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EXHIBIT A (9) (b)
Servicing Agreement
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SERVICE AGREEMENT
AGREEMENT made as of the 9th day of September, 1994, by and between SAFECO
Life Insurance Company ("the Customer"), having its principal office and place
of business at 00000 Xxxxxxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and
Financial Administrative Services, Inc. ("FAS"), having its principal office and
place of business at 00 Xxxxxx Xx., Xxxxxx, Xxxxxxxxxxx 00000.
WHEREAS, Customer desires to appoint FAS as Record Keeping Service Agent for
Customer's insurance policies ("the Policies"), and FAS desires to accept such
appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
SECTION 1 Terms of Appointment
1.01 Subject to the provisions set forth in this Agreement, Customer hereby
appoints FAS as Recordkeeping Service Agent for the Policies. The Policies
subject to this Agreement are described in Exhibit A.
1.02 FAS hereby accepts such appointment and agrees that on and after the
effective date of its appointment it will act as Customer's Recordkeeping
Service Agent for the Policies.
1.03 FAS agrees to provide the necessary facilities, equipment, and personnel to
perform its duties and obligations hereunder in accordance with industry
practice, such facilities being referred to hereinafter as the "FAS Facilities"
and such systems being referred to hereinafter as the "FAS System".
1.04 FAS agrees that it will perform, at the direction of the Customer, those
Recordkeeping Service Agent Functions as set forth in Schedule A, Schedule B,
Schedule C, Schedule D, Schedule E and Schedule F of SAFECO's FAS Operations
Manual (the "Operations Manual"), which was in effect on the effective date of
this Agreement and which shall be considered a part of this Agreement.
1.05 FAS shall modify its systems and procedures to comply with any applicable
federal or state statute, law, or regulation pertaining to the administration
and servicing of the Customer's product(s) under this Agreement, within a
reasonable time of receiving written law or regulation from Customer, unless
such statute, law or regulation substantially increases the obligations of FAS,
in which case, FAS reserves the right to terminate this Agreement in accordance
with Section 9.02. Such termination may occur in the initial and in subsequent
terms of this Agreement.
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SECTION 2 Term
2.01 Subject to termination as hereinafter provided, this Agreement shall remain
in force and effect for an initial term of three (3) years. This Agreement shall
continue in force and effect from year to year thereafter until terminated as
herein provided, each such additional year being an additional term of this
Agreement.
2.02 In the event that this Agreement is terminated, regardless of the reason
for such termination, FAS shall cooperate with Customer and use its best efforts
to effect an orderly transfer of administration as rapidly and smoothly as
possible and shall provide all necessary staff, services and assistance required
subject to reimbursement of FAS for such assistance at its standard rates and
fees as defined in this Agreement.
SECTION 3 Fees and Expenses
3.01 During the initial term of the Agreement, Customer shall pay FAS within
thirty (30) days of receipt of FAS' statement, the fees and charges in the
amounts as set out in Exhibit B annexed hereto and made a part hereof.
3.02 Customer shall also reimburse FAS for all reasonable out-of-pocket expenses
incurred by FAS in the performance of this Agreement; FAS hereby agrees that the
expenses referred to in this section shall be only those charges directly
incurred by FAS as referred to in Exhibit B or those other expenses authorized
by Customer.
3.03 For each additional term of this Agreement, FAS shall be entitled to
receive such fees and charges as shall be agreed upon by the parties prior to
commencement of each term, pursuant to Section 9.03 hereof.
3.04 In no event will any fee under Paragraph 3.03 above exceed the like fee
during the previous term of this Agreement by more than fifteen percent (15%).
3.05 Payment terms hereunder are net thirty (30) days with interest at one and
one-half percent (1 1/2%) per month, but in no event more than the highest
interest rate allowable by law assessed on all amounts owing more than thirty
(30) days.
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SECTION 4 Representations and Warranties of FAS
FAS represents and warrants to Customer as follows:
4.01 It is a corporation duly organized and existing and in good standing under
the laws of the State of Connecticut.
4.02 It is empowered under applicable laws and by its charter and bylaws to
enter into and perform the services contemplated in this Agreement.
4.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform the services contemplated in this Agreement.
4.04 It has, and will continue to have and maintain, the necessary facilities,
equipment, licenses, and personnel to perform its duties and obligations under
this Agreement.
4.05 To the best of FAS' knowledge based on due inquiry, FAS represents and
warrants that neither FAS, its affiliates which are involved in providing any of
the services provided pursuant to this Agreement nor any person employed in any
material connection with respect to the services provided pursuant to this
Agreement:
(a) within the last ten (10) years has been convicted of any
felony or misdemeanor arising out of conduct involving
embezzlement, fraudulent conversion, or misappropriation of
funds or securities, or involving violations of Sections 1341,
1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code; or
(b) within the last ten (10) years has been found by any state
regulatory authority to have violated or has acknowledged
violation of any provision of any state insurance law
involving fraud, deceit or knowing misrepresentation; or
(c) within the last ten (10) years has been found by any federal
or state regulatory authorities to have violated or have
acknowledged violation of any provision of federal or state
securities laws involving fraud, deceit or knowing
misrepresentation.
4.06 To the best of FAS' knowledge and ability, FAS has complied with and will
continue to comply with, all laws and regulations.
SECTION 5 Representations and Warranties of Customer
Customer represents and warrants to FAS as follows:
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5.01 It is a corporation duly organized and existing and in good standing under
the laws of the State of Washington.
5.02 It is empowered under the applicable laws and regulations and by its
charter and bylaws to enter into and perform this Agreement.
5.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
5.04 All of the Prospectuses, Policies, and other forms provided by Customer
shall have been approved by all required regulatory agencies and shall be in
compliance with all state, and local laws and regulations.
5.05 Customer has complied with, and will continue to comply with, all laws and
it has and will continue to make, all required filings with regulatory agencies
in connection with the offer, sale, or administration of the Policies.
SECTION 6 Liability
6.01 FAS shall not be responsible for, and Customer shall indemnify and hold FAS
harmless from and against, any and all costs, expenses, losses, damages,
charges, counsel fees, payments and liability, which may be asserted against FAS
or for which it may be held liable, to the extent arising out of or attributable
to:
a) Customer's willful refusal or failure to comply with the terms
of this Agreement, or which arise out of Customer's
negligence, mistake or willful misconduct or which arise out
of the breach of any representation, or warranty of Customer
hereunder;
b) FAS' reliance on, or use of, information, rate books, cash
value and reserve factors, data records and/or documents
received by FAS from the Customer;
c) FAS's reliance on, or acts of good faith based on, any
instructions or requests made by any persons listed on a
"Schedule of Authorized Personnel" to be furnished to FAS by
the Customer upon execution of this Agreement and attached as
Exhibit C, and as amended from time to time in writing by the
Customer.
6.02 FAS shall be responsible for and shall indemnify and hold Customer harmless
from and against any and all direct losses, damages, costs, charges, counsel
fees, payments, expenses and liability, to the extent arising out of or
attributable to FAS'
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willful refusal or failure to comply with the terms of this Agreement, or which
arise out of FAS, negligence, or willful misconduct or which arise out of the
breach of any representation, or warranty of FAS hereunder.
6.03 In the event FAS is unable to perform its obligations under the terms of
this Agreement because of strikes, equipment or transmission failure or damage,
or other causes beyond its control, FAS will not be liable for any damages
resulting from such causes. FAS shall use reasonable care to minimize the
likelihood of any damage, loss of data, delays or errors resulting from the
uncontrollable event and, in the event such damage, loss of data, delays or
errors occur, FAS shall use its best efforts to mitigate the effect of such
occurrence.
6.04 At any time FAS may apply to a person indicated in Exhibit C as a person
authorized to give instructions under this section with respect to any matter
arising in connection with this Agreement. FAS shall not be liable for, and
shall be indemnified by Customer against, any action taken or omitted by FAS in
good faith in reliance upon such instructions.
6.05 The Customer shall immediately provide FAS with written notice of any
change of authority of persons authorized and enumerated in Exhibit C to provide
FAS with instructions or directions relating to services to be performed by FAS
under this Agreement.
6.06 In the event malfunction of the FAS System or other business process causes
an error or mistake in any record, report, data, information or output under the
terms of this Agreement, FAS shall upon discovery of this event notify the
Customer in writing and at FAS' expense correct and reprocess such records.
6.07 In the event malfunction of the FAS System causes an error or mistake in
any record, report, data, information or output under the terms of the
Agreement, if Customer discovers an error or mistake, the Customer shall
promptly notify FAS in writing.
6.08 In the event of a mistake caused by FAS, relating to the services performed
by FAS under this Agreement, as described in Section 1.04, FAS shall upon
discovery of this event notify the Customer in writing and at FAS's expense
correct such systems and records. If the parties to this Agreement cannot
mutually agree on an appropriate resolution of this mistake, Section 9.06 will
apply.
6.09 FAS has received the software being used to perform its obligations to
Customer under this Agreement from Integrity Life through The Leverage Group on
an as is basis. SAFECO will hold FAS harmless from any inadequacies, problems
and non-performance created by Integrity Life with respect to such software as
received by FAS. Programming and or administrative corrections to such
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inadequacies, problems and non-performance will be regarded as customized
modifications which are billable to the Customer as expressed in Exhibit B.
SECTION 7 Covenants of Customer and FAS
7.01 FAS shall keep safe the following items, and establish and maintain
facilities and procedures for the safekeeping of: policy forms; check forms and
facsimile signature imprinting devices, if any; and all other documents,
reports, records, books, files and other materials relative to this Agreement,
as set forth in Schedule E of the Operations Manual referenced in Section 1.04
above.
7.02 Upon reasonable notice to FAS, Customer shall have access, during ordinary
business hours, to all documents, records, reports, books, files, and other
materials relative to this Agreement and maintained by FAS, subject to the
reasonable security concerns of FAS.
7.03 It is expressly understood and agreed that all documents, reports, records,
books, files and other materials relative to this Agreement shall be the sole
property of Customer and that such property shall be held by FAS as agent,
during the continuance of the Agreement.
7.04 FAS shall maintain appropriate backup computer files according to the terms
of the FAS back up procedures in the FAS Disaster Recovery Plan. The purpose of
these files is to permit file recovery in the event of destruction of normal
processing files. FAS shall maintain appropriate back up copies as outlined in
the Operations Manual referenced in Section 1.04 above. Customer may review the
procedures in effect upon demand.
7.05 Customer shall in a timely fashion, provide FAS with all information
necessary for the timely and proper administration of the policies subject to
the Agreement as listed in Exhibit A, including information related to changes
in applicable laws and regulations pertaining to the administration and
servicing of the Customer's product(s) under this Agreement. This includes, but
is not limited to: policy forms; a list of all states of license; agents and
representatives authorized to sell Customer's policies; rate books; cash value
and reserve factors; data records; actuarial support; mortality rates; and
verified client files or facsimile, such as microfilm or microfiche.
7.06 All information furnished to FAS by the Customer, its policyholders and all
other parties in interest regarding the Policies is confidential and FAS shall
not disclose such information, directly or indirectly, to any third party except
to
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the extent that FAS is required by law to make such disclosure; nor shall FAS
use any such information for any purpose other than to Customer's benefit or to
perform its obligations under the Agreement.
7.07 The Customer acknowledges that FAS has proprietary rights in and to the FAS
System and that the FAS System constitutes confidential material and trade
secrets of FAS; and it agrees to maintain the confidentiality of the FAS System,
except to the extent that Customer is required by law to make such disclosure.
7.08 The Customer acknowledges that this agreement in no way gives the Customer
any rights in, and/or to the Systems and/or Facilities used by FAS in
performance of its duties hereunder.
7.09 All premium, loan repayments and other receipts are directed to a Customer
owned lock box for deposit in a Customer owned account. In the event that any
monies are inadvertently received by FAS, FAS shall hold such monies in trust on
Customer's behalf. The documents accompanying the payment will be date stamped
by FAS (to insure proper interest or investment effective date) and forwarded on
the day of receipt with the payment to the lock box for processing in the
standard manner. In no event will FAS deposit any funds in any account other
than the aforementioned Customer owned account.
7.10 The Customer acknowledges its responsibility to provide actuarial support
for policy and agent administration and financial reporting as referenced in
Schedule B of the Operations Manual.
7.11 If either party is required to produce any information by order of any
government agency or other regulatory body, it may, upon not less than ten (10)
days after written notice to the other party, release the required information,
unless compelled by statute, regulatory requirements, or Court order to release
the information sooner. This provision shall apply whether or not the required
information is confidential or proprietary.
7.12 FAS shall maintain a general liability policy or policies under which FAS
is a named insured in an amount of not less than $1,000,000 and which covers
FAS' performance of services under this Agreement and provide proof of such
insurance to Customer at least annually.
7.13 FAS shall maintain an errors and omissions policy or policies under which
FAS is named insured in an amount of not less than $1,000,000 and which covers
FAS' performance of services under this Agreement and provide proof of such
insurance to Customer at least annually.
7.14 FAS shall maintain a fidelity bond or bonds under its parent company policy
under which FAS is covered in an amount not less
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than $10,000,000 which covers the acts of FAS' directors, officers, employees
and agents in connection with the performance of services under this Agreement
and provide proof of such bond or bonds to Customer at least annually.
SECTION 8 Computer Access
8.01 Provided both parties hereto have authorized such access by signing in the
space therefor on the signature page hereof, and subject to the terms and
conditions set forth below, Customer shall be entitled to obtain access on a
"view only" basis to all data relating to the Policies (the "Information") which
is maintained on the computer(s) utilized by or on behalf of FAS in providing
the services it provides to Customer pursuant to the Agreement ("System
Access").
8.02 Customer's access to such data shall be on Mondays through Fridays,
exclusive of holidays, between the hours of 8 a.m. and 5 p.m., Hartford,
Connecticut time. FAS retains the right, however, to limit or otherwise change
those hours at any time and for any reason without prior notice to Customer.
Furthermore, FAS makes no representations or warranties as to the ability of
Customer to successfully utilize System Access at any given time, in light of
the fact that computer facilities suffer occasional "down-time".
8.03 Customer shall take no actions to affect or modify System Access, the
Information or any of the hardware or software utilized by or on behalf of FAS
in conjunction with System Access. Use of System Access to view data shall be
made only through means and codes authorized by FAS hereunder or pursuant
hereto. Customer agrees not to divulge such means and codes to any person other
than those of its employees it wishes to have use System Access. Neither FAS nor
any of its affiliates shall have responsibility for determining whether a person
with the proper means and codes to utilize System Access was properly authorized
to do so by Customer.
8.04 FAS shall have the right to modify or cause the modification of the System
Access program from time to time at its sole discretion without prior notice to
Customer.
8.05 In the event that Customer suspects a possible breach of security with
respect to System Access, including any intended disclosure of codes, or
Customer obtains Information, through System Access, on any person other than
its own policyholders, then Customer shall immediately notify FAS of such
circumstances by telephone, followed by a confirmation in writing, specifying
the nature of the problem.
8.06 Neither FAS nor any of its affiliates shall be liable to Customer for
any loss, cost or liability arising out of or in conjunction with Customer's
participation in System Access. Under
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no circumstances shall FAS or any of its affiliates be liable to Customer for
any indirect, incidental or consequential damages arising out of or in
conjunction with Customer's participation in such system, even if advised of the
possibility thereof.
8.07 Customer shall indemnify FAS and its affiliates and hold them harmless from
all direct losses and all liabilities resulting to them, as well as all costs
and expenses (including court costs and attorneys fees) reasonably incurred by
them, due to Customer's failure to properly safeguard the codes and/or passwords
provided pursuant hereto for its use. Customer shall also indemnify FAS and its
affiliates and hold them harmless from all liabilities, costs and expenses
(including court costs and attorneys fees) reasonably incurred as a result of
Customer's breach of its obligations of confidentiality with respect to the
Information unless Section 7.11 shall apply to the Information. Customer shall
further indemnify and hold FAS and its affiliates harmless from all liabilities,
costs and expenses (including court costs and attorneys fees) reasonably
incurred by them due to any acts or omissions of Customer in its use of
Information.
SECTION 9 Termination of Agreement
9.01 This Agreement may be terminated or amended by mutual agreement at any
time.
9.02 Subsequent to the initial term as defined in Section 2.01, this Agreement
may be terminated by either party by written notice to the other party ninety
(90) days following delivery by registered mail of said written notice to the
other party. The Customer has the option of continuing this Agreement for up to
three hundred sixty (360) days after written notice to terminate is received
from FAS, unless such termination is based on Section 9.04 with respect to a
material breach of the Agreement by Customer. Customer will continue to pay the
standard fees to FAS from the notice of termination date to the termination of
the Agreement.
9.03 At least ninety (90) days prior to the end of any term hereof, FAS shall
give Customer written notice if FAS desires to increase its fees or charges to
Customer or to change the manner of payment. If FAS and Customer do not agree to
fees and changes before the end of the term during which such notice is given by
FAS, this Agreement shall terminate at a date not less than ninety (90) days
after the end of such term. The Customer has the option of continuing the
Agreement for up to three hundred sixty (360) days, at standard Agreement fees
after the end of such term.
9.04 If either of the parties hereto shall materially breach this
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Agreement or be materially in default in the performance of any of its duties
and obligations 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. If FAS is the Defaulting Party, and Customer elects to
terminate this Agreement as described above, and the Customer shall agree in
writing, FAS shall continue to provide the services described herein to the
Customer for a period not to exceed three hundred sixty (360) days following
such termination; FAS shall be required to remedy the default or breach if
Customer elects to continue such services; and, such service to be provided in
accordance with the terms of this Agreement and at the standard rate charged the
Customer the last six (6) months under the most recent term. If Customer is the
Defaulting Party, and FAS elects to terminate this Agreement as described above
and the Customer shall agree in writing, FAS shall continue to provide the
services described herein to the Customer for a period not to exceed three
hundred sixty (360) days following such termination provided, however, Customer
shall be required to remedy the default or breach as a condition of continuing
such services. In this situation, during the continuation period, such service
shall be provided in accordance with the terms of the Agreement and at a rate of
one hundred twenty five percent (125%) of the fees in effect for the last six
(6) months under the most recent term. Termination of this Agreement by default
or breach by the Customer shall not constitute a waiver of any rights of FAS in
reference to services performed prior to such termination or rights of FAS to be
reimbursed for out-of-pocket expenditures; termination of this Agreement by
default or breach by FAS shall not constitute a waiver by the Customer of any
other rights it might have under this Agreement.
9.05 Neither party shall be liable to the other party under this Agreement for
consequential or exemplary damages in excess of fifty percent (50%) of the total
fees paid under this Agreement to FAS during the twelve months immediately
preceding the action or event creating the initial liability.
9.06 Arbitration - Any damages sought for termination for material breach or
other dispute between the parties relating to any transaction under this
Agreement, or any act or omission hereunder, shall be referred to three
arbitrators who must be members of the American Arbitration Association and who
are not related or affiliated in any way with Customer or Customer's affiliates
or FAS or FAS' affiliates. FAS and Customer shall each appoint one of the
arbitrators and such two arbitrators shall select the third. Should the two
arbitrators not be able to agree on the choice of the third, the appointment
shall be left to the American Arbitration Association. Any such arbitration
shall take place in
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Middlesex County, Connecticut unless some other location is mutually agreed upon
by the parties. The arbitrators so chosen shall take into consideration the
scope and purpose of this Agreement. They will be relieved of all judicial
formalities and may abstain from following strict rules of law. They shall
decide by a majority of votes, and from their written decision, there shall be
no appeal. Each party will be responsible for its own arbitration costs,
including its arbitrators and direct costs, and shall equally divide the costs
of the third arbitrator, court reporter and facility charges.
SECTION 10 Changes and Modifications
10.01 FAS shall have the right, at any time, and from time to time, to alter and
modify any system, programs, procedures or facilities used or employed in
performing its duties and obligations hereunder, provided that no such
alterations or modifications shall, without the consent of the Customer,
materially change or affect the operations and procedures of the Customer in
using or employing the FAS System or Facilities hereunder.
10.02 From time to time FAS may develop or the Customer may request enhancements
to FAS' administrative capability with respect to administration of insurance
policies by FAS or particular features of the Policies ("Enhancements").
Development of such Enhancements shall be in accordance with the procedures set
forth in Exhibit D hereto. The Customer will bear the cost of Enhancements
needed to accommodate special features of its Policies.
10.03 Any modifications to the Service Agreement shall be valid only if made in
writing and signed by the authorized party(s) for both the Customer and FAS as
outlined in Exhibit C.
SECTION 11 Assignment
11.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party hereto without the prior written consent of the other,
which consent shall not be unreasonably withheld.
11.02 This agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
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SECTION 12 Miscellaneous
12.01 Customer or its duly authorized independent and internal auditors will
have the right under this Agreement to perform onsite audits of records,
procedures, and accounts directly pertaining to the Policies serviced by FAS
hereunder at FAS Facilities in accordance with reasonable frequencies and
reasonable and customary notice to FAS. At the request of Customer, FAS will
make available to Customer's auditors and representatives of regulatory agencies
all reasonably requested records, data and access to operating procedures,
within the scope of this Agreement.
12.02 The parties hereto agree that all tapes, books, reference manuals,
instructions, records, information and data pertaining to the business of the
other party, FAS' system and Enhancements as set forth in Exhibit D and the
policy owners serviced by Customer hereunder 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
or used by the receiving party as contemplated under this Agreement and that all
such tapes, books, reference manuals, instructions, records, information and
data in the possession of each of the parties hereto shall be returned to the
party from which it was obtained upon the termination or expiration of this
Agreement.
12.03 It is understood and agreed that all services performed hereunder by FAS
shall be as an independent contractor and not as an employee of Customer.
12.04 For the purposes of this Agreement, the terms policy, policies, contract
and contracts are interchangeable where appropriate and refer to the primary
coverage documents for each of Customer's insureds.
12.05 This Agreement, including Exhibits A - D which are deemed to be
incorporated herein and made a part hereof, constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof, whether oral or written, and this Agreement may not
be modified except in a written instrument executed by both of the parties
hereto.
12.06 The representations and warranties contained herein shall survive the
execution of the Agreement and the performance of services hereunder.
12.07 This Agreement shall be governed by the laws of the State of Connecticut.
12.08 All notices and requests in connection with the Agreement shall be given
or made upon the respective parties in writing and shall be deemed given as of
the day deposited in the U.S. mail,
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postage pre-paid, certified or registered, return receipt requested, and
addressed as follows:
If to FAS: FAS
00 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attn: Chief Executive Officer
If to Customer: SAFECO Life Insurance Company
00000 X.X. 00xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
or to such other address as the party to receive the notice or request so
designates by written notice to the other.
12.09 FAS agrees to maintain and make available to Customer complete books and
records of all transactions performed on behalf of Customer. The books and
records shall be maintained in accordance with prudent standards of insurance
and securities laws and regulations record keeping and must be maintained in
accordance with the retention periods as set forth in Schedule E of the
Operations Manual as referenced in Section 1.04 above.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers as of the day and year first above written.
SAFECO Life Insurance Company
Attest: /s/ Xxxx Xxxxxxx
-----------------------------------
By: [illegible]
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Title: V.P. [illegible]
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Financial Administrative Services, Inc.
Attest: /s/ Xxxxxx Wasgutt
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By: [illegible]
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Title: President
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System Access Authorized By:
FAS: By: /s/ [signature illegible]
--------------------------------
Customer: By: [illegible]
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THE ABOVE INFORMATION AND ATTACHED EXHIBITS ARE CONSIDERED TO BE CONFIDENTIAL
AND PROPRIETARY. THEY ARE TO ONLY BE SHARED WITH EMPLOYEES OF THE CUSTOMER
AND/OR EMPLOYEES OF FAS.
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EXHIBIT A
Policies on Policy Form L-9450 issued on behalf of SAFECO Life Insurance
Company, are subject to this Agreement. Riders, benefits and/or endorsements
attached to such policies are also subject to this Agreement.
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EXHIBIT B
PRICING SCHEDULE
SYSTEM IMPLEMENTATION FEE: Actual implementation cost will be based on a
minimum of $50,000.
This fee will be charged to implement the Customer's products on the FAS system.
This includes:
a. Installation of the Leverage System from Integrity Life.
b. Implementation of the billing, premium collection, and commission
payment process.
C. Format and implement the Policyholder Quarterly Statement and any
other client specific forms.
d. Implementation of accounting.
e. Implementation of appropriate management reporting.
f. System testing with appropriate user sign off.
g. Development of Customer specific administrative procedures and
service levels.
Implementation Fee will be payable as follows:
a. $20,000.00 paid with letter of intent dated April 11, 1994.
b. $30,000.00 payable upon execution of the Service Agreement.
ISSUE AND ASSEMBLY FEE:
For each policy added to the system due to original issue, term conversion,
guaranteed insurability option or other transactions requiring issuance of a
new policy, the following schedule will apply.
Full Policy Issue Service
Per Policy Fee In-Force Policy Count
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$15.00 1 - 5,000
14.50 5,001 - 10,000
14.00 10,001 - 15,000
13.50 15,001 - 20,000
13.00 20,001 +
* Policy issue fees are not subject to the Minimum Monthly Administration
Fee.
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FAS will maintain records of all expenses charged to Customer under this
Agreement.
Per Policy Monthly Administration Fees:
For all active policies:
Monthly Fee Annualized In-Force Policy Count
$3.50 $42.00 1 - 5,000
3.45 41.40 5,001 - 10,000
3.40 40.80 10,001 - 15,000
3.35 40.20 15,001 - 20,000
3.30 39.60 20,001 +
* For example, 15,000 in-force policies would be billed $3.50 for the
first 5,000 policies, $3.45 for the next 5,000 policies and $3.40 for
the remaining 5,000.
Inactive policies $.50 per month per policy
Minimum Monthly
Administration Fees $ 7,000
Conversion of policy records and commencement of administrative activities by
FAS is scheduled for October 1, 1994. The monthly administrative charges will
commence on October 1, 1994, whether or not the policy records have actually
been converted.
Fees are billed monthly based upon the number of policies on the system on the
date of billing. The total policies transferred from Integrity Life for all
companies will be combined for satisfying the Minimum Monthly Administration
Fee. This amount ($7,000) will be billed for administration only when the number
of policies times the monthly charge does not meet or exceed this amount.
Additional Charges:
The additional charges incurred by the Customer include, but are not limited to:
a. Telephone Costs to include: basic phone line, long distance and 800
long distance lines, optional Dial-In Service to NAS (Netware Access
Server), and other phone costs incurred in communicating with the
Customer, its insureds or its agents and representatives.
b. U.S. Mail postage charges are passed through to Customer. No
service charge applies.
C. Express delivery charges are Customer's responsibility.
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d. Expenses incurred in printing Customer specific forms.
e. Reasonable travel expenses incurred on behalf of the Customer by FAS,
its employees and/or duly authorized agents and representatives.
f. Related expenses for record retention beyond that currently provided
(microfilm, microfiche, paper).
g. Custom programming for unique policy provisions, special reports, etc.,
is available at the rate of $600 per person day, and are passed through
to Customer.
h. On-site consulting is billable to the Customer at the rate of $600 per
day.
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EXHIBIT C
SCHEDULE OF AUTHORIZED PERSONNEL
The following parties are authorized on the part of SAFECO Life Insurance
Company to modify the Service Agreement:
Xxxx X. Xxxxxxxx, Senior Vice President
I. Xxxxxxx Xxxxx, Vice President
The following parties are authorized on the part of SAFECO Life Insurance
Company to modify the Operations Manual:
I. Xxxxxxx Xxxxx, Vice President
Xxxx X. Xxxxxxx, Assistant Vice President
Exceptions may be authorized by the personnel as set forth in Schedule F of the
Operations Manual as referenced in Section 1.04 of the Service Agreement.
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EXHIBIT D
SOFTWARE ENHANCEMENT PROCEDURES
I. Definitions
The following terms have the meanings ascribed to them for the purposes of
these procedures and agreements.
A. Generic Feature: A process, modification or addition which FAS has
or will need to support its own procedures or policies of other
companies.
B. Special Enhancement: A modification or addition needed or desired
which is not required to support the current policy or procedures,
but as to which the rights, cost and development are shared.
C. Proprietary Enhancement: A modification or addition requested which is
deemed unique or confidential in which Customer wishes to retain all
rights, unless it is: (1) substantially the same as one that has
already begun to develop in whole or in part; or, (2) related to a
change in law, regulation or enforcement; or, (3) subject to the prior
proprietary rights of any other company, to the best of FAS'
knowledge.
II. Request for Enhancement:
A. Customer may request a feature by providing a description of the
feature sufficient to enable FAS to determine whether it is a generic
feature, special enhancement or proprietary enhancement. Customer will
clearly state whether it regards such enhancement as proprietary.
B. Within 30 business days following receipt of a request for an
enhancement, FAS will provide written notice to Customer as to how
such enhancement will be classified, plus provide a preliminary
estimate of cost and development time.
C. Upon such notice, Customer will have 30 days to notify FAS in writing
whether and how it wishes to proceed.
III. Rights and Availability of Enhancements:
A. FAS retains all rights to generic features; however, it will make such
features available for use to Customer.
B. Only those companies subscribing to share the cost and
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development of special enhancements will have the right to use such
enhancements. This restriction will apply until such enhancement has
been operational for twelve (12) months.
C. Customer will retain rights to its proprietary enhancements. Others
may use such enhancements if:
1. Customer authorizes use of the enhancement and notifies FAS in
writing of all companies so authorized; or,
2. Six (6) months have elapsed since the enhancement has been
operational and such other company has requested the enhancement
and paid a pro rata share of the expense to Customer; or,
3. Twelve (12) months have elapsed since the enhancement has been
operational, in which case no sharing of expense is required.
D. When FAS recognizes proprietary rights respecting a Proprietary
Enhancement, FAS will not disclose either the concept of the
Proprietary Enhancement or the associated software (in either case
so long as it is non-obvious to a person skilled in the field and
not otherwise known to FAS) to any person without Customer's written
authorization, except FAS may disclose such concept and software to
The Leverage Group to the extent such disclosure is made in
connection with FAS' obligations under this Agreement. FAS will
request that The Leverage Group protect and preserve Customer's
proprietary rights.
IV. Cost of Enhancements:
A. The expense for all generic features will be incurred by FAS. However,
the cost either to allow or adapt such features to exist with
non-generic features will be incurred by Customer.
B. Customer will pay FAS for the cost incurred in developing a special or
proprietary enhancement. In the case that FAS or other companies wish
to share in the enhancements, the expense of such enhancement will be
prorated equally among Customer and any subscribing company. All
arrangements for expense sharing will be made by Customer.
C. The requirement to share the cost of development ceases 12 months
after the enhancement is operational.
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