including the names and jurisdictions
of license and/or registration of all insurance agents and
representatives and broker-dealers authorized to sell or solicit
the Contracts, and such other additional information as Administrator
may reasonably request in connection with the provision of the
Services.
2.10. Direction; Authorized Personnel. Customer personnel listed in a
Statement of Work as Customer authorized personnel, as such list
may be amended by Customer from time to time by notice to
Administrator, shall be authorized to provide Administrator with
instructions or directions on behalf of Customer relating to
Administrator's normal day-to-day provision of the Services
under the applicable Statement of Work. Customer shall promptly
provide Administrator notice of any change in the authority of any
such person to provide such instructions and directions.
2.11. Customer Personnel. All costs incurred by Customer in respect of its
personnel in connection with the policies, including all salaries,
wages, benefits (including, but not limited to, compensation,
insurance, disability insurance, employees' pension plan, employee
welfare benefit plan, unemployment insurance, vacations or leave), and
employment-related taxes, shall, as between Administrator and
Customer, be borne solely, exclusively, and entirely by Customer. The
Parties do not intend, under this Agreement or otherwise, that
Administrator shall be required to create, maintain, or provide any
benefits or rights for any of Customer's personnel.
2.12. Control and Supervision of Customer Personnel. Persons employed by
Customer shall be employees of Customer and not Administrator.
Customer shall be solely responsible for the control, supervision, and
direction of, and shall have sole authority to control, supervise, and
direct, Customer personnel in respect of the services related to the
Contracts. Customer shall in addition have sole authority and
responsibility with respect to the selection, hiring, promotion,
demotion, dismissal, firing, training, and setting of salaries, wages,
and benefits of its personnel, and with respect to any complaints of
its personnel. Administrator shall not have any obligation or right or
authority or responsibility to supervise, direct, discharge, or
discipline any of Customer's personnel.
3. RECORDKEEPING AND AUDIT RIGHTS.
3.1. Recordkeeping - Contract Related Information. Administrator shall
establish and maintain facilities and procedures for the safekeeping
of complete Contract accounting books and records of all transactions
of any nature performed by Administrator on behalf of Customer
(collectively, "Contract Accounting Books and Records"). Contract
Accounting Books and Records generated and maintained by Administrator
includes the information required for a person to
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administer the Contracts in accordance with Applicable Law, but
Contract Accounting Books and Records excludes all other information
generated or maintained by Administrator which is not reasonably
necessary to administer the Contracts in accordance with Applicable
Law, such as the fees and charges under this Agreement. All such
Contract Accounting Books and Records shall be maintained in
accordance with Applicable Law with respect to the Services. Copies of
Contract Accounting Books and Records shall be maintained by
Administrator for the longer of any period that may be required by
Applicable Law. Records must be kept for the life of the policies and
for so long as required by Customer recordkeeping policies unless a
replacement third party assumes, in writing and on terms reasonably
acceptable to Administrator, responsibility to maintain such records
for such period of time. Notwithstanding the foregoing, Administrator
may satisfy the foregoing by tendering such Contract Accounting Books
and Records to Customer at the end of this Agreement, at such time as
a Contract is rendered inactive, when Administrator no longer needs
immediate access to such Books and Records, or at the end of the
applicable Statement of Work in a non-proprietary format reasonably
acceptable to Customer.
3.2. Return of Contract Accounting Books and Records. Promptly following
the termination or expiration of a Statement of Work, Administrator
shall deliver to Customer, or to a Customer Designee identified by
Customer, all Contract Accounting Books and Records of all
transactions performed in connection with such Statement of Work. Such
Contract Accounting Books and Records shall be reasonably cataloged or
indexed and in a reasonably commercially accessible format at all
times and when so delivered to the Customer.
3.3. Historical (Pre-Statement of Work) Hard Copy Records.
(a) Any hard copy, non-electronic records with respect to the
Contracts that were prepared or made prior to the date of a
Statement of Work that: (i) Administrator needs to perform the
Services; or (ii) Customer desires to transfer possession and
control of to Administrator, and which Administrator agrees in
writing shall be transferred into its possession or control,
shall be delivered by Customer or a Customer Designee, to
Administrator, or Administrator Personnel, at such times as the
Parties shall agree in writing, catalogued or indexed and
maintained in such manner as the Parties shall agree, all at
Customer's expense.
(b) Upon Administrator's receipt of such historical records, such
historical records shall be Contract Accounting Books and
Records. Administrator shall not be required to catalogue or
index such records beyond which they are catalogued or indexed
when delivered to Administrator. Administrator shall only be
obligated to maintain such records in the format in which
delivered by Customer or a Customer Designee to Administrator.
(c) Subject to Customer's prior approval, Administrator may image,
or cause to be imaged hard copy historical records, upon the
occurrence of which such images shall be subject to the
requirement that they be reasonably catalogued and indexed and in
a reasonably accessible format at all times and when so delivered
to Customer or a Customer Designee, just as the other complete
books and records of all transactions of any nature
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performed by Administrator on behalf of Customer. Hardcopy
records shall be maintained by Administrator or by a third party
approved by Customer, and shall be returned to Customer upon
Customer's request. In lieu of retaining such hardcopy records,
Administrator may tender them to Customer.
(d) Customer acknowledges that Administrator's ability to perform
the Services in accordance with this Agreement is dependent on
Customer providing complete and accurate historical data to
Administrator in a usable format. Further, from time to time,
Administrator may request Customer to review and approve the
accuracy and completeness of certain historical data. Where such
historical information provided by Customer or the prior
administrator may not be complete and accurate, Administrator may
request Customer to review and approve certain assumptions or
work-arounds relating to such information. To the extent
Administrator is required to devote additional time and resources
assembling, analyzing or re-formatting such historical data in
connection with the Services to be provided, Customer shall
compensate Administrator for such additional time and resources
at the rates set forth herein or the applicable Statement of
Work. In any case, where Administrator requests Customer to
review and approve information and Customer does approve such
information, Administrator may rely on such approvals and shall
not be liable for the inaccuracy of information presented to and
approved by Customer.
3.4. Back-up Storage Location. Administrator may send back-up tapes to one
or more off-site storage facilities provided that:(a) Administrator
shall inform Customer in advance of the name and location of any
replacement or new off-site facility; and (b) each new or additional
off-site facility shall maintain at least the same level of security
as required by this Agreement. Upon Customer's reasonable request,
authorized personnel or designated representatives of Customer shall
be permitted access to the off-site facilities at which
Administrator's back-up tapes are kept during normal business hours
and subject to any reasonable security procedures or other
restrictions in effect at the off-site facilities at the time of the
access.
3.5. Segregation. Administrator shall at all times keep logically
segregated the Customer Contract Accounting Books and Records and
items in process from those of Administrator's Affiliates and other
customers and from those of Administrator themselves.
3.6. Recordkeeping - Other Records. Administrator shall maintain books and
records in accordance with Applicable Law and general industry
standards, including those records relating to the areas identified in
Section 3.12 below. Such books and records shall be maintained during
the Term and for a period of six (6) years thereafter. The books and
records to be maintained pursuant to this Section 3.6 do not include
Contract Accounting Books and Records governed by Section 3.1 above.
3.7. Litigation Holds. In the event of any dispute arising under or with
respect to this Agreement or in the event that Customer issues a
"record hold order" in writing, the applicable retention period will
be extended until the resolution of such
- 16 -
dispute becomes final and non-appealable and all obligations of the
Parties hereto have been satisfied in full. Administrator will, and
will cause its Permitted Subcontractors to, comply with any such
record hold orders issued by Customer requiring preservation of
certain records for legal, regulatory or other purposes.
3.8. Audits - General. Upon ten (10) Business Days notice to Administrator
and during normal business hours, and no more than twice each calendar
year unless it is reasonably necessary or appropriate, Customer or a
Customer Designee may, in compliance with the Administrator's security
regulations and the further provisions hereof, audit Administrator for
the purposes set forth in this Section 3. Customer may conduct audits
itself or with the assistance of a Customer Designee (provided that
such third party executes a confidentiality agreement that contains
protections for Confidential Information comparable to those set forth
in this Agreement and provided further that such third party shall not
be any person that Administrator deems in its reasonable discretion to
be an Administrator Competitor), at Customer's expense, subject to the
provisions below. No such audit may be performed by any person
compensated on a contingency fee basis. The foregoing shall not
restrict the number of audits which may be conducted by Governmental
Authorities having jurisdiction over Customer or any Customer Designee
and the exception for "good cause" referred to above shall apply to
audits conducted by Customer in connection with any breach of this
Agreement by Administrator or any failure of Administrator to attain
the Service Levels.
3.9. Access.
(a) Customer. During any audit in relation hereto, Administrator
shall provide reasonable access to Customer and Customer
Designees (including their respective internal audit and
compliance staff), inspectors, consultants, and other
representatives, who are not Administrator Competitors to: (i)
facilities where the Services are being performed; (ii) its
personnel and subcontractors; and (iii) data and records in the
possession of Administrator relating to its performance of the
Services. Customer, the Customer Designees and their respective
auditors, inspectors, consultants, and other representatives
shall adhere to Administrator's reasonable and customary security
and safety policies.
(b) Customer's Regulators. Administrator shall provide any
Governmental Authority of any nature whatsoever having regulatory
authority over Customer or Customer Designees on-site access
during Administrator's ordinary business hours to: (i) facilities
where the Services are being performed; (ii) their personnel and
subcontractors; and (iii) data and records in the possession of
Administrator relating to its performance of any of the Services.
Customer shall request such representatives of such Governmental
Authority to comply with Administrator's reasonable and customary
security and safety policies.
3.10. Cooperation. Administrator shall cooperate fully with and assist
Customer, Customer Designees, and their respective auditors,
inspectors, consultants, and other representatives, and any
Governmental Authority, in connection with audits
- 17 -
in relation hereto and/or to any Statement of Work and shall, on a
reasonably timely basis, furnish each with all information
reasonably requested.
3.11. Audit Support Expenses and Charges. Customer shall reimburse
Administrator for the reasonable costs incurred by Administrator and
for the time devoted by Administrator Personnel in connection with
such audits which are beyond the Baseline Audit Support at the rate
stated in Exhibit 6. "Baseline Audit Support" means the cost
incurred and the time devoted by Administrator Personnel in
providing audit assistance and access to Customer, Customer
Designees and Governmental Authorities during each calendar year (or
pro rata portion) during the Term of up to one hundred twenty (120)
hours of such assistance. The time devoted by Administrator
Personnel in providing such audit assistance and access to Customer
relating to Administrator's failure to perform in accordance with
this Agreement, including the Service Levels will be provided at no
charge to Customer (and is not included in the calculation of
Baseline Audit Support
3.12. Scope of Audits. Audits shall be limited to information relating to
Administrator's provision of the Services in compliance with its
obligations under this Agreement and, except for audits conducted in
connection with, in anticipation of, or relating to, requests by, or
inquiries from Governmental Authorities, shall be limited to the
period of the then current calendar year and the immediately
preceding two (2) calendars years in connection with: (a)
Administrator's practices and procedures, including procedures to
maintain the confidentiality of Confidential Information; (b)
Administrator's controls and security measures and procedures; (c)
Administrator's disaster recovery and back-up plans and procedures;
(d) any matter necessary to ensure that Administrator or Customer
has met or is meeting requirements of Applicable Law; (e)
Administrator's compliance with its Service Level obligations;
and/or (f) Administrator's charges for the Services, including
expenses and taxes invoiced with respect thereto, and any credits
provided or that should have been provided. The foregoing time
limitation shall not restrict Customer from requesting information
directly relating to Administrator's performance in prior periods
where Customer's examination of the information for the then current
calendar year and the immediately preceding two (2) calendars years
reveals an error under this Agreement by Administrator in the more
recent period, provided that Customer identify in writing such error
alleged to have occurred in the more current period.
3.13. Overcharges. If, as a result of any such an audit, Customer
determines that Administrator overcharged it, Customer shall notify
Administrator in writing of its determination, including the amount
of the overcharge and the basis for its conclusion, and
Administrator shall promptly pay to Customer the reasonable out of
pocket costs incurred by Customer with respect to the audit, the
amount of the overcharge, plus interest at the rate of the prime
rate published by The Wall Street Journal on the day after the day
on which it receives such notice (but in no event to exceed the
highest lawful rate of interest), calculated from the date of
payment of the overcharged amount until the date of payment to
Customer, unless such claim of overcharge is promptly (but in any
event within forty-five (45) days) disputed by Administrator in
writing, in good faith.
3.14. No Interference. All audits shall be performed in a manner to
minimize disruption to Administrator's business. In no event shall
Customer, while conducting an
- 18 -
audit, materially interfere with Administrator's ability to perform
the Services or any of its other obligations under this Agreement or
any Statement of Work or to conduct its other operations in the
ordinary course of business.
3.15. Exit Conference. Following any audit by Customer, Customer shall
conduct (in the case of an internal audit), or request its external
auditors to conduct, a conference with Administrator to discuss the
preliminary conclusions from such audit with Administrator. Customer
shall report, in writing, to Administrator any actual or suspected
deficiencies identified in such audit within sixty (60) days from
the conclusion of the audit. To the extent that Administrator is not
performing in accordance with this Agreement, Administrator shall
promptly take all such actions as are appropriate to correct such
deficiencies and otherwise perform in accordance with this
Agreement.
3.16. Undercharges. Subject to Section 7.8(d) below, if, as a result of
Administrator's audit of its charges to Customer, Administrator
determines that it has undercharged Customer for Services provided
by it, Administrator may specially invoice Customer for such amount
but in no event shall Customer be liable for amounts that would have
otherwise been due more than twelve months prior to the discovery of
the undercharges. Any such invoice shall include evidence that the
amount was not previously charged to Customer. Upon receipt of this
information and evidence, Customer shall promptly pay to
Administrator the amount of the undercharge that it does not
promptly (but in any event within sixty (60) days), in writing,
dispute in good faith.
3.17. SAS 70 Audits. At least annually, at no additional charge to
Customer, Administrator shall provide to Customer a copy of a SAS 70
Type II report or the successor thereof for the twelve (12) months
ending September 30, with the first report being provided for the
twelve (12) months ending September, shall be for the September
period beginning immediately prior to the first Commencement Date
unless otherwise already provided. Administrator shall deliver to
Customer such final report as soon as possible after December 1, but
no later than December 31. Such report shall be prepared by a
nationally recognized firm for Administrator's facility or
facilities from which it (including, as applicable, its Affiliates
and subcontractors) is providing Services. Such reports provided by
Administrator under this Section shall be considered Administrator
Confidential Information. Administrator may redact from such
reports, those portions containing confidential information of third
parties.
4. ADMINISTRATOR RESOURCES AND SECURITY
4.1. Facilities, Equipment, and Software. Administrator shall provide
the Services from facilities, and using office furniture, office
supplies, equipment, and, subject to Section 2.1, software, supplied
and furnished by Administrator at no additional charge beyond those
set forth in a Statement of Work. Administrator shall provide the
Services from the Administrator Service Location(s) identified in a
Statement of Work as those from which the Services in respect of the
Statement of Work are to be provided; provided that Administrator,
upon written notice to and the approval of Customer change the
Administrator Service Location(s) so long as such facilities meet the
Security Regulations (see Section 4.3, below) and subject to
Administrator's business resumption plan or the equivalent and
- 19 -
performance of the Services in accordance with the applicable service
levels (see Section 1.4, above). Administrator shall bear all costs of
any change of the Administrator Service Location(s), including any
costs reasonably incurred by Customer associated with any such change,
except to the extent such change involves a system modification and
Customer is responsible for any of its cost related to such system
modification pursuant to the terms of Section 4.2. Administrator shall
in addition bear any costs of connectivity for its facilities,
equipment, and software to the internet.
4.2. System Modifications.
(a) Right to Make. Subject to the express limitations hereof,
Administrator may alter and modify the facilities, equipment,
software, and systems used or employed by them in performing the
Services; provided that no such alterations or modifications: (i)
shall materially adversely affect the levels of service being
provided under a Statement of Work; or (ii) subject to Section
4.2(b), shall require Customer to incur additional expenses
relative to this Agreement and all Statement of Work, taken in
aggregate, without Customer's prior written consent.
Administrator shall consult with Customer in advance about any
alterations or modifications that will require changes to
Customer's facilities or systems.
(b) Required or Modernizing in Nature. If Administrator's proposed
alterations or modifications are the result of changes or
requirements made by Administrator's suppliers or vendors
(including changes in software or hardware), and Administrator
has no commercially reasonable alternatives other than to make
such alterations or modifications, or if such alterations or
modifications represent reasonable modernization of
Administrator's facilities, equipment, software, or systems,
Customer agrees, on ninety (90) days written notice to it from
Administrator, to make such changes in its facilities or systems
as are lawful and reasonably necessary to conform to
Administrator's alterations and modifications.
(c) Not Required or Modernizing in Nature. If Administrator's
proposed alterations or modifications neither are the result of
changes or requirements made by Administrator's suppliers or
vendors nor represent reasonable modernization of Administrator's
facilities, equipment, software, or systems, Customer shall, upon
reasonable written notice to it from Administrator in light of
the severity of the proposed changes, make changes in its
facilities, equipment, software, and systems if and to the extent
that they are lawful and will not impose cost on Customer
relative to this Agreement and all Statement of Work, taken in
aggregate.
4.3. Security. During the term of a Statement of Work, Administrator shall
maintain and enforce security regulations at the facilities it
utilizes to provide the Services which are: (a) in accordance with
Exhibit 3 (the "Security Regulations"); and (b) at least as rigorous
as those security procedures in effect at such facilities as of the
date of each applicable Statement of Work. Administrator may from
time to time amend or supplement the Security Regulations so long
as such amendment or supplement does not lessen the protections
afforded by the Security Regulations as in effect up to the
time of such amendment or supplement.
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4.4. Personnel.
(a) General. Administrator shall provide the Services utilizing
individuals who, by reason of their education, skills,
abilities, training and/or experience, are qualified based on
industry standards to perform the particular services
Administrator assigns them to perform to or for the benefit of
Customer. In any event, each individual shall be duly licensed,
certified, or registered if necessary to perform the duties
assigned to him or her. Administrator will use commercially
reasonable efforts to ensure the continuity of Administrator's
employees assigned to perform Services.
(b) Control and Supervision. Persons employed by Administrator
shall be employees of Administrator and not Customer.
Administrator shall be solely responsible for the control,
supervision, and direction of, and shall have sole authority to
control, supervise, and direct, Administrator personnel in
respect of their provision of the Services on behalf of
Administrator to or for the benefit of Customer. Administrator
shall in addition have sole authority and responsibility with
respect to the selection, hiring, promotion, demotion,
dismissal, firing, training, and setting of salaries, wages, and
benefits of its personnel, and with respect to any complaints of
their respective personnel. Notwithstanding the foregoing, in
the event that any Administrator personnel performing Services
hereunder is found to be unacceptable to Customer for any lawful
reason articulated to Administrator (including demonstration
that he or she is not qualified to perform or has provided false
information on his or her resume), Customer may notify
Administrator of such facts (without waiving any other rights or
remedies it may have hereunder) and Administrator shall promptly
evaluate whether to remove such personnel from performing
Services under the applicable Statement of Work and, if
requested by Customer, provide a replacement with similar
experience, suitable ability and suitable qualifications, at no
additional cost to Customer. Customer's identification to
Administrator of unqualified or unsuitable Administrator
personnel and Administrator's corrective steps in response
thereto shall not relieve Administrator of its performance
obligations hereunder.
(c) Assignment of Personnel. Customer hereby acknowledges that
Administrator personnel working on Statement of Work may perform
the same or similar services from time to time for others, and
that neither this Agreement nor a Statement of Work shall
prevent Administrator from performing such similar services or
assigning such personnel to perform the same or similar work for
other parties; provided that Administrator and such personnel
perform and comply with Administrator's obligations hereunder
and under any Statement of Work, including the obligations to
maintain confidential and not use Customer's Confidential
Information in any manner prohibited hereby or pursuant to a
Statement of Work; and provided further that Administrator make
commercially reasonable effort to honor any specific requests of
Customer with regard to the assignment of particular
Administrator personnel to perform Services.
(d) Key Personnel. Notwithstanding Sections 4.4(b) and 4.4(c), if a
Statement of Work lists any personnel or positions as key in
respect of Administrator's performance thereof, then
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Administrator shall, prior to adding, removing, or replacing any
such personnel or positions, or their responsibilities, inform
Customer of such proposed action; provided that Administrator
agrees to provide Customer reasonable opportunity, upon request,
to interview such replacement key personnel prior to
Administrator assigning such person to perform Services directly
relating to Customer. In the event of an emergency,
Administrator shall inform Customer as promptly as reasonably
practicable, may appoint a qualified replacement, or assign the
duties of such key personnel to one or more other qualified
personnel, on an interim basis, to mitigate against interruption
in Service, and shall commence diligently to work to nominate a
permanent replacement and/or reassign one or more of the duties
of the individual or position to one or more other individuals
or positions.
(e) Personnel Costs. All costs incurred by Administrator in respect
of personnel directly or indirectly utilized by Administrator to
provide Services, including all salaries, wages, benefits
(including, but not limited to, compensation, insurance,
disability insurance, employees' pension plan, employee welfare
benefit plan, unemployment insurance, vacations or leave), and
employment-related taxes, shall, as between Administrator and
Customer, be borne solely, exclusively, and entirely by
Administrator. The Parties do not intend, under this Agreement
or otherwise, that Customer shall be required to create,
maintain, or provide any benefits or rights for any of
Administrator's personnel.
(f) Direction; Authorized Personnel. Administrator personnel listed
in a Statement of Work as Administrator authorized personnel, as
such list may be amended by Administrator from time to time by
notice to Customer, shall be authorized to provide Customer with
instructions or directions on behalf of Administrator relating
to Customer's normal day-to-day provision of the Services under
the applicable Statement of Work. Administrator shall promptly
provide Customer notice of any change in the authority of any
such person to provide such instructions and directions.
5. PROPRIETARY RIGHTS
5.1. Ownership of Administrator Materials. Excluding Customer Information,
all (a) Administrator Materials, (b) modifications, enhancements and
derivative works thereof without regard to whether such modifications,
enhancements and derivative works were developed by Administrator or
jointly by Customer, Customer Designees and Administrator, and (c) all
intellectual property rights with respect thereto, shall be, as
between Customer and Administrator, the exclusive property of
Administrator.
5.2. Ownership of Customer Materials. Excluding Administrator Materials,
all: (a) Customer Information; (b) modifications, enhancements and
derivative works thereof without regard to whether such modifications,
enhancements and derivative works were developed by Customer or
jointly by Customer, Customer Designees and Administrator; (c) all
intellectual property rights with respect thereto; and (d) those
policies, processes, work flows, and interpretations of Applicable Law
unique to administering the Contracts as may be reasonably
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specified in writing by Customer in accordance with this Agreement,
shall be, as between Customer and Administrator, the exclusive property
of Customer. For the avoidance of doubt, Customer Information shall
include all materials provided by Customer or Customer Designees to
Administrator in connection with the Transition Services or provided
thereafter, including among other things, Customer's business
requirements to complete such Transition Services.
5.3. Other Developed Materials. Excluding all information described in
Sections 5.1 and 5.2 and all intellectual property rights with respect
thereto, except as may be otherwise expressly set forth in any
Statement of Work, the following shall govern:
(a) Any Systems, materials, techniques, policies, practices,
procedures, processes, work flows, ideas and know-how, which are
jointly developed by Administrator, Customer and/or Customer
Designees (the "Jointly Developed Materials") and all
intellectual property rights with respect thereto, shall, as
between the Parties, be the exclusive property of Administrator.
(b) Customer irrevocably and unconditionally assigns to
Administrator all its right, title and interest in and to the
Jointly Developed Materials, including, without limitation, all
intellectual property rights with respect thereto.
(c) Customer shall have a non-exclusive, non-assignable,
non-transferable, perpetual, royalty-free right to use the
Jointly Developed Materials in its business, without any further
obligation to Administrator with respect to such Jointly
Developed Materials.
(d) For the avoidance of doubt: (i) nothing in this Section 5.3
shall give Customer any ownership, license or other rights in or
to any Administrator Software; and (ii) nothing in this Section
5.3 shall give Administrator any ownership, license or other
rights in or to any Customer Information.
(e) Notwithstanding the above, from time to time Customer may
request Administrator to assist Customer in developing Jointly
Developed Materials which may contain ideas or know-how which
Customer states would give Customer a competitive advantage. For
such developments specifically identified by the Parties as being
a competitive development subject to this Section in writing in
accordance with the Change Procedures ("Competitive
Developments"), if Administrator develops such Competitive
Developments, the rights and obligations of the Parties shall be
as specified in such writing executed in accordance with the
Change Procedures.
5.4. Administrator License. Subject to the provisions of Section 6,
Customer hereby grants Administrator (and Permitted Subcontractors) a
non-exclusive, royalty-free right to use, modify, enhance, copy,
publish, transmit, perform, display, create derivative works from and
otherwise use Customer Information solely to the extent necessary to
perform the Services under this Agreement. Except as expressly
authorized in writing by Administrator, Customer shall not be entitled
to access any Administrator Software.
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5.5. Customer License.
(a) Subject to the provisions of Section 6, Administrator hereby
grants Customer a non-exclusive, non-assignable, royalty-free
right to use, modify, enhance, copy, perform, display, create
derivative works from, and otherwise use, Administrator Materials
which include or reflect Customer specific requirements in
documents created during the term of the Letter Agreement,
together with such other procedures and processes to the extent
necessary for Customer: (i) to receive the Services during the
Term; and (ii) for Customer to receive the Termination Assistance
Services during the Termination Assistance Period in accordance
with Section 16 below. Furthermore, Administrator hereby consents
to the disclosure of such Administrator Materials to third
parties subject to execution of a nondisclosure agreement between
any such third party and Administrator in a form reasonably
acceptable to the Parties.
(b) Subject to the provisions of Section 6, and to the extent not
otherwise Customer Information, Administrator hereby grants
Customer a non-exclusive, non-assignable, royalty-free right to
use, modify, enhance, copy, perform, display, create derivative
works from and otherwise use, and the right to authorize the
Customer Designees to use, modify, enhance, copy, perform,
display, create derivative works from and otherwise use, the
Operating Guidelines: (i) to the extent necessary for Customer to
receive the Services during the Term; (ii) to receive the
Termination Assistance Services in accordance with Section 16
below; or (iii) for those Contracts administered by Administrator
as of the End Date, to the extent necessary for Customer to
administer those Contracts after the End Date.
(c) The foregoing licenses shall exclude all Administrator Software
and materials incorporating or reflecting Administrator Software.
5.6. Ownership of Consumer Confidential Information and Contract Holder
Data. As between Administrator and Customer, Customer shall be the
exclusive owner of all Consumer Confidential Information and all
Contract Holder Data. All Contract Holder Data is, will be and will
remain the property of Customer or Customer Designees and will be
deemed Confidential Information of such parties. Customer or such
Customer Designees will have all right, title and interest in and to,
including worldwide ownership of trade secret rights, copyrights,
patents and other proprietary rights in the Contract Holder Data and
all copies thereof.
6. CONFIDENTIALITY / PRIVACY
6.1. General. In the course of the performance of Services, Administrator
may receive or have access to confidential and proprietary
information, and Administrator's engagement by Customer may bring it
into close contact with confidential and proprietary information of
Customer or third parties with whom Customer conducts business.
Similarly, Administrator may provide Customer with confidential and
proprietary information, including data, information, specifications,
procedures, software, technical processes and formulas, source code
and other unpublished financial information and business plans, or
other confidential and proprietary information of Administrator.
Customer Confidential
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Information and Administrator Confidential Information are
collectively referred to as "Confidential Information" as that term is
more fully defined below. In recognition of the foregoing, each Party
agrees that:
(a) it will keep and maintain the Confidential Information of the
other Party in strict confidence, using such degree of care to
protect against unauthorized access to, or prohibited disclosure
or use of, the other Party's Confidential Information that it
uses to protect its own Confidential Information of a similar
type, but in any event no less than a reasonable standard of
care;
(b) it will use and, subject to compliance with Section 6.2,
disclose Confidential Information of the other Party solely for
the purposes described in Section 6.2(c) and will not use or
disclose Confidential Information of the other Party for its own
purposes, for the benefit of any third party or for any other
purpose;
(c) it will not, directly or indirectly, disclose Confidential
Information of the other Party to any third party, except with
prior written consent of the other Party or as permitted under
the express terms of this Agreement;
(d) as between the Parties, Customer shall retain all ownership
rights in Customer Confidential Information and Administrator
shall retain all ownership rights in Administrator Confidential
Information; and
(e) it will notify the other Party promptly of learning of
unauthorized access to, disclosure of, or breach in the security
of, the other Party's Confidential Information.
6.2. Permitted Use and Disclosures.
(a) Customer may disclose the Administrator's Confidential
Information to its employees, Customer Designees, contractors,
agents and advisors, but excluding Administrator Competitors,
having a need to know such information solely in connection with
Customer receiving the Services under this Agreement and who have
been obligated to protect such Confidential Information on terms
no less protective than those contained in this Agreement.
Administrator may disclose Customer's Confidential Information
only to its employees, Affiliates, and its Permitted
Subcontractors and other suppliers having a need to know such
information in connection with the Services and who have been
obligated to protect such Confidential Information on terms no
less protective than those contained in this Agreement. Each
Party shall instruct all of its permitted recipients having
access to the other Party's Confidential Information as to their
obligations to protect such Confidential Information on terms no
less protective than those contained in this Agreement.
(b) Each Party shall be responsible for its permitted recipients'
compliance with the terms of this Agreement. Exhibit 2 sets forth
the form of non-disclosure agreement that Administrator and its
Affiliates require their employees to sign as a condition of
employment.
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(c) Customer shall use Administrator's Confidential Information
solely for the purpose of receiving the Services under this
Agreement and for no other reason. Administrator shall use
Customer's Confidential Information solely for the purpose of
performing the Services under this Agreement and for no other
reason.
6.3. Confidential Information. "Confidential Information" means (a) the
pricing and service level terms and conditions of this Agreement or
any Statement of Work, (b) any Nonpublic Information or Consumer
Confidential Information that is disclosed (whether in writing,
orally, visually, electronically, by physical delivery or permitted
observation or inspection, or otherwise) by one Party, any of its
Affiliates, or any of its or their officers, directors, employees,
agents, or other representatives (the "Disclosing Party") to the other
Party or any of its or their officers, directors, employees, agents,
or other representatives (the "Recipient Party") in connection with
this Agreement or any Statement of Work, and (c) any Nonpublic
Information as defined by GLB and Reg S-P of third parties in the
possession of the Disclosing Party that is disclosed (whether in
writing, orally, visually, electronically, by physical delivery or
permitted observation or inspection, or otherwise) by the Disclosing
Party to the Recipient Party in connection with this Agreement or any
Statement of Work. Each Party's Confidential Information includes all
business and other proprietary information of such Party, written or
oral, including, as applicable:
(a) information relating to planned or existing businesses or
business initiatives, organizational restructuring plans, and
actual and projected sales, profits and other financial
information;
(b) information relating to technology, such as computer systems and
systems architecture, including computer hardware, computer
software, source code, object code, documentation, methods of
processing and operational methods;
(c) information that describes insurance, annuities and financial
services products and strategies, including actuarial
calculations, product designs, product administration and
management; tax interpretations, tax positions and treatment of
any item for tax purposes;
(d) confidential information, software and material of third parties
with whom that Party conducts business; and
(e) information about that Party's employees, agents, contractors
and representatives.
6.4. Exceptions. Confidential Information shall not include information
that:
(a) has been widely disseminated, or becomes widely disseminated, in
the general public domain other than as a result of a disclosure
by a Recipient Party in violation of this Agreement;
(b) has been filed by a Party, any of its Affiliates, or any of its
or their officers, directors, employees, agents, or other
representatives with, and is available
- 26 -
to the other Party from, a Governmental Authority and is not
otherwise subject to a protective order;
(c) was demonstrably known to the Recipient Party or any of its
officers, directors, employees, agents, or other representatives
previously, without a duty of confidentiality of any nature to
the other Party;
(d) is independently developed by a Recipient Party or any of its
officers, directors, employees, agents, or other representatives
without use of or access to the Confidential Information of the
Disclosing Party; or
(e) is rightfully obtained by a Recipient Party from one or more
third parties without, to the knowledge of the Recipient Party,
breach by such third party of a duty of confidentiality of any
nature to the other Party.
The foregoing exceptions shall not supersede the respective
obligations of the Parties set forth in Section 6.10 with respect to
Consumer Confidential Information.
6.5. Separation. If a Recipient Party is required to disclose information
relating to itself or other persons, but not the Disclosing Party,
Recipient Party shall use commercially reasonable efforts to separate
all Disclosing Party's Confidential Information from tapes, files or
other records containing the requested information, so that Disclosing
Party's Confidential Information is not disclosed.
6.6. Additional Exceptions.
(a) Governmental Authority. Notwithstanding anything in this Article
6 to the contrary, a Recipient Party may disclose this Agreement,
a Statement of Work, and other Confidential Information to any
Governmental Authority if required to do so in connection with an
examination of the Recipient Party by such Governmental
Authority, if required to do so in connection with the filing of
any application for or for renewal of any license or registration
issued by the Governmental Authority required to be possessed by
such Party pursuant to applicable law, if otherwise required to
do so by law, or if requested to do so by any such authority. If
the Confidential Information disclosed will or is likely to be
made public or publicly available, Recipient Party (to the extent
permitted by applicable law) shall: (i) immediately notify
Disclosing Party of the existence, terms, and circumstances
surrounding such request; (ii) consult with Disclosing Party on
the advisability of taking legally available steps to resist or
narrow such request and cooperate with Disclosing Party on any
such steps Disclosing Party considers advisable and determines to
take to attempt to prevent, limit, or protect the disclosure;
(iii) if disclosure of the Confidential Information is required
or deemed advisable, exercise its best efforts to obtain an
order, stipulation, or other reliable assurance acceptable to
Disclosing Party that confidential treatment shall be accorded to
the portion of the Confidential Information to be disclosed; and
(iv) limit disclosure to only that information required to be
disclosed pursuant to the subpoena or inquiry. Disclosures of
Confidential Information made pursuant to and in accordance with
this Section shall be excepted from the prohibitions set forth in
this Article 6. Notwithstanding the foregoing,
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Administrator may disclose all or part of this Agreement to one
or more Governmental Authorities as required by the Applicable
TPA Laws.
(b) Legal Process. If Recipient Party is requested to disclose all
or any part of any Confidential Information under a subpoena or
inquiry issued by a court of competent jurisdiction, by a
judicial or administrative agency or legislative body or
committee, or in a proceeding before any such court, body, or
committee, Recipient Party shall (to the extent permitted by
applicable law): (i) immediately notify Disclosing Party of the
existence, terms, and circumstances surrounding such request;
(ii) consult with Disclosing Party on the advisability of taking
legally available steps to resist or narrow such request and
cooperate with Disclosing Party on any such steps Disclosing
Party considers advisable and determines to take steps to attempt
to prevent, limit, or protect the disclosure; (iii) if disclosure
of the Confidential Information is required or deemed advisable,
exercise its best efforts to obtain an order, stipulation, or
other reliable assurance acceptable to Disclosing Party that
confidential treatment shall be accorded to the portion of the
Confidential Information to be disclosed; and (iv) limit
disclosure to only that information required to be disclosed
pursuant to the subpoena or inquiry. Disclosures of Confidential
Information made pursuant to and in accordance with this Section
shall be excepted from the prohibitions set forth in this
Article 6.
(c) Residual Knowledge. Notwithstanding any other provision of this
Agreement to the contrary, each Party shall be free to use in its
business, and to disclose to the extent reasonably necessary to
use in its business, the Residuals (as defined below) from any
deliverable, work product, or Confidential Information produced
or disclosed under this Agreement or a Statement of Work,
including processing techniques, concepts, methods, practices,
ideas, and know-how, subject only to the obligation not otherwise
to disclose, publish, or disseminate such information. The term
"Residuals" means ideas, concepts, know-how, methodologies,
processes, technologies, algorithms or techniques retained in the
unaided mental impressions of such Party's personnel relating to
the Services which either Party, individually or jointly,
develops or discloses under this Agreement. The foregoing shall
not, however, authorize either Party to disclose:
(i) the source of the Residual information or any information
reasonably likely to reveal the source of such information;
(ii) any Confidential Information of the other Party;
(iii)any confidential information of a third party; or
(iv) information intentionally committed to the memory of a
person so as to reduce it to intangible form to avoid the
obligations otherwise contained in this Agreement.
- 28 -
6.7. Return or Destruction of Confidential Information.
(a) General. Promptly following the expiration or termination of
this Agreement or a Statement of Work (or earlier if requested by
the Disclosing Party), the Recipient Party shall, at its cost,
return to the Disclosing Party or its designee or destroy such
that the Confidential Information is unreadable or undecipherable
by any means, as directed by the Disclosing Party, all
Confidential Information disclosed by the Disclosing Party to the
Recipient Party (excluding, for purposes of this Section, this
Agreement or a Statement of Work) and shall, at its cost, destroy
such that such Confidential Information is unreadable or
undecipherable by any means other Confidential Information that,
to Recipient Party's knowledge, is in Recipient Party's
possession or control, and shall, if requested by the Disclosing
Party, furnish Disclosing Party a certificate signed by Recipient
Party in form and substance reasonably satisfactory to the
Disclosing Party, stating that all the Confidential Information
of Disclosing Party required to be returned or destroyed pursuant
to this Section has in fact been returned or destroyed.
(b) Commercially Reasonable Limit on Duty. If such information
described in (a) above is not, using commercially reasonable
efforts, available to return or destroy, the Recipient Party
shall nevertheless, to the extent the Recipient Party retains
such Confidential Information in any format or stored on any
medium, be permitted to retain copies of the Confidential
Information in accordance with its record retention program and
shall destroy all such retained Confidential Information such
that it is unreadable or undecipherable in accordance with its
record retention program. All such Confidential Information
retained by Recipient Party pursuant to this Section shall
continue to be accorded confidential treatment pursuant to and in
accordance with this Agreement for so long as such information is
retained by Recipient Party and shall be returned or destroyed if
and when such information can commercially reasonably be returned
or destroyed. This Section shall survive the termination or
expiration of the Agreement or applicable Statement of Work.
(c) Legal Duty to Retain. Notwithstanding the Section above,
Recipient Party is not required to return or destroy Confidential
Information that it is legally required to maintain for so long
as such legal requirement remains. Any Confidential Information
retained by Recipient Party pursuant to this Section shall
continue to be accorded confidential treatment pursuant to and in
accordance with this Agreement for so long as such information is
retained by Recipient Party and shall be returned or destroyed
(in the manner required under Section 6.7(a)) if and when
Recipient Party is no longer legally required to maintain such
information.
6.8. Unauthorized Acts. To the extent Recipient Party has access to
Disclosing Party's Consumer Confidential Information, Recipient shall
notify Disclosing Party promptly and without unreasonable delay of
learning of unauthorized access to, disclosure of, or breach in the
security of the Disclosing Party's Consumer Confidential Information
may have occurred (a "Security Incident"). Recipient Party's
obligation to notify the Disclosing Party arises from the time
Recipient Party actually determines or reasonably should have
determined that Disclosing
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Party's Consumer Confidential Information was in fact involved in the
actual or suspected Security Incident. Thereafter, Recipient Party
shall:
(a) promptly furnish to Disclosing Party full details of the
Security Incident;
(b) assist and cooperate fully with Disclosing Party's investigation
of Recipient Party's personnel or third parties related to the
Security Incident, including providing Disclosing Party with
physical access to the facilities and operations affected,
facilitating interviews with personnel and others involved in the
matter, and making available all relevant records, logs, files,
and data;
(c) cooperate with Disclosing Party in any litigation or other
formal action against third parties deemed necessary by
Disclosing Party to protect its rights; and
(d) promptly use all commercially reasonable best efforts to prevent
a recurrence of any such Security Incident.
6.9. Action by Parties. The Recipient Party shall not commence any legal
action or proceeding against a third party in respect of any
unauthorized act within the meaning of Section 6.8 hereof purported to
have been committed by the third party without the prior written
consent of the Disclosing Party, which will not be unreasonably
withheld.
6.10. GLB Compliance; Information Security Management Procedures.
(a) Administrator agrees not to: (i) use any Consumer Confidential
Information disclosed by Customer or directly or indirectly by
customers of Customer; or (ii) disclose any such information to
any third party, in either case without the express prior
written consent of Customer, except as required by Applicable
Law or as reasonably necessary for the performance of the
Services; provided in the case of disclosure to a third party,
other than Permitted Subcontractors as permitted by this
Agreement.
(b) Administrator shall implement and maintain measures designed
to: (i) ensure the security and confidentiality of Consumer
Confidential Information disclosed to it by Customer, Customer
Designees, or directly or indirectly by customers of Customer;
(ii) protect against any anticipated threats or hazards to the
security or integrity of such information; and (iii) protect
against unauthorized access to or use of such information that
could result in substantial harm or inconvenience to the
Contract Holder or person applying for a Contract or any other
individual to whom such information relates. Without limiting
the generality of the foregoing, Administrator shall implement
and maintain the information security management procedures and
obligations detailed in the Security Regulations during the Term
of this Agreement.
(c) It is understood and agreed that, in the event of a breach of
this Section 6, damages are likely to be immeasurable and
irreparable and thus there may not be an adequate remedy at law
and accordingly that the non-breaching Party shall be entitled
to apply for injunctive and other equitable relief to
- 30 -
restrain any such breach, threatened or actual. Each Party agrees
to be responsible for breaches of this Section 6 caused by its
and its Affiliates' directors, officers, employees, agents or
other representatives, whether then current or former directors,
officers, employees, agents, Permitted Subcontractors or other
representatives of such Party or an Affiliate of such Party,
including all losses and damages caused thereby.
7. FEES AND PAYMENT
7.1. General. In return for the Services rendered by Administrator,
Customer shall pay the fees and charges set forth in such Statement
of Work; provided that in no event may Administrator's compensation
be contingent upon Administrator's claim expenses with respect to the
Contracts, or upon savings effected in the adjustment, settlement,
and/or payment of losses or claims covered under the Contracts.
7.2. Proration. Except for amounts payable under Section 7.5 and as set
forth on Exhibit 6, all periodic fees or charges under this Statement
of Work are to be computed on a calendar month basis and will be
prorated on a per diem (Business Day) basis for any partial month. If
a Contract is transitioned for Administrator to begin providing
Services during a calendar month, the fees for such Contract shall be
based on the status of the Contract, as of the Commencement Date for
such Contract, and shall be prorated based on the number of Business
Days remaining in the month relative to the total number of Business
Days in such month. The fees shall be similarly prorated for the last
calendar month Services are provided under the applicable Statement
of Work if the End Date is not the last day of a calendar month.
7.3. Increases. Administrator may increase the fees and charges under a
Statement of Work once every twelve (12) months, but not with effect
before the first January 1 following the first anniversary date of
the effective date of each such Statement of Work, in accordance with
the United States Department of Labor Consumer Price Index - All
Urban Consumers (1982-84 = 100) since the later of (a) the date of
the Statement of Work or (b) the date of the last increase of such
fees and charges for the Statement of Work pursuant to this Section.
Provided, however, if the percentage increase for any single year is
greater than five percent (5%), the amount of the increase shall be
the sum of five percent (5%) plus one-half (1/2) of the increase
above five percent (5%).
7.4. Estimates. From time to time, Administrator may provide to Customer
estimates relating to requested additional services. Administrator
shall use good faith in developing estimates and shall provide
Customer with a reasonable basis for such estimates. Customer
acknowledges that unless otherwise agreed in writing clearly
designating that a quoted amount or estimated amount is a fixed
price, a not-to-exceed price, or that Administrator's then-current
fees would be subject to adjustment in some other fashion, all quotes
or estimates provided by Administrator are just estimates, not
subject to any caps or other adjustments provided that if during the
course of a given project, Administrator anticipates exceeding such
estimate by an amount more than the tolerance level stated in the
estimate approved by Customer, Administrator shall first receive
Customer's prior written (or via email) consent for the amount in
excess of such tolerance
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amount, otherwise Customer is not obligated to pay for amounts that
exceeded such estimate plus such tolerance. If no such tolerance
amount is identified then the tolerance amount shall be deemed to be
zero.
7.5. Pass-Through Expenses. To the extent Service Provider has received
invoices from the providers of such Pass-Through Expenses, the
monthly invoice delivered by Administrator will include the
Pass-Through Expenses. Service Provider will use commercially
reasonable efforts to obtain such invoices in a timely manner. In
connection with entering a new SOW which involves Pass-Through
Expenses, the parties will review the details surrounding the
expected Pass-Through Expenses, including the steps Administrator has
taken to obtain, in light of all surrounding circumstances, favorable
terms, including pricing, for such suppliers of Pass-Through Expense
items.
7.6. Expenses Reimbursement. Customer shall reimburse Administrator for
documented "out-of-pocket" and travel expenses that are reasonably
incurred and necessary for Administrator's performance of the
Services which are approved in advance by Customer. If travel is
required, Administrator will comply with Customer's travel policies.
Under no circumstances will Customer reimburse Administrator for
first class or business class travel. Administrator will support all
requests for reimbursement of travel expenses in excess of _________
dollars ($____) with original receipts. Subject to Section 4.1,
Customer shall reimburse Administrator for all other out-of-pocket
expenses incurred by Administrator for which Customer is responsible
pursuant to a Statement of Work. Administrator shall furnish evidence
of such reimbursable expenses, such as copies of receipts, to
Customer reasonably promptly upon request.
7.7. Payment Disputes. Payment disputes shall be resolved as stated in
Section 12.4.
7.8. Taxes.
(a) General. Prices in Statement of Work do not include any
applicable sales, use, ad valorem or similar taxes (each, a
"Sales Tax" and collectively, "Sales Taxes") regardless of the
taxing authority. Customer shall pay applicable Sales Taxes on
the fees and charges payable under a Statement of Work, unless
there is an applicable exemption from such Sales Tax. To the
extent Administrator is required by law to collect such Sales
Taxes, one hundred percent (100%) of such Sales Taxes shall be
added to invoices as separately stated charges and paid in full
by Customer, unless Customer is exempt from such Sales Taxes and
furnishes Administrator a certificate of exemption.
Administrator shall be responsible for all taxes imposed on its
income, franchise, or property and Administrator shall be
responsible for all taxes and all obligations to withhold taxes
with respect to its directors, officers, agents, employees and
other persons who may be involved in providing Services on its
behalf.
(b) Contest by Customer. If Customer disagrees with Administrator's
determination that any Sales Tax is due with respect to
Services, Customer shall have the right to seek an
administrative determination from the
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applicable taxing authority, or, alternatively, Customer shall
have the right to contest any asserted claim for such Sales
Taxes, subject to it agreeing to indemnify Administrator for the
entire amount of such contested Sales Tax (including any
associated interest and/or late penalties) should such Sales Tax
be deemed applicable. Administrator agrees to fully cooperate
with Customer in the event Customer determines to contest any
such Sales Taxes. Administrator agrees to provide Customer with
copies of all communications from any tax authority relating to
the Customer's Sales Tax.
(c) Additional Taxes. Customer and Administrator shall promptly
inform each other in writing of any assertion by a taxing
authority of any tax liability with respect to the Services, in
addition to those taxes which have, prior to such notice from
such taxing authority, been identified previously by the
parties. Any legal proceedings or any other action against
Administrator with respect to such asserted liability shall be
under Administrator's direction; provided that Administrator
shall promptly inform Customer of all material developments. The
parties will cooperate to minimize the amount of such additional
taxes imposed. If the resolution or settlement of such
proceeding or action could cause Customer to pay any additional
Sales Taxes or other amounts, Customer, at its option and
expense, may participate in and jointly control with
Administrator such proceeding or action with Administrator's
cooperation. Any legal proceedings or any other action against
Customer with respect to such asserted liability shall be under
Customer's direction; provided that Customer shall promptly
inform Administrator, of all material developments; and further
provided that, if the resolution or settlement of such a
proceeding or action could cause Administrator to pay any
amounts, Administrator, at its option and expense, may
participate in and jointly control with Customer such proceeding
or action with Customer's cooperation. In any event, Customer
and Administrator shall fully cooperate with each other as to
the asserted liability. Each Party shall bear all the reasonable
costs of any action undertaken by the other at that Party's
request.
(d) Failure Timely to Invoice. If any Sales Taxes payable by
Customer that are required to be collected by Administrator
pursuant to Section 1.3 are not invoiced by Administrator (or
are invoiced on a date such that Administrator are not
reasonably able to deliver the amount of such Sales Taxes to the
relevant taxing authority in a timely fashion), and it is
ultimately determined that such Sales Taxes are due and payable,
then Customer shall reimburse Administrator for the amount of
such Sales Taxes; provided that, in such event, Administrator
shall indemnify and hold harmless Customer from and against any
and all interest and other penalties assessed as a result of
such Sales Taxes not being paid in a timely manner.
(e) Failure Timely to Report or Pay. Customer shall not be required
to pay or otherwise be liable or responsible for, and
Administrator shall indemnify, defend, and hold harmless
Customer from and against, any penalty, additional tax, costs,
or interest that may be assessed or levied by any taxing
authority as a result of the failure of Administrator to file
any return, form, or information statement that may be duly
required from Administrator by such taxing authority or to pay
any tax amounts collected from Customer hereunder, unless such
failure is caused by failure of Customer to provide
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necessary information, upon request, to Administrator or to
timely pay any Sales Tax amounts, upon request, to Administrator
that Customer is required to pay to Administrator pursuant to
this Section 7.8 for payment to the applicable taxing authority.
(f) Refunds. If Administrator receives a refund as a result of a
payment by Customer under this Section, then Administrator shall
credit Customer an amount equal to such refund on its next
invoice to Customer for fees and charges, or if the relevant
Statement of Work has terminated, shall refund such amount to
Customer.
(g) Invoicing. Any and all invoices from Administrator to Customer
shall comply with the requirements of each relevant taxing
authority and shall contain data sufficient under applicable law
to enable Customer to (i) obtain appropriate credit if available
under the law for any Sales Taxes charged on such invoices (ii)
verify the Administrator's computation of the Sales Tax. If any
Sales Taxes are assessed on Administrator's provision of
Services, Administrator shall segregate all invoices between
taxable and nontaxable Services.
(h) Withholding by Customer. If Customer believes that it is
required under applicable law to deduct or withhold any taxes
("Withholding Taxes") from or in respect of a payment to
Administrator, it shall notify Administrator in writing and in a
timely manner. Customer may deduct and withhold any Withholding
Tax that Customer reasonably determines is required by
applicable law to be deducted and withheld at the lowest rate
statutorily permitted, and may make any payment to Administrator
pursuant to a Statement of Work net of such Withholding Tax. Any
Withholding Tax so deducted and withheld shall be treated for
all purposes of a Statement of Work as a payment duly and timely
made by Customer to Administrator. Administrator shall provide
Customer such forms or other documentation as may be required to
establish any reduction in or exemption from any such
Withholding Tax.
7.9. Invoices. On or about the beginning of each calendar month,
Administrator shall send to Customer, at the address specified in the
applicable Statement of Work by U.S. mail, postage pre-paid, by
nationally recognized express courier, or by electronic mail, an
invoice and/or a billing statement, as applicable, in respect of a
Statement of Work containing the following items:
(a) the period covered by the invoice;
(b) any fixed fees due for such calendar month for the Services
and/or Brokerage Services;
(c) any additional Service or Brokerage Service fees and charges
(in reasonable detail and in amount) due;
(d) any credits owed (in reasonable detail and in amount);
(e) any expenses to be reimbursed (in reasonable detail and in
amount);
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(f) any Sales Taxes or other taxes to be paid by Customer (in
reasonable detail and in amount); and
(g) the total amount due.
7.10. Payment Terms. Payment of all invoiced or billed amounts not
disputed by Customer in accordance with Section 7.7 shall be due
within 30 days of receipt by Customer.
7.11. Interest. Commencing on the first day following the day on which
payment of an invoice is due, Customer shall be liable for interest
on any unpaid amounts at the prime rate of interest as published on
such day (or the nearest business day) in The Wall Street Journal,
or, if less, the highest rate permitted by law.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1. Administrator. Administrator represents, warrants or covenants to
Customer that:
(a) it has the expertise and resources to perform the Services in a
professional and workmanlike manner, and it will perform the
Services in accordance with the provisions of this Agreement and
the applicable Statement of Work;
(b) the Administrator Personnel are and will be properly educated,
trained and qualified for the Services they are to perform;
(c) all Work Product conforms to the specifications or descriptions
thereof in the applicable Statement of Work;
(d) it will not introduce into any Customer Information any
Malicious Code and will use commercially reasonable efforts to
prevent any such Malicious Code from entering Customer
Information under the control of Administrator or otherwise
accessed or used by Administrator in the performance of this
Agreement;
(e) all Services and Administrator Materials: (i) are original to
Administrator (or its subcontractors, as the case may be) or are
the subject of one or more licenses authorizing Administrator to
use such materials as contemplated hereby; (ii) which are owned
by Administrator, do not violate any patent, copyright, trade
secret or other property right of any other Party; and (iii) for
other materials to which Administrator has only a license to
use, Administrator's use is in accordance with Administrator's
license for such materials;
(f) it has obtained and will at all times during the Term maintain
all applicable consents, permits and/or licenses necessary to
perform the Services;
(g) it has not paid or caused to be paid and will not pay or cause
to be paid, directly or indirectly, any wages, compensation,
gifts or gratuities to any employee or agent of Customer or to
any government agent, official, or employee for the purpose of
influencing any decisions with respect to the
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making of this Agreement, or in connection with any Services
contemplated hereby; and
(h) all Administrator Personnel are eligible to legally work and
accept employment in the United States or such other country
from which the Services will be provided; and
8.2. Mutual. Each Party represents and warrants that, as of the Effective
Date:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the state in which it is
incorporated, and is in good standing in each other jurisdiction
where the failure to be in good standing would have a material
adverse affect on its business or its ability to perform its
obligations under this Agreement.
(b) It has all necessary corporate power and authority to own,
lease and operate its assets and to carry on its business as
presently conducted and as it will be conducted pursuant to this
Agreement.
(c) It has all necessary corporate power and authority to enter
into this Agreement and to perform its obligations hereunder,
and the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate actions on
its part.
(d) This Agreement constitutes a legal, valid and binding
obligation of such Party, enforceable against it in accordance
with its terms.
(e) It is not a party to, and is not bound or affected by or
subject to, any instrument, agreement, charter or by-law
provision, law, rule, regulation, judgment or order which would
be contravened or breached as a result of the execution of this
Agreement.
(f) It has and shall maintain all the licenses, permits, and
approvals from governmental agencies required to perform its
obligations under this Agreement.
9. INDEMNIFICATION AND REIMBURSEMENT FOR DATA ERRORS
9.1. Administrator Indemnity. Subject to Section 9.5 below and to the
limitations, exclusions and exceptions in Article 10, Administrator,
at its own expense, shall indemnify, defend and hold harmless
Customer, and its directors, officers, employees and agents
(collectively, the "Customer Indemnitees"), from and against
Indemnified Damages relating to or arising from any loss, claim,
demand, suit, action or proceeding (collectively, a "Claim") brought
by a third party (a person which is not an Affiliate of any Customer
Indemnitee) against any of the Customer Indemnitees to the extent
based upon:
(a) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') breach of the terms or warranties
contained herein;
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(b) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') gross negligence, fraud or willful
misconduct; or
(c) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') breach of Article 5 (Proprietary
Rights) or Article 6 (Confidentiality/Privacy).
9.2. Customer's Indemnity. Subject to Section 9.5 below and to the
limitations, exclusions and exceptions in Article 10, Customer, at
its own expense, shall indemnify, defend and hold harmless
Administrator, and its directors, officers, employees and agents
(collectively, the "Administrator Indemnitees"), from and against
Indemnified Damages relating to or arising from any Claim brought by
a third party (a person which is not an Affiliate of any
Administrator Indemnitee) against any of the Administrator
Indemnitees to the extent based upon:
(a) Customer's or its agents' (including Customer Designees')
breach of Customer's warranties in Section 8.2;
(b) Customer's or its agents' (including Customer Designees') gross
negligence, fraud or willful misconduct;
(c) Customer's or its agents' (including Customer Designees')
breach of Article 5 (Proprietary Rights) or Article 6
(Confidentiality/Privacy) above;
(d) Any of the matters in Section 1.10(a) for which Administrator
is not liable for under this Agreement;
(e) Customers or its agents' (including Customer Designees'),
breach of any other agreement relating to a Contract, including
any agreement relating to the sale of the Contract, commissions
paid or payable relating to such Contract, the reinsurance of
such Contract, provided that Administrator otherwise performed
in all material respects with this Agreement; or
(f) Administrator's performance under this Agreement in conformity
with: (i) any written policies, processes, interpretations or
other written instructions provided by individuals designated in
writing by Xxxxxxx Still (or his successor) for SAAL and Xxxxxx
Xxxx (or his successor) for AI Life AGL DE (for purposes of
performance of the Services to the extent such processes,
interpretations or other instructions were not, at the relevant
time, superseded by a later version of the Operating Guidelines
approved by Customer in accordance with this Agreement; (ii) the
Operating Guidelines approved by Customer; or (iii) this
Agreement, including the Statement of Work and attachments
thereto.
9.3. Special Indemnification Relating to Infringement. Subject to Section
9.5 below and to the limitations, exclusions and exceptions in
Article 10:
(a) Administrator shall defend, hold harmless and indemnify the
Customer Indemnitees from all Indemnified Damages which arise
out of a Claim brought by a third party that is not an Affiliate
of Customer against Customer
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arising from the actual or alleged infringement by such
Administrator Materials of the rights of such third party.
(b) Customer shall defend, hold harmless and indemnify the
Administrator Indemnitees from all Indemnified Damages which
arise out of a Claim brought by a third party that is not an
Affiliate of Administrator against Administrator arising from
the actual or alleged infringement by Customer Information of
the rights of such third party.
(c) Notwithstanding the provisions above, neither Party shall be
obligated to indemnify or defend the other or settle any
Claim of infringement: (i) asserted by an Affiliate of the
other Party, (ii) caused by the other Party's (including
its suppliers, designees, Affiliates, vendors or any other
third parties who may perform certain services for the benefit
of the other Party) additions to, changes in, or modification
of Administrator Materials or Customer Information, as
applicable; (iii) caused by the other Party's use of such
information in combination with information provided by third
parties; or (iv) caused by the other Party breaching Article
5 or Article 6 of this Agreement.
9.4. Acts of Employees and Subcontractors. Subject to Section 9.5 below
and to the limitations, exclusions and exceptions in Article 10, each
Party shall indemnify, defend and hold harmless, the other Party and
its respective indemnitees from any and all Indemnified Damages which
arise out of a Claim brought by a third party that is not an
Affiliate of either Party, by reason of personal injury, death or
tangible personal property damage of any nature or kind arising, in
whole or in part, out of, as a result of, or in connection with, the
negligent acts or omissions of the indemnifying Party's employees,
agents, subcontractors, or in the case the case of Customer, Customer
Designees.
9.5. Indemnification Procedures.
(a) If any third party brings a Claim against a Party and such
Party reasonably believes that such Claim is or may be covered
by the indemnification obligations under this Agreement (the
"Indemnified Party"), such Indemnified Party shall promptly
deliver to the other Party (the "Indemnifying Party") a written
notice (a "Claims Notice"), including a brief description of the
amount and basis of the Claim, if known; provided, however, that
the failure of the Indemnified Party to give prompt notice shall
not relieve the Indemnifying Party of any of its obligations
hereunder, except to the extent such failure materially
prejudices the Indemnifying Party.
(b) The Indemnifying Party shall, at its own expense, be entitled
to assume and control the defense of any such Claim on the
Indemnified Party's behalf by written notice to the Indemnified
Party within fifteen (15) days after receipt of a Claims Notice.
To assume the defense of such Claim, the Indemnifying Party
shall first have acknowledged (via the foregoing notice) to the
Indemnified Party the Indemnifying Party's unconditional
obligation to indemnify fully the Indemnified Party for the
matter in accordance with this Agreement. In the absence of such
assurance, the Indemnified Party shall control the defense of
such claim, without prejudicing in any way its right to recover
Indemnified Damages under this Section in accordance with this
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Agreement. If so specified in such notice, the Indemnifying
Party, in the event that the Indemnifying Party is entitled to
indemnification from a third party for such claim ("Third Party
Indemnitor") in respect of the same underlying subject matter,
facts, or circumstances as the Claim asserted, may assign the
defense of such Claim hereunder to such Third Party Indemnitor.
The Indemnified Party shall cooperate fully with, and assist the
Indemnifying Party or Third Party Indemnitor in the defense and
all related settlement negotiations of the Claim. The
Indemnifying Party shall pay all reasonable costs incurred by
the Indemnified Party related to the Indemnified Party's
assistance in defense of a Claim.
(c) The Indemnified Party shall have the right to join in the
defense of such Claim and employ its own separate counsel in any
action, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party; provided, however, that:
(i) if the Parties agree that it is advantageous to the defense
for the Indemnified Party to employ its own counsel; (ii) if the
Indemnified Party shall have reasonably concluded that there may
be a conflict of interest between the Indemnifying Party or
Third Party Indemnitor and the Indemnified Party in the conduct
of the defense of the claim (in which case the Indemnifying
Party and/or Third Party Indemnitor shall not have the right to
direct or participate in the defense of such claim on behalf of
the Indemnified Party), or (iii) the claim is an action,
proceeding, inquiry, or investigation commenced by a
Governmental Authority and the Indemnified Party elected to
control the defense of such claim, then, in each such instance,
the reasonable fees and expenses of counsel for such Indemnified
Party shall be borne by the Indemnifying Party. The Party
controlling the defense of a Claim for which indemnification is
available pursuant hereto shall keep the other Party reasonably
apprised at all times as to the status of its defense of the
claim.
(d) Notwithstanding anything in this Article 9 to the contrary, in
the event the Claim is an action, proceeding, inquiry, or
investigation commenced by a Governmental Authority, the
Indemnified Party shall have the right to control the defense of
such Claim.
(e) If the Indemnifying Party shall fail to notify the Indemnified
Party of its desire to assume the defense of the Claim within
the prescribed period of time, shall notify the Indemnified
Party that it will not assume the defense of the Claim, or shall
fail to assume the defense of the Claim, then the Indemnified
Party must defend the Claim in any such manner as it may deem
appropriate. The Indemnifying Party shall also be permitted to
join in the defense of the Claim and employ counsel at its own
expense. Neither the Indemnifying Party nor any Indemnified
Party shall be liable for any settlement of any Claim effected
without its prior written consent.
(f) Notwithstanding the foregoing, the Indemnified Party shall
retain, assume, or reassume sole control over, and all expenses
relating to, every aspect of the defense that it believes
is not the subject of the indemnification provided for in
this Agreement and upon such retention, assumption, or
reassumption, the Indemnifying Party will be relieved of
responsibility for indemnifying the
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Indemnified Party for such defense or the Claim to which such
defense relates.
(g) In any Claim as to which the Indemnifying Party is entitled
pursuant to this Section to assume and control the defense
thereof, until both: (i) the Indemnified Party receives notice
from the Indemnifying Party that it will defend the Claim or, as
permitted, assign such defense to a Third Party Indemnitor; and
(ii) the Indemnifying Party assumes or so assigns such defense,
the Indemnified Party may, at any time after notifying the
Indemnifying Party of the Claim, resist the Claim or, after
consultation with and the consent of the Indemnifying Party,
settle or otherwise compromise or pay the Claim. The
Indemnifying Party shall pay all reasonable costs of the
Indemnified Party actually incurred arising out of or relating
to that defense and any such settlement, compromise, or payment.
(h) Following indemnification as provided herein, the Indemnifying
Party shall be subrogated to all rights of the Indemnified Party
with respect to the matters with respect to which
indemnification has been furnished.
9.6. Variances.
(a) Correction. In the event of a discrepancy or other error arising
in the execution or recording of an investment transaction during
the Term, including a portfolio allocation or reallocation
transaction (a "Variance"), Administrator shall, promptly upon
learning of the Variance, reconcile the Variance by crediting or
debiting the applicable Contract Holder's account such that the
Contract Holder shall not have lost or gained any amounts as a
result of the Variance.
(b) Reporting. Promptly after the end of each calendar month,
Administrator shall furnish Customer a detailed, itemized report
listing of (a) Variances caused by Administrator's errors (each,
a "Type A Variance") and (b) Variances that are not caused by
Administrator's errors (each, a "Type B Variance"); provided that
Administrator shall promptly inform Customer of any Variance from
any discrepancy or other error that results in a net gain or net
loss in excess of _____________ dollars ($____), whether a Type A
Variance or a Type B Variance.
(c) Annual Settle-Up. If, as of the last day of each calendar year
during the Term of this Agreement, there is a Net Loss, as
defined below, for that calendar year, Administrator shall pay
the amount of that Net Loss to Customer. Provided, however, the
amount Administrator is obligated to pay Customer for a given
calendar year shall be reduced by the amount of Net Gains, as
defined below, from prior calendar years during the Term of this
Agreement to the extent such Net Gains were not credited against
Net Losses from prior periods. Such payment will be due and
payable on February 1.
(d) "Net Loss" means the amount by which the losses from Type A
Variances were greater than the gains from the Type A Variances
that occurred during that prior calendar year, when reduced by
the amount of net gains, if any,
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from Type B Variances in excess of the losses from Type B
variances for that same calendar year. For the avoidance
of doubt, if the losses from Type B Variances are greater than
the gains from Type B Variances, such difference shall not
increase the Net Loss.
(e) "Net Gain" means the amount by which the gains from the Type A
Variances were greater than the losses from the Type A Variances
that occurred during that prior calendar year, when combined with
the net gain or loss, as the case may be, between the gains from
Type B Variances and losses from Type B Variances for that same
calendar year. For the avoidance of doubt, if the losses from
Type B Variances are greater than the gains from Type B
Variances, such difference shall reduce the Net Gain.
(f) A Type A Variance shall be deemed to have occurred on the date
the transaction occurs (or should have occurred) that results in
the discrepancy or other error.
(g) Administrator shall, as reasonably requested by Customer, assist
Customer to recover Type B Variances that are the fault of a
mutual fund unaffiliated with Customer.
10. DISCLAIMERS, LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES
10.1. Disclaimer of Implied Warranties. THE WARRANTIES EXPRESSLY STATED IN
THIS AGREEMENT AND IN ONE OR MORE STATEMENTS OF WORK ARE IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS, AND
FITNESS FOR A PARTICULAR PURPOSE.
10.2. Certain Damages Excluded. SUBJECT TO SECTION 10.4, IN NO EVENT SHALL
A PARTY OR ITS AFFILIATES BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL OR
INDIRECT DAMAGES OF ANY KIND, INCLUDING LOST PROFITS OR LOSS OF
GOODWILL, OR EXEMPLARY, PUNITIVE, OR SPECIAL DAMAGES ON ANY CLAIM OR
DEMAND AGAINST IT BY ANOTHER PARTY ITS AFFILIATES OR ANY OTHER
PERSONS, WHETHER IN CONTRACT, EQUITY, TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE, AND STRICT LIABILITY IN TORT) OR OTHERWISE,
EVEN IF, AND WHETHER OR NOT, SUCH PARTY OR ITS AFFILIATES HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
10.3. Limitation on Liability.
(a) SUBJECT TO SECTION 10.4 BELOW, THE TOTAL AGGREGATE LIABILITY
OF ADMINISTRATOR AND ITS AFFILIATES IN RESPECT OF ANY AND ALL
CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT IN
THE AGGREGATE, INCLUDING ANY AND ALL STATEMENTS OF WORK,
WHETHER IN CONTRACT, EQUITY, TORT (INCLUDING BREACH OF WARRANTY,
NEGLIGENCE AND STRICT LIABILITY IN TORT) OR OTHERWISE, DURING
AND AFTER THE TERM, SHALL IN NO EVENT EXCEED, WHEN AGGREGATED
WITH ALL
- 41 -
OTHER CLAIMS HEREUNDER: (A) WITH RESPECT TO CLAIMS WHICH ARISE
AFTER THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE, THE FEES
AND CHARGES PAID FOR THE SERVICES HEREUNDER DURING THE ONE (1)
YEAR IMMEDIATELY PRECEDING THE FIRST EVENT GIVING RISE TO ANY
CLAIM OR $_____, WHICHEVER IS GREATER, OR (B) WITH RESPECT TO
CLAIMS WHICH ARISE BEFORE THE FIRST ANNIVERSARY OF THE EFFECTIVE
DATE, THE FEES AND CHARGES PAID HEREUNDER DURING SUCH FIRST
YEAR ANNUALIZED FOR A ONE (1) YEAR PERIOD) OR $______,
WHICHEVER IS GREATER, OR (C) WITH RESPECT TO CLAIMS WHICH ARISE
AFTER THE END OF THE TERM OF THIS AGREEMENT, THE FEES AND
CHARGES PAID DURING THE LAST ONE (1) FULL YEAR DURING WHICH THIS
AGREEMENT WAS IN EFFECT OR $______, WHICHEVER IS GREATER.
PAYMENTS MADE SHALL BE DEEMED MADE OUT OF SUCH AMOUNTS DRAWING
FROM ONE YEAR PRIOR TO THE EVENT GIVING RISE TO THE CLAIM
MOVING FORWARD TO SUCH EVENT.
(b) SUBJECT TO SECTION 10.4 BELOW, THE TOTAL AGGREGATE LIABILITY OF
CUSTOMER AND ITS AFFILIATES TO ADMINISTRATOR, ITS AFFILIATES AND
OTHER PERSONS IN RESPECT OF ANY AND ALL CLAIMS ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT IN THE AGGREGATE, INCLUDING
ANY AND ALL STATEMENTS OF WORK, WHETHER IN CONTRACT, EQUITY,
TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE AND STRICT
LIABILITY IN TORT) OR OTHERWISE, DURING AND AFTER THE TERM,
SHALL IN NO EVENT EXCEED, WHEN AGGREGATED WITH ALL OTHER CLAIMS
HEREUNDER: (A) WITH RESPECT TO CLAIMS WHICH ARISE AFTER THE
FIRST ANNIVERSARY OF THE EFFECTIVE DATE, THE FEES AND CHARGES
PAID OR PAYABLE FOR THE SERVICES DURING THE ONE (1) YEAR
IMMEDIATELY PRECEDING THE FIRST EVENT GIVING RISE TO ANY CLAIM
OR $______ WHICHEVER IS GREATER, OR (B) WITH RESPECT TO CLAIMS
WHICH ARISE BEFORE THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE,
THE FEES AND CHARGES PAID OR PAYABLE BY CUSTOMER DURING SUCH
FIRST YEAR ANNUALIZED FOR A ONE (1) YEAR PERIOD OR $______,
WHICHEVER IS GREATER, OR (C) WITH RESPECT TO CLAIMS WHICH ARISE
AFTER THE END OF THE TERM OF THIS AGREEMENT, THE FEES AND
CHARGES PAID OR PAYABLE DURING THE LAST ONE (1) FULL YEAR DURING
WHICH THIS AGREEMENT WAS IN EFFECT OR $______, WHICHEVER IS
GREATER. SUCH SUMS SHALL ONLY BE AVAILABLE ONCE TO PAY ANY AND
ALL SUCH CLAIMS. PAYMENTS MADE SHALL BE DEEMED MADE OUT OF SUCH
AMOUNTS DRAWING FROM ONE YEAR PRIOR TO THE EVENT GIVING RISE TO
THE CLAIM MOVING FORWARD TO SUCH EVENT.
(c) References above to "fees and charges" paid or payable shall
not include any Pass-Through Expenses, taxes, or reimbursed
expenses.
10.4. Exceptions. Notwithstanding Sections 10.2 and 10.3, no limitation on
liability or exclusion of damages shall apply with respect to:
- 42 -
(a) Losses suffered by breach of Article 5 (Proprietary Rights) or
Article 6 (Confidentiality/Privacy);
(b) Losses suffered by gross negligence, fraud or willful
misconduct of the other Party, including any claim brought under
Section 9.1(b) or under Section 9.2(b);
(c) any claim brought under Section 9.1(c) or under Section 9.2(d)
or (e);
(d) any claim brought under Section 9.3(a) or under Section 9.3(b);
(e) Losses suffered by reason of personal injury or damage to
tangible personal property, including any claim brought under
Section 9.4;
(f) Invoiced fees, charges and other amounts that are due and owing
to Administrator under this Agreement.
(g) Losses suffered by Customer relating to or arising from
Administrator's (i) breach of Section 15.3 (Disaster Recovery)
or (ii) its intentional breach or gross disregard of its
obligations under Article 16 (Termination Assistance).
11. OTHER RIGHTS AND OBLIGATIONS.
11.1. Independent Contractor. In connection with this Agreement, each
Party is an independent contractor. This Agreement establishes and
will only be construed as establishing a contract between unrelated
business entities for the provision and purchase of certain services
and does not and will not be deemed to create a joint venture,
partnership, fiduciary or agency relationship between the Parties for
any purpose. With respect to its own personnel, each Party is
independently responsible for all obligations incumbent upon an
employer. Customer is not responsible for payment of workers'
compensation, disability benefits or unemployment insurance, nor is
Customer responsible for withholding or paying employment related
taxes for Administrator or any of its employees.
11.2. Subcontracting.
(a) Administrator will not subcontract any Restricted Activities
without the prior written consent of Customer. Administrator
will not subcontract to a Customer Competitor in any event.
Customer's consent under this Section is not required with
respect to Administrator's Affiliates.
(b) Prior to entering into any subcontract in respect of Restricted
Activities, Administrator will inform Customer of the proposed
subcontract and will obtain Customer's consent of such proposed
subcontractor. Permitted Subcontractors who will perform
Restricted Activities as of the Effective Date are listed in
Exhibit 4. Customer consents to such listed Permitted
Subcontractors performing the Restricted Activities.
(c) No subcontracting will release Administrator from its
responsibility for its obligations under this Agreement or any
Statement of Work. Administrator will be Customer's sole point
of contact with respect to the Services.
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(d) With respect to any Services performed by a Permitted
Subcontractor, Administrator hereby assumes all liability and
responsibility for such subcontractors' compliance with and
breach of the terms of this Agreement and Statement of Work, and
for all acts and omissions of such subcontractors.
(e) For those third parties providing services which give rise to
Pass-Through Expenses for a given Statement of Work,
Administrator shall: (i) use commercially reasonable efforts to
negotiate favorable terms and conditions in the contract with
such suppliers; and (ii) consult with Customer with respect to
the source of such services and the commercial terms and
conditions and (iii) such Pass-Through Expenses will be agreed
to in writing by Customer in the applicable Statement of Work.
11.3. Service Locations.
(a) Notwithstanding any consent that Customer may have provided
to Administrator to subcontract all or a portion of Services,
under no circumstances will Administrator perform or cause
to be performed, directly, indirectly or by agents or
subcontractors, any Restricted Activities outside of the
continental United States of America unless it obtains the prior
written consent of Customer with respect to performance of the
Services from such location.
(b) Regardless of whether Customer's consent is or is not required
and regardless of whether it did consent to Administrator
changing an Administrator Service Location, Administrator, and
not Customer, shall bear the costs of such change in
Administrator Service Location.
(c) Notwithstanding any consent that Customer may have provided
to Administrator to subcontract all or a portion of any
Restricted Activities, Administrator may not change the
location from where such Restricted Activities are being
performed from an on-shore location to an off-shore location or
from an off-shore location to a different off-shore location,
unless it obtains the prior written consent of Customer with
respect to such change in location.
12. DISPUTE RESOLUTION.
12.1. Informal Dispute Resolution. Prior to the initiation of any formal
dispute resolution procedures, the Parties shall first attempt to
resolve any dispute with respect to this Agreement or a Statement of
Work as follows:
(a) Upon the request of a Party, each Party to any such dispute
shall promptly vest a designated representative with authority
to settle the dispute. Such representatives shall meet one or
more times, as they deem necessary or advisable, and attempt in
good faith to resolve the dispute. The meeting(s) will be held
reasonably promptly after the request therefore is furnished at
an agreed location or via conference call. If the designated
representatives cannot resolve the matter within thirty (30)
Business Days after the request for attempt at informal
resolution pursuant to this Section is furnished by the
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requesting Party to the receiving Party, or for such longer
period upon which the Parties respective representatives may
agree in writing to continue to attempt to resolve the dispute
informally, then either Party may elect to submit the dispute
for resolution in accordance with the formal dispute resolution
procedure specified below.
(b) During the negotiations, all reasonable requests made by one
Party to the other for non-privileged information reasonably
related to the dispute shall be promptly honored. Any
information, discussions, or offers exchanged between the
Parties shall be privileged, confidential, and without prejudice
to a Party's legal position in any formal proceedings. All such
information, discussions, and offers will be considered
settlement discussions and inadmissible in any subsequent
proceedings.
(c) This Section shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period or to seek an injunction or any other
equitable remedy.
12.2. Formal Dispute Resolution. In the event that the Parties are unable
to resolve a dispute under the provisions set forth herein, either
Party may institute such actions as may be permitted at law or in
equity.
12.3. Continued Performance. Subject Customer's compliance with Sections
12.4 and 16.1(d), pending the resolution of a good faith dispute
between Customer, on the one hand, and Administrator, on the other
hand, under this Agreement or a Statement of Work, Administrator and
Customer shall continue to perform hereunder and under any Statement
of Work.
12.4. Payment Dispute. The following provisions shall apply where one
Party disputes in good faith that it owes an amount to the other
Party, which the other Party claims is payable under this Agreement:
(a) The Party disputing ("Disputing Party") that it owes the other
Party amounts under this Agreement shall provide to the other
Party ("Billing Party") a detailed written explanation of
Disputing Party's basis for disputing in good faith the amounts
claimed due by Billing Party. Disputing Party shall pay Billing
Party the undisputed amounts due. Disputing Party shall provide
such notice within thirty (30) business days of receiving the
invoice containing disputed charges.
(b) Upon receipt of any notice of disputed fees, each Party shall
promptly and diligently cooperate with each other to resolve the
disputed amounts. At such time as the Billing Party determines
that the Parties have reached an impasse regarding such disputed
amounts, the Billing Party shall provide a written notice to the
Disputing Party stating that the parties have reached an impasse
with respect to the disputed amount described in such letter.
(c) Within fifteen (15) calendar days of the date of Disputing
Party's receipt of the notice provided for in Section 12.4(b),
if the amount(s) in dispute exceeds $_______ in the aggregate,
the Disputing Party shall deposit the
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entire disputed amount into an interest bearing escrow account
for the benefit of the Billing Party, on terms as set forth
by the Billing Party providing that such deposited amounts
shall be released only: (a) as the parties may jointly direct
the escrow agent; or (b) pursuant to a final resolution in
accordance with this Agreement. If Disputing Party is Customer
and if Customer has not deposited such amounts into an escrow
account as described in this Section, subject to such amounts
in dispute being due and payable as asserted by Administrator,
Administrator may immediately discontinue providing Services
until the parties mutually agree upon terms for Administrator
to be paid for the continuing Services provided or Customer
deposits such amounts into an escrow account as described above.
If Disputing Party is Administrator and if Administrator has
not deposited such amounts into an escrow account as described
in this Section, Customer shall have the right to reduce
amounts payable to Administrator under this Agreement on a
dollar-for-dollar basis the amount disputed by Administrator
without prejudicing Customer's rights under this Agreement and
such withholding by Customer shall not entitle Administrator,
under any circumstances, to stop performing any Services
under this Agreement.
(d) Nothing contained herein shall prevent Administrator from
terminating this Agreement for breach and ceasing to provide
Services if Customer is unwilling or unable to comply with the
terms of this Section 12.
(e) In lieu of depositing amounts in the escrow account as
described above, Customer may pay Administrator such disputed
amounts and seek to recover such amounts.
13. TERM AND TERMINATION.
13.1. Term. The initial term of this Agreement, including all Statements
of Work, shall be for ten (10) years from the Effective Date, unless
terminated earlier in accordance with this Agreement or the
applicable Statement of Work and thereafter, shall renew
automatically for successive one (1) year terms, unless either Party
notifies the other in writing at least six (6) months in advance of
such Party's election to terminate at the end of the initial ten (10)
year term, or at the end of a successive one (1) year term
(collectively, the "Term").
13.2. Termination by Customer. At any time during the Term, Customer may
terminate this Agreement and/or any Statement of Work, in accordance
with the following provisions:
(a) Termination for Cause.
(i) Customer may, at its option, terminate (1) this Agreement
and all Statement of Work at any time during the Term or
Termination Assistance Period if Administrator materially
breaches this Agreement or a Statement of Work and such
breach is not cured within thirty (30) days after written
notice thereof to Administrator, (2) a specific Statement
of Work at any time during the Term or Termination
Assistance Period if Administrator materially breaches such
Statement of Work and such breach is not cured
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within thirty (30) days after written notice thereof
to Administrator, or (3) a Statement of Work only with
respect some but not all of the Services to which
Administrator's material breach directly relates, and such
breach is not cured in all material respects within
thirty (30) days after written notice thereof to
Administrator. Such written notice of breach by Customer
shall be provided promptly after Customer is aware of such
breach, but in no circumstances, more than six (6) months
following Customer's awareness of such breach. If, after
Customer has provided the notice of breach above,
Administrator has not cured the specified breach in all
material respects, for so long as Administrator has still
not cured the specified breach in all material respects,
Customer may terminate as permitted above by providing
Administrator thirty (30) days notice of termination. If
Customer delivers notice terminating specific Services
of one or more Statement of Work, Customer is not
thereafter entitled to terminate the Statement of Work
with respect to the continuing Services or this Agreement
as a whole as a result of the same events. Customer shall
provide notice of termination under this Section within
two (2) years after the date Customer sent the notice of
breach for which Customer is exercising such right to
terminate.
(ii) To the extent not contrary to applicable law, if a
governmental agency issues a written order revoking,
suspending or otherwise terminating Administrator's license
as may be required to perform the Services and such
revocation, suspension or termination, if capable of cure,
is not cured within thirty (30) calendar days after
Administrator's receipt of such written order. In such
case, the party receiving such order shall promptly provide
to the other a copy of such order and the effective date of
such termination, if the revocation, suspension or
termination is not cured as provided herein, shall be as
set forth in such order.
(iii) Customer may terminate this Agreement in whole or in
part for Administrator's failure to meet the Default
Performance Standards as stated in Section 1.4(d).
(b) Termination Without Cause. Customer may terminate this
Agreement (and all Statements of Work) in its entirety, in its
sole discretion upon six (6) months prior written notice to
Administrator and upon payment of the "Early Termination Fee(s)"
set forth in each Statement of Work, if any. The terms of
payment of any Early Termination Fee(s) shall be as set forth in
the applicable Statement of Work.
(c) No Statements of Work. If there is no Statement of Work in
effect, either Party may terminate this Agreement at any time
upon ten (10) days written notice to the other Party.
(d) Partial Termination Process. If Customer terminates less than
the entire Agreement pursuant to Section 13.2(a) above:
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(i) The Parties will negotiate the appropriate amendment to
each affected Statement of Work to remove from each
such affected Statement of Work the affected Services,
adjust the fees and charges to reflect the revised scope
of Services to be performed, reduce the scope of Services
provided under each affected Statement of Work, revise any
affected Service Levels, including revising the scope of
Service Levels to reflect the revised responsibilities of
Administrator, and make all other reasonable and equitable
revisions to each Party's rights and duties to reflect the
change in scope and nature of Services to be performed
by Administrator. Until the Parties agree in writing in
accordance with the Change Procedures for such adjustments,
Administrator shall invoice the amount reasonably adjusted
by Administrator to reflect the changes in the Services to
be performed and Customer shall pay all such amounts. To
the extent there is any dispute regarding how the adjusted
amount was determined and invoiced by Administrator, the
provisions of Section 12.4 shall govern.
(ii) Pending execution of a mutually agreed upon amendment as
contemplated above, with effect from the date the specific
Services are terminated pursuant to Section 13.2(a),
Administrator shall not be liable for failure to meet the
Service Levels for the terminated Services or any other
Services the performance of which is affected by the
termination of the terminated Services, or for any other
breach of this Agreement to the extent directly caused by
the termination of the terminated Services. Administrator
shall inform Customer of which Services and/or Service
Levels are affected by the termination of the Terminated
Services as promptly as practicable after receipt of
Customer's notice of termination.
13.3. Termination for Insolvency. Subject to Applicable Law, Customer may
terminate this Agreement and all Statement of Work in the event of
Insolvency of Administrator by providing sixty (60) days written
notice and such Insolvency is not cured within sixty (60) days after
written notice thereof.
13.4. Termination by Administrator. Administrator may terminate the
affected Statement of Work if Customer fails to pay undisputed
amounts due thereunder and does not cure such breach in all material
respects within thirty (30) days of receipt of Administrator's
notice. Administrator may consider Customer's failure to comply with
the payment dispute provisions of Section 12.4 above a material
breach of this Agreement, in which case, Administrator may terminate
the affected Statement of Work if Customer does not cure such breach
within thirty (30) days of receipt of Administrator's notice.
Administrator may terminate this Agreement if Customer materially
breaches Article 5 or Article 6 of this Agreement and does not cure
such breach in all material respects within thirty (30) days of
receipt of Administrator's notice. If after Administrator has
provided the notice of breach above Customer has not cured the
specified breach in all material respects within the time specified
above and Administrator seeks to terminate as permitted above,
Administrator shall provide to Customer sixty (60) days notice of
termination. Even in the event of a termination under this section,
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Administrator shall provide Customer with Termination Assistance
Services as detailed in Section 16.1.
13.5. Termination Pursuant to a Statement of Work. In addition to the
termination rights in this Section 13, either Party may terminate a
Statement of Work at any time during the Term or Termination
Assistance Period as may be expressly stated in such Statement
of Work.
14. INSURANCE.
14.1. Required Insurance. Administrator will obtain from a company or
companies (other than Customer Affiliates ) having a current A.M.
Best Rating of A- VIII or better, and maintain in force during the
Term and for not less than two (2) years thereafter, the following
insurance coverages in the minimum amounts indicated:
TYPE OF COVERAGE REQUIRED AMOUNT
---------------- ---------------
Workers Compensation providing coverage Worker's Compensation - Statutory
to all employees in all states where Limits as mandated under the Worker's
operations will be performed. Compensation laws of the state or
Federal body having jurisdiction over
the location of the project or operation
Employer's Liability (Bodily injury by $______
disease per person, by accident policy
limit, by disease policy limit)
Internet Media Security & Privacy Liability $______ limit providing 3rd party
insurance a/k/a Cyber Risk Insurance liability coverage
Comprehensive General Liability Insurance $______ combined single limit/General
including Broad Form Contractual, Broad Aggregate $______ for bodily injury
Form Property Damage, Personal Injury and property damage liability
and Advertising Liability, Completed
Operation and Products coverage
Medical Payments $______ per person
Comprehensive Auto Liability including $______ combined single limit
Owned, Non-owned and Hired Motor
Vehicles coverage which are operated on
behalf of Administrator pursuant to
Administrator's activities hereunder
Umbrella/Excess Liability on a following $______ each occurrence/general
form basis aggregate
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TYPE OF COVERAGE REQUIRED AMOUNT
---------------- ---------------
$______ each occurrence/general
Professional Liability aggregate
Blanket Fidelity Bond Minimum amount $______
14.2. Evidence of Coverage. Administrator will, upon request, provide
Customer with a Certificate or Certificates of Insurance evidencing
that the above insurance requirements have been satisfied.
Administrator shall deliver to Customer certificates of insurance as
evidence of the insurance and limits stipulated above, with
provisions for not less than thirty (30) days prior written notice to
Customer in the event of material alteration which may be detrimental
to Customer's interest, cancellation or non-renewal of such insurance.
14.3. Additional Insured. Where applicable, the above policies will name
Customer and/or Customer as additional insureds. The Automobile and
General Liability insurance coverage shall be extended to Customer as
additional insured. The coverage so extended will protect the
Customer only against claims arising out of and caused by
Administrator's operation.
14.4. Waiver of Subrogation. The Automobile, General Liability and
Workers' Compensation policies shall provide standard waiver of
subrogation, which prohibits the Administrator's insurer from seeking
redress from Customer, except in jurisdictions, and to the extent
where prohibited by law.
14.5. Non-Limitation of Insurance. It is understood that the above may not
be all the types of insurance or bonds normally carried by vendors in
similar operation or size for their commercial activities. Therefore,
compliance with any of the type and limits of insurance stipulated in
this contract will not in itself be construed to be limitation of
liability of Administrator or its sub-contractors. All insurance
required of Administrator will be primary, and not excess over or
contributing with any insurance maintained Customer.
14.6. Contravention of Insurance. Administrator will not intentionally do,
allow or permit anything to be done for Customer or on or about
Customer's premises that will affect, impair or contravene any
policies of insurance that may be carried by Customer or Customer's
client , against loss of any kind.
15. FORCE MAJEURE
15.1. Force Majeure Event. If and to the extent that a Party's performance
of any of its obligations pursuant to a Statement of Work is
prevented, hindered or delayed directly or indirectly by the other
Party or its agents (except to the extent such Party or agents are
acting in accordance with the other Party's specific instructions),
or fire, flood, earthquake, elements of nature or acts of God, acts
of war, terrorism, riots, civil disorders, rebellions, revolutions,
strikes or any other causes of a similar nature beyond the reasonable
control of such Party (each, a "Force Majeure Event"), and such
non-performance, hindrance or delay could not have been prevented by
the taking of all reasonable precautions by the non-
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performing, hindered or delayed Party, then the non-performing,
hindered or delayed Party will be excused for such nonperformance,
hindrance or delay, as applicable, of those obligations affected
by the Force Majeure Event for as long as such Force Majeure Event
continues and such Party continues to use efforts consistent
with industry standards and practices to recommence performance
whenever and to whatever extent possible without delay, including
through the use of alternate sources, workaround plans or other
means. The Party whose performance is prevented, hindered or
delayed by a Force Majeure Event will immediately inform the other
Party of the occurrence of the Force Majeure Event, describing in
reasonable detail the nature of the Force Majeure Event. The
occurrence of a Force Majeure Event will not excuse, limit or
otherwise affect Administrator's obligation to provide normal
recovery procedures or any other disaster recovery services described
in an applicable Statement of Work.
15.2. No Payment for Unperformed Services. If Administrator fails to
provide any Services in accordance with the applicable Statement of
Work as a result of a Force Majeure Event, Customer will not be
responsible for the payment of fees relating to the Services that
Administrator fails to provide.
15.3. Disaster Recovery Plan And Crisis Management.
(a) Administrator has provided to Customer, prior to the Statement
of Work Execution Date, a copy of the se2 Business Recovery Plan
which plan includes the procedures to be followed by
Administrator with respect to its continued provision of
Services in the event any facility used by Administrator to
provide the Services is unavailable for use by Administrator
because it has been destroyed, significantly damaged, or is
otherwise inoperable as a result of or is the subject of a
disaster (the "DRP") to such an extent that Administrator is
unable to provide any portion of the Services. Administrator or
its parent corporation(s), may modify or change the DRP at any
time; provided, however, that no such change or modification
shall adversely affect Administrator's ability to restore or
resume its provision of Services. Administrator or its parent
corporation(s), shall: (i) test the DRP at least once every
calendar year during the Term, beginning the first calendar year
following the Commencement Date, and promptly advise Customer of
the test results: (ii) consult with Customer regarding the
priority to be given to restoration of Administrator's
performance of the Services during the pendency of any such
disaster or other applicable occurrence; and (iii) implement the
DRP in the event of a disaster or other applicable occurrence.
Administrator agrees to use commercially reasonable efforts to
resume as promptly as practicable functions identified by
Customer as critical.
(b) If "Critical Services," as defined in Exhibit 11, are not
reinstated within seventy-two (72) hours from the event
disabling Administrator's ability to perform the Services or if
the other Services are not reinstated in accordance with the
time frames in such DRP, Customer may terminate the applicable
Statement of Work pursuant to Section 13.2(a) immediately upon
notice to Administrator without regard to the thirty (30) day
notice and cure period or the thirty (30) day notice of
termination period.
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(c) If a Force Majeure Event prevents, hinders or delays performance
of the Services for more than one hundred and twenty (120) hours
or within the time frames in such DRP, Customer may procure such
affected Services from an alternate source.
16. TERMINATION ASSISTANCE
16.1. Termination Assistance Services. The following applies with respect
to Services under each Statement of Work, unless set forth otherwise
in the applicable Statement of Work:
(a) Notices and Duration. At least ninety (90) days before
expiration of the Term of this Agreement or a Statement of Work,
or in the case of a termination of this Agreement or one or more
Statement of Work for any reason other than as described in
Section 16.1(i) below, Customer may request Administrator to
provide Termination Assistance Services. Unless otherwise
specified in writing by Customer, the Termination Assistance
Period shall commence on the date such notice is received by
Administrator and shall continue for twenty-four (24) consecutive
calendar months thereafter, but under no circumstances shall the
Termination Assistance Period extend beyond the end of the Term
of this Agreement or the applicable Statement of Work. Provided,
however, Customer may request Administrator, and Administrator
shall provide, additional services after the Term as reasonably
requested by Customer, at Administrator's then-current time and
materials rates. At any time during the Termination Assistance
Period, Customer may terminate all remaining Services by
providing sixty (60) days written notice.
(b) Fees During Termination Assistance Period. All Services
performed during the Termination Assistance Period shall be
performed at the rates then in effect under the applicable
Statement of Work for Services described in such Statement of
Work and for Termination Assistance Services, Customer shall pay
Administrator's then current time and materials rates. To the
extent Administrator is entitled to receive any minimum fees
under a Statement of Work for the Services, Customer's obligation
to pay such minimum fees shall continue for the duration of the
performance of the Services.
(c) Nature of the Services Provided During Termination Assistance
Period. Administrator shall not be obligated to perform Services
beyond the Term stated in the applicable Statement of Work, as
such Term may be extended in accordance with this Agreement.
Subject to the preceding sentence, in addition to providing such
Services, Administrator shall continue to perform during the
Termination Assistance Period such Services on the same terms and
conditions then in effect, except as the Parties may agree in
accordance with the Change Procedures as part of the Termination
Assistance Services. Services above and beyond Services shall be
provided as the Termination Assistance Services for which
Customer shall pay Administrator at the time and materials rates
set forth in the applicable Statement of Work.
(d) Right to Hire. If Customer terminates this Agreement pursuant to
Sections 13.2(a) and (c), 13.3 or 13.5, upon Customer's written
request, Administrator will promptly provide Customer with
reasonable access to its key personnel
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dedicated exclusively to performing Services for Customer and
information related to Permitted Subcontractors as Customer may
reasonably request so that Customer may extend offers of
engagement to such persons. For any such person hired by
Customer, Administrator shall waive any prohibitions in any
employment or other agreements with such persons that may
restrict such individuals from accepting such offers from
Customer. The foregoing shall not obligate Administrator to
release such persons from any confidentiality obligations or
restrictive covenants for the benefit of any third party, if any.
Administrator will cooperate with Customer to identify whether
any such persons are bound to any restrictive covenants for the
benefit of any third parties, other than confidentiality
obligations.
(e) Termination Assistance. In addition to continuing to provide
Services during the Termination Assistance Period, Administrator
will, upon the request of Customer during the Termination
Assistance Period, meet with Customer personnel to: (i) explain
how the Services are provided: and (ii) provide training and the
Operating Guidelines and the other materials in accordance with
Section 5.5 above, all as may be necessary and reasonably
requested by Customer for Customer to transition to a replacement
provider of such Services. Administrator shall not be obligated
to provide Customer with any other Administrator Materials.
(f) Data Extracts. Administrator will, upon written request of
Customer during the Termination Assistance Period, provide
Customer with an extract of all data relating to the Contracts,
including, Contract Accounting Books and Records, which are then
retained by Administrator in non-proprietary form and format as
may be requested by Customer.
(g) Other Books and Records. Administrator will, upon the request of
Customer during the Termination Assistance Period, make available
all Contract Accounting Books and Records created for Customer in
the course of performing the Services in the form and format
retained by Administrator, including, without limitation,
tendering to Customer, by assigning related agreements or by
promptly providing reasonable access to Customer, the physical
copies of records which may be retained in one or more off-site
storage locations. Such access provided by Administrator shall
include access to and use of appropriate retrieval tools, such as
indices of how and where the books and records are archived, to
the extent available to Administrator.
(h) Further Cooperation. Until the End Date, Administrator will
promptly: (i) answer questions from Customer or Customer's Agents
regarding the Services; and (ii) deliver to Customer any
remaining reports and documentation still in Administrator's
possession.
(i) Obligation to Provide. Subject to Customer's compliance with the
payment obligations in Section 16.1(b) above and Section 16(j)
below, Administrator will provide the Termination Assistance
Services regardless of the reason for expiration or termination
of the applicable Statement of Work. Notwithstanding the
foregoing, to the extent Customer has: (1) "Materially Breached"
(as hereinafter defined) its obligations under Article 5 or
Article 6,
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and such breach is capable of being cured, and (2) Customer fails
to cure such breach in all material respects after notice from
Administrator, Administrator shall not be obligated to provide
any Services, including any Termination Assistance Services
impacted by such material breach or if providing such Services or
Termination Assistance Services would cause Administrator further
losses, provided that Administrator seeks and receives a
temporary restraining order and / or a preliminary restraining
order (or such other order by a Governmental Authority having
jurisdiction over Customer) requiring Customer to cure the
Material Breach, and Customer fails to cure such Material Breach
in all material respects within three (3) calendar days from the
issuance of such order or mandate. Solely for purposes of this
subsection (i), a "Material Breach" of Article 5 or Article 6
means a breach that would: (y) endanger the trade secret status
or confidentiality status of Administrator Materials; or (z)
cause Administrator to breach or remain in breach of its
contractual obligations or statutory duties to one or more third
parties in connection with the Administrator Materials which are
the subject of such breach by Customer. Administrator shall not
be required to post any security in connection with its pursuit
of the request for the order or mandate described above and the
parties will be deemed to have stipulated that immediate and
irreparable injury, loss, and damages will result if the
temporary restraining order and/ or a preliminary restraining
order sought by the moving party is not granted.
(j) Termination by Administrator. The following shall govern if
Administrator terminates this Agreement or a Statement of Work in
accordance with Sections 13.3, 13.4 or 13.5:
(i) Within thirty (30) days from receipt of
Administrator's notice of termination, Customer may
request Administrator to provide Termination Assistance
Services for up to twenty-four (24) months from the
effective date of termination specified in
Administrator's notice of termination. At any time
during the Termination Assistance Period, Customer may
terminate all remaining Services by providing sixty
(60) days written notice.
(ii) If the basis for termination is Customer's failure to
pay any undisputed amounts to Administrator in
accordance with the terms of the Agreement or failure
to comply with Section 12.4 with respect to disputed
amounts, Customer must pay Administrator all amounts
due to Administrator, plus one (1) month of estimated
(as determined in good faith by Administrator) fees and
charges and Pass-Through Expenses (or, if a shorter
period of extension is specified, estimated fees,
charges, and Pass-Through Expenses in respect of the
period by which the Agreement or applicable Statement
of Work is to be extended).
(iii) Administrator's obligation to continue performing any
Services shall be conditioned on Customer paying, in
advance, the full amount reasonably estimated by
Administrator for the following calendar month. Such
first payment to Administrator must be delivered to
Administrator not less than thirty (30) days from
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receipt of Administrator's notice of termination.
Customer must thereafter continue diligently to cure
(if the basis for the termination is curable) and
otherwise to perform under the Agreement and/or
Statement of Work and, if the basis for termination is
Customer's failure to pay any undisputed amounts to
Administrator in accordance with the terms of the
Agreement, shall be required to pay estimated fees,
charges, and Pass-Through Expenses to Administrator for
the Services in advance as Administrator shall
reasonably determine and invoice.
16.2. Exit Rights. With respect to Customer's rights to access the "Source Code
Materials" and the "Other Software List", as those terms are defined
below:
(a) Administrator does hereby grant to Customer a non-exclusive,
non-assignable, license to use, and to the extent the Administrator
Software includes source code, the right to modify and use
Administrator Software specific to performing the Services, as
defined in the applicable Statement of Work which Administrator owns
or has a license to use with the right to sublicense. The foregoing
license shall be for two years or the remainder of the Term following
termination of this Agreement as result of Administrator's
Insolvency. Customer's license to such Administrator Software shall
be limited to performing for itself such Services with respect to
those Contracts for which Administrator is performing such Services
at the time of Administrator's Insolvency. The license granted herein
shall remain subject to the provisions of Article 5 and Article 6. As
to the Administrator Software for which Administrator does not own or
have a license with right to sublicense (including without limitation
third party tools such as compilers and utilities used by
Administrator in connection therewith), a list of such software (the
"Other Software List") will be maintained in escrow pursuant to
Section 16.2 above.
(b) As to the Administrator Software which is known as the "Accenture
Life Insurance Platform", Administrator shall use commercially
reasonable efforts (excluding the payment of additional license fees)
to assist Customer in obtaining from Accenture in the name of
Customer the right for Customer to be able to use the version of such
Administrator Software then used by Administrator for no less than
two (2) years following termination or the remaining period in the
Term, whichever is greater, of this Agreement as a result of
Administrator's Insolvency for Customer to perform for itself such
Services with respect to those Contracts for which Administrator is
performing such Services at the time of Administrator's Insolvency.
To the extent Customer requests, Administrator shall use commercially
reasonable efforts to have Accenture migrate the Contracts from the
Accenture Life Insurance Platform to a platform designated by
Customer, at Customer's expense. In connection with such use of the
Accenture Life Insurance Platform, Customer, and not Administrator,
shall be responsible for any and all obligations under such license.
(c) Administrator shall maintain in escrow, pursuant to an escrow
arrangement sponsored by Administrator (at Administrator's expense)
with a mutually acceptable escrow agent, and participation or
beneficiary agreements
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consistent herewith signed by Customer, no later than sixty (60) days
following the date Contracts are first administered by Administrator,
the Other Software List, and a copy, as described in the next
sentence, of the Software as to which Administrator owns or has a
license to use with right of sublicense, in the form used by
Administrator from time to time to provide Services, and the source
code from which such executable copy was compiled (except with respect
to any third party Software for which Administrator does not have
source code). The escrow shall include Software source code (in the
case of Software licensed by Administrator, to the extent possessed by
Administrator), the Other Software List, the hardware used by
Administrator configurations thereof and any other components and
other information that reasonably skilled programmers and other
technicians would need to build and utilize the same applications in
the same manner as Administrator in its provision of Services to
Customer. All of the foregoing components (including the object code
and the Other Software List) of the escrow shall be updated in escrow
on each major release cycle and in any event not less frequently than
once every twelve (12) months. Customer will bear all costs and
expenses associated with its participation in the escrow arrangement
to be established by Administrator pursuant to this Section.
(d) Customer may access, and the above-referenced source code escrow
agreement shall provide for, on usual and customary terms of such a
source code escrow agreement, the Source Code Materials and the Other
Software List only on Administrator's Insolvency.
(e) Administrator shall: (a) update and deliver the Source Code Materials
and Other Software List in strict compliance with the terms and
conditions of this Agreement and of the Escrow Agreement, (b) take
commercially reasonable efforts to ensure that the media on which the
Source Code Materials and Other Software List are delivered to the
Escrow Agent will be free from defects in workmanship and materials
and viruses and (c) take commercially reasonable efforts to ensure
that at the time of each delivery, the Source Code Materials and Other
Software List provided to the Escrow Agent will constitute a complete,
correct and accurate set of the Other Software List and Source Code
Materials for the Administrator Software or applicable Release, as
applicable, which are the only materials required to render the
Administrator Software readable and usable in the event of the
occurrence of a Release Condition.
(f) Prior to each delivery of the Source Code Materials to the Escrow
Agent, Administrator will conspicuously label for identification each
magnetic tape, disk or other tangible media upon which the Source Code
Materials are written or stored. In addition, upon each such delivery,
Administrator will provide an itemized list of the Source Code
Materials contained in the delivery.
(g) At Customer's expense, from time to time, Customer may direct that
the Source Code Materials be reviewed and tested for completeness and
accuracy. If such review or test indicates that the Source Code
Materials, including any component thereof, are incomplete or
inaccurate, then upon
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notice from Customer or its designee, Administrator will promptly
redeliver the Source Code Materials in accordance with the terms and
conditions of this Agreement and of the Escrow Agreement.
(h) The parties agree that the Source Code Materials and Administrator
Software provided hereunder is intellectual property, as defined in
section 101 of title 11, United States Code (the "Bankruptcy Code")
and that this Agreement is governed by section 365(n) of the
Bankruptcy Code. Administrator acknowledges that if it, as a debtor in
possession or a trustee in bankruptcy in a case under the Bankruptcy
Code, rejects this Agreement, then Customer may elect to retain its
rights under this Agreement as provided in section 365(n) of the
Bankruptcy Code. Administrator agrees and acknowledges that
enforcement by Customer of any rights under section 365(n) of the
Bankruptcy Code in connection with this Agreement shall not violate
the automatic stay of section 362 of the Bankruptcy Code and waives
any right to object on such basis. Upon rejection of this Agreement by
Administrator or the bankruptcy trustee in a bankruptcy case under the
Bankruptcy Code and written request of Customer to Administrator or
the bankruptcy trustee pursuant to section 365(n) of the Bankruptcy
Code, Administrator or such bankruptcy trustee shall: (a) provide
Customer the Administrator Software, the Source Code Materials and any
intellectual property otherwise required to be provided to Customer
under this Agreement held by Administrator or such bankruptcy trustee;
and (b) not interfere with the rights of Customer provided in this
Agreement to the Administrator Software, the Source Code Materials and
any intellectual property provided under such agreements, including
any right to obtain the Administrator Software, the Source Code
Materials and any such intellectual property from another entity, but
only where such use by Customer is in strict compliance with this
Agreement.
(i) If such Administrator Software is software to which Administrator has
only a license, the license created by this Section shall not extend
beyond the remaining term of the applicable license held by
Administrator.
16.3. Termination of License to Customer Software. Upon the End Date, with
respect to any terminated or expired Statement of Work, any software
license rights granted to Administrator by Customer in the applicable
Statement of Work will immediately terminate and Administrator will
promptly (a) deliver to Customer, at no cost to Customer, a current copy
of all such software, if any, in the form in use as of the End Date, and
(b) comply with the provisions of Section 6.7 with respect to all other
copies of all such software in Administrator's possession.
17. GENERAL.
17.1. Divestiture Rights. "Divested Entity" means any Affiliate of Customer
which is divested, spun-off or otherwise ceases to meet the definition of
Affiliate as a result of a disposition or sale after the Effective Date.
Customer shall notify Administrator in writing within ten (10) days of an
Affiliate of Customer whose Contracts are governed by this Agreement
becoming an Divested Entity. If an Affiliate becomes a Divested Entity,
upon written notification to Administrator:
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(a) Administrator will, at Customer's election (in Customer's sole
discretion), allow such Divested Entity: (i) for a period not to
exceed twenty four (24) months from the date an entity becomes a
Divested Entity to continue to receive the license and obtain the
Services hereunder subject to and in accordance with the terms and
conditions of the Agreement and the applicable Schedule; and/or (ii)
to obtain the license or Services under a separate agreement, on the
same terms as contained in this Agreement, in each case commencing on
the date an entity becomes a Divested Entity, in any event,
conditioned on the Divested Entity agreeing in writing with
Administrator to be bound to the terms and conditions of this
Agreement.
(b) Administrator will, at Customer's election (in Customer's sole
discretion), allow the Divested Entity to terminate the Schedule
(notwithstanding anything to the contrary set forth in this Agreement
and/or in the Schedule) without such Divested Entity being obligated
to pay any early termination fee under this Agreement, but without
relieving Customer of the obligation to pay such early termination fee
or the obligation to continue paying any fees due and payable, as may
be stated in this Agreement as of the applicable date the entity
becomes a Divested Entity.
(c) If under (a) or (b) above, the Divested Entity seeks to terminate
this Agreement as it applies to it, Administrator will provide
Termination Assistance on the terms stated in Article 16 above.
(d) As a condition to Administrator performing any of the obligations
under this Section, Customer or the Divested Entity shall have agreed
in writing to compensate Administrator, at Administrator's
then-current time and materials rates for the Services to be
reasonably rendered in connection with the separation for the Divested
Entity, for the additional services necessary for Administrator to
administer the Contracts of the Divested Entity on a segregated basis,
all as to be stated in a written project plan executed by Customer,
the Divested Entity and Administrator in accordance with the Change
Procedures. Such mutually agreed project plan will contain the
additional activities to be performed by Administrator in connection
with the segregation associated with the Divested Entity.
17.2. Separation.
(a) Upon the written request of Customer or an Affiliate, without
charging any additional fees (except to the extent permitted under
this Agreement), Administrator will enter into separate agreements
with Affiliates of Customer, under the same terms and conditions,
including the same rates, as this Agreement (each, an "Affiliate
Agreement"). The license and Services provided by Administrator to
Customer and/or an Affiliate under an Affiliate Agreement shall be
provided uninterrupted to Customer and/or its Affiliates. Any fees
paid and/or payable pursuant to each Affiliate Agreement shall be
aggregated with the fees paid and/or payable by Customer under this
Agreement for purposes of computing any discounts, credits or
otherwise, if and as applicable to Customer and its Affiliates under
this Agreement.
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(b) Upon the execution of an Affiliate Agreement, Customer shall have no
further liability or obligations in connection with the license or
Services transferred to the Affiliate under such Affiliate Agreement,
including, without limitation, any payment obligations, but excluding
the obligation of Customer to pay fees payable under this Agreement
which may have accrued prior to the effective date of the Affiliate
Agreement.
(c) As a condition to Administrator performing any of the obligations
under this Section, Customer or the Affiliate shall have agreed in
writing to compensate Administrator, at Administrator's then-current
time and materials rates for the Services to be reasonably rendered in
connection with the Affiliate Agreement, for the additional services
necessary for Administrator to administer the Contracts of the
Affiliate on a segregated basis, all as to be stated in a written
project plan executed by Customer, the Affiliate and Administrator in
accordance with the Change Procedures. Such mutually agreed project
plan will contain the additional activities to be performed by
Administrator in connection with the segregation associated with the
Affiliate added under the Affiliate Agreement.
17.3. No Publicity. Except in the course of performing the Services,
Administrator will not use the name, trademark, service xxxx, trade name,
logo or other commercial or product designations of Customer in any way,
in print or electronic format or on a web or internet site, without the
prior written consent of Customer in each instance, which may be withheld
regardless of Section 17.19
17.4. No Waiver; Remedies. A Party may not waive a right or remedy except
pursuant to a writing executed by such Party. No failure or delay in
exercising any right or remedy or requiring the satisfaction of any
condition under this Agreement, and no course of dealing between the
Parties, operates as a waiver or estoppel of any right, remedy or
condition. A waiver made in writing on one occasion is effective only in
that instance and only for the purpose that it is given and is not to be
construed as a waiver on any future occasion. No single or partial
exercise of any right or remedy under this Agreement precludes the
simultaneous or subsequent exercise of any other right or remedy. The
rights and remedies of the Parties set forth in this Agreement are not
exclusive of, but are cumulative to, any rights or remedies now or
subsequently existing at law, in equity or by statute.
17.5. Certain Acknowledgments. The Parties acknowledge and agree that they have
mutually negotiated the terms and conditions of this Agreement and each
Statement of Work and that any provision contained herein or therein with
respect to which an issue of interpretation or construction arises shall
not be construed to the detriment of the drafter on the basis that such
Party or its professional advisor was the drafter. THE PARTIES FURTHER
ACKNOWLEDGE THAT AN AUTHORIZED OFFICIAL OF EACH HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND AGREES ON BEHALF OF THE PARTY TO BIND THE PARTY BY ITS
TERMS.
17.6. Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid, illegal or unenforceable under any
applicable statute or rule of law, such provision is to that extent deemed
omitted, and the balance of
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the Agreement remains in full force if the essential terms and conditions
of this Agreement for each Party remain valid, binding and enforceable.
17.7. Assignment.
(a) Administrator may not assign any of its rights, except as otherwise
permitted herein, or delegate any performance under this Agreement,
voluntarily or involuntarily, whether by merger, consolidation,
dissolution, change of control, operation of law or any other manner,
except with the prior written consent of Customer. Any other
purported assignment by Administrator of rights or delegation of
performance without Customer's prior written consent is void, and
Customer is entitled to terminate this Agreement effective as of the
date Customer obtains knowledge of the purported assignment or
delegation without prejudice to Customer's claims for damages.
(b) Customer may not assign any of its rights, except with the prior
written consent of Administrator, unless to Customer's Affiliate in
connection with a corporate restructuring, so long as such assignee
Affiliate is as financially sound as Customer as determined by such
Affiliate having an a financial rating by a nationally recognized
credit rating agency, such as AM BEST, Moodys, or S&P. which is
equivalent to or better than Customer as the time of assignment, or
Customer otherwise remains liable for the Customer's obligations
hereunder in the case of an insolvency of such assignee Affiliate.
Any purported assignment by Customer of rights without
Administrator's prior written consent is void, and Administrator is
entitled to terminate this Agreement effective as of the date
Administrator obtains knowledge of the purported assignment without
prejudice to Administrator's claims for damages.
(c) This Agreement is binding upon the Parties' respective successors
and permitted assigns.
17.8. Governing Law. The laws of the State of New York, without giving effect
to its choice of law principles, govern all matters arising under or
relating to this Agreement and all of the transactions it contemplates,
including, without limitation, its validity, interpretation, construction,
performance and enforcement. The Parties further agree that the Uniform
Computer Information Transactions Act (UCITA) does not apply to this
Agreement.
17.9. Forum. Each Party irrevocably agrees that any legal action, suit or
proceeding brought by it in any way arising out of this Agreement must be
brought solely and exclusively in the United States District Court for the
Southern District of New York or, in the state courts of the State of New
York if the legal action, suit or proceeding lacks the subject matter
jurisdiction to be brought in such District Court, and irrevocably accepts
and submits to the sole and exclusive in personam jurisdiction of each of
the aforesaid courts, generally and unconditionally with respect to any
action, suit or proceeding brought by it or against it by the other Party.
Notwithstanding the foregoing, either party may pursue the relief
described in Section 16.1(i) in any United States District Court in the
State of Kansas, in which case, notwithstanding Section 17.8 above, the
laws
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of the State of Kansas. without giving effect to its choice of law
principles, shall govern such proceedings.
17.10. Waiver of Trial by Jury. EACH PARTY, TO THE EXTENT PERMITTED BY LAW,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS IT CONTEMPLATES. EACH PARTY ACKNOWLEDGES
THAT IT HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL.
17.11. Notices.
(a) Each Party will deliver any notices required or desired pursuant to
this Agreement in writing. Notices are deemed given: (i) if by hand
delivery, upon receipt thereof; (ii) if mailed, five (5) days after
deposit in the U.S. mails, postage prepaid, certified mail, return
receipt requested; or (iii) if sent via overnight courier upon
receipt. Customer will address all notices to the Administrator at
the address at 0000 XX 0xx Xxxxxx, Xxxxxx, Xxxxxx 00000-0000 to the
attention of its General Counsel. Administrator will address all
notices to Customer at the addresses indicated below, to the
attention of its General Counsel. (In the case of notice to an
Affiliate of Customer who may have executed a Joinder Agreement, then
at the addresses indicated in the Joinder Agreement, to the attention
of its General Counsel.) Either Party may change its address by
giving written notice to the other Party in accordance with the terms
of this paragraph.
Customer Addresses for Notice:
SunAmerica Annuity and Life Assurance Company
Attn: General Counsel
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
American General Life Assurance Company of Delaware
Attn: General Counsel
0000 Xxxxx Xxxxxxx, XX00
Xxxxxxx, Xxxxx 00000
The United States Life Insurance Company in the City of New York
Attn: General Counsel
0000 Xxxxx Xxxxxxx, XX00
Xxxxxxx, Xxxxx 00000
(b) The Parties acknowledge that only certain individuals are authorized
to act on their behalf and on behalf of one or more of their
respective Affiliates. Customer shall notify Administrator in writing
of the name and title of each officer of Customer, as well as the
name and title of each individual to act on behalf of each Customer
Designee, and the limitations on each such individual's authority, to
act on behalf of Customer. Administrator shall notify Customer in
writing, on behalf of Administrator and each relevant Affiliate of
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Administrator, the name and title of each authorized representative
of Administrator and its Affiliates and the limitations on each such
individual's authority to act on behalf of Administrator.
17.12. Survival. All provisions hereof relating to proprietary rights,
confidentiality and non-disclosure, indemnification and limitation of
liability survive the completion of the Services or any earlier
termination, expiration or rescission of this Agreement.
17.13. EEO Requirements. To the extent applicable, the equal employment
opportunity and affirmative action requirements set forth in 41 C.F.R.
Part 60-1.4(a) (women and minorities), 41 C.F.R. Part 60-250.5(a)
(covered veterans) and 41 C.F.R. Part 60-741.5(a) (individuals with
disabilities) are hereby incorporated by reference into this Agreement.
17.14. Non-Solicitation. The Parties agree that, unless otherwise agreed to by
the Parties in writing, during the term of this Agreement and for a
period of one (1) year after the expiration or termination of this
Agreement, neither Party shall directly or indirectly solicit for hire as
an employee or engagement as an independent contractor an employee of the
other Party who is or was, within one year, involved with the provision
of the Services or receipt of the benefits thereof provided under this
Agreement; provided that this prohibition shall not apply in respect of:
(a) any such employee who responds to general advertisements or
solicitations or recruitment searches not specifically targeted by the
Party or any of its Affiliates at any of the other Party's employees or
who is referred by search firms or employment agencies or similar
entities so long as such entities have not been instructed by the Party
or any of its Affiliates or representatives to solicit such employees;
(b) who approaches the Party of his or her own initiative, without any
direct or indirect solicitation by the other Party or any of its
Affiliates or search firms, employment agencies or similar entities
engaged by them; (c) who has been given or has given notice of
termination or resignation to the other Party prior to commencement of
employment discussions between the Party and such specific employee; or
(d) with whom the Party or any of its Affiliates are currently having
employment discussions prior to the date of this Agreement, or any hires
made by the Party pursuant to any of the foregoing. The Parties agree
that, in the event of any violation of this provision, the liquidated
damages to be paid by the breaching Party, as its sole obligation, shall
be fifty percent (50%) of the individual's annual base salary or one
hundred twenty-five thousand dollars ($_______), whichever is less.
17.15. Services Provided Prior to Effective Date. All services provided by
Administrator which were rendered prior to the Effective Date (including
services provided under the Letter Agreement) in anticipation of the
Parties executing this Agreement shall be governed solely by this
Agreement.
17.16. Legal Fees. In any litigation or proceeding between the Parties hereto
arising out of or in connection with this Agreement, the prevailing Party
is entitled to recover its costs, legal fees and expenses (including
allocated costs of in-house staff counsel).
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17.17. Headings. The section headings are used in this Agreement for reference
and convenience only and do not affect this Agreement's construction or
interpretation.
17.18. Governing Order; Subsequent Modifications. In the event of a conflict
between:
(a) this Agreement and any Exhibit to this Agreement, the terms of the
Exhibit shall prevail;
(b) this Agreement and a Statement of Work, the terms of the Statement
of Work shall prevail;
(c) this Agreement, a Statement of Work and an Attachment to a
Statement of Work, the Statement of Work will prevail (as between
the Statement of Work and any Attachment to the Statement of Work,
the Attachment will prevail specifically and only with respect to
the additional or different terms that are included in such
Attachment); and
(d) this Agreement, a Statement of Work, an Attachment to a Statement
of Work and the Operating Guidelines, the Operating Guidelines will
prevail.
17.19. Construction. In this Agreement and the Statement of Work, Exhibits and
Attachments to this Agreement:
(a) references to any law, legislative act, rule or regulation mean
references to such law, legislative act, rule or regulation in
changed or supplemented form or to a newly adopted law, legislative
act, rule or regulation replacing a previous law, legislative act,
rule or regulation;
(b) references to and mentions of the word "including" or "include" or
the phrase "e.g." will mean "including, without limitation" or
"include, without limitation;"
(c) unless otherwise specifically provided: (i) in the computation of a
period of time from a specified date to a later specified date, the
word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding," (ii) the word "dollar" and the
symbol "$" refer to United States Dollars, and (iii) the word "day"
means calendar day unless otherwise specified; and
(d) unless otherwise specifically set forth in this Agreement, all
consents and approvals to be given by either Party under this
Agreement shall not be unreasonably withheld, delayed, denied or
conditioned and each Party shall make only reasonable requests under
this Agreement.
17.20. Counterparts. The Parties may execute this Agreement in any number of
duplicate originals and in multiple counterparts, each of which
constitutes an original, and all of which, collectively, constitute only
one agreement. The signatures of all of the Parties need not appear on
the same counterpart, and delivery of an executed counterpart signature
page by facsimile is as effective as executing and delivering this
Agreement in the presence of the other Party to this Agreement. This
Agreement is effective upon delivery of one executed
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counterpart from each Party to the other Party. Any Party delivering an
executed counterpart of this Agreement by facsimile will also deliver a
manually executed counterpart of this Agreement as soon as reasonably
practicable following transmittal by facsimile, but the failure to do so
does not affect the validity, enforceability or binding effect of this
Agreement.
17.21. Third Party Beneficiaries. Each Party intends that this Agreement shall
not benefit, or create any right or cause of action in or on behalf of,
any person or entity, including without limitation any Governmental
Authority, Permitted Subcontractor and Customer Designee.
17.22. Entire Agreement. This Agreement, together with the exhibits, schedules,
attachments and Statement of Work, constitutes the entire agreement
between the Parties in connection with the subject matter hereof and
supersedes all prior and contemporaneous agreements (including the Letter
Agreement), understandings, negotiations and discussions, whether oral or
written, of the Parties, and there are no warranties, representations
and/or agreements between the Parties in connection with the subject
matter hereof except as set forth in this Agreement. The Parties also
understand, acknowledge and agree that, unless otherwise specified in a
written instrument signed by an officer of each Party, no additional
terms or changes to these terms are valid or binding on the Parties, even
if such additional terms or changes contain provisions to the contrary.
Additionally, the Parties specifically agree that any language or
provisions contained on Administrator's web site, statements of work or
other Service documents, or contained in any "shrinkwrap" or "clickwrap"
provided with a Work Product is of no force and effect.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
SE/2/, INC. SUNAMERICA ANNUITY AND LIFE ASSURANCE COMPANY
By: _________________________________ By: __________________________________
Print Name: __________________________ Print Name: ___________________________
Title: ________________________________ Title: ________________________________
Date: ________________________________ Date: _________________________________
AMERICAN GENERAL LIFE INSURANCE COMPANY OF DELAWARE THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
By: _________________________________ By: __________________________________
Print Name: __________________________ Print Name: ___________________________
Title: ________________________________ Title: ________________________________
Date: ________________________________ Date: _________________________________
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APPENDIX A
GLOSSARY
"Account Guidelines" has the meaning specified in Section 1.3(c)(i) of the
Agreement.
"Administrator" has the meaning specified in the preamble of the Agreement.
"Administrator Competitor" means any of the entities listed in Exhibit 10.
"Administrator Indemnitees" has the meaning specified in Section 9.2 of the
Agreement.
"Administrator Materials" means: (1) the Administrator Software; (2)
Administrator Confidential Information; (3) materials (including related
customizations, modifications and training materials) that reflect or
incorporate ideas from Administrator Software or Administrator's Confidential
Information; and (4) all data processing techniques, business and policy
administration policies, practices, procedures, processes, techniques and work
flows and ideas and know-how contained or reflected in the foregoing developed
by Administrator prior to the Effective Date or independently from this
Agreement.
"Administrator Personnel" means the employees, agents, subcontractors and
representatives of Administrator performing Services under this Agreement.
"Administrator Service Location(s)" means the facility or facilities owned or
operated by Administrator and from which the Services are provided.
"Administrator Software" means depending on the context, a single System or
collectively all the Systems owned or licensed directly from third parties by
Administrator or any of its Affiliates and used from time to time by
Administrator to perform the Services herein, including all modifications,
enhancements and derivative works thereof, whenever made.
"Affiliate" means a person or entity that directly, or indirectly through one or
more intermediaries, Controls, is Controlled by or is under common Control with
another person or entity or beneficially owns or has the power to vote or direct
the vote of at least a majority of the voting stock (or of any form of voting
equity interest in the case of a person that is not a corporation) of such other
entity
"Agreement" has the meaning specified in the preamble of the Agreement.
"Applicable Law" means all laws, common laws, rules, regulations, codes,
statutes, judgments, injunctions, orders, agreements, decrees, policies and
other requirements of all Governmental Authorities applicable to the person,
place and situation in question.
"Applicable TPA Laws" has the meaning specified in Section 1.6 of the Agreement.
"Baseline Audit Support" has the meaning specified in Section 3.11 of the
Agreement.
"Billing Party" has the meaning specified in Section 12.3(b) of this Agreement.
"Business Days" means any day other than a Saturday, Sunday, that the New York
Stock Exchange is open for trading.
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"Change Procedures" means the change control procedures set forth in Exhibit 7.
"Claim" has the meaning specified in Section 9.1 of the Agreement.
"Claims Notice" has the meaning specified in Section 9.5 of the Agreement.
"Commencement Date" means the date set forth in the applicable Transition Plan
on which Administrator assumes full responsibility for delivery of the Contract
administrative Services described in the applicable Statement of Work.
"Competitive Developments" has the meaning specified in Section 5.3(e) of the
Agreement.
"Confidential Information" has the meaning specified in Sections 6.1 and 6.3 of
the Agreement.
"Consumer Confidential Information" means all individually identifiable
information about a consumer, in connection with a Contract issued, reinsured,
or processed by Customer or its Affiliates, or in connection with the
application, issuance or administration of such Contracts, and includes
Underwriting Information about such consumers. A "consumer" is a Contract Holder
as well as prospective, current and former employees and contractors of Customer
or its Affiliates and shall also include personally identifiable financial
information, or the equivalent, as defined by Title V of the Xxxxx-Xxxxx-Xxxxxx
Act ("GLB"), as amended from time to time, or any other similar Applicable Law,
including applicable state law equivalents, or any other similar Applicable Law,
including applicable state law equivalents, pertaining to any past, current, or
future Contract Holder in respect of any Contract or applicant therefor, or any
other person, including former or current employees or contractors of
Administrator and its Affiliates.
"Contract" means those annuity contracts identified in the applicable
Statement of Work, together with all other terms and conditions of such annuity
contracts, including the related prospectuses.
"Contract Accounting Books and Records" has the meaning set forth in Section 3.1
of this Agreement.
"Contract Holder" means a prospective, current or former insured or annuitant
and includes the owner of a Contract, applicant for a Contract, the person who
is insured under a Contract, the beneficiary under a Contract, or representative
of any of the foregoing.
"Contract Holder Data" means all data relating to the rights and obligations of
Customer and the Contract Holder under the Contracts which is required to be
maintained, processed or generated by Administrator in connection with
administration of the Contracts.
"Control" (including, with correlative meanings, the terms "Controlled by" and
"under common Control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by contract or otherwise.
"Customer" has the meaning specified in the preamble to the Agreement.
"Customer Client" means a person or entity with which Customer or an Affiliate
of Customer has a business relationship for which Customer or such Affiliate has
assumed responsibility to
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provide services and which Customer or such Affiliate will have Administrator
provide a subset of the Services under the Agreement.
"Customer Competitor" means an entity which, either itself or has an Affiliate
which, issues life insurance or annuities or provides administrative services
similar to those provided by Customer.
"Customer Content" means any of Customer's, its Affiliates' or Customer
Customer's unique materials (1) relating solely to Customer's or its Affiliates'
business and (2) provided by Customer or a Customer Designee, excluding Consumer
Confidential Information, but including, without limitation, any names,
trademarks, images, photographs, illustration, data, confidential strategic
business information, future marketing and business plans, other text unique to
Customer's or its Affiliates', business and Contract administration policies,
practices, procedures, processes, techniques and work flows and ideas and
know-how contained or reflected in the foregoing, product content, and business
requirements relating to those business processes which are the subject of this
Agreement, as well as Systems which may be owned, acquired or licensed by
Customer, other than Customer Software.
"Customer Designee" means a person (including that person's employees, agents,
contractors and suppliers) who is identified by Customer as a person acting on
behalf of or for the benefit of Customer relating to the Services.
"Customer Information" means all Customer Confidential Information, Consumer
Confidential Information, Customer Content, Customer Software, Contract Holder
Data, Contract Account Books and Records and Underwriting Information.
"Customer Indemnitees" has the meaning specified in Section 9.1 of the
Agreement.
"Customer Software" means any System owned or licensed by Customer or its
Affiliates (including any software modules, modifications and enhancements
thereto) which is listed in Exhibit 5, and for which Administrator has been
authorized by Customer or its Affiliates to utilize in performing the Services
hereunder, but excluding any Administrator Software which Customer or its
Affiliates have licensed.
"Default Performance Standards" has the meaning set forth in Section 1.4(d).
"Disputing Party" has the meaning specified in Section 12.3(b) of this
Agreement.
"DRP" has the meaning specified in Section 15.3(a) of the Agreement.
"Early Termination Fee(s)" has the meaning specified in Section 13.2(b) of the
Agreement.
"Effective Date" has the meaning specified in the preamble to the Agreement.
"End Date" means the later of (1) the expiration or termination of the
applicable Statement of Work and (2) the last day of the Termination Assistance
Period.
"Extraordinary Change" has the meaning specified in Section 2.5(g) of the
Agreement.
"Force Majeure Event" has the meaning specified in Section 15.1 of the
Agreement.
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"Governmental Authority" means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision, any governmental or quasi-governmental authority of any
nature (including any division, department, agency, commission, instrumentality,
official, organization, unit, body or entity), and any non-governmental
organization which has promulgated compliance standards applicable to the
Services to be provided hereunder.
"Indemnified Damages" means all liabilities, losses and damages incurred,
expenses reasonably incurred by an Indemnified Party (including reasonable fees
of attorneys and other professional advisors and of expert witnesses incurred
prior to the Indemnifying Party assuming the defense of a claim in accordance
with this Agreement) and final judgments (regardless of how such monetary
damages payable to a third party are characterized as part of such judgments,
but subject to the limitations and exclusions in this Agreement), settlements
and court costs.
"Indemnified Party" has the meaning specified in Section 9.5(a) of the
Agreement.
"Indemnifying Party" has the meaning specified in Section 9.5(a) of the
Agreement.
"Insolvency" means an event which results in a Party: (1) ceasing to carry on
business as a going concern, making a general assignment for the benefit of
creditors, filing a voluntary petition in bankruptcy petitioning for or
instituting a liquidation under any bankruptcy, insolvency, incorporation or
other applicable laws; or (2) having a petition in bankruptcy or any other case
or proceeding in bankruptcy involving liquidation, dissolution or winding-up is
filed, commenced or instituted against the other and remains undismissed for a
period of thirty (30) calendar days; or (3) having a receiver or trustee is
appointed for all or substantially all of the property and assets of the other.
"Jointly Developed Materials" has the meaning specified in Section 5.3(a) of the
Agreement.
"Letter Agreement" means that certain letter agreement between the Parties dated
August 4, 2010.
"Losses" means any and all damages, fines, penalties, deficiencies, losses,
liabilities (including settlements and judgments) and expenses (including
interest, court costs, reasonable fees and expenses of attorneys, accountants
and other experts and professionals or other reasonable fees and expenses of
litigation or other proceedings or of any claim, default or assessment).
"Malicious Code" means (1) any code, program, or sub-program whose knowing or
intended purpose is to damage or interfere with the operation of the computer
system containing the code, program or sub-program, or to halt, disable or
interfere with the operation of the software, code, program, or sub-program,
itself, or (2) any device, method, or token that permits any person to
circumvent the normal security of the software or the system containing the
code.
"Net Loss" has the meaning specified in Section 9.6(c) of the Agreement.
"Nonpublic Information" means all designs, concepts, ideas, requirements,
specifications, calculations, drawings, diagrams, maps, charts, software,
network structures, configurations, interfaces, components, processes,
practices, policies, procedures, protocols, methodologies, reports, lists,
analyses, compilations, data, studies, and other similar materials regarding the
property, products, services, customers, or the existing or planned businesses
or operations or
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any parts thereof of a Party, any one or more of its Affiliates, disclosed by
the Disclosing Party to the Recipient Party in connection with this Agreement or
any Statement of Work by whatever means, including orally, visually,
electronically, or by physical delivery, regardless whether specifically
identified as "confidential" but which the Recipient Party knows or reasonably
ought to know is confidential; however, in the case of Nonpublic Information
orally or visually disclosed by Administrator, Administrator will, within ten
(10) days of the date of disclosure confirm that such information is Nonpublic
Information in writing.
"Normal Change" has the meaning specified in Section 2.5(g) of the Agreement.
"Operating Guidelines" means the work flows and procedures used by Administrator
to perform the Services, as defined in the applicable Statement of Work, in
conformity with: (i) Applicable Law as interpreted by Customer in accordance
with the terms of this Agreement; and (ii) those procedures and interpretations
of Applicable Law specific to Customer as may be reasonably specified in writing
by Customer in accordance with this Agreement and subsequently revised in
accordance with this Agreement.
"Other Software List" has the meaning specified in Section 16.2(c) of the
Agreement.
"Party" or "Parties" means Customer and Administrator, as signatories to this
Agreement.
"Pass-Through Expenses" means the out-of-pocket expenses identified as
'Pass-through Expenses' in Exhibit 6, which amounts are passed through at
Administrator's cost without any administrative or other markup.
"Payment Threshold Amount" has the meaning specified in Section 12.4(d)
of this Agreement.
"Permitted Subcontractors" means subcontractors that Administrator uses to
provide the Services.
"Person" whether capitalized or not, includes an individual or any corporation,
joint stock company, limited liability company, association, partnership
(general or limited), joint venture, financial institution, firm, organization
or unincorporated organization, individual, business or other trust or any other
entity, or organization of any kind or character, including a Governmental
Authority.
"Residuals" has the meaning specified in Section 6.6(c) of the Agreement.
"Restricted Activities" means any activity which would require or permit: (1) a
Permitted Subcontractor's employees to: (a) have direct phone, face-to-face,
email or other real-time communications with Contract Holders, Customer clients,
or Customer personnel in connection with the Services, other than by means of
"pre-formatted responses" (as defined below); or (b) access, use or transmit to
any local storage device or print, any Consumer Confidential Information; or (2)
a Permitted Subcontractor to perform services directly relating to this
Agreement for which Administrator would reasonably likely pay such person five
hundred thousand dollars ($_______) or more annually. "Pre-formatted responses"
means those responses which have been approved by Customer and are automatically
generated by Administrator Software based on the following inputs and any other
inputs that have been approved by Customer: acknowledgements of receipt,
completion of a task, request for additional information, or reminder, whether
such acknowledgement is sent via email or other correspondence.
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"Sales Tax" and "Sales Taxes" have the meaning specified in Section 7.8(a) of
the Agreement.
"Security Incident" has the meaning specified in Section 6.8 of the Agreement.
"Security Regulations" has the meaning specified in Section 4.3 of the
Agreement.
"Statement of Work" means any schedule attached to and made a part of this
Agreement describing the specific Services to be provided to Customer and any
other terms and conditions applicable to the performance of such Services.
"Services" means, collectively, the Administrator's services, as set forth in
this Agreement and in the Statements of Work, the Transition Services, and the
Termination Assistance Services.
"Service Level" or "Service Levels" has the meaning specified in Section 1.4(a)
of the Agreement.
"Service Level Credit" has the meaning specified in Section 1.4(a) of the
Agreement.
"Statement of Work" has the meaning specified in the recitals to the Agreement.
"System" is a collective reference to the hardware and computer software systems
which may be the property of Administrator, Customer or a third party. A
"System" includes all hardware, peripheral devices, software systems, databases
and materials related thereto, which may include, without limitation,
documentation, file layouts, firmware, computer software languages, utilities,
flow charts, logic diagrams, source codes, object codes, and materials of any
type whatsoever (tangible or intangible and machine or human readable) which
incorporate or reflect the design, specifications, or workings of such programs
and any changes, additions or modifications thereto.
"Term" has the meaning specified in Section 13.1 of the Agreement.
"Termination Assistance Period" means a period of time designated by Customer
within thirty (30) days of the notice of termination of the applicable Statement
of Work, commencing on the date such notice of termination is delivered to
Administrator if Customer is the terminating Party, or to Customer, if
Administrator is the terminating Party, for up to twenty-four (24) months after
the delivery of notice as referred to above, during which Administrator will
provide the Termination Assistance Services in accordance with Section 16.
"Termination Assistance Services" means (1) the Services (and any replacements
thereof or substitutions therefore) other than the Services as may be described
in the applicable Statement of Work, to the extent Customer requests in writing
such additional Services during the Termination Assistance Period, (2)
Administrator's reasonable cooperation with Customer and/or any successor
service provider designated by Customer to facilitate the transfer of the
Services under the applicable Statement of Work to Customer or such other
service provider, and (3) any additional or new services requested by Customer
in writing to facilitate the transfer of the Services under the applicable
Statement of Work to Customer or such other service provider.
"Third Party Indemnitor" has the meaning specified in Section 9.5(b) of the
Agreement.
"Threshold Amount" has the meaning specified in Section 12.4(b) of the
Agreement.
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"Transition Services" has the meaning specified in Section 1.2(c)(i) of the
Agreement.
"Transition Plan" means a plan setting for the respective obligations of
Administrator, Customer, Customer Designees and other third parties to
transition the administrative services to be provided hereunder from Customer or
a third party service provider, to Administrator, as such plan is approved in
writing (or via email) by the Project Managers for Administrator and Customer, a
summary of which, as of the Effective Date, is attached to the Statement of Work
for Transition Services.
"Type A Variance" has the meaning specified in Section 9.6(b) of the Agreement.
"Type A Net Loss" has the meaning specified in Section 9.6(c) of the Agreement.
"Type B Variance" has the meaning specified in Section 9.6(b) of the Agreement.
"Variance" has the meaning specified in Section 9.6(a) of the Agreement.
"Underwriting Information" means the information obtained from a consumer or
from a third party provider of information which is used in underwriting an
application processed by Customer or its Affiliates which may or may not be a
"consumer report," as that term is defined in the federal Fair Credit Reporting
Act or any other applicable federal or state law.
"Withholding Taxes" has the meaning specified in Section 7.8(h) of the
Agreement.
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INDEX OF EXHIBITS AND SCHEDULES
Exhibit 1 TPA Mandatory Terms
Exhibit 2 Form of Nondisclosure Agreement for Administrator Personnel
Exhibit 3 Security Procedures
Attachment A to Exhibit 3 Basic Employee Background Investigation
Policy Requirements
Attachment B to Exhibit 3 Background Check Disqualifying
Standards
Attachment C to Exhibit 3 Additional Safeguards
Exhibit 4 Permitted Subcontractors
Exhibit 5 Customer Software
Exhibit 6 Fees and Charges
Attachment A to Exhibit 6 Standard Rates
Exhibit 7 Change Procedures
Attachment A to Exhibit 7 Project Change Request
Exhibit 8 Policy Administration and Processing Services (Standard and
Optional)
Exhibit 9 Service Levels and Service Level Credits
Exhibit 10 Administrator Competitors
Exhibit 11 Disaster Recovery
Exhibit 12 Forms of Statements of Work
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