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EXHIBIT 1 A 9
MASTER ADMINISTRATION AGREEMENT
between
XxXxxxxx Systems, L.L.C.
and
National Life of Vermont
dated as of August 18, 1998
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS.......................................................1
1.01 Books and Records.......................................................1
1.02 Case....................................................................2
1.03 End User................................................................2
1.04 Effective Date..........................................................2
1.05 Initial Term............................................................2
1.06 Policy Administration Services..........................................2
1.07 Plan Administration Services............................................2
1.08 Policies................................................................2
1.09 Products................................................................2
1.10 Participants............................................................3
SECTION 2 TERM..............................................................3
SECTION 3 POLICY OR PLAN ADMINISTRATION.....................................3
3.01 Administrative Service..................................................3
3.02 Performance Criteria....................................................3
3.03 Authorized Personnel....................................................3
3.04 Records.................................................................4
SECTION 4 FEES AND EXPENSES.................................................4
4.01 Administration Fees.....................................................4
4.02 Expenses................................................................4
4.03 System Enhancements.....................................................5
4.04 Payment.................................................................5
SECTION 5 REPRESENTATIONS AND WARRANTIES OF XxXXXXXX........................5
SECTION 6 REPRESENTATIONS AND WARRANTIES OF NATIONAL LIFE...................7
SECTION 7 ADDITIONAL COVENANTS..............................................8
7.01 Independent Contractor..................................................8
7.02 Confidentiality and Disclosure..........................................8
7.03 Indemnification........................................................10
7.04 Arbitration............................................................10
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7.05 Compliance ........................................................ 11
7.06 Actions ........................................................... 11
7.07 Records ........................................................... 13
7.08 Audit ............................................................. 13
7.09 Security of Operations ............................................ 13
7.10 Insurance Coverage ................................................ 13
SECTION 8 TERMINATION OF AGREEMENT ........................................ 14
8.01 By Mutual Agreement ............................................... 14
8.02 By Non-Renewal .................................................... 14
8.03 For Cause ......................................................... 14
SECTION 9 ASSIGNMENT ...................................................... 14
9.01 Assignment by National Life ....................................... 14
9.02 Assignment by XxXxxxxx ............................................ 15
SECTION 10 MISCELLANEOUS ................................................... 15
10.01 Governing Law ..................................................... 15
10.02 Notices ........................................................... 15
10.03 Entire Agreement .................................................. 16
10.04 Binding Effect .................................................... 16
10.05 Severability ...................................................... 16
10.06 No Third Party Beneficiaries ...................................... 16
10.07 Headings .......................................................... 16
10.08 Counterparts ...................................................... 16
10.09 Waiver ............................................................ 17
10.10 Construction ...................................................... 17
10.11 Taxes ............................................................. 17
10.12 Software Escrow Agreement ......................................... 17
10.13 Software License in Escrow ........................................ 18
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TABLE OF EXHIBITS
A Policy Administration Services
B Plan Administration Services
C Performance Criteria
D Fee Schedule
E Products
F Schedule of Authorized Personnel
G Insurance Coverage
H Software Escrow Agreement
I Software System License Agreement
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MASTER ADMINISTRATION AGREEMENT
This MASTER ADMINISTRATION AGREEMENT (this "Agreement") is made and entered
into as of the 18th day of August, 1998, by and between XxXxxxxx Systems,
L.L.C., a Georgia limited liability company, having its principal address and
place of business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx,
00000 (hereinafter referred to as "XxXxxxxx"); and National Life of Vermont, a
mutual life insurance company registered under the laws of the State of Vermont,
having its principal place of business at One National Xxxx Xxxxx, Xxxxxxxxxx,
XX 00000 (hereinafter referred to as "National Life").
WITNESSETH:
WHEREAS, the parties hereto desire to enter into this Agreement to provide
for the provision by XxXxxxxx, as an independent contractor, of insurance policy
administration services and non-qualified plan administration services to
National Life on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and other good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
SECTION 1 DEFINITIONS.
As used in this Agreement, the following terms shall have the meaning set
forth:
1.01 Books and Records. "Books and Records" means all books and records in
the possession or control of XxXxxxxx that contain information related to the
Policies (defined in Section 1.08 below) and Participants Policies (defined in
Section 1.10 below), including without limitation, to the extent any of the
following exist, (i) hard copy and microfiche records; (ii) all paper files;
(iii) all electronic images; (iv) all computer data files; (v) all
correspondence between XxXxxxxx and owners of Policies; (vi) administrative
records; (vii) claim records; (viii) sales records; (ix) reinsurance records,
(x) underwriting records and (xi) accounting records; provided,
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however, that Books and Records shall not include any of XxXxxxxx'x internal
documentation of its own programs, systems and procedures or any of XxXxxxxx'x
books and records which are not directly related to the Policies. Books and
records shall be maintained for a period time not less than five (5) years
following the termination of this Agreement.
1.02 Case. "Case" means a group of Policies that have a common owner
and payor, have a common corporate objective, and/or a group of Participants
that are part of a common benefit plan.
1.03 End User. "End User" means a party for whom National Life has
agreed to provide Plan Administration Services which are the subject of this
Agreement.
1.04 Effective Date. "Effective Date" means the date stated in the
first paragraph of this Agreement.
1.05 Initial Term. "Initial Term" means the five (5) year period
commencing on the Effective Date of this Agreement and ending at 11:59 p.m. on
the day prior to the fifth anniversary of the Effective Date.
1.06 Policy Administration Services. "Policy Administration Services"
means the services set forth in Exhibit A attached hereto and designated as
"Policy Administration Services".
1.07 Plan Administration Services. "Plan Administration Services"
means the services set forth in Exhibit B attached hereto and designated as
"Plan Administration Services".
1.08 Policies. "Policies" means, collectively, the insurance policies
included within one of the Products and "Policy" means any one of the Policies.
1.09 Products. "Products" means the insurance products described in
Exhibit E attached hereto and made a part hereof. A "Product" is limited to a
single policy form of an
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insurance company. Exhibit E may be amended during the Term by mutual written
agreement of the parties hereto.
1.10 Participants. "Participants" means, collectively, the individuals
included within a non-qualified benefit plan for which service is provided under
the terms of this Agreement.
SECTION 2 TERM.
This Agreement shall commence on the Effective Date and shall continue in
effect for the Initial Term; thereafter this Agreement shall continue in full
force and effect from year to year until terminated as herein provided, each
such additional year being an "Additional Term" of this Agreement. The Initial
Term and any Additional Terms hereunder are herein collectively referred to as
the "Term".
SECTION 3 POLICY OR PLAN ADMINISTRATION.
3.01 Administrative Services. During the Term, XxXxxxxx shall perform
Policy Administration Services and Plan Administration Services (collectively,
sometimes referred to as the "Administration Services").
3.02 Performance Criteria. The manner and method of performing
Administration Services is set forth in Exhibit C.
3.03 Authorized Personnel. At any time XxXxxxxx may apply to a person
indicated on the "Schedule of Authorized Personnel", attached hereto as Exhibit
F, as a person authorized to give instructions under this section with respect
to any matter arising in connection with this Agreement. XxXxxxxx shall not be
liable for, and shall be indemnified and held harmless by National Life against
any loss, cost, damage or expense arising from, any action taken or omitted by
XxXxxxxx to the extent XxXxxxxx can demonstrate that the action or omission was
taken or omitted in good faith in reliance upon such instruction.
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National Life may at any time provide XxXxxxxx with written notice of any
change of authority of persons authorized and enumerated in Exhibit F to provide
XxXxxxxx with instructions or directions relating to services to be performed by
XxXxxxxx under this agreement.
3.04 Records. During the Term, XxXxxxxx shall keep true and correct Books
and Records relating to the performance of all Administration Services
hereunder. XxXxxxxx shall deliver the Books and Records and copies thereof upon
request by National Life. Anything herein to the contrary notwithstanding,
XxXxxxxx shall be allowed to make and retain copies of the Books and Records, at
its own expense, upon termination of this Agreement. It is acknowledged and
agreed that any such Books and Records may be maintained on magnetic media,
electronic media, microfiche, CD and other non-paper media.
SECTION 4 FEES AND EXPENSES
4.01 Administration Fees.
(a) During the Initial Term of this Agreement, National Life shall pay to
XxXxxxxx, as compensation for all Administration Services rendered
pursuant to this Agreement, the amounts set forth in Exhibit D. In no
event, except as provided below, will the fees payable by National
Life to XxXxxxxx hereunder be less than the fees determined by the
application of the Minimum Charges set forth in Exhibit D.
(b) for each Additional Term of this Agreement, National Life shall pay to
XxXxxxxx, as compensation for all Administration Services rendered
pursuant to this Agreement, such fees and charges as shall be agreed
to by the parties and attached hereto as an amended Exhibit D prior to
commencement of such Additional Term.
4.02 Expenses. National Life will promptly reimburse XxXxxxxx for all
reasonable out-of-pocket expenses incurred by XxXxxxxx in the performance of
this Agreement. Out-of-pocket expenses include, but are not limited to the
following:
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(a) Travel related costs for travel requested by National Life.
(b) Postage and forms cost of special mailings requested by National Life.
(c) Charges for telephone line(s) dedicated to service of National Life
customers, agents and brokers.
(d) Charges for dedicated voice/data lease line(s) providing wide area
network access from National Life site(s) to XxXxxxxx site(s).
4.03 System Enhancements. Requested by National Life for enhancements to
systems or procedures for support of new products or new functional capabilities
will be performed and billed by XxXxxxxx to National Life on a time and expense
basis at the then current rate in effect. Such National Life requests will be in
writing. XxXxxxxx will provide, in writing, a design specification that will
include a detailed description of the requested enhancement, an estimate of cost
and an estimated implementation schedule. XxXxxxxx will undertake the project
upon receipt of the signed acceptance of the design specification by National
Life.
4.04 Payment. During the Term of this Agreement, National Life shall pay
XxXxxxxx within thirty (30) days of the date of XxXxxxxx'x invoice. Late
payments shall be subject to XxXxxxxx'x standard late payment charges as set
forth on XxXxxxxx'x invoice.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX.
XxXxxxxx hereby represents and warrants to National Life as follows:
(a) It is a limited liability company duly organized and existing and in
good standing under the laws of the State of Georgia.
(b) It is empowered under applicable laws and by its articles of
organization and operating agreement to enter into and perform the
services contemplated in this Agreement.
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(c) All requisite proceedings have been taken to authorize it to enter
into and perform the services contemplated in, and execute and
deliver, the Agreement.
(d) It has duly executed and delivered this Agreement and such execution
and delivery nor the performance by it of any of its obligations under
this Agreement will (i) violate any provision of its certificate of
incorporation or by-laws, (ii) result in a violation or breach of, or
constitute a default or an event of default under, any indenture,
mortgage, bond or other contract, license, agreement, permit,
instrument or other commitment or obligation to which it is a party or
(iii) violate any law, rule or regulation of any governmental body,
writ, judgment, injunction or court decree (collectively, "Laws")
applicable to it or its business.
(e) It has all licenses, permits, registrations and other governmental
approvals necessary or advisable for the performance of its
obligations under this Agreement.
(f) Its business operations have been conducted, are now, and will
continue to be in compliance in all material respects with all Laws.
(g) In its reasonable business judgment, it has the facilities, equipment
and personnel necessary to carry out its duties and obligations under
this Agreement.
(h) Maintenance of Information
1. XxXxxxxx shall maintain and make available to National Life
complete books and records of all transactions performed on
behalf of National Life. The books and records shall be
maintained in accordance with prudent standards of insurance
recordkeeping and must be maintained for a period of not less
than five (5) years from the date of their creation.
2. Insurance regulators authorized by statute shall have access to
books and records maintained by XxXxxxxx for the purposes of
examination, audit and inspection. Any trade secrets contained in
such books and records, including the
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identity and addresses of policyholders and certificate holders,
shall be kept confidential, except that insurance regulators
authorized by statute may use such information in any proceeding
instituted against XxXxxxxx.
3. National Life shall own the records generated by XxXxxxxx
pertaining to National Life; however, XxXxxxxx shall retain the
right to continuing access to books and records to permit XxXxxxxx
to fulfill all of its contractual obligations to insured parties,
claimants and National Life.
4. In the event National Life and XxXxxxxx cancel this Agreement;
notwithstanding the provisions of this Paragraph, XxXxxxxx may, by
written agreement with National Life, transfer all records to a new
administrator rather than retain them for five (5) years. In such
cases, the new administrator shall acknowledge, in writing, that it
is responsible for retaining the records so transferred by XxXxxxxx
as required by Sub-paragraph 4.06(1) of this Agreement.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF National Life.
National Life hereby represents and warrants to XxXxxxxx as follows:
(a) It is a registered mutual life insurance company organized and
existing and in good standing under the laws of the State of Vermont.
(b) It is empowered under the applicable laws and regulations and by its
governing documents to enter into and perform this Agreement.
(c) All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement.
(d) It has duly executed and delivered this Agreement and neither such
execution and delivery nor the performance by it of any of its
obligations under this Agreement will (i) violate any provision of its
governing documents, (ii) result in a violation or breach
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of, or constitute a default or an event of default under, any indenture,
mortgage, bond or other contract, license, agreement, permit, instrument
or other commitment or obligation to which it is a party or (iii)
violate any Law applicable to it or its business.
SECTION 7 ADDITIONAL COVENANTS.
7.01 Independent Contractor. It is understood and agreed that all
Administration Services performed hereunder by XxXxxxxx shall be performed
solely for National Life by XxXxxxxx in the capacity of an independent
sub-contractor of National Life. Nothing contained herein shall be construed to
create between XxXxxxxx and National Life a partnership, joint venture,
association or other legal entity or relationship other than that of independent
sub-contractor.
7.02 Confidentiality and Disclosure.
(a) Each Party to this Agreement ("Disclosing Party") may disclose to the
other party ("Recipient") certain proprietary and confidential
information including, without limitation, policyholder information,
procedures, National Life customer lists, prospect lists, contracted
broker and agent lists, and material related to policy design, pricing,
filings, marketing and sales administration and systems information
("Information").
(b) Recipient agrees to maintain, during the Term and thereafter, the
Information of the Disclosing Party in confidence using at least the
same degree of care as it uses in maintaining as secret its own trade
secret, confidential and proprietary information, but always at least a
reasonable degree of care.
(c) All tapes, books, reference manuals, instructions, records, information,
and data pertaining to the business of National Life, including
information relating to the contracts and the names, addresses and other
information regarding the policy owners, which are exchanged or received
pursuant to the negotiation of and/or the carrying out of this Agreement
shall remain confidential and shall not be voluntarily disclosed to any
other person except as required to perform this Agreement.
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XxXxxxxx further agrees not to use any such information for any
purpose other than as directly related to its performance under this
Agreement, and specifically agrees not to use such information
directly or through affiliates to contact Contract Owners, insureds or
beneficiaries, to replace any of the contracts or to solicit financial
services or products. For this purpose, affiliate means any business
organization in which XxXxxxxx has a majority ownership interest at
the time such contacts is made. XxXxxxxx, however, may disclose any
information if: (i) pursuant to Court order or the lawful requirement
or demand of a government agency; (ii) otherwise required by law; or
(iii) authorized in writing by National Life. XxXxxxxx will, upon
request by National Life, return the tapes, books, reference
materials, instructions, records and data mentioned above to National
Life.
(d) Recipient shall use reasonable efforts to limit access to information
received from the Disclosing Party to only those personnel of
Recipient who have need of such access for the performance of any
obligation of Recipient under this Agreement.
(e) Recipient shall use information only for purposes of fulfilling its
obligations under the Agreement.
(f) Except as expressly provided in the Agreement, Disclosing Party grants
no license, right or interest to Recipient under any copyrights,
patents, trademarks, trade secrets or other property rights of
Disclosing Party by reason of the disclosure of the information.
(g) Each party acknowledges that some information may, under applicable
law, be deemed to be confidential information of third parties (such
as natural persons whose lives are insured under a Policy) and agrees
to preserve the confidentiality of all information, which under
applicable Law must be treated as confidential.
The terms and conditions of this Section 7.02 shall survive the termination
of this Agreement.
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7.03 Indemnification. Each party to this Agreement shall indemnify and
hold harmless the other party and its officers, directors, partners, principals,
independent contractors, employees, member firms, subcontractors and affiliates
and their respective personnel from and against any and all liabilities, losses,
damages, costs, expenses (including, without limitation, reasonable attorneys'
fees and court costs), interest, penalties or other loss directly or indirectly
arising out of, in connection with or with respect to any breach of this
Agreement or any fraudulent, criminal, negligent and/or bad faith acts or
omissions by such party or its officers, directors, partners, principals,
independent contractors, employees, member firms, subcontractors and affiliates
and their respective personnel under this Agreement.
If a party is named in any lawsuit or other proceeding for which such party
believes it may be entitled to indemnification hereunder (other than any action
or proceeding described in Section 7.06), such party shall promptly give notice
thereof to the other party, such notice to include a description in reasonable
detail of such lawsuit or proceeding and the basis for such party's belief that
it may be entitled to indemnification hereunder. The parties shall cooperate in
all reasonable respects with each other in defending such lawsuit or proceeding.
XxXxxxxx agrees not to settle any such lawsuit or proceeding without the written
consent of National Life.
The terms and conditions of this Section 7.03 shall survive the termination
of this Agreement.
7.04 Arbitration. In the event of any dispute between National Life and
XxXxxxxx with respect to the subject matter of this Agreement or the enforcement
of rights hereunder, either party may, by written notice to the other, require
such dispute or difference to be submitted to arbitration. This provision,
however, shall not be applicable to any dispute that involves a claim by or
against a Third Party. The arbitrator or arbitrators shall be selected by
agreement of the parties or, if they cannot agree on an arbitrator or
arbitrators within twenty (20) days after the notice of such party's desire to
have the question settled by arbitration, then the arbitrator or arbitrators
shall be selected by the American Arbitration Association (the "AAA") in
Atlanta, Georgia. The determination reached, or award granted, in such
arbitration shall be final and binding, to the extent not in violation of law or
public policy, on all parties hereto. Enforcement of the arbitration award or
determination may be sought in any court of competent jurisdiction. The
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arbitrators shall not be bound by judicial formalities and may abstain from
following the strict rules of evidence. The parties hereby mutually instruct the
arbitrators to limit the time and scope of discovery to the greatest extent
practicable and request the arbitrators to provide a decision as rapidly as
practicable, in each case consistent with the interests of justice, it being the
intention of the parties that any arbitration under this Section 7.04 be
commenced, conducted and completed, and a decision rendered, as rapidly as
practicable. Pending such decision, each party will continue to perform its
obligations under this Agreement. Unless otherwise agreed by the parties, any
such arbitration shall be conducted in accordance with the rules of the AAA.
In the event of any litigation or arbitration as provided under this
Agreement, or the enforcement of rights hereunder, each party shall bear its own
costs and expenses relating to such litigation or arbitration, including
reasonable attorney's fees and expenses, unless otherwise provided by the
arbitration award or determination. In no event shall the arbitrators have the
right or authority to award consequential, incidental, indirect, special or
punitive damages relating to this Agreement.
The terms and conditions of this Section 7.04 shall survive the termination
of this Agreement.
7.05 Compliance. XxXxxxxx shall provide staff with the skills necessary to
perform the Administrative Services, as determined by XxXxxxxx using its
reasonable business judgment. XxXxxxxx shall obtain and maintain for itself, all
licenses necessary for performance under this Agreement. XxXxxxxx shall maintain
all records of its administrative services in accordance with relevant SEC and
NASD requirements.
7.06 Actions.
(a) Each party to this Agreement (the "Notifying Party") shall promptly
notify the other party of any threatened or pending lawsuit or
governmental or regulatory agency inquiry or complaint relating to
Policies of which the Notifying Party has actual knowledge and shall
promptly transmit to such other party a copy of any applicable
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service of process or other instrument related to a court proceeding or any
correspondence or other document transmitted to or from any governmental or
regulatory agency relating to the Policies which shall be actually received
by the Notifying Party.
(b) XxXxxxxx shall make no response to any governmental or regulatory agency's
inquiry or complaint relating to Policies without first obtaining National
Life's approval and consent to the response to such inquiry or complaint;
provided, however, that if National Life fails to give its approval or
consent or delays its approval or consent and such failure or delay would
subject XxXxxxxx to any fine, penalty, liability or sanction, then XxXxxxxx
may make a response.
(c) National Life reserves the right to control the defense of any litigation,
threatened or pending, by or against it, or to respond on its own behalf to
any governmental or regulatory agency's inquiry or complaint; provided,
however, that if National Life shall exercise this right in such a manner
as shall subject XxXxxxxx to any fine, penalty, liability or sanction for
failure to follow procedure, or otherwise in a manner which, in the
reasonable opinion of XxXxxxxx or its legal counsel may have a material
adverse effect on XxXxxxxx, then XxXxxxxx shall have the right to defend
itself with counsel of its choice at its own expense.
(d) XxXxxxxx reserves the right to control the defense of any litigation,
threatened or pending, by or against it, or, subject to subsection (b)
above, to respond on its own behalf to any governmental or regulatory
agency's inquiry or complaint; provided, however, that if XxXxxxxx shall
exercise this right in such a manner as shall subject National Life to any
fine, penalty, liability or sanction for failure to follow procedure, or
otherwise in a manner which, in the reasonable opinion of National Life or
its legal counsel may have a material adverse effect on National Life, then
National Life shall have the right to defend itself with counsel of its
choice at its own expense.
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(e) The parties shall cooperate with each other in responding to or
defending any such lawsuit, threat, demand, inquiry, complaint,
administrative or regulatory investigation or proceeding.
7.07 Records. Each party to this Agreement shall maintain, following
the termination of this Agreement for any reason, its Books and Records with
respect to business produced under this Agreement for such period of time as
may be required by law. It is acknowledged and agreed that any such books and
records may be maintained on magnetic media, electronic media, microfiche or
other non-paper media.
7.08 Audit. Upon forty-eight (48) hours advanced notice to XxXxxxxx,
National Life will have the right under this Agreement to perform on-site
inspection and analyses of the Books and Records in accordance with reasonable
procedures and at reasonable frequencies. At the request of National Life,
XxXxxxxx will make available to National Life representatives of the
appropriate regulatory agencies all reasonable requested Books and Records and
access to operating procedures. In addition to any rights granted National Life
elsewhere in this Agreement, National Life shall have the right to conduct
periodic audits, including termination audits, with reasonable frequency during
normal business hours at XxXxxxxx'x office. If National Life decides to
conduct an audit at its own office, XxXxxxxx shall ship to National Life all
requested records to National Life at National Life's expense. Audits may
include examination of books and records, fiduciary accounts, business
practices and procedures, compliance with applicable laws and regulations, and
compliance with this Agreement.
7.09 Security of Operations. XxXxxxxx shall maintain such off-site
backup of its systems, procedures, and Books and Records as National Life may
reasonably request. XxXxxxxx shall maintain at all times during the Term a
disaster recovery capability materially consistent with that currently
maintained by XxXxxxxx.
7.10 Insurance Coverage. XxXxxxxx shall use its reasonable efforts to
continue in effect the insurance coverages described in Exhibit G attached
hereto provided that such coverage is available from a domestic insurance
carrier at a reasonable cost to XxXxxxxx.
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XxXxxxxx shall not voluntarily cause any termination, reduction, or alteration
of these coverages without thirty (30) days prior written notice to National
Life.
SECTION 8 TERMINATION OF AGREEMENT.
8.01 By Mutual Agreement. This Agreement may be terminated or amended by
mutual written agreement of the parties at any time.
8.02 By Non-Renewal. At least one hundred and eighty (180) days prior to
the end of the Initial Term and any Additional Term hereof, either party may
give the other notice if the party delivering such notice desires to change any
term of the Agreement. If XxXxxxxx and National Life do not agree in writing
with respect to the matters described in such notice before the end of the Term
during which XxXxxxxx gives such notice, this Agreement shall terminate at the
end of such Term.
8.03 For Cause. If either of the parties hereto shall materially breach
this Agreement or be materially in default hereunder (the Defaulting party),
the other party hereto may give written notice thereof to the Defaulting Party
and if such default or breach shall not have been remedied within thirty (30)
days after such written notice is given, then the party giving such written
notice may terminate this Agreement by giving thirty (30) days written notice
of such termination to the Defaulting Party. Termination of this Agreement by
default or breach by a party shall not constitute a waiver of any rights of
the other party in reference to services performed prior to such termination,
rights to be reimbursed for out-of-pocket expenditures or any other rights such
other party might have under this Agreement at law, in equity or otherwise.
SECTION 9 ASSIGNMENT.
9.01 Assignment by National Life. National Life shall not, directly or
indirectly, in whole or in part, assign any of its rights or obligations
hereunder without the prior written consent of XxXxxxxx, which consent shall not
be unreasonably withheld.
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9.02 Assignment by XxXxxxxx. XxXxxxxx shall not directly or indirectly,
in whole or in part, delegate its duties or assign its rights under this
Agreement without the prior written consent of National Life, which consent
shall not be unreasonably withheld.
SECTION 10. MISCELLANEOUS
10.01 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Georgia, without giving effect to
the principles of conflicts of laws thereof.
10.02 Notices. Any notice, consent, approval or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by facsimile transmission, overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, and
addressed as follows:
(a) If to XxXxxxxx:
XxXxxxxx Systems, L.L.C.
0000 Xxxxxx Xxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, Senior Vice President
Facsimile Number: (000) 000-0000
(b) If to National Life:
National Life of Vermont
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, Senior Vice President
Facsimile Number: (000) 000-0000
Any such notice shall be deemed given when so delivered (in the case of
personal delivery or overnight courier service) or sent by facsimile
transmission or, if mailed, upon receipt as evidenced by the return receipt. If
the address of any party hereunto is changed, written
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notice of such change shall be given to the other party, in accordance with this
Section, and said new address shall be used for purposes of this Agreement.
10.03 Entire Agreement. This Agreement, the Exhibits which are attached
hereto and made a part hereof, and the documents executed pursuant hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and thereof and no representation, warranty, covenant or agreement
not embodied herein or therein, oral or otherwise, shall be of any force or
effect whatsoever with respect to the subject matter hereof or thereof. Further,
no change, amendment or modification of this Agreement shall be effective unless
in writing and signed by both parties hereto.
10.04 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.05 Severability. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
10.06 No Third Party Beneficiaries. Nothing in this Agreement is intended
or shall be construed to give any person, other than the parties hereto, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
10.07 Headings. The Section headings of this Agreement are for convenience
only and shall not affect the construction or interpretation of this Agreement.
10.08 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which will
constitute one and the same document.
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21
10.09 Waiver.
(a) A waiver of any default or breach hereunder granted by any party hereto
shall not constitute a waiver by such party of any other default or
breach or a waiver by such party of the same default or breach at a
later time. Further, to be effective, any such waiver must be in
writing and be signed by the party granting such waiver.
(b) Subject to the last sentence of Section 10.09(a), the forbearance or
neglect by National Life or XxXxxxxx to insist upon strict compliance
with any of the provision of this Agreement, or to declare a
forfeiture or termination, shall not be construed as a waiver of any
right or privilege hereunder. No waiver of any right or privilege
arising from any default or failure of performance hereunder shall
affect the rights or privileges of either party in the event of a
further default or failure of performance hereunder.
10.10 Construction. All parties hereto have participated, directly or
indirectly, in the negotiations and preparation of this Agreement. In no event
shall this Agreement be construed more or less stringently against any party
hereto by reason of either party being construed as the principal drafting party
hereto.
10.11 Taxes. All sales, use, excise or other similar taxes or duties which
may be or become payable on account of goods or services provided hereunder
shall be payable by National Life to XxXxxxxx Systems upon the receipt by
National Life of XxXxxxxx Systems' invoice therefor. In lieu of paying such
taxes, National Life may provide XxXxxxxx Systems with a tax exemption
certificate acceptable in form and substance to the appropriate taxing
authorities.
10.12 Software Escrow Agreement. As soon as is practicable after the
execution of this Agreement, (i) the parties hereto shall execute and deliver an
Escrow Agreement substantially in the form of Exhibit H attached hereto and
made a part hereof (the "Escrow Agreement") for the purpose of protecting
National Life in the event of a breach of this Agreement by XxXxxxxx or the
17
22
termination of this Agreement by National Life for Cause, pursuant to Section 8
hereof, prior to the end of the Term; and (ii) upon execution of the Escrow
Agreement by all parties thereto, XxXxxxxx shall deposit with the Escrow Agent
a copy of the Software to be held in accordance with the terms and conditions
of the Escrow Agreement.
10.13 Software License in Escrow. As soon as is practicable after execution
of the Escrow Agreement, the parties hereto shall execute and deliver to the
Escrow Agent, to be held in accordance with the terms and conditions of the
Escrow Agreement, a License Agreement substantially in the form of Exhibit I
attached hereto and made a part hereof (the "License Agreement"), which shall
provide that in the event the Software shall be released by the Escrow Agent to
National Life, upon the occurrence of a Release Event (as defined in the Escrow
Agreement), but only in such event, XxXxxxxx grants to National Life, effective
upon receipt of the Software from the Escrow Agent, a license to use the
Software (and such modifications, enhancements, improvements, updates,
corrections or changes as National Life shall elect to make to the Software)
(the "Software License") for a period of twenty-four months following the
termination of this Agreement, solely on the terms and conditions of the License
Agreement. At the expiration of the license term, the National Life shall have
no further rights with respect to the Software.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized partners and officers, all as of
the date first above written.
XxXxxxxx Systems, L.L.C. National Life of Vermont
By:_________________________ By:__________________________
Xxx X. Xxxxxx Xxxxxxx Xxxxxxxxx
Senior Vice President Senior Vice President
18
23
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
1. XxXxxxxx will perform the following services related to the policy issue
process:
(a) XxXxxxxx will, upon receipt of Case Set up Worksheet for new cases,
set up the case and case version information.
(b) XxXxxxxx will, upon receipt of census data in a prescribed format,
perform the following census edits:
(i) Validate named, sex, date of birth, state of issue, and social
security number;
(ii) Validate eligibility requirements as applicable;
(iii) Test for duplicate insureds.
(c) XxXxxxxx will, upon receipt of policy applications, perform the
following;
(i) Validate application;
(ii) Validate agent license status;
(iii) Validate product approval status;
(iv) Determine and report underwriting requirements for each
applicant according to National Life provided rules;
(v) Electronically feed to National Life Underwriter Workbench
System;
(vi) Electronically accept changes in the underwriting status as
provided by National Life;
(vii) Track the underwriting process.
(d) XxXxxxxx will, upon completion of the underwriting process, produce
the required policy pages, including state exception pages, in the
following optional scenarios:
(i) A set of policy pages for each policy;
(ii) A set of policy pages for a single policy and a policy
specification page for each policy.
(e) XxXxxxxx will prepare Policy Delivery Receipts(s) in the following
optional scenarios:
(i) A Policy Delivery Receipt for each policy;
(ii) A single Policy Delivery Receipt for the owner and a list
detailing each policy.
(f) XxXxxxxx will determine the date on which the free look period expires
and the initial allocation takes place according to National Life
provided rules.
1
24
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
2. XxXxxxxx will perform the following services related to the renewal
function:
(a) XxXxxxxx will produce a Case Renewal Audit Checklist and associated
reports approximately 90 days prior to renewal date.
(b) XxXxxxxx will, for policies with automatic death benefit change
provisions and upon receipt of updated census data, perform the
following services:
(i) Perform eligibility and underwriting edits;
(ii) Provide National Life with target death benefit and
underwriting criteria;
(iii) Track underwriting process;
(iv) Process death benefit changes and produce new policy
specification pages as required.
3. XxXxxxxx will perform the following services related to the policy
administration function:
(a) XxXxxxxx will prepare and distribute an initial and modal billing kit
for premiums and loan interest due based on National Life supplied
rules. At any time prior to the due date and upon request by the
owner, XxXxxxxx will prepare an additional billing kit.
(b) XxXxxxxx will, upon expiration of the free look period, cause the
initial allocation of policy funds from the free look default fund
into the policy owner's selected funds.
(c) XxXxxxxx is not responsible for receiving, directly handling any of
National Life or the policy owner's funds. Upon notification by
National Life of receipt of payment, XxXxxxxx will perform the
following services:
(i) Update Case/Policy suspense records;
(ii) Reconcile cash received versus funds due;
(iii) Apply premium and loan interest;
(iv) Create accounting journal entries.
(d) XxXxxxxx will provide the following services related to death claims:
(i) Perform claim adjudication to insure that the claim should be
paid;
(ii) Transfer separate account funds into the general account;
(iii) Establish pending death claim as necessary;
(iv) Calculate net proceeds and interest on proceeds;
(v) Identify net cash refunds of transactions occurring after the
date of death;
2
25
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
(vi) Create Death Claim Worksheet and payment letter;
(vii) Create check or wire request for disbursement of claim proceeds;
(viii) Create accounting journal entries;
(ix) Produce monthly pending claim status reports as necessary.
(e) XxXxxxxx will perform the following services related to other policy
terminations, including not taken, surrender, rescission and lapse:
(i) Calculate net surrender value or net refund;
(ii) Create Surrender Worksheet or Rescission Worksheet and cover letter;
(iii) Create check or wire request for disbursement of proceeds;
(iv) Create accounting journal entries.
(f) XxXxxxxx will perform the following services as part of anniversary
processing:
(i) Create an invoice for loan interest due;
(ii) Capitalize due and unpaid loan interest;
(iii) Create accounting journal entries.
(g) XxXxxxxx will perform the following services as part of monthaversary
processing:
(i) Compute and deduct fees and charges due;
(ii) Compute and deduct cost of insurance for all coverages and benefits;
(iii) Compute and credit interest to fixed funds;
(iv) Perform grace period and lapse processing on policies failing equity
test;
(v) Create accounting journal entries.
(h) XxXxxxxx will, upon request, perform the following policy services:
(i) Process changes of owner, payor or beneficiary;
(ii) Process name or address changes;
(iii) Process change in coverage and coverage amount;
(iv) Process change in death benefit option;
(v) Process change in dividend option;
(vi) Process change in sex, birth date, and policy rating criteria of
insured.
(i) XxXxxxxx will, upon request, perform the following financial event
services:
(i) Process premium remittances;
(ii) Process loan repayment and loan interest payment remittances;
(iii) Process loans;
3
26
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
(iv) Process partial withdrawals;
(v) Process dividend distributions;
(vi) Create check or wire request for disbursements, as appropriate;
(vii) Create accounting journal entries.
(j) XxXxxxxx will, upon request, perform the following policy asset
related services:
(i) Process rebalance of assets;
(ii) Process transfer of assets;
(iii) Process reallocation of assets;
(iv) Process dollar cost averaging of assets;
(v) Process change in investment allocations;
(vi) Create accounting journal entries.
4. XxXxxxxx will perform the following services related to agent/broker
commissions and service fees:
(a) Process changes in commission structure;
(b) Upon notification of receipt of premium payment, compute actual
commissions and fees, or if premiums are no longer payable, compute
paid up service fee;
(c) Compute commission and fee reversals due to undo processing;
(d) Compute commission and fee charge back due to terminated policies;
(e) Prepare commission statement and recaps of commissions, fees,
commission reversals and commission charge backs;
(f) Create check or wire request for funds to be disbursed;
(g) Create accounting journal entries.
5. XxXxxxxx will produce the following processing related reports:
(a) Policy owner reports:
(i) Confirmation of Policy Activity (variable products only);
(ii) Periodic Statement of Policy Activity.
(b) Daily processing reports:
4
27
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
(i) Transaction Registers;
(ii) Error Report;
(iii) Accounting Journal;
(iv) Check Register;
(v) Billing Register;
(vi) Disbursement Suspense;
(vii) Deposit Suspense.
(c) XxXxxxxx will develop special reports or services as requested on a
time and expense basis using its then current consulting rates.
6. XxXxxxxx will perform the following services related to fund pricing and
trading:
(a) For each fund XxXxxxxx is required to value, XxXxxxxx will, on fund
valuation days and upon receipt of the Net Asset Value:
(i) Compute mortality & expense charge;
(ii) Compute Unit Value;
(iii) Update the Price Table;
(iv) Create accounting journal entries.
(b) For each fund National Life is required to value, XxXxxxxx will, on
fund valuation days and upon receipt of the Unit Value:
(i) Update the Price Table.
(c) XxXxxxxx will produce daily on National Life processing days:
(i) An electronic feed of fund trading activity;
(ii) Fund Summary Report;
(iii) Fund Detail Report.
(d) XxXxxxxx will prepare a monthly statement of mortality & expense
charges due for each fund that XxXxxxxx is required to value.
7. XxXxxxxx will provide National Life with the following services related to
the insurance carrier financial reporting function:
(a) XxXxxxxx will provide National Life with the following accounting
reports, on a monthly basis, in a printable format and on CD, unless
noted as CD only:
(i) Premium/Benefits by State;
(ii) Detail Journal - Policy Order;
(iii) Detail Journal - Account Order;
(iv) Trial Balance - YTD All Cases;
(v) Trial Balance - YTD by Case;
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28
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
(vi) Disbursement Clearing Recap;
(vii) Collection Suspense Recap;
(viii) Cash Receipts Control Recap;
(ix) Disbursements Outstanding Recap;
(x) Policy Suspense Recap.
(b) XxXxxxxx will provide, on a monthly basis, an electronic data feed
of accounting entries in a form specified by National Life.
(c) XxXxxxxx will provide the following Valuation and Policy Exhibit
reports, as required, on a monthly basis, in a printable format and
on CD, unless noted as CD only:
(i) Policy Exhibit by State;
(ii) Policy Loan Detail;
(iii) Policy Loan Summary;
(iv) Policy Loan By Case;
(v) Coverage Reserves Detail;
(vi) Coverage Reserves Summary;
(vii) Reserves Released Detail;
(viii) Reserves Released By Case;
(ix) Dividend Liability Detail;
(x) Dividend Liability Summary;
(xi) Dividend Liability by Case;
(xii) Coverage Reserves By Case;
(xiii) Experience Credit Contingency Reserve;
(xiv) Pending Death Claim Reserve;
(xv) Death Claim History.
(d) XxXxxxxx will maintain an agent balance sub-account by agent within
case and provide the following reports on a monthly basis. All
reports will be provided electronically in a printable format and on
CD, unless noted as CD only:
(i) Agent Balance By Case by Month;
(ii) Agent Balance Summary by Month;
(iii) Agent Balance Reconciliation.
(e) XxXxxxxx will provide National Life with following reinsurance
reports on a monthly basis. All reports will be provided
electronically in a printable format and on CD, unless noted as CD
only.
(f) XxXxxxxx will provide National Life with a monthly electronic feed
of financial management information data.
8. XxXxxxxx will provide the following remote access subject to security
authorization:
6
29
EXHIBIT A
POLICY ADMINISTRATIVE SERVICES
(a) Wide Area Network access from designated National Life office(s) policy
inquiry and report request capability;
(b) Dial In access by National Life employees and by designated
agents/brokers, providing policy inquiry and report request capability.
7
30
EXHIBIT B
PLAN ADMINISTRATION SERVICES
1. XxXxxxxx will perform the following services related to establishing a new
plan:
(a) Establish plan records;
(b) Upon receipt of participant census data in a specified format, XxXxxxxx
will perform the following participant census data edits:
(i) Valid name, sex, date of birth and Social Security Number,
(ii) Duplicate names.
2. XxXxxxxx will perform the following functions relating to split dollar
insurance contracts:
(a) Maintain employer/employee split ownership records for cash value and
death benefit based on plan rules;
(b) Compute employee's economic benefit from a policy;
(c) Provide historic and projection of split dollar values.
3. XxXxxxxx will perform the following functions relating to defined
contribution plans:
(a) Upon receipt of participant deferral data in a specified format,
XxXxxxxx will update contributions to participant accounts, including
employee deferrals and employer matching amounts;
(b) Maintain detail records of investment elections and fund activity;
(c) Provide periodic participant account statements;
(d) Provide reports of historic and projected participant account activity
and balances;
(e) Provide plan level reports of projected funding liabilities and
projected policy assets.
4. XxXxxxxx will perform the following functions relating to defined benefit
plans:
(a) Upon receipt of participant funding data in a specified format,
XxXxxxxx will detail records of participant account contributions;
(b) Maintain detail records of investment elections and fund activity;
(c) Provide periodic participant account statements;
1
31
EXHIBIT B
PLAN ADMINISTRATION SERVICES
(d) Provide reports of historic and projected participant account activity
and balances;
(e) Provide plan level reports of projected funding liabilities and
projected policy assets.
5. XxXxxxxx will provide the following reports on an Ad Hoc or pre-scheduled
basis:
(a) Participant Reports:
(i) Deferral Statement of Account;
(ii) Summary of Executive Benefits.
(b) Plan Analysis Reports (Individual or Composite):
(i) Summary of Insurance;
(ii) Summary of Plan Costs;
(iii) Summary of Financial Accounting;
(iv) Plan Cash Flow;
(v) Analysis of Cost Savings with Insurance.
(c) Plan Financial Reports (Individual or Composite):
(i) Profit and Loss Effect;
(ii) Balance Sheet Effect;
(iii) Retirement Benefit Journal Entries;
(iv) Insurance Journal Entries;
(v) Tax Journal Entries;
(vi) Accounts for Journal Entries.
2
32
EXHIBIT C
PERFORMANCE CRITERIA
1. XxXxxxxx shall discharge its duties hereunder in a manner that is
consistent with insurance industry practices.
2. Performance with respect to Policy Administration Services shall include
the following:
(a) XxXxxxxx will electronically, or by hard copy or both as periodically
agreed upon by National Life and XxXxxxxx, provide National Life with
copies of all policy owner and agent/broker reports, letters and other
correspondence on an agreed upon basis;
(b) Calculation of policy values, dividends, policy distributions, and
commissions will be made in accordance with procedures agreed to by
National Life and XxXxxxxx and will not be changed without prior
approval by National Life;
(c) Specimens of each policy owner and agent/broker report referenced in
Exhibit A - Policy Administrative Services will be provided to
National Life and changes to existing report formats or development of
new reports will be provided to National Life for approval prior to
use;
(d) Calculation of death proceeds will be done in accordance with
procedures agreed to by National Life, and will be sent to National
Life within three working days following receipt by XxXxxxxx of all
required documentation.
3. Performance with respect to financial reporting shall include the
following:
(a) XxXxxxxx will deliver financial reports within five working days
following the accounting close, as agreed to by National Life and
XxXxxxxx;
(b) XxXxxxxx will maintain financial records in accordance with procedures
agreed to by National Life and XxXxxxxx and will not change procedures
without prior approval by National Life.
4. Performance with respect to Plan Administration Services shall include the
following:
(a) XxXxxxxx will electronically, or by hard copy or both as periodically
agreed upon by National Life and XxXxxxxx, provide National Life with
copies of all plan and participant reports, letters and other
correspondence on an agreed upon basis;
(b) Calculation of policy and benefit values will be made in accordance
with procedures agreed to by National Life and XxXxxxxx and will not
be changed without prior approval by National Life;
1
33
EXHIBIT C
PERFORMANCE CRITERIA
(c) Specimens of each plan and participant report referenced in Exhibit
B - Plan Administrative Services will be provided to National Life and
changes to existing report formats or development of new reports will
be provided to National Life for approval prior to use.
5. National Life and XxXxxxxx may mutually agree, from time to time, to
modifications of the administrative services and/or performance criteria or
to additional administrative services and/or performance criteria.
2
34
EXHIBIT D
CORPORATE OWNED LIFE INSURANCE
POLICY AND PLAN ADMINISTRATION PRICING SCHEDULE
The monthly charge under the Agreement is the greater of the MINIMUM MONTHLY
CHARGE (a) and the POLICY ADMINISTRATION UNIT CHARGE (b); plus the PLAN
ADMINISTRATION UNIT CHARGE (c):
(a) MINIMUM MONTHLY CHARGE. This is the minimum amount due each month for fees
associated with (b) and (c) below.
AGREEMENT MONTH MINIMUM MONTHLY CHARGE
--------------- ----------------------
Months 1 - 3 $15,000.00
Months 4 - 6 $20,000.00
Months 7 - 9 $25,000.00
Months 10 - 12 $30,000.00
Months 13 - 24 $35,000.00
Months 25 - 36 $40,000.00
Months 37 - 48 $45,000.00
Months 49 - 60 $50,000.00
(b) POLICY ADMINISTRATION UNIT CHARGE. This charge is due monthly, at the end
of the calendar month, for each Policy processed during the month or any
part of the month.
NUMBER OF POLICIES FEE PER POLICY
------------------ --------------
First 25,000 Policies $2.50
Next 25,000 Policies 2.30
Thereafter 1.88
(c) PLAN ADMINISTRATION UNIT CHARGE. This charge is due monthly, at the end of
the calendar month, for each Participant active during the month or any
part of the month.
NUMBER OF PARTICIPANTS FEE PER PARTICIPANT
WITH POLICY WITHOUT POLICY
---------------------- ----------- --------------
First 25,000 Participants $3.00 $5.00
Next 25,000 Participants 2.50 4.50
Thereafter 1.83 4.00
1
35
EXHIBIT D
CORPORATE OWNED LIFE INSURANCE
POLICY AND PLAN ADMINISTRATION PRICING SCHEDULE
(d) Consulting Rates:
Actuary I 15 $165
Actuary II 17 $190
Actuary III 19 $250
Sr. Actuary 20 $325
Business Analyst I 10 $125
Business Analyst II 13 $150
Business Analyst III 15 $165
Business Analyst IV 17 $190
Sr. Business Analyst 20 $250
Project Manager I 14 $150
Project Manager II 16 $175
Project Manager III 18 $210
Sr. Project Manager/Account Manager 21 $275
TPA Specialist I 6 $75
TPA Specialist II 8 $100
TPA Specialist III 10 $125
Sr. TPA Specialist 12 $150
Software Engineer I 11 $125
Software Engineer II 13 $150
Software Engineer III 15 $165
Software Engineer IV 17 $190
Sr. Software Engineer 19 $250
2
36
EXHIBIT E
PRODUCTS
PLAN CODE PLAN NAME
--------------------------------------------------
____ Registered Variable Universal Life.
____ Non-registered Variable Universal Life.
____ Traditional Life
1
37
EXHIBIT F
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized to give instructions or direction to
XxXxxxxx with respect to matters arising in connection with the servicing to be
performed under this Agreement:
X. Xxxxxx Brink
Xxxxxx XxxXxxx
1
38
EXHIBIT G
INSURANCE COVERAGE
XxXxxxxx will maintain the following coverages during the term of this
Agreement:
(a) Worker's Compensation at statutory limits;
(b) Employers Liability, with $1,000,000 limit of liability;
(c) Commercial General Liability including Products-Completed Operations
coverage with Broad Form Contractual cover with the following limits
of liability:
(i) with a combined single limit of $1,000,000 for Bodily Injury and
Property Damage;
(ii) $1,000,000 limit of liability for Aggregate Products-Completed
Operations and Property Damages; and
(iii) $1,000,000 General Aggregate;
(d) Automobile Liability, with a combined single limit of liability of
$1,000,000/accident;
(e) Crime Insurance policy with limits of $5,000,000;
(f) Errors and Omissions policy with limits of $5,000,000;
(g) Umbrella/Excess Liability insurance with a $4,000,000 limit of
liability.
1
39
ADDENDUM NO. 1
ADDENDUM to MASTER ADMINISTRATION AGREEMENT is made and entered into as of
the 18th day of August, 1998, by and between XxXxxxxx Systems, L.L.C., a Georgia
limited liability company, having its principal address and place of business at
0000 Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx, 00000, (hereinafter
referred to as "XxXxxxxx"); and National Life of Vermont, a mutual life
insurance company registered under the laws of the State of Vermont, having its
principal place of business at One National Xxxx Xxxxx, Xxxxxxxxxx, XX 00000
(hereinafter referred to as "National Life").
1. BUY OUT PROVISION.
In the event National Life terminates the MASTER ADMINISTRATION AGREEMENT
during the Initial Term other than for cause, National Life agrees to pay
XxXxxxxx compensation set forth in Exhibit J attached hereto and designated as
"Buy Out Compensation" in lieu of the Minimum Monthly Charge as set forth in
Exhibit D to the MASTER ADMINISTRATION AGREEMENT.
2. ADMINISTRATION SYSTEM SOFTWARE LICENSE.
In the event National Life terminates the MASTER ADMINISTRATION AGREEMENT
during the Initial Term, National Life has the option to purchase the XxXxxxxx
Corporate Owned Life Insurance Third Party Administration Software for a license
fee as set forth in Exhibit K attached hereto and designated as "Administration
System Software License Fee". Said license fee(s) will be used to offset
payments due XxXxxxxx as described in the BUY OUT PROVISION.
In the event National Life terminates the MASTER ADMINISTRATION AGREEMENT
during the Initial Term and purchases the XxXxxxxx Corporate Owned Life
Insurance Third Party Administration Software, the amount of the One Time
License Fee paid to XxXxxxxx will be applied towards the payments due XxXxxxxx
as described in the BUY OUT PROVISION. For the purposes of this calculation, the
amount of the One Time License Fee will be set at $750,000.
1
40
XxXxxxxx Systems, L.L.C. National Life of Vermont
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxx
--------------------- -------------------------
Xxx X. Xxxxxx Xxxxxxx Xxxxxxxxx
Senior Vice President Senior Vice President
2
41
EXHIBIT J
BUY OUT COMPENSATION
TERMINATION YEAR COMPENSATION
---------------- ------------
Year 2 $1,200,000
Year 3 $1,060,000
Year 4 $700,000
Year 5 $300,000
For example, in the event National Life exercises the Buy Out Provision in
Year 2, National Life would pay XxXxxxxx as compensation under the Buy Out
Provision, $1,200,000. Both parties understand that National Life will have no
further liability upon payment of the Buy Out Provision Compensation in Year 2.
In the event National Life exercises the Buy Out Provision in Year 2 and
purchases the XxXxxxxx Corporate Owned Life Insurance Third Party
Administration Software as a One Time License Fee With Support as described in
Exhibit K, National Life would pay XxXxxxxx as compensation under the Buy Out
Provision $450,000, ($1,200,000 less the $750,000 One Time License Fee With
Support).
3
42
EXHIBIT K
ADMINISTRATION SYSTEM SOFTWARE LICENSE FEE
1. One Time License Fee No Support $1,000,000
XxXxxxxx does not provide maintenance, updates nor perform
special requests.
2. One Time License Fee With Support $750,000
Annual Maintenance Fee $112,500
XxXxxxxx provides maintenance and updates. Support Contract
is for 5 years. Special requests, while contract is in effect, are
performed at standard time and materials.
In the event of a Buy-Out during the Initial Term the charge for the License
Fees would be subtracted from the Buy-Out amount to determine the amount of
compensation due under the Buy Out Provision. For example, in the event
National Life exercises the Buy Out Provision in Year 2 and purchases the
XxXxxxxx Corporate Owned Life Insurance Third Party Administration Software as
a One Time License Fee With Support as described in Exhibit K, National Life
would pay XxXxxxxx as compensation under the Buy Out Provision $450,000,
($1,200,000 less the $750,000 One Time License Fee With Support).
4
43
ADDENDUM NO. 2
ADDENDUM to MASTER ADMINISTRATION AGREEMENT is made and entered into as of
the 10th day of September, 1998, by and between XxXxxxxx Systems, L.L.C., a
Georgia limited liability company, having its principal address and place of
business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx, 00000
(hereinafter referred to as "XxXxxxxx"); and National Life of Vermont, a mutual
life insurance company registered under the laws of the State of Vermont, having
its principal place of business at One National Xxxx Xxxxx, Xxxxxxxxxx, XX 00000
(hereinafter referred to as "National Life").
YEAR 2000 COMPLIANCE
XxXxxxxx hereby represents and warrants that the VPAS-Corporate Life software is
Year 2000 Compliant. For these purposes, Year 2000 Compliant is defined to mean
that this software:
(a) uses date data century recognition, and as appropriate, same century
and multi-century formulas and date values in each instance for all
calculations for which a date is used;
(b) will not abnormally end or provide invalid or incorrect results as a
result of date data, specifically including date data which represents
or references different centuries or more than one century; and
otherwise conforms with the current industry standards in order that
it will fully perform without any errors or other problems due to the
year being greater than 1999;
(c) will correctly manage and manipulate data involving dates, including,
but not limited to: single-century formulas and multi-century
formulas, century recognition and calculations that accommodate same
century and multi-century formulas, comparing and sequencing, and leap
year calculations; and will operate without any time or Year 2000
related defects or abnormalities; and
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(d) to the extent that the software will accept data from other systems and
sources that are not Year 2000 Compliant, the software will properly
recognize, calculate, sort, store output, and otherwise process such
data in a manner that eliminates any century ambiguity so that the
software remains Year 2000 Compliant.
IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be
executed and delivered by their duly authorized partners and officers, all as of
the date first above written.
XxXxxxxx Systems, L.L.C. National Life of Vermont
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxx
--------------------- --------------------------
Xxx X. Xxxxxx Xxxxxxx Xxxxxxxxx
Senior Vice President Senior Vice President
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