EXHIBIT 10.4
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is entered into and
effective as January 18, 2001 between ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
("▇▇▇▇▇▇▇"), a Massachusetts corporation, and Legacy Marketing Group ("LMG"), a
California corporation, with reference to the following facts:
A. Concurrently herewith ▇▇▇▇▇▇▇ and LMG are entering into a certain Marketing
Agreement pursuant to which certain insurance business is to be marketed by
LMG.
B. That ▇▇▇▇▇▇▇ desires to have LMG provide services to ▇▇▇▇▇▇▇ with respect
to this business and LMG is willing to provide such services, subject to
the terms and conditions of this Agreement.
Based on the foregoing facts, LMG and ▇▇▇▇▇▇▇ agree as follows:
1. SERVICES
1.1 From and after the date of this Agreement, LMG agrees to perform
certain ▇▇▇▇▇▇▇ accounting and service functions. Such accounting and
service functions shall consist of the activities described in
APPENDIX C, but only for the Policies recited in APPENDIX A.
Consideration for such accounting and service functions is set forth
in APPENDIX B.
1.2 LMG may provide additional services for ▇▇▇▇▇▇▇ that are not specified
in APPENDIX C. Consideration and other terms for such additional
services will be agreed to by LMG and ▇▇▇▇▇▇▇ in writing prior to
LMG's performance of such services.
2. RIGHTS AND OBLIGATIONS OF ▇▇▇▇▇▇▇
2.1 ▇▇▇▇▇▇▇ has the sole obligation to its customers to provide for
competent administration of the policies administered by LMG. ▇▇▇▇▇▇▇
hereby delegates to LMG certain duties as specified herein.
2.2 ▇▇▇▇▇▇▇ shall be responsible for researching, obtaining, and the
registration of any service marks issued by the U.S. Patent and
Trademark Office for use with the products jointly developed by LMG
and ▇▇▇▇▇▇▇, and any costs associated therewith, and ▇▇▇▇▇▇▇ shall own
all such rights. ▇▇▇▇▇▇▇ grants to LMG a gratuitous license for the
use of such marks on LMG and ▇▇▇▇▇▇▇ proprietary products. ▇▇▇▇▇▇▇
will not use LMG's Service Marks, Trademarks and Tradenames or the
name of any affiliate of LMG in any way or manner not specifically
authorized in writing by LMG. Notwithstanding the foregoing, LMG may
register and own its own marks that may be used by LMG to market
products jointly developed by LMG and ▇▇▇▇▇▇▇ that are underwritten by
▇▇▇▇▇▇▇.
2.3 With respect to claims that LMG is authorized to pay on behalf of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ shall be responsible for any and all costs of
litigation associated with the payment of such claims. ▇▇▇▇▇▇▇ shall
have the sole discretion whether to litigate a claim. These expenses
shall include, but are not limited to, counsel fees and court fees.
Notwithstanding the foregoing, ▇▇▇▇▇▇▇ shall not be responsible for
any costs or expenses that arise out of any bad faith, gross
misconduct or fraud on LMG's part.
2.4 ▇▇▇▇▇▇▇ shall have sole responsibility for filing advertising
materials in those states that so require prior to approving their use
by LMG. All costs associated with such filings will be the
responsibility of ▇▇▇▇▇▇▇.
2.5 ▇▇▇▇▇▇▇ shall be responsible for the establishment and maintenance of
any group trusts associated with such group product filings and any
costs associated therewith.
2.6 ▇▇▇▇▇▇▇ shall be responsible for the processing of payments under the
election of a settlement option by the beneficiary or owner. LMG's
responsibilities as they relate to this function are detailed in
APPENDIX C, Policyholder Services, Section 2. ▇▇▇▇▇▇▇ will supply LMG
with software to calculate estimated settlement option payments.
Notwithstanding the foregoing, this provision shall not preclude LMG
from processing such in the future.
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o CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
2.7 ▇▇▇▇▇▇▇ shall be responsible for determining the benefits and claims
payment procedures applicable to such coverage, if any.
2.8 ▇▇▇▇▇▇▇ shall, at least semiannually, conduct a review of operations
of LMG. At least one such review will be an on-site audit of the
operations of LMG.
2.9 Currently, LMG does not perform medical underwriting for ▇▇▇▇▇▇▇,
however, if granted such authority, LMG will comply with all
underwriting standards established by ▇▇▇▇▇▇▇ and adhere to all
pertinent provisions contained in applicable Third Party Administrator
statutes. ▇▇▇▇▇▇▇ shall be responsible for the underwriting or other
standards pertaining to the business underwritten by ▇▇▇▇▇▇▇.
2.10 LMG shall have no authority, nor shall it represent itself as having
such authority, other than as specifically set forth in this
Agreement. Without limiting the generality of the foregoing sentence,
LMG specifically agrees that it will not do any of the following
without the prior written consent of ▇▇▇▇▇▇▇:
(a) Litigation: Institute, prosecute or defend any legal proceedings
in connection with any matter pertaining to the Services provided
pursuant to this Agreement or ▇▇▇▇▇▇▇'▇ business.
(b) Alterations: Waive, amend, modify, alter, terminate or change any
term, provision or condition stated in any Policy Form or
discharge any contract in the name of ▇▇▇▇▇▇▇, except as
otherwise specifically provided in this Agreement, such policy
forms or as a result of a complaint resolution in accordance with
mutually acceptable written guidelines and procedures.
(c) Advice to Policyholders/Prospective Policyholders: Offer tax,
legal, or investment advice to any Policyholder or prospective
Policyholder of ▇▇▇▇▇▇▇ under any circumstances, with respect to
a Policy or the Services provided pursuant to this Agreement.
2.11 ▇▇▇▇▇▇▇ shall provide LMG with written notice of any change of
authority of persons authorized and enumerated in APPENDIX D to
provide LMG with instructions or directions relating to services to be
performed by LMG under this Agreement. In the absence of timely notice
and LMG relies to its detriment on instructions or directions from one
who is no longer authorized, ▇▇▇▇▇▇▇ will indemnify LMG for any loss
or claim as a result of such reliance.
3. RIGHTS AND OBLIGATIONS OF LMG
3.1 LMG agrees to maintain the following insurance coverages:
(a) LMG will possess an adequate fidelity bond for any losses caused
by the dishonesty of LMG's employees or agents (not Wholesalers
or Producers) with limits of at least o. LMG will also maintain
adequate surety bond(s) as so required in the states which it is
compelled to do so. LMG will file such bond, if so required, with
the appropriate agency. The bond shall be executed by a corporate
insurer authorized to transact business in the states which
mandate the maintenance of such bond.
(b) LMG will possess and maintain at all times errors and omissions
coverage with a limit of not less than o written by an insurer
with a minimum Best's rating of A-. Such coverage will comply
with the requirements of the states in which such insurance
coverage is required.
(c) LMG will possess and maintain commercial, general and liability
insurance with limits of not less than o per occurrence combined
single limit.
(d) LMG will require its Wholesalers and Producers to maintain Errors
and Omissions coverage per Wholesaler or Producer, or per
occurrence, or through LMG's exclusive coverage with a limit of
not less than o, which is offered on a per contract sold basis.
3.2 In the event malfunction of the LMG systems causes an error or mistake
in any record, report, data, information or output under the terms of
this Agreement, LMG shall at its expense correct and reprocess
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such records. LMG will reimburse ▇▇▇▇▇▇▇ for any costs and/or expenses
associated with such error or mistake. In the event ▇▇▇▇▇▇▇ discovers
any such errors or mistake it shall, within three (3) business days
after discovery, notify LMG in writing of such error or mistake in any
record, report, data, information or output received by ▇▇▇▇▇▇▇.
3.3 LMG shall respond to all correspondence of a routine nature and other
general functions necessary for satisfactory administration of the
Policies referenced in APPENDIX A. LMG shall maintain complaint files
and complaint logs to comply with applicable laws and regulations. LMG
shall use its best efforts to comply with the service standards
attached hereto as APPENDIX E. Notwithstanding the foregoing, ▇▇▇▇▇▇▇
retains the ultimate responsibility for the filing of such complaint
logs or files with the appropriate regulatory agencies.
If LMG receives:
(a) notice of the commencement of any legal proceeding involving any
of ▇▇▇▇▇▇▇'▇ customers; or
(b) a communication from any insurance department, other
administrative agency or any other person identifying a complaint
by any ▇▇▇▇▇▇▇ customer or calling a hearing involving any
▇▇▇▇▇▇▇ practice; or
(c) written complaints regarding ▇▇▇▇▇▇▇ Policies referenced in
APPENDIX A from customers of ▇▇▇▇▇▇▇ (oral complaints are
directed to make such complaint in writing and therefore will be
handled in accordance with such written complaint handling
procedures); or
(d) a demand or request by any court, government agency or regulatory
body to examine any of the books and records of ▇▇▇▇▇▇▇ relating
to Policies or services; or
(e) LMG will notify ▇▇▇▇▇▇▇ within two (2) business days of such
receipt. LMG will send copies of any necessary documentation to
▇▇▇▇▇▇▇ within three (3) business days or sooner if reasonably
requested by ▇▇▇▇▇▇▇, and will cooperate with and assist ▇▇▇▇▇▇▇
in responding to such document . Notwithstanding the foregoing,
written guidelines and procedures for such assistance will be
established by mutual agreement of LMG and ▇▇▇▇▇▇▇.
3.4 LMG will maintain a file containing any correspondence relating to
complaints received from ▇▇▇▇▇▇▇ customers and/or government agency or
regulatory body for a period of seven (7) years from receipt of the
complaint letter. ▇▇▇▇▇▇▇ will respond to summons and complaints
commencing legal actions on its own behalf. ▇▇▇▇▇▇▇ will also be
responsible for the costs associated with responding to such summons
and complaints commencing legal action on its own behalf.
3.5 LMG will provide a written notice, approved in writing by ▇▇▇▇▇▇▇, to
policyholders advising them of the identity of ▇▇▇▇▇▇▇ and LMG, and
the relationship between LMG, the policyholder and ▇▇▇▇▇▇▇.
3.6 LMG will only use advertising pertaining to the business underwritten
by ▇▇▇▇▇▇▇ that ▇▇▇▇▇▇▇ has approved in writing in advance of its use.
If so required, ▇▇▇▇▇▇▇ shall obtain the prior approval of the
appropriate Department of Insurance before approving advertising for
use by LMG. ▇▇▇▇▇▇▇ will also be responsible for all costs associated
with obtaining such approval.
3.7 LMG is responsible for system modification costs for initial new
product development. LMG is not responsible for the costs associated
for other modifications that are not necessary to the normal course of
business. "New product development" will be defined and agreed on
prior to development. ▇▇▇▇▇▇▇ will reimburse LMG for any system
modification costs requested that are beyond those necessary to the
normal course of business at its standard rates illustrated in
APPENDIX B.
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3.8 LMG will comply with all of the relevant provisions contained in
applicable Third Party Administrator statutes including, without
limitation, applicable licensing or authorization requirements. LMG is
licensed or otherwise authorized as a third party administrator in all
states which require such licenses or authorizations. If any provision
of this Agreement is in conflict with the laws of the State which
governs this agreement, such provision will be deemed to be amended to
conform with such laws. Further, if the laws of the State which
governs this Agreement require the inclusion of certain provisions of
relevant statutes, this Agreement shall be deemed to be amended to
conform with such laws.
3.9 LMG grants to ▇▇▇▇▇▇▇ a gratuitous license for the use of its marks on
LMG and ▇▇▇▇▇▇▇ proprietary products. LMG will not use ▇▇▇▇▇▇▇'▇
Service Marks, Trademarks and Tradenames, or the name of any affiliate
of the other in any way or manner not specifically authorized in
writing by the other.
4. QUALITY AND LIMITATION OF SERVICES
4.1 All services to be provided by LMG under this Agreement shall be
performed in accordance with the policies and procedures mutually
agreed to by both parties, industry standards, good faith efforts to
comply with the service standards attached hereto as APPENDIX E and in
accordance with all applicable laws and regulations. ▇▇▇▇▇▇▇ and LMG
will use their best efforts to agree to and document within 60 days of
execution of this Agreement the policies and procedures for all such
services to be provided by LMG on behalf of ▇▇▇▇▇▇▇.
5. HOLD HARMLESS AND INDEMNIFICATION
5.1 LMG shall indemnify and hold harmless ▇▇▇▇▇▇▇ from any and all claims,
liability, costs and expenses, including reasonable attorneys' fees,
arising out of LMG's negligent act(s) or omission(s); LMG's refusal to
comply with the terms of this Agreement; LMG's failure to comply with
any law or regulation with respect to its duties hereunder except that
LMG shall not be required to indemnify or hold harmless ▇▇▇▇▇▇▇ for
any act or omission of LMG which was directed orally or in writing by
▇▇▇▇▇▇▇ unless LMG knew that such direction by ▇▇▇▇▇▇▇ was contrary to
applicable law or regulation or was otherwise contrary to good
business practices and LMG failed to advise ▇▇▇▇▇▇▇.
5.2 ▇▇▇▇▇▇▇ shall indemnify and hold harmless LMG from any and all claims,
liability, costs and expenses, including reasonable attorneys' fees,
arising out of ▇▇▇▇▇▇▇'▇ negligent act(s) or omission(s); ▇▇▇▇▇▇▇'▇
refusal to comply with the terms of this Agreement; ▇▇▇▇▇▇▇'▇ failure
to comply with any law or regulation with respect to the offering or
sale of contracts, or the records maintained.
5.3 Neither party shall be entitled to indemnification from the other
party for any claim resulting from its own negligent act(s) or
omission(s).
5.4 If any claim is made by a party which would give rise to a right or
indemnification under paragraph 5.1 the party entitled to
indemnification (the "Indemnified Party") promptly will give notice of
the claim to the party required to provide indemnification (the
"Indemnifying Party"). The Indemnifying Party shall have the right, at
its option and its own expense and by its own counsel, to participate
in the defense of any such indemnified claim for which indemnification
is provided by this Agreement. Notwithstanding the foregoing, the
Indemnifying Party shall not have the right to control or represent
the Indemnified Party in the defense of any claim.
6. ASSIGNMENT, MODIFICATION AND TERMINATION OF AGREEMENT
6.1 Neither party may assign or delegate all or any part of its rights
and/or duties under this Agreement without the written consent, as
signed by one or more of the personnel shown on APPENDIX D, of the
granting party.
6.2 This Agreement may be modified or amended at anytime by mutual
agreement of the parties, provided the modification or amendment is in
writing, by one or more of the personnel shown on APPENDIX D or by any
other authorized officer of such party. APPENDIX D may be modified by
a party by notice to the other party, signed by an authorized officer
of such party.
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6.3 The termination of this Agreement is governed by the following provisions:
(a) LMG or ▇▇▇▇▇▇▇ may terminate this Agreement without cause by twelve
(12) months written notice to the other. This Agreement may be
terminated by mutual agreement of the parties in writing at any time.
(b) LMG shall provide ▇▇▇▇▇▇▇ ninety (90) days written notice if LMG
desires to increase its fees or charges to ▇▇▇▇▇▇▇ or to change the
manner of payment or to change any of the other terms and conditions
of this Agreement. ▇▇▇▇▇▇▇ must respond to such request within sixty
(60) days of receipt. Processing fees, systems time and material rates
may be increased annually.
(c) If either of the parties hereto shall materially breach this Agreement
or be materially in default in the performance of any of its duties
and obligations hereunder (the defaulting party), the aggrieved party
hereto may give written notice thereof to the defaulting party and if
such default or breach shall not have been remedied within forty-five
(45) days after such written notice is given, then the aggrieved party
may terminate this Agreement by giving thirty (30) days written notice
of such termination to the defaulting party. This Agreement shall
terminate immediately upon expiry of the 30 day notice period.
(d) Notwithstanding anything herein to the contrary, ▇▇▇▇▇▇▇ or LMG may
immediately terminate this Agreement with cause, upon written notice
to the other. Cause includes, without limitation, acts or omissions
that constitute fraudulent, criminal or unethical activity or blatant
disregard for the terms and conditions of this Agreement.
(e) Termination of this Agreement by default or breach by ▇▇▇▇▇▇▇ shall
not constitute a waiver of any rights of LMG in reference to services
performed prior to such termination; termination of this Agreement by
default or breach by LMG shall not constitute a waiver by ▇▇▇▇▇▇▇ of
any other rights it might have under this Agreement.
(f) In the event that this Agreement is terminated, LMG agrees that, in
order to assist in providing uninterrupted service to ▇▇▇▇▇▇▇, LMG
shall offer reasonable analysis and programming assistance to ▇▇▇▇▇▇▇
in converting the records of ▇▇▇▇▇▇▇ from the LMG system to whatever
service or system is selected by ▇▇▇▇▇▇▇, subject to reimbursement to
LMG for such assistance at its standard rates as illustrated in
APPENDIX B.
(g) In the event that this Agreement terminates for any reason other than
by mutual written agreement, as provided for above in Section 6.3(a),
LMG and ▇▇▇▇▇▇▇ agree that LMG, at ▇▇▇▇▇▇▇'▇ option, will continue to
provide the administrative services on behalf of ▇▇▇▇▇▇▇, as set forth
in this Agreement, for up to one year from the date of such
termination.
(h) In the event either party becomes or is declared insolvent or
bankrupt, is the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a receiver or
similar officer for it, makes an assignment for the benefit of all or
substantially all of its creditors, or enters into an agreement for
the continuation, extension, or readjustment of all or substantially
all of its obligations, other than those agreements entered into as
part of LMG's normal course of business, the other party may
immediately terminate this Agreement for cause.
(i) ▇▇▇▇▇▇▇ shall provide fifteen (15) days written notice of termination,
modification or cancellation of this Agreement to the appropriate
Departments of Insurance if and to the extent required by applicable
law or regulation. ▇▇▇▇▇▇▇ shall fulfill any lawful obligations with
respect to the Policies referenced by APPENDIX A of this Agreement,
regardless of any dispute between LMG and ▇▇▇▇▇▇▇.
(j) Termination of this Agreement does not affect in any way the Marketing
Agreement, executed concurrently herewith.
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o CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
7. RECORDS MAINTENANCE AND CONFIDENTIALITY
7.1 This Agreement shall be retained as a part of the official record of
both LMG and ▇▇▇▇▇▇▇ for the duration of this Agreement and for seven
years after the termination of this Agreement.
7.2 LMG will maintain complete books and records of all transactions
between LMG, ▇▇▇▇▇▇▇ and its policyholders. LMG will preserve detailed
and adequate books and records of all administered transactions, among
LMG, ▇▇▇▇▇▇▇ and its policyholders, sufficient to permit the insurer
to fulfill all of its contractual obligations to insured persons.
These books and records shall be maintained in accordance with prudent
standards generally accepted in business record keeping. LMG will
maintain ▇▇▇▇▇▇▇'▇ records intact and separate and apart from the
records of any other carrier. The documentation will contain all
pertinent documents in sufficient detail to identify the relevant
dates, events, and persons participating in those insurance events.
LMG will maintain complete records of all transactions taken pursuant
to its Third Party Administrator license. The books and records shall
be maintained throughout this Agreement and for ten years after the
transaction to which they respectively relate.
7.3 ▇▇▇▇▇▇▇ shall own the records generated by LMG pertaining to ▇▇▇▇▇▇▇;
however, LMG shall retain the right to continuing access to records to
permit LMG to fulfill all of its contractual obligations. ▇▇▇▇▇▇▇ and
LMG shall have continuing right to access and copy all accounts and
records maintained by LMG related to ▇▇▇▇▇▇▇'▇ business. Any
appropriately authorized governmental agency shall have access to all
books, bank accounts and records of LMG and ▇▇▇▇▇▇▇ for the purpose of
examination, inspection and audit. All information contained in the
aforementioned books and records, including the identity and addresses
of policyholders shall be kept confidential, except that such
information may be used in proceedings instituted against LMG or
▇▇▇▇▇▇▇.
7.4 In the event that LMG and ▇▇▇▇▇▇▇ cancel this Agreement, LMG may, by
written agreement with ▇▇▇▇▇▇▇, transfer all records to ▇▇▇▇▇▇▇ or the
successor administrator rather than retain them for the period
referenced in Section 7.2. If LMG transfers the records to a successor
administrator or to ▇▇▇▇▇▇▇, LMG is no longer responsible for
retaining such records. The successor third party administrator shall
acknowledge in writing in its agreement with ▇▇▇▇▇▇▇, or ▇▇▇▇▇▇▇
itself shall acknowledge in writing, that it is responsible for
retaining the records for which LMG had previously been responsible.
7.5 LMG will be given on-line access during ▇▇▇▇▇▇▇'▇ normal business
hours to ▇▇▇▇▇▇▇'▇ producer/agent database for the purpose of
inquiring on such system prior to LMG processing agent appointments.
Such access will continue until such time as LMG ceases to process
agent appointments for ▇▇▇▇▇▇▇.
7.6 LMG acknowledges that certain information received from ▇▇▇▇▇▇▇
including, without limitation, information concerning ▇▇▇▇▇▇▇
customers or consumers, may be proprietary and/or confidential in
nature. All such information shall be used by LMG solely for purposes
of providing services pursuant to the Administrative Services
Agreement between the parties. LMG agrees to indemnify and hold
▇▇▇▇▇▇▇ harmless from any and all loss and expenses sustained by
▇▇▇▇▇▇▇ as a result of the unauthorized use of proprietary and/or
confidential information by LMG, or its Wholesalers or Producers.
7.7 ▇▇▇▇▇▇▇ acknowledges that certain information received from LMG may be
proprietary and/or confidential in nature. All such information shall
be used by ▇▇▇▇▇▇▇ solely for purposes contemplated by, and in a
manner that is consistent with, this Agreement or the Marketing
Agreement between the parties. ▇▇▇▇▇▇▇ agrees to indemnify and hold
LMG harmless from any and all loss and expenses sustained by LMG as a
result of the unauthorized use of proprietary and/or confidential
information by ▇▇▇▇▇▇▇.
7.8 LMG and ▇▇▇▇▇▇▇ shall each have in place reasonable security measures
to safeguard the confidentiality of the other's proprietary and
confidential information and the nonpublic information of consumers
and customers in their possession.
8. TERM
8.1 This Agreement shall remain in force and effect until such agreement
terminates as provided for in Section 6.3 of this Agreement.
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9. COMPUTER SYSTEM AND PROPRIETARY RIGHTS
9.1 Definitions: As used in this Agreement, the following terms shall have
such meanings:
(a) "Administrative Computer System" or "Computer System" shall refer
to all computer systems and related materials used by LMG to
administer the Policies, including LMG proprietary software and
third party licensed software comprised of computer programs and
supporting documentation, including, but not limited to, source
code, object code input and output formats, program listings,
narrative descriptions and operating instructions and shall
include the tangible media upon which the computer programs and
supporting documentation are recorded as well as the deliverable
forms and documents.
LMG's proprietary software and third party licensed software are
used to administer the Policies listed in APPENDIX A.
(b) "Property" shall mean all property of either party including, but
not limited to, data records, materials, supplies, computer
software, customer records, premium information, underwriting
files, customer lists, sales data, policyholder data, data on
Wholesalers and Producers and any other distribution systems.
9.2 oo. The o will be and remain the property of o shall have no rights or
interest in the o except as provided in this Agreement. o developed
for o that are mutually agreed to be proprietary to o shall not be
sold, licensed, transferred, assigned or otherwise distributed without
the express written consent of o.
(a) The o currently uses the o, o. o understands and agrees that, at
o option, the o or any replacement o may be replaced at any time
and from time to time, at o expense, with other suitable o of o
choice.
In the event that o decides to replace such o, o agrees to test
the replacement o prior to its installation to be certain that it
will properly perform the services contemplated by this
Agreement. o will provide o with reasonable notice prior to any
such replacements.
(b) Notwithstanding the above, o understands and agrees that in no
event shall o provide to o during the term of this Agreement or
any extension thereto, access to o.
o warrants that the o is the property of o and utilizes o . o
further warrants that the use of the o to provide the Services
contemplated by this Agreement will not infringe upon or violate
any patent, copyright, trade secret or other proprietary right of
any third party. These warranties shall survive termination of
this Agreement.
(c) Under the terms of the o is not authorized to o .
Accordingly, in the event that o is unable to fulfill its
contractual obligations as set forth herein, due to its
subsequent bankruptcy or insolvency and o desires to use the o to
administer o policies. Further, o shall contract with o, as
hereafter defined. The o is the o, for all carriers with which o
contracts, required to administer the products. All costs
associated with o obtaining of the o shall be borne by o. Once
split, o will provide o with the ability to administer their o
products to the same extent and standard as does o; the o.
In the event that o indicated above, o shall adhere to the terms
as set forth above with the pertinent licensure.
Notwithstanding the foregoing, o to administer the policyholder
data. If o elects to implement a different choice of o, o will
only be required to provide o.
10. GENERAL PROVISIONS
10.1 LMG and ▇▇▇▇▇▇▇ agree this Agreement is an honorable undertaking, and
each agree to cooperate with the other in carrying out its provisions.
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10.2 If any clause, paragraph, term or provision of this Agreement shall be
found to be void or unenforceable by any court of competent
jurisdiction, such finding shall have no effect upon any other clause,
paragraph, term or provision of this Agreement, and same shall be in
full force and effect.
10.3 For any notice under this Agreement, notice shall be sufficient and
effective five (5) business days after deposit in the U.S. Mail,
postage prepaid, return receipt requested, or upon receipt if
delivered personally or by fax or facsimile or by a delivery service.
Such notice shall be directed as follows:
To LMG: Legacy Marketing Group
▇▇▇▇▇▇▇ ▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To ▇▇▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
▇▇▇▇▇ ▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Senior Counsel
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
10.4 Each party expressly represents and warrants that it has the authority
to enter into this Agreement and that it is not or will not be, by
virtue of entering into this Agreement or otherwise, in breach of any
other agreement with any other insurance company, association, firm,
person, or corporation.
10.5 The persons signing this Agreement on behalf of ▇▇▇▇▇▇▇ and LMG
warrant, covenant and represent that they are authorized to execute
this document on behalf of such corporations pursuant to their bylaws
or a resolution of their boards of directors.
10.6 LMG shall, in all cases and at all times, observe and obey the rules,
regulations, instructions and directives of ▇▇▇▇▇▇▇ which shall be
equitable and consistent with the terms of this Agreement. ▇▇▇▇▇▇▇
may, from time to time and at any time, promulgate such rules,
regulations, instructions and directions for its operations.
10.7 LMG is an independent contractor. Nothing contained in this Agreement
shall be construed to create the relationship of employer and employee
between ▇▇▇▇▇▇▇ and LMG, nor shall LMG's employees, Wholesalers or
Producers be considered employees of ▇▇▇▇▇▇▇ for any purpose.
10.8 This Agreement is the result of mutual negotiations between the
parties and shall not be deemed to have been prepared by either party,
but by both equally. The headings of the several paragraphs contained
herein are for convenience only and do not define, limit, or construe
the contents of such paragraph.
10.9 This Agreement, including APPENDICES A, B, C, D and E attached and the
provisions thereof, constitute the entire agreement between the
parties. This Agreement shall be governed and construed in accordance
with the laws of the State of California. Any similar agreement signed
prior to the execution dates below is null and void and abrogated
hereby. No change, waiver, or discharge shall be valid unless in
writing and signed by an authorized representative of the party
against whom such change, waiver, or discharge is sought to be
enforced. No delay or omission by either party to exercise any right
or power
8
shall impair such right or power or be construed as a waiver. A waiver
by either of the parties of any of the covenants to be performed by
the other or any breach shall not be construed to be a waiver of any
succeeding breach or of any other covenant.
10.10 When a policy is issued to a trustee or trustees, a copy of the trust
agreement and any amendment thereto, shall be furnished to ▇▇▇▇▇▇▇ by
LMG and shall be retained as part of the official records of both LMG
and ▇▇▇▇▇▇▇ for the duration of the policy and for six years
thereafter.
10.11 Any policies, certificates, booklets, termination notices or other
written communication delivered by ▇▇▇▇▇▇▇ to LMG for delivery to
insured parties or covered individuals shall be delivered by LMG
within ten (10) days after receipt of instructions from ▇▇▇▇▇▇▇ to
deliver them unless applicable law or regulation requires an earlier
delivery.
10.12 Payment to LMG of any premiums or charges for insurance by or on
behalf of the insured party shall be deemed to have been received by
▇▇▇▇▇▇▇, and the payment of return premiums or claim payments
forwarded by ▇▇▇▇▇▇▇ to LMG shall not be deemed to have been paid to
the insured party or claimant until such payments are received by the
insured party or claimant.
10.13 During the term of this Agreement and for one (1) year thereafter,
▇▇▇▇▇▇▇ and LMG shall not, directly or indirectly, solicit for
employment any person employed or working on the services provided
hereunder within the preceding 12 months by the other party or any
affiliate of the other party without the prior written consent of the
other party; provided however; that (i) in the event either party uses
the services of a professional recruiter and provides such recruiter
solely with generic job duties and job descriptions (without making
any reference to the other party or the party's affiliates) and such
recruiter contacts a qualified candidate who happens to be an employee
of the other party and that candidate initiates contact through a
recruiter with that party, then that party may employ that employee,
or (ii) in the event an employee of the other party responds to a
general advertisement placed by a party, then that party may employ
that employee.
10.14 LMG shall provide reasonable access during normal business hours to
any location from which LMG conducts its business and provides
services to ▇▇▇▇▇▇▇ pursuant to this Agreement to auditors designated
in writing by ▇▇▇▇▇▇▇ for the purpose of performing audits for
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ shall give reasonable advance written notice of an
audit and include in that notice the matters which it will audit. LMG
shall provide the auditors any assistance they may reasonably require.
Such auditors shall have the right during normal business hours to
audit any business record, activity, procedure, or operation of LMG
that is reasonably related to LMG's responsibilities identified in
this Agreement, including the right to interview any LMG personnel
involved in providing or supporting such responsibilities.
10.15 Each party shall be excused from performance for any period and to
the extent that the party is prevented from performing any services,
in whole or in part as a result of delays caused by an act of God,
war, civil disturbance, court order, labor dispute, or other cause
beyond that parties reasonable control, including failures or
fluctuations in electrical power, heat, light, air conditioning, or
telecommunications equipment and such non-performance shall not be a
default or a ground for termination. Notwithstanding the above, LMG
agrees that it will establish and maintain reasonable recovery steps,
including technical disaster recovery facilities, uninterruptable
power supplies for computer equipment and communications and that as a
result thereof LMG will use its best efforts to ensure that the
Computer System shall be operational within 48 hours of a performance
failure. LMG's Rome, Georgia, and Petaluma, California, offices will
provide for each others' off-premises site for storage of backup
software for the operating systems and data files.
10.16 In no event and under no circumstances, however, shall either party
under this Agreement be liable to the other party under any provision
of this Agreement for lost profits or for exemplary, speculative,
special consequential or punitive damages.
10.17 Any claim or dispute arising out of or relating to this Agreement, or
any claimed breach thereof, or arising out of or relating to the
relationship between the parties shall be settled by arbitration
administered by the American Arbitration Association, in San
Francisco, California, under its Commercial Arbitration Rules and the
judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction.
9
10.18 The parties agree that this Agreement constitutes the full, complete
and entire Agreement between them and supersedes all prior
understanding, agreement, conversations, or representations between
them with respect to the subject matter of this Agreement. Any prior
agreement between LMG and ▇▇▇▇▇▇▇ regarding the same subject matter is
null and void and abrogated hereby.
10.19 Survival: Sections 5, 6.3(f), 6.3(g), 7, 10.9, 10.13, 10.14 and 10.16
shall survive the termination of this Agreement.
{Remainder of this page intentionally left blank.}
10
In witness whereof, the parties here to have executed this Agreement to take
effect on the effective date specified above.
LEGACY MARKETING GROUP
By: /s/ ▇▇▇ ▇. ▇▇▇▇
Title: V.P. Product Development
Date: January 18, 2001
▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Date: January 18, 2001
11
APPENDIX A
GEOGRAPHIC TERRITORY:
The District of Columbia and all states except Alabama
POLICY FORMS
State required variations of the above referenced forms may be required.
12
o CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
APPENDIX B
PROCESSING FEES
1. Multi Year Guarantee Products
a. Acquisition Fees: One time fee of [___] per application received.
b. Maintenance: [___] per inforce Policy per year to be paid weekly pro
rata.
c. Terminations: One time fee of [___] to be paid at time of surrender,
maturity, election of a settlement option or death claim of each
Policy.
d. Payment of Claims: [___] per death claim paid by LMG in addition to
the [___] termination fee, as provided above in ss. c.
2. Agent Appointment and Termination: [___] per agent appointment per state;
[___] per agent termination per state.
3. Out-Of-Pocket Expenses
a. In addition to the fees set forth above, LMG will forward to ▇▇▇▇▇▇▇
on a monthly basis a ▇▇▇▇ for the out of pocket expenses listed below.
Such invoice will include adjustments for any fees due to ▇▇▇▇▇▇▇ from
LMG as a result of Agent initial and renewal appointment fees which
are due or have been collected from such Wholesalers and Producers.
▇▇▇▇▇▇▇ will reimburse LMG with fifteen (15) days of receipt of such
▇▇▇▇. If LMG does not receive reimbursement within fifteen (15) days,
▇▇▇▇▇▇▇ will allow LMG to draw the following out of pocket expenses
from the disbursement account. Out-of-pocket expenses are expenditures
for the items such as those listed below and any other items agreed to
in writing by the parties:
(1) Costs of telecommunication lines and equipment installed to
provide primary and back-up support for on-line access to LMG's
administrative system and transmission of data.
(2) The costs involved with off-site storage for ▇▇▇▇▇▇▇ records,
documents, correspondence and other items as provided in this
Agreement, or cost of shipping those items to ▇▇▇▇▇▇▇.
(3) The costs associated with Agent (Wholesalers and Producers)
appointments and terminations, including Agent background
investigations and Agent initial appointment fees and termination
fees referenced in the Marketing Agreement executed concurrently
with this Agreement.
▇. ▇▇▇▇▇▇▇ will be responsible for cash management of this disbursement
account and LMG agrees to provide ▇▇▇▇▇▇▇ records and information to
properly perform this function.
4. Systems Time and Materials Rates
Under certain conditions as set forth in this Agreement, ▇▇▇▇▇▇▇ will
reimburse LMG for the costs of systems modifications or systems support at
the following rates:
Chief Information Officer o per hour
Director--Technical Support o per hour
Senior Programmer Analyst o per hour
Programmer Analyst o per hour
Senior Business Analyst o per hour
Project Manager o per hour
Business Analyst o per hour
Tester o per hour
5. Payment of Processing Fees.
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▇▇▇▇▇▇▇ will pay LMG the processing fees from 1 and 2 weekly. Fees from 1
and 2 will be paid by wire transfer within 5 days of receipt of such
documentation.
6. Compensation Not To Be Contingent
This Agreement shall not provide for compensation, commissions, fees or
charges which are contingent upon savings effected in the adjustment,
settlement and payment of losses (the loss ratio) covered by ▇▇▇▇▇▇▇'▇
obligations. In the event that LMG adjusts or settles claims on behalf of
▇▇▇▇▇▇▇, such compensation shall in no way be contingent on claims
experience.
This provision does not prevent the compensation of LMG from being based on
premiums or charges collected or the number of claims paid or processed or
performance-based compensation for providing auditing services. LMG will
not receive any administrative compensation except as expressly set forth
in this Agreement between LMG and ▇▇▇▇▇▇▇.
7. LIMRA CAP Survey Response Fees
▇▇▇▇▇▇▇ will pay LMG a flat fee of [___] per reply that LMG prepares in
response to LIMRA CAP survey answers. LMG will maintain a record of the
responses to policyholders that it prepares on behalf of ▇▇▇▇▇▇▇. The
record will indicate the number of such responses prepared and will be
forwarded as an invoice to ▇▇▇▇▇▇▇ on a monthly basis. ▇▇▇▇▇▇▇ remit
payment to LMG within twenty (20) days of receipt of such invoice.
8. Additional compensation to be paid to LMG by ▇▇▇▇▇▇▇ for services not
contemplated herein shall be mutually decided by both parties.
All fees set forth in this Agreement shall be reviewed annually by LMG and
▇▇▇▇▇▇▇ to ensure that such fees remain constant with any inflation.
14
APPENDIX C
SERVICES TO BE PROVIDED
These services are to be performed by LMG in accordance with the policies and
procedures mutually agreed to by both parties, applicable laws and regulations
and reasonable industry standards.
1. Services:
Clerical Processing of Agent Appointment and Termination with States
Appointment
1. Review signed Producer Agreement for completeness and accuracy, input
agent information into the Computer System
2. Conduct Background Investigation on Producer, including credit report,
NAIC RIRS inquiry, Vector Check, state licensing check (in all States
in which Producer requests appointment), criminal check, and past
employment check.
3. If Producer meets LMG/▇▇▇▇▇▇▇ contracting criteria, complete and mail
all state required appointment forms or electronic transmission of
appointment data to state.
4. Depending on state criteria, once appointment is effective, input
appointment information into the Computer System system for renewal
tracking, new business processing and weekly transmission to carrier.
Termination
1. Complete and mail state required forms or electronic transmission to
terminate agent's appointment in state(s).
2. Update the Computer System with appropriate appointment termination
into the Computer System to prohibit new business processing. Monthly
transmission of agent termination information to carrier.
Appointment Renewal Processing
1. LMG will forward to ▇▇▇▇▇▇▇ within three (3) business days of a
written request by ▇▇▇▇▇▇▇ any Producer address that is required to be
provided to a regulatory agency.
Clerical Processing of Transfers (1035x, CD Money Market, Mutual Fund
Qualified Transfers)
1. Review all transfer documentation for completeness and accuracy,
including receipt of all state specific forms (replacements).
2. Contact transfer institution for verification of account information.
3. Mail required documentation including state specific forms to transfer
institution.
4. Mail initial letter to applicant confirming receipt of application.
5. Contact transfer institution on a regular basis until receipt of such
funds.
6. Once all funds are received complete Contract Issue.
15
Contract Issue
1. Review all annuity applications for completeness and accuracy,
including state product availability and agent licensing.
2. Input application into LMG's administrative system.
3. Process any transfers, as previously defined.
4. Generate state specific policy forms.
5. Mail policy to Producer for delivery.
6. Follow-up on any outstanding delivery requirements and delivery
receipt.
7. Once all outstanding requirements are received, apply the premium to
policy, place the policy inforce and generate a commission payment to
agent.
Policyholder Service
Includes all maintenance on all certificates/policies after issue
(inforce). Responsibilities include the following:
1. Responding to all written or verbal consumer or agent inquiries
regarding an inforce policy.
2. Clerical processing of the following financial transactions:
Withdrawals (including systematic withdrawal income and Minimum
Required Distributions).
Partial surrenders.
Full surrenders, including 1035X.
Strategy transfers.
Election of a settlement option by owner or beneficiary (however LMG
will not process the actual payments under a settlement option). LMG
will provide ▇▇▇▇▇▇▇ with the all required documentation to process
the payments under such election within ten (10) business days of
receipt of completed forms.
Free Look or Not Taken processing
Additional Deposit(s)
Claims processing, as defined in this Agreement
3. Clerical processing of the following non-financial transactions.
Address changes
Beneficiary changes
Ownership changes
Mailing of quarterly statements
Collateral Assignment Review of legal documents
(not limited to POA, Guardianship).
4. Maintain a toll-free telephone line for policyholders.
Clerical processing is defined as reviewing requests to determine all state
and carrier mandated forms have been completed, data entry into ALS
(administrative system) to record such transaction and providing written
confirmation to policyholder of such clerical processing.
Maintenance of Policyholder Records
LMG will be responsible for the maintenance of policyholder records.
Specifically, LMG will maintain accurate and complete policyholder records
according to the provisions of this Agreement. Paper records will be
maintained in an offsite storage facility. Copies of all paper records will
be permanently scanned with LMG's imaging system. Records of all
transactions will also be maintained in LMG's administrative system.
Data Processing Services - All data files provided to ▇▇▇▇▇▇▇ will be in
formats that are mutually agreed to by both parties. Month end cutoff for
all accounting files will be the 21st of each month or the prior business
day unless otherwise agreed upon by both parties. {Need to specify month
end.)
1. Maintenance of the general ledger for all premium and disbursement
cash accounting as well as all policy related financial transactions.
2. Within ten (10) days of month end LMG will transmit the general ledger
interface to ▇▇▇▇▇▇▇ for financial statement preparation.
3. Maintain policy transaction data files.
4. Transmission of policy transaction data files to ▇▇▇▇▇▇▇ for the
preparation of reserve calculations.
16
5. Provide computer-accessible valuation data: account balance
information, policyholder activity, and policy provision data (such as
changing schedules of interest) at a sufficient level of detail to
make Statutory Valuation and GAAP accounting possible without
resorting to estimates. Create and transmit the data files with a
sufficiently early effective date that they may be used by ▇▇▇▇▇▇▇
before the calendar month end.
6. Provide ledger input data whose end-of-month close date coincides with
the effective date for the valuation data.
7. Provide ▇▇▇▇▇▇▇ with a complete file extract of all policyholder data
from the administration system once per month in a mutually agreed
upon format. Such policyholder data is confidential and shall only be
used by ▇▇▇▇▇▇▇ for the purpose of performing demographic and
marketing research. Any other use of such data requires prior written
consent by LMG. More frequent updates or incremental updates will be
provided at a mutually agreed upon date.
Agent Compensation
LMG is responsible for weekly processing and payment via check or ACH of
first year and trailing commissions to its Wholesalers and Producers.
Commission payments result from premium being applied to appropriate
▇▇▇▇▇▇▇ policies. LMG is responsible for generating the weekly commission
statements, maintenance of year to date commission information, and
processing of the actual commission payment. Agent compensation amounts are
determined by the Producer's LMG contract level, product type, age of
annuitant and owner, and premium amount.
Premium Accounting
LMG is responsible for receiving premium checks and depositing into ▇▇▇▇▇▇▇
depository bank account. The receipt of premium is recorded in the
administrative system and a general ledger entry is created to record the
deposit. However, LMG is not responsible for investing and managing these
assets.
Tax Reporting to Agents
LMG will be responsible for the reporting on a yearly basis to its
Producers and Wholesalers information on all commissions earned, as well as
other compensation from incentive trips, etc. Such reporting to Wholesalers
and Producers will consist of generating and mailing of 1099 forms. LMG
will also be responsible for the transmission of such records to the
applicable federal and state taxing authorities. LMG policies and
procedures comply with all state and federal regulations.
Tax Reporting to Policyholders
LMG is responsible for the reporting on a yearly basis to policyholders
information regarding certain financial transactions on such ▇▇▇▇▇▇▇
policies. Reporting to policyholders consists of generating and mailing of
1099 forms, Year End Account Balances and 5498 forms. LMG will also be
responsible for the transmission of such records to the applicable federal
and state taxing authorities. LMG policies and procedures comply with all
state and federal taxing authority regulations. Such tax reporting only
encompasses disbursements that are made by LMG on behalf of ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ shall be responsible for any tax reporting for disbursements that
are made by ▇▇▇▇▇▇▇ directly.
Tax Reporting to Vendors
LMG will be responsible for the reporting on a yearly basis to its vendors
information on all compensation paid. Such reporting to vendors will
consist of generating and mailing of 1099 forms. LMG will also be
responsible for the transmission of such records to the applicable federal
and state taxing authorities. LMG's policies and procedures comply with all
state and federal regulations.
Tax Reporting to Beneficiary(ies)
LMG is responsible for the reporting to beneficiary(ies) on a yearly basis
information regarding receipt of lump sum claim payments. Reporting to
beneficiary(ies) consist of generating and mailing of 1099 forms. LMG will
also be responsible for the transmission of such records to the applicable
federal and state taxing authorities. LMG policies and procedures comply
with all state and federal taxing authority regulations. Such tax reporting
only encompasses disbursements that are made by LMG on behalf of ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ shall be responsible for any tax reporting for disbursements that
are made by ▇▇▇▇▇▇▇ directly.
17
2. Other Services:
a. Accounting Services
(1) Maintenance of general ledger system
(2) Reconciliation of all cash and suspense accounts monthly
(3) Furnishing to ▇▇▇▇▇▇▇ of all applicable data necessary for
preparation of ▇▇▇▇▇▇▇ NAIC Convention Blank
(4) Furnishing to ▇▇▇▇▇▇▇ of all applicable data necessary for
preparation of the ▇▇▇▇▇▇▇ corporate tax return
(5) Furnishing to ▇▇▇▇▇▇▇ of all applicable data necessary for
preparation of the ▇▇▇▇▇▇▇ GAAP financial statements
(6) Furnishing to ▇▇▇▇▇▇▇ of all applicable data necessary for the
preparation of the ▇▇▇▇▇▇▇ unclaimed property reports
(7) Furnishing to ▇▇▇▇▇▇▇ of monthly data sets of all applicable data
necessary for the preparation of the ▇▇▇▇▇▇▇ premium tax returns
and payments
b. Actuarial Services
(1) LMG will assist and provide actuarial support to ▇▇▇▇▇▇▇. LMG's
responsibilities will vary by each product jointly developed and
may include:
Provide initial product specification
Provide competitive analysis for the product
Define pricing assumptions
Provide any necessary support for pricing assumptions
Share deterministic pricing results
Perform sensitivity analysis
Provide final product specifications
Define actuarial memorandum
Provide Actuarial field support
Monitor actuarial assumptions
Assist in ongoing profit/pricing management of the business
(2) LMG will draft initial policy forms and applications to be used
for each product jointly developed. LMG will assist ▇▇▇▇▇▇▇ in
the completion and preparation of filing such forms, and assist
in the approval process, LMG's responsibilities may vary with
each product jointly developed.
c. Advertising Material Development
LMG will be responsible for the creation, printing and distribution of
all advertising material used by LMG for such products jointly
developed. However, LMG will obtain the necessary approval from
▇▇▇▇▇▇▇ prior to use of such advertising material.
It is LMG's intention to provide all administrative services, with the
exception of the following:
a. Administration after the election of a settlement option by Owner, and
any subsequent payments after such election.
b. Administration after the election of a settlement option resulting
from a death, and any subsequent payments after such election.
3. Collection and Disposition of Funds:
All insurance premiums collected by LMG on behalf of ▇▇▇▇▇▇▇, and return
premiums received from ▇▇▇▇▇▇▇, shall be held by LMG in a fiduciary
capacity and will not be used as general operating funds of LMG. Such funds
shall be immediately, within two (2) business days be remitted to the
person or persons entitled to them or shall be deposited promptly, within
two (2) business days, in a Premium Fiduciary Account. Such Premium
Fiduciary Account will be held in the name of ▇▇▇▇▇▇▇. However, it will be
established and maintained by LMG in a federally or state insured financial
institution, separate and apart from any funds belonging to LMG or third
parties.
18
This Premium Fiduciary Account will at all times have a balance equal to
contributions plus any interest earned less, authorized disbursements by
▇▇▇▇▇▇▇. If LMG is authorized to draw checks on the Premium Fiduciary
Account, this will be clearly indicated on their face.
LMG may not pay any claim by withdrawals from the aforementioned Premium
Fiduciary Account. Withdrawals from the Premium Fiduciary Account shall be
made as provided in this Agreement between LMG and ▇▇▇▇▇▇▇ for any of the
following:
a. Remittance to ▇▇▇▇▇▇▇, if so entitled to such remittance;
b. Deposit in an account maintained in the name of ▇▇▇▇▇▇▇;
c. Transfer to and deposit in a claims-paying account, with claims to be
paid as provided by ▇▇▇▇▇▇▇.
LMG will maintain in a fiduciary capacity, Disbursement Accounts where
▇▇▇▇▇▇▇ will fund the balance and LMG is authorized to make the following
disbursements:
a. Payment to LMG of its out of pocket expenses, as defined in Appendix
B, Section 3a, and weekly commissions.
b. Remittance of return premium to the person or persons entitled
thereto.
c. Any policy/certificate holder disbursements, including payment of
claims.
LMG will pay claims from funds collected on behalf of ▇▇▇▇▇▇▇ and shall be
paid only on drafts of, and as authorized by ▇▇▇▇▇▇▇. In the event that LMG
receives monies to pay claims on behalf of ▇▇▇▇▇▇▇, such funds will be held
in a fiduciary capacity. No deposits will be made into or disbursements
made from this fiduciary account except for claims and claim adjustment
expenses. This fiduciary account will at all times have a balance equal to
the amount deposited less claims and claims adjustment expenses paid.
4. Settlements/Reports:
a. As agreed upon but no later than twenty (20) calendar days of the end
of each month, the prior month's balance sheet activity shall be
reconciled by LMG.
b. As agreed upon, LMG shall provide reports to ▇▇▇▇▇▇▇, including but
not limited to the following items:
(1) General ledger report
(2) Premium and commission reports
(3) Claim reports
(4) Statutory reserve policy information
(5) FAS 97 detail policy information
c. Daily, LMG shall provide to ▇▇▇▇▇▇▇, including but not limited to the
following items:
(1) Cash control reports, beginning the first day of business
d. Weekly (Monday, for the previous week's business activity), LMG shall
provide to ▇▇▇▇▇▇▇, including but not limited to the following items:
(1) Copies of check registers
(2) Bi-weekly--Transmission of general ledger data (including state
code detail), beginning on a mutually agreeable date after the
volume of business reaches a level determined by ▇▇▇▇▇▇▇ to
warrant daily updates
e. As agreed upon but no later than twenty (20) calendar days of the end
of each month, LMG shall provide to ▇▇▇▇▇▇▇, including but not limited
to the following items:
(1) Copies of all bank reconciliations
(2) All supplemental financial reporting information as requested by
▇▇▇▇▇▇▇
(3) Copies of tax reporting to policyholders and vendors
f. Miscellaneous ad hoc sales reporting.
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5. Claims Payment:
All Policy claims services, with the exception of the adjudication of death
claims not paid out as a lump sum, shall be performed by LMG on behalf of
▇▇▇▇▇▇▇. All Policy claims shall be investigated, processed and paid in
accordance with the policies and procedures mutually agreed to by both
parties. ▇▇▇▇▇▇▇'▇ claim personnel shall be made available at ▇▇▇▇▇▇▇'▇
expense to answer any questions that might arise from LMG's claims
personnel relating to claims investigation, processing and payment of
Policy claims.
In addition to the foregoing, in the case of a decision by LMG that a
Policy claim should be denied, LMG shall communicate its proposed action to
appropriate ▇▇▇▇▇▇▇ personnel who must agree and approve the proposed claim
denial before the claims decision is finalized. LMG will communicate
appropriate details of any proposed claim denial in accordance with
notification procedures to be jointly developed by the parties. If no
response is received within five (5) business days of transmission, LMG
shall have the right to proceed on the basis that ▇▇▇▇▇▇▇ is in agreement
with the decision to deny the claim. All claims paid by LMG from funds
collected on behalf of or for ▇▇▇▇▇▇▇ shall be paid on only drafts or
checks of and as authorized by ▇▇▇▇▇▇▇. All monies received by LMG to pay
claims on behalf of ▇▇▇▇▇▇▇ shall be held in an administrative capacity. No
deposits will be made into, nor disbursements made from this fiduciary
account, with the exception of claims and claims adjustment expenses. This
fiduciary account will at all times have a balance equal to the amount
deposited less claims and claims adjustment expenses paid. LMG is
responsible for all correspondence with the claimant and preparation of the
claim checks.
For those claims referred to ▇▇▇▇▇▇▇ by LMG, LMG will provide ▇▇▇▇▇▇▇ with
copies of the following:
1) Policy records (including but not limited to: all correspondence
relating to the policy)
2) All correspondence with the claimant.
3) Diary screens.
4) Claim proofs.
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APPENDIX D
SCHEDULE OF AUTHORIZED PERSONNEL
Representing ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, Senior Vice President
▇▇▇▇▇ ▇▇▇▇▇, Vice President
Representing LMG
▇▇▇▇ ▇▇▇▇▇▇▇▇ Chief Information Officer
▇▇▇▇▇ ▇▇▇▇▇ Chief Officer of Strategic Development
▇▇▇▇▇ ▇▇▇▇▇▇ Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇ Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇ Chief Operations Officer
▇▇▇ ▇▇▇▇ Vice President of Product Development
▇▇▇▇ ▇▇▇▇▇▇▇ Vice President of Distribution
▇▇▇▇ ▇▇▇▇▇▇ Officer of Special Markets
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o CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
APPENDIX E
Service Standards
Process Standard
New Business
Policy Issue Policy will be issued within o days* of receipt
Reissue Policy will be reissued within o days* of
receipt
New Business Transfers New business transfers will be mailed within o
days* of receipt
Transfer Follow-up Transfers will be follow-up on every o business
days* or as otherwise determined effective based
on the transfer company
Agent Contracting All new agent contracts will be reviewed and all
necessary background investigation reports
ordered within o days* of receipt
Appointment Processing Agent appointment(s) will be completed within o
days* of receipt Commission Processing Process
and mail checks on Friday of each week for all
complete new business applications received by
Thursday of that week
Commission Inquiries Process and confirm within o business days*
Premium Deposit Premium will be deposited the day it is received
Policyholder Services
Claims Processing Process and approve within o business days* of
receipt
Financial Transactions Process and confirm within o business days* of
receipt
Non-Financial Transactions Process and confirm within o business days* of
receipt
Customer Service Call Center
Answer Rate o
Abandon Rate o
Average Hold Time o
* Turnaround times are from the date of receipt of complete
policyholder/beneficiary/Producer documentation or approval from ▇▇▇▇▇▇▇ when
applicable. Further, the times given above are average times.
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