EXHIBIT 10(L)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is entered into and
effective as January 18, 2001 between Xxxx Xxxxxxx Life Insurance Company
("Xxxxxxx"), a Massachusetts corporation, and Legacy Marketing Group ("LMG"), a
California corporation, with reference to the following facts:
A. Concurrently herewith Xxxxxxx and LMG are entering into a certain Marketing
Agreement pursuant to which certain insurance business is to be marketed by
LMG.
B. That Xxxxxxx desires to have LMG provide services to Xxxxxxx with respect
to this business and LMG is willing to provide such services, subject to
the terms and conditions of this Agreement.
Based on the foregoing facts, LMG and Xxxxxxx agree as follows:
1. SERVICES
1.1 From and after the date of this Agreement, LMG agrees to perform
certain Xxxxxxx accounting and service functions. Such accounting
and service functions shall consist of the activities described
in APPENDIX C, but only for the Policies recited in APPENDIX A.
Consideration for such accounting and service functions is set
forth in APPENDIX B.
1.2 LMG may provide additional services for Xxxxxxx that are not
specified in APPENDIX C. Consideration and other terms for such
additional services will be agreed to by LMG and Xxxxxxx in
writing prior to LMG's performance of such services.
2. RIGHTS AND OBLIGATIONS OF XXXXXXX
2.1 Xxxxxxx has the sole obligation to its customers to provide for
competent administration of the policies administered by LMG.
Xxxxxxx hereby delegates to LMG certain duties as specified
herein.
2.2 Xxxxxxx shall be responsible for researching, obtaining, and the
registration of any service marks issued by the U.S. Patent and
Trademark Office for use with the products jointly developed by
LMG and Xxxxxxx, and any costs associated therewith, and Xxxxxxx
shall own all such rights. Xxxxxxx grants to LMG a gratuitous
license for the use of such marks on LMG and Xxxxxxx proprietary
products. Xxxxxxx will not use LMG's Service Marks, Trademarks
and Tradenames or the name of any affiliate of LMG in any way or
manner not specifically authorized in writing by LMG.
Notwithstanding the foregoing, LMG may register and own its own
marks that may be used by LMG to market products jointly
developed by LMG and Xxxxxxx that are underwritten by Xxxxxxx.
2.3 With respect to claims that LMG is authorized to pay on behalf of
Xxxxxxx, Xxxxxxx shall be responsible for any and all costs of
litigation associated with the payment of such claims. Xxxxxxx
shall have the sole discretion whether to litigate a claim. These
expenses shall include, but are not limited to, counsel fees and
court fees. Notwithstanding the foregoing, Xxxxxxx shall not be
responsible for any costs or expenses that arise out of any bad
faith, gross misconduct or fraud on LMG's part.
2.4 Xxxxxxx shall have sole responsibility for filing advertising
materials in those states that so require prior to approving
their use by LMG. All costs associated with such filings will be
the responsibility of Xxxxxxx.
2.5 Xxxxxxx shall be responsible for the establishment and
maintenance of any group trusts associated with such group
product filings and any costs associated therewith.
2.6 Xxxxxxx shall be responsible for the processing of payments under
the election of a settlement option by the beneficiary or owner.
LMG's responsibilities as they relate to this function are
detailed in APPENDIX C, Policyholder Services, Section 2. Xxxxxxx
will supply LMG with software to calculate estimated settlement
option payments. Notwithstanding the foregoing, this provision
shall not preclude LMG from processing such in the future.
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2.7 Xxxxxxx shall be responsible for determining the benefits and
claims payment procedures applicable to such coverage, if any.
2.8 Xxxxxxx shall, at least semiannually, conduct a review of
operations of LMG. At least one such review will be an on-site
audit of the operations of LMG.
2.9 Currently, LMG does not perform medical underwriting for Xxxxxxx,
however, if granted such authority, LMG will comply with all
underwriting standards established by Xxxxxxx and adhere to all
pertinent provisions contained in applicable Third Party
Administrator statutes. Xxxxxxx shall be responsible for the
underwriting or other standards pertaining to the business
underwritten by Xxxxxxx.
2.10 LMG shall have no authority, nor shall it represent itself as
having such authority, other than as specifically set forth in
this Agreement. Without limiting the generality of the foregoing
sentence, LMG specifically agrees that it will not do any of the
following without the prior written consent of Xxxxxxx:
(a) Litigation: Institute, prosecute or defend any legal
proceedings in connection with any matter pertaining to the
Services provided pursuant to this Agreement or Xxxxxxx'x
business.
(b) Alterations: Waive, amend, modify, alter, terminate or
change any term, provision or condition stated in any Policy
Form or discharge any contract in the name of Xxxxxxx,
except as otherwise specifically provided in this Agreement,
such policy forms or as a result of a complaint resolution
in accordance with mutually acceptable written guidelines
and procedures.
(c) Advice to Policyholders/Prospective Policyholders: Offer
tax, legal, or investment advice to any Policyholder or
prospective Policyholder of Xxxxxxx under any circumstances,
with respect to a Policy or the Services provided pursuant
to this Agreement.
2.11 Xxxxxxx shall provide LMG with written notice of any change of
authority of persons authorized and enumerated in APPENDIX D to
provide LMG with instructions or directions relating to services
to be performed by LMG under this Agreement. In the absence of
timely notice and LMG relies to its detriment on instructions or
directions from one who is no longer authorized, Xxxxxxx will
indemnify LMG for any loss or claim as a result of such reliance.
3. RIGHTS AND OBLIGATIONS OF LMG
3.1 LMG agrees to maintain the following insurance coverages:
(a) LMG will possess an adequate fidelity bond for any losses
caused by the dishonesty of LMG's employees or agents (not
Wholesalers or Producers) with limits of at least *. LMG
will also maintain adequate surety bond(s) as so required in
the states which it is compelled to do so. LMG will file
such bond, if so required, with the appropriate agency. The
bond shall be executed by a corporate insurer authorized to
transact business in the states which mandate the
maintenance of such bond.
(b) LMG will possess and maintain at all times errors and
omissions coverage with a limit of not less than * written
by an insurer with a minimum Best's rating of A-. Such
coverage will comply with the requirements of the states in
which such insurance coverage is required.
(c) LMG will possess and maintain commercial, general and
liability insurance with limits of not less than * per
occurrence combined single limit.
(d) LMG will require its Wholesalers and Producers to maintain
Errors and Omissions coverage per Wholesaler or Producer, or
per occurrence, or through LMG's exclusive coverage with a
limit of not less than *, which is offered on a per contract
sold basis
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3.2 In the event malfunction of the LMG systems causes an error or
mistake in any record, report, data, information or output under
the terms of this Agreement, LMG shall at its expense correct and
reprocess such records. LMG will reimburse Xxxxxxx for any costs
and/or expenses associated with such error or mistake. In the
event Xxxxxxx discovers any such errors or mistake it shall,
within three (3) business days after discovery, notify LMG in
writing of such error or mistake in any record, report, data,
information or output received by Xxxxxxx.
3.3 LMG shall respond to all correspondence of a routine nature and
other general functions necessary for satisfactory administration
of the Policies referenced in APPENDIX A. LMG shall maintain
complaint files and complaint logs to comply with applicable laws
and regulations. LMG shall use its best efforts to comply with
the service standards attached hereto as APPENDIX E.
Notwithstanding the foregoing, Xxxxxxx retains the ultimate
responsibility for the filing of such complaint logs or files
with the appropriate regulatory agencies.
If LMG receives:
(a) notice of the commencement of any legal proceeding involving
any of Xxxxxxx'x customers; or
(b) a communication from any insurance department, other
administrative agency or any other person identifying a
complaint by any Xxxxxxx customer or calling a hearing
involving any Xxxxxxx practice; or
(c) written complaints regarding Xxxxxxx Policies referenced in
APPENDIX A from customers of Xxxxxxx (oral complaints are
directed to make such complaint in writing and therefore
will be handled in accordance with such written complaint
handling procedures); or
(d) a demand or request by any court, government agency or
regulatory body to examine any of the books and records of
Xxxxxxx relating to Policies or services; or
(e) LMG will notify Xxxxxxx within two (2) business days of such
receipt. LMG will send copies of any necessary documentation
to Xxxxxxx within three (3) business days or sooner if
reasonably requested by Xxxxxxx, and will cooperate with and
assist Xxxxxxx in responding to such document .
Notwithstanding the foregoing, written guidelines and
procedures for such assistance will be established by mutual
agreement of LMG and Xxxxxxx.
3.4 LMG will maintain a file containing any correspondence relating
to complaints received from Xxxxxxx customers and/or government
agency or regulatory body for a period of seven (7) years from
receipt of the complaint letter. Xxxxxxx will respond to summons
and complaints commencing legal actions on its own behalf.
Xxxxxxx will also be responsible for the costs associated with
responding to such summons and complaints commencing legal action
on its own behalf.
3.5 LMG will provide a written notice, approved in writing by
Xxxxxxx, to policyholders advising them of the identity of
Xxxxxxx and LMG, and the relationship between LMG, the
policyholder and Xxxxxxx.
3.6 LMG will only use advertising pertaining to the business
underwritten by Xxxxxxx that Xxxxxxx has approved in writing in
advance of its use. If so required, Xxxxxxx shall obtain the
prior approval of the appropriate Department of Insurance before
approving advertising for use by LMG. Xxxxxxx will also be
responsible for all costs associated with obtaining such
approval.
3.7 LMG is responsible for system modification costs for initial new
product development. LMG is not responsible for the costs
associated for other modifications that are not necessary to the
normal course of business. "New product development" will be
defined and agreed on prior to development. Xxxxxxx will
reimburse LMG for any system modification costs requested that
are beyond those necessary to the normal course of business at
its standard rates illustrated in APPENDIX B.
3.8 LMG will comply with all of the relevant provisions contained in
applicable Third Party Administrator statutes including, without
limitation, applicable licensing or authorization requirements.
LMG is licensed or otherwise authorized as a third party
administrator in all states which require such licenses or
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authorizations. If any provision of this Agreement is in conflict
with the laws of the State which governs this agreement, such
provision will be deemed to be amended to conform with such laws.
Further, if the laws of the State which governs this Agreement
require the inclusion of certain provisions of relevant statutes,
this Agreement shall be deemed to be amended to conform with such
laws.
3.9 LMG grants to Xxxxxxx a gratuitous license for the use of its
marks on LMG and Xxxxxxx proprietary products. LMG will not use
Xxxxxxx'x Service Marks, Trademarks and Tradenames, or the name
of any affiliate of the other in any way or manner not
specifically authorized in writing by the other.
4. QUALITY AND LIMITATION OF SERVICES
4.1 All services to be provided by LMG under this Agreement shall be
performed in accordance with the policies and procedures mutually
agreed to by both parties, industry standards, good faith efforts
to comply with the service standards attached hereto as APPENDIX
E and in accordance with all applicable laws and regulations.
Xxxxxxx and LMG will use their best efforts to agree to and
document within 60 days of execution of this Agreement the
policies and procedures for all such services to be provided by
LMG on behalf of Xxxxxxx.
5. HOLD HARMLESS AND INDEMNIFICATION
5.1 LMG shall indemnify and hold harmless Xxxxxxx from any and all
claims, liability, costs and expenses, including reasonable
attorneys' fees, arising out of LMG's negligent act(s) or
omission(s); LMG's refusal to comply with the terms of this
Agreement; LMG's failure to comply with any law or regulation
with respect to its duties hereunder except that LMG shall not be
required to indemnify or hold harmless Xxxxxxx for any act or
omission of LMG which was directed orally or in writing by
Xxxxxxx unless LMG knew that such direction by Xxxxxxx was
contrary to applicable law or regulation or was otherwise
contrary to good business practices and LMG failed to advise
Xxxxxxx.
5.2 Xxxxxxx shall indemnify and hold harmless LMG from any and all
claims, liability, costs and expenses, including reasonable
attorneys' fees, arising out of Xxxxxxx'x negligent act(s) or
omission(s); Xxxxxxx'x refusal to comply with the terms of this
Agreement; Xxxxxxx'x failure to comply with any law or regulation
with respect to the offering or sale of contracts, or the records
maintained.
5.3 Neither party shall be entitled to indemnification from the other
party for any claim resulting from its own negligent act(s) or
omission(s).
5.4 If any claim is made by a party which would give rise to a right
or indemnification under paragraph 5.1 the party entitled to
indemnification (the "Indemnified Party") promptly will give
notice of the claim to the party required to provide
indemnification (the "Indemnifying Party"). The Indemnifying
Party shall have the right, at its option and its own expense and
by its own counsel, to participate in the defense of any such
indemnified claim for which indemnification is provided by this
Agreement. Notwithstanding the foregoing, the Indemnifying Party
shall not have the right to control or represent the Indemnified
Party in the defense of any claim.
6. ASSIGNMENT, MODIFICATION AND TERMINATION OF AGREEMENT
6.1 Neither party may assign or delegate all or any part of its
rights and/or duties under this Agreement without the written
consent, as signed by one or more of the personnel shown on
APPENDIX D, of the granting party.
6.2 This Agreement may be modified or amended at anytime by mutual
agreement of the parties, provided the modification or amendment
is in writing, by one or more of the personnel shown on APPENDIX
D or by any other authorized officer of such party. APPENDIX D
may be modified by a party by notice to the other party, signed
by an authorized officer of such party.
6.3 The termination of this Agreement is governed by the following
provisions:
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(a) LMG or Xxxxxxx may terminate this Agreement without cause by
twelve (12) months written notice to the other. This
Agreement may be terminated by mutual agreement of the
parties in writing at any time.
(b) LMG shall provide Xxxxxxx ninety (90) days written notice if
LMG desires to increase its fees or charges to Xxxxxxx or to
change the manner of payment or to change any of the other
terms and conditions of this Agreement. Xxxxxxx must respond
to such request within sixty (60) days of receipt.
Processing fees, systems time and material rates may be
increased annually.
(c) If either of the parties hereto shall materially breach this
Agreement or be materially in default in the performance of
any of its duties and obligations hereunder (the defaulting
party), the aggrieved party hereto may give written notice
thereof to the defaulting party and if such default or
breach shall not have been remedied within forty-five (45)
days after such written notice is given, then the aggrieved
party may terminate this Agreement by giving thirty (30)
days written notice of such termination to the defaulting
party. This Agreement shall terminate immediately upon
expiry of the 30 day notice period.
(d) Notwithstanding anything herein to the contrary, Xxxxxxx or
LMG may immediately terminate this Agreement with cause,
upon written notice to the other. Cause includes, without
limitation, acts or omissions that constitute fraudulent,
criminal or unethical activity or blatant disregard for the
terms and conditions of this Agreement.
(e) Termination of this Agreement by default or breach by
Xxxxxxx shall not constitute a waiver of any rights of LMG
in reference to services performed prior to such
termination; termination of this Agreement by default or
breach by LMG shall not constitute a waiver by Xxxxxxx of
any other rights it might have under this Agreement.
(f) In the event that this Agreement is terminated, LMG agrees
that, in order to assist in providing uninterrupted service
to Xxxxxxx, LMG shall offer reasonable analysis and
programming assistance to Xxxxxxx in converting the records
of Xxxxxxx from the LMG system to whatever service or system
is selected by Xxxxxxx, subject to reimbursement to LMG for
such assistance at its standard rates as illustrated in
APPENDIX B.
(g) In the event that this Agreement terminates for any reason
other than by mutual written agreement, as provided for
above in Section 6.3(a), LMG and Xxxxxxx agree that LMG, at
Xxxxxxx'x option, will continue to provide the
administrative services on behalf of Xxxxxxx, as set forth
in this Agreement, for up to one year from the date of such
termination.
(h) In the event either party becomes or is declared insolvent
or bankrupt, is the subject of any proceedings relating to
its liquidation, insolvency or for the appointment of a
receiver or similar officer for it, makes an assignment for
the benefit of all or substantially all of its creditors, or
enters into an agreement for the continuation, extension, or
readjustment of all or substantially all of its obligations,
other than those agreements entered into as part of LMG's
normal course of business, the other party may immediately
terminate this Agreement for cause.
(i) Xxxxxxx shall provide fifteen (15) days written notice of
termination, modification or cancellation of this Agreement
to the appropriate Departments of Insurance if and to the
extent required by applicable law or regulation. Xxxxxxx
shall fulfill any lawful obligations with respect to the
Policies referenced by APPENDIX A of this Agreement,
regardless of any dispute between LMG and Xxxxxxx.
(j) Termination of this Agreement does not affect in any way the
Marketing Agreement, executed concurrently herewith.
7. RECORDS MAINTENANCE AND CONFIDENTIALITY
7.1 This Agreement shall be retained as a part of the official record
of both LMG and Xxxxxxx for the duration of this Agreement and
for seven years after the termination of this Agreement.
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7.2 LMG will maintain complete books and records of all transactions
between LMG, Xxxxxxx and its policyholders. LMG will preserve
detailed and adequate books and records of all administered
transactions, among LMG, Xxxxxxx and its policyholders,
sufficient to permit the insurer to fulfill all of its
contractual obligations to insured persons. These books and
records shall be maintained in accordance with prudent standards
generally accepted in business record keeping. LMG will maintain
Xxxxxxx'x records intact and separate and apart from the records
of any other carrier. The documentation will contain all
pertinent documents in sufficient detail to identify the relevant
dates, events, and persons participating in those insurance
events. LMG will maintain complete records of all transactions
taken pursuant to its Third Party Administrator license. The
books and records shall be maintained throughout this Agreement
and for ten years after the transaction to which they
respectively relate.
7.3 Xxxxxxx shall own the records generated by LMG pertaining to
Xxxxxxx; however, LMG shall retain the right to continuing access
to records to permit LMG to fulfill all of its contractual
obligations. Xxxxxxx and LMG shall have continuing right to
access and copy all accounts and records maintained by LMG
related to Xxxxxxx'x business. Any appropriately authorized
governmental agency shall have access to all books, bank accounts
and records of LMG and Xxxxxxx for the purpose of examination,
inspection and audit. All information contained in the
aforementioned books and records, including the identity and
addresses of policyholders shall be kept confidential, except
that such information may be used in proceedings instituted
against LMG or Xxxxxxx.
7.4 In the event that LMG and Xxxxxxx cancel this Agreement, LMG may,
by written agreement with Xxxxxxx, transfer all records to
Xxxxxxx or the successor administrator rather than retain them
for the period referenced in Section 7.2. If LMG transfers the
records to a successor administrator or to Xxxxxxx, LMG is no
longer responsible for retaining such records. The successor
third party administrator shall acknowledge in writing in its
agreement with Xxxxxxx, or Xxxxxxx itself shall acknowledge in
writing, that it is responsible for retaining the records for
which LMG had previously been responsible.
7.5 LMG will be given on-line access during Xxxxxxx'x normal business
hours to Xxxxxxx'x producer/agent database for the purpose of
inquiring on such system prior to LMG processing agent
appointments. Such access will continue until such time as LMG
ceases to process agent appointments for Xxxxxxx.
7.6 LMG acknowledges that certain information received from Xxxxxxx
including, without limitation, information concerning Xxxxxxx
customers or consumers, may be proprietary and/or confidential in
nature. All such information shall be used by LMG solely for
purposes of providing services pursuant to the Administrative
Services Agreement between the parties. LMG agrees to indemnify
and hold Xxxxxxx harmless from any and all loss and expenses
sustained by Xxxxxxx as a result of the unauthorized use of
proprietary and/or confidential information by LMG, or its
Wholesalers or Producers.
7.7 Xxxxxxx acknowledges that certain information received from LMG
may be proprietary and/or confidential in nature. All such
information shall be used by Xxxxxxx solely for purposes
contemplated by, and in a manner that is consistent with, this
Agreement or the Marketing Agreement between the parties. Xxxxxxx
agrees to indemnify and hold LMG harmless from any and all loss
and expenses sustained by LMG as a result of the unauthorized use
of proprietary and/or confidential information by Xxxxxxx.
7.8 LMG and Xxxxxxx shall each have in place reasonable security
measures to safeguard the confidentiality of the other's
proprietary and confidential information and the nonpublic
information of consumers and customers in their possession.
8. TERM
8.1 This Agreement shall remain in force and effect until such
agreement terminates as provided for in Section 6.3 of this
Agreement.
9. COMPUTER SYSTEM AND PROPRIETARY RIGHTS
9.1 Definitions: As used in this Agreement, the following terms shall
have such meanings:
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(a) "Administrative Computer System" or "Computer System" shall
refer to all computer systems and related materials used by
LMG to administer the Policies, including LMG proprietary
software and third party licensed software comprised of
computer programs and supporting documentation, including,
but not limited to, source code, object code input and
output formats, program listings, narrative descriptions and
operating instructions and shall include the tangible media
upon which the computer programs and supporting
documentation are recorded as well as the deliverable forms
and documents.
LMG'sproprietary software and third party licensed software
are used to administer the Policies listed in APPENDIX A.
(b) "Property" shall mean all property of either party
including, but not limited to, data records, materials,
supplies, computer software, customer records, premium
information, underwriting files, customer lists, sales data,
policyholder data, data on Wholesalers and Producers and any
other distribution systems.
9.2 *
(a) *
(b) *
(c) *
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10. GENERAL PROVISIONS
10.1 LMG and Xxxxxxx agree this Agreement is an honorable undertaking,
and each agree to cooperate with the other in carrying out its
provisions.
10.2 If any clause, paragraph, term or provision of this Agreement
shall be found to be void or unenforceable by any court of
competent jurisdiction, such finding shall have no effect upon
any other clause, paragraph, term or provision of this Agreement,
and same shall be in full force and effect.
10.3 For any notice under this Agreement, notice shall be sufficient
and effective five (5) business days after deposit in the U.S.
Mail, postage prepaid, return receipt requested, or upon receipt
if delivered personally or by fax or facsimile or by a delivery
service. Such notice shall be directed as follows:
To LMG: Legacy Marketing Group
Xxxxxxx Xxxxx, President
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With copy to: Xxxxxx Xxxxxxx & Xxxxxxxxxx LLP
00 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxx: Xxxx Xxxxxxx Life Insurance Company
Xxxxx Xxxxx, Vice President
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
With copy to: Xxxx Xxxxxxx Life Insurance Company
Xxxxxxx Xxxx Xxxxxx, Senior Counsel
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
10.4 Each party expressly represents and warrants that it has the
authority to enter into this Agreement and that it is not or will
not be, by virtue of entering into this Agreement or otherwise,
in breach of any other agreement with any other insurance
company, association, firm, person, or corporation.
10.5 The persons signing this Agreement on behalf of Xxxxxxx and LMG
warrant, covenant and represent that they are authorized to
execute this document on behalf of such corporations pursuant to
their bylaws or a resolution of their boards of directors.
10.6 LMG shall, in all cases and at all times, observe and obey the
rules, regulations, instructions and directives of Xxxxxxx which
shall be equitable and consistent with the terms of this
Agreement. Xxxxxxx may, from time to time and at any time,
promulgate such rules, regulations, instructions and directions
for its operations.
10.7 LMG is an independent contractor. Nothing contained in this
Agreement shall be construed to create the relationship of
employer and employee between Xxxxxxx and LMG, nor shall LMG's
employees, Wholesalers or Producers be considered employees of
Xxxxxxx for any purpose.
10.8 This Agreement is the result of mutual negotiations between the
parties and shall not be deemed to have been prepared by either
party, but by both equally. The headings of the several
paragraphs contained herein are for convenience only and do not
define, limit, or construe the contents of such paragraph.
10.9 This Agreement, including APPENDICES A, B, C, D and E attached
and the provisions thereof, constitute the entire agreement
between the parties. This Agreement shall be governed and
construed in accordance with the laws of the State of California.
Any similar agreement signed prior to the execution dates below
is null and void and abrogated hereby. No change, waiver, or
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discharge shall be valid unless in writing and signed by an
authorized representative of the party against whom such change,
waiver, or discharge is sought to be enforced. No delay or
omission by either party to exercise any right or power shall
impair such right or power or be construed as a waiver. A waiver
by either of the parties of any of the covenants to be performed
by the other or any breach shall not be construed to be a waiver
of any succeeding breach or of any other covenant.
10.10 When a policy is issued to a trustee or trustees, a copy of the
trust agreement and any amendment thereto, shall be furnished to
Xxxxxxx by LMG and shall be retained as part of the official
records of both LMG and Xxxxxxx for the duration of the policy
and for six years thereafter.
10.11 Any policies, certificates, booklets, termination notices or
other written communication delivered by Xxxxxxx to LMG for
delivery to insured parties or covered individuals shall be
delivered by LMG within ten (10) days after receipt of
instructions from Xxxxxxx to deliver them unless applicable law
or regulation requires an earlier delivery.
10.12 Payment to LMG of any premiums or charges for insurance by or on
behalf of the insured party shall be deemed to have been received
by Xxxxxxx, and the payment of return premiums or claim payments
forwarded by Xxxxxxx to LMG shall not be deemed to have been paid
to the insured party or claimant until such payments are received
by the insured party or claimant.
10.13 During the term of this Agreement and for one (1) year
thereafter, Xxxxxxx and LMG shall not, directly or indirectly,
solicit for employment any person employed or working on the
services provided hereunder within the preceding 12 months by the
other party or any affiliate of the other party without the prior
written consent of the other party; provided however; that (i) in
the event either party uses the services of a professional
recruiter and provides such recruiter solely with generic job
duties and job descriptions (without making any reference to the
other party or the party's affiliates) and such recruiter
contacts a qualified candidate who happens to be an employee of
the other party and that candidate initiates contact through a
recruiter with that party, then that party may employ that
employee, or (ii) in the event an employee of the other party
responds to a general advertisement placed by a party, then that
party may employ that employee.
10.14 LMG shall provide reasonable access during normal business hours
to any location from which LMG conducts its business and provides
services to Xxxxxxx pursuant to this Agreement to auditors
designated in writing by Xxxxxxx for the purpose of performing
audits for Xxxxxxx. Xxxxxxx shall give reasonable advance written
notice of an audit and include in that notice the matters which
it will audit. LMG shall provide the auditors any assistance they
may reasonably require. Such auditors shall have the right during
normal business hours to audit any business record, activity,
procedure, or operation of LMG that is reasonably related to
LMG's responsibilities identified in this Agreement, including
the right to interview any LMG personnel involved in providing or
supporting such responsibilities.
10.15 Each party shall be excused from performance for any period and
to the extent that the party is prevented from performing any
services, in whole or in part as a result of delays caused by an
act of God, war, civil disturbance, court order, labor dispute,
or other cause beyond that parties reasonable control, including
failures or fluctuations in electrical power, heat, light, air
conditioning, or telecommunications equipment and such
non-performance shall not be a default or a ground for
termination. Notwithstanding the above, LMG agrees that it will
establish and maintain reasonable recovery steps, including
technical disaster recovery facilities, uninterruptable power
supplies for computer equipment and communications and that as a
result thereof LMG will use its best efforts to ensure that the
Computer System shall be operational within 48 hours of a
performance failure. LMG's Rome, Georgia, and Petaluma,
California, offices will provide for each others' off-premises
site for storage of backup software for the operating systems and
data files.
10.16 In no event and under no circumstances, however, shall either
party under this Agreement be liable to the other party under any
provision of this Agreement for lost profits or for exemplary,
speculative, special consequential or punitive damages.
10.17 Any claim or dispute arising out of or relating to this
Agreement, or any claimed breach thereof, or arising out of or
relating to the relationship between the parties shall be settled
by arbitration administered by the American Arbitration
Association, in San Francisco, California, under its Commercial
Arbitration Rules and the judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction.
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10.18 The parties agree that this Agreement constitutes the full,
complete and entire Agreement between them and supersedes all
prior understanding, agreement, conversations, or representations
between them with respect to the subject matter of this
Agreement. Any prior agreement between LMG and Xxxxxxx regarding
the same subject matter is null and void and abrogated hereby.
10.19 Survival: Sections 5, 6.3(f), 6.3(g), 7, 10.9, 10.13, 10.14 and
10.16 shall survive the termination of this Agreement.
{Remainder of this page intentionally left blank.}
9
In witness whereof, the parties here to have executed this Agreement to take
effect on the effective date specified above.
LEGACY MARKETING GROUP
By: /s/ Xxx X. Xxxx
Title: V.P. Product Development
Date: January 18, 2001
XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxx
Title: Vice President
Date: January 18, 2001
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APPENDIX A
GEOGRAPHIC TERRITORY:
The District of Columbia and all states except Alabama
POLICY FORMS
State required variations of the above referenced forms may be required.
00
XXXXXXXX X
PROCESSING FEES
1. Multi Year Guarantee Products
a. Acquisition Fees: One time fee of *** per application received.
b. Maintenance: *** per inforce Policy per year to be paid weekly
pro rata.
c. Terminations: One time fee of *** to be paid at time of
surrender, maturity, election of a settlement option or death
claim of each Policy.
d. Payment of Claims: *** per death claim paid by LMG in addition to
the *** termination fee, as provided above in ss. c.
2. Agent Appointment and Termination: *** per agent appointment per state; ***
per agent termination per state.
3. Out-Of-Pocket Expenses
a. In addition to the fees set forth above, LMG will forward to
Xxxxxxx on a monthly basis a xxxx for the out of pocket expenses
listed below. Such invoice will include adjustments for any fees
due to Xxxxxxx from LMG as a result of Agent initial and renewal
appointment fees which are due or have been collected from such
Wholesalers and Producers. Xxxxxxx will reimburse LMG with
fifteen (15) days of receipt of such xxxx. If LMG does not
receive reimbursement within fifteen (15) days, Xxxxxxx will
allow LMG to draw the following out of pocket expenses from the
disbursement account. Out-of-pocket expenses are expenditures for
the items such as those listed below and any other items agreed
to in writing by the parties:
(1) Costs of telecommunication lines and equipment installed to
provide primary and back-up support for on-line access to
LMG's administrative system and transmission of data.
(2) The costs involved with off-site storage for Xxxxxxx
records, documents, correspondence and other items as
provided in this Agreement, or cost of shipping those items
to Xxxxxxx.
(3) The costs associated with Agent (Wholesalers and Producers)
appointments and terminations, including Agent background
investigations and Agent initial appointment fees and
termination fees referenced in the Marketing Agreement
executed concurrently with this Agreement.
x. Xxxxxxx will be responsible for cash management of this
disbursement account and LMG agrees to provide Xxxxxxx records
and information to properly perform this function.
4. Systems Time and Materials Rates
Under certain conditions as set forth in this Agreement, Xxxxxxx will
reimburse LMG for the costs of systems modifications or systems
support at the following rates:
Chief Information Officer * per hour
Director--Technical Support * per hour
Senior Programmer Analyst * per hour
Programmer Analyst * per hour
Senior Business Analyst * per hour
Project Manager * per hour
Business Analyst * per hour
Tester * per hour
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5. Payment of Processing Fees.
Xxxxxxx will pay LMG the processing fees from 1 and 2 weekly. Fees
from 1 and 2 will be paid by wire transfer within 5 days of receipt of
such documentation.
6. Compensation Not To Be Contingent
This Agreement shall not provide for compensation, commissions, fees
or charges which are contingent upon savings effected in the
adjustment, settlement and payment of losses (the loss ratio) covered
by Xxxxxxx'x obligations. In the event that LMG adjusts or settles
claims on behalf of Xxxxxxx, such compensation shall in no way be
contingent on claims experience.
This provision does not prevent the compensation of LMG from being
based on premiums or charges collected or the number of claims paid or
processed or performance-based compensation for providing auditing
services. LMG will not receive any administrative compensation except
as expressly set forth in this Agreement between LMG and Xxxxxxx.
7. LIMRA CAP Survey Response Fees
Xxxxxxx will pay LMG a flat fee of *** per reply that LMG prepares in
response to LIMRA CAP survey answers. LMG will maintain a record of
the responses to policyholders that it prepares on behalf of Xxxxxxx.
The record will indicate the number of such responses prepared and
will be forwarded as an invoice to Xxxxxxx on a monthly basis. Xxxxxxx
remit payment to LMG within twenty (20) days of receipt of such
invoice.
8. Additional compensation to be paid to LMG by Xxxxxxx for services not
contemplated herein shall be mutually decided by both parties.
All fees set forth in this Agreement shall be reviewed annually by LMG and
Xxxxxxx to ensure that such fees remain constant with any inflation.
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APPENDIX C
SERVICES TO BE PROVIDED
These services are to be performed by LMG in accordance with the policies and
procedures mutually agreed to by both parties, applicable laws and regulations
and reasonable industry standards.
1. Services:
Clerical Processing of Agent Appointment and Termination with States
Appointment
1. Review signed Producer Agreement for completeness and accuracy, input
agent information into the Computer System
2. Conduct Background Investigation on Producer, including credit report,
NAIC RIRS inquiry, Vector Check, state licensing check (in all States
in which Producer requests appointment), criminal check, and past
employment check.
3. If Producer meets LMG/Xxxxxxx contracting criteria, complete and mail
all state required appointment forms or electronic transmission of
appointment data to state.
4. Depending on state criteria, once appointment is effective, input
appointment information into the Computer System system for renewal
tracking, new business processing and weekly transmission to carrier.
Termination
1. Complete and mail state required forms or electronic transmission to
terminate agent's appointment in state(s).
2. Update the Computer System with appropriate appointment termination
into the Computer System to prohibit new business processing. Monthly
transmission of agent termination information to carrier.
Appointment Renewal Processing
1. LMG will forward to Xxxxxxx within three (3) business days of a
written request by Xxxxxxx any Producer address that is required to be
provided to a regulatory agency.
Clerical Processing of Transfers (1035x, CD Money Market, Mutual Fund
Qualified Transfers)
1. Review all transfer documentation for completeness and accuracy,
including receipt of all state specific forms (replacements).
2. Contact transfer institution for verification of account information.
3. Mail required documentation including state specific forms to transfer
institution.
4. Mail initial letter to applicant confirming receipt of application.
5. Contact transfer institution on a regular basis until receipt of such
funds.
6. Once all funds are received complete Contract Issue.
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Contract Issue
1. Review all annuity applications for completeness and accuracy,
including state product availability and agent licensing.
2. Input application into LMG's administrative system.
3. Process any transfers, as previously defined.
4. Generate state specific policy forms.
5. Mail policy to Producer for delivery.
6. Follow-up on any outstanding delivery requirements and delivery
receipt.
7. Once all outstanding requirements are received, apply the premium to
policy, place the policy inforce and generate a commission payment to
agent.
Policyholder Service
Includes all maintenance on all certificates/policies after issue
(inforce). Responsibilities include the following:
1. Responding to all written or verbal consumer or agent inquiries
regarding an inforce policy.
2. Clerical processing of the following financial transactions:
Withdrawals (including systematic withdrawal income and
Minimum Required Distributions).
Partial surrenders.
Full surrenders, including 1035X.
Strategy transfers.
Election of a settlement option by owner or beneficiary
(however LMG will not process the actual payments under a
settlement option). LMG will provide Xxxxxxx with the all
required documentation to process the payments under such
election within ten (10) business days of receipt of completed forms.
Free Look or Not Taken processing
Additional Deposit(s)
Claims processing, as defined in this Agreement
3. Clerical processing of the following non-financial transactions.
Address changes
Beneficiary changes
Ownership changes
Mailing of quarterly statements
Collateral Assignment
Review of legal documents (not limited to POA, Guardianship).
4. Maintain a toll-free telephone line for policyholders.
Clerical processing is defined as reviewing requests to determine all state
and carrier mandated forms have been completed, data entry into ALS
(administrative system) to record such transaction and providing written
confirmation to policyholder of such clerical processing.
Maintenance of Policyholder Records
LMG will be responsible for the maintenance of policyholder records.
Specifically, LMG will maintain accurate and complete policyholder records
according to the provisions of this Agreement. Paper records will be
maintained in an offsite storage facility. Copies of all paper records will
be permanently scanned with LMG's imaging system. Records of all
transactions will also be maintained in LMG's administrative system.
Data Processing Services - All data files provided to Xxxxxxx will be in
formats that are mutually agreed to by both parties. Month end cutoff for
all accounting files will be the 21st of each month or the prior business
day unless otherwise agreed upon by both parties. {Need to specify month
end.)
1. Maintenance of the general ledger for all premium and disbursement
cash accounting as well as all policy related financial transactions.
2. Within ten (10) days of month end LMG will transmit the general ledger
interface to Xxxxxxx for financial statement preparation.
3. Maintain policy transaction data files.
15
4. Transmission of policy transaction data files to Xxxxxxx for the
preparation of reserve calculations.
5. Provide computer-accessible valuation data: account balance
information, policyholder activity, and policy provision data (such as
changing schedules of interest) at a sufficient level of detail to
make Statutory Valuation and GAAP accounting possible without
resorting to estimates. Create and transmit the data files with a
sufficiently early effective date that they may be used by Xxxxxxx
before the calendar month end.
6. Provide ledger input data whose end-of-month close date coincides with
the effective date for the valuation data.
7. Provide Xxxxxxx with a complete file extract of all policyholder data
from the administration system once per month in a mutually agreed
upon format. Such policyholder data is confidential and shall only be
used by Xxxxxxx for the purpose of performing demographic and
marketing research. Any other use of such data requires prior written
consent by LMG. More frequent updates or incremental updates will be
provided at a mutually agreed upon date.
Agent Compensation
LMG is responsible for weekly processing and payment via check or ACH of
first year and trailing commissions to its Wholesalers and Producers.
Commission payments result from premium being applied to appropriate
Xxxxxxx policies. LMG is responsible for generating the weekly commission
statements, maintenance of year to date commission information, and
processing of the actual commission payment. Agent compensation amounts are
determined by the Producer's LMG contract level, product type, age of
annuitant and owner, and premium amount.
Premium Accounting
LMG is responsible for receiving premium checks and depositing into Xxxxxxx
depository bank account. The receipt of premium is recorded in the
administrative system and a general ledger entry is created to record the
deposit. However, LMG is not responsible for investing and managing these
assets.
Tax Reporting to Agents
LMG will be responsible for the reporting on a yearly basis to its
Producers and Wholesalers information on all commissions earned, as well as
other compensation from incentive trips, etc. Such reporting to Wholesalers
and Producers will consist of generating and mailing of 1099 forms. LMG
will also be responsible for the transmission of such records to the
applicable federal and state taxing authorities. LMG policies and
procedures comply with all state and federal regulations.
Tax Reporting to Policyholders
LMG is responsible for the reporting on a yearly basis to policyholders
information regarding certain financial transactions on such Xxxxxxx
policies. Reporting to policyholders consists of generating and mailing of
1099 forms, Year End Account Balances and 5498 forms. LMG will also be
responsible for the transmission of such records to the applicable federal
and state taxing authorities. LMG policies and procedures comply with all
state and federal taxing authority regulations. Such tax reporting only
encompasses disbursements that are made by LMG on behalf of Xxxxxxx.
Xxxxxxx shall be responsible for any tax reporting for disbursements that
are made by Xxxxxxx directly.
Tax Reporting to Vendors
LMG will be responsible for the reporting on a yearly basis to its vendors
information on all compensation paid. Such reporting to vendors will
consist of generating and mailing of 1099 forms. LMG will also be
responsible for the transmission of such records to the applicable federal
and state taxing authorities. LMG's policies and procedures comply with all
state and federal regulations.
Tax Reporting to Beneficiary(ies)
LMG is responsible for the reporting to beneficiary(ies) on a yearly basis
information regarding receipt of lump sum claim payments. Reporting to
beneficiary(ies) consist of generating and mailing of 1099 forms. LMG will
also be responsible for the transmission of such records to the applicable
federal and state taxing authorities. LMG policies and procedures comply
with all state and federal taxing authority regulations. Such tax reporting
only encompasses
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disbursements that are made by LMG on behalf of Xxxxxxx. Xxxxxxx shall be
responsible for any tax reporting for disbursements that are made by
Xxxxxxx directly.
2. Other Services:
a. Accounting Services
(1) Maintenance of general ledger system
(2) Reconciliation of all cash and suspense accounts monthly
(3) Furnishing to Xxxxxxx of all applicable data necessary for
preparation of Xxxxxxx NAIC Convention Blank
(4) Furnishing to Xxxxxxx of all applicable data necessary for
preparation of the Xxxxxxx corporate tax return
(5) Furnishing to Xxxxxxx of all applicable data necessary for
preparation of the Xxxxxxx GAAP financial statements
(6) Furnishing to Xxxxxxx of all applicable data necessary for the
preparation of the Xxxxxxx unclaimed property reports
(7) Furnishing to Xxxxxxx of monthly data sets of all applicable data
necessary for the preparation of the Xxxxxxx premium tax returns
and payments
b. Actuarial Services
(1) LMG will assist and provide actuarial support to Xxxxxxx. LMG's
responsibilities will vary by each product jointly developed and
may include:
Provide initial product specification
Provide competitive analysis for the product
Define pricing assumptions
Provide any necessary support for pricing assumptions
Share deterministic pricing results
Perform sensitivity analysis
Provide final product specifications
Define actuarial memorandum
Provide Actuarial field support
Monitor actuarial assumptions
Assist in ongoing profit/pricing management of the business
(2) LMG will draft initial policy forms and applications to be used
for each product jointly developed. LMG will assist Xxxxxxx in
the completion and preparation of filing such forms, and assist
in the approval process, LMG's responsibilities may vary with
each product jointly developed.
c. Advertising Material Development LMG will be responsible for the
creation, printing and distribution of all advertising material used
by LMG for such products jointly developed. However, LMG will obtain
the necessary approval from Xxxxxxx prior to use of such advertising
material.
It is LMG's intention to provide all administrative services, with the
exception of the following:
a. Administration after the election of a settlement option by Owner, and
any subsequent payments after such election.
b. Administration after the election of a settlement option resulting
from a death, and any subsequent payments after such election.
3. Collection and Disposition of Funds:
All insurance premiums collected by LMG on behalf of Xxxxxxx, and return
premiums received from Xxxxxxx, shall be held by LMG in a fiduciary
capacity and will not be used as general operating funds of LMG. Such funds
shall be immediately, within two (2) business days be remitted to the
person or persons entitled to them or shall be deposited promptly, within
two (2) business days, in a Premium Fiduciary Account. Such Premium
Fiduciary Account will be held in the name of Xxxxxxx. However, it will be
established and maintained by LMG in a federally or state insured financial
institution, separate and apart from any funds belonging to LMG or third
parties.
17
This Premium Fiduciary Account will at all times have a balance equal to
contributions plus any interest earned less, authorized disbursements by
Xxxxxxx. If LMG is authorized to draw checks on the Premium Fiduciary
Account, this will be clearly indicated on their face.
LMG may not pay any claim by withdrawals from the aforementioned Premium
Fiduciary Account. Withdrawals from the Premium Fiduciary Account shall be
made as provided in this Agreement between LMG and Xxxxxxx for any of the
following:
a. Remittance to Xxxxxxx, if so entitled to such remittance;
b. Deposit in an account maintained in the name of Xxxxxxx;
c. Transfer to and deposit in a claims-paying account, with claims to be
paid as provided by Xxxxxxx.
LMG will maintain in a fiduciary capacity, Disbursement Accounts where
Xxxxxxx will fund the balance and LMG is authorized to make the following
disbursements:
a. Payment to LMG of its out of pocket expenses, as defined in Appendix
B, Section 3a, and weekly commissions.
b. Remittance of return premium to the person or persons entitled
thereto.
c. Any policy/certificate holder disbursements, including payment of
claims.
LMG will pay claims from funds collected on behalf of Xxxxxxx and shall be
paid only on drafts of, and as authorized by Xxxxxxx. In the event that LMG
receives monies to pay claims on behalf of Xxxxxxx, such funds will be held
in a fiduciary capacity. No deposits will be made into or disbursements
made from this fiduciary account except for claims and claim adjustment
expenses. This fiduciary account will at all times have a balance equal to
the amount deposited less claims and claims adjustment expenses paid.
4. Settlements/Reports:
a. As agreed upon but no later than twenty (20) calendar days of the end
of each month, the prior month's balance sheet activity shall be
reconciled by LMG.
b. As agreed upon, LMG shall provide reports to Xxxxxxx, including but
not limited to the following items:
(1) General ledger report
(2) Premium and commission reports
(3) Claim reports
(4) Statutory reserve policy information
(5) FAS 97 detail policy information
c. Daily, LMG shall provide to Xxxxxxx, including but not limited to the
following items: (1) Cash control reports, beginning the first day of
business
d. Weekly (Monday, for the previous week's business activity), LMG shall
provide to Xxxxxxx, including but not limited to the following items:
(1) Copies of check registers
(2) Bi-weekly--Transmission of general ledger data (including state
code detail), beginning on a mutually agreeable date after the
volume of business reaches a level determined by Xxxxxxx to
warrant daily updates
e. As agreed upon but no later than twenty (20) calendar days of the end
of each month, LMG shall provide to Xxxxxxx, including but not limited
to the following items:
(1) Copies of all bank reconciliations
(2) All supplemental financial reporting information as requested by
Xxxxxxx
(3) Copies of tax reporting to policyholders and vendors
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f. Miscellaneous ad hoc sales reporting.
5. Claims Payment:
All Policy claims services, with the exception of the adjudication of death
claims not paid out as a lump sum, shall be performed by LMG on behalf of
Xxxxxxx. All Policy claims shall be investigated, processed and paid in
accordance with the policies and procedures mutually agreed to by both
parties. Xxxxxxx'x claim personnel shall be made available at Xxxxxxx'x
expense to answer any questions that might arise from LMG's claims
personnel relating to claims investigation, processing and payment of
Policy claims.
In addition to the foregoing, in the case of a decision by LMG that a
Policy claim should be denied, LMG shall communicate its proposed action to
appropriate Xxxxxxx personnel who must agree and approve the proposed claim
denial before the claims decision is finalized. LMG will communicate
appropriate details of any proposed claim denial in accordance with
notification procedures to be jointly developed by the parties. If no
response is received within five (5) business days of transmission, LMG
shall have the right to proceed on the basis that Xxxxxxx is in agreement
with the decision to deny the claim. All claims paid by LMG from funds
collected on behalf of or for Xxxxxxx shall be paid on only drafts or
checks of and as authorized by Xxxxxxx. All monies received by LMG to pay
claims on behalf of Xxxxxxx shall be held in an administrative capacity. No
deposits will be made into, nor disbursements made from this fiduciary
account, with the exception of claims and claims adjustment expenses. This
fiduciary account will at all times have a balance equal to the amount
deposited less claims and claims adjustment expenses paid. LMG is
responsible for all correspondence with the claimant and preparation of the
claim checks.
For those claims referred to Xxxxxxx by LMG, LMG will provide Xxxxxxx with
copies of the following:
1) Policy records (including but not limited to: all correspondence
relating to the policy)
2) All correspondence with the claimant.
3) Diary screens.
4) Claim proofs.
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APPENDIX D
SCHEDULE OF AUTHORIZED PERSONNEL
Representing Xxxxxxx
*
*
Representing LMG
Xxxx Xxxxxxxx Chief Information Officer
Xxxxx Xxxxx Chief Officer of Strategic Development
Xxxxx Xxxxxx Chief Financial Officer
Xxxxx Xxxxx Chief Executive Officer
Xxxx Xxxxxx Chief Operations Officer
Xxx Xxxx Vice President of Product Development
Xxxx Xxxxxxx Vice President of Distribution
Xxxx Xxxxxx Officer of Special Markets
00
XXXXXXXX X
Service Standards
Process Standard
New Business
Policy Issue Policy will be issued within * days* of receipt
Reissue Policy will be reissued within * days* of receipt
New Business Transfers New business transfers will be mailed within * days* of receipt
Transfer Follow-up Transfers will be follow-up on every * business days* or as
otherwise determined effective based on the transfer company
Agent Contracting All new agent contracts will be reviewed and all necessary background
investigation reports ordered within * days* of receipt
Appointment Processing Agent appointment(s) will be completed within *
days* of receipt
Commission Processing Process and mail checks on Friday of each week for all complete new
business applications received by Thursday of that week
Commission Inquiries Process and confirm within * business days*
Premium Deposit Premium will be deposited the day it is received
Policyholder Services
Claims Processing Process and approve within * business days* of receipt
Financial Transactions Process and confirm within * business days* of receipt
Non-Financial Transactions Process and confirm within * business days* of receipt
Customer Service Call Center
Answer Rate *
Abandon Rate *
Average Hold Time *
* Turnaround times are from the date of receipt of complete
policyholder/beneficiary/Producer documentation or approval from Xxxxxxx
when applicable. Further, the times given above are average times.
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