Exhibit 27(i)
SERVICES AGREEMENT
This Services Agreement (Agreement), which is dated as of December 31, 2003,
(Effective Date) is between Life Product Developers, Inc., a Connecticut
corporation, with its principal office at 0 Xxxxxx Xxxxxxx Xxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxxx 00000 ("LPD" or "Vendor(s)"), Xx. Xxxxxx Xxxxxxxxxx of 0 Xxxxxxxxx
Xxxx, Xxxx, Xxxxxxxxxxxxx 00000 ("VB" or "Vendor(s)") and National Life
Insurance Company, a Vermont corporation with its principal offices at National
Life Drive, Montpelier, Vermont 05602 ("Company" or "NLV"). The Effective Date
shall remain December 31, 2003.
WHEREAS, LPD, at Company's request, designed certain variable life insurance
products for Company; and
WHEREAS, it is the desire of Company that LPD provide Company with certain
ongoing services relating to said variable life insurance products; and
WHEREAS, LPD is ready and willing to provide such services ("Services") to
Company; and
WHEREAS, it is the desire of Company and LPD to enter into an agreement pursuant
to which Company will compensate LPD for such services rendered.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. (A) DEFINITIONS
The parties acknowledge that as used in this Agreement "NLV personnel or
employees" or "NLV" or the "Company" shall mean either employees of NLV or
employees of Xxxxx, Inc., the third-party information system provider to NLV for
all computer feeds and data analysis and collection on behalf of NLV.
I. TERM AND ACCEPTANCE TESTING
THIS AGREEMENT SHALL COMMENCE ON THE EFFECTIVE DATE AND SHALL CONTINUE IN EFFECT
FOR THE INITIAL TERM OF THREE YEARS ENDING ON DECEMBER 31, 2006. THE PARTIES
ACKNOWLEDGE THAT THE SBP COLI ADMINISTRATION SYSTEM (SBP) AND RELATED SERVICES
AS FURTHER DESCRIBED BELOW UNDER SERVICES AND IN THE ATTACHED SOFTWARE LICENSE
AND MAINTENANCE AGREEMENT WHICH IS INCORPORATED AND MADE A PART OF THIS
AGREEMENT, AS SOON AS PRACTICABLE SHALL BE INSTALLED AT COMPANY AS FURTHER
DESCRIBED HEREIN FOR A FULL ACCEPTANCE TESTING EVALUATION, INCLUDING CORRECTION
OF ANY SPECIFICATION NON-CONFORMITIES OR ERRORS. THE ACCEPTANCE TESTING
REQUIREMENTS SHALL ALSO APPLY TO ALL SUBSTITUTES, REPLACEMENTS, CONVERSIONS, AND
UPGRADES OF THE SBP AND RELATED SERVICES. IN THE EVENT THE SBP SYSTEM FAILS TO
COMPLY WITHIN THE PERFORMANCE SPECIFICATIONS DURING ANY ACCEPTANCE TEST, COMPANY
SHALL HAVE THE RIGHT TO IMMEDIATELY TERMINATE AND SHALL HAVE NO FURTHER
OBLIGATION TO MAKE ANY PAYMENT(S) SPECIFIED IN V (B) AND V(C) TO VENDOR FOR SUCH
SERVICES. PAYMENTS SPECIFIED UNDER V(D) AND V(E) WILL SURVIVE THE TERMINATION.
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II. SERVICES
Beginning on the 1st of March, 2004 and continuing until December 31, 2006, and
subject to the terms and conditions of this Agreement, LPD, as and when
requested by Company and during normal business hours of the LPD, agrees to
provide the following specified services to Company with respect to the
Registered Variable Universal Policies intended primarily for the corporate
market (as used in the Agreement, collectively, the "Policies").
1. VB will provide a license to the Company according to the terms and
specifications described in Schedule I for an administration system that is
capable of calculating periodic policy values and provide applicable accounting
feeds, reinsurance feeds and commission feeds as well as monthly policy
statements and an illustration system that is capable of providing illustrations
according to specification provided by LPD. The system will further be able to
issue policies for new insureds.
2. VB will transfer the license to LPD and enable LPD the right to use the
illustration system when completed.
3. VB will provide the license to LPD and enable LPD to run the administration
system. LPD will be prepared to run the system if and when NLV requests LPD to
undertake additional responsibilities to run the system and LPD agrees to assume
such additional responsibility. .
4. VB will train NLV personnel to be able to receive all applicable accounting
feeds, reinsurance feeds and commission feeds and issue new policies.
5. LPD will assist VB in implementing the product in the administration system,
test and validate the calculations of policy values and ensure compliance with
respect to applicable tax codes specified under IRC 7702.
6. LPD will test and validate the calculations of policy values of the
illustration/inforce reprojection system provided by VB.
7. LPD will provide illustration support with respect to the existing cases to
the brokers and agents.
8. LPD will provide case support with respect to existing cases to the brokers
and agents. Case support includes interfacing with appropriate underwriting,
actuarial and legal representatives of NLV. The parties acknowledge that only
duly authorized registered representatives shall solicit new policies under
existing cases.
9. LPD will interface with agents with respect to answering questions directed
by the Company with respect to reports and statements sent by the Company.
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10. LPD will visit duly authorized registered representatives with applicable
licenses in order to generate additional premiums under existing cases. The
parties acknowledge that only duly authorized registered representatives shall
solicit and place new policies.
III. SOLICITATION
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
require LPD to solicit any purchaser or potential purchaser of the Policies or
to perform any services or engage in any activities for which a license to sell
insurance or securities may be required under any state or federal law.
IV. PAYMENTS TO VB
VB agrees to receive payments from LPD for the services specified in section I
above. In no event shall VB have any claim of right to payments, moneys, fees,
or other amounts from NLV relating to any services or SBP system, conversions,
or upgrades as provided pursuant to the terms of this Agreement, either during
or following termination of this Agreement.
V. PAYMENT
In consideration of LPD's performance of the Services hereunder, and upon the
performance of successful Acceptance Testing protocols by Company of such
services and/or the SBP system, its conversions or upgrades, Company agrees to
pay to LPD the following amounts:
a) A payment in the amount of $50,000 will be paid as of March 1, 2004. An
amount of $25,000 will be paid in January 2005 and in January 2006. The payments
are in consideration of the delivery, installation and implementation of the
COLI administrative software as articulated in Section II, paragraphs 5. and 6.
Payments 3 in January 2005 and 4 in January 2006 are contingent upon acceptance
testing of the software performed by LPD and approved by NLV.
b) A monthly payment of $21,183 will be paid at the beginning of each calendar
month beginning March 1, 2004 and ending in December 2006. The payments are
attributable to the services specified in Section II, paragraphs 1 through 4 and
7 through 10. The first payment for the month of March 2004 will be reduced by
$5,833.33.
c) An additional monthly payment of $ 2,000 will be paid for illustration
system. This payment will begin as of the date of delivery of the licensed
software immediately following the acceptance testing performed by LPD and
approved by NLV. However, no such additional payment shall be made by NLV in the
event the illustration system does not perform in accordance with
specifications.
d) 10% of the sale price of the block of business consisting of SBP and any
SBPII policies at the time of sale of COLI block.
e) LPD's asset based fee according the existing agreement executed on June 00,
0000xxxxxxx XXX xxx XXX will be increased to 0.05% per annum attributable to
policy assets under SBP and 0.03% per annum attributable to policy assets under
SBPII (if any) effective January 2007. Continuation of such fee will be waived
by LPD at the time of the sale of the block of COLI business consisting of SBP
and any SBPII policies.
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f). In the event NLV decides to issue the private placement policies (SBPII),
NLV reserves the right to request LPD to implement SBPII in the systems, subject
to additional fees payable by NLV.
g) For any month in which NLV receives from System reports which contain
computational errors, NLV and LPD shall have the right to withhold monthly
payment to VB until an error-free report is provided within the expected cure
period under Ongoing Support set forth under the attached Schedule Three.
VI. AUTHORIZATION
LPD is authorized to correspond directly with Underwriting department, Corporate
actuarial department and legal resources and inform Xx. Xxxxxxx Xxxxxxxxx.
V. (2) Confidentiality and Disclosure.
(a) Each Party to this Agreement ("Disclosing Party") may disclose to
the other party ("Recipient") certain proprietary and confidential
information including, without limitation, policyholder
information, procedures, COMPANY customer lists, prospect lists,
contracted broker and agent lists, and material related to policy
design, pricing, filings, marketing and sales administration and
systems information ("Information").
(b) Recipient agrees to maintain, during the Term and thereafter, the
Information of the Disclosing Party in confidence using at least
the same degree of care as it uses in maintaining as secret its
own trade secret, confidential and proprietary information, but
always at least a reasonable degree of care.
(c) Confidentiality of Information. All tapes, books,
reference manuals, instructions, records, information, and
data pertaining to the business of each party, including
information relating to the Contracts and the names, addresses
and other information regarding the annuity owners, which are
exchanged or received pursuant to the negotiation of and/or
the carrying out of this Agreement shall remain confidential
and shall not be voluntarily disclosed to any other person
except as required to perform this Agreement. Parties further
agree not to use any such information for any purpose other
than as directly related to its performance under this
Agreement to replace any of the Contracts or to solicit
financial services or products. For this purpose, affiliate
means any business organization in which Party(s) have a
majority ownership interest at the time such contacts is made.
Party(s), however, may disclose any information if: 1)
pursuant to Court order or the lawful requirement or demand of
a government agency; 2) otherwise required by law; or 3)
authorized in writing by the applicable Party. Party(s) will,
upon request return the tapes, books, reference materials,
instructions, records and data mentioned above.
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(d) Recipient shall use reasonable efforts to limit access to
Information received from the Disclosing Party to only those
personnel of Recipient who have need of such access for the
performance of any obligation of Recipient under this Agreement.
(e) Recipient shall use information only for purposes of fulfilling
its obligations under the Agreement.
(f) Except as expressly provided in the Agreement, Disclosing Party
grants no license, right or interest to Recipient under any
copyrights, patents, trademarks, trade secrets or other property
rights of Disclosing Party by reason of the disclosure of the
Information.
(g) Each party acknowledges that some Information may, under applicable
law, be deemed to be confidential information of third parties (such as
natural persons whose lives are insured under a Policy) and agrees to
preserve the confidentiality of all Information, which under applicable Law
must be treated as confidential. The terms and conditions of this
subsection shall survive the termination of this Agreement.
(h) Indemnification. Each party to this Agreement shall indemnify and
hold harmless the other party and its officers, directors, partners, principals,
independent contractors, employees, member firms, subcontractors and affiliates
and their respective personnel from and against any and all liabilities, losses,
damages, costs, expenses (including, without limitation, reasonable attorneys'
fees and court costs), interest, penalties or other loss directly or indirectly
arising out of, in connection with or with respect to any breach of this
Agreement or any fraudulent, criminal, negligent and/or bad faith acts or
omissions by such party or its officers, directors, partners, principals,
independent contractors, employees, member firms, subcontractors and affiliates
and their respective personnel under this Agreement.
If a party is named in any lawsuit or other proceeding for which such
party believes it may be entitled to indemnification hereunder such party shall
promptly give notice thereof to the other party, such notice to include a
description in reasonable detail of such lawsuit or proceeding and the basis for
such party's belief that it may be entitled to indemnification hereunder. The
parties shall cooperate in all reasonable respects with each other in defending
such lawsuit or proceeding. Party(s) agree not to settle any such lawsuit or
proceeding without the written consent of each other. The terms and conditions
of this subsection shall survive the termination of this Agreement.
(i) Arbitration. In the event of any dispute between Company and
Vendor(s) with respect to the subject matter of this Agreement or the
enforcement of rights hereunder, either party may, by written notice to the
other, require such dispute or difference to be submitted to arbitration. This
provision, however, shall not be applicable to any dispute that involves a claim
by or against a Third Party. The arbitrator or arbitrators shall be selected by
agreement of the parties or, if they cannot agree on an arbitrator or
arbitrators within twenty (20) days after the notice of such party's desire to
have the question settled by arbitration, then the arbitrator or arbitrators
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shall be selected by the American Arbitration Association (the "AAA") in New
York, New York. The determination reached, or award granted, in such arbitration
shall be final and binding, to the extent not in violation of law or public
policy, on all parties hereto. Enforcement of the arbitration award or
determination may be sought in any court of competent jurisdiction. The
arbitrators shall not be bound by judicial formalities and may abstain from
following the strict rules of evidence. The parties hereby mutually instruct the
arbitrators to limit the time and scope of discovery to the greatest extent
practicable and request the arbitrators to provide a decision as rapidly as
practicable, in each case consistent with the interests of justice, it being the
intention of the parties that any arbitration under this Section 7.04 be
commenced, conducted and completed, and a decision rendered, as rapidly as
practicable. Pending such decision, each party will continue to perform its
obligations under this Agreement. Unless otherwise agreed by the parties, any
such arbitration shall be conducted in accordance with the rules of the AAA.
In the event of any litigation or arbitration as provided under this
Agreement, or the enforcement of rights hereunder, each party shall bear its own
costs and expenses relating to such litigation or arbitration, including
reasonable attorney's fees and expenses, unless otherwise provided by the
arbitration award or determination. In no extent shall the arbitrators have the
right or authority to award consequential, incidental, indirect, special or
punitive damages relating to this Agreement. The terms and conditions of this
subsection shall survive the termination of this Agreement.
(j) Compliance. Vendor(s) shall provide staff with the skills necessary
to perform the Administrative Services, as determined by Vendor(s) using its
reasonable business judgment. Vendor(s) shall obtain and maintain for itself,
all licenses necessary for performance under this Agreement.
VII. PROGRESS REPORT
LPD will meet with Xx. Xxxxxxx Xxxxxxxxx monthly to inform of the progress. The
information would include the following:
a) Action plan indicating the status of deliverables of Administrative System
until May 2004. b) Status of transferring the existing policies in June, 2004 c)
Action plan indicating the status of deliverables of Illustration System
beginning July 2004 until completion of acceptance testing by LPD and approval
by NLV.
d) Estimated projections of revenues and profits based on one representative age
of the COLI block will be submitted upon request. Weekly reports will be
supplied to the Company during the installation phase of the project.
VIII. POLICY ADMINISTRATION SYSTEM VENDOR
LPD is authorized by NLV to purchase the System from VB on behalf of NLV.
VB agrees to license NLV to use the system, which license shall include the
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right of Xxxxx, Inc or its duly authorized employees to have full access to the
System on behalf of NLV. VB agrees to work with LPD in order to implement SBP in
his system and transfer all existing policies from XxXxxxxx System to his system
within three months from the date of execution of this contract. VB further
agrees to sell the source code to NLV at a price of $225,000 provided that the
system is purchased within five years from the date of execution of the
contract. Upon purchase of the Source Code, VB will provide the services and
materials listed under "Purchase of Source Code" in Schedule 3.
IX. NOTICES
All notices, requests, or other communications required or permitted to be
delivered hereunder shall be in writing, delivered personally or forwarded by
certified mail, postage, prepaid, or by overnight mail via nationally recognized
carrier, to the address set forth on page 1 of this Agreement. Any party hereto
may, from time to time, designate in writing any other address to which such
notices, requests or other communications shall be sent.
X. INDEPENDENT CONTRACTOR
The parties agree that in performing the services enumerated in this Agreement,
LPD shall be an independent contractor. LPD shall not be obliged or expected to
devote all resources to the performance of its obligations hereunder, nor shall
LPD be obliged or expected to furnish consulting services to Company exclusively
during the term of this Agreement. LPD shall be free to provide consulting and
other services to other clients during the term of this Agreement.
XI. APPLICABLE LAW
This Agreement shall be interpreted and enforced in accordance with the
substantive law of the State of Connecticut.
XII. COUNTERPARTS
This Agreement may be executed in separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
XIII. SEVERABILITY
The parties agree that if any part, term, or provision of this Agreement is held
to be invalid or in conflict with any law or regulation, then the validity of
the remaining portions or provisions hereof will not be affected, and the
parties' rights and obligations will be construed and enforced as if this
Agreement did not contain the particular part, term or provisions held to be
invalid.
XIV. TERMINATION
In the event that NLV terminates the agreement within three years, other than
for cause as a direct result of either the failure of the SBP system,
conversions, or upgrades of such system to perform in accordance with all
specifications, or because Company wishes to sale, transfer the COLI block to a
Third Party, NLV will continue to pay an amount equal to $15,000 per month until
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the end of the initial three year term. LPD will pay $9,000 per month to VB
until the end of the initial three-year term. Termination of this Agreement by
the Company during the initial three year term because the SBP system and/or
services thereunder do not conform satisfactorily with the terms of this
Agreement pursuant to any initial or follow-up Acceptance Testing protocol shall
entitle LPD to receive no further payments as described in Section I.
In the event that the failure of the administration system to operate as
intended causes substantial damage to NLV's capability to administer existing
polices or NLV's reputation is severely damaged, or of any Default or of Act of
Insolvency or of Force Majeure as specified under item 10 of the license
agreement, NLV shall have no obligation to make any further payments to
Vendor(s) as described in Section I.
LPD reserves the right to terminate the agreement without any penalties by
providing 6 month notice to the Company. In the event that LPD terminates the
agreement, no more payments will be due LPD from NLV.
During the initial or any subsequent term of this Agreement if the number of NLV
COLI policies falls below 200 individual pollicies, NLV reserves the right to
terminate the Agreement without having to make any further payments to LPD.
XIV. ENTIRE AGREEMENT AND MODIFICATION
This Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof. No modifications or amendment of this
Agreement or any provision thereof shall be binding unless executed in writing
by both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the Effective Date.
Life Product Developers, Inc. Xxxxxx Xxxxxxxxxx
--------------------------------- ----------------------
By: By:
Name: Kiri Parankirinthan Name: Xxxxxx Xxxxxxxxxx
Title: President Date:
Date:
National Life Insurance Company
--------------------------------
By:
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------
Title: Senior Vice President
-----------------
Date:
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SOFTWARE LICENSE AND MAINTENANCE AGREEMENT
This Agreement is made between National Life of Vermont ("company") located at
One National Xxxx Xxxxx, Xxxxxxxxxx, XX 00000, Life Product Developers, Inc.
(LPD) located at 0 Xxxxxx Xxxxxxx Xxxx, Xxx Xxxxxxxxx, XX 00000 and Xxxxxx
Xxxxxxxxxx ("VB") with a principal place of business at 0 Xxxxxxxxx Xxxx, Xxxx,
XX 00000.
1. DEFINITIONS
(a) "Software" means the computer programs and documentation listed in Schedule
1 attached to this Agreement. The Software licensed shall include in its
meaning, in addition to the description contained in Schedule 1, any
improvements, additions, or modifications of the version or versions of the
Software which VB has licensed LPD and the Company to use and materials related
thereto and all materials, documentation, and technical information provided to
LPD and the Company in written form for use in connection with the Software.
(b) "Install" means placing the Software on a computer's hard disk, CD-ROM or
other secondary storage device.
(c) "Use" means (i) executing or loading the Software into computer RAM or other
primary memory, and (ii) copying the Software for archival or emergency restart
purposes.
(d) "Source Code" means human readable copies of the Software consisting of
instructions to be executed upon a computer in the language used by its
programmers (i.e. prior to compilation).
2. GRANT OF RIGHTS
VB hereby grants to the Company and LPD a nonexclusive license to install and
use the Software on an unlimited number of single-user computers in its
possession.
3. LICENSE TERM
This License is effective when executed by all three parties and the license
granted to the Software remains in force until the Company and LPD stop using
the Software or until VB terminates this Agreement because of The Company's
failure to comply with any of its terms and conditions.
4. LICENSE FEE
LPD agrees to pay VB the license fee set forth in the attached Schedule 2
provided that NLV fulfills its payment obligations specified herein.
5. DELIVERY AND INSTALLATION
VB shall deliver the Software at the time, place and order of delivery as
described in Schedule 1. VB shall install the Software and provide necessary
support services, including training, in accordance with the terms set forth
herein. VB shall notify LPD and the Company that the program is ready for
acceptance testing no later than the date set forth in Schedule 1.
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6. SERVICES PROVIDED
Maintenance. VB shall maintain the Software so that it operates in conformity
with all descriptions and specifications herein, including specifications for
performance of all improved or modified versions of the Software which the
Company and LPD has been licensed to use. VB shall correct all errors discovered
by the Company or LPD.
Support. In the event that the Company or LPD detects any error, defect or
nonconformity in the Software, VB shall furnish complete off-site telephone
support, in the form of consultations, assistance and advice on the use and
maintenance of the Software.
While this License is in effect, VB will also provide the services listed in
Schedule 3.
7. ESCROW
Concurrent with delivery of the Software hereunder, VB shall place a copy of the
source code for the Software into escrow with the Company. The company shall not
examine or use the source code for any purpose except under the following
conditions:
(a) The death of VB.
(b) VB becomes unable to perform the services under this Agreement due to
disability.
(c) VB becomes insolvent, makes a general assignment for the benefit of
creditors, suffers or permits the appointment of a receiver for its business or
assets, becomes subject to any proceeding under any bankruptcy or insolvency law
whether domestic or foreign, or has wound up or liquidated, voluntarily or
otherwise.
(d) The source code is purchased by the Company.
8. COPIES OF SOFTWARE
The Company shall have the right to reproduce the software and documentation for
the exclusive use of the Company and LPD. The Company shall have the right to
reproduce for archival purposes all of the Software and documentation. In the
event of loss of or damage to the Software, LPD and the Company may acquire an
additional copy of the Software at no additional expense except the reasonable
costs of the medium, handling and shipping.
9. SOFTWARE MAINTENANCE
While this Agreement is in effect, VB shall provide to the Company and LPD any
new, corrected, or enhanced version of the Software as created by the VB. Such
enhancement shall include all modifications to the Software which increase the
speed, efficiency or ease of use of the Software, or add additional capabilities
or functionality of the Software, but shall not include any substantially new or
rewritten version of the Software.
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10. TERMINATION
Default. Either party has the right to terminate this Agreement if the other
party breaches or is in default of any obligation hereunder, which default is
incapable of cure or which, being capable of cure, has not been cured within
seven (7) days after receipt of notice of such default from the non-defaulting
party or within such additional cure period as the non-defaulting party may
authorize. VB shall also be deemed in default if the Software program continues
to exhibit defects causing serious disruption of use and/or repeated periods of
downtime, notwithstanding VB's remedial or maintenance efforts, over a
continuous period of six months or more.
Act of Insolvency. Customer may terminate this Agreement by written notice to
Licensor, and may regard the other party as in default of this Agreement, if
Licensor becomes insolvent, makes a general assignment for the benefit of
creditors, suffers or permits the appointment of a receiver for its business or
assets, becomes subject to any proceeding under any bankruptcy or insolvency law
whether domestic or foreign, or has wound up or liquidated, voluntarily or
otherwise.
Force Majeure; Suspension and Termination. In the event that either party is
unable to perform any of its obligations under this Agreement or to enjoy any of
its benefits because of (or if loss of the Software is caused by) natural
disaster, actions or decrees of governmental bodies or communications line
failure not the fault of the affected party (hereinafter referred to as a "Force
Majeure Event"), the party who has been so affected immediately shall give
notice to the other party and shall do everything possible to resume
performance. Upon receipt of such notice, this Agreement shall immediately be
suspended. If the period of non-performance exceeds fifteen (15) days from the
receipt of notice of the Force Majeure Event, the party whose ability to perform
has not been so affected may by giving written notice terminate this Agreement.
However, delays in delivery due to Force Majeure events shall automatically
extend the delivery date for a period equal to the duration of such events; any
warranty period affected by a force majeure event shall likewise be extended for
a period equal to the duration of such event.
11. RETURN OR DESTRUCTION OF SOFTWARE UPON TERMINATION
Upon termination of this License, the Company and LPD shall return to VB or
destroy the original and all copies of the Software including partial copies and
modifications. VB shall have a reasonable opportunity to conduct an inspection
of the Company's place of business and LPD's place of business to assure
compliance with this provision.
12. TITLE TO SOFTWARE
VB retains title to and ownership of the Software and all enhancements,
modifications and updates of the Software.
13. MODIFICATION AND ENHANCEMENTS
The Company or LPD will make no efforts to reverse engineer the Software, or
make any modifications or enhancements without VB's express written consent.
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14. WARRANTY
(a) Warranty of Title
VB hereby represents and warrants to the Company and LPD that VB is the owner of
the Software or otherwise has the right to grant to the Company and LPD the
rights set forth in this Agreement. In the event of any breach or threatened
breach of the forgoing representation and warranty, the Company's and LPD's sole
remedy shall be to require VB to either: I) procure, at the VB's expense, the
right to use the Software, ii) replace the Software or any part thereof that is
in breach and replace it with Software of comparable functionality that does not
cause any breach, or iii) discontinue the receipt of any further monthly
payments from LPD.
(b) Warranty of Functionality
For a period of three years following delivery of the Software to The Company
(the "Warranty Period"), VB warrants that the Software shall perform in all
material respects according to VB's specifications concerning the Software when
used with the appropriate computer equipment. In the event of any breach or
alleged breach of this warranty, the Company and LPD shall promptly notify VB
and return the Software to VB at LPD's expense. The Company's sole remedy shall
be that the VB shall correct the Software so that it operates according to the
warranty. This warranty shall not apply to the Software if modified by anyone or
if used improperly or on an operating environment not approved by VB.
THE WARRANTY GRANTED HEREIN IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
VB's entire liability and VB's sole and exclusive remedy for breach of the
foregoing warranty shall be, at VB's option, to either:
(a) o return to The Company the license fee for the period in which the
Software did not perform according to this warranty, or
(b) o repair the defects or replace the Software.
15. CONFIDENTIALITY
Each party acknowledges that all information concerning the other party is
"Confidential and Proprietary Information." Each party agrees that it will not
permit the duplication, use or disclosure of any such Confidential and
Proprietary Information to any person (other than its own employee who must have
such information for the performance of his obligations under this Agreement),
unless authorized in writing by the other party. "Confidential and Proprietary
Information" is not meant to include any information which, at the time of
disclosure, is generally known by the public and any competitors of either
party. Neither party shall use the name(s), trademark(s) or trade name(s),
whether registered or not, of the other party in publicity releases or
advertising or in any other manner, including customer lists, without securing
the prior written approval of the other party.
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Licensor agrees to allow access to the Software to on-site
consultants/contractors performing work on behalf of Customer.
The Company and LPD will treat the Software, including any source code held in
Escrow, as trade secrets and proprietary know-how belonging to VB that is being
made available to the Company and LPD in confidence. The Company agrees to treat
the Software with at least the same care as it treats it own confidential or
proprietary information.
16. ARBITRATION
The parties agree to submit any dispute under this License to binding
arbitration in the state of Vermont under the rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator may be entered
in any court with jurisdiction to do so.
17. ATTORNEY FEES
If any legal action is necessary to enforce this License, the prevailing party
shall be entitled to reasonable attorney fees, costs and expenses in addition to
any other relief to which it may be entitled.
18. LIMITATION OF LIABILITY
VB shall not be responsible for, and shall not pay, any amount of incidental,
consequential or other indirect damages, whether based on lost revenue or
otherwise, regardless of whether VB was advised of the possibility of such
losses in advance. In no event shall VB's liability hereunder exceed the amount
of license fees paid by LPD, regardless of whether the Company's claim is based
on contract, tort, strict liability, product liability or otherwise.
19. TAXES
The Company shall be responsible for the payment of all taxes in connection with
this Agreement, except for any tax based on VB's net income.
20. GENERAL PROVISIONS
(a) Complete Agreement: This License together with all schedules or
other attachments, which are incorporated herein by reference, is the sole and
entire Agreement between the parties. This Agreement supersedes all prior
understandings, agreements and documentation relating to such subject matter.
(b) Modifications to License: Modifications and amendments to this
License, including any exhibit or appendix hereto, shall be enforceable only if
they are in writing and are signed by authorized representatives of both
parties.
(c) Applicable law: This License will be governed by the laws of the
State of Vermont.
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(d) Notices: All notices and other communications given in connection
with this License shall be in writing and shall be deemed given as follows:
o When delivered personally to the recipient's address as appearing in
the introductory paragraph to this License;
o Three days after being deposited in the United States mails, postage
prepaid to the recipient's address as appearing in the introductory paragraph to
this License; or
o When sent by fax or telex to the last fax or telex number of the
recipient known to the party giving notice. Notice is effective upon receipt
provided that a duplicate copy of the notice is promptly given by first-class or
certified mail, or the recipient delivers a written confirmation of receipt.
Any party may change its address appearing in the introductory
paragraph to this License by giving notice of the change in accordance with this
paragraph.
(e) No Agency: Nothing contained herein will be construed as creating
any agency, partnership, joint venture or other form of joint enterprise between
the parties.
(f) Assignment: The rights conferred by this License shall not be
assignable by The Company without VB's prior written consent. VB may impose a
reasonable license fee on any such assignment
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SCHEDULE 1
Description of Software
GENERAL DESCRIPTION
The software consists of two separate systems:
(a) The Illustration System. The Illustration System generates
illustrations of life insurance policies, both new policies and
inforce policies.
(b) The Administration System. The Administration System is used to
administer variable universal life insurance policies.
Both systems are designed to operate on Personal Computers running the Windows
operating system.
It is anticipated under this Agreement that the Administration System will be
used by between one and four employees of the Company.
It is anticipated that the Illustration System will be used by between one and
four employees of the Company and LPD, and with a limited number (less than 12)
of sales agents of the company.
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SCHEDULE 1 (CONTINUED)
SPECIFIC FUNCTIONALITY FOR ADMINISTRATION SYSTEM
CATEGORY 1
Category 1 is the functionality required to administer the Company's registered
Corporate VUL product, including inforce policies. All Category 1 functionality
will be provided no later than three months after the execution of this
Agreement. At that time, a one month Acceptance Testing period will commence,
which will include parallel processing with the existing system.
PRODUCT
Implementation of registered Corporate VUL product, including:
Loads and charges
All available transactions
Death benefit options 1, 2, 3
Cash value enhancement
NEW BUSINESS PROCESSING
Load new business spreadsheet
Create Generic Policy Specifications Pages
REPORTS
Case Level
User Requested Reports Cash Value Quote Policy Value
Report Cash Value Report Death Benefit Report Fund
Value Totals Report Fund Value by Policy Report
Premium Report Loans and Withdrawals Report Seven Pay
Report Guideline Premium Report
Policy Level
Automated Reports
Periodic Statements
Transaction Confirmations
Billing Statements
Lapse Notices
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User Requested Reports
Cash Value Quotes
Financial History
Transaction Details
Seven Pay History
Guideline Premium History
Other reports showing calculation details
Corporate
Automated Reports
Internal Performance Report
Product Report by quarter and year
Weekly Morningstar report
Monthly Morningstar report
Audit Report
Daily m&e report
Trade report
FEEDS
The System will generate the following feeds:
General Ledger
Commission
Reinsurance
Valuation
Policy History
Client Index
Trade Feed
TRANSACTIONS
For each transaction, system will generate the appropriate accounting
records in the accounting feed, produce the confirmation (if appropriate)
and provide undo functionality.
Premium Payments - includes ability to waive loads, allocate to
specific funds 1035 Exchange Payments - with existing loan, existing
basis, existing MEC status Partial Withdrawal, including ability to
allocate to specific funds, waive face reduction New Loan, including
ability to allocate to specific funds Loan Repayment, including ability
to allocate to specific funds Death Claim Surrender Lapse Not Taken
Free Look Monthly processing (coi charges, etc.) Anniversary processing
(loan interest capitalization, etc.)
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Face Increase - new coverage layer with ability for coverage specific
ratings Face Reduction Change Death Benefit Option
Transfers (available at case, group, and policy level)
Free Look Transfer
Reallocation
Dollar Amount
Percentage Amount
Dollar Cost Averaging
Change Premium Allocation (case, group and policy level) Change Monthly
Deduction Allocation (case, group and policy level)
Non-financial
Owner Change
Beneficiary Change
Billing Change
7702/7702A COMPLIANCE
Full MEC Testing
Calculation of 7 pay premiums
Reduction processing
Material Change processing
Full Guideline Premium Testing
Calculation of guideline premiums, initial and on changes
Full CVAT Testing
NSP/Corridor calculations
Deemed Cash Value and unnecessary premium
CONVERSION
Conversion of all existing in-force policies. Conversion is contingent
on the Company providing or making available to VB all relevant inforce
policy data in electronic format. This includes, but is not limited to:
historical nav's and unit values
historical non-system generated transactions, such as premium
payments withdrawals loans and loan repayments face
increases db option changes other changes that affect
policy values transfers
historical premium allocations and deduction allocations
current commission split data current reinsurance data
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CATEGORY 2
Category 2 functionality is functionality that is not immediately required. It
is anticipated that this functionality would be provided within six months of
the effective date of this agreement, but if VB, LPD and the Company agree, any
of the items below may be delayed, or other items may be substituted.
PRODUCT
Automatic reblending of sex/smoking status should be Day 2. Product
customization at case, group, and policy level - Day 2.
NEW BUSINESS PROCESSING
State Specific Policy Pages
TRANSACTIONS
Change Ratings
Change Sex
Change Smoking Status
Change Age
Reinstatement
7702/7702A COMPLIANCE
On-line Premium Testing (Note, the system does not currently test
premium against 7 pay or guidelines before application, but reports can
be generated so that premium can be checked manually) Necessary Premium
Test for Guideline Premium Policies
DOCUMENTATION
Updating of both on-line and printed documentation to reflect system
enhancements and processing instructions for the Company.
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VALIDATION
Automatic validation of items entered into the system, including but
not limited to:
State Approvals
Agent Status
Policy parameters (valid issue ages, minimum face, etc.)
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SCHEDULE 2
License Fee
The License Fee is the sum of
(a) $9,000 per month, payable at the beginning of each month the license is in
effect.
(b) $2,000 per month, payable at the beginning of each month after the
illustration software is approved by LPD.
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SCHEDULE 3
Services Provided
The following services are provided under the License Fee:
IMPLEMENTATION
Product Installation of one registered CVUL product Conversion of existing
policies.
TESTING
All system testing and trouble-shooting during the three month implementation
period.
It is anticipated that after the three month implementation period, there will
be a one month parallel test with the existing administration system.
TRAINING
Reasonable and necessary training for Company personnel. Training will include
but not be limited to:
Daily operation of system
Entering new policies
Entering transactions
Importing data
Running nightly batch
All other information needed to properly run the system.
ONGOING SUPPORT
SEVERITY LEVELS
The Production Support and User Support services are classified based on the
business criticality and/or breadth of the outage. Following are descriptions of
each severity type:
SEVERITY 1 - A production event that results in a critical outage or critical
reduction in Application function of a mission critical or time-dependant
business Application that prohibits the use of the system and requires immediate
resolution. Examples of Severity 1 events include Application failure, batch
failure, data corruption, or other events that impact client ability to conduct
business.
SEVERITY 2 - A production event that results in a partial outage or reduction in
Application function that reduces the use of the system but does not immediately
impact the business. Examples of Severity 2 events include Application failure
for non-mission critical functions or non-time-dependant functions, data
corruption, data feed failure, prevent proper execution of batch processes, or
other events that impact the Application function.
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SEVERITY 3 - A production event that results in a non-critical outage,
non-critical reduction in Application function, or request for assistance (e.g.,
request for facsimile broadcast). This type of event requires research and
correction but does not prohibit general use of the system or client ability to
conduct business. An example of a Severity 3 event includes non-critical report
failure or problems not related to business use (such as excessive error log
files).
--------------------- -------------------------------- ---------------------- ------------------ --------------------
TYPE COMMITMENT SERVICE LEVEL
SERVICE LEVEL COVERAGE [CURRENT]
--------------------- -------------------------------- ---------------------- ------------------ --------------------
SEVERITY XXXXX 0 XXXXXXXX XXXXXX 2 HOURS OF 99% RESPONSE 99% RESPONSE
NOTIFICATION ACHIEVEMENT ACHIEVEMENT
ASSESSMENT WITHIN 4 HOURS OF 99% ASSESSMENT ALL HOURS 99% ASSESSMENT
NOTIFICATION ACHIEVEMENT ACHIEVEMENT
RESOLUTION AS AGREED TO BY 99% RESOLUTION 99% RESOLUTION
BUSINESS UNIT AND IT ACHIEVEMENT ACHIEVEMENT
--------------------- -------------------------------- ---------------------- ------------------ --------------------
SEVERITY XXXXX 0 XXXXXXXX XXXXXX 2 HOURS OF 99% RESPONSE 99% RESPONSE
NOTIFICATION ACHIEVEMENT ACHIEVEMENT
ASSESSMENT WITHIN 4 HOURS OF 99% ASSESSMENT ALL BUSINESS 99% ASSESSMENT
NOTIFICATION ACHIEVEMENT HOURS ACHIEVEMENT
RESOLUTION AS AGREED TO BY 99% RESOLUTION 99% RESOLUTION
BUSINESS UNIT AND IT ACHIEVEMENT ACHIEVEMENT
--------------------- -------------------------------- ---------------------- ------------------ --------------------
SEVERITY XXXXX 0 XXXXXXXX XXXXXX 2 HOURS OF 99% RESPONSE 99% RESPONSE
NOTIFICATION ACHIEVEMENT ACHIEVEMENT
ASSESSMENT WITHIN 24 HOURS OF 99% ASSESSMENT ALL BUSINESS 99% ASSESSMENT
NOTIFICATION ACHIEVEMENT HOURS ACHIEVEMENT
RESOLUTION AS AGREED TO BY 99% RESOLUTION 99% RESOLUTION
BUSINESS UNIT AND IT ACHIEVEMENT ACHIEVEMENT
--------------------- -------------------------------- ---------------------- ------------------ --------------------
SOFTWARE UPDATES
VB will provide the Company and LPD will all normal updates to the system,
including support for the installation of such updates. Such updates would
include, for example, improvements like an improved report generator, enhanced
interface features, and enhancements to improve processing time. A major new
component of the system, such as the addition of a pricing component, or
web-enabled capabilities, or features would require a significantly different
operating environment, would not be considered a normal update. Also major
changes to the feeds and other reports created by the system would not be
included as a normal update to the system.
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SERVICES PROVIDED UPON PURCHASE OF SOURCE CODE BY THE COMPANY
Complete documentation of the source code.
Training for Company personnel, on the internal design of the system. Up to 200
hours of training will be provided under the purchase price. Additional training
would be provided at VB's then current hourly rate.
MISCELLANEOUS
Reasonable travel expenses to and from the offices of the Company and LPD
covered by VB.
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