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EXHIBIT 10.4(a)
PART I
ADMINISTRATION SERVICES AGREEMENT
THIS AGREEMENT is made as of the first day of November 1989, between
The Travelers Insurance Company, a corporation organized under the laws of the
State of Connecticut (hereinafter referred to as The Travelers), and
Consolidated Group, Inc. Of Framingham, Massachusetts (hereinafter referred to
as The Trust Administrator).
Article I
Purpose
It is the intention of the parties to provide for the terms under
which The Trust Administrator will provide administration services for the
Group policies listed in Schedule A (each policy on that Schedule hereinafter
being referred to as the "Group Policy"), which Schedule is attached to and
forms a part of this Agreement as amended from time to time.
Article II
Consideration
The consideration for this agreement shall be the mutual promises of
the parties contained herein.
Article III
Independent Contractor
The relationship of the Trust Administrator to The Travelers with
respect to administrative services is that of an independent contractor and
nothing in the Agreement will be construed as creating any other relationship.
The Travelers assumes no liability of any nature or kind for personal or
property damages arising out of the Trust Administrator's performance of this
Agreement, except those liabilities expressly assumed under Article X.
Article IV
Duties of the Trust Administrator
A. The Trust Administrator agrees to perform the following services:
1. Process requests for participation in the Trusts.
2. Arrange for the collection and remittance of premiums. (See
Section B below.)
3. Prepare premium reports and other reports as agreed to between
the parties.
4. Maintain all records necessary for the proper administration
of premium collection.
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5. Underwrite all employees in accordance with guidelines agreed
to between the parties, but if such agreement cannot be
reached and all possible solutions are exhausted The Travelers
will retain final decision making capacity.
6. Process enrollment of new employees as they become eligible
and maintain employment records.
7. Issue all certificates (See Section C below.)
8. Perform any other general services required for the efficient
marketing and administration of the insurance provided under
the above policies as may be agreed to between the parties.
9. Process appointments so that all agents are properly licensed
for states in which products are sold and that appropriate
contraction material is provided to The Travelers in a timely
fashion.
10. Provide administration services in accordance with legislative
information and interpretation provided by The Travelers.
B. All insurance charges and premiums collected by the Trust
Administrator on behalf of The Travelers and charges and premiums
returned by The Travelers shall be held by The Trustee and/or a
qualified banking institution in a fiduciary capacity. Such funds
shall be immediately remitted to the person or persons entitled
thereto, or shall be deposited promptly in a fiduciary bank account
established and maintained by the Trust Administrator. If the charges
or premiums in account have been collected on behalf more that one
Insurer, The Trust Administrator shall cause the bank to hold The
Traveler's funds in a designated account on behalf of The Travelers.
The Trust Administrator shall promptly obtain and keep copies of all
bank account records and shall furnish The Travelers with copies of
the records which pertain to it upon demand of The Travelers. The
Trust Administrator may not pay any claim by withdrawing money form
its fiduciary account. Withdrawals from such account shall be made
for (1) remittance to The travelers or (2) remittance of charges and
returned premiums to the person or persons entitled thereto or as
payment to the Trust Administrator of compensation for services
rendered. All net premium payments shall be remitted to The Travelers
within 17 days after receipt by the Trustee.
C. Any policies, certificates, booklets, booklet-certificates,
termination notices or other written communications delivered by The
Travelers to The Trust Administrator for delivery to the
Policyholders, Participant Employers or Insureds, shall be delivered
by The Trust administrator promptly after receipt of instructions from
The Travelers to do so.
D. It shall be the duty of The Trust Administrator to maintain fidelity
coverage, including bonding of employees, in a reasonable amount and
by a carrier satisfactory to The Travelers. The Trust Administrator
shall furnish a certificate of insurance naming The Travelers as a
certificateholder. Said policy shall provide that it cannot be
canceled or modified except on ninety (90) days prior written notice
to The Travelers. The actual amount of the such coverage as
determined by The Travelers as of the effective date of this Agreement
shall be subject to change as of each anniversary of this Agreement,
or more frequently if The Travelers deems that there is a significant
change in the total amount of funds handled.
The Trust Administrator shall also maintain an errors and omissions
liability policy in a reasonable amount and by a carrier satisfactory
to The Travelers providing for indemnification of The Travelers to
cover any loss arising as a result of any real or alleged negligence
on the part of
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the Trust Administrator, its agents or employees in any aspect of the
performance of the Trust Administrator's duties under this Agreement.
The Trust Administrator shall cause the issuer of said policy to
deliver to The Travelers evidence of the existence of such policy
which provides protection to The Travelers and shall cause the insurer
to give The Travelers ninety (90) days written notice prior to the
cancellation of, or any material change in, the policy. If the
insurance is canceled, substitute coverage shall be obtained.
E. If any notice of the commencement of any legal proceeding involving
any Travelers Insured is received by The Trust Administrator, or if it
receives any communication from any Insurance Department or other
administrative agency or any other person identifying a complaint by a
Travelers Insured or calling a hearing involving any Travelers
insuring practice, The Trust Administrator shall immediately advise
The Travelers Home Office of the proceeding. The Trust Administrator
shall immediately thereafter forward any correspondence or necessary
files to The Travelers Home Office for determination of appropriate
handling.
F. If any notice of the commencement of any legal proceeding involving
The Trust Administrator is received by The Travelers, or the Travelers
receives any communication from any Insurance Department or other
administrative agency or any other person identifying a complaint
against The Trust Administrator or calling a hearing involving The
Trust Administrator, The Travelers shall immediately advise The Trust
Administrator of the proceeding. The Travelers shall immediately
thereafter forward any copies of necessary correspondence or files to
The Trust Administrator.
G. Adequate books and records of all transactions among The Travelers,
The Trust Administrator, Participant Employers and Insured persons
shall be maintained at The Trust Administrator's administrative office
for the duration of the Agreement and 6 years thereafter, or such
period of time as my be required under the Employee Retirement Income
Security Act of 1974. Such books and records shall be maintained in
accordance with prudent standards or insurance record-keeping. All
books and records pertaining to such administrative transactions shall
be maintained by The Travelers at its office in like fashion.
H. The Trust Administrator shall maintain a file containing any written
letters of complaint received by The Trust Administrator from
Travelers Insureds, Policyholders or service providers for a period of
6 years from receipt of the complaint letter, or such period of time
as may be required under the Employee Retirement Income Security Act
of 1974.
I. The Trust Administrator shall conform to the underwriting and other
standards agreed to between the parties, but if such agreement cannot
be reached and all possible solutions are exhausted The Travelers will
retain final decision making capacity. The Trust Administrator may
presume that its underwriting and other standards are acceptable to
The Travelers unless and until written notice is received from The
Travelers.
J. In the conduct of its business and in the performance of its
obligations under this Agreement, the Trust Administrator shall comply
with all applicable statues, ordinances, rules, and regulations of any
and all federal, state, and municipal regulatory authorities. If
required by state law, the Trust Administrator shall hold a
certificate of registration as a Third Party Administrator issued by
the Department of Insurance or other regulatory body and post any bond
required by any such regulatory body.
The Trust Administrator will promptly notify The Travelers of any
complaint filed against The Travelers with a state regulatory body
received by the Trust Administrator which is related to or arises from
any interpretation of the contract by immediately forwarding such
complaint to The
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Travelers, Xxx Xxxxx Xxxxxx, Xxxxxxxx, XX 00000, Attention: Employee
Benefits Department, Claim Division.
Article V
Standard of Performance
The Trust Administrator represents to The Travelers that it is
experienced in the field of group insurance administration, that it
will perform its obligations as trust administrator hereunder in a
prudent manner and that it will exercise professional standards of
diligence in the performance of its duties thereunder and the
settlement of disputes with insureds concerning the foregoing.
Article VI
Restriction on Performance
A. It is understood and agreed by the parties that all insured's records
are to be processed with due and careful regard for the individual's
rights of confidentiality.
B. The Trust Administrator shall not sub-contract any of the
administrative function, duties or responsibilities as assigned to and
accepted by it in this agreement without prior written approval by The
Travelers, such approval or denial not to be unreasonably delayed or
withheld.
Article VII
Rights
A. With reasonable notice, The Travelers shall have the right to conduct
periodic audits at any time at the office of The Trust Administrator.
The Travelers shall have the right of access to The Trust
Administrator's premises during the normal business hours of The Trust
Administrator's premises for the purpose of conducting periodic
audits. If The Travelers chooses to conduct an audit at its own
offices, The Trust Administrator shall upon request ship all necessary
records (or true copies thereof) to the designated Travelers office,
at the expense of The Travelers.
B. At all times during the term of this contract and following its
termination for any reason, The Travelers shall have access to all
records respecting Travelers Insureds. Subject to the preservation of
records provisions specified under this contract, The Travelers shall,
at its own expense, be entitled to obtain copies of any and all such
records.
Article VIII
Duties of The Travelers
A. The Travelers will provide The Trust Administrator with the following
items:
1. Certain necessary forms for enrolling new employees and
maintaining employee records, including claim forms for those
cases for which The Travelers processes claims.
2. Statistical premium, claim and retention experience
information and analysis, in a manner mutually agreed upon by
the parties.
3. Agent licensing appointment fees.
4. Notice of laws, regulations, and mandates that apply to The
Travelers insureds and instructions for the administration
thereof.
5. Managed care materials including, but not limited to,
preferred provider directories and updates, enrollment
materials, identification cards and promotional materials.
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6. Patient Advocate materials.
7. Claim forms for those cases for which The Travelers pays
claims.
8. The Travelers will exercise due diligence in providing 90 days
advance notice of any change in new business rates and 90 days
advance notice of any rate changes for inforce accounts.
Advance notice will include the planned percentage change for
both of these instances.
B. The Travelers will not allow its own distribution to market the
11/1/89 AnchorPlan or Blue Chip plan design except through the Trust
Administrator's AnchorPlan and Blue Chip products.
C. The Travelers shall be responsible for all necessary Insurance
Department Filings, and shall deliver to the Trust Administrator all
required booklet-certificates and endorsement materials.
D. Where there is a conflict between any guide or instructions provided
by The Travelers and this Agreement, the terms of this Agreement shall
control.
E. With prior notice and authorization, The Travelers will allow
descriptions of other products offered by the Trust Administrator
through other carriers to be included in the AnchorPlan , Blue Chip,
and CGT Preferred brochures. The Travelers will have the right to
review these documents prior to printing.
Article IX
Compensation
A. The Trust Administrator shall retain the difference between gross
monthly premiums, (excluding administration fees due the Trust
Administrator) received from Participant Employers and net monthly
premium payments established by The Travelers. Factors used in
determining gross and net monthly premiums shall be agreed to between
the parties but if such agreement cannot be reached and all possible
solutions are exhausted, The Travelers will retain final decision
making authority. Similarly, compensation payable to the Trust
Administrator shall be agreed to between the parties, but if such
agreement cannot be reached and all possible solutions are exhausted,
the Trust Administrator shall retain final decision making authority
with respect to the compensation paid to the Trust Administrator under
the terms of this agreement. Should the Trust Administrator effect a
change in its compensation, The Travelers reserves the right to change
gross monthly premiums coincident with such change in the Trust
Administrator's compensation.
B. The Trust Administrator's office and operational expenses are its sole
responsibility.
Article X
Indemnification
A. The Trust Administrator agrees to indemnify and hold The Travelers
harmless from any and all liability, loss, damage, fines, punitive
damages, penalties and costs, including expenses and attorneys fees,
which result from any gross negligence, criminal, fraudulent, or
willful misconduct in carrying out its responsibilities in accordance
with the standards set forth in this Agreement, or which result from
any action which exceeds its authority under this Agreement.
The Travelers agrees to indemnify and hold the Trust Administrator
harmless from any and all liability, loss, damage, fines, punitive
damages, penalties and costs, including expenses and attorneys fees,
which result from any gross negligence, criminal, fraudulent, or
willful
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misconduct in carrying out its responsibilities in accordance with the
standards set forth in this Agreement, or which result from any action
which exceeds its authority under this Agreement.
B. The Travelers will indemnify the Trust Administrator against any and
all loss, damage, liability, judgment, awards and expense, including
court costs and attorneys fees resulting form any act of any officer
or employee of the Trust Administrator which is performed strictly in
accordance with the instructions, manual, or guidelines agreed to by
The Travelers and which is performed in good faith and without willful
misconduct.
C. In the event that the Trust Administrator is named as a defendant in a
suit arising out of the administration of the policy, The Travelers
agrees to defend and hold harmless the Trust Administrator from the
judgment, the costs, and defense expenses of such litigation, provided
that the Trust Administrator was acting strictly in accordance with
the provisions of this Agreement or the instructions manuals, or
guidelines of The Travelers.
Article XI
Use of Information
Any information, including but not limited to data, business
information, technical information, legal information, specifications,
forms, computer programs and documentation, written, oral, or
otherwise (hereinafter "Furnishing Party") to the other party
hereunder or in contemplation hereof shall remain the property of the
Furnishing Party. All copies of such Information in written, graphic,
or other tangible form, including computer systems discs and tapes,
shall be returned to the Furnishing Party upon the termination of this
Agreement, or upon request at any time. Unless such information was
previously known to be free of any obligation to keep it confidential,
or has been or is subsequently made public, it shall be kept
confidential by the party furnished such information, and shall be
used only upon such terms as may be agreed upon in writing by the
Furnishing Party.
Article XII
Amendment
This Agreement may be amended at any item by a writing agreed to and
signed by both parties
Article XIII
Termination
This Agreement shall terminate on the occurrence of any of the
following events:
1. By mutual consent of the parties.
2. Fraud or embezzlement on the part of the Trust Administrator
or negligence or omissions uncorrected after notice.
3. Material breach of this Agreement.
4. Twelve months following written notice of termination given by
either party to this Agreement to the other party. The notice
shall be mailed, by certified mail, to the other party at its
last known address.
B. Should either party become aware of a materiel breach of this
Agreement, that party must notify the breaching party of the breach
and provide thirty (30) days to correct such breach. Should the
breach remain uncured at the end of thirty (30) days, the breaching
party shall have an additional thirty (30) days to correct the breach,
provided a reasonable effort was made during the initial thirty (30)
day period to correct the breach.
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C. Either party may terminate this Agreement without cause upon twelve
months' written notice to the other party. Both parties agree to
provide twelve months notice of cancellation of the group policy. The
parties agree that there will be no announcement or disclosure of
cancellation of the group policy or this administration services
agreement until eight months following the date notice of cancellation
has been given.
D. Upon termination of this Agreement, The Travelers shall have access to
all records representing Travelers insureds and The Travelers shall be
entitled to receive copies of any and all such records, as long as the
cost to the Trust Administrator does not exceed $10,000.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
in duplicate to be effective as of the date specified above.
THE TRAVELERS LIFE INSURANCE COMPANY CONSOLIDATED GROUP, INC.
BY: /Illegible/ BY: /Xxxxxxx X.Xxxxxxxx/
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TITLE: /Illegible/ TITLE: Executive Vice President
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DATE: Feb 27, 1991 DATE: Feb. 26, 1991
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