NON-MARKETING
THIRD PARTY ADMINISTRATOR AGREEMENT
BY AND BETWEEN
ALLIANCE-ONE SERVICES, INC.
AND
LINCOLN BENEFIT LIFE COMPANY
EFFECTIVE DATE
June 16, 2014
NOTICE OF CONFIDENTIALITY
This Agreement contains confidential and proprietary information. The owners of
the information included herein are Alliance-One Services, Inc., its parent
corporation, Computer Sciences Corporation and Lincoln Benefit Life Company, as
applicable.
TABLE OF CONTENTS
1. STRUCTURE OF THIS AGREEMENT 9
1.1. General 9
1.2. Interpretation and Precedence 9
1.3. Scope of the Set of Agreements 11
1.4. Parent Guarantee 12
1.5. MSA 12
1.6. Joint Affiliate Agreements 12
1.7. Work Orders 12
1.8. Ancillary Agreements 13
1.9. Set of Agreements 13
2. DEFINITIONS 13
3. TERMS OF APPOINTMENT 13
3.1. Appointment 13
3.2. Non-Marketing Third Party Administrator Services 13
3.3. Continuing Customer Responsibilities as to Contracts 14
3.4. Certain Services Requiring Licensure Not Included 14
3.5. Authority 14
3.6. Underwriting 14
3.7. Claims 14
3.8. Policy to Trustee 14
3.9. Required State Regulatory Bonds, Sureties and Insurance 14
3.10. Changes to or Termination of Agreement 15
3.11. Customer Responsibility 15
4. Services 15
4.1. Services 15
4.2. Provision of Services and Commitment to Provide Services 16
4.3. Authorized Users of the Services 17
4.4. Reports and Data 17
4.5. Communications with Contract Holders 18
4.6. Error Correction 18
4.7. Changes in Services 18
4.8. Modification 18
4.9. Additional Services 18
4.10. Acceptance Tests 18
4.11. Non-interference with On-going Operations 19
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4.12. Reports 19
4.13. Quality Assurance 20
4.14. Correction of Errors 20
4.15. Delays 20
5. Admin Guidelines, Compliance with Laws and Licensing 21
5.1. Admin Guidelines 21
5.2. Change in Applicable Law 22
5.3. Conformity to Applicable Law 24
5.4. Professional Licenses, Authorizations And Permits 24
5.5. Applicable Licensing Laws 25
5.6. Performance Consistent with Applicable Laws 25
5.7. Material Impacts on Service Provision 26
5.8. Compliance with Accounting Principles and Applicable Law 26
5.9. Consumer Privacy Laws 27
5.10. Compliance 27
6. Subcontractors and Personnel 27
6.1. Offshoring/Subcontractors / Personnel 27
6.2. Subcontractors and Countries of Performance 27
6.3. Personnel Checks 29
6.4. Assistance for Third Parties 29
6.5. Training 29
6.6. Continuity and Replacement 30
7. Service Levels, Improvement and Currency 30
7.1. Failure to Perform Performance Standards 30
7.2. Technology Refresh Services 30
7.3. Improved Technology and Knowledge Sharing 30
7.4. Service Levels- Generally 31
7.5. Service Level Default 31
7.6. Monitoring and Service Level Review 31
7.7. Gain Share 32
7.8. Benchmarking 32
8. Books, Records and Access 33
8.1. Right to Information and Instructions 33
8.2. Copy of Written Agreement 33
8.3. Books and Records 33
8.4. Ownership of Books and Records 33
8.5. Access to Books and Records 33
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8.6. Advertising 34
8.7. Additional Information 34
8.8. Access to Customer Information 34
8.9. Costs of Audit Support 34
8.10. Litigation / Regulatory Action 34
9. Contract Payments and Collections 35
9.1. Effect of ALLIANCE-ONE's Receipt of Payments 35
9.2. Fiduciary Account 35
9.3. Claims Account 35
9.4. Form of Payments of Claims 35
9.5. Records of Transactions 35
9.6. Records of Receipts 36
9.7. Records of Disbursements 36
9.8. Monthly Accounting 36
9.9. Currency 36
10. Term, Termination and Restructuring 36
10.1. Term of the Agreement and of Work Orders 36
10.2. Termination by Mutual Consent 36
10.3. Termination for Cause 36
10.4. For Convenience 37
10.5. For Change of Control 37
10.6. Data Security Breach 38
10.7. Chronic or Significant Service Level Defaults 38
10.8. [Intentionally Left Blank.] 38
10.9. Termination in Whole or in Part 38
10.10. Services after Notice of Termination or Expiration 38
10.11. Termination Assistance 39
10.12. Effect of Termination 40
10.13. Return of Information and Books and Records after Termination 40
10.14. Ongoing Business Divestitures, Acquisitions and Restructurings 40
10.15. Business Divestitures 40
10.16. Business Acquisitions 41
10.17. Business Restructurings 41
11. Fees and Expenses 41
11.1. Estimates 41
11.2. Fees 41
11.3. Reimbursable Expenses 42
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11.4. Good Faith Dispute as to Charges or Fees 42
11.5. Payment Terms 42
11.6. Taxes 42
11.7. CPI Escalation 42
11.8. Right of Set-Off 42
11.9. Unused Credits 43
12. Representations, Warranties and Covenants of ALLIANCE-ONE 43
12.1. Corporate Existence 43
12.2. Corporate Capacity 43
12.3. Corporate Authority 43
12.4. Valid and Binding Obligation 43
12.5. Legal Compliance 43
12.6. Background Checks 43
12.7. Litigation 44
12.8. Non-Infringement 44
12.9. Additional ALLIANCE-ONE Covenants 44
12.10. Disclaimer 45
12.11. Disclaimer of Responsibility 45
13. Representations, Warranties AND COVENANTS of Customer 46
13.1. Corporate Existence 46
13.2. Corporate Capacity 46
13.3. Corporate Authority 46
13.4. Valid and Binding Obligation 46
13.5. Litigation 46
13.6. Legal Compliance 46
13.7. Non-Infringement 46
13.8. Disclaimer 46
14. Informal Dispute Resolution 47
14.1. Disputes 47
14.2. Process 47
14.3. Subsequent Proceedings 47
14.4. Continuity of Services 47
14.5. Change Procedures Dispute 47
15. Indemnification and other express remedies 48
15.1. Indemnification of Customer 48
15.2. Indemnification of ALLIANCE-ONE 49
15.3. Additional Indemnifications 50
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15.4. Indemnification Procedures 50
15.5. Step-in Rights of Customer 51
15.6. Erroneous Payments 52
15.7. Breakage 54
16. Limitations of Liability and Disclaimers 55
16.1. Cure 55
16.2. Limitation of Liability 55
16.3. Exclusion of Consequential Damages 55
16.4. Exceptions 55
16.5. Damages Generally 56
16.6. Customer Affiliate's claims 57
17. Force Majeure, Disaster Recovery and Business Continuity 57
17.1. Force Majeure Event 57
17.2. Disaster Recovery and Business Continuity Plans 58
18. Confidentiality 58
18.1. ALLIANCE-ONE Confidential Information 58
18.2. Customer Personal Information 59
18.3. Customer Confidential Information 61
18.4. Customer Content and Software 62
18.5. Customer Software 62
18.6. Exceptions 63
18.7. Privacy Laws and Copyright Notices 63
19. Proprietary Rights 63
19.1. Customer Proprietary Materials 63
19.2. Customer Designated Third Party Proprietary Materials 64
19.3. ALLIANCE-ONE Proprietary Materials 65
19.4. ALLIANCE-ONE Proprietary Materials Created During the Term of
the Set of Agreements and the Termination Assistance Period 66
19.5. Competitive Developments 66
19.6. Deliverables 66
19.7. Changes to Materials 68
19.8. No use of Trademarks 68
19.9. Admin Guidelines 68
20. Service Locations 68
20.1. Service Locations / Approval for Relocation 68
20.2. Conduct at Customer's Service Locations 69
21. Security 70
21.1. SSAE 16 Report 70
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22. Miscellaneous 71
22.1. Confidentiality of Terms 71
22.2. Transfer 71
22.3. Independent Contractor 71
22.4. Entire Agreement 71
22.5. Waivers 71
22.6. Notice, Service of Process and Regulatory Notices 72
22.7. Governing Law 72
22.8. Waiver of Jury Trial 72
22.9. Counterparts 73
22.10. Construction 73
22.11. Severability 73
22.12. Third Party Beneficiaries 73
22.13. Covenant of Further Assurances 73
22.14. Conflict of Interest / No Side-Payments 73
22.15. No Solicitation of Employees 73
22.16. Schedule of Authorized Personnel 73
22.17. Survival 74
22.18. Headings 74
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NON-MARKETING THIRD PARTY ADMINISTRATOR AGREEMENT
This Non-Marketing Third Party Administrator Agreement ("Agreement"), executed
on the date set forth below but with an effective as of the 16th day of June,
2014 (the "Effective Date"), by and between Lincoln Benefit Life Company, with a
principal place of business at 0000 X. Xxxxx Xx., Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000 ("Customer"), and Alliance-One Services, Inc., a wholly-owned subsidiary
of Computer Sciences Corporation, with a principal place of business of business
at 0000 Xxxxxxxx Xxxxxxx, Xxxxxx, XX 00000 ("ALLIANCE-ONE"). Customer and
ALLIANCE-ONE shall be referred to herein individually as a "Party" and
collectively as the "Parties." The Parties intend for this Agreement to
supersede and replace entirely, ab initio, Amendments No. 1 through No. 3 to
that Interim Agreement dated February 17, 2014 (the "Interim Agreement") as they
relate to all Project Start-Up Activities.
This Agreement consists of this signature page, the General Terms and Conditions
that follow, and all Exhibits and Work Orders expressly made a part of this
Agreement. The Exhibits listed below are part of this Agreement and are attached
behind the General Terms and Conditions:
Exhibit 1.3(c) - Change Management Procedures
Exhibit 1.4(a) - Form of ALLIANCE-ONE Parent Guarantee
Exhibit 3.11 - Administration Services
Exhibit 4.4 - Reports
Exhibit 5.5(b) - Applicable Licensing Laws - Mandatory Provisions
Exhibit 6.2(d) - Approved Subcontractors
Exhibit 7.4(a) - Service Levels and Service Level Credits
Exhibit 7.8 - Benchmarking Process
Exhibit 10.11 - Termination Assistance Services
Exhibit 11.2 - Pricing and Financial Provisions
Exhibit 14.5 - Expedited Dispute Procedures
Exhibit 17.2 - Business Continuity / Disaster Recovery Plan
Exhibit 18.2 - Information Security Requirements
Exhibit 20.1(a) - ALLIANCE-ONE Service Locations
Additional Exhibits and Work Orders may be added to this Agreement by written
amendments signed by the Parties.
ALLIANCE-ONE and Customer certify by the undersigned authorized agents that they
have read this Agreement, including its Exhibits and the related Work Orders and
agree to be bound by all terms and conditions.
"ALLIANCE-ONE" "Customer"
Alliance-One Services, Inc. Lincoln Benefit Life Company
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
------------------------ -----------------------
Xxxxxxx Xxxxxx Xxxxx Xxxxxx
(Authorized Signatory) (Authorized Signatory)
Xxxxxxx X. Xxxxxx Xxxxx Xxxxxx
(Printed Name) (Printed Name)
President Chief Transformation Officer
(Title) (Title)
12-15-2014 12-12-2014
(Execution Date) (Execution Date)
Page 8 of 82
GENERAL TERMS AND CONDITIONS
WHEREAS, Customer is a duly authorized insurance company domiciled in the State
of Nebraska;
WHEREAS, ALLIANCE-ONE provides certain non-marketing, clerical and ministerial
services as a third party administrator for insurance and annuity products;
WHEREAS, ALLIANCE-ONE provides to insurers and others these services related to
insurance product administration and policyholder service on new, existing and
closed blocks of insurance products, including management of supporting
information technology ("IT") infrastructures;
WHEREAS, ALLIANCE-ONE possesses administration application software and
automated work distributor software, together with other software applications
and technology, technical and programming services, IT infrastructures,
processing equipment, facilities, and administrative support personnel necessary
to provide and support the administrative processing, maintenance of records,
processing of information and generation of output (collectively the "Facilities
and Systems") with respect to Customer's insurance and annuity products; and
WHEREAS, Customer desires to appoint ALLIANCE-ONE as its Non-Marketing Third
Party Administrator to perform the functions and services described in the
Agreement for the life insurance and/or annuity products listed or described in
attached Work Order(s), and if permitted hereunder, the insurance and/or annuity
products of Customer's subsidiaries and Affiliates (collectively, the
"Contracts"), as such list(s) of Contracts may be supplemented or revised in
accordance with this Agreement, and ALLIANCE-ONE desires to accept such
appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
Parties hereto agree as follows:
1. STRUCTURE OF THIS AGREEMENT
1.1. General. The Exhibits and Work Orders to this Agreement describe specific
Services that ALLIANCE-ONE agrees to provide to Customer, and may contain
special terms related to particular insurance products or Services. These
General Terms and Conditions and the annexed Glossary, Exhibits and Work Orders
state the terms that apply to all dealings among the Parties pursuant to this
Agreement. If there is any conflict between an Exhibit or Work Order and these
General Terms and Conditions, the Exhibit or Work Order, as appropriate,
controls.
1.2. Interpretation and Precedence.
(a) In the Set of Agreements, unless the context otherwise requires:
(i) the table of contents page and the headings are included for
convenience only and will not affect the interpretation or
construction of the Set of Agreements;
(ii) any reference to a Party or the Parties is to a party or the
parties (as the case may be) to the Agreement and will include any
permitted assignees of a party;
(iii) any reference to a Section is to a Section of the document in
which it appears and any reference to an Exhibit or a part of an
Exhibit is to the prevailing Exhibit (including, where a reference is
to an Exhibit only, to any Appendices the Exhibit) from time to time;
(iv) a reference to the "Agreement" will, as the case may be or
require, include
1) on an MSA-level, or where Services are directly provided based
on the MSA, the MSA and the MSA Exhibits,
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2) on a Work Order level, that Work Order and the Work Order
Exhibits thereto are made a part of and incorporated into this
MSA, and
3) any written amendments to such agreement made from time to
time;
(v) where a reference is made to a specific agreement only, the
reference is made specifically to such document only, whereas a
reference to the MSA will include the related Exhibits;
(vi) a reference to the "Set of Agreements" will include all
agreements mentioned under Section 1.2 (a) (iv) above and Section 1.9
(Set of Agreements), respectively;
(vii) in case of discrepancies between two or more MSA Exhibits, in
particular in all cases involving safety and security standards, the
strictest standards of all Exhibits will prevail over any lesser
standards; if a discrepancy has been caused by an Exhibit subsequently
agreed or amended by the Parties, the most recent document will
prevail;
(viii) the words include and including will not be construed as terms
of limitation;
(ix) references to Customer mean Lincoln Benefit Life Company except
where the reference is in the context of:
1) a Joint Affiliate Agreement;
2) the transfer of any Third Party Contracts, assets or
Employees, under any Ancillary Agreement; or
3) Customer obtaining certain rights and interest in equipment
and Software, where such rights and interest will vest in such
member or members of the Customer Group as reasonably required to
secure the proper operation of the Services and to safeguard
Customer's best interests hereunder,
whereas for 1) through 3) the reference will be to such member of
the Customer Group which enters into or obtains the Services
under a JAA, Work Order or enters into the respective Ancillary
Agreement, or obtains the rights and interest there under; it
being understood that Customer may at any time appoint Customer
Affiliates as its attorney-in-fact;
(x) references to an obligation of either Customer or ALLIANCE-ONE
includes an obligation by the relevant Party to procure the
performance of its relevant Affiliate of that obligation, to the
extent contemplated by the Set of Agreements;
(xi) words in the singular include the plural and vice versa and words
in a specific gender include any other gender;
(xii) nothing in the Set of Agreements affects any statutory rights
granted or provisions required, in either case, by mandatory
Applicable Law that cannot be waived or limited by contract. If there
is a conflict between the terms in the Set of Agreements and mandatory
Applicable Law, mandatory Applicable Law will prevail; and
(xiii) where any provision refers to the knowledge and/or belief of a
Party such provision will be deemed to include a further statement
that the Party in question made such statement after due and careful
enquiry.
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(b) In cases of conflict between any documents of the Set of Agreements,
the following order of precedence will apply:
(i) an MSA Exhibit will have precedence over the MSA;
(ii) a Work Order will have precedence over the MSA;
(iii) an Exhibit of a Work Order will have precedence over an MSA
Exhibit;
(iv) an Exhibit of a Work Order will have precedence over its Work
Order;
(v) notwithstanding the foregoing, any inconsistency or conflict
between any provisions contained in any documents of the Set of
Agreements which cannot be resolved with the rules of precedence as
set out above, will be resolved in favor of the meaning ascribed to
the provision in question in this MSA unless expressly otherwise
provided in the Set of Agreements;
(vi) in respect of any other provision in the Set of Agreements
related to particularities of local Jurisdictions, such terms will in
all cases prevail over any other terms of the Set of Agreements.
1.3. Scope of the Set of Agreements.
(a) The Set of Agreements sets out the terms and conditions pursuant to
which ALLIANCE-ONE will supply the Services and at which Customer will
receive the Services.
(b) The Set of Agreements will be applicable to the provision of Services
by ALLIANCE-ONE to Customer. The Parties may change the terms in the Set of
Agreements by following the Change Management Procedures in Exhibit 1.3 -
Change Management Procedures.
(c) Customer will not be obligated to pay for any services, including new
services, not properly authorized in accordance with the Set of Agreements.
(d) To the extent Customer and ALLIANCE-ONE disagree whether services
Customer requires ALLIANCE-ONE to perform are in-scope Services or new
services, ALLIANCE-ONE will provide such services at Customer's request and
the Parties will escalate the resulting issue in accordance with the
Informal Dispute Resolution process of Article 14 (Informal Dispute
Resolution). Notwithstanding anything to the contrary in this Section, to
the extent the disagreement is resolved by qualifying such services at
issue as new services, the provision of such services will be deemed
approved by Customer, and ALLIANCE-ONE will be entitled to be compensated
for such services in accordance with the Change Management Procedures.
(e) ALLIANCE-ONE confirms and agrees that the provision of services
included within the scope of the Services is not exclusively reserved for
ALLIANCE-ONE. Customer does not commit or warrant any exclusivity rights or
preferred ALLIANCE-ONE treatment to ALLIANCE-ONE, meaning that neither
Customer nor any member of the Customer Group will be required to engage
ALLIANCE-ONE or any members of the ALLIANCE-ONE Group to provide the
Services.
(f) Unless otherwise agreed in the Set of Agreements, Customer will not
have, and will not have at any time during the Term of this MSA, any
minimum revenue/purchase commitment to or any warranty of a certain
business volume or market share for Services from ALLIANCE-ONE or any other
member of the ALLIANCE-ONE Group.
(g) ALLIANCE-ONE will at all times during the Term and the Termination
Assistance Period be in a position to provide any of the Services as set
out in the Set of Agreements unless otherwise agreed to by the Parties in
the Transition Assistance Plan.
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(h) ALLIANCE-ONE confirms and agrees that the provision of new services is
not exclusively reserved for ALLIANCE-ONE.
1.4. Parent Guarantee.
(a) ALLIANCE-ONE's ultimate parent entity will duly execute the guarantee
in form and substance as set out in Exhibit 1.4(a) - Form of ALLIANCE-ONE
Parent Guarantee (the "ALLIANCE-ONE Parent Guarantee").
(b) The ALLIANCE-ONE Parent Guarantee will be duly signed by all relevant
parties and effective as at the Effective Date of this MSA and will take
effect as a condition precedent to Customer's obligations and liabilities
under the Set of Agreements.
1.5. MSA.
(a) This MSA will govern as a framework agreement for the provision of the
Services and related services by ALLIANCE-ONE to Customer. All Exhibits
attached to this MSA constitute an integral part of this MSA.
(b) By reference to and integration of this MSA, this MSA (including its
Exhibits) will apply, as amended or supplemented from time to time by
mutual agreement in writing between the Parties, to all agreements to
provide Services entered into between:
(i) Customer Affiliate and ALLIANCE-ONE under a Joint Affiliate
Agreements, and/or,
(ii) Customer and ALLIANCE-ONE under a Work Order
(c) ALLIANCE-ONE will not be permitted to make any claim under the MSA
alone against any Customer Affiliate, other than Customer unless such
Customer Affiliate has signed a Joint Affiliate Agreement.
1.6. Joint Affiliate Agreements.
(a) One or more Affiliates of Customer may agree to be bound by the terms
of this Agreement by such Affiliate, Customer and ALLIANCE-ONE executing a
Joint Affiliate Agreement ("JAA.") Upon execution of a JAA, such Affiliate
of Customer will be bound by the terms of this Agreement applicable to
Customer to the same extent as Customer for the same Services provided to
such Affiliate. The Parties will use a standard form JAA, in a form as
mutually agreed.
(b) Customer shall not be jointly and severally liable for any JAA, unless
otherwise expressly delineated in a JAA or Set of Agreements. ALLIANCE-ONE
will not be permitted to make any claim under a JAA against Customer, or
any Customer Affiliate, other than the JAA Party.
(c) The JAA Parties, if different from the MSA Parties, will not have any
rights or obligations, including to provide or to receive Services, unless
and until each signs a JAA.
(i) All references to Customer in this MSA and its Exhibits will be
deemed to also mean the JAA Party joining onto the MSA through a JAA
agreement unless a reference to Customer will expressly or in the
context be understood to refer to the Customer Party of the MSA only.
1.7. Work Orders.
(a) Services which are not provided directly under this MSA and the MSA
Exhibits will only be initiated upon the execution of a Work Order.
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(b) Additional Services will only be initiated through the process
described in Exhibit 1.3(c) - Change Management Procedures, upon the
execution of a Work Order or other written document approved by a Customer
Authorized Representative and accepted by ALLIANCE-ONE. Such additional
Services are deemed ordered by execution of a Work Order and will be
delivered for as long as the term specified in such Work Order.
(c) Work Orders will be issued through the use of a standardized form as
the parties may mutually agree upon.
(d) Upon execution of each Work Order, the provisions of the MSA, as
amended or supplemented from time to time by mutual agreement in writing
between the Parties, shall thereafter include such Work Order.
(e) ALLIANCE-ONE agrees to negotiate in good faith each Work Order which
may be requested by Customer or Customer Affiliates for additional Services
and to perform such Work Order in accordance with the terms and conditions
set out in this MSA, the MSA exhibits, the applicable Work Order and Work
Order Exhibits.
(f) A Work Order may include special conditions that will apply in addition
to the terms of this MSA. The special conditions set out in the Work Order
may supersede certain terms of this MSA in relation to the Services
supplied under the Work Order.
1.8. Ancillary Agreements. The agreements required to effect the transfer of any
assets and Customer Third Party Contracts, if any, under or in connection with
the Set of Agreements will be executed by ALLIANCE-ONE and Customer ("Ancillary
Agreements").
1.9. Set of Agreements.
(a) The whole of the contractual documentation, consisting of:
(i) the MSA and its Exhibits (which, for the avoidance of doubt,
include each Work Order);
(ii) all JAAs, if any, and their Exhibits;
(iii) all Ancillary Agreements, if any; and
(iv) all Work Orders and their Exhibits,
(collectively the "Set of Agreements").
2. DEFINITIONS
This Glossary attached hereto and incorporated herein defines some capitalized
terms that may be used in this Agreement. Other terms are defined and
capitalized in the Agreement, as appropriate.
3. TERMS OF APPOINTMENT
3.1. Appointment. Subject to the terms and conditions set forth in this
Agreement, Customer hereby appoints ALLIANCE-ONE as its Non-Marketing Third
Party Administrator to perform the Services described in this Agreement for the
listed insurance and/or annuity Contracts, and ALLIANCE-ONE hereby accepts such
appointment. This appointment is immediately revoked upon the termination of
this Agreement.
3.2. Non-Marketing Third Party Administrator Services. ALLIANCE-ONE agrees to
perform those Non-Marketing Third Party Administrator services set forth in the
Exhibits and Work Orders attached hereto and as directed by Customer (herein
defined as the "Services"). ALLIANCE-ONE acknowledges and agrees that the
relationship established by this Agreement is not an exclusive relationship and
Customer may obtain from a third
Page 13 of 82
party services that are similar or identical to, interdependent with, dependent
upon or in any other way related to the Services, provided that Customer shall
not interfere with or disrupt, or allow any third party to interfere with or
disrupt, the provision of the Services by ALLIANCE-ONE. ALLIANCE-ONE agrees to
provide the Services under this Agreement with reasonable promptness, diligence
and in a workmanlike manner or a professional manner depending on the functions
being performed, in each case in accordance with the terms of the Agreement and
with the practices and standards used in well-managed back-office operations
performing services similar to the Services provided hereunder.
3.3. Continuing Customer Responsibilities as to Contracts. Notwithstanding the
scope of the Services performed by ALLIANCE-ONE and its Affiliates under this
Agreement and without relieving ALLIANCE-ONE of any of its obligations under
this Agreement, Customer shall continue to be at all times responsible for
determining all benefits, premium rates, underwriting criteria, adjudication of
claims, claims payment procedures applicable to the Contracts, and for securing
reinsurance related to such Contracts, if any. Except as expressly stated herein
or in the Admin Guidelines, ALLIANCE-ONE shall not be obligated to perform any
such functions or activities under this Agreement, including through a
subcontract, delegation or attempted subcontract or delegation from Customer
(and ALLIANCE-ONE shall have no responsibility and no liability for such
functions or activities). As expressly stated herein or in the Admin Guidelines,
ALLIANCE-ONE may perform certain limited, non-discretionary ministerial services
related to these continuing Customer responsibilities to the extent expressly
stated herein or in the Admin Guidelines.
3.4. Certain Services Requiring Licensure Not Included. Regardless of any
language used in this Agreement, ALLIANCE-ONE is not contracted or bound to
perform any activities or services requiring licensure or registration as an
insurance "adjuster", "agent," "broker," "producer," "managing general agent",
or "transfer agent" as those terms are defined by the 50 States, the District of
Columbia, territories or insular possessions of the United States.
3.5. Authority. ALLIANCE-ONE will have no power or authority other than as
expressly granted and set forth in this Agreement. ALLIANCE-ONE will have no
power or authority on lines of business or insurance products or policy forms
other than those specifically listed and set forth in the Exhibits and Work
Orders attached hereto.
3.6. Underwriting. ALLIANCE-ONE shall not be called upon to (and shall have no
responsibility to) establish any underwriting criteria, or perform or conduct
any services related to underwriting other than the limited, non-discretionary
ministerial services described in Section 3.3 (Continuing Customer
Responsibilities as to Contracts) above.
3.7. Claims. ALLIANCE-ONE shall only exercise the ministerial authority to pay
claims as is set forth in Customer's Admin Guidelines. ALLIANCE-ONE shall not be
called upon to establish any claims adjudication procedures, or to negotiate,
adjust, compromise, settle or adjudicate any claims, or negotiate with Contract
Holders, Insureds or claimants on disputed and/or contested claims.
3.8. Policy to Trustee. If the Services provide for ALLIANCE-ONE to clerically
issue on behalf of Customer any Contracts, when a Contract is issued to a
trustee, a copy of the trust agreement and any amendments to the trust agreement
shall be furnished to Customer by ALLIANCE-ONE and shall be retained as part of
the official records of ALLIANCE-ONE and/or Customer for the duration of the
Contract plus seven years thereafter, subject to Section 10.13 (Return of
Information and Books and Records after Termination) below.
3.9. Required State Regulatory Bonds, Sureties and Insurance. ALLIANCE-ONE
agrees that whenever required by Applicable Law, it will maintain a deposit,
bond, surety or insurance in favor of such authority, to be held in trust for
the benefit and protection of Customer, Contract Holders and Insureds whose
monies ALLIANCE-ONE handles, and in addition, shall comply with any other
Applicable Law relating to bond and insurance requirements.
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3.10. Changes to or Termination of Agreement. Customer shall provide fifteen
(15) days advance written notice to the Director of the Department of Insurance
for the State of Arizona of any termination or cancellation or any other change
in the Set of Agreements as required by Arizona Law (or any other state
requiring similar notification).
3.11. Customer Responsibility.
(a) Subject to ALLIANCE-ONE's duty to provide the Administration Services
(see Exhibit 3.11 - Administration Services) in accordance with the Admin
Guidelines, Customer will be at all times solely responsible for any of the
following:
(i) Determining all coverage benefits, premium rates, underwriting
criteria, identification of and interpretation of applicable insurance
and other administration Applicable Laws, adjudication of claims and
claims payment procedures applicable to the Contracts, and for
securing reinsurance, if any.
(ii) Customer's or its subsidiaries or Affiliates' underwriting
decisions, claims decisions, claim payment decisions, or claim
recovery decisions.
(iii) Insurance risk or liability relating to any of the Contracts or
their respective Insureds.
4. SERVICES
4.1. Services.
(a) ALLIANCE-ONE will provide to the Customer:
(i) the Administration Services described in Exhibit 3.11, inclusive
of any services, functions and responsibilities not specifically
described in the Set of Agreements but that are required for the
proper performance and provision of the Services as described in the
Set of Agreements, and
(ii) the services, functions and responsibilities described in the Set
of Agreements, with (i) through (ii) above collectively referred to as
the "Services."
(b) With respect to those Services that are Administration Services as
stated in the applicable Work Order, and subject to Section 5.1 (Admin
Guidelines) and Section 5.2 (Change in Law):
(i) ALLIANCE-ONE shall cause each of its managers having
responsibility for any Administration Services and each of its senior
executives having direct responsibility for Administration Services
(the "Oversight Managers") to monitor diligently its (including its
subcontractors') performance hereunder as well as the ability of its
subcontractors to continue performing Administration Services in light
of all surrounding circumstances in each jurisdiction where such
subcontractors perform such Administration Services, including,
without limitation, the development or likely development of hostile
operating environments, civil war or political unrest. If an Oversight
Manager discovers credible evidence that ALLIANCE-ONE has breached the
Agreement in a way that could adversely impact Customer, then
ALLIANCE-ONE will promptly inform Customer, including the relevant
facts readily available to ALLIANCE-ONE. If an Oversight Manager
discovers credible evidence that would lead a reasonable person to
conclude that ALLIANCE-ONE is likely to have materially breached the
Agreement in a way likely to cause material harm to Customer where
early notice of such event could provide Customer the ability to
mitigate its damages, then ALLIANCE-ONE will promptly inform Customer,
including the relevant facts readily available to ALLIANCE-ONE. Any
notice provided by ALLIANCE-ONE under this Section 4.1(b)(i) to alert
Customer of an actual or suspected breach shall not be admissible into
any dispute proceedings between the parties.
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(ii) Customer shall cause each of its managers having responsibility
for the administration of the Contracts which are the subject of
Administration Services and each of its senior executives having
direct responsibility for administration of the Contracts (the
"Operations Managers") to monitor ALLIANCE-ONE's performance
hereunder. If an Operations Manager discovers credible evidence that
ALLIANCE-ONE has breached the Agreement in a way that could materially
adversely impact Customer, then Customer will promptly inform
ALLIANCE-ONE, including the relevant facts readily available to
Customer. If an Operations Manager discovers credible evidence that
would lead a reasonable person to conclude that ALLIANCE-ONE may have
breached the Agreement in a way likely to cause material harm to
Customer where early notice of such event would provide Customer the
ability to mitigate its damages, then Customer will promptly inform
ALLIANCE-ONE, including the relevant facts readily available to
Customer. Any notice provided by Customer under this Section
4.1(b)(ii) to alert ALLIANCE-ONE of an actual or suspected breach
shall not be admissible into any dispute proceedings between the
parties.
4.2. Provision of Services and Commitment to Provide Services.
(a) ALLIANCE-ONE will and will procure that its employees, Subcontractors
and agents provide the Services to Customer:
(i) commencing from the Service Commencement Date, for the applicable
term as defined in the Work Order, or absent such specified Work Order
term, for the Term and any Termination Assistance Period, or where
applicable until completion of the relevant project work;
(ii) in accordance with the Work Order and any work or service
description contained in a Work Order;
(iii) subject to Section 4.1 (Services), in accordance with all
Applicable Law as documented in Customer's approved Admin Guidelines
(including identifying and procuring required permits, certificates,
approvals and inspections);
(iv) in accordance with Section 3.2; and
(v) in accordance with the other provisions of the Set of Agreements.
(b) ALLIANCE-ONE will procure, install, manage, maintain, repair and keep
updated the facilities, assets and resources (including personnel and
equipment) as required to deliver the Services and meet its obligations in
accordance with the Set of Agreements. ALLIANCE-ONE will bear the risk for
any costs related to this Section which are required to deliver the
Services to the extent such costs were not considered in the Set of
Agreements and not agreed in a Work Order.
(c) ALLIANCE-ONE will provide all support reasonably related to the
Services that is required for Customer to meet all of its requirements
imposed by Applicable Law and to meet Customer's own audit compliance
requirements, which may be more stringent than Applicable Law. Additional
support may be obtained via the Change Management Procedures if the same
exceeds the provisions of Section 8.5 and Article 10 of this Agreement.
(d) ALLIANCE-ONE will co-operate with Customer's employees, suppliers and
other consultants where necessary for the proper performance of the
Services.
(e) While a Party's Personnel are at any other Party's premises, that Party
will ensure that it will comply, and will procure that its Personnel
comply, with all health and safety, security (including information
security policies) and internal staff requirements and policies and
procedures of the other Party. Access to one
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another's premises will be granted only to the extent necessary to enable
one another to perform their obligations under the Set of Agreements.
(f) Each Party to the Set of Agreements will notify the other Parties in
writing within seven (7) Business Days of the discovery of any
circumstances which might impair or prevent the provision of the Services
which arise at any time during the Term.
(g) ALLIANCE-ONE will provide evidence at Customer's request sufficient to
show that it is regarded by the relevant tax authorities in the
jurisdiction where the Services are being provided as a bona fide
independent agent acting in the ordinary course of its business for the
purposes of income tax and withholding tax liabilities.
(h) ALLIANCE-ONE will notify Customer and its Affiliates, on the one hand,
and Customer shall notify ALLIANCE-ONE on the other hand, in writing within
seven (7) Business Days of discovery about all material or persistent
industrial, insurance, safety, regulatory, financial or insolvency matters
(subject to Applicable Law prohibiting such disclosure) or public relations
matters, and matters where litigation arises or is threatened or there are
grounds for litigation arising, which are known by ALLIANCE-ONE or its
Personnel, or Customer and its Personnel, respectively, arising out of or
in connection with the Set of Agreements or the provision of Services.
(i) As may be agreed in accordance with the Change Management Procedures,
with respect to an acquisition, divestiture, material reorganization or a
similar transaction, ALLIANCE-ONE will provide due diligence support
(including assessments, and transition and migration planning support).
ALLIANCE-ONE will subsequently provide the Services as they apply to the
acquired, divested or reorganized entities as set out in the Set of
Agreements via the procedure set forth in Exhibit 1.3(c) - Change
Management Procedures.
(j) If requested by Customer, but subject to ALLIANCE-ONE's approval (not
to be unreasonably withheld or delayed), ALLIANCE-ONE will act as a
purchasing agent for Customer to procure equipment, Software and services
not within the scope of the Services. ALLIANCE-ONE will make available to
Customer the benefit of any equipment, Software and service volume
purchasing discounts and convey to Customer any other benefits offered to
ALLIANCE-ONE by third party suppliers.
4.3. Authorized Users of the Services.
(a) ALLIANCE-ONE will provide the Services to Customer and thereby to any
authorized users designated by Customer, and to any third party suppliers
and customers of Customer whose business relationship with Customer
involves the use of the Services (the "Authorized Users"). For the
avoidance of doubt, the Parties agree that neither this provision nor
provisions similar to it in the Set of Agreements creates any privity of
contract as between ALLIANCE-ONE and any party other than Customer or other
person not a party to a Set of Agreements. Further, neither this provision
nor provisions similar to it in the Set of Agreements gives any party other
than Customer or other person not a party to a Set of Agreements the right
to demand Services or enforce the right to Services directly from
ALLIANCE-ONE.
(b) In addition, ALLIANCE-ONE will provide at Customer's expense transition
support services to Customer and any acquiring entity of the Authorized
User similar to those described in Section 4.2 (Provision of Services and
Commitment to Provide Services) above for acquisitions.
4.4. Reports and Data. ALLIANCE-ONE shall provide to Customer the reports
described in Exhibit 4.4 - Reports attached hereto with the frequency described
in same concerning the performance of the Services. With respect to any
additional reports, or the production of any data described in an Exhibit or
Work Order, preparation of such reports or data may require programming or
manual work effort to be performed at Customer's expense,
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in which case ALLIANCE-ONE shall notify Customer of the estimated cost for such
reports or data, prior to incurring any expenses without Customer's prior
approval.
4.5. Communications with Contract Holders. To the extent required by Applicable
Law, ALLIANCE-ONE shall, at Customer's expense, provide a written notice to each
Contract Holder advising them of the identity of and relationship among
ALLIANCE-ONE as TPA Agent for Customer, the Contract Holder and Customer. If
ALLIANCE-ONE collects funds from a Contract Holder, ALLIANCE-ONE will provide
the Contract Holder with written notice of the premium charged by Customer for
such insurance coverage. Any policies, certificates, booklets, termination
notices or other written communications delivered by Customer to ALLIANCE-ONE
for delivery to Customer's Contract Holders shall be delivered by ALLIANCE-ONE
promptly after receipt of instructions from Customer to do so.
4.6. Error Correction. Customer shall notify ALLIANCE-ONE in writing of any
error or mistake in any record, report, data, information, administrative task
or output subject to this Agreement caused by the Facilities and Systems,
Software Products provided hereunder or any mishandling or misprocessing of
administrative tasks described in the Admin Guidelines, or otherwise caused by
ALLIANCE-ONE. Such notice shall provide details of such error or mistake
necessary for ALLIANCE-ONE to identify and recreate such error or mistake. Upon
receipt of such notice, ALLIANCE-ONE shall take steps to correct and re-process
such reported error or mistake as soon as reasonably practicable given the
nature and complexity of the error or mistake. Customer shall promptly advise
ALLIANCE-ONE of any errors or mistakes in the data transmitted to the Facility
and Systems, the records maintained, or output generated hereunder. In the event
Customer erroneously transmits data or transmits incorrect data, Customer, at
Customer's expense, shall correct such data and retransmit the same. The Parties
understand that many tasks to be performed hereunder have shared responsibility
between the Parties and the Parties will cooperate in good faith to facilitate
the performance of such tasks. Customer shall cooperate with Alliance-One by
taking all commercially reasonable steps permitted under the terms of the
Contracts to correct any errors or mistakes made.
4.7. Changes in Services. From time to time Customer may request new services or
changes in the Services set forth in this Agreement and rendered by ALLIANCE-ONE
under the Exhibits and Work Orders and Admin Guidelines. ALLIANCE-ONE will
implement changes requested by Customer after ALLIANCE-ONE and Customer have
agreed on the change(s) to be made and additional or adjusted charges, if any,
attributable to the change(s). ALLIANCE-ONE shall have no responsibility or
liability for such requested new services or changes unless and until
ALLIANCE-ONE and Customer have so agreed in writing to the new services or
changes and any related charges.
4.8. Modification. ALLIANCE-ONE shall have the right from time to time, without
the consent of Customer, to alter and modify its Facilities and Systems,
Software Products, and any systems, programs, internal procedures, or facilities
used or employed in performing its duties and obligations hereunder, so long as
no such alterations or modifications shall materially change, diminish, or
degrade the performance levels or functionality of the Services or adversely
affect the operations and procedures of Customer in using or employing the
Facilities and Systems, Software Products hereunder.
4.9. Additional Services. Customer may purchase additional services from
ALLIANCE-ONE in accordance with the Change Management Procedures.
4.10. Acceptance Tests.
(a) Acceptance Criteria and Acceptance Test Procedure - Milestones and
deliverables to be delivered by ALLIANCE-ONE under the Set of Agreements
including the progress and completion of Transition and Transformation will
be subject to acceptance testing, including the acceptance criteria and
acceptance test procedures agreed by the Parties for this purpose. Neither
party will refuse the other Party's requirements in respect of any
acceptance test consistent with the applicable previously agreed upon
testing approach. In the
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absence of any agreed acceptance criteria and/or acceptance test procedure,
the achievement of milestones and deliverables under the Set of Agreements
will be subject to Customer's approval.
(b) Customer's Involvement in Acceptance Tests - ALLIANCE-ONE will give
reasonable advance notice of the dates proposed for all Acceptance Tests as
set out in the applicable Work Order. All Acceptance Tests will take place
with the involvement of designated Customer representatives unless
otherwise agreed by the Parties. ALLIANCE-ONE will perform all Acceptance
Tests and Customer will provide such co-operation and assistance as
ALLIANCE-ONE may reasonably require. ALLIANCE-ONE will document the results
of the Acceptance Tests (including the reasons for any failures of them and
the proposals for rectifying such failures).
(c) Failure to Complete Acceptance Tests - ALLIANCE-ONE must meet the
applicable acceptance test criteria in accordance with the acceptance
testing procedures specified in the Work Order and/or applicable Work
Order. Where the criteria are not met within the timeframe specified due to
ALLIANCE-ONE's delay, ALLIANCE-ONE will repeat the acceptance testing or
perform such additional work as may be required to enable the acceptance
tests to be successfully completed. If such criteria are not successfully
met within the required time period, without prejudice to Customer's other
rights and remedies:
(i) In the case of any Milestone identified as critical in the Set of
Agreements, the provisions of sub-Sections 4.2(c) will apply; and
(ii) In respect of any other Milestone or Critical Deliverable, as
identified in the applicable Work Order, Customer will have the option
to:
1) accept such milestone or deliverable, provided that the
monetary value of any deficiencies, defects or errors or faults
will be assessed and agreed in good faith so that an abatement of
the Charges applies which, taking into account all the
circumstances, is reasonable, can be agreed between the Parties.
ALLIANCE-ONE acknowledges that the abatement will apply unless
and until all the deficiencies, defects and errors have been made
good or rectified. Such deficiencies, defects or errors will be
made good or rectified by the date stipulated at the time; or
2) where the degree of non-conformity is such that the milestone
or deliverable is materially different from the specifications
set out in the applicable Work Order, reject the milestone or
deliverable as not being in conformity with the Work Order. Upon
the rejection, Customer will be entitled to terminate and wind
down the respective Work Order, request reimbursement of the
Charges paid for such Work Order, and immediately terminate all
or part of the Services to which the failed development is
related to and the applicable provisions of Article 11 (Fees and
Expenses) will apply.
4.11. Non-interference with On-going Operations. ALLIANCE-ONE will ensure that,
in the supply of the Services, it will coordinate with the activities of and
will not interfere with the other operations of Customer or any other member of
the Customer Group, or their respective employees, or any other contractor
employed at such facilities.
4.12. Reports.
(a) ALLIANCE-ONE will comply as part of the Services with the requirements
related to reporting contained in Exhibit 4.4 - Reports, and as otherwise
specified in the Set of Agreements.
(b) The reports listed in Exhibit 4.4 - Reports are additional to any other
reports ALLIANCE-ONE needs to provide under the Set of Agreements, or any
Work Order.
Page 19 of 82
4.13. Quality Assurance. ALLIANCE-ONE will develop and employ a quality
assurance program, subject to Customer's approval, designed to promote
performance of the Services at a high level of quality, focusing on measuring
and improving reliability, speed, cost effectiveness, and customer satisfaction.
ALLIANCE-ONE will in particular:
(a) provide to Customer ALLIANCE-ONE's procedures and measurements on all
quality assurance activities associated with the Services ("Quality
Assurance Procedures and Measurements");
(b) ensure that the Quality Assurance Procedures and Measurements are
consistent with similar standards in Customer's peer group and/or in the
provision of similar professional services;
(c) ensure compliance with a published quality assurance program, with
adequate internal controls and verification activities; and
(d) allow Customer to perform audits that will focus on:
(i) ALLIANCE-ONE's adherence to its quality assurance procedures and
standards and to the Quality Assurance Procedures and Measurements;
(ii) the metrics gathered to support quality assurance activities;
(iii) ALLIANCE-ONE's efforts to improve overall quality; and
(iv) ALLIANCE-ONE will co-operate fully and assist Customer with any
such audits.
4.14. Correction of Errors. ALLIANCE-ONE will, at the request and sole
discretion of Customer, promptly correct any errors or inaccuracies in Personal
Information caused by ALLIANCE-ONE or its Affiliates or Subcontractors.
4.15. Delays.
(a) ALLIANCE-ONE will perform the Services in accordance with any
implementation and/or project plan agreed between the respective Parties in
the relevant Agreement.
(b) Where performance of the Services is likely to be delayed and where any
critical milestone date is not met, ALLIANCE-ONE will:
(i) notify Customer in writing of the relevant facts, reasons and
circumstances of the delay immediately on first becoming aware of the
likelihood of the delay; and
(ii) continue to keep Customer informed in writing of the relevant
facts, reasons and circumstances of the delay and its remedial
actions, if any, until such time as the delay has been remedied and
the agreed project plan is back on course.
(iii) prepare and deliver a written remedial plan to Customer
detailing ALLIANCE-ONE's proposals for performing the relevant
Services in accordance with the applicable requirements under the Set
of Agreements or, in relation to any milestone dates or other
requirements as to timing that have or are likely to be missed, as
soon as reasonably practicable thereafter.
(iv) At Customer's request, and, without prejudice to any other remedy
Customer may have, implement any remedial plan approved by Customer in
accordance with its terms at no cost to Customer (save to the extent
that failure to meet the relevant date is excused in accordance with
Section 17.1 (Force Majeure Event), is caused by Customer, or to any
breach of this MSA).
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(c) Where performance of the Services is delayed such that any Critical
Milestone date is delayed (save to the extent that failure to meet the
relevant date is excused in accordance with Section 17.1 (Force Majeure
Event) or to any acts or omissions of Customer) Customer will be entitled
to, without prejudice to any other remedy Customer may have:
(i) terminate the Set of Agreements in whole or in part in accordance
with Section 10.7 (Chronic Failure or Critical Delay) or 10.8
(Termination for Multiple Critical Deliverable Failures); and/or
(ii) recover from ALLIANCE-ONE by way of damages.
5. ADMIN GUIDELINES, COMPLIANCE WITH LAWS AND LICENSING
5.1. Admin Guidelines.
(a) ALLIANCE-ONE is responsible for documenting and maintaining in a set of
records (tangible or electronic records) the policies, processes, work
flows, and procedures comprising the Admin Guidelines, which, for the
Administration Services, shall include those policies, processes and work
flows consistent with Applicable Laws, and interpretations of Applicable
Law unique to administering the Contracts as specified in writing by
Customer in accordance with this Agreement.
(b) Customer shall promptly review such documentation of the initial
version of the Admin Guidelines and all material changes thereto which
ALLIANCE-ONE provides to Customer and advise in writing ALLIANCE-ONE of any
changes which are required in such documentation to ensure that the Admin
Guidelines, to the extent documented, are accurate and legally compliant.
(c) Throughout the Term whether on its own initiative or at the request of
Customer, ALLIANCE-ONE will periodically provide drafts of suggested
changes to the Admin Guidelines to Customer for review, comment and
approval.
(d) Customer's approval of the documented Admin Guidelines may be only from
an authorized officer of Customer as indicated in Exhibit 22.16. Customer
shall respond to ALLIANCE-ONE's draft of the Admin Guidelines and any
material changes thereto within a reasonable time after their submission by
ALLIANCE-ONE. For subsequent material changes to the Admin Guidelines which
ALLIANCE-ONE submits to Customer for Customer's approval, pending approval
of the revised documented Admin Guidelines by Customer, the prior version
of the approved Admin Guidelines shall govern.
(e) On reasonable request from Customer, ALLIANCE-ONE will make available
to Customer (in hard copy or in electronic form) the Admin Guidelines which
are used by ALLIANCE-ONE in performing the Administration Services.
(f) ALLIANCE-ONE shall not make any material changes to the Admin
Guidelines as they relate specifically to the Administration Services
without first providing reasonable notice to Customer and the reason for
such change.
(g) To the extent the policies, processes, work flows, and procedures in
the Admin Guidelines have been memorialized and approved in writing by
Customer, ALLIANCE-ONE shall be entitled to rely upon such documented
policies, processes, work flows, and procedures in performing the
Administration Services and shall not be responsible for any breach of, or
failure to perform its obligations under, this Agreement, to the extent
caused by ALLIANCE-ONE's compliance therewith.
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(h) To the extent the policies, processes, work flows, and procedures have
not been memorialized in the Admin Guidelines and approved by Customer for
any particular activities within the general scope of the Administration
Services ALLIANCE-ONE is to perform, ALLIANCE-ONE shall either:
(i) follow (until such time as Customer approves the applicable
supplement to the Admin Guidelines containing the additional policies,
processes, work flows, and procedures) the policies, processes, work
flows, and procedures required to perform the Administration Services
in conformity with:
1) Applicable Law in accordance with Customer's reasonable
interpretations thereof as may be requested by ALLIANCE-ONE and,
on Customer's initiative, as provided in writing by Customer;
2) prudent business standards for detecting and preventing fraud;
3) prudent internal controls;
4) general industry standards;
5) terms and conditions of the Contracts provided by Customer to
ALLIANCE-ONE;
6) the terms and conditions of applicable reinsurance agreements
that are provided by Customer to ALLIANCE-ONE; and
7) those policies, processes, work flows, interpretations of
applicable laws and regulations, unique to administering the
Contracts as may be reasonably specified in writing by Customer
in accordance with the Set of Agreements, which are to be
memorialized in the Admin Guidelines and approved by Customer; or
(ii) promptly request from Customer written direction on how to
perform that portion of the Administration Services not covered by the
Customer-approved Admin Guidelines, in which case, ALLIANCE-ONE may
await further written instructions from Customer before performing
such Administration Services.
(i) ALLIANCE-ONE shall perform the Administration Services in accordance
with the Admin Guidelines.
5.2. Change in Applicable Law.
(a) Customer will notify ALLIANCE-ONE of any changes in Applicable Law (and
amendments thereof), changes in interpretations thereof or other changes
necessary to comply with Applicable Law pertaining to Customer's insurance
business and specifically the Contracts and the Services provided under the
Set of Agreements, of which Customer learns. Customer is responsible for
monitoring all Applicable Law (and amendments thereof) applicable to its
insurance business and specifically the Contracts and the Services provided
under the Set of Agreements. ALLIANCE-ONE shall promptly evaluate all
proposed and actual changes in Applicable Law of which ALLIANCE-ONE is
informed (including such changes identified by Customer, ALLIANCE-ONE's
other customers or resources otherwise available to ALLIANCE-ONE) and shall
inform Customer of its assessment as to the consequences of such proposed
or actual changes on the receipt, delivery or method of performing the
Services, as described in b) below. ALLIANCE-ONE shall endeavor in good
faith to notify Customer of any changes in Applicable Law (and amendments
thereof) affecting the Administration Services and the Contracts of which
it becomes aware of, whether from other of its customers or otherwise.
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(b) Within a commercially reasonable period of time of becoming aware of a
change described in a) above, ALLIANCE-ONE will provide to Customer (in
writing or via email) notice of same, and will provide an assessment of
such change based upon the applicable regulatory effective date thereof
that includes:
(i) ALLIANCE-ONE's performance of the Services;
(ii) the change to any previously-approved Admin Guidelines which may
be necessary;
(iii) unless already provided by Customer, to what extent such change
requires legal interpretations of the Applicable Law which are
required to be made by Customer;
(iv) a proposed plan (including tasks assigned to Customer and a
timeline to complete the necessary activities) for finalizing the
assessment of the change to enable ALLIANCE-ONE to implement the
necessary changes on a timely basis to the Admin Guidelines to remain
in compliance with the Applicable Law, as to be amended by such
change;
(v) an estimate of the costs to implement such changes.
(c) The Parties will negotiate promptly and in good faith the necessary
changes as a result of such changes in accordance with the Change
Management Procedures, including the charges therefore, subject to the
other provisions of this Agreement, including e) below and Section 14.5
(Change Procedures Dispute) below.
(d) If any change in the Applicable Law would result in a fee increase of
more than fifteen percent (15%) of the Administrative Service Charges per
year, or significantly adversely affect ALLIANCE-ONE's performance of the
Services in a way that cannot be reasonably avoided, then provided Customer
gives ALLIANCE-ONE written notice of termination within one hundred eighty
(180) days from Customer becoming aware of such change, Customer may
terminate the affected portion of the Services or the entire Set of
Agreements at least one hundred eighty (180) days from ALLIANCE-ONE's
receipt of such written notice. If Customer exercises the termination right
under this Section to terminate the entire Set of Agreements, Customer will
only be required to pay to ALLIANCE-ONE two-thirds (2/3) of the applicable
Termination Fee (and other applicable early termination charges), if any,
as set out in Exhibit 11.2 - Pricing and Financial Provisions, or a Work
Order, if any, only if the change in the Applicable Law would only have the
same effect on Customer but for Customer's entering into the Set of
Agreements (otherwise, Customer will pay ALLIANCE-ONE all such Termination
Fees).
(e) With respect to changes to the Services necessary to remain compliant
with: (i) Applicable Law or in accordance with Customer's reasonable
interpretations thereof, on Customer's initiative, as provided in writing
by an authorized officer of Customer; (ii) prudent business standards for
detecting and preventing fraud; (iii) prudent internal controls; (iv)
general industry standards; (v) the terms and conditions of the Contracts
provided by Customer to ALLIANCE-ONE; and (vi) those policies, processes,
work flows, interpretations of Applicable Laws, unique to administering the
Contracts as may be reasonably specified in writing by Customer in
accordance with the Set of Agreements, the Parties will bear the cost of
implementing such changes (which costs include the costs of analysis,
design, programming, testing and implementation), the cost of determining
an acceptable approach as follows:
(i) if the change would not have arisen but for the fact that Customer
has outsourced / ordered the Services, then ALLIANCE-ONE will bear the
full cost of conforming the Services to such change;
(ii) if the change would have arisen even if Customer had not
outsourced / ordered the Services but if ALLIANCE-ONE must conform its
operations with respect to other of its customers to comply with such
change, then ALLIANCE-ONE will exercise commercially reasonable
efforts to
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approach all affected customers receiving similar services from
ALLIANCE-ONE and will in good faith work to develop a cost sharing
proposal between itself and the affected customers with the intent to
spread the cost of complying with such changes across as many entities
as possible. At Customer's request and provided prior written consent
of all affected customers of ALLIANCE-ONE is obtained, ALLIANCE-ONE
will allow a third party auditor bound by a confidentiality
undertaking to access the required information regarding costs
incurred by ALLIANCE-ONE and affected customers of ALLIANCE-ONE to
verify that ALLIANCE-ONE has complied with this cost sharing
requirement;
(iii) if:
1) the requirement to conform the Services would have arisen even
if Customer had not outsourced/ordered the Services, and
2) ALLIANCE-ONE can demonstrate to Customer's reasonable
satisfaction that it must conform its operations only with
respect to Customer or to Customer plus a small number of
customers,
then Customer will bear ALLIANCE-ONE's reasonable, verifiable cost of
conforming the Services to the change in Applicable Law to the extent such
changes are made with respect to Customer only and not to other customers;
and
(f) Notwithstanding the foregoing, but without limiting Customer's
termination right above, if a change in Applicable Law significantly
impairs the ability of either Party reasonably to enjoy the economic
benefits of the affected Service, such as the result of a legal prevention
from providing Services from any offshore locations which has not been
introduced by a law governing the outsourcing industry exclusively, then
the Parties will discuss the matter in good faith and attempt to develop an
appropriate alternative course of action.
5.3. Conformity to Applicable Law. From time to time, either Party may present
the other Party with amendments to this Agreement required to maintain such
Party's status as a corporation, TPA or insurer, as the case may be, to conform
this Agreement to Applicable Law. If Customer determines that Customer is not in
compliance with any Applicable Law relating to the Services, or if any
regulatory authority having jurisdiction over Customer or ALLIANCE-ONE notifies
ALLIANCE-ONE that ALLIANCE-ONE is not in compliance with any Applicable Law
relating to the Services, ALLIANCE-ONE shall work diligently with Customer to
achieve compliance, in accordance with its other obligations under this
Agreement. If either Party's request results in additional costs and expenses to
the other Party (other than in an inconsequential manner), then the Parties
shall enter into good faith discussions to reach agreement to pay that other
Party for such additional costs and expenses pursuant to the Change Management
Procedures in Exhibit 1.3 - Change Management Procedures.
5.4. Professional Licenses, Authorizations And Permits.
(a) ALLIANCE-ONE will be responsible for obtaining and maintaining all
professional licenses, notices, approvals, authorizations and permits
required by Applicable Law which ALLIANCE-ONE is required to have in order
to perform the Services, including to the extent applicable, as a licensed
third party administrator ("TPA", such licenses are referred to as
"Required Licenses" and those Applicable Laws requiring such a Required
License are referred to as "Applicable Licensing Laws"). ALLIANCE-ONE will
have financial responsibility for all fees and taxes associated with
obtaining and maintaining such licenses, notices, approvals, authorizations
and permits. Customer acknowledges that ALLIANCE-ONE is not obligated to
perform any activities or services requiring licensure or registration as
an insurance "adjuster," "agent," "broker," "producer," "managing general
agent," or "transfer agent" as those terms are defined by the 50 States,
the District of Columbia, territories or insular possessions of the United
States.
Page 24 of 82
(b) ALLIANCE-ONE will comply with all Applicable Licensing Laws regarding
the provision of the Services to Customer. Changes in Applicable Law will
be dealt with in accordance with the rules as set out in Section 5.2
(Change in Applicable Law), provided, however, ALLIANCE-ONE shall be
responsible for monitoring all changes in Applicable Licensing Laws and for
taking the steps necessary to obtain and maintain the Required Licenses for
complying with the Applicable Licensing Laws.
(c) To the extent allowed by Applicable Law, ALLIANCE-ONE will be
responsible for and will pay (or reimburse Customer, as applicable) for any
fines and penalties imposed on ALLIANCE-ONE or Customer or Customer
Affiliates arising from any non-compliance by ALLIANCE-ONE or ALLIANCE-ONE
Affiliates with the Applicable Licensing Laws applicable to the provision
of the Services to Customer.
(d) Customer will be responsible for obtaining and maintaining all
professional licenses, notices, approvals, authorizations and permits
required by Applicable Law which Customer is required to have in order to
receive and use the Services. Customer will have financial responsibility
for all fees and taxes associated with obtaining and maintaining such
licenses, notices, approvals, authorizations and permits.
(e) Customer will comply with Applicable Law applicable to the receipt and
use of the Services by Customer.
(f) Except as stated in Section 5.4(c), Customer will be responsible for
any fines and penalties imposed on Customer or ALLIANCE-ONE arising from
any non-compliance by Customer or Customer Affiliates with Applicable Law
applicable to the receipt and use of the Services by Customer in its role
as an insurance company.
5.5. Applicable Licensing Laws.
(a) ALLIANCE-ONE shall perform the Administration Services in conformity
with all Applicable Licensing Laws. Exhibit 5.5(a) - Applicable Licensing
Laws - Mandatory Provisions describes certain of those Applicable Licensing
Laws which require certain provisions to be in an agreement between a third
party administrator and an insurance company with respect to the
Administration Services provided under this Agreement, as determined by
ALLIANCE-ONE. ALLIANCE-ONE shall notify Customer of any changes in
Applicable Licensing Laws that become effective after the Effective Date
where such change in law relates to the provisions required to be in an
agreement between a third party administrator and an insurance company, by
providing an updated Exhibit 5.5(a) - Applicable Licensing Laws - Mandatory
Provisions, with a reasonable explanation of the basis for such changes and
if any such changes in Applicable Licensing Laws conflict with the
provisions of this Agreement, a detailed description of such conflicts
shall also be provided. To the extent the Applicable Licensing Laws in
effect as of the Effective Date of a Work Order impose obligations on
ALLIANCE-ONE in addition to ALLIANCE-ONE's obligations expressly stated in
this Agreement, ALLIANCE-ONE shall perform such obligations at no
additional cost to Customer. To the extent the Applicable Licensing Laws
impose obligations on ALLIANCE-ONE which ALLIANCE-ONE believes may conflict
with ALLIANCE-ONE's obligations expressly stated in this Agreement,
ALLIANCE-ONE shall notify Customer's designated authorized officer in
writing of such conflicts and such changes shall be considered a change in
Applicable Laws as described above. To the extent the Applicable Licensing
Laws allocate, as between ALLIANCE-ONE and Customer, obligations to
Customer, with respect to third parties, the parties acknowledge such
allocation of ultimate control and authority, but such allocation shall not
relieve ALLIANCE-ONE of any of its obligations under this Agreement which
are permitted under Applicable Licensing Laws.
5.6. Performance Consistent with Applicable Laws.
(a) ALLIANCE-ONE will, and will procure that ALLIANCE-ONE's employees and
agents, ALLIANCE-ONE Affiliates, its and ALLIANCE-ONE Affiliates'
Subcontractors and suppliers, take all reasonable actions, as advised by
Customer and Customer Affiliates, for the Customer Group to ensure
Page 25 of 82
compliance with the Applicable Law applicable in connection with the
provision of the Services, including without limitation the requirements,
demands, regulations, instructions and requests of any Regulator and those
official guidelines, recommendations, and any other additional or
substituted standards or procedures implemented by Customer from time to
time as required by Applicable Law.
(b) Both ALLIANCE-ONE and Customer will be entitled, taking into account
the matters listed in Section 8.1 (Right to Information and Instructions),
8.10 (Requests, Audits and Intervention by Regulator), to provide or
receive, as the case may be, the Services or perform those obligations
consistent with Applicable Law or other mandatory or published terms. No
lawful action taken by either Party to secure compliance with Applicable
Law will be considered a breach of the Set of Agreements.
(c) Customer will be entitled, from time to time, to request modifications
to the Services and/or the obligations under the set of Agreements in case
of changes in the Applicable Law to secure compliance with the Applicable
Law in accordance with Section 5.2 (Change in Applicable Law).
(d) Should Customer be required, as a result of the Set of Agreements or
during its Term or the Termination Assistance Period, to make any
regulatory filings or obtain regulatory approvals relating to, inter alia,
the subject matter of the Set of Agreements, then ALLIANCE-ONE will assist
Customer, by providing all information and documentation reasonably
requested by the Regulators or Customer in connection with the preparation
of such filing or application, or as required by any Applicable Law. At
Customer's request (but subject to any Applicable Law), ALLIANCE-ONE will
promptly provide Customer with copies of any relevant correspondence,
filings, approvals, licenses, and other documents and information relating
to ALLIANCE-ONE's obligations under the sub-Section.
5.7. Material Impacts on Service Provision. ALLIANCE-ONE will immediately
disclose any developments to Customer that may have a material impact on its
ability to provide the Services, including but not limited to any adverse effect
from new Applicable Laws that it becomes aware of and including but not limited
to its financial resources or its risk profile. Customer will immediately
disclose any developments to ALLIANCE-ONE that may have a material impact on
ALLIANCE-ONE's provision to Customer of the Services, including but not limited
to any adverse effect from new Applicable Laws that it becomes aware of and
including but not limited to its financial resources or its risk profile.
5.8. Compliance with Accounting Principles and Applicable Law.
(a) If any audit by an auditor designated by Customer or any Regulator
having jurisdiction over Customer or ALLIANCE-ONE results in ALLIANCE-ONE
being notified that it or one of its Affiliates or Subcontractors is not in
compliance with:
(i) any generally accepted accounting principle,
(ii) Applicable Law,
(iii) the agreed system development life cycle (SDLC) methodology, if
any,
(iv) other agreed standards,
(v) any other agreed policies and procedures,
(vi) any other governance, or
(vii) audit requirement relating to the Services,
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then, to the extent such noncompliance is not as a result of direction or
obligations of Customer, ALLIANCE-ONE will, at its own expense and within
the period of time specified by such auditor or Regulator, comply with all
requirements as expressed by such auditor or Regulator, as applicable.
5.9. Consumer Privacy Laws. ALLIANCE-ONE shall comply with Applicable Licensing
Laws, including, as applicable, Privacy Laws. On written request from Customer,
ALLIANCE-ONE shall provide to Customer a description of each unauthorized
acquisition of information governed by Privacy Laws which has occurred within
the previous twenty-four (24) months, or since the last such report from
ALLIANCE-ONE, whichever is more recent, which involves the facilities or
subcontractors involved in performing the Services under this Agreement.
5.10. Compliance. Customer shall comply with all Applicable Laws with respect to
the operation of its business, and in the solicitation, sale and administration
of the Contracts, and it has and will continue to make all required filings with
regulatory agencies in connection with the offer, sale, or administration of the
Contracts. Customer shall, and in a timely fashion, provide ALLIANCE-ONE with
all materials and information - including any changes to any Applicable Laws -
necessary for the timely and proper administration of the Contracts by
ALLIANCE-ONE, which may include, but are not limited to: policy forms; lists of
all Agents and representatives authorized to provide service to Contract Holders
and certificate-holders of the Contracts, including their respective states of
license; rate books; cash value and reserve factors; cost of insurance factors;
data records; actuarial support; mortality rates; and verified customer files or
facsimile thereof, such as microfilm or microfiche. Customer shall also be
responsible for providing ALLIANCE-ONE with any policy-specific actuarial and
legal support needed in order for ALLIANCE-ONE to fulfill its policy and Agent
administration and financial reporting responsibilities under this Agreement.
The foregoing shall not relieve ALLIANCE-ONE or Customer of any of its
obligations under the Set of Agreements.
6. SUBCONTRACTORS AND PERSONNEL
6.1. Offshoring/Subcontractors/Personnel. ALLIANCE-ONE may share, subcontract or
otherwise delegate any of the Services hereunder only as is expressly permitted
by the Set of Agreements. ALLIANCE-ONE continues to be solely obligated to
Customer for the satisfactory performance of any functions performed by any such
Affiliate, or a permitted subcontractor, pursuant to this Agreement.
6.2. Subcontractors and Countries of Performance.
(a) ALLIANCE-ONE will perform the Administration Services with
ALLIANCE-ONE's own staff and performance of same will not occur outside the
ALLIANCE-ONE Service Locations as agreed in the Set of Agreements, the
Exhibits, or a respective Work Order. If subcontracting of the
Administration Services with a third party is proposed, ALLIANCE-ONE will
disclose to Customer in advance any financial interests in such third party
or a related party, otherwise it is assumed that ALLIANCE-ONE has no
financial interests in such third party.
(b) ALLIANCE-ONE will not subcontract, delegate, assign to leased staff, or
outsource (all such activities collectively being referred to as
"subcontracting" or a similar term or being performed by "Subcontractors"
in the Set of Agreements) any of its obligations to perform the
Administration Services without the prior written approval of Customer,
which will not be unreasonably withheld.
(c) ALLIANCE-ONE will not outsource any Customer Facing Activity without
written authorization from Customer in advance.
(d) Subcontractors approved by Customer as of the Effective Date are listed
in Exhibit 6.2(d) - Approved Subcontractors with a description of approved
subcontracted Administration Services.
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(e) Prior to obtaining Customer's consent to enter into a subcontract,
ALLIANCE-ONE will provide Customer with written documentation specifying
the identity, qualifications and scope for the proposed Subcontractor, as
well as the location(s) from which the Subcontractor would perform the
subcontracted obligation and all appropriate due diligence with respect to
the proposed Subcontractor's information security policies, procedures,
practices and history, together with a general description of the proposed
terms upon which ALLIANCE-ONE proposes to engage the subcontractor.
(f) ALLIANCE-ONE will not disclose Customer Confidential Information to a
Subcontractor until such Subcontractor has executed an appropriate
nondisclosure agreement at least as stringent as the confidentiality
obligations applicable to ALLIANCE-ONE under the Set of Agreements.
(g) ALLIANCE-ONE will procure that all subcontracted obligations are
performed at the Service Locations and any change in the place of
performance will be addressed as a change to Service Locations in
accordance with Section 20.1 (Service Locations / Approval for Relocation).
(h) Customer's consent to any approved Subcontractor or any subcontracting
will not relieve ALLIANCE-ONE of any obligation or liability under the Set
of Agreements nor reduce or otherwise affect ALLIANCE-ONE's obligations and
liability under the Set of Agreements. ALLIANCE-ONE will be responsible for
the work and activities of Subcontractors, including compliance with the
terms of the Set of Agreements, to the same extent as if such obligations
were performed by ALLIANCE-ONE.
(i) If the use of a specific ALLIANCE-ONE Affiliate or third party has
expressly been permitted in writing by Customer, the following will apply:
(i) ALLIANCE-ONE will act as an independent contractor and not act as
Customer's agent;
(ii) ALLIANCE-ONE will not act on behalf of Customer and not act in
the name of or on the account of Customer;
(iii) ALLIANCE-ONE will not receive the authority to directly or
indirectly bind or commit Customer;
(iv) ALLIANCE-ONE will act as a general contractor assuming total
control for the Subcontractors' performance and deliverables; and
(v) all Services provided by Subcontractors will be provided on behalf
of ALLIANCE-ONE.
(j) Customer will have the right to have any Subcontractor removed for
Cause as envisioned by Section 10.3 from the Customer account, and thereby
withdraw its approval of a Subcontractor, at any time and at its sole
discretion and at no cost to Customer.
(k) ALLIANCE-ONE will be responsible for all payments to Subcontractors and
will defend, indemnify and hold Customer harmless from any and all costs of
addressing and satisfying any and all claims by any Subcontractor arising
hereunder, or by reason of engagement in connection with the Services
including, without limitation, worker's and similar liens, and claims for
payment made by or on behalf of Subcontractors due to ALLIANCE-ONE's
failure to make payments to such Subcontractor for which it is responsible
and the costs of responding to the same. ALLIANCE-ONE will promptly pay for
all services, materials, equipment and labor used by ALLIANCE-ONE in
providing the Services and ALLIANCE-ONE will keep Customer's Service
Locations free of all worker's and similar liens.
(l) The Services will be provided under the management, direction, control,
and supervision of ALLIANCE-ONE. ALLIANCE-ONE may choose to perform its
responsibilities under the Set of Agreements through ALLIANCE-ONE
Affiliates, provided that:
Page 28 of 82
(i) ALLIANCE-ONE will not be relieved of its obligations under the Set
of Agreements by the use of such ALLIANCE-ONE Affiliates; and
(ii) prior written approval has been obtained from Customer where such
change results in a cross-border or off-shore relocation for the
delivery of any components of the Services to Customer.
6.3. Personnel Checks.
(a) ALLIANCE-ONE will carry out its normal background checks on all
ALLIANCE-ONE Personnel who have access to Customer systems, data, or
Customer premises, provided that such background checks will in no event
violate Applicable Law. Such background checks will be carried out prior to
ALLIANCE-ONE Personnel having any access to Customer systems, data, or
Customer premises. Such background checks will include at a minimum, felony
criminal convictions, credit history, and designated screenings as required
by ALLIANCE-ONE's parent CSC. Customer will have the right to request
additional forms of background check at Customer's expense.
(b) ALLIANCE-ONE will provide Customer upon written request:
(i) with a detailed description of ALLIANCE-ONE's background checks,
as defined by ALLIANCE-ONE's third party background investigation
vendor, for review.
6.4. Assistance for Third Parties. Subject to Change Management Procedures in
Exhibit 1.3 - Change Management Procedures, and subject to such third party
entering an appropriate confidentiality agreement with ALLIANCE-ONE, if Customer
intends to contract with a third party for services relating to any in-scope
Service or any new service, ALLIANCE-ONE will reasonably co-operate with
Customer and such third party to the extent reasonably required by Customer,
including without limitation by providing:
(i) written requirements, standards, and policies for systems operations
and business processes so that the enhancements or developments provided by
such third party may be operated by ALLIANCE-ONE;
(ii) termination assistance and support services to such third party as set
out in the Set of Agreements (including all matters set out in Section
10.11 (Termination Assistance); and
(iii) access to the systems as may be reasonably required by such third
party in connection with the performance and/or transition of such
Services.
Provided, however, ALLIANCE-ONE shall not be required to disclose sensitive
intellectual property to a competitor of ALLIANCE-ONE.
6.5. Training.
(a) At least once each year or on request after notice from Customer, or in
case ALLIANCE-ONE changes a Service, ALLIANCE-ONE will meet with Customer
to explain how the Services are provided.
(b) In case ALLIANCE-ONE subcontracts a Service to a third party provider
and training for the respective third party personnel is required,
ALLIANCE-ONE will bear the cost of such arrangement.
(c) ALLIANCE-ONE may not make any change which would have any material
impact on how Customer is to receive the Services, without Customer's prior
written consent. Prior to making any such material change ALLIANCE-ONE
proposes to implement in how Customer is to receive the Services,
ALLIANCE-ONE
Page 29 of 82
will provide additional training to Customer to explain the nature of such
change and the impact on how Customer is to receive the Services are
provided.
6.6. Continuity and Replacement.
(a) ALLIANCE-ONE shall provide personnel with suitable training, education,
skill and other qualifications to perform the Services under each specific
Work Order.
(b) Upon any reasonable and lawful request by Customer based upon "cause"
as that term is commonly understood in employment law, ALLIANCE-ONE shall
promptly withdraw or replace any personnel who has been assigned to perform
any Services, and in connection with such action, Customer shall not be
liable to ALLIANCE-ONE (or any third party, including any personnel) for
any employment termination costs arising therefrom.
7. SERVICE LEVELS, IMPROVEMENT AND CURRENCY
7.1. Failure to Perform Performance Standards. In the event ALLIANCE-ONE fails
to meet any Performance Standard (a "Fault"), ALLIANCE-ONE shall promptly notify
Customer of such failure and upon request by Customer, ALLIANCE-ONE shall: (a)
perform a root cause analysis for such failure in order to identify the cause of
such failure; (b) provide Customer with an explanation detailing the causes of,
and a procedure for rapidly correcting, such failure; (c) advise Customer of the
status of remedial efforts being undertaken with respect to such problems; (d)
to the extent it is ALLIANCE-ONE's fault, correct the failure and begin meeting
the Performance Standards; and (e) take appropriate preventive measures so that
the Performance Standard failure and its underlying causes do not recur.
7.2. Technology Refresh Services.
(a) Without limiting ALLIANCE-ONE's other obligations under the Set of
Agreements, as part of the Services, ALLIANCE-ONE will exercise
commercially reasonable efforts to realize efficiency enhancements to meet
the Service Levels under the Set of Agreements.
(b) In providing the Services to Customer, ALLIANCE-ONE will perform the
following:
(i) together with Customer, identify opportunities to implement new
technology and business processes advantageous to Customer's business
operations and ALLIANCE-ONE's and its Subcontractors' Service delivery
operations;
(ii) procure the attendance of appropriately senior personnel to meet
with Customer periodically, at least once a year or whenever
significant actual developments occur, in order to inform Customer of
any new technology, business process methodology, or technology trends
and directions that ALLIANCE-ONE is developing or is otherwise aware
of that could reasonably be expected to have an impact on Customer's
businesses and ALLIANCE-ONE's Service delivery.
(c) ALLIANCE-ONE will make appropriate documentation, processes, procedures
and, in accordance with Exhibit 1.3 - Change Management Procedures, the
training available to Customer designed to position Customer's Personnel to
accomplish sufficient knowledge retention is maintained within Customer
throughout the Term in order to allow Customer to continuously understand
its own processes, systems and applications.
7.3. Improved Technology and Knowledge Sharing.
(a) The Parties acknowledge that Customer operates in a business
environment characterized by constant change that directly affects the
delivery of Services.
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(b) The Parties agree that:
(i) Subject to the Change Management Procedures, the Services will be
performed by ALLIANCE-ONE as necessary to meet Customer's business
needs using industry standard technological advancements and
improvements in the methods of delivering the Services; and
(ii) ALLIANCE-ONE will, with Customer's prior approval in writing,
implement such agreed technology evolutions and advancements in the
provision of the Services.
(c) ALLIANCE-ONE will support all of the technologies and methodologies
which are identified in the Set of Agreements as of the applicable Service
Commencement Date, will implement such new technologies and methodologies
as are identified in the Set of Agreements, and will be proactive in
identifying opportunities to implement new technologies and methodologies
that will improve service and support at a reduced cost.
(d) Upon Customer's approval in accordance with the Change Management
Procedures and with the appropriate amendments to the Set of Agreements,
ALLIANCE-ONE will implement such technology changes and methodologies.
(e) At any time on written request from Customer, but at least once each
year during the Term and the Termination Assistance Period, ALLIANCE-ONE
will meet with Customer's service management team in order:
(i) to provide an overview of how the systems ALLIANCE-ONE operates in
connection with the provision of the Services work and are operated;
(ii) to explain how the Services are provided; and
(iii) to discuss and agree on any updates that may be required, in
particular with regard to Termination Assistance Services, as a result
of changes to the Services.
(f) In the event Customer requires ALLIANCE-ONE to provide any training
and/or documentation during the Term, such reasonable services will be
provided. Additional training and/or documentation will be provided
pursuant to the Change Management Procedures.
7.4. Service Levels- Generally. As of the applicable Service Commencement Date,
ALLIANCE-ONE will provide the Services to Customer in accordance with the
Service Levels set out in Exhibit 7.4(a) - Service Levels and Service Level
Credits and the applicable Work Order(s).
7.5. Service Level Default. There will be deemed to have been a Chronic or
Significant Service Level Default which shall entitle Customer to terminate the
Set of Agreements, in whole or in part, on the occurrence of any of the events
set forth in Exhibit 7.4(a) - Service Levels and Service Level Credits (Matrix,
Table III), provided that Customer provides notice of termination within a
period of twelve (12) months after Customer has become aware of the event as set
out therein, unless otherwise agreed upon in the remediation plan or the Change
Management Procedures. Such termination will be considered a termination for
cause as per Section 10.3 (Termination for Cause).
7.6. Monitoring and Service Level Review.
(a) ALLIANCE-ONE will be responsible for implementing and operating the
necessary measurement and monitoring tools and procedures required to
measure and report its performance relative to the applicable Service
Levels as approved by Customer. The Service Level measurement, monitoring
and reporting process will all be subject to audit by Customer in
accordance with Article 8 (Books, Records and Access).
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(b) As further set out in Exhibit 7.4(a) - Service Levels and Service Level
Credits, Customer and ALLIANCE-ONE will periodically review the Service
Levels during the Term and make changes in accordance with the mechanisms
and parameters as set out therein.
7.7. Gain Share.
(a) When Customer seeks to add additional blocks of business to the Set of
Agreements, Customer will expect to participate in the benefits of any
achieved additional productivity improvements that occur during the term
and are subject to the process set forth in the Change Management
Procedures.
(b) ALLIANCE-ONE will make a minimum of one proposal in writing in each
Contract Year during the Term to Customer that is designed to reduce
Customer's costs which could include but not be limited to the following:
(i) reduction in the Charges;
(ii) reduction in Pass-Through Expenses;
(iii) reduction in Customer's retained costs;
(iv) reduction in Customer's current or planned consumption of the
Services; and/or
(v) other new services.
(c) Each proposal submitted will contain:
(i) the scope of the proposed initiative;
(ii) the anticipated benefits of the initiative;
(iii) an overall business case;
(iv) the plan for implementing the initiative including Customer and
ALLIANCE-ONE responsibilities, major activities, schedules, risks and
costs;
(v) the mechanisms by which benefits to Customer will be measured; and
(vi) where applicable, a proposal for:
1) funding the initiative; and
2) any associated risk/reward mechanisms.
7.8. Benchmarking. Customer shall have the right, at any time during the Term
and at its cost, to benchmark any of the Services to ensure that the Services
are competitive with respect to price, quality, service, performance standards,
and technology, subject to not disclosing the terms of this Agreement to any
third party and subject to the other confidentiality obligations in this
Agreement. Customer shall consult with ALLIANCE-ONE in advance concerning the
definition and specifications of each Service provided by ALLIANCE-ONE that
Customer desires to subject to the benchmarking process. The Parties will follow
the process described in Exhibit 7.8 - Benchmarking Process.
Page 32 of 82
8. BOOKS, RECORDS AND ACCESS
8.1. Right to Information and Instructions. Customer will have the right at all
times throughout the Term and the Termination Assistance Period to: (i) request
any reasonable information from ALLIANCE-ONE regarding the Services; and (ii)
issue instructions related to the Services consistent with this Agreement,
8.2. Copy of Written Agreement. This Agreement shall be retained as part of the
official records of ALLIANCE-ONE and Customer for the duration of this Agreement
plus seven years thereafter.
8.3. Books and Records. Whether in physical or electronic form, ALLIANCE-ONE
shall establish and maintain facilities and procedures for the safekeeping of
policy forms, check forms and facsimile signature imprinting devices, if any,
and all other documents, reports, records, books, files, and other materials
relative to this Agreement and all transactions between ALLIANCE-ONE, Customer,
and each Contract Holder, which shall include the identity and addresses of each
Contract Holder (collectively, "Books and Records"). Subject to the provisions
of Section 10.13 (Return of Information and Books and Records after
Termination), ALLIANCE-ONE shall maintain the Books and Records at its principal
administrative office, for the duration of this Agreement and seven years
thereafter (or the duration required under the Customer's document retention
period as described in the Admin Guidelines, whichever is longer), and in
accordance with prudent standards of insurance recordkeeping and as required by
Applicable Law. Such period of time will be extended as to any Books and Records
as to which Customer has notified ALLIANCE-ONE of the need to preserve such due
to any court or regulatory order or pending litigation. Customer will promptly
notify ALLIANCE-ONE when any such preservation order has expired.
8.4. Ownership of Books and Records. The Books and Records (excluding
information confidential to ALLIANCE-ONE) shall be the sole property of Customer
and such property shall be held by ALLIANCE-ONE, as agent, during the initial
term of this Agreement, and renewal thereafter. All information furnished by
Customer to ALLIANCE-ONE hereunder concerning Customer's customers, Contract
Holders, Insureds, business practices, and internal affairs is confidential.
ALLIANCE-ONE shall take all reasonable precautions to prevent the use of such
information for a purpose unrelated to the administration of the Contracts.
ALLIANCE-ONE shall not disclose such information directly, or indirectly, to any
third party except to the extent that ALLIANCE-ONE is required by Applicable Law
to make such disclosure or as authorized by the Customer.
8.5. Access to Books and Records.
(a) Customer, and any Regulator, shall have full and free on-site access,
during ordinary business hours, to review and audit the Books and Records,
which shall be in a form usable by them. Customer and the Regulator shall
keep confidential any ALLIANCE-ONE Confidential Information or trade
secrets contained in the Books and Records, except that a Regulator may use
such information in a proceeding instituted against Customer or
ALLIANCE-ONE (in which event Customer shall cooperate with ALLIANCE-ONE's
efforts to maintain such confidentiality).
(b) Customer or its duly authorized internal or independent auditors have
the right under this Agreement to perform on-site reviews and audits of the
Books and Records directly pertaining to the Services in accordance with
reasonable accounting practices and procedures. ALLIANCE-ONE shall
reasonably accommodate such reviews and audits. If Customer or its auditors
call upon ALLIANCE-ONE to go beyond its obligation to reasonably
accommodate for such (meaning ordinary and customary hosting assistance and
activities) and to materially assist with such reviews and audits (e.g.,
production of special reports, research, making copies of policy files,
resorting of data associated with regular reports) then all specific tasks,
reports or activities in furtherance of same are considered out of scope,
and Customer shall approve, before the start of any such assistance
commences, the estimated fees for such assistance. Those fees, and all of
the costs and expenses of which ALLIANCE-ONE notified Customer incurred in
connection with ALLIANCE-ONE's material assistance to such reviews and
audits shall be on a Time and Materials Basis at the then-applicable Time
and
Page 33 of 82
Material Rates. Provided, however, to the extent an inquiry by a
Regulator requires support from ALLIANCE-ONE, then to the extent such
inquiry was caused by ALLIANCE-ONE's performance, then to that extent
ALLIANCE-ONE shall provide such support at no additional charge to
Customer.
(c) ALLIANCE-ONE shall make the Books and Records available to Customer and
to the applicable Regulator as required by Applicable Law, including at
such facilities of Customer as may be required by Applicable Law.
8.6. Advertising. To the extent the Services provide for ALLIANCE-ONE to
distribute Customer's marketing materials, ALLIANCE-ONE may use only such
advertising pertaining to the business underwritten by Customer as has been
approved by Customer in advance of its use.
8.7. Additional Information. To the extent necessary to perform the Services,
Customer shall, from time to time, provide ALLIANCE-ONE with current forms of
the Contracts, prospectuses, applications, and other related documents, names
and States of license of all insurance and/or broker-dealer Agents and
representatives authorized to provide service to Contract Holders and
certificate-holders of the Contracts.
8.8. Access to Customer Information. When necessary to ALLIANCE-ONE's
performance of the Services, Customer will be provided access to certain
ALLIANCE-ONE Software and Contract Holder Data used to provide the Services.
Should it become necessary for ALLIANCE-ONE to incur additional license fees to
provide this connectivity/access, these expenses will be passed-through to
Customer in accordance with the Change Management Procedures.
8.9. Costs of Audit Support.
(a) ALLIANCE-ONE shall provide the access described in this Article 8 to
Customer (including those of third party auditors and inspectors conducting
the audit) at no additional charge to Customer. Provided, however to the
extent the Books and Records are readily available to Customer and Customer
nevertheless requests ALLIANCE-ONE's assistance instead, ALLIANCE-ONE may
charge Customer on a reasonable time and materials basis for providing such
access.
(b) Customer will bear its own costs of any audit under Article 8 (Books,
Records and Access) effected on its behalf. Provided, if Customer's audit
reveals:
(i) any overpayment of fees or overcharges to Customer (not
compensated by a credit adjustment revealed in the same audit);
(ii) Services not provided for which Customer has been invoiced; or
(iii) any other amounts or costs for which ALLIANCE-ONE is not
entitled to be paid or reimbursed for which Customer has been
invoiced, or any other breach of the Set of Agreements, Applicable
Law,
referred in i), ii) and iii) above a sum equal to Customer's own costs of
the audit within twenty (20) days of receiving written invoice of those
costs from Customer, then ALLIANCE-ONE shall reimburse Customer for the
reasonable costs of such audit and shall promptly pay Customer the amounts
previously paid in error.
8.10. Litigation/Regulatory Action. In addition to ALLIANCE-ONE's other
obligations under this Section, if litigation arises or is threatened or there
is an issue of regulatory compliance or there are grounds for litigation or
regulatory compliance issues arising, which are known to ALLIANCE-ONE or its
Affiliates, arising out of or in connection with the Set of Agreements or the
provision of Services, ALLIANCE-ONE will immediately notify
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Customer and, if requested by Customer, provide Customer immediate access to all
such information and Personnel as Customer may reasonably require in order to
enable Customer to assess Customer's and its Affiliates' potential liability, to
defend the litigation or to achieve regulatory compliance. Provided, however, to
the extent litigation or actions by a Regulator requires support from
ALLIANCE-ONE, then to the extent such litigation or action was caused by
ALLIANCE-ONE's performance, then to that extent ALLIANCE-ONE shall provide such
support at no additional charge to Customer.
9. CONTRACT PAYMENTS AND COLLECTIONS
9.1. Effect of ALLIANCE-ONE's Receipt of Payments. The payment to ALLIANCE-ONE
of any premiums or charges for insurance by or on behalf of a Contract Holder or
Insured shall be deemed to have been received by Customer, and the payment of
return premiums or claims by the Customer to ALLIANCE-ONE shall not be deemed
payment to the Contract Holder, Insured, or other claimant until such payments
are received by such Contract Holder, Insured or claimant.
9.2. Fiduciary Account. Customer will establish one or more accounts for
collection of premiums and designate ALLIANCE-ONE as its Agent under such
accounts to enable ALLIANCE-ONE to perform its obligations hereunder.
ALLIANCE-ONE will hold in a fiduciary capacity all insurance charges or premiums
collected by it on behalf of or for Customer with respect to Contract Holders or
Insureds, and return premiums received from Customer. ALLIANCE-ONE shall comply
with all applicable fiduciary account Applicable Laws. ALLIANCE-ONE will
immediately (and in any event within fifteen (15) days) remit funds to the
person or persons entitled thereto, or shall promptly (and in any event within
fifteen (15) days) deposit them in a fiduciary account established and
maintained by ALLIANCE-ONE in the name of Customer. ALLIANCE-ONE shall require
the bank(s) in which such fiduciary account(s) is maintained to keep records
clearly recording the deposits in and withdrawals from such account(s) on behalf
of Customer. ALLIANCE-ONE shall promptly obtain and keep copies of all such
records and, upon request of Customer, furnish Customer with copies of such
records pertaining to deposits and withdrawals on behalf of or for Customer.
ALLIANCE-ONE may make withdrawals from such account(s) for:
(a) remittance to Customer when entitled thereto;
(b) transfer to and deposit in a claims paying account, with claims to be
paid as provided in this Agreement; or,
(c) remittance of return premiums to the person or persons entitled
thereto.
9.3. Claims Account. Customer will establish one or more claims disbursement
accounts. Customer shall fund and maintain a balance in these accounts necessary
to sufficiently cover all claims disbursements it authorizes. ALLIANCE-ONE will
be authorized by Customer to make withdrawals from this account for:
(a) remittance to Customer when entitled thereto; or
(b) authorized claim disbursements.
9.4. Form of Payments of Claims. All claims paid by ALLIANCE-ONE from funds
collected on behalf of Customer shall be paid only on checks or drafts of and as
authorized by Customer.
9.5. Records of Transactions. ALLIANCE-ONE shall maintain detailed books and
records that reflect all administered transactions specifically in regard to
premiums, premium taxes, Agent's commissions, administrator's fees, payments or
contributions received and deposited and claims, policy loans and authorized
expenses paid. The detailed preparation, journalizing, and posting of such Books
and Records shall be made in accordance with the terms and conditions of this
Agreement, and in accordance with ERISA, and to enable the
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Customer to complete the National Association of Insurance Commissioners' annual
financial statement and its financial statements prepared in accordance with
Generally Accepted Accounting Principles (GAAP).
9.6. Records of Receipts. ALLIANCE-ONE shall maintain a cash receipts register
of all premiums, payments, or contributions received. The minimum detail
required in the register shall be: date received and deposited, the mode of
payment, the policy number, name of policyholder and names of
certificate-holders (if any) and individual premium amounts and Customer's sales
Agent.
9.7. Records of Disbursements. The description of a disbursement shall be in
sufficient detail to identify the source document substantiating the purpose of
the disbursement, and shall include all of the following: (i) the check number;
(ii) the date of disbursement; (iii) the person to whom the disbursement was
made; (iv) the amount disbursed; (v) ledger account number; (vi) the policy or
account number; and (vii) address and/or alternate address of payee. If the
amount disbursed does not agree with the amount billed or authorized,
ALLIANCE-ONE shall prepare a written record as to the application for the
disbursement. If the disbursement is for the earned administrative fee or
commission, the disbursement shall be supported by evidential matter. The
evidential matters must be referenced in the journal entry so that it may be
traced for verification.
9.8. Monthly Accounting. ALLIANCE-ONE shall provide reports to Customer
detailing all financial transactions under this Agreement on a monthly basis or
on such other basis as mutually agreed to by the Parties. ALLIANCE-ONE will
periodically render an accounting to the Customer detailing all transactions
performed by ALLIANCE-ONE pertaining to the business underwritten by the
Customer. ALLIANCE-ONE shall prepare and maintain monthly financial institution
account reconciliations if such service is requested by Customer.
9.9. Currency. All transactions will be paid and reported in U.S. dollars.
ALLIANCE-ONE is under no obligation to accept premium payments, fees and charges
in any currency other than U.S. dollars.
10. TERM, TERMINATION AND RESTRUCTURING
10.1. Term of the Agreement and of Work Orders. Subject to termination as
hereinafter provided:
(a) This Agreement shall remain in effect for so long as there is at least
one Work Order in effect.
(b) Except as may otherwise be stated in a Work Order, each Work Order for
Administration Services shall remain in force and effect for ten (10) years
from the longer of: (i) the Effective Date (of this Agreement), and (ii)
the effective date of the last Work Order for Administration Services, and
thereafter shall automatically renew for successive one (1) year terms,
unless either Party provides at least one (1) year advance written notice
of termination.
(c) Except as may otherwise be stated in a Work Order, each Work Order for
Services other than for Administration Services shall remain in effect
until fully performed.
10.2. Termination by Mutual Consent. This Agreement may be terminated or amended
by mutual agreement of the Parties in writing at any time.
10.3. Termination for Cause.
(a) If ALLIANCE-ONE defaults in the performance of any of its material
obligations (or repeatedly defaults in the performance of any of its other
obligations) under the Set of Agreements, and Customer gives to
ALLIANCE-ONE notice of default specifying, in reasonable detail, the nature
of the default, no later than sixty (60) days after Customer's learned of
the default (or of the last default in case of repeated defaults), and such
default is not cured within thirty (30) days after notice is received by
ALLIANCE-ONE, then, without prejudice to any other remedies Customer may
have, Customer may, upon further notice to ALLIANCE-ONE, such notice
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to be submitted within twelve (12) months after the end of the cure period,
terminate the Set of Agreements in its sole discretion in whole or in part
as of the date specified in such notice of termination.
(b) If Customer fails to pay to ALLIANCE-ONE undisputed amounts due
hereunder exceeding the greater of three (3) months' Charges or five
hundred thousand dollars ($500,000.00) due to ALLIANCE-ONE and after
ALLIANCE-ONE has given to Customer written notice of default no later than
sixty (60) days after the due date of such undisputed amount, and such
default is not cured within sixty (60) days after written notice received
by Customer, and after ALLIANCE-ONE has given to Customer a second written
notice of default no later than sixty (60) days after end of the first cure
period, and Customer has not cured such default within sixty (60) days
after Customer's receipt of the second written notice of default, then
ALLIANCE-ONE may upon written notice of termination terminate the relevant
Work Order as of the date specified in such notice of termination. For the
avoidance of doubt, written notices provided by ALLIANCE-ONE pursuant to
this Section and for which ALLIANCE-ONE intends to exercise the termination
right as specified in this Section shall expressly state that if Customer
fails to pay the designated undisputed amount, ALLIANCE-ONE does intend to
exercise the termination right. A failure by Customer to hold and maintain
any and all licenses and permits required in any state in the United States
required by its issuance of the Contracts shall be considered an event of
default for purpose of this Section 10.3.
10.4. For Convenience.
(a) Unless otherwise specifically set forth in a Work Order or JAA that
termination will not end with the Set of Agreements, Customer may at any
time, subject to Customer's payment of the applicable termination for
convenience fee, if any, as expressly designated in the applicable Work
Order or JAA, terminate a Work Order, the entire Set of Agreements, in
whole, but not in part, at its sole discretion for convenience upon ninety
(90) days' written notice to ALLIANCE-ONE, and such a termination notice
will not be considered a termination at an improper time.
(b) In connection with an acquisition of one or more blocks of Contracts by
Customer or an Affiliate of Customer, whereby the types of Contracts
acquired by Customer or its Affiliate are administered by a third party
vendor and are similar to the types of Contracts which are the subject of
Administration Services hereunder and Customer seeks to combine with that
other vendor administration of Contracts of a similar type, Customer may,
subject to Customer's payment of an equitable portion of the applicable
termination for convenience fee, if any, as expressly designated in the
applicable Work Order or JAA, terminate the Work Order(s) for
Administration Services for those Contracts hereunder to be consolidated
with administration services with the other vendor, in whole or in part, at
its sole discretion for convenience upon ninety (90) days' written notice
to ALLIANCE-ONE, and such a termination notice will not be considered a
termination at an improper time.
10.5. For Change of Control.
(a) In the case of ALLIANCE-ONE, a Change of Control will be deemed to have
occurred if after the Effective Date ALLIANCE-ONE comes under the control
of an entity outside of the ALLIANCE-ONE Group, as of the Effective Date.
In the case of Customer, a Change of Control will be deemed to have
occurred if after the Effective Date Customer comes under the control of an
entity other than one or more of its Affiliates as of the Effective Date.
For this purpose, "control" will have the same meaning as in the definition
of Affiliates.
(b) In the event of a Change of Control of ALLIANCE-ONE whereby the
acquiring entity is a direct competitor of Customer or the acquiring entity
does not have an investment grade credit rating of at least "BBB" by
Standard & Poor's or a "Baa2" by Xxxxx'x, Customer may terminate the Set of
Agreements in whole in its sole discretion upon ninety (90) days' written
notice to ALLIANCE-ONE.
(c) In the event of a Change of Control of Customer, if ALLIANCE-ONE
reasonably determines that Customer's financial position would materially
deteriorate as a result of the acquiring entity(ies) of Customer
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being less financially sound than Customer, ALLIANCE-ONE shall promptly
(but not later than thirty days from the date Customer first informs
ALLIANCE-ONE of the identity of the acquirer(s) of Customer) inform
Customer in writing of such determination and the basis for same. Upon
receipt of such written notice, Customer and ALLIANCE-ONE shall confer in
good faith regarding the financial soundness of Customer and its ability to
continue performing under this Agreement.
10.6. Data Security Breach. In case of a material breach by ALLIANCE-ONE of any
of its data protection and data security obligations relating to information
governed by one or more consumer privacy or data protection laws (such breach a
"Data Security Breach"), Customer may, at its sole discretion, upon notice with
immediate effect terminate the Set of Agreements in whole or in part in
accordance with Section 10.3 (Termination for Cause).
10.7. Chronic or Significant Service Level Defaults. In addition to any
termination rights expressly stated elsewhere in the Set of Agreements relating
to the event of a Chronic or Significant Service Level Default, Customer may
terminate the Set of Agreements in whole or in part in its sole discretion upon
ninety (90) days' written notice to ALLIANCE-ONE. In case of termination due to
Chronic or Significant Service Level Defaults, ALLIANCE-ONE will bear the cost
of knowledge transfer, to a satisfactory level, to the Customer and/or a
successor of Customer.
10.8. [Intentionally Left Blank.]
10.9. Termination in Whole or in Part.
(a) For the purpose of this Section and any other provisions in the Set of
Agreements providing rights to terminate, "termination in whole" will mean
the termination of the entire Set of Agreements, and "termination in part"
will mean the termination of any one or multiple related Work Orders or
parts thereof relating to the portion of the Administration Services that
were breached.
(b) If one or more Work Orders under the Set of Agreement are terminated in
part, then the Parties will negotiate in good faith to agree:
(i) Upon what effect the termination will have upon the remaining Work
Orders or remainder of a given Work Order in the event of partial
termination of a given Work Order and how a fair and equitable
adjustment of the Charges will be made to account for the changed
scope or volume of Services being provided;
(ii) If applicable to the circumstances, whether a fair and equitable
reduction of any remaining Work Order's Termination Fee payable in the
case of a full termination is justified reflecting the scope and
extent of the remaining Services and the amount of the continuing
Charges; and
(iii) Upon the adjustments to be made to the Performance Standards,
which may include additional activities to be performed by Customer
(or other third party retained by Customer).
10.10. Services after Notice of Termination or Expiration.
(a) Within six (6) months of Customer having given ALLIANCE-ONE notice of
termination, Customer may extend the duration of the Termination Assistance
Period for up to an additional twelve (12) months from the previously
notified end date of the Termination Assistance Period, by notifying
ALLIANCE-ONE of such extension in writing.
(b) If this Agreement or a Work Order expires, and if Customer shall so
request in writing, ALLIANCE-ONE shall provide additional Services
consisting of providing additional information relating to how the
Administration Services were performed by ALLIANCE-ONE, for up to a period
of 12 months following
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such expiration, such Service to be provided in accordance with the terms
of this Agreement and at the then-applicable fees and time and rates.
10.11. Termination Assistance.
(a) Commencing:
(i) twelve (12) months prior to the expiration of the Set of
Agreements (whether expiration of the initial Term or of any
extension), in whole or in part; or
(ii) upon any notice of termination or non-renewal of the Set of
Agreements regardless of reason for termination, in whole or in part,
and continuing through the effective date of expiration, termination
or cessation,
ALLIANCE-ONE will provide to Customer and any third party successor, all
necessary and reasonable assistance requested in writing by Customer to
allow the Services to continue without interruption or adverse effect and
to facilitate the orderly transfer of the Services to such successor. The
provisions of Exhibit 10.11 - Termination Assistance Services shall apply
during the Termination Assistance Period.
(b) Commencing:
(i) upon expiration of the Set of Agreements, in whole or in part; or
(ii) at Customer's option upon (1) any notice of termination or
non-renewal of the Set of Agreements, in whole or in part; or (2) upon
the end of the applicable notice period of termination of the Set of
Agreements in whole or in part, regardless of reason,
ALLIANCE-ONE will provide Termination Assistance for up to twenty-four (24)
months, and if requested by Customer with three (3) month written notice to
ALLIANCE-ONE, for additional six (6) months, (aa) in case of Section
10.11(b)(i) above from the expiration date and (bb) in case of Section
10.11(b)(ii) above from the end of the applicable notice period
("Termination Assistance Period").
(c) It is understood that the terminated Set of Agreements, in whole or
parts thereof, will cease to have effect, except as provided in Section
22.17 (Survival), at the end of the Termination Assistance Period.
(d) During the Termination Assistance Period, ALLIANCE-ONE will provide as
part of the Services the Terminated Services, the Retained Services (if
any) and the Termination Assistance Services as may be reasonably requested
in writing by Customer. "Termination Assistance" will include:
(i) the provision of Services (and any replacements thereof or
substitutions therefore), to the extent Customer requests such
Services; and
(ii) the reasonable co-operation of ALLIANCE-ONE with Customer or
another service provider designated by Customer in the transfer of the
Services to Customer or to such other service provider.
(e) The quality and level of performance during the termination process
will not be degraded during the Termination Assistance Period. Payment for
the Termination Assistance Services will be in accordance with time and
materials rates in Article 11 (Fees and Expenses).
(f) For the duration of the Termination Assistance Period the Parties will
establish a multilevel executive steering committee to monitor the quality
and level of performance and the progress of the transfer of the Services
to any successor which will include monthly meetings with senior executives
of the Parties.
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Customer and ALLIANCE-ONE, and if applicable, any third party successor,
will monitor the overall transfer progress, review risk mitigation plans,
define and review critical success factors, decide on suggested project
changes and resolve any contract interpretation issues that cannot be
resolved by the Parties' respective program managers. The executive
steering committee will meet no less than once each calendar month during
the Termination Assistance Period. Customer and ALLIANCE-ONE will ensure
that in case of escalation respective members of the executive steering
committee will be available to hold an extraordinary meeting as soon as is
reasonably practicable. The decisions of the executive steering committee
will be made by mutual agreement.
(g) During the Termination Assistance Period, ALLIANCE-ONE will provide
Customer, its Affiliates, and their third parties who are not competitors
of ALLIANCE-ONE who have entered into confidentiality agreements with
ALLIANCE-ONE, as necessary, with reasonable access to the hardware and
software as reasonably requested in writing by Customer.
(h) Where such Termination Assistance unreasonably interferes with
ALLIANCE-ONE's ability to perform the Services, then upon notice from
Customer, ALLIANCE-ONE will be granted by Customer Service Level relief
against such affected Services.
(i) Except as otherwise agreed to by the Parties, the applicable provisions
of the Set of Agreements will remain in full force and effect during the
Termination Assistance Period.
10.12. Effect of Termination. Termination of this Set of Agreements or any Work
Order for any reason under this Section shall not affect (i) any liabilities or
obligations of either Party arising before such termination or out of the events
causing such termination; or (ii) any damages or other remedies to which a Party
may be entitled under this Agreement or any Work Order, at Applicable Law or in
equity, arising from any breaches of such liabilities or obligations. Subject to
the Termination Assistance provision in Section 10.11 (Termination Assistance),
termination of the Set of Agreements shall automatically terminate all Work
Orders then in effect. In the event of termination of the Set of Agreements,
Customer will pay for all Services rendered through the effective date of
termination (including for work in progress) in accordance with the terms of the
Set of Agreements.
10.13. Return of Information and Books and Records after Termination. Upon
termination of a Work Order or this Agreement, Customer will return to
ALLIANCE-ONE all documentation and information relating to its Facilities and
Systems, Software Products, the ALLIANCE-ONE Confidential Information and any
other similar or related materials confidential to ALLIANCE-ONE (and any copies
thereof). Upon termination of a Work Order or this Agreement, ALLIANCE-ONE will
return all of the data and files of Customer, including its Books and Records
which includes the Customer Contract Holder Data. Customer agrees to allow
ALLIANCE-ONE reasonable access to, including the right to make copies of, all
such returned materials in the event such access is requested by ALLIANCE-ONE
for any reasonable and legitimate purpose, including, but not limited to, as a
result of any administrative or regulatory request or action, litigation or any
similar proceeding.
10.14. Ongoing Business Divestitures, Acquisitions and Restructurings. From time
to time, Customer has, and intends to, acquire, divest or restructure its
businesses (or parts of its businesses). ALLIANCE-ONE will perform the Services
set out in this Section in connection with such business divestitures,
acquisitions and restructurings if requested by Customer. Requests for such
additional Services will be dealt with through specific ad hoc Work Orders
agreed to by the Parties.
10.15. Business Divestitures. As agreed in accordance with the Change Management
Procedures, ALLIANCE-ONE's responsibilities include:
(a) assisting Customer in planning, preparing and implementing any
transition or changes related to the Services as a result of a divestiture,
taking into account the reduced economies of scale and potential impact
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on the Unit Rate(s) as applicable, associated with the Services. Changes to
the Set of Agreements will be dealt with in accordance with the Change
Control Process set out in Exhibit 1.3(c) - Change Management Procedures;
(b) where Customer has an existing commitment to provide related services
to a divested business, providing the required services on behalf of
Customer, as long as required by Customer. Such related services will not
include the provision of Services by ALLIANCE-ONE to the Divested Entity as
set out in Section 22.2 (Transfer);
(c) performing increased data and physical security as required; and
(d) performing increased Business Continuity planning.
10.16. Business Acquisitions. As agreed in accordance with the Change Management
Procedures, ALLIANCE-ONE's responsibilities include:
(a) assisting Customer in planning, preparing and implementing any
transition or changes related to the Services as a result of an
acquisition;
(b) analyzing the acquired business' (or to-be-acquired business') current
services and the impacts to the acquired business and Customer;
(c) taking into account economies of scale and other synergies between the
acquired business and Customer, and striving to reduce the per unit Charges
associated with the Services;
(d) performing increased data and physical security as required;
(e) as agreed, providing temporary staffing to ensure uninterrupted
services for both Customer and the target entity; and
(f) providing assistance to improve Customer's Business Continuity
planning.
10.17. Business Restructurings. As agreed in accordance with the Change
Management Procedures, ALLIANCE-ONE's responsibilities include:
(a) assisting Customer in planning, preparing and implementing any
transition or changes related to the Services as a result of a
restructuring; and
(b) assisting Customer with the provision of any information, or access to
Customer Affected Personnel as may be required to assist with the
restructuring.
11. FEES AND EXPENSES
11.1. Estimates. If ALLIANCE-ONE provides Customer with an estimate of the cost
or timeframe for any services to be provided by ALLIANCE-ONE, the estimate will
be made in good faith based on the information known to ALLIANCE-ONE at the time
of the estimate. However, ALLIANCE-ONE does not warrant or promise that
estimates will be accurate, and estimates are not intended as price or
performance guarantees, except as otherwise agreed in accordance with the Change
Management Procedures.
11.2. Fees.
(a) During the Term of this Agreement, Customer shall pay to ALLIANCE-ONE
upon receipt of ALLIANCE-ONE's statement the fees and charges ("Charges")
in the amounts as set out in the Exhibits and Work Orders attached hereto.
ALLIANCE-ONE shall not receive commissions, fees, or charges contingent
upon
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savings obtained in the adjustment, settlement and payment of losses
covered by the Customer's obligations, but ALLIANCE-ONE may receive
compensation based on premiums or charges collected or the number of claims
paid or processed. ALLIANCE-ONE shall not receive from Customer or any
covered individual or under a Contract any compensation or other payments
except as expressly set forth in this Agreement. Additional information
concerning the Charges and financial provisions are set forth in Exhibit
11.2 - Pricing and Financial Provisions.
(b) Set forth in Exhibit 11.2 - Pricing and Financial Provisions is the
rate card with the time and materials rates that shall remain in effect for
the Term of the Set of Agreements.
11.3. Reimbursable Expenses. In addition to all other specified fees and
charges herein, the Customer will reimburse ALLIANCE-ONE for expenditures for
items such as those defined in Exhibit 11.2 - Pricing and Financial Provisions
as Reimbursable Expenses. ALLIANCE-ONE shall endeavor to promptly present
Customer with all reimbursable expense invoices.
11.4. Good Faith Dispute as to Charges or Fees. If Customer, in good faith,
disputes any amount on an invoice, it shall pay the undisputed portion of the
invoice and will be entitled to withhold the disputed portion pending resolution
of the matter. If Customer withholds disputed amounts, Customer shall use
reasonable efforts to provide written notice to ALLIANCE-ONE within ten (10)
Business Days after discovery by Customer of the nature of the dispute. Upon
resolution of the dispute, Customer shall pay any amounts then owing within
twenty-one (21) Business Days of resolution. If the dispute is not informally
resolved pursuant to Article 14 (Informal Dispute Resolution) within 60 Business
Days after receipt by ALLIANCE-ONE of notice impasse of the dispute, the Parties
may proceed with litigation.
11.5. Payment Terms. ALLIANCE-ONE will invoice the Customer monthly, within
fifteen (15) calendar days of the month's end and Customer is deemed to have
received the invoice five (5) days after invoice mailing, for all charges
incurred by the Customer under this Agreement, and payment will be due upon
receipt of the invoice. If any undisputed portion of an invoice is not paid
within sixty (60) days of receipt by the Customer, the Customer will pay
ALLIANCE-ONE interest on the amount due, beginning forty five (45) days after
the invoice is mailed by ALLIANCE-ONE, at a rate of 1.5% per month, or the
highest rate permitted by Applicable Law if that is less. However, the charging
of interest is not a consent to late payment. Customer will reimburse
ALLIANCE-ONE for any costs or attorney fees reasonably incurred by ALLIANCE-ONE
to collect overdue amounts. Neither the failure of ALLIANCE-ONE to deliver an
invoice for charges incurred hereunder nor any error in the amount billed by
ALLIANCE-ONE for such charges shall constitute a waiver by ALLIANCE-ONE of the
Customer's obligations to pay such charges. Customer shall pay the undisputed
portion of all invoices when due. Such late charges will not apply to disputed
amounts until thirty (30) days after the dispute is resolved.
11.6. Taxes. Except for income or other taxes levied on ALLIANCE-ONE's net
income, Customer shall pay or reimburse ALLIANCE-ONE for all taxes and
assessments levied by each taxing authority having jurisdiction over Customer,
based on the amount of payments made under the Set of Agreements. All taxes
payable by Customer hereunder shall become due when billed by ALLIANCE-ONE to
Customer, or when assessed, levied or billed by the appropriate taxing
authority, even though such billing shall occur subsequent to expiration or
termination of this Agreement.
11.7. CPI Escalation. As provided in a Work Order, beginning the first
anniversary after the effective date of a given Work Order, the rates and
charges set forth in the applicable Work Order shall be increased effective as
of that anniversary and each anniversary thereafter by an amount equal to the
percentage increase in the Consumer Price Index for all Urban Consumers
(Professional Services) ("CPI"), published by the United States Bureau of Labor
Statistics, from the immediately preceding calendar year times the rates and
charges in effect for the immediately preceding calendar year.
11.8. Right of Set-Off.
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(a) With respect to any amount that:
(i) should be reimbursed to Customer; or
(ii) is otherwise payable to Customer pursuant to the Set of
Agreements,
Customer may deduct the entire amount owed to Customer against the Charges
otherwise payable or against the expenses owed to ALLIANCE-ONE under the
Set of Agreements.
(b) The Parties agree that any amount due under a specific Work Order will
be set-off against amounts claimed under the same Work Order until such
amounts claimed are exhausted in which case the amounts can be set off
against the amounts claimed in the rest of the Set of Agreements.
11.9. Unused Credits. Any unused credits against future payments owed to either
Party by the other pursuant to the Set of Agreements will be paid to the
applicable Party within thirty (30) days of the earlier of the expiration or
termination of the Set of Agreements.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ALLIANCE-ONE
12.1. Corporate Existence. ALLIANCE-ONE represents and warrants to Customer that
ALLIANCE-ONE is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware, with the power to own all of its
properties and assets and to carry on its business as it is presently being
conducted.
12.2. Corporate Capacity. ALLIANCE-ONE represents and warrants to Customer that
ALLIANCE-ONE is empowered under Applicable Laws and by its charter and bylaws to
enter into and perform the services contemplated in this Agreement.
12.3. Corporate Authority. ALLIANCE-ONE represents and warrants to Customer
that all requisite corporate proceedings have been taken to authorize
ALLIANCE-ONE to enter into and perform the services contemplated in this
Agreement, and that it is not required to obtain the consent of any Party,
including the consent of any Party to any contract to which it is a Party, in
connection with the execution of this Agreement and the performance of the
Services.
12.4. Valid and Binding Obligation. This Agreement constitutes a valid and
binding obligation, enforceable in accordance with its terms, except as
enforceability is limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Applicable Law affecting creditors' rights
generally, or (ii) general principles of equity, whether considered in a
proceeding of equity or at Applicable Law.
12.5. Legal Compliance. ALLIANCE-ONE covenants to Customer that ALLIANCE-ONE
has and will continue to comply with all Applicable Laws with respect to its
role as a third party administrator ("TPA") as that term is defined under the
various state Applicable Laws regulating the activities of TPAs. At all times
during the term of this Agreement, ALLIANCE-ONE shall hold and maintain any and
all licenses and permits required in any state in the United States to perform
the Services. Failure to maintain any such state license may constitute a
termination for cause event as described in 10.3 (Termination for Cause)
hereunder.
12.6. Background Checks. As of the date of the execution of this Agreement,
ALLIANCE-ONE covenants to Customer that it has completed an appropriate
background investigation to verify that each ALLIANCE-ONE employee (or
subcontractor) performing Services for Customer (a) has all necessary
certification and documentation, including any work authorization documents, to
confirm that the ALLIANCE-ONE employee (or subcontractor, if applicable) is
working within the United States and abroad in accordance with all relevant
employment and immigration Applicable Laws; (b) is not on any list of prohibited
persons or entities that is maintained and administered by the U.S. Treasury
Department's Office of Foreign Assets Control, as amended from time to time; and
(c) has not been convicted of a felony involving dishonesty or breach of trust.
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12.7. Litigation. As of the date of its execution of this Agreement,
ALLIANCE-ONE represents to Customer that to the best of its knowledge (a) there
is no litigation pending or, threatened by, against or affecting ALLIANCE-ONE or
any of its properties or assets that, individually or in the aggregate, would
materially impair the ability of ALLIANCE-ONE to perform its obligations under
this Agreement, or would have or result in a material adverse effect, upon its
performance under the Set of Agreements without regard to whether the defense of
or liability in respect of the litigation is covered by policies of insurance or
any indemnity, contribution, cost sharing or similar agreement or arrangement by
or with any other person and (b) there are no outstanding orders, judgments,
decrees or injunctions issued by any governmental authority against ALLIANCE-ONE
in any way affecting its business that, individually or in the aggregate, would
materially impair the ability of ALLIANCE-ONE to perform its obligations under
the Set of Agreements. ALLIANCE-ONE further covenants that it will immediately
notify Customer upon notice to ALLIANCE-ONE of any litigation described in
subsection (a) of this Section or outstanding orders, judgments, decrees or
injunctions issued by any governmental authority against ALLIANCE-ONE as
described in subsection (b) of this Section.
12.8. Non-Infringement. ALLIANCE-ONE represents and warrants that:
(a) There are no threatened or actual claims or suits in connection with
U.S. patents and U.S. trademarks, and, to the best of its knowledge, there
are no threatened or actual claims or suits in connection with any
worldwide patents or other intellectual property matters that would
materially adversely affect ALLIANCE-ONE's ability to perform its
obligations under this Agreement;
(b) ALLIANCE-ONE will perform its responsibilities under the Agreement in
a manner that does not infringe any intellectual property rights of
Customer, Customer Affiliates or any third party;
(c) ALLIANCE-ONE is the owner of, or is authorized to use or provide, all
Facilities and Systems and Software Product and third-party materials used
and to be used in connection with the performance of its obligations under
the Set of Agreements; and
(d) The warranties under this Section do not apply to intellectual property
provided by Customer or its Affiliates for use by ALLIANCE-ONE in
performing the Services contemplated in this Agreement.
12.9. Additional ALLIANCE-ONE Covenants.
(a) ALLIANCE-ONE Covenants to Customer that:
(i) it will not intentionally insert any malware (including but not
limited to viruses, trojans, spyware, etc.) into any deliverables or
other materials provided by ALLIANCE-ONE in conjunction with the
Services or in any Customer Software or other systems;
(ii) it will not intentionally insert any code that would have the
effect of disabling or otherwise shutting down all or any portion of
Customer's Software or Customer's other systems and Software into any
deliverables or other materials provided by ALLIANCE-ONE in
conjunction with the Services or in any Customer Software or other
systems;
(iii) it will use reasonable efforts, including using frequently
updated virus detection and correction Software, to reduce the
likelihood that any malware (including but not limited to viruses,
trojans, spyware, etc.) is introduced into any Software or Customer's
other systems;
(b) Further, ALLIANCE-ONE covenants to Customer that:
(i) If malware (including but not limited to viruses, trojans,
spyware, etc.) is introduced into ALLIANCE-ONE Software, ALLIANCE-ONE
Third Party Software, Customer Software, Customer Third Party Software
or other Customer systems in the course of the Service provision or by
any person
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to whom ALLIANCE-ONE has provided access to such ALLIANCE-ONE
Software, ALLIANCE-ONE Third Party Software, Customer Software,
Customer Third Party Software or other Customer systems, ALLIANCE-ONE
will provide all assistance requested by Customer to remove such
malware and will provide all necessary assistance to minimize the
impact of such malware. In this case, ALLIANCE-ONE will be liable for
loss of Customer Data or records to the extent such loss is caused by
the willful or negligent introduction of such malware into
ALLIANCE-ONE Software, ALLIANCE-ONE Third Party Software, Customer
Software, Customer Third Party Software or other Customer systems by
ALLIANCE-ONE or any person, other than Customer or Customer
Affiliates, to whom ALLIANCE-ONE has provided access to such
ALLIANCE-ONE Software, ALLIANCE-ONE Third Party Software, Customer
Software, Customer Third Party Software or other Customer systems.
(ii) It will provide such assistance as is reasonably requested by
Customer as a result of, or in furtherance of any investigation of,
any breach of security in any Customer system to the extent relating
to ALLIANCE-ONE Software or ALLIANCE-ONE Third Party Software.
(iii) If at any time the licensor of any third party Software invokes
or threatens to invoke any disabling code in third party Software
licensed to ALLIANCE-ONE, the invocation of which could adversely
affect ALLIANCE-ONE's ability to provide the Services, ALLIANCE-ONE
will promptly provide written notice of such invocation or threatened
invocation to Customer and use commercially reasonable efforts to
preclude such action on the part of such licensor;
12.10. Disclaimer. THE WARRANTIES STATED IN THE SET OF AGREEMENTS ARE IN LIEU OF
ALL IMPLIED WARRANTIES AND ALLIANCE-ONE DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS, AND FITNESS FOR A
PARTICULAR PURPOSE.
12.11. Disclaimer of Responsibility. ALLIANCE-ONE shall have no responsibility
or liability and Customer shall continue to be at all times solely responsible
for any of the following:
(a) Determining all coverage and benefits, premium rates, underwriting
criteria, identification of and interpretation of applicable insurance and
other administration Applicable Laws, adjudication of claims and claims
payment procedures applicable to the insurance Contracts, and for securing
reinsurance, if any.
(b) Non-compliance with the Performance Levels in Exhibit 7.4(a) - Service
Levels and Service Level Credits due to a decision by Customer or a
Customer subsidiary or Affiliate, provided such decision and the
consequences of such decision are documented in writing.
(c) Customer's or its subsidiaries or Affiliates' underwriting decisions,
claims decisions, claim payment decisions, or claim recovery decisions.
(d) Insurance risk or liability relating to any of the insurance
Contracts.
(e) Failure of Customer to fulfill all lawful obligations with respect to
Contracts affected by this Agreement, regardless of any dispute between
Customer and ALLIANCE-ONE.
(f) Any prospectuses, advertisements and other solicitation materials,
training programs and materials, insurance Contracts, amendments,
endorsements and other forms provided by, used by or required by Customer.
(g) the accuracy and completeness of the Customer Content, Contract Holder
Data and all other data and information provided by Customer; (b) any
errors in and with respect to data obtained from ALLIANCE-ONE caused by
inaccurate or incomplete Customer Content, Contract Holder Data or data
provided by Customer,
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or (c) accuracy and completeness of Customer's policies and procedures or
business rules provided to ALLIANCE-ONE.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CUSTOMER
13.1. Corporate Existence. Customer represents and warrants to ALLIANCE-ONE that
the Customer is a corporation duly organized and existing and in good standing
under the laws of the State of Nebraska, with the power to own all of its
properties and assets and to carry on its business as it is presently being
conducted.
13.2. Corporate Capacity. Customer represents and warrants to ALLIANCE-ONE that
the Customer is empowered under the Applicable Laws and by its charter and
bylaws to enter into and perform this Agreement.
13.3. Corporate Authority. Customer represents and warrants to ALLIANCE-ONE
that all requisite corporate proceedings have been taken to authorize the
Customer to enter into and perform this Agreement, and that it is not required
to obtain the consent of any Party, including the consent of any Party to any
contract to which it is a Party, in connection with the execution of this
Agreement and the performance of the Services.
13.4. Valid and Binding Obligation. This Agreement constitutes its valid and
binding obligation, enforceable in accordance with its terms, except as
enforceability is limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Applicable Law affecting creditors' rights
generally, or (ii) general principles of equity, whether considered in a
proceeding of equity or at Applicable Law.
13.5. Litigation. As of the date of its execution of this Agreement, Customer
represents to ALLIANCE-ONE that to the best of its knowledge (a) there is no
litigation pending or, threatened by, against or affecting Customer or any of
its Affiliates or properties or assets that, individually or in the aggregate,
would materially impair the ability of Customer to perform its obligations under
this Agreement, or would have or result in a material adverse effect, upon its
performance under the Set of Agreements without regard to whether the defense of
or liability in respect of the litigation is covered by policies of insurance or
any indemnity, contribution, cost sharing or similar agreement or arrangement by
or with any other person and (b) there are no outstanding orders, judgments,
decrees or injunctions issued by any governmental authority against Customer in
any way affecting its business that, individually or in the aggregate, would
materially impair the ability of Customer to perform its obligations under the
Set of Agreements. Customer further covenants that it will immediately notify
ALLIANCE-ONE upon notice to Customer of any litigation described in subsection
(a) of this Section or outstanding orders, judgments, decrees or injunctions
issued by any governmental authority against Customer as described in subsection
(b) of this Section.
13.6. Legal Compliance. To the extent the failure to do so could adversely
affect ALLIANCE-ONE or its ability to perform the Services under the Set of
Agreements, Customer covenants to ALLIANCE-ONE that Customer will comply with
all Applicable Laws with respect to its role as an insurance company as that
term is defined under the various state Applicable Laws regulating the
activities of insurance companies.
13.7. Non-Infringement. Customer represents and warrants that there are no
threatened or actual claims or suits in connection with U.S. patents and U.S.
trademarks, and, to the best of its knowledge, there are no threatened or actual
claims or suits in connection with any worldwide patents or other intellectual
property matters that would materially adversely affect Customer's ability to
perform its obligations under this Agreement. The warranties under this Section
do not apply to intellectual property provided by ALLIANCE-ONE or its Affiliates
for use by Customer, including the Software Product and Facilities and Systems.
13.8. Disclaimer. THE WARRANTIES STATED IN THE SET OF AGREEMENTS ARE IN LIEU OF
ALL OTHER IMPLIED WARRANTIES, AND CUSTOMER DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS, AND FITNESS FOR A
PARTICULAR PURPOSE.
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14. INFORMAL DISPUTE RESOLUTION
14.1. Disputes. Customer is responsible to Contract Holders for fulfilling all
lawful obligations with respect to the Contracts regardless of any dispute
between Customer and ALLIANCE-ONE. ALLIANCE-ONE shall not impair Customer's
ability to fulfill Customer's responsibility to Contract Holders.
14.2. Process.
(a) In the event that there is a dispute between the Parties regarding
matters arising while this Agreement is in effect, the Parties shall adhere
to the following internal escalation procedures within ALLIANCE-ONE and
Customer prior to proceeding with a legal proceeding in order to
expeditiously resolve any problems: (i) one individual who is authorized to
speak for each Party will be nominated and will attempt to resolve the
problem and (ii) if these individuals do not reach a resolution within five
(5) Business Days after referral of the problem, or otherwise determine in
good faith that resolution through continued discussions by them does not
appear likely, the matter will be escalated within twenty (20) Business
Days thereafter to the appropriate members of the Parties who have
management responsibility and may be augmented by additional personnel from
each Party for immediate resolution.
(b) During the course of negotiations, the Parties shall honor all
reasonable requests made by one Party to the other for non-privileged
information, reasonably related to the dispute, in order that each of the
Parties may be fully advised of the other's position.
(c) The Parties, at their discretion, shall determine the specific format
for the discussions, which may include the preparation of agreed upon
statements of fact or written statements of position.
(d) This dispute resolution process is discretionary where the dispute
between the Parties involves a third party initiated claim.
14.3. Subsequent Proceedings. Proposals for resolution made during the informal
proceedings described in Article 14 (Informal Dispute Resolution) between the
Parties are settlement discussions only and are privileged, confidential and
without prejudice to a Party's legal position in any formal proceedings.
14.4. Continuity of Services. In the event of a dispute between Customer and
ALLIANCE-ONE and at the exclusive option of Customer, ALLIANCE-ONE shall
continue to perform its obligations, including without limitation the Services,
under this Agreement in good faith during the resolution of such dispute unless
and until this Agreement is terminated.
14.5. Change Procedures Dispute.
(a) The provisions of this Section shall be read to supplement, not
supersede, the provisions above and are intended to govern a specific
category of disputes relating to Administration Services where there is
urgency to resolving the dispute so that Customer may remain in compliance
with Applicable Law and current industry practices. With respect to changes
to the Admin Guidelines to remain compliant with (i) Applicable Law in
accordance with Customer's reasonable interpretations thereof, on
Customer's initiative, as provided in writing by an authorized officer of
Customer; (ii) prudent business standards for detecting and preventing
fraud; (iii) prudent internal controls; (iv) general industry standards;
(v) the terms and conditions of the Contracts provided by Customer to
ALLIANCE-ONE; (vi) the terms and conditions of applicable reinsurance
agreements that are provided by Customer to ALLIANCE-ONE; and (vii) those
policies, processes, work flows, interpretations of applicable laws and
regulations, unique to administering the Contracts as may be reasonably
specified in writing by Customer in accordance with the Set of Agreements,
if Customer determines that all of the material issues relating to such a
change (a "Change Procedures Dispute") are not likely to be resolved in
time for the changes to be developed and implemented prior to the effective
date of such change in the case of a change in the Applicable
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Law, or within a reasonable time after such change was requested by
Customer, then Customer may notify ALLIANCE-ONE that ALLIANCE-ONE and
Customer have fifteen (15) Business Days to conclude the Change Procedures
Dispute from one of the following alternatives:
(i) The Parties agree in writing as to all material details of the
Change Procedures Dispute.
(ii) ALLIANCE-ONE committing to Customer in writing to implement the
changes required to perform the Services hereunder in accordance with
(a)(i)-(vii) above as reasonably interpreted by Customer and such
written commitment includes an estimate of the charges to complete
such tasks as reasonably allocated to Customer, subject to Customer
agreeing in writing to pay ALLIANCE-ONE all undisputed amounts and
paying ALLIANCE-ONE fifty percent (50%) of the disputed elements of
the estimated charge. ALLIANCE-ONE shall develop and implement such
changes within the required time in the case of changes in Applicable
Law and within a reasonable time, as reasonably stated by Customer in
the written notice provided to ALLIANCE-ONE under this Section in the
case of other changes. The Parties will diligently pursue timely
resolution of such Change Procedures Dispute. ALLIANCE-ONE shall
invoice Customer monthly for the portion of the costs incurred by
ALLIANCE-ONE, as reasonably allocated by ALLIANCE-ONE, taking into
account the benefit received by ALLIANCE-ONE's other customers.
Customer shall promptly pay such amounts which are not disputed in
good faith. For any amounts disputed by Customer, the provisions of
Section 14.2 (Process) above shall govern. Neither Party's rights to
recover amounts paid or amounts owing under this Section shall be
prejudiced by compliance with this Section.
(b) Dispute resolution: If a dispute concerning the matters addressed in
this Section cannot be resolved, the dispute shall proceed through the
Expedited Dispute Procedure outlined in Exhibit 14.5 - Expedited Dispute
Procedures.
15. INDEMNIFICATION AND OTHER EXPRESS REMEDIES.
15.1. Indemnification of Customer.
(a) Customer shall not be responsible for, and ALLIANCE-ONE shall indemnify
and hold Customer harmless from and against, any and all reasonable costs,
expenses, losses, damages, charges, counsel fees, payments, and liability
which may be asserted against Customer by an unaffiliated third party, or
for which Customer may be held liable, arising out of or attributable to:
(i) ALLIANCE-ONE's willful misconduct or Gross Negligence with regard
to its provision of the Services; or which arise out of the breach of
any representation and warranty provided by ALLIANCE-ONE in Article 12
(Representations, Warranties and Covenants of ALLIANCE-ONE) or in any
Work Order; or breach by ALLIANCE-ONE of its obligations in Section
18.2 (Customer Personal Information) hereof;
(ii) All claims or actions by an ALLIANCE-ONE subcontractor arising
out of ALLIANCE-ONE's breach or violation of its subcontracting
arrangements, including claims for payments from same;
(iii) Any claim, demand, charge, action, cause of action or other
proceeding asserted against Customer but resulting from an act or
omission of ALLIANCE-ONE in its capacity as an employer of a person;
(iv) Fines, penalties and interest paid to a governmental authority
arising out of ALLIANCE-ONE's breach of its obligations under Sections
5.2(a), 5.4 and 5.5.
(b) ALLIANCE-ONE shall indemnify, defend and hold harmless the Customer
from and against any and all losses incurred by Customer as a result of a
claim relating to any actual or alleged infringement or
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misappropriation of any Intellectual Property Rights of a third party
relating to (i) the Services, (ii) the ALLIANCE-ONE materials utilized by
ALLIANCE-ONE in providing the Services, and (iii) use by Customer of any
ALLIANCE-ONE Proprietary Materials or other materials provided by
ALLIANCE-ONE to Customer pursuant to the Set of Agreements for use by
Customer ((i) - (iii) collectively referred to as "Covered IP"), including
any claims alleging or establishing that Customer's permitted use under the
Set of Agreements of the Covered IP infringes or misappropriates any
Intellectual Property Rights of a third party. ALLIANCE-ONE's
indemnification obligations under this Agreement shall not extend to any
claims:
(i) resulting from, or relating to compliance by ALLIANCE-ONE with
written specifications or written instructions supplied by Customer.
(ii) resulting from, or relating to modifications made by Customer
(its Affiliates) to the Covered IP or use of the Covered IP not
expressly authorized by the Set of Agreements; or
(iii) based on or caused by Customer Proprietary Materials infringing
the Intellectual Property Rights of a third party.
(c) In addition to other rights provided to Customer in (b) above, with
respect to an infringing item, ALLIANCE-ONE shall, at its discretion:
(i) procure for Customer the right to continue using such infringing
item; or
(ii) replace or modify such infringing item to make its use
non-infringing while providing substantially the same functionality;
or
(iii) perform the Services relating to the infringing item in a way
that does not require use of the infringing item or any material
change in the nature of the Services provided by ALLIANCE-ONE. If none
of options (i) through (iii) are commercially reasonable,
ALLIANCE-ONE's obligation to provide the infringing Service will be
terminated and the charges or fees will be equitably adjusted to
reflect that removal.
15.2. Indemnification of ALLIANCE-ONE.
(a) ALLIANCE-ONE shall not be responsible for, and the Customer shall
indemnify and hold ALLIANCE-ONE harmless from and against, any and all
costs, expenses, losses, damages, charges, counsel fees, payments, and
liability which may be asserted against ALLIANCE-ONE by an unaffiliated
third party, or for which it may be held liable, arising out of or
attributable to:
(i) Any claims by third parties related to ALLIANCE-ONE's
administration of the Contracts based upon actions taken by
ALLIANCE-ONE in compliance with the terms of this Agreement;
(ii) Any failure by the Customer to inform ALLIANCE-ONE of changes to
the Applicable Laws affecting ALLIANCE-ONE's administration of the
Contracts that causes legal or regulatory actions to be taken against
ALLIANCE-ONE;
(iii) Customer's: (aa) failure to safeguard the codes and/or
passwords, if any, provided by ALLIANCE-ONE to access the Facilities
and Systems or Software Products; (bb) failure to implement and
maintain procedures designed to safeguard ALLIANCE-ONE Confidential
Information and trade secrets obtained under this Agreement; or (ccc)
wrongful use of ALLIANCE-ONE Confidential Information or trade secrets
obtained under this Agreement;
(iv) Fines, penalties and interest paid to a governmental authority
arising out of Customer's breach of its obligations under Section
5.2(a) or 5.4.
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(v) Customer's willful misconduct or Gross Negligence or which arise
out of the breach of any representation or warranty of CUSTOMER in
Section 13.
(b) Customer shall indemnify, defend and hold harmless ALLIANCE-ONE from
and against any and all losses incurred by ALLIANCE-ONE as a result of a
claim relating to any actual or alleged infringement or misappropriation of
any Intellectual Property Rights of a third party relating to Customer
Proprietary Materials or other materials provided by Customer to
ALLIANCE-ONE pursuant to the Set of Agreements for use by ALLIANCE-ONE
("Customer Covered IP"), including any claims alleging or establishing that
ALLIANCE-ONE's permitted use under the Set of Agreements of the Customer
Covered IP infringes or misappropriates any Intellectual Property Rights of
a third party. Customer's indemnification obligations under this Agreement
shall not extend to any claims:
(i) resulting from, or relating to modifications made by ALLIANCE-ONE
(its Affiliates) to the Customer Covered IP or use of the Customer
Covered IP not expressly authorized by the Set of Agreements; or
(ii) based on or caused by ALLIANCE-ONE Proprietary Materials
infringing the Intellectual Property Rights of a third party.
(c) In addition to other rights provided to ALLIANCE-ONE in (b) above, with
respect to an infringing item, Customer shall, at its discretion:
(i) procure for ALLIANCE-ONE the right to continue using such
infringing item; or
(ii) replace or modify such infringing item to make its use
non-infringing while providing substantially the same functionality;
or
(iii) utilize the Services relating to the infringing item in a way
that does not require use of the infringing item or any material
change in the nature of the Services provided.
15.3. Additional Indemnifications. Each Party will indemnify, defend and hold
harmless the other, and the other's respective Affiliates, officers, directors,
employees, agents, successors, and assigns, against:
(a) any claim, demand, charge, action, cause of action, or other proceeding
asserted against such person arising out of the death or bodily injury of
any person caused by the wrongful conduct of the indemnifying Party;
(b) any claim, demand, charge, action, cause of action, or other proceeding
asserted against such person arising out of the damage, loss or destruction
of any real or tangible personal property caused by the wrongful conduct of
the indemnifying Party; and
(c) any claim, demand, charge, action, cause of action, or other proceeding
asserted against the other Party but resulting from an act or omission of
the indemnifying Party or Subcontractor in its or its Subcontractor's
capacity as an employer of a person.
15.4. Indemnification Procedures.
(a) The Parties' obligations under this Section are subject to the
indemnified Party following the procedures set out hereafter:
(i) The indemnified Party will promptly notify the indemnifying Party
in writing of a claim covered by this Section;
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(ii) Subject to first confirming in writing to the indemnified Party
its obligation to fully indemnify the indemnified Party for the matter
involved, the indemnifying Party will be entitled to take sole control
of the Defense and investigation of the claim (collectively the
"Defense") at its own expense, and to use attorneys of its choice, by
providing prompt written notice to the indemnified Party. The
indemnifying Party will not be liable to the indemnified party for any
Defense costs incurred after such notice, except for Defense costs
incurred at the indemnifying Party's request;
(iii) The indemnified Party will co-operate upon the indemnifying
Party's request in all reasonable respects with the indemnifying Party
and its attorneys in the Defense of such claim at the indemnifying
Party's expense or may at its own discretion reasonably participate at
its own expense, through its attorneys or otherwise, in such Defense;
(b) If the indemnifying Party does not take sole control of the Defense of
a claim as provided in this Section:
(i) the indemnifying Party may participate in such Defense, at its
sole cost and expense;
(ii) the indemnified Party will have the right to defend the claim in
such manner as it may deem appropriate; and
(iii) the indemnifying Party will pay the reasonable indemnified
Party's Defense costs.
(c) All settlements of claims subject to indemnification under this Section
will:
(i) be entered into only with the consent of the indemnified Party,
which consent will not be unreasonably withheld; and
(ii) completely release the indemnified Party of any obligation.
(d) The rights and Defenses of the indemnified Party will be available to
the indemnifying Party to the extent of, and with respect to, the
indemnifying Party's obligation to indemnify the indemnified Party under
this Section.
15.5. Step-in Rights of Customer. Upon the occurrence of (a) a state insurance
regulator's notice of ALLIANCE-ONE's non-compliance with Applicable Licensing
Law and ALLIANCE-ONE's failure to cure such non-compliance within the state
insurance regulator's requested compliance period, or (b) any breach of this
Agreement by ALLIANCE-ONE where the Services are not provided in accordance with
the standard of care (each of (a) and (b), a "Triggering Event"), Customer has
the right to assist ALLIANCE-ONE in resolving the Triggering Event (the "Step-in
Rights").
(a) Notice of Customer's Exercise of Step-in Rights. Customer shall provide
ALLIANCE-ONE thirty (30) days advance written notice of its intent to
exercise the Step-in Rights (the "Step-in Notice"), and ALLIANCE-ONE shall
promptly acknowledge Customer's notice. A Step-in Notice shall include the
following: (i) a clear statement that the Customer is exercising Step-in
Rights, with reference to this Section; (ii) a statement clearly describing
the Triggering Event, the affected Administration Services, together with
an explanation of the Customer's reasoning for exercising the Step-In
Rights (such statement to be sufficiently detailed to permit ALLIANCE-ONE
to understand the Customer's reasoning); (iii) a statement of the actions
that Customer proposes need to be taken by ALLIANCE-ONE to resolve the
Triggering Event; and (iv) a statement of what the Customer requires
ALLIANCE-ONE to do to resolve the Triggering Event. During the Step-in
Period, the Customer Step-in Manager shall be authorized to direct the
ALLIANCE-ONE managers to prioritize activities of the Step-in Staff within
the Administration Services to be performed and to direct such managers in
managing other ALLIANCE-ONE resources customarily available to the Step-in
Staff to remediate problems with the
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Administration Services. Customer acknowledges that the Step-in Staff will
not necessarily be dedicated exclusively to Customer during the Step-in
Period.
(b) Effective Date of Step-in Rights. Customer's exercise of its Step-in
Rights shall be effective upon the later of ALLIANCE-ONE's receipt of the
Step-in Notice or on the time and date provided in the Step-in Notice.
(c) Step-in Period.
(i) Upon the expiration of the Step-in Notice period without
resolution of the Triggering Event, ALLIANCE-ONE shall designate
appropriately qualified key employees who are reasonably available to
provide the Administration Services during the Step-in period (the
"Step-in Staff"). Customer shall appoint a manager to oversee such
dedicated managers and employees' provision of the Administration
Services (the "Customer Step-in Manager"). Customer Step-in Manager
shall not have access to data of other ALLIANCE-ONE clients but shall
have the right to monitor ALLIANCE-ONE employees' daily provision of
Services within such limits of confidentiality on behalf of Customer.
Customer will continue to pay ALLIANCE-ONE the appropriate Charges for
the Services during such time. The parties may agree upon a reduction,
if any, in the Charges paid by Customer for the affected Services
during the Step-in period in accordance with the Change Procedures.
(ii) The Step-in period will commence upon the expiration of the
Step-in Notice and will terminate upon either a sustained return to
the provision of Services consistent with the standard of care or, if
such Administration Services are not resumed, then until Customer's
transition of the Administration Services back to Customer or to a new
third party administrator following Customer's termination of this
Agreement
(d) Step-out. Upon a mutually acceptable resolution of the Triggering Event
or upon Customer's exercise of its termination rights, Step-out will be
deemed to have occurred. Customer may also, in its sole discretion,
determine that it is no longer necessary for Customer to exercise Step-in
Rights, and thereafter, Customer shall provide ALLIANCE-ONE with advance
written notice of its determination to Step-out (the "Step-out Notice").
The Step-out Notice shall include reference to any actions, including
additional monitoring by Customer and additional reporting by ALLIANCE-ONE
that must be carried out or are continuing as needed to resolve the
Triggering Event, if any.
15.6. Erroneous Payments.
(a) Subject to the remaining provisions of this Section 15.6, ALLIANCE-ONE
shall reimburse Customer for "EP Amounts" (as defined below) by Customer or
its Affiliates to a Contract Holder, an insurance producer authorized by
Customer or its Affiliates to market, solicit, sell or negotiate Contracts,
a person claiming to be a Contract Holder or such an insurance producer
(collectively, each an "EP Third Party"), which amounts would not have been
paid or payable had ALLIANCE-ONE performed the Administration Services in
accordance with the Set of Agreement (hereafter, an "EP Amount"). EP
Amounts may include:
(i) Insurance claims payments based upon a Contract but paid by
ALLIANCE-ONE to a person other than the beneficiary listed in such
Contract;
(ii) Loan proceeds based upon a Contract but paid by ALLIANCE-ONE to a
person other than the owner listed in such Contract;
(iii) Surrenders or withdrawals based upon a Contract but paid by
ALLIANCE-ONE to a person other than the owner of such Contract;
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(iv) Overpayments made to any person in connection with a claim, loan,
surrender or withdrawal; or
(v) If applicable, commission payments made by ALLIANCE-ONE to the
wrong person.
(b) EP Amounts shall not include amounts paid or payable to any third party
as a result of: (i) incorrect data provided to ALLIANCE-ONE by Customer or
its Affiliates, (ii) acts or omissions of Customer or its Affiliates or
their respective predecessors inconsistent with its obligations under this
Set of Agreements, (iii) Customer's express approval, unless Customer's
approval was based on incorrect data supplied by Suppler; or (iv) defects
in the software previously used by Customer to perform for itself the
administration services where ALLIANCE-ONE continued the use of such
software in accordance with the Admin Guidelines and where ALLIANCE-ONE did
not otherwise have a duty hereunder to correct such software. Further, EP
Amounts shall not include any contractual underpayments owed by Customer to
an EP Third Party.
(c) ALLIANCE-ONE shall not be liable to pay Customer for Erroneous Payments
in any Contract Year until and unless the aggregate of all EP Amounts in
that Contract Year exceed four percent (4%), and then only for amounts that
exceed that four percent (4%) threshold, of the fees for Administration
Services (less taxes and Reimbursable Expenses) to be paid and payable by
Customer under that particular Work Order for that Contract Year (the "EP
Threshold"). For any portion of a Contract Year during the Term, the EP
Threshold shall be based on a fraction of the number of whole calendar
months in the Term in the applicable Contract Year, divided by twelve (12).
(d) Subject to Section 15.6(h), if the total of EP Amounts arising in a
given Contract Year under a particular Work Order exceed the EP Threshold
for that Contract Year for that Work Order, ALLIANCE-ONE shall reimburse
Customer for fifty percent (50%) of the EP Amounts in that Contract Year
above the EP Threshold.
(e) Customer shall take "Reasonable Recovery Steps" (as defined below) to
mitigate the damages incurred as a result of an EP Amount. Customer shall
also cooperate with ALLIANCE-ONE to assist ALLIANCE-ONE in taking
Reasonable Recovery Steps to recover or otherwise mitigate EP Amounts,
which may include reasonable revisions to the Admin Guidelines designed to
prevent future failures. If requested by ALLIANCE-ONE for the purpose of
ALLIANCE-ONE taking Reasonable Recovery Steps on behalf of Customer, to the
extent permitted by Applicable Law, Customer shall assign its rights to
ALLIANCE-ONE, or to enter a subrogation agreement with ALLIANCE-ONE, to
assist ALLIANCE-ONE in taking Reasonable Recovery Steps. To the extent that
ALLIANCE-ONE has reimbursed Customer for an EP Amount, then the amount so
recovered shall belong to ALLIANCE-ONE.
(f) Prior to ALLIANCE-ONE taking any action to collect amounts paid by
ALLIANCE-ONE to Customer under this Section, ALLIANCE-ONE first shall
consult with Customer regarding the Reasonable Recovery Steps proposed to
be taken by ALLIANCE-ONE. ALLIANCE-ONE will not take any other action
(other than Reasonable Recovery Steps) to recover an EP Amount without
Customer's prior written consent not to be unreasonably delayed, denied or
conditioned.
(g) ALLIANCE-ONE shall reimburse Customer for EP Amounts within sixty (60)
days after ALLIANCE-ONE's receipt of a written claim from Customer that
such amounts are due and the reasons therefore.
(h) For the avoidance of doubt, ALLIANCE-ONE's maximum liability for all EP
Amounts, when added together for a particular Work Order, is the equivalent
of the last six (6) months of fees paid by Customer under that particular
Work Order. ALLIANCE-ONE's payment to Customer of its liability under this
Subsection 15.6 counts towards the overall cap of liability found in
Section 16.2 of the Agreement. Further, EP Amounts
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reimbursed by ALLIANCE-ONE under this Section 15.6 shall not be deemed to
be consequential damages under Section 16.3.
(i) If the EP Amounts for a particular Work Order exceed the EP Threshold,
Customer shall have the right to terminate that particular Work Order (or
those parts relating to ALLIANCE-ONE's failures giving rise to the
Erroneous Payments) for convenience without early termination fee or
penalty.
(j) "Paid" means an amount actually paid to an EP Third Party.
(k) "Payable" means an amount due an EP Third Party which a commercially
reasonable life insurance company acting for its own account would itself
determine is advisable or is legally required to pay to such third party in
settlement of a claim by such third party, in light of all surrounding
circumstances.
(l) "Reasonable Recovery Steps" means those steps which a commercially
reasonable life insurance company would itself take to recover amounts from
an EP Third Party erroneously paid by that insurance company to such third
party, or such steps to avoid a duty to pay such amounts, as applicable, in
light of all surrounding circumstances. In completing such assessment, the
limitations of the right of Customer to recover such amounts from
ALLIANCE-ONE under this Set of Agreements may be taken into account.
Reasonable Recovery Steps shall take into account any case law or arguments
favoring the right to correct any administrative mistakes made so as to not
unjustly enrich a person not legally entitled to an EP Payment.
15.7. Breakage.
(a) Notwithstanding anything to the contrary, ALLIANCE-ONE's liability and
reimbursements under this Section 15.7 shall be deemed to be direct damages
and not consequential under Section 16.3 of the Agreement.
(b) Subject to Section 4.6 Error Correction and Section 15.7(g) below, as
to any applicable Administration Services related to variable Contacts as
set forth in any Work Order attached to this Agreement, "Breakage" is
defined as when an administrative transaction affecting the financial value
on a variable Contract is effective at an accumulation unit value different
than the accumulation unit value that should have been used in accordance
with applicable federal securities laws and regulations (as further
detailed in the next paragraph below and in the Admin Guidelines). Based on
the difference in unit values on the current transaction date and effective
date, Breakage can be positive or negative and has a direct impact to
Customer's financial statements.
(c) Administrative transactions affecting financial values on variable
Contracts can only be processed once received in good order prior to close
of business of the New York Stock Exchange and must be processed same day.
Transactions received after close of business of the New York Stock
Exchange will be processed the next price day.
(d) ALLIANCE-ONE will only be accountable for Breakage that is to the
extent caused by ALLIANCE-ONE's failure to perform the Administration
Services in accordance with the Set of Agreements, including the Admin
Guidelines.
(e) ALLIANCE-ONE will implement an approval process for every Breakage
event as further set forth in the Admin Guidelines.
(f) ALLIANCE-ONE will provide to Customer, on a monthly basis, a report of
the transactions ALLIANCE-ONE processed with an effective date prior to the
transaction date. This report will contain Contract number, effective date,
transaction date, gain/loss amount and processor. In said report,
ALLIANCE-ONE will provide Customer with a listing of the reasons for
Breakage for amounts greater than $50.00.
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(g) Breakage amounts associated with a particular Work Order that are
ALLIANCE-ONE's liability will accumulate on a Contract Year basis. At the
end of Contract Year, Breakage amounts will be netted: gains vs losses.
After netting, if the Breakage is under five percent (5%) (the "Breakage
Threshold") of the fees paid for Administration Services (exclusive of
taxes and Reimbursable Expenses) for the administration of the variable
Contracts under a particular Work Order for the completed Contract Year, no
payment will be required by ALLIANCE-ONE. However, if the net amount of
losses in a Contract Year exceed the Breakage Threshold, ALLIANCE-ONE will
credit such amount that exceeds the Breakage Threshold against future
monthly invoices. If there are no future invoices to be credited,
ALLIANCE-ONE will make payment in full within thirty (30) days from the
last day of ALLIANCE-ONE provision of Administration Services.
(h) For the avoidance of doubt, amounts treated as Breakage under this
Section shall not also be recoverable by Customer under Section 15.6
(Erroneous Payments). Further, ALLIANCE-ONE's maximum liability for all
Breakage, when added together for a particular Work Order, is the
equivalent of the last six (6) months of fees paid by Customer for
Administration Services (exclusive of taxes and Reimbursable Expenses) for
the administration of the variable Contracts under that particular Work
Order. ALLIANCE-ONE's payment to Customer of its liability under this
Subsection 15.7 counts towards the overall cap of liability found in
Section 16.2 of the Agreement.
(i) If the Breakage amounts for a particular Work Order exceed the Breakage
Threshold, Customer shall have the right to terminate that particular Work
Order (or those parts relating to ALLIANCE-ONE's failures giving rise to
Breakage) for convenience without early termination fee or penalty.
16. LIMITATIONS OF LIABILITY AND DISCLAIMERS
16.1. Cure. Where the Customer's claim relates to a defect in any of the
Services, the Customer will give ALLIANCE-ONE the cure period, if any, stated in
the applicable Work Order, to correct the defect in Services.
16.2. Limitation of Liability. EACH PARTY'S AGGREGATE LIABILITY FOR DAMAGES
UNDER AND RELATED TO THE SET OF AGREEMENTS AND ITS SUBJECT MATTER FOR ALL
EVENTS, ACTS, OR OMISSIONS OCCURRING DURING THE TERM OF THE SET OF AGREEMENTS
SHALL BE LIMITED IN THE AGGREGATE TO THE AMOUNT PAID UNDER THE SET OF AGREEMENTS
BY CUSTOMER AND ITS AFFILIATES TO ALLIANCE-ONE (AND ITS AFFILIATES) DURING THE
TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING WHEN SUCH CLAIM AROSE, WHETHER
BASED ON ONE OR MORE ACTIONS OR CLAIMS IN CONTRACT, WARRANTY, STRICT LIABILITY,
NEGLIGENCE OR OTHER TORT, OR OTHERWISE, EVEN IF A PARTY IS ADVISED OF THE
POSSIBILITY OF SUCH LOSSES OR DAMAGES, OR IF SUCH LOSSES OR DAMAGES ARE
FORESEEABLE.
16.3. Exclusion of Consequential Damages. EVEN IF THE REMEDIES PROVIDED
HEREUNDER FAIL OF THEIR ESSENTIAL PURPOSE, NO PARTY SHALL BE LIABLE FOR, NOR
WILL THE MEASURE OF DAMAGES ARISING FROM THIS AGREEMENT INCLUDE ANY INDIRECT,
INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES SUFFERED BY A
PARTY OR AMOUNTS FOR LOSS OF INCOME, PROFITS OR SAVINGS SUFFERED BY A PARTY.
16.4. Exceptions. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT,
THE LIMITATIONS IN SECTION 16.2 AND 16.3 WILL NOT APPLY TO:
(a) The indemnification obligations in Sections 15.1, 15.2 and 15.3; or
(b) Claims relating to a breach by the other Party of its confidentiality
obligations provided that damages for such shall be limited to an aggregate
amount of $10 million, excluding any and all damages for loss
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of profit, revenue or business advantage. This limitation of liability is
not in addition to the aggregate damage cap set forth above in Section
16.2; or
(c) a Party's Gross Negligence or willful misconduct; or
(d) ALLIANCE-ONE's refusal to provide Termination Assistance Services in
accordance with the Set of Agreements.
16.5. Damages Generally.
(a) Each Party will be liable to the other Party for actual and direct
damages arising out of or in relation to a breach of such Party's
performance which causes a failure of such Party to perform in accordance
with the Set of Agreements. The following will be considered a
non-exhaustive list of direct damages which ALLIANCE-ONE will not assert
are excluded by Section 16.3 to the extent they result from the failure of
ALLIANCE-ONE (and not by the acts or omissions of the Customer ) to provide
the Services in accordance with the Set of Agreements:
(i) ALLIANCE-ONE agrees that it will at its cost recreate or reload
for the benefit of Customer any of the Contract Holder Data that is
lost or damaged. If ALLIANCE-ONE fails to reasonably do so then
Customer's cost in recreating or reloading the data is a direct
damage;
(ii) Upon a failure of same, ALLIANCE-ONE agrees that it will at its
cost implement appropriate manual workarounds in respect to its
failure to provide all or a portion of the Services or any part
thereof that are automated or system driven under the Set of
Agreements and for which it is responsible for maintaining. If
ALLIANCE-ONE fails to reasonably do so then Customer's cost to provide
a reasonable workaround is a direct damage;
(iii) ALLIANCE-ONE agrees that it will at its cost replace lost,
stolen or damaged equipment, Software and related tangible materials
provided to ALLIANCE-ONE by Customer and for which it is responsible
under the Set of Agreements. If ALLIANCE-ONE fails to do so then
Customer's cost to replace same is a direct damage;
(iv) straight time, overtime, or related expenses incurred by Customer
or its third party suppliers, including increased call center costs,
wages, and salaries of additional employees, travel expenses, overtime
expenses, telecommunication charges, and similar charges reasonably
and directly incurred in connection with (i) through (ii) above, but
excluding fixed overhead allocations of Customer for the employees of
Customer;
(v) Consistent with Sections 5.4 and 5.5, payments or penalties
imposed by a regulatory agency for ALLIANCE-ONE's failure to comply
with deadlines; and
(vi) Amounts due and payable under Sections 15.5, 15.6 and 15.7.
(b) ALLIANCE-ONE will promptly notify Customer in writing whenever its
liability for recoverable damages under the Set of Agreements has reached
or exceeded eighty percent (80%) of such maximum liability amount. In such
case, Customer may terminate in whole the Set of Agreements upon ninety
(90) days' written notice without having to pay any Termination Fees.
ALLIANCE-ONE may at its option agree that amounts previously applied to the
maximum liability amount shall be disregarded with respect to all other
claims, subject to Customer's agreement, and in such case Customer will not
have the termination right.
(c) For the avoidance of doubt, Article 16 (Limitation of Liability and
Disclaimers) will apply to any losses incurred by a Party regardless of
whether such losses are caused by the other Party and/or the other Party's
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Subcontractors and/or by their respective employees, officers, directors,
agents, advisors and other Representatives.
16.6. Customer Affiliate's claims.
(a) Notwithstanding any other provision of the Set of Agreements (but
subject to the provisions of this Section), Customer will be entitled to
recover from ALLIANCE-ONE on behalf of Customer Affiliates' damages
incurred by such Customer Affiliates, but only to the extent that Customer
would be entitled to recover such damages under the terms and conditions of
the Set of Agreements if Customer had incurred such damages instead of such
Customer Affiliate.
(b) For the avoidance of doubt, a claim for Losses suffered by a Customer
Affiliate will not be deemed to be indirect damages by the mere fact that
the Losses are claimed by Customer on behalf of a Customer Affiliate. In no
event, however, will ALLIANCE-ONE have to compensate Customer and/or
Customer Affiliates for more than the aggregate actual damages Customer
and/or the Customer Affiliates suffered as a result of ALLIANCE-ONE's acts
or omissions regardless of which party raised, presented and/or prosecuted
the claim.
17. FORCE MAJEURE, DISASTER RECOVERY AND BUSINESS CONTINUITY
17.1. Force Majeure Event.
(a) If and to the extent that a Party's performance of any of its
obligations under the Set of Agreements is prevented, hindered or delayed
by fire, flood, earthquake, elements of nature or acts of God, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions, pandemics or
any other similar cause beyond the reasonable control of such Party (each,
a "Force Majeure Event"), and such non-performance, hindrance or delay
could not have been prevented by reasonable precautions, then the
non-performing, hindered or delayed Party will be excused for such
non-performance, hindrance or delay, as applicable, of those obligations
affected by the Force Majeure Event for as long as such Force Majeure Event
continues and such Party continues to use all its reasonable efforts to
recommence performance whenever and to whatever extent possible without
delay, and to mitigate the impact of its non-performance, including through
the use of alternate sources (including alternate service providers),
workaround plans or other means, provided that Customer may terminate the
Set of Agreements (or the affected portion(s) thereof) upon not less than
ten (10) days written notice to ALLIANCE-ONE in the event a Force Majeure
Event preventing, hindering or delaying ALLIANCE-ONE's performance of any
of its obligations under the Set of Agreements continues for more than ten
(10) consecutive days. In case Customer making use of its termination right
under this Section, Customer will pay to ALLIANCE-ONE the Termination Fees,
if any, provided ALLIANCE-ONE can prove that the Force Majeure Event would
have had the same effect on Customer without entering into the Set of
Agreements.
(b) In particular, the following events do not qualify as Force Majeure
Events: (i) any strike other than general and\or national, lock-out or
industrial dispute; (ii) malicious damage or acts of sabotage by any of the
Personnel of the Party prevented from performance; or (iii) a failure or
inability to pay money.
(c) The failures of independent third party providers of services used by
ALLIANCE-ONE in performing the Services will not be considered Force
Majeure Events.
(d) The Party whose performance is prevented, hindered or delayed by a
Force Majeure Event will immediately notify the other Party by telephone
(to be immediately confirmed in writing after the inception of such delay)
of the occurrence of a Force Majeure Event and will describe in reasonable
detail the nature of the Force Majeure Event.
(e) The occurrence of a Force Majeure Event will not excuse, limit or
otherwise affect ALLIANCE-ONE's obligation to provide either normal
recovery procedures or any other Business Continuity Services
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described in the Set of Agreements, provided that the Force Majeure Event
does not also prevent ALLIANCE-ONE from providing such Business Continuity
Services or any alternative disaster recovery Services including through
the use of alternate sources, workaround plans or other means.
(f) No Charges will be due for the disrupted Services for the duration of
the disruption.
(g) Without limiting ALLIANCE-ONE's obligations under the Set of
Agreements, whenever a Force Majeure Event or risk event causes
ALLIANCE-ONE to allocate limited resources between or among ALLIANCE-ONE's
customers and ALLIANCE-ONE Affiliates, ALLIANCE-ONE will maintain the
resource levels and skills which are used prior to the Force Majeure Event
or risk event for the provision of the Services under the Set of
Agreements.
(h) A non-performing Party will be obligated to use commercially reasonable
efforts to continue to perform or to mitigate the impact of its
non-performance notwithstanding the Force Majeure Event.
17.2. Disaster Recovery and Business Continuity Plans. Throughout the term of
this Agreement, ALLIANCE-ONE shall maintain a Disaster Recovery and Business
Continuity Plan ("Plan" or "Business Continuity / Disaster Recovery Plan") in
compliance with Exhibit 17.2 - Business Continuity / Disaster Recovery Plan
attached hereto.
(a) ALLIANCE-ONE Disaster Recovery Plan. ALLIANCE-ONE covenants to Customer
that it has a disaster recovery plan covering the data center facilities
used by ALLIANCE-ONE to operate all of the Software Products to perform the
Services under this Agreement. ALLIANCE-ONE's disaster recovery plan shall
enable ALLIANCE-ONE to provide the Services: (i) in accordance with the
obligations in this Agreement, but not necessarily at the timeliness
standards of each and every Performance Standard set forth in Exhibit
7.4(a) - Service Levels and Service Level Credits, within seventy-two (72)
hours from the first occurrence of such disaster; and (ii) in accordance
with the obligations in this Agreement including at or above the
Performance Standards levels set forth in Exhibit 7.4(a) - Service Levels
and Service Level Credits within eight (8) days from the first occurrence
of such disaster.
(b) ALLIANCE-ONE Business Continuity Plan. ALLIANCE-ONE covenants to
Customer that it has a business continuity plan covering the data center
and administration facilities used by ALLIANCE-ONE to perform the Services
under this Agreement. ALLIANCE-ONE's business continuity plan shall enable
ALLIANCE-ONE to provide the Services if its facilities become unusable: (i)
in accordance with the obligations in this Agreement, but not necessarily
at the timeliness standards of each and every Performance Standard set
forth in Exhibit 7.4(a) - Service Levels and Service Level Credits within
one hundred twenty (120) hours from the first occurrence of such disaster;
and (ii) in accordance with the obligations in this Agreement including at
or above the Performance Standards levels set forth in Exhibit 7.4(a) -
Service Levels and Service Level Credits within thirty (30) days from the
first occurrence of such disaster (together, the "Business Continuity
Services").
(c) Customer's Right to Review Recovery and Continuity Plan. The disaster
recovery plan and the business continuity plan, or reasonable summaries
thereof to enable Customer to verify the sufficiency of such Plans, will be
made available to Customer for review upon Customer's request as set forth
in Exhibit 17.2 - Business Continuity / Disaster Recovery Plan.
ALLIANCE-ONE agrees that it will (1) test the disaster recovery plan and
the business continuity plan at least once every calendar year during the
term hereof and covenant to Customer that such Plans are fully operational,
and (2) consult with Customer regarding the priority to be given to the
Services during the pendency of any such disaster.
18. CONFIDENTIALITY
18.1. ALLIANCE-ONE Confidential Information. Customer understands that
ALLIANCE-ONE claims that the Facilities and Systems, Software Products
(including the program code, documentation, specifications, logic, and design of
the Software Products) and internal third party administration methodologies are
confidential trade
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secrets of ALLIANCE-ONE, developed at great expense. Customer agrees to treat as
confidential and keep secret all details regarding the Facilities and Systems,
Software Products and any modifications, enhancements, or corrections to same
(including the program code, documentation, specifications, logic, and design of
the Software Products), and all information about ALLIANCE-ONE's internal
affairs, business plans, and business practices (collectively, "ALLIANCE-ONE
Confidential Information"). Customer shall take precautions not less than those
employed to protect Customer's own proprietary information to maintain the
confidentiality of the ALLIANCE-ONE Confidential Information and in particular
Customer agrees that it:
(a) will disclose the ALLIANCE-ONE Confidential Information only as
follows:
(i) to employees of Customer who have a legitimate need to know, who
have been instructed to keep the ALLIANCE-ONE Confidential Information
confidential, and who have agreed to do so;
(ii) to Customer's auditors responsible for examining Customer's
affairs who have agreed in writing to keep the ALLIANCE-ONE
Confidential Information confidential and governmental authorities as
necessary;
(iii) to third parties providing products or services to Customer, but
only after Customer notifies ALLIANCE-ONE of the name and address of
such third party, and to and the third party have signed a
non-disclosure agreement ("NDA") in a form containing confidentiality
and ownership provisions substantially similar as the same are set
forth in this Agreement and appoints ALLIANCE-ONE as a third party
beneficiary under such NDA; provided, however, Customer shall not
disclose the Software Products to a third party that provides or
services computer software competitive to the same;
(iv) as expressly permitted in the Set of Agreements.
(b) shall safeguard any and all copies of the ALLIANCE-ONE Confidential
Information against any unauthorized disclosure;
(c) will not allow any copies of the ALLIANCE-ONE Confidential Information
to leave its possession and control and will supervise all access to the
ALLIANCE-ONE Confidential Information;
(d) shall not disassemble the Software Products nor tamper with, bypass or
alter its security features; and
(e) shall take all necessary steps designed to ensure that the provisions
of this Agreement are not violated by any person under its control or in
its service.
18.2. Customer Personal Information.
(a) All Personal Information (as that term is defined below) furnished by
or on behalf of Customer or its customers to ALLIANCE-ONE hereunder
concerning its customers (including, without limitation, those individuals
who may be deemed to be "customers" or "consumers" of Customer, as those
terms are defined under Public Law 106-102, titled the Xxxxx-Xxxxx-Xxxxxx
Act of 1999 and any rule promulgated thereunder, including but not limited
to Regulation S-P of the Securities and Exchange Commission (collectively,
the "Privacy Laws"), is confidential to Customer. ALLIANCE-ONE shall take
all necessary precautions as described in Exhibit 18.2 Information Security
Requirements, as contemplated by the Privacy Laws, to prevent the
unauthorized access, use or release of such Personal Information to any
third party and to prevent the use of such Personal Information for a
purpose unrelated to administration of the Contracts.
(b) "Personal Information," means information provided by or at the
direction of Customer, or to which access was provided in the course of
ALLIANCE-ONE's performance of Services under the Agreement that (i)
identifies an individual (by name, signature, address, telephone number or
other unique identifier), (ii) that
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can be used to authenticate that individual (including, without limitation,
passwords or PINs, biometric data, unique identification numbers, answers
to security questions, or other personal identifiers), (iii) arises from
individuals as "consumers' and customers'" of financial institutions and
can be described as nonpublic personal information (herein "NPI") as those
terms are defined in the Xxxxx-Xxxxx-Xxxxxx Act (15 U.S.C. ?6801, et seq.).
Such NPI may include, but is not limited to, names and addresses,
application information, medical information, account information,
including all financial data related to the Contracts whether for
individual transactions or in aggregate and social security numbers, or
(iv) is protected information under the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191). An individual's social
security number, even in isolation, is Personal Information. For purposes
of this Section, ALLIANCE-ONE includes its parent corporation Computer
Sciences Corporation, its subsidiaries and affiliates.
(c) ALLIANCE-ONE acknowledges that in the course of its engagement with
Customer, ALLIANCE-ONE may receive or have access to Personal Information.
In recognition of the foregoing, ALLIANCE-ONE agrees that:
(i) it will keep and maintain all Personal Information in strict
confidence, using such degree of care as is appropriate to avoid
unauthorized use or disclosure;
(ii) it will use and disclose Personal Information solely for the
purposes for which such information, or access to it, is provided
according to the terms of this Agreement, and will not use or disclose
such information for ALLIANCE-ONE's own purposes or for the benefit of
anyone other than Customer;
(iii) it will not, directly or indirectly, disclose Personal
Information to anyone outside ALLIANCE-ONE, except with Customer's
prior written consent as permitted under the terms of this Agreement;
and
(iv) it shall, upon the earlier of (i) completion of an engagement or
termination of this Agreement or as appropriate a Work Order
thereunder, (ii) determination that it has no need for Personal
Information, or (iii) at any time Customer requests, dispose of all
records, electronic or otherwise (including all backup records and/or
other copies thereof) regarding or including any Personal Information
that ALLIANCE-ONE may then possess or control. Disposal may be
achieved, at Customer's option, through prompt delivery of the records
to Customer or destruction pursuant to Customer's written policy
governing such destruction and in a manner that renders the records
unreadable and undecipherable by any means. Upon any occurrence of
(i), (ii), or (iii) above, ALLIANCE-ONE shall promptly certify in
writing to Customer that all such Personal Information has been
destroyed or returned.
(d) ALLIANCE-ONE shall be permitted to disclose Personal Information only
to its employees and permitted subcontractors (individually an "Employee"
and collectively, "Employees") having a need to know such information in
connection with the performance of the Services. ALLIANCE-ONE shall
instruct all Employees as to their obligations under this Section.
ALLIANCE-ONE shall be responsible for all Employees' compliance with the
terms of this Agreement. If ALLIANCE-ONE is required by Applicable Law to
disclose Personal Information, ALLIANCE-ONE shall promptly notify Customer
in writing in advance of such disclosure, and provide Customer with copies
of any related information so that Customer may take appropriate action to
protect the Personal Information. This notification is not applicable to
disclosures made in the ordinary course of business to state and federal
regulatory authorities that regulate the activities of Customer.
(e) ALLIANCE-ONE acknowledges that the disclosure of Personal Information
may cause irreparable injury to Customer and damages, which may be
difficult to ascertain. Therefore, Customer shall, upon a disclosure or
threatened disclosure of any Personal Information, be entitled to
injunctive relief, and
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ALLIANCE-ONE shall not object to the entry of an injunction or other
equitable relief against ALLIANCE-ONE on the basis of an adequate remedy at
Applicable Law, lack of irreparable harm or any other reason.
(f) Customer and ALLIANCE-ONE agree to mutually work together to place any
reasonable privacy and/or security policies, rules and practices, as
Customer desires into the Customer's Admin Guidelines, subject to the
Change Management Procedures.
(g) ALLIANCE-ONE shall notify Customer, promptly and without unreasonable
delay, but in no event more than two (2) Business Days of learning that
unauthorized access to, disclosure of, or breach in the security of
Personal Information may have occurred or been attempted (a "Security
Incident"). Thereafter, ALLIANCE-ONE shall:
(i) promptly furnish to Customer full details of the Security
Incident;
(ii) assist and cooperate fully with Customer in ALLIANCE-ONE's
investigation of ALLIANCE-ONE, Employees or third parties related to
the Security Incident, including but not limited to providing Customer
with physical access to the facilities and operations affected,
facilitating interviews with Employees and others involved in the
matter, and making available all relevant records, logs, files, and
data;
(iii) cooperate with Customer in any litigation or other formal action
against third parties deemed necessary by Customer to protect its
rights; and,
(iv) promptly use its best efforts to prevent a recurrence of any such
Security Incident.
(v) In addition to the foregoing, ALLIANCE-ONE agrees that in the
event of a Security Incident, Customer shall have the sole right to
determine (i) whether notice is to be provided to any individuals,
regulators, law enforcement agencies, consumer reporting agencies, or
others as required by Applicable Law or regulation; and (ii) the
contents of such notice, whether any type of remediation may be
offered to affected persons, and the nature and extent of any such
remediation.
(h) ALLIANCE-ONE certifies that to the best of its knowledge its treatment
of Personal Information is in compliance with Applicable Law with respect
to privacy and data security and that it has implemented and currently
maintains an effective information security program that includes
administrative, technical, and physical safeguards to (a) ensure the
security and confidentiality of Personal Information; (b) protect against
any anticipated threats or hazards to the security or integrity of such
Personal Information; and (c) protect against unauthorized access to,
destruction, modification, disclosure or use of Personal Information that
could result in substantial harm or inconvenience to Customer, or to any
person who may be identified by such Personal Information. ALLIANCE-ONE
shall immediately notify Customer if ALLIANCE-ONE is in material breach of
this Section.
(i) Customer at any time has the right, in any reasonable manner and with
ALLIANCE-ONE's full co-operation, to review and audit ALLIANCE-ONE's (and
any Subcontractor's) compliance with this Section or to have such audit
performed by a qualified third party. The costs will be borne by Customer,
provided that no significant non-compliance is revealed in which case
ALLIANCE-ONE will bear the costs.
18.3. Customer Confidential Information.
(a) "Customer Confidential Information" will mean all information and
documentation of Customer, whether disclosed to or accessed by ALLIANCE-ONE
in connection with the preparation and the performance of the Set of
Agreements, including all data and all information provided by or through
Customer or its Affiliates and other contractors (or by or through
ALLIANCE-ONE or its Affiliates and Subcontractors) relating to (but
excluding any Customer Personal Information as defined in Section 18.2
above):
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(i) their customers;
(ii) their respective employees, suppliers, contractors and other
third parties doing business with them;
(iii) the terms and conditions of the Set of Agreements;
(iv) any information relating to business plans, sales or marketing
methods and customer lists or requirements;
(v) all trade secrets and/or existing or contemplated products,
business processes, services, designs, technology, processes,
technical data, engineering, techniques, methodologies and concepts
and any information related thereto;
(vi) any information developed by reference to or use of any of the
foregoing information;
(vii) any information which, under the circumstances taken as a whole,
would reasonably be deemed to be confidential;
(viii) any information that Alliance-One has agreed to keep
confidential; and
(ix) all data and information in connection with or which are
expressly termed as confidential in the Set of Agreements.
(b) In addition to performance of its obligations elsewhere in this
Alliance-One will:
(i) keep Customer Confidential Information confidential;
(ii) exclusively use the Customer Confidential Information for the
purpose for which it was disclosed or otherwise for the benefit of
Customer; and
(iii) only distribute or grant access to the Confidential Information
to its employees, Affiliates' employees and Subcontractors who
reasonably require the Confidential Information in order to perform
Alliance-One's obligations under the Set of Agreements.
(c) If requested by Customer, ALLIANCE-ONE and each of its employees and
Subcontractors will enter into and execute any additional documents or
agreements dealing with security, confidentiality, data protection or
investment dealing as required from case to case.
18.4. Customer Content and Software. ALLIANCE-ONE shall take reasonable
precautions to prevent the unauthorized release of Customer Content and Customer
Software to any third party and to prevent the use of such for a purpose
unrelated to administration of the Contracts. ALLIANCE-ONE shall keep and
maintain all Customer Content in confidence, using such degree of care as is
appropriate to avoid unauthorized use or disclosure, but in no event less than a
reasonable degree of care.
18.5. Customer Software. Customer shall provide ALLIANCE-ONE with the right to
use Customer Software required for ALLIANCE-ONE to provide the Services
hereunder. Customer agrees that if such Customer Software is the property of a
third party, it is Customer's responsibility to obtain such third party's
authorization for ALLIANCE-ONE's use of such Customer Software for purposes of
providing Services to Customer, its subsidiaries and Affiliates. At Customer's
expense, ALLIANCE-ONE shall cooperate with Customer to obtain the consents of
the licensor of such Customer Software, including, without limitation, entering
reasonable confidentiality agreements as may be required by such licensors.
Except as may be agreed in writing, ALLIANCE-ONE shall not be responsible for
Customer Software performance and general application functions.
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18.6. Exceptions. The confidentiality obligations herein shall not include
information that:
(a) is or becomes publicly available in the insurance and data processing
industry through no act or omission of the receiving Party;
(b) was in the receiving Party's lawful possession prior to the disclosure
and had not been obtained by such Party either directly or indirectly from
the disclosing Party;
(c) is lawfully disclosed to the receiving Party by a third party without
restriction on disclosure;
(d) is furnished by the disclosing Party to a third party in the insurance
and data processing industry without restrictions on disclosure; or,
(e) is independently developed by the receiving Party.
18.7. Privacy Laws and Copyright Notices. ALLIANCE-ONE and Customer acknowledge
that the above exceptions in Section 18.6 (Exceptions) shall not apply to
information governed by the Privacy Laws. The existence of a copyright notice
will not cause, or be construed as causing, any part of the Software Products to
be a published copyrighted work or to be in the public domain.
19. PROPRIETARY RIGHTS
19.1. Customer Proprietary Materials.
(a) All Customer Proprietary Materials, all Derivative Works thereof and
all Intellectual Property Rights with respect to the foregoing and those
policies, processes, work flows, and any interpretation of law unique to
Customer that is designated as such a unique interpretation in writing (or
via email) by Customer and acknowledged in writing by ALLIANCE-ONE as the
same, shall be, as between Customer and ALLIANCE-ONE, the exclusive
property of Customer. Notwithstanding anything to the contrary in this
Section, Customer Proprietary Materials will not include any ALLIANCE-ONE
Proprietary Materials.
(b) All Contract Holder Data shall, as between Customer and ALLIANCE-ONE,
be deemed to be Customer Proprietary Materials.
(c) Subject to Section 19.3(c) below, to the extent ALLIANCE-ONE creates
modifications to or Derivative Works from any ALLIANCE-ONE Software which
include any of Customer Proprietary Materials, Customer shall nevertheless
retain all Intellectual Property Rights in such Customer Proprietary
Materials as disclosed by Customer or as otherwise made available by
Customer to ALLIANCE-ONE and ALLIANCE-ONE shall have no claim to any
Intellectual Property Rights in such Customer Proprietary Materials, except
as stated in Section 19.3(c) below.
(d) Customer grants to ALLIANCE-ONE to the extent necessary for the
provision of the Services, during the Term and the Termination Assistance
Period, a non-exclusive, non-transferable and limited right to use and to
permit Subcontractors to use, access, copy, maintain, modify, enhance and
create Derivative Works of Customer Proprietary Materials, in each case
solely for the purpose and in connection with and solely to the extent
necessary for ALLIANCE-ONE's provision of the Services, Customer
Proprietary Materials.
(e) ALLIANCE-ONE may not use Customer Proprietary Materials for any other
purpose, and may not sublicense any rights with respect to Customer
Proprietary Materials. Customer reserves all rights in Customer Proprietary
Materials not expressly granted in the Set of Agreements.
(f) Upon expiration or termination in whole or in part for any reason of
the Set of Agreements or relevant parts thereof, to the extent ALLIANCE-ONE
no longer needs Customer Proprietary Materials to perform
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the remaining Services, the respective licenses granted by Customer to
ALLIANCE-ONE will immediately terminate and revert to Customer and
ALLIANCE-ONE will:
(i) deliver to Customer, at no cost to Customer, a current copy of all
such Customer Proprietary Materials in the form(s) in use as of the
date of such expiration or termination; and
(ii) irremediably destroy or erase (using a file erasure program that
renders previously stored data irretrievable) all other copies of such
Customer Proprietary Materials in the possession or control of
ALLIANCE-ONE or Subcontractors upon Customer's written confirmation
that Customer has received such current copy.
(g) ALLIANCE-ONE will certify to Customer in writing that it has returned
and/or destroyed/erased all such Customer Proprietary Materials.
(h) For the avoidance of doubt, nothing in this Section shall restrict
ALLIANCE-ONE or its Affiliates from using any data processing techniques,
business and policy administration policies, practices, procedures,
processes, techniques and work flows and ideas and know-how contained or
reflected in the foregoing which: (i) are in the general public domain
other than as a result of a public disclosure by ALLIANCE-ONE or its
Affiliates; (ii) were demonstrably known to ALLIANCE-ONE or its Affiliates
previously, without a duty of confidentiality of any nature to Customer;
(iii) are independently developed by ALLIANCE-ONE or its Affiliates or any
of its or their officers, directors, employees, agents, or other
representatives without use of or access to Customer Proprietary Materials;
or (iv) are rightfully obtained by ALLIANCE-ONE or its Affiliates from one
or more third parties without, to the knowledge of ALLIANCE-ONE or its
Affiliates, breach by such third party of a duty of confidentiality of any
nature to Customer or its Affiliates.
19.2. Customer Designated Third Party Proprietary Materials.
(a) All Customer Designated Third Party Proprietary Materials shall be the
property of such third party and governed by the applicable third party
license agreement(s).
(b) Customer grants to ALLIANCE-ONE to the extent necessary for the
provision of the Services, during the Term and the Termination Assistance
Period, a non-exclusive, non-transferable and limited right to use and
permit Subcontractors to use, in each case solely for the purpose and in
connection with and solely to the extent necessary for ALLIANCE-ONE's
provision of the Services, Customer Designated Third Party Proprietary
Materials subject to the extent Customer obtains any required consents or
permissible under the applicable third party agreements.
(c) In the event a restriction prevents the use of any Customer Designated
Third Party Proprietary Materials for the Services to be performed by
ALLIANCE-ONE, Customer may, at its expense, but will not be required to
obtain any required consents or propose a workaround or provide an
alternative.
(d) ALLIANCE-ONE will co-operate with Customer, at Customer expense, in
obtaining required consents or in implementing such workaround or
alternative. ALLIANCE-ONE shall comply (and will procure that its
subcontractors will comply) with the terms of the applicable license or
other agreement concerning the use of the Customer Designated Third Party
Proprietary Materials.
(e) Customer hereby reserves all rights it may have in Customer
Designated Third Party Proprietary Materials not expressly granted to
ALLIANCE-ONE.
(f) Upon expiration or termination in whole or in part for any reason of
the Set of Agreements or relevant parts thereof, to the extent ALLIANCE-ONE
no longer needs Customer Designated Third Party Proprietary Materials to
perform the remaining Services, the respective rights granted to
ALLIANCE-ONE will immediately terminate and to the extent legally permitted
ALLIANCE-ONE will:
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(i) deliver to Customer, at no cost to Customer, a current copy of all
such Customer Designated Third Party Proprietary Materials in the
form(s) in use by ALLIANCE-ONE as of the date of such expiration or
termination;
(ii) irremediably destroy or erase (using a file erasure program that
renders previously stored data irretrievable) all other copies of such
Customer Designated Third Party Proprietary Materials in the
possession or control of ALLIANCE-ONE or Subcontractors upon
Customer's confirmation that Customer has received such current copy;
and
(iii) certify to Customer in writing that it has returned and/or
destroyed/erased all such Customer Designated Third Party Proprietary
Materials.
19.3. ALLIANCE-ONE Proprietary Materials.
(a) All ALLIANCE-ONE Proprietary Materials, all Derivative Works thereof
and Intellectual Property Rights with respect to the foregoing, shall be,
as between Customer and ALLIANCE-ONE, the exclusive property of
ALLIANCE-ONE. Notwithstanding anything to the contrary in this Section,
ALLIANCE-ONE Proprietary Materials will not include any Customer
Proprietary Materials.
(b) Where required to secure ALLIANCE-ONE's ownership in any Derivative
Works of ALLIANCE-ONE Proprietary Materials or the Intellectual Property
Rights therein or in the event that Applicable Law, any court,
administrative agency or any other adjudicative body will determine that
all or parts of the Derivative Works or any of the Intellectual Property
Rights therein requires a legal transfer or assignment, then Customer
hereby assigns and transfers to supplier at no additional cost and without
limitation all of its rights to (including title and interests) in such
Derivative Works or any Intellectual Property Rights therein upon their
creation. Customer will, where required, undertake any further
confirmations and provide any assistance for the formal assignment of all
rights to ALLIANCE-ONE.
(c) Subject to Section 19.1(a) above, to the extent any modifications or
Derivative Works are created from any ALLIANCE-ONE Software (regardless if
created by Customer, Customer Affiliate, ALLIANCE-ONE or any third party)
which include any of Customer's processing techniques, business and policy
administration policies, practices, procedures, processes, techniques, or
work flows or any Customer Standards and Procedures, ALLIANCE-ONE
Proprietary Materials shall include the embodiment of such techniques,
business and policy administration policies, practices, procedures,
processes, techniques, or work flows or any Customer Standards and
Procedures in ALLIANCE-ONE Software, subject to restrictions declared via
Section 19.5 (Competitive Developments) below relating to competitive
developments, and Customer shall have no claim to the ALLIANCE-ONE Software
modifications or Derivative Works, but Customer shall nevertheless retain
all Intellectual Property Rights in Customer's processing techniques,
business and policy administration policies, practices, procedures,
processes, techniques, work flows and Customer Standards and Procedures as
disclosed by Customer or as otherwise made available by Customer to
ALLIANCE-ONE.
(d) For the avoidance of doubt, nothing in this Section shall restrict
Customer or its Affiliates from using any data processing techniques,
business and policy administration policies, practices, procedures,
processes, techniques and work flows and ideas and know-how contained or
reflected in the foregoing which: (i) are in the general public domain
other than as a result of a public disclosure by Customer or its
Affiliates; (ii) were demonstrably known to Customer or its Affiliates
previously, without a duty of confidentiality of any nature to ALLIANCE-ONE
or its Affiliates; (iii) are independently developed by Customer or its
Affiliates or any of its or their officers, directors, employees, agents,
or other representatives without use of or access to ALLIANCE-ONE
Proprietary Materials; or (iv) are rightfully obtained by Customer or its
Affiliates from one or more third parties without, to the knowledge of
Customer or its Affiliates, breach by such third party of a duty of
confidentiality of any nature to ALLIANCE-ONE or its Affiliates.
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19.4. ALLIANCE-ONE Proprietary Materials Created During the Term of the Set of
Agreements and the Termination Assistance Period. To the extent ALLIANCE-ONE
Proprietary Materials used for the provision of the Services (including Tools)
individually, including modifications and enhancements to ALLIANCE-ONE
Proprietary Materials made for Customer during the Term of the Set of Agreements
or the Termination Assistance Period are necessary for Customer to receive the
Services, ALLIANCE-ONE grants to Customer during the Term and the Termination
Assistance Period, a non-exclusive, non-transferable and limited right to use
and to permit its contractors to use, access, copy, maintain, and create
Derivative Works of the record layout formats or data input structure or data
call codes to the ALLIANCE-ONE Proprietary Materials necessary to create
automated interfaces between ALLIANCE-ONE Proprietary Materials and Customer
Proprietary Materials, in each case solely for the purpose and in connection
with and solely to the extent necessary for Customer to receive the Services
(the "Data Interface Formats"). The license granted in this Section permits:
(i) Customer's agents and representatives to use, access, copy,
maintain, and create Derivative Works of Data Interface Formats;
(ii) any other independent provider of technical support services to
use, access, copy, maintain, and create Derivative Works of Data
Interface Formats; and
(iii) to sublicense third parties to do any of the foregoing,
in each case only during the Term and Termination Assistance Period and
solely for the purpose and in connection with and solely to the extent
necessary for Customer to receive the Services. Customer acknowledges that
the use of the Data Interface Formats and all resulting Derivative Works
thereof shall be governed by the terms and conditions of the Set of
Agreements. For the avoidance of doubt, any such Derivative Works shall be
ALLIANCE-ONE Proprietary Material and all Intellectual Property rights to
all such Derivative Works shall vest in ALLIANCE-ONE.
19.5. Competitive Developments. Notwithstanding the above, from time to time
Customer may request ALLIANCE-ONE, at Customer's expense, to assist Customer in
developing ALLIANCE-ONE Proprietary Materials which may contain protectable
Intellectual Property Rights which Customer states would give Customer a
competitive advantage. For such developments specifically identified by the
Parties as being a competitive development subject to this Section in accordance
with the Change Management Procedures ("Competitive Developments"), if
ALLIANCE-ONE develops such Competitive Developments, the rights and obligations
of the Parties shall be as specified in such writing executed in accordance with
the Change Management Procedures. ALLIANCE-ONE acknowledges that such
obligations may include ALLIANCE-ONE's covenant not to make available to any
competitor of Customer such Competitive Development for a period of time, but
that such covenant will not preclude ALLIANCE-ONE from independently developing
similar functionality for any person, including a competitor of Customer.
19.6. Deliverables.
(a) Any proprietary rights, in particular Intellectual Property Rights, in
connection with and related to:
(i) any enhancements or modifications to the Customer Materials
delivered to Customer by ALLIANCE-ONE;
(ii) any other newly developed Materials to the extent not
modifications to or Derivative Works of ALLIANCE-ONE Proprietary
Materials made by ALLIANCE-ONE for Customer in performing the Services
and/or jointly developed by Customer and ALLIANCE-ONE in relation to
the Set of Agreements; and
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(iii) any related documentation,
will as between the Parties hereby vest initially with and be exclusively
owned by Customer or as directed by Customer, its third party licensors and
consequently the terms set out under Section 19.1 (Customer Proprietary
Materials).
(b) Where required to secure Customer ownership in any Derivative Work of
Customer Proprietary Materials above or the Intellectual Property Rights
therein or in the event that Applicable Law, any court, administrative
agency or any other adjudicative body will determine that all or parts of
the above or any of the Intellectual Property Rights therein requires a
legal transfer or assignment, then ALLIANCE-ONE hereby assigns and
transfers to Customer at no additional cost and without limitation all of
its rights to (including title and interests) in such deliverables or any
Intellectual Property Rights therein upon their creation. ALLIANCE-ONE
will, where required, undertake any further confirmations and provide any
assistance for the formal assignment of all rights to Customer.
ALLIANCE-ONE will include a respective Customer copyright statement in all
deliverables described above, in particular in any source code and
documentation, once such copyright statement has been provided by Customer
to ALLIANCE-ONE.
(c) For the duration of the Term and the Termination Assistance Period, and
to the extent required for performing the Services, Customer hereby grants
ALLIANCE-ONE a non-exclusive worldwide, royalty free license to use and
modify the deliverables described above, including the right to sublicense
to third parties to do the same on the terms and conditions stated in
Section 19.1 (Customer Proprietary Materials) above.
(d) Upon Customer's written request, ALLIANCE-ONE will deliver to Customer,
at no cost to Customer, a current copy of all such described above in the
form(s) in use by ALLIANCE-ONE in connection with the Services as of the
date of such delivery.
(e) For any deliverable described above which is Software, ALLIANCE-ONE
will promptly as it is developed by ALLIANCE-ONE, provide Customer with the
source code of the Software. Such source code includes the program source
code, a detailed description of the system level and user level
documentation that would enable experienced programmers to modify, compile
and maintain such Software and documentation for the Software.
(f) ALLIANCE-ONE will not incorporate third party Materials, including but
not limited to free or open source software into any of the deliverables
described above without the advance written consent of Customer, or
expressly identified as such in Customer approved functional
specifications.
(g) The deliverables will comply with the applicable documentation and
specifications, will provide the functions and features and operate in a
manner consistent with the documentation and in accordance with the
applicable change request authorization, Work Order, or as otherwise agreed
to by the Parties. This warranty will apply for a period to be agreed upon
by the Parties in the associated Work Order.
(h) Upon expiration or termination in whole or in part of the Set of
Agreements or relevant parts thereof and at the end of any Termination
Assistance Period, ALLIANCE-ONE will:
(i) deliver to Customer, at no cost to Customer, a current copy of all
such deliverables described above (including a copy of any associated
documentation that would enable experienced operations staff to
modify, compile and maintain the Services documented in any such
deliverables) in the form in use by ALLIANCE-ONE in connection with
the Services as of the date of such expiration or termination; and
(ii) irremediably destroy or erase (using a file erasure program that
renders previously stored data irretrievable) all other copies of the
deliverables described above in the possession or control of
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ALLIANCE-ONE upon Customer's confirmation that Customer has received
such current copy. Upon Customer's request ALLIANCE-ONE will offer to
Customer to enter into a maintenance agreement, the maintenance being
limited to corrective maintenance, and support agreement under terms
and conditions to be negotiated by the Parties.
19.7. Changes to Materials.
(a) Except as specified in a Work Order or as may be otherwise approved in
writing by Customer, ALLIANCE-ONE will not make any changes or
modifications to:
(i) Customer Proprietary Materials;
(ii) Customer Designated Third Party Proprietary Materials, or
(iii) any deliverables that would negatively alter the functionality
of or degrade the performance of (i) (ii) or (iii) above, or have a
materially negative affect on the Services or the day-to-day
operations of the business of Customer.
(b) ALLIANCE-ONE will be responsible, at no charge to Customer, for any
modification or enhancement to, or substitution for, Customer Proprietary
Materials or Customer Designated Third Party Proprietary Materials or any
other hardware or Software for the provision and/or receipt of the Services
necessitated by:
(i) unauthorized changes made by ALLIANCE-ONE to Customer Proprietary
Materials or Customer Designated Third Party Proprietary Materials,
that result in a materially negative affect to Customer Proprietary
Materials or Customer Designated Third Party; or
(ii) changes to any ALLIANCE-ONE Proprietary Materials or ALLIANCE-ONE
Designated Third Party Proprietary Materials or related operating
environments that result in a materially negative affect to the
Services or Customer's day-to-day operations related to the Services,
it being understood that ALLIANCE-ONE may, in its sole discretion,
either modify the Materials or reverse the changes and return to the
version prior to such changes being made.
19.8. No use of Trademarks. Except as otherwise agreed, neither Party will be
entitled to use in the course of trade or otherwise any registered or
unregistered trademark, service xxxx, company or trade name, logo or
abbreviation of the name of the other Party or its Affiliates.
19.9. Admin Guidelines. For the avoidance of doubt, Customer will have a
continuing right to use the Admin Guidelines (including a license to
ALLIANCE-ONE Proprietary Materials to the extent imbedded in the Admin
Guidelines) in its business, including sharing the Admin Guidelines with one or
more replacement providers, subject to such replacement provider being obligated
to limit the use of any ALLIANCE-ONE Proprietary Materials imbedded in the Admin
Guidelines solely for the purpose of assisting Customer and to treat same as
confidential and proprietary information of ALLIANCE-ONE. Notwithstanding the
foregoing, Customer shall not disclose to any competitor of ALLIANCE-ONE any
portions of the Admin Guidelines containing screen shots or detailed
descriptions of ALLIANCE-ONE Software.
20. SERVICE LOCATIONS
20.1. Service Locations/Approval for Relocation.
(a) Customer facilities and ALLIANCE-ONE facilities to or from which the
Administration Services are provided (the "Service Locations") are set out
in the Set of Agreements. See Exhibit 20.1(a) with respect to ALLIANCE-ONE
Service Locations.
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(b) Should Customer request additional or change Customer Service Locations
such request will be dealt with according to the Change Management
Procedures. ALLIANCE-ONE will apply the same resource management and
program management functions for the new Customer Service Locations as
described in the Set of Agreements, without disruption to the ongoing
service delivery.
(c) ALLIANCE-ONE will bear all costs associated with operating the
ALLIANCE-ONE Service Locations.
(d) ALLIANCE-ONE will obtain in accordance with the Change Management
Procedures the written approval from Customer prior to the commencement of
the provision of the Services from any Service Location other than those
set out in the Set of Agreements. Approval will not be unreasonably
withheld. Customer may refuse to approve a relocation, in particular, if
such relocation adds demonstrable risks for Customer, or endangers
compliance with Applicable Law, or if it is questionable in Customer's
opinion whether ALLIANCE-ONE would be able to meet any of the agreed
Service Levels after such relocation.
(e) Any incremental expense and tax consequences incurred by Customer as a
result of a change of ALLIANCE-ONE Service Location or the use of any
location other than the ALLIANCE-ONE Service Locations set out in the Set
of Agreements will, at Customer's sole discretion, be paid by ALLIANCE-ONE
or reimbursed to Customer by ALLIANCE-ONE.
(f) For Customer owned or leased premises (or parts thereof) which Customer
makes available to ALLIANCE-ONE to use as ALLIANCE-ONE Service Locations
("ALLIANCE-ONE Special Service Locations"), the provision of this Section,
Section 20.2 (Conduct at Customer's Service Locations), and Section 21.3
(Security) will apply.
(g) Customer is under no obligation to provide the use of Customer owned or
leased premises to ALLIANCE-ONE and will do so at Customer's discretion as
set out in Section 20.2 (Conduct at Customer's Service Locations).
20.2. Conduct at Customer's Service Locations.
(a) If applicable, unless otherwise agreed by the Parties, ALLIANCE-ONE may
use space in Customer's facilities as may be approved and designated from
time to time by Customer for the sole and exclusive purpose of providing
the Services. ALLIANCE-ONE acknowledges and agrees that the use of such
facilities by ALLIANCE-ONE or its Subcontractors will not be exclusive and
does not constitute a leasehold interest in favor of ALLIANCE-ONE, of
employees, of its Subcontractors or any of ALLIANCE-ONE's customers or
other persons connected with the ALLIANCE-ONE.
(b) The use of Customer facilities provided in Section 20.2(a) above, is
subject to the following conditions:
(i) ALLIANCE-ONE and its Subcontractors will use the designated space
in Customer's facilities in a reasonably efficient manner and for such
purposes as previously approved in writing by Customer. In no event
will the ALLIANCE-ONE operate the space in a manner that increases
Customer's costs for the Customer facilities unless otherwise approved
in writing by Customer. ALLIANCE-ONE acknowledges that where such
approval is given and ALLIANCE-ONE or its Subcontractors operate the
space in a manner that increases Customer's facilities costs, Customer
reserves the right to set-off the excess costs of such practices;
(ii) ALLIANCE-ONE and its Subcontractors will keep Customer's
facilities in good order, not commit or permit waste or damage to such
facilities, not use such facilities for any unlawful purpose, or to
cause without limitation any insurance policy to be void or increase
the cost of any insurance
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premiums, not bring on the facilities any offensive or toxic
substances, or act against and comply with all of Customer Standards
and Procedures which Customer may have or may put into effect from
time to time, including procedures for the physical security of
Customer's facilities;
(iii) ALLIANCE-ONE acknowledges that Customer and its representatives
are entitled to enter into those parts of the Customer facilities
designated for use by ALLIANCE-ONE Personnel and Subcontractors at any
time and for any reason;
(iv) ALLIANCE-ONE and its Subcontractors will not make any
improvements or changes whatsoever to the facilities or its mechanical
or electrical alterations without Customer's written approval. In the
event that any improvements are made to Customer's facilities, whether
owned or leased, these will become the property of Customer or its
lessors;
(v) ALLIANCE-ONE acknowledges that the space designated for use by
ALLIANCE-ONE and any associated access ways may be relocated or
reorganized at any time at Customer's sole and absolute discretion;
and
(vi) ALLIANCE-ONE and its Subcontractors remain in compliance at all
times with Customer Standards and Procedures.
(vii) ALLIANCE-ONE not knowingly or negligently causing any insurance
policy entered into by Customer or any Affiliate for the premises or
space to be void or breached nor knowingly or negligently increase the
cost of any associated insurance premiums; and
(viii) ALLIANCE-ONE not knowingly or negligently causing any lease,
license or other agreement entered into by Customer or any Customer
Affiliate for the occupancy or use of the premises or space to be void
or breached`
(c) While at Customer's facilities, ALLIANCE-ONE Personnel and
Subcontractors will:
(i) comply with the requests, standard rules and regulations of
Customer communicated to ALLIANCE-ONE regarding personal and
professional conduct (including the wearing of a particular uniform,
identification badge, or personal protective equipment and adhering to
the regulations and safety practices, policies and procedures of
Customer) applicable to such facility; and
(ii) otherwise conduct themselves in a businesslike manner and in
accordance with good professional practice it being understood that
Customer may immediately remove from its facilities any ALLIANCE-ONE
Personnel or Subcontractor who does not comply with those rules and
conduct itself in a businesslike manner.
(d) When Customer's facilities are no longer required for the performance
of the Services, ALLIANCE-ONE will return such facilities to Customer in
substantially the same condition as when ALLIANCE-ONE began using such
facilities, ordinary wear and tear excepted.
21. SECURITY
21.1. SSAE 16 Report. Customer may be subject to certain Applicable Laws that
require management to assess the effectiveness of its internal controls over
financial reporting and state or certify to in its annual report whether such
internal controls are effective. Because Customer has outsourced certain
functions to ALLIANCE-ONE, as described in this Agreement, certain procedures
performed by ALLIANCE-ONE may be relevant to Customer's evaluation of its
internal controls. Having acknowledged the foregoing and when applicable,
ALLIANCE-ONE agrees to cooperate with Customer as reasonably necessary to
facilitate Customer's ability to comply with any such regulatory obligations. In
furtherance of this, ALLIANCE-ONE shall provide annually to Customer an
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SSAE 16/SOC1 Type 2 report ("SSAE 16 Report") conducted by one of the American
Institute of Certified Public Accountants member firms. Such SSAE 16 Report
shall reasonably cover ALLIANCE-ONE's controls and procedures at each facility
at which the Services for Customer are being performed under this Agreement, to
enable Customer to comply with Applicable Laws relating to security, disclosure
controls and procedures and similar subjects, including but not limited to, the
Xxxxxxxx-Xxxxx Act of 2002, the rules of the Public Company Accounting Oversight
Board, and the rules of the Securities and Exchange Commission. If Customer
desires additional audit controls and procedures other than found in
ALLIANCE-ONE's standard SSAE 16 Report, the Parties shall mutually agree, at
Customer's expense, to add to the scope of ALLIANCE-ONE's standard SSAE 16
Report.
22. MISCELLANEOUS
22.1. Confidentiality of Terms. Both Parties promise not to disclose the price
and payment terms and conditions of this Agreement to any third party, except:
(a) to a Party's auditors, accountants, tax advisors, attorneys, and insurance
advisors, to the extent necessary when required in the normal conduct of such
Party's business and provided such professionals are obligated in writing not to
otherwise use or disclose this Agreement; (b) for governmental reporting and
auditing requirements; (c) as required by Applicable Law; or (d) as agreed to in
writing by the other Party.
22.2. Transfer. The Customer may not assign or sublicense or otherwise transfer
voluntarily, or by operation of Applicable Law, any rights or obligations under
this Agreement to a non-Affiliate without ALLIANCE-ONE's prior written consent,
which consent shall not be unreasonably withheld. With respect to an AFFILIATE,
Customer may assign or sublicense or otherwise transfer voluntarily, or by
operation of Applicable Law, any rights or obligations under this Agreement with
sixty (60) days prior written notice to ALLIANCE-ONE. ALLIANCE-ONE may not
assign this Agreement without Customer's consent (except to Affiliates of
ALLIANCE-ONE), which consent shall not be unreasonably withheld. This Agreement
shall inure to the benefit of and be binding upon the Parties hereto and their
respective successors and permitted assigns.
22.3. Independent Contractor. Nothing in this Agreement will be construed as
creating the relationship of employer and employee, partners or joint venturers
between ALLIANCE-ONE and Customer, or between any of the Parties employees or
representatives. Neither Party shall represent that it is (or that any of its
employees are) an employee, partner or joint venturer with the other Party. It
is the express intent of the Parties that ALLIANCE-ONE is not an employee,
partner or joint venturer of the Customer for any purpose and that all services
performed hereunder by ALLIANCE-ONE shall be as an "independent contractor" as
that term is defined by Applicable Law, and that ALLIANCE-ONE shall be free to
exercise independent judgment as to the time, place and manner of performing its
duties as to all of the ministerial, non-discretionary Services under this
Agreement.
22.4. Entire Agreement. This Agreement (including Exhibits and Work Orders
hereunder and written amendments hereto) constitutes the entire agreement
between the Parties hereto and supersedes any prior agreement (including those
provisions of the Interim Agreement as related to all Project Start-Up
Activities) with respect to the subject matter hereof, whether oral or written,
and this Agreement may not be modified except in a written instrument executed
by duly authorized representatives of both of the Parties hereto.
22.5. Waivers. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, in writing, at any time by the Party
or Parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for purposes of this Agreement if, as to any Party, it
is authorized in writing by an authorized representative of such Party. The
failure of any Party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any Party thereafter to enforce each and every provision. No such waiver of any
breach of this Agreement shall be held to constitute a waiver of any preceding
or subsequent breach.
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22.6. Notice, Service of Process and Regulatory Notices. All notices and other
communications required or permitted to be given under this Agreement shall be
in writing and will be deemed to have been duly given on the date delivered by
hand, by overnight courier service or by messenger, or upon delivery by
registered or certified mail (return receipt requested) postage prepaid, to any
Party at the following addresses, or to such other address as a Party to receive
the notice or request so designates by written notice to the other:
If to ALLIANCE-ONE-
Computer Sciences Corporation
Attention: General Counsel
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
With a copy to-
Alliance-One Services, Inc.
Attn: President
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
If to Customer-
Lincoln Benefit Life Company
Attn: General Counsel
0000 X. Xxxxx Xx.
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
With a copy to-
Lincoln Benefit Life Company
Chief Transformation Officer
0000 X. Xxxxx Xx.
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
In the event any legal process or notice is served on a Party to this Agreement
in a suit or proceeding against any of the other Parties, the Party served shall
promptly forward such process or notice on to the appropriate other Party at the
address specified above. In the event any regulatory notices or correspondence
pertaining to this Agreement is received by a Party, the Party receiving same
shall promptly forward a copy to the other Parties at the address specified
above.
22.7. Governing Law. The laws of the State of New York govern this Agreement,
without regard to its principles governing the conflicts of laws. Because the
Parties agree that this contract is not a contract for the sale of goods, this
Agreement shall not be governed by any codification of Article 2, 2A, or 2B of
the Uniform Commercial Code or any reference to the United Nations Convention on
Contracts for the International Sale of Goods. Customer agrees that the Software
Products are protected under the copyright laws of the United States and of the
Berne Convention.
22.8. Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM,
COUNTERCLAIM, THIRD-PERSON CLAIM OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION.
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22.9. Counterparts. The signatures of the Parties need not appear on the same
copy of this Agreement, so long as each Party signs at least one copy of this
Agreement and the copies contain the same terms. The Parties may execute this
Agreement in any number of duplicate originals and in multiple counterparts,
each of which constitutes an original, and all of which, collectively,
constitute only one agreement. Executed counterparts may be delivered
electronically by facsimile or computer transmission, and electronic
counterparts shall be deemed to be original copies of this Agreement (but, for
clarity, electronic signature stamps shall not be permitted). This Agreement is
effective upon delivery of one executed counterpart from each Party to the other
Party.
22.10. Construction. The headings used herein are inserted only as a matter of
convenience and for reference and shall not affect the construction or
interpretation of this Agreement. Where context so indicates, a word in the
singular form shall include the plural, a word in the masculine form the
feminine, and vice-versa. The word "including" and similar constructions (such
as "for example", "such as", and "e.g.") shall mean "including, without
limitation," throughout this Agreement. The Parties agree that the terms and
conditions of this Agreement are the result of negotiations between the Parties
and that this Agreement shall not be construed in favor of or against any Party
by reason of the extent to which the Party or its professional advisors
participated in the preparation of this Agreement.
22.11. Severability. If any provision of this Agreement is held to be
unenforceable, all other provisions will nevertheless continue in full force and
effect.
22.12. Third Party Beneficiaries. Each Party intends that this Agreement shall
not benefit, or create any right or cause of action in or on behalf of, any
person or entity other than Customer and ALLIANCE-ONE.
22.13. Covenant of Further Assurances. Customer and ALLIANCE-ONE covenant and
agree that, subsequent to the execution and delivery of this Agreement and
without any additional consideration, each shall execute and deliver any further
legal instruments and perform any acts which are or may become necessary to
effectuate the purposes of this Agreement.
22.14. Conflict of Interest / No Side-Payments. The Parties are not aware of any
circumstances which cause or may cause a conflict of interest and which would
affect its obligations and performance under the Set of Agreements. If during
the Term or Termination Assistance Period, a conflict of interest arises, the
Party with the conflict will immediately notify the other Party and agree on
appropriate remedial actions.
(a) The Parties will implement adequate procedures and policies to prevent,
manage and resolve any conflicts of interest which arise as a result of the
provision of services to a third party.
(b) Neither ALLIANCE-ONE nor Customer will pay any salaries, commissions,
fees or make any payments or rebates to any employee of the other Party, or
to any designee of such employee, or favor any employee of the other Party,
or any designee of such employee, with gifts or entertainment of
significant cost or value or with services or goods sold at less than full
market value.
22.15. No Solicitation of Employees. During the term of this Agreement, or any
renewal thereto, and for a period of one (1) year after any expiration or
termination of this Agreement, or any renewal thereto, neither ALLIANCE-ONE or
Customer shall directly or indirectly solicit, attempt to employ or retain, or
employ or retain any employee or representative of the other Party, independent
contractor or otherwise, or take any other action to induce any person to leave
the employ of the other Party, or any person, firm or corporation, public or
private, to terminate any other relationship with the other Party;
22.16. Schedule of Authorized Personnel. ALLIANCE-ONE may rely on and carry out
any of the instructions or requests of Customer pertaining to the normal
day-to-day operations and functions of the Facilities and Systems, Software and
Systems only from persons designated as having such authority as identified in a
writing signed by Customer's President or General Counsel. Customer shall
immediately provide ALLIANCE-ONE with
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written notice of any change of authority of persons previously authorized and
enumerated as stated above to provide ALLIANCE-ONE with instructions or
directions relating to services to be performed under this Agreement.
22.17. Survival. All Party's representations, warranties, confidentiality,
indemnification, right to audit, recordkeeping and "no publicity" obligations
and Customer's payment obligations pursuant to requests under either Section
10.10 (Services after Expiration) or Section 10.11 (Termination Assistance)
shall survive the expiration or termination of this Agreement and continue in
full force and effect.
22.18. Headings. The headings of the sections, subsections and paragraphs of
this Agreement are inserted for convenient reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK.]
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GLOSSARY
"Acceptance Tests" refer to Section 4.10.
"Admin Guidelines" means those policies, processes, work flows, and procedures
required to perform the respective Administration Services for the applicable
Contracts under the Set of Agreements in conformity with: (i) Applicable Law in
accordance with Customer's reasonable interpretations thereof as may be
requested by supplier and, on Customer's initiative, as provided in writing by
an authorized officer of Customer; (ii) prudent business standards for detecting
and preventing fraud; (iii) prudent internal controls; (iv) general industry
standards; (v) the terms and conditions of the Contracts provided by Customer to
ALLIANCE-ONE; (vi) the terms and conditions of applicable reinsurance agreements
that are provided by Customer to ALLIANCE-ONE; and (vii) those Business Rules
policies, processes, work flows, interpretations of applicable laws and
regulations, including those unique to administering the Contracts, as may be
reasonably specified in writing by Customer in accordance with the Set of
Agreements.
"Administration Services" means (i) the services, functions and responsibilities
described as within the scope of services to be provided, as stated in the
applicable Work Order; and (ii) the services, functions, and responsibilities
that are within the scope of services to be provided, as stated in the
applicable Work Order, that are of a nature and type that would ordinarily be
performed by the organization or part of the organization performing third party
administration services substantially similar to the specified Administration
Services within a company in the insurance and financial services industry, even
if not specifically described in the Work Order.
"Administration Services Fees" means the fees stated in Sections _______ of
Exhibit 11.2 - Pricing and Financial Provisions.
"Affiliate" an "affiliate" of, or Person "affiliated" with, a specific Person,
means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. The term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract other
than a commercial contract for goods or non-management services, or otherwise,
unless the power is the result of an official position with or corporate office
held by the Person. Control shall be presumed to exist if any Person, directly
or indirectly, owns, controls, holds with the power to vote, or holds proxies
representing, ten percent (10%) or more of the voting securities of any other
Person. This presumption may be rebutted by a showing made in a manner permitted
by applicable law. In addition, Affiliates of Customer shall also include a
Person who is able to exert a controlling influence over such other Person by
virtue of: (1) having the ability to elect a majority of the board of directors
of such other person, or (2) having the ability to appoint the management of
such other Person, or (3) having a contract to manage such other person
(including reciprocal or inter-insurance exchanges and mutual insurer) or, (4)
being appointed to act as attorney-in-fact for such Person, or (5) any other
kind of contract, or (5) control through other comparable means (including
conforming to the local definition of control, if any), and/or a Person
identified in the Set of Agreements as a Customer Service Recipient.
"Agent" means any employees, officers, directors, partners, consultants,
representatives, third-party service providers or contractors or other persons
designated by a Party to act or perform on its behalf.
"Agreement" means the documents in which the term "Agreement" is used, including
all Exhibits, attachments and schedules or any other attachments thereto
including the MSA document.
"ALLIANCE-ONE Confidential Information" has the meaning in Section 18.1.
"ALLIANCE-ONE Designated Third Party Proprietary Materials" means all Materials
owned by any third party and licensed to ALLIANCE-ONE as of or after the
Effective Date, as expressly and separately identified in the Set of Agreements.
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"ALLIANCE-ONE Group" means ALLIANCE-ONE, and all of the ALLIANCE-ONE Affiliates.
"ALLIANCE-ONE Personnel" means employees of ALLIANCE-ONE.
"ALLIANCE-ONE Parent Guarantee" has the meaning in Section 1.4(a).
"ALLIANCE-ONE Proprietary Materials" means: (1) the ALLIANCE-ONE Software; (2)
ALLIANCE-ONE Confidential Information; (3) all data processing techniques,
business and policy administration policies, practices, procedures, processes,
techniques and work flows and ideas and know-how contained or reflected in the
foregoing developed by ALLIANCE-ONE prior to the Effective Date or independently
from the Set of Agreements; (4) Materials that reflect or incorporate ideas from
ALLIANCE-ONE Software or ALLIANCE-ONE Confidential Information and any
modification and/or Derivative Works created from the foregoing, regardless of
whether created by ALLIANCE-ONE and its Affiliates or Customer and its
Affiliates; and (5) all Intellectual Property Rights in the foregoing, but
excluding Customer Proprietary Materials.
"ALLIANCE-ONE Service Locations" means the locations (other than Customer
Premises, if the context so requires) from which ALLIANCE-ONE provides the
Services to Customer under this Set of Agreements, as set out in Exhibit 20.1(a)
ALLIANCE-ONE Service Locations.
"ALLIANCE-ONE Software" means depending on the context, a single Software system
or collectively all the Software owned or licensed directly from third parties
by ALLIANCE-ONE or any of its Affiliates (other than from Customer or its
Affiliates) and used from time to time by ALLIANCE-ONE to perform the Services
under the Set of Agreements, including all modifications, enhancements and
Derivative Works thereof, whenever made.
"Alliance-One Special Service Locations" has the meaning in Section 20.1(g).
"Ancillary Agreement" has the meaning in Section 1.8.
"Applicable Law" means any of the following in force from time to time, no
matter whether it is global, transnational, federal, state or local: any
legislation including any common law, statute, statutory instrument, treaty,
rule, regulation, directive, ordinance, decision, by-law, circular, code,
mandatory guidance plan, order, notice, demand, decree, injunction, resolution,
judgment, or mandatory instructions or requests by the respective regulators
relating to either of the Parties or the Services or any lawful requirement, or
demand of any Governmental Authority which has jurisdiction with regard to the
Parties or the Services in the countries where the Services are supplied under
this Agreement, or to matters dependent on or affected by the Services whether
or not that requirement or demand has force of law.
"Applicable Licensing Laws" has the meaning in Section 5.5(a).
"Applications" means programs and other Software (including the supporting
documentation, media, on-line help facilities and tutorials) that perform user
or business related information processing functions. Applications do not
include the tools, utilities, or System Software used to deliver it.
Applications include database management Software.
"Authorized User" means an entity designated by Customer in accordance with
Section 4.3 as authorized to receive the Services.
"Books and Records" has the meaning in Section 8.3.
"Business Continuity / Disaster Recovery Plan" refer to Section 17.2.
"Business Continuity Services" has the meaning in Section 17.2(b).
"Business Day" means a day other than a Saturday, Sunday or a Customer published
holiday in the jurisdiction where the Authorized User of the Services is located
unless such holiday is not a Zurich Financial Services corporate holiday in
Switzerland.
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"Change Management Procedures" means the change management procedures set out in
Exhibit 1.3(c) - Change Management Procedures.
"Change of Control" refer to Section 10.5.
"Charges" has the meaning in Section 11.2.
"Chronic Failure" has the meaning in Section 10.7(a).
"Chronic or Significant Service Level Defaults" means the ALLIANCE-ONE's
performance, as measured by the applicable policy performance standards table,
has fallen below the level of performance as designed as "Chronic or Significant
Service Level Defaults" in Exhibit 7.4(a) - Service Levels and Service Level
Credits, which shall entitle Customer to exercise the termination rights stated
in Section 10 of the Agreement, subject to ALLIANCE-ONE's right to cure such
failure, as further described in Section 16.1.
"Section" means in this Glossary reference to a section in the MSA.
"Commencement Date" means the first day that ALLIANCE-ONE begins the
Administration Services set forth in Exhibit 3.11 - Administration Services for
the Contracts following completion and acceptance of any applicable transition
services.
"Competitive Developments" has the meaning in Section 19.5.
"Contract" means the coverage documents for each insured or annuitant, which are
written or reinsured by Customer or its Affiliates. Interchangeable with
insurance policy.
"Contract Holder" means an insured, annuitant, owner, payor, or beneficiary
under a Contract.
"Contract Holder Data" means all data relating to Contracts which may be
generated by or made available to Administrator under the Set of Agreements,
including Personal Information and includes such data relating to the Contracts
written or reinsured by Customer or Customer Affiliates.
"Contract Year" means a period of twelve consecutive months commencing on the
Effective Date or on an anniversary of the Effective Date, and with respect to
the final Contract Year, the period between the last anniversary of the
Effective Date and the date of the expiration or termination of the applicable
Agreement (which may be shorter than twelve months).
"Covered IP" has the meaning in Section 15.1(b).
"Critical Deliverable(s)/Milestone(s)" means any deliverable defined as critical
in the applicable Work Order.
"Critical Delay" has the meaning in Section 10.7(b).
"Customer" has the meaning in the Recitals.
"Customer Authorized Representative" means a person expressly authorized by
Customer in a writing signed by the General Counsel, President, or other officer
designated by the General Counsel or President to act on behalf of Customer in
the areas corresponding to the such person's name, as such writings may be
updated from time to time in a written notice to ALLIANCE-ONE's general counsel.
"Customer Agent" means a person engaged in the sale of products and services of
Customer pursuant to a contract with Customer, excluding employees of Customer.
"Customer Confidential Information" has the meaning in Section 18.3.
"Customer Content" means any of Customer's, its Affiliates' or Customer
Customer's unique materials (1) relating solely to Customer's or its Affiliates'
business and (2) provided by Customer, excluding Personal Information, but
including, without limitation, any names, trademarks, images, photographs,
illustration, data, confidential strategic business information, future
marketing and business plans, other text unique to Customer's
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or its Affiliates', business and Contract administration policies, practices,
procedures, processes, techniques and work flows and ideas and know-how
contained or reflected in the foregoing, product content, and business
requirements relating to those business processes which are the subject of this
Agreement.
"Customer Covered IP" has the meaning in Section 15.2(b).
"Customer Data" means collectively all data and information (1) submitted to
ALLIANCE-ONE or Subcontractors by or on behalf of Customer, (2) obtained by
ALLIANCE-ONE or Subcontractors in connection with the Set of Agreements or (3)
to which ALLIANCE-ONE or Subcontractors have access from or on behalf of
Customer in connection with the provision of the Services.
"Customer Designated Third Party Proprietary Materials" means all Materials
owned by any third party and licensed to Customer as of or after the Effective
Date, as expressly and separately identified in the Set of Agreements.
"Customer Facing Activities" means any activity to be performed by ALLIANCE-ONE
which involves direct communications with Customer's suppliers, Customer Agents,
or Contract Holders, regardless of whether such communications is via the
telephone, written correspondence, email or otherwise.
"Customer Group" means the Customer MSA Party and all of the Customer
Affiliates.
"Customer Personal Information" refer to Section 18.2.
"Customer Personnel" means employees of Customer.
"Customer Proprietary Materials" means: (1) the Customer Software; (2) Customer
Confidential Information; (3) Customer Content; (4) all data processing
techniques, business and policy administration policies, practices, procedures,
processes, techniques and work flows and ideas and know-how contained or
reflected in the foregoing used by Customer prior to the Effective Date or
independently from the Set of Agreements and including all Customer Standards
and Procedures; (5) Materials that reflect or incorporate ideas from Customer
Software or Customer Confidential Information and modifications and/or
Derivative Works created from the foregoing, regardless of whether created by
ALLIANCE-ONE and its Affiliates or Customer and its Affiliates; and (6) all
Intellectual Property Rights in the foregoing, but excluding ALLIANCE-ONE
Proprietary Materials and the embodiments described in Section 19.3(c).
"Customer Software" means depending on the context, a single Software system or
collectively all the Software owned or licensed directly from third parties by
Customer or any of Customer's Affiliates (other than from ALLIANCE-ONE or its
Affiliates) and used by Customer or any of Customer's Affiliates in its or their
business, including all modifications, enhancements and Derivative Works
thereof, whenever made.
"Customer Standards and Procedures" means all of Customer's standards,
practices, policies and procedures relating to corporate information security,
safety, personnel, contractors, subcontractors and data retention and which have
been disclosed to ALLIANCE-ONE.
"Data Interface Formats" has the meaning in Section 19.4(a).
"Data Security Breach" has the meaning in Section 10.6.
"Defense" has the meaning in Section 15.4(a).
"Derivative Works" means any Materials created after the Effective Date which
are based upon the specifically referenced Materials, where such newly created
Materials may include translations, reproductions, abridgements, condensations,
or any other form in which the specifically referenced Materials may be recast,
transformed, adapted, revised or modified.
"Dispute" means any dispute, controversy or claim arising out of or relating to
the Set of Agreements.
"Effective Date" has the meaning given to such term in the introductory
paragraph to this Agreement.
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"Employees" has the meaning in Section 18.2(d).
"End User " means an individual using the Applications supported by ALLIANCE-ONE
as part of the Service.
"Exceptional Items " means expenditures approved in advance by Customer and
incurred by ALLIANCE-ONE in connection with directions given by the Regulator as
described in Section 8.10(c).
"Exhibit " means any Exhibit, including its appendices and schedules, as amended
from time to time, each of which form an integral part of the MSA, unless an
Exhibit is referenced in subsequent agreements.
"Expedited Dispute Procedure" means the procedure for escalating and resolving
Disputes set out in Exhibit 14.5 - Expedited Dispute Procedures.
"Facilities and Systems" has the meaning in given in the Recitals.
"Force Majeure Event" has the meaning in Section 17.1.
"Gross Negligence" means both "the intentional failure to perform under the
Agreement," and "performance under the Agreement, but with reckless disregard of
the consequences."
"In Force Policy" means those Policy Products that are active.
"Insolvency Event" means, in relation to a Party (i) the issuance of a petition
for winding up of that Party which petition is not withdrawn or discharged
within twenty-eight (28) days of its issue; (ii) the making of an order or an
effective resolution being passed for the winding up of that Party, except for
the purpose of a solvent amalgamation or reconstruction where the resulting
entity assumes all of the obligations of the relevant Party under this
Agreement; (iii) the appointment of a liquidator, receiver, administrative
receiver, administrator, trustee or other similar officer or an encumbrance (a)
taking possession of the whole or any part (which is material in the context of
the performance of the affected Party's obligations under this Agreement) of
that Party's undertaking, property or assets; and (b) notifying the other Party
in writing that such event will or is highly likely to materially affect the
first Party's ability to perform any of its material obligations under this
Agreement; (iv) a Party ceasing to service its outstanding debt; (v) the
application for debtor's protection under applicable bankruptcy laws; or (vi)
the voluntary notification by the Party that it is over-indebted.
"Insured" means Customer's life Contract Holder or certificate-holder of a
Contract, and/or person insured thereunder if not the Contract Holder or
certificate-holder.
"Intellectual Property Rights" means all intellectual property, including
patents, utility models, trade and service marks, trade names, domain names,
right in designs, copyrights, moral rights, topography rights, rights in
databases, trade secrets and know-how, in all cases whether or not registered or
registrable and including registrations and applications for registration of any
of these and rights to apply for the same, rights to receive equitable
remuneration in respect of any of these and all rights and forms of protection
of a similar nature or having equivalent or similar effect to any of these
anywhere in the world.
"IT" means information technology.
"Joint Affiliate Agreement" or "JAA" has the meaning in Section 1.6(a).
"Jurisdictions" means the countries where or into which the Services will be
supplied.
"Losses" In respect of any matter, event or circumstance includes all damages,
payments, losses, costs, fees, fines, penalties, reasonable expenses or other
liabilities, including interest thereon.
"Materials" means collectively, Software, literary works, other works of
authorship, specifications, design documents and analyses, equipment
configuration information, processes, methodologies, programs, program listings,
documentation, reports, drawings, data compilations or databases and similar
work products.
"MSA" means this Master Services Agreement.
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"NDA" has the meaning in Section 18.1(a).
"NPI" has the meaning in Section 18.2(b).
"Net Loss" has the meaning in Section 15.12(d).
"OFAC" means the "Office of Foreign Assets Control" in the United States
Department of the Treasury, and should be used in the context of Customer's
compliance with Federal OFAC Law applicable to the financial services industry.
"Paid" has the meaning in Section 15.11(g).
"Pass-Through Expenses" refer to Exhibit 11.2 - Pricing and Financial
Provisions.
"Payable" has the meaning in Section 15.11(h).
"Person" means any individual, firm, corporation wherever incorporated, trust,
joint venture (whether or not having a separate legal personality), partnership,
limited liability company, association (whether incorporated or not),
government, state, agency of state or authority thereof, and also such person's
legal personal representatives and successors.
"Personal Information" is defined in Section 18.2(b). Personal Information will
be used by ALLIANCE-ONE solely to perform Services under this Agreement and will
not be disclosed to any person or entity other than ALLIANCE-ONE's employees,
subcontractors, or representatives needing access to the Personal Information to
perform under this Agreement. However, ALLIANCE-ONE may use non-Personal
Information obtained from this Contract Holder Data for the purpose of data
compilation, statistical analyses, and other studies.
"Performance Standard" means the standards of performance of the Services
required of ALLIANCE-ONE pursuant to this Agreement, and described in Exhibit
12.11(b) - Performance Levels.
"Person-hour" means the services of one person for one full hour.
"Personnel" means, in relation to a Party, any officer, employee, servant,
agent, Subcontractor or other personnel employed, used, assigned or engaged by
that Party or, in relation to Customer, any other member of the Customer Group
or, in relation to ALLIANCE-ONE, any other member of the ALLIANCE-ONE Group;
"Policy Product " means a product in the portfolio of products serviced (i.e.
new business and in-force) under the Set of Agreements. Interchangeable with
Contract.
"Privacy Laws" has the meaning in Section 18.2(a).
"Quality Assurance Procedures and Measurements" has the meaning in Section
4.13(a).
"Regulator" means a representative of a governmental entity having jurisdiction
over the Person in question.
"Reimbursable Expenses" means those authorized costs and expenses incurred by
ALLIANCE-ONE in connection with its performance of the Services and its
obligations under this Agreement and as described in Exhibit 11.2 - Pricing and
Financial Provisions.
"Security Incident" has the meaning in Section 18.2(g).
"Services" means the services to be provided under the Set of Agreements,
including the Administration Services, Transition Services, Transformation
Services and Termination Assistance.
"Service Commencement Date" means (i) the date on which ALLIANCE-ONE begins to
provide the Services under the MSA, and (ii) in respect of New Services, each
Date of Acceptance or (iii) such other date as may be agreed between the
Parties.
"Service Locations" has the meaning in Section 20.1(a).
Page 80 of 82
"Service Recipients" means End Users, customers of Customer and/or the Customer
Retained Organization, as applicable.
"Set of Agreements" means all agreements that governs the outsourcing
relationship between ALLIANCE-ONE and Customer as well as the provision of the
Services and all related services in relation to such outsourcing relationship
by ALLIANCE-ONE to Customer.
"Shared Usage Applications" means an Application supported by ALLIANCE-ONE which
may be used by Customer staff and/or agents and/or customers and/or prospective
customers
"Software" means the object code and source code version of any applications
programs, operating system software, firmware, computer software languages,
utilities, other computer programs and related documentation, in whatever form
or media, including the tangible media upon which such applications programs,
operating system software, firmware, computer software languages, utilities,
other computer programs and related documentation are recorded or printed,
together with all corrections, improvements, updates and releases thereof.
"Software Product" means any computer software package owned, licensed or
marketed by ALLIANCE-ONE and used by ALLIANCE-ONE in providing the Services
under this Agreement, and includes all computer code (whether machine readable
or human readable), Documentation, and related materials identified by
ALLIANCE-ONE as part of the package, including moral rights related thereto.
"SSAE 16" means "Statement on Standards for Attestation Engagements (SSAE) No.
16," an attestation standard put forth by the Auditing Standards Board (ASB) of
the American Institute of Certified Public Accountants (AICPA) or its equivalent
replacement.
"SSAE 16 Report" has the meaning in Section 21.1.
"Step-In Action" has the meaning in Section 15.6(a).
"Subcontractor" means a third party entity unrelated to ALLIANCE-ONE that
undertakes to provide any of the Administration Services in Exhibit 3.11.
"System Software" means those programs and Software, including documentation and
materials, that perform tasks basic to the functioning of the computer hardware,
or which are required to operate the Applications, or otherwise support the
provision of Services by ALLIANCE-ONE. Systems Software includes Operating
Software, systems utilities, and any other Software not designated as
Applications.
"Term" means the term of the MSA as described in Section 10.
"Terminated Services" means any Service or portion of a Service that Customer or
ALLIANCE-ONE terminates in accordance with the MSA.
"Termination Assistance" has the meaning in Section 10.11(d).
"Termination Assistance Period" has the meaning in Section 10.11(b).
"Termination Effective Date" means the date in which Customer no longer pays
Customer In Force Policy fees or New Business Transaction Fees.
"Termination Fees" means the fees payable by Customer for early termination in
accordance with Exhibit 11.2(a) - Pricing and Financial Provisions.
"Third Party" means a legal entity, company or person(s) that is not a Party to
the Agreement, and is not an Affiliate of a Party.
"Third Party Contract" means those agreements where a Third Party is providing
products or services prior to the Effective Date that relates to or support the
Services, including any licenses, leases and service contracts.
Page 81 of 82
"Time and Materials Basis" If a Work Order or Exhibit states that services will
be provided on a "Time and Materials Basis," charges for said services will be
determined by the amount of ALLIANCE-ONE's personnel time, computer time, and
materials used in providing the services, plus reimbursable expenses in the Work
Orders. Services may be billed by the Person-hour or any other unit agreed on in
writing in the Work Orders. Services will be provided on a Time and Materials
Basis and billed by the Person-hour at Standard Time and Materials Rates, unless
the controlling Work Order or Exhibit specifies a different arrangement.
"Tools" means the application software, utility software, software development
and performance testing tools, testing scripts, know-how, methodologies,
processes, technologies and algorithms, and related documentation, used by
ALLIANCE-ONE to provide the Services.
"Transformation" means the activities and projects undertaken by ALLIANCE-ONE
for the purpose of achieving the target solution under this Set of Agreements,
as further described in the applicable Work Order.
"Transition" means the one-time activities and projects required to effectively
transfer the responsibility for the Assets, the Affected Employees and the Third
Party Contracts from Customer to ALLIANCE-ONE as further described in the
applicable Work Order.
"Work Order" means a Customer-approved request for Services submitted by
Customer.
Page 82 of 82
Exhibit 3.11 - Administration Services
1. ADMINISTRATION SERVICES.
Unless otherwise stated in a Work Order, ALLIANCE-ONE shall provide, following
the completion and acceptance of any applicable transition services, all of the
Administration Services listed in this Exhibit 3.11 for the Contracts identified
in each Work Order under this Agreement.
2. ALLIANCE-ONE SHALL PROVIDE CONTRACT ADMINISTRATION SERVICES AS MORE FULLY
DESCRIBED BELOW:
2.1. Description of Administration Services. The following describes the
Administration Services ALLIANCE-ONE will perform in accordance with the Admin
Guidelines and as directed by Customer (herein described as the "Services"):
(a) Underwriting Services. ALLIANCE-ONE assumes the policy block will be
closed to new business, supporting only underwriting for post issue
conversion and change processing, Term product conversion, reinstatements
guidelines, and future purchase options.
(b) Policy Owner Services. ALLIANCE-ONE will support policy service and
change requests, as applicable to Customer's in-force product portfolio and
policy blocks, including:
(i) Policy status, benefit, billing information.
(ii) Benefit, payment or loan history.
(iii) Service or change forms.
(iv) Change of ownership, beneficiary, assignment, power of attorney,
address.
(v) Change of billing mode, form, payor address, third-party address.
(vi) Policy loan, withdrawal, cancellation, surrender.
(vii) Duplicate policy, specimen policy or policy certificate.
(viii) In-force illustration requests for up to three illustrations
per policy per year.
(ix) Billing notice or annual statement reprint.
(x) Reinstatement, conversion, exchange, policy benefit or face amount
change, re-entry, GIO and future purchase options.
(xi) Policy maturity and non-forfeiture processing.
(xii) Replacement, 1035 exchange, cost basis.
(xiii) Policy correspondence and confirmation notices.
(xiv) On benefit annuity set-up and payout.
EXHIBIT 3.11 - 1
(xv) Policy dividends.
(xvi) Minimum required distribution and other annuity withdrawals.
(xvii) Reinstatements and complex changes requiring underwriting
review will be routed to Customer underwriting for approval using
ALLIANCE-ONE's automated workflow and image systems.
(xviii) Disbursements in excess of the Customer-defined limits will be
routed to Customer's client services management for review and
approval.
(xix) The Customer will provide required policy forms and state
variation pages to support duplicate or specimen policy requests.
(xx) The Customer has provided required illustration software.
(xxi) Copies of policyholder annual statements, correspondence,
confirmations billing, grace and lapse notices, annual privacy notices
are archived per ALLIANCE-ONE's standard archive processes for future
audit and reference, as well as policyholder or agent requests for
notice or statement re-mailing.
(xxii) Copies of system reports and registers are archived for future
audit and reference.
(c) U.S. Treasury's Financial Crimes Enforcement Network ("FinCEN") and
OFAC program services as set forth in the Customer Admin Guidelines.
(d) Customer Contact Center. ALLIANCE-ONE will deliver dedicated customer
service:
(i) Dedicated 800 lines will direct calls to ALLIANCE-ONE's customer
contact center team, responding to policy queries and service
requests, from policyholders, agents, claimants, beneficiaries.
(ii) Service transactions and correspondence are processed, following
Customer's Admin Guidelines.
(e) Claims. Claims will be processed by ALLIANCE-ONE in accordance with
Admin Guidelines. ALLIANCE-ONE will support these processes for claims:
(i) Logging and documenting claim notification.
(ii) Claim acknowledgement beneficiary notification as defined by the
Customer's Admin Guidelines.
(iii) Collecting claims requirements as defined by the Customer's
Admin Guidelines.
(iv) Pending claim follow-up as defined by the Customer's Admin
Guidelines.
(v) Claims examination and decision to pay or not pay as defined by
the Customer's Admin Guidelines.
(vi) Routing claims in excess of ALLIANCE-ONE'S approval limits to the
Customer for approval, via ALLIANCE-ONE'S automated workflow and image
system.
EXHIBIT 3.11 - 2
(vii) Final processing, including check payment, retained asset
account transfers, claim denial, contract rescission. Claim denials
will be routed to Customer for final review and decision, via
ALLIANCE-ONE's automated workflow and image system.
(viii) Contestable claims information will be collected by
ALLIANCE-ONE, and then referred to the Customer for final review and
decision.
(ix) Claim files will be maintained in AWD image and workflow system,
with restricted-access to confidential claims materials and files.
(x) Claim types include but are not limited to the following: death,
waiver of premium, A&H, acceleration of benefit requests.
(xi) ALLIANCE-ONE claims personnel, as appropriate, will receive
general anti-fraud and unfair claims practices act training annually.
(f) Billing and Premium Processing. ALLIANCE-ONE will support the aspects
of billing and collection, including:
(i) Direct, ACH, government allotment and list billing.
(ii) Lockbox for direct premium and loan repayments.
(iii) Returned checks, ACH and credit or debit card payments.
(iv) Premium payment research and suspense reconciliation.
(v) Copies of billing and other policyholder notices are archived for
future audit and reference, as well as policyholder or agent requests
for notice re-mailing.
(g) Agent Commissions and Support Services. ALLIANCE-ONE will provide the
following Agent Support Services:
(i) Provide a file of commissionable event to Customer's provider Se2
for payments.
(ii) ALLIANCE-ONE will update its files based upon work provided to
ALLIANCE-ONE by Se2.
(h) Financial Reporting Services. ALLIANCE-ONE will provide Financial
Administration Services as follows:
(i) Accounting - ALLIANCE-ONE shall be responsible for establishing a
chart of accounts on the ALLIANCE-ONE general ledger systems based on
guidelines submitted by the Customer and providing an interface
between ALLIANCE-ONE's system and the Customer's Oracle general ledger
on a monthly basis with individual transaction level detail.
ALLIANCE-ONE will maintain policy level accounting and provide the
Customer with detailed reporting regarding state and federal
withholding, policy benefits, policy loans and policy deaths. Monthly
reserve files will be produced and reconciliation of assets owned to
policy liabilities will be performed. The Customer shall be
responsible for providing
EXHIBIT 3.11 - 3
ALLIANCE-ONE with any necessary manual policy level accounting
entries, reporting to regulatory agencies, tabulating and paying state
premium taxes (where applicable). ALLIANCE-ONE is responsible for
balancing cash accounts and will also handle any returned checks per
the Customer's Admin Guidelines.
(ii) Bank Account Reconciliation - The Customer will establish a
unique bank deposit account to be utilized by ALLIANCE-ONE for premium
deposits and miscellaneous receipts of cash. The Customer will also
establish a unique bank disbursement account for policy checks
produced by ALLIANCE-ONE during the administration of the business.
Both accounts will be reconciled by ALLIANCE-ONE on a monthly basis,
with copies of all reconciliations sent to the Customer in accordance
with the Performance Standards.
(iii) Disbursements - ALLIANCE-ONE's disbursement platform will be
used to generate checks and create positive pay interfaces to the
banks. Cleared check files from the bank will be interfaced to the
system to generate outstanding checks and escheat information. All
escheat information will be provided to the Customer and includes the
mailing of uncashed check notices on stale-dated checks after
responses received from uncashed check notices as well as all
remaining stale-dated outstanding items shall be remitted to Customer
via electronic format that can be imported into Customer's unclaimed
property system or similar manual process. Disbursement account(s)
will be set-up and maintained as needed to handle all Customer
disbursements, which include, but are not limited to the following:
claims, surrenders and loans.
(iv) Audits - ALLIANCE-ONE will provide support of audits from both
Customer's internal and external auditors, subject to the provisions
of Section 8 of the Agreement.
(v) Tax processing - In accordance with the standards as provided by
Customer in the Admin Guidelines, ALLIANCE-ONE will calculate taxable
amounts in connection with any payments ALLIANCE-ONE makes in
connection with Services. ALLIANCE-ONE will ensure, as Agent for
Customer, that tax information reporting and withholding is properly
calculated and reported to Customer in accordance with the standards
provided by Customer in the Admin Guidelines. ALLIANCE-ONE will
provide periodic data files in accordance with the method, format,
frequency and timing specified by Customer in the Admin Guidelines so
that Customer has the information Customer requires in order to submit
applicable tax filings, tax information reporting and depositing of
withheld tax.
(vi) ALLIANCE-ONE will notify Customer as soon as reasonably possible
and consult with Customer prior to responding to correspondence
received from federal, state, local and foreign tax authorities
concerning any subpeona, audit, notice of deficiency, or IRS Penalty
Notice under IRS Notice 972CG. ALLIANCE-ONE will follow the Admin
Guidelines in processing and responding to IRS levy requests and any
similar levy requests received from state or local tax authorities
received in connection with insurance policies administered on behalf
of Customer.
EXHIBIT 3.11 - 4
(vii) ALLIANCE-ONE will endeavor to administer the Contracts by
following the Customer's Admin Guidelines on behalf of Customer.
Customer shall ensure that the Admin Guidelines incorporate and remain
current with all Applicable Laws applicable to the administration of
the Contracts. Customer and ALLIANCE-ONE will endeavor to put in place
controls to administer life Contracts in compliance with IRC Section
7702 and IRC Section 7702A as interpreted by Customer.
(i) Mail and Records. ALLIANCE-ONE will provide the following services:
(i) Mail will be directed to the Customer-owned post office boxes.
Mail will be transported by courier to ALLIANCE-ONE's service center
several times during the business day. Incoming mail is immediately
opened, prepped and scanned into ALLIANCE-ONE's automated workflow and
image system.
(ii) Policy notices and statements are printed in ALLIANCE-ONE's
central print center and mailed by pre-sort houses at lower postal
rates.
(iii) Policy correspondence, notices and statements are mailed with
USPS address forwarding service requested and change of address
notification.
(iv) The Customer utilizes a combination of paper, microfiche,
microfilm and/or image policy files. ALLIANCE-ONE will be responsible
for all delivered inventoried, in-scope policy files, defined as:
1. Policy files for all in-force policies.
2. Policy files for all life policies terminated within the 24
months of the date of transition.
(v) The Customer will deliver to ALLIANCE-ONE's designated locations
in-scope paper policy files on a case by case basis upon request.
On-demand retrievals will be scanned by ALLIANCE-ONE into image files,
as well as any other records and files required to provide the
services outlined. The Customer will retain all microfiche and
microfilm physical records and will deliver to ALLIANCE-ONE images for
these records when the file is required for policy administration.
(vi) ALLIANCE-ONE will be responsible for maintaining all out-of-scope
policy files. When required for policy research or servicing, file
retrieval will be ALLIANCE-ONE's responsibility. Customer will be
responsible for the cost of shipping and installing paper policy files
to the Iron Mountain storage facility supporting ALLIANCE-ONE's
Nashville, TN service center. Customer will be responsible for the
monthly storage and retrieval expenses. When retrieved policy files
are delivered to ALLIANCE-ONE's service center, the file will be
scanned into ALLIANCE-ONE's automated workflow and image system.
(vii) As provided for in Customer's Admin Guidelines, scanned mail and
policy files will be securely shredded or retained at off-site storage
facilities designated by the Customer.
EXHIBIT 3.11 - 5
(viii) Annual mailing of prospectuses 2016 forward (mailing as handled
by a third-party) including determination of which prospect and fund
goes with which policyholder. This service not included in Policy Fee
and would be performed on a Time and Materials basis.
(j) Financial Reporting. ALLIANCE-ONE will provide the following services:
(i) Monthly valuation extracts.
(ii) Monthly reinsurance extracts.
(iii) Standard daily reports as defined by Customer, and as mutually
agreed to in the project study.
(k) Complaint Handling. Pursuant to the performance schedule in Exhibit
7.4(a), ALLIANCE-ONE will draft suggested to all complaints and, upon
approval and return of response by the Customer with electronic signature,
mail all final complaint responses.
(i) Complaints include all written or verbal communications primarily
expressing a grievance and include, but are not limited to, all such
communications with regard to a Contract from state departments of
insurance, state or federal regulators or an attorney.
(ii) ALLIANCE-ONE will track receipt, description, and status of all
complaints by state and, upon request, will provide to Customer
reports providing such information.
(iii) ALLIANCE-ONE will provide proposed complaint responses to
Customer for review and approval via ALLIANCE-ONE's automated workflow
and image systems. The service requirements stated in the Performance
Standards set forth in Exhibit 7.4(a) will toll during the review and
approval period and will resume upon a final response being returned
by Customer to ALLIANCE-ONE.
(iv) ALLIANCE-ONE will provide access to Customer of all complaint
responses, together with copies of any accompanying documentation, as
well as copies of the originating communication.
(v) ALLIANCE-ONE will forward any lawsuit, threatened lawsuit, legal
or judicial action pertaining to Customer or its Contracts to Customer
as soon as possible after its receipt of such communication but in no
case later than 2 Business Days after its receipt of such
communication.
EXHIBIT 3.11 - 6
Exhibit 5.5(b) -- Applicable TPA Laws - Mandatory Provisions
This Exhibit 5.5(b) shall apply only if, to the extent, and for so long as,
ALLIANCE-ONE or its successor is subject to state insurance laws applicable to
third party administrators and to the extent that any of the Services are
subject to Applicable Law governing insurance administrators.
DEFINITIONS
In addition to those terms defined in the Agreement of which this Exhibit 5.5(b)
is a part and those terms defined in the Agreement, as used in this Exhibit
5.5(b):
"Administrator" refers to ALLIANCE-ONE and shall apply only if, to the extent,
and for so long as such entity or its successor is subject to state insurance
laws applicable to third party administrators.
"Customer" refers to the insurance company for whom ALLIANCE-ONE will perform
Administration Services.
"Admin Guidelines" refers to the detailed description of how Customer's business
is to be administered by ALLIANCE-ONE in accordance with the Agreement, as that
detailed description is to be confirmed in writing by Customer as complying with
applicable laws.
MANDATORY PROVISIONS FOR ADMINISTRATOR
AGREEMENTS BASED UPON STATE STATUTES
Subject: Continuing Customer Responsibilities
1. Continuing Customer Responsibilities. Customer shall be responsible for
determining the benefits, premium rates, underwriting criteria and claims
payment procedures applicable to the coverage and for securing reinsurance,
if any. As to the administration of coverage insured by Customer, Customer,
and not Administrator, shall be responsible for determining the benefits,
rates, underwriting criteria, and claims payment procedures applicable to
such coverage and for securing reinsurance, if any. As applicable for the
services provided by Administrator, the rules pertaining to these matters
shall be provided, in writing, by Customer to Administrator. Customer shall
provide to Administrator, in writing, procedures pertaining to
Administrator's administration of benefits, premium rates, underwriting
criteria and claims payment. The responsibilities of Administrator as to
any of these matters shall be set forward in the written agreement between
the Administrator and the Customer and as reflected in more detail in the
Customer Admin Guidelines.
2. Continuing Customer Responsibilities. The written agreement between the
Administrator and Customer and as reflected in more detail in the Customer
Admin Guidelines shall make provision with respect to the underwriting or
other standards pertaining to the business underwritten by Customer, as
well as with respect to the other functions Administrator is to perform,
including for which lines, classes, and types of coverage Administrator
shall perform such functions.
EXHIBIT 5.5(b)- 1
3. Continuing Customer Responsibilities.
3.1. It is the sole responsibility of Customer to provide for
competent administration of its programs.
3.2. In cases where Administrator administers benefits for more than
one hundred (100) certificate holders or covered individuals on behalf
of Customer who are resident in a state that so requires, Customer
shall, at least semiannually, conduct a review of the operations of
Administrator. At least one such review shall be an on-site audit of
the operations of the Administrator All information and documentation
related to a review or on-site audit shall be made available to the
appropriate insurance regulatory official upon request and must remain
on file with the Customer for at least five years from the date of the
review or on-site audit.
Subject: Copy of Written Agreement
4. A copy of the written Agreement between Administrator and Customer shall
be retained by both parties for the duration of the Agreement, and any
renewals thereof, and for seven (7) years thereafter. The Agreement must
include a statement of the functions that the Administrator will perform on
behalf of the Customer and specify the lines, classes, or types of coverage
that the Administrator is authorized to administer on behalf of the
Customer.
Subject: Approval of Materials
5. Advertising and Other Materials Sent to Policyholders.
5.1. To the extent the Administrative Services provide for
Administrator to distribute Customer's marketing materials,
Administrator may use only those advertising materials pertaining to
the Contracts underwritten by Customer as have been approved in
writing by Customer in advance of their use.
5.2. Any policies, certificates, booklets, termination notices, or
other written communications provided by Customer to Administrator for
delivery to policyholders shall be delivered by Administrator promptly
after receipt of instructions from Customer to deliver them.
Subject: Receipts, Payments, Accounts and Compensation
6. Effect of Administrator's Receipt of Payments. The payment to
Administrator of any premiums or charges for insurance or annuity
contributions or investments by or on behalf of a policyholder shall be
deemed to have been received by Customer with respect to such policyholder,
and the payment of return premium, other consideration, claims or other
contract payments or other amounts by Customer to Administrator shall not
be deemed payment to the policyholder or claimant until such payments are
received by such policyholder or claimant.
7. Premium Collection and Payment of Claims. All insurance charges or
premiums collected by Administrator on behalf of or for Customer, and the
return of premiums received from Customer, shall be held by Administrator
in a fiduciary capacity. In the event Customer for any reason requests
Administrator to establish, and Administrator agrees to and does establish,
a fiduciary deposit bank account for Customer on behalf of a Customer, such
account shall be exclusive to Customer in a federal or state chartered,
federally insured financial institution. Any such funds received by
Administrator shall be immediately remitted to the person entitled to them
or
EXHIBIT 5.5(b)- 2
deposited promptly into the fiduciary deposit bank account. Administrator
shall withdraw funds from such account only for the purposes stated below.
If charges or premiums so deposited have been collected on behalf of or for
more than one insurer, Administrator shall maintain records clearly
recording the deposits in and withdrawals from such account on behalf of or
for each insurer. Administrator shall keep copies of all such records and,
upon request of an insurer, shall furnish such insurer with copies of such
records pertaining to deposits and withdrawals on behalf of or for such
insurer. Administrator shall not pay any claim by withdrawals from an
account established in which premiums or charges are deposited.
Administrator shall withdraw funds from such account only for the following
purposes: (1) remittance to Customer of funds to which Customer is
entitled; (2) deposit in an account maintained in the name of Customer; (3)
transfer to and deposit in a claims paying account with claims to be paid
as required or permitted under Applicable Law and this Agreement; (4)
payment to a group policyholder for remittance to the insurer entitled to
the funds; or (5) remittance of return premiums to the persons entitled to
the funds.
8. Form of Payments. All claims, disbursements, or payments paid by
Administrator on behalf of Customer shall be paid only on checks, drafts
or, if permitted by law, wire transfers of and as authorized by Customer,
including as specified in the Customer Admin Guidelines.
9. Contingent Fees. Administrator's compensation under this Agreement shall
not be contingent upon savings obtained in the adjustment, settlement and
payment of losses covered by the Customer's obligations. The foregoing
shall not preclude compensation to Administrator based on premiums or
charges collected or the number of claims paid or processed.
Subject: Books, Records and Reporting
10. Records of Receipts. Administrator shall maintain a cash receipts
register of all premiums or contributions or investments received. The
minimum detail required in the register shall be date received and
deposited, the mode of payment, the policy number, name of policyholder,
individual premium or other consideration, other contributions or
investment amounts, and agent or other selling representative, if
applicable.
11. Records of Disbursements. The description of a disbursement shall be in
sufficient detail to identify the source document substantiating the
purpose of the disbursement, and shall include all of the following: (1)
the check number; (2) the date of disbursement; (3) the person to whom the
disbursement was made; (4) the amount disbursed; and (5) ledger account
number. If the amount disbursed does not agree with the amount billed or
authorized, Administrator shall prepare a written record as to the
discrepancy.
12. Monthly Accounting. Administrator shall render accounts to Customer
detailing all policy-related transactions and remit all money due to
Customer under the Agreement at least monthly. Administrator will
periodically render an accounting to Customer detailing all transactions
performed by Administrator pertaining to the business relating to the
Agreement. Administrator shall prepare and maintain monthly financial
institution account reconciliations as part of the policyholder accounting
books and records.
13. Recordkeeping requirements.
13.1. Administrator shall maintain at its principal administrative
office, for the duration of the Agreement and at least five (5) years
thereafter, adequate books and records of all transactions between
Administrator, Customer and insured persons. Such books and
EXHIBIT 5.5(b)- 3
records shall be maintained in accordance with prudent standards of
insurance record keeping. The appropriate insurance regulatory
official shall have access to such books and records for the purpose
of examination, audit and inspection.
13.2. Any trade secrets contained therein, including, but not limited
to, the identity and addresses of policyholders and certificate
holders, shall be confidential, except the appropriate insurance
regulatory official may use such information in any proceedings
instituted against Administrator.
13.3. Customer shall retain the right to continuing access to such
books and records of Administrator sufficient to permit Customer to
fulfill all of its contractual obligations to insured persons, subject
to any restrictions in the Agreement between Customer and
Administrator concerning the proprietary rights of the parties in such
books and records.
13.4. Administrator may transfer the books and records of transactions
between Administrator and Customer with which Administrator has
entered into a written agreement to a new administrator if: (A) the
agreement between Administrator and Customer is canceled; and (B) a
written agreement for a transfer of the books and records is made
between Administrator and Customer. If the books and records are
transferred to a new administrator, the new administrator shall
acknowledge in writing that the new administrator is responsible for
retaining the books and records of the prior Administrator as required
under subsection 13.1 above.
Subject: Notices and Disclosures
14. Notices to Policyholders.
14.1. To the extent required by Applicable Law, Administrator shall
provide written notice, which must first be approved by Customer, to
policyholders advising them of the identity of and relationship among
Administrator, the policyholder, and Customer.
14.2. When Administrator collects funds (e.g. premiums or other
permitted charges) from a policyholder, the Customer Admin Guidelines
will provide for the policyholder to have received written notice of
the amount attributable to premium charged by Customer for such
insurance coverage separate from any other charges. Additional charges
may not be made for a service to the extent that the charge for the
service has been paid by the Customer.
Subject: Termination
15. Termination. Customer may terminate the Agreement for cause upon
written notice sent by certified mail to Administrator and may suspend the
underwriting authority of Administrator during a dispute regarding the
cause for termination. Customer must fulfill all lawful obligations with
respect to the Contracts being administered pursuant to the Agreement,
regardless of any dispute between Customer and Administrator.
Subject: Misc.
16. Contract to Trustee. If a Contract is issued to a trustee, a copy of
the trust agreement and any amendments to the trust agreement shall be
retained as part of the official records of
EXHIBIT 5.5(b)- 4
Administrator and Customer for a period of five (5) years after termination
of the trust agreement, or for such longer period as may be required by
Applicable Law.
17. Required Administrator Deposits, Bonds and Insurance. Administrator
agrees that whenever required by Applicable Law, to maintain a bond or
deposit (or other insurance as appropriate) with a regulatory authority
beyond what is described in the Agreement, Administrator has and shall
maintain a bond or deposit (or other insurance, as appropriate) in favor of
such authority, to be held in trust for the benefit and protection of
Administrator's clients and/or the policyholders, or other customers in
respect of whose Contracts Administrator may furnish Administration
Services.
Subject: Examples of State Specific Provisions
18. Special Rules for Termination in Arizona. The Agreement shall include a
provision that Customer shall provide thirty (30) days written notice to
Administrator of the termination or cancellation of the Agreement. The
Agreement shall also include a provision that Customer shall provide
fifteen (15) days written notice to the director of the Department of
Insurance for the State of Arizona of termination or cancellation or any
other change in the Agreement.
19. Special Rules for Use of Advertising Materials in Georgia.
Administrator shall maintain at its principal administrative office a
complete file of all advertisements, regardless of by whom written, created
or designed, which are used in the course of the Administrator's business
in Georgia, with a notation indicating the manner and extent of
distribution and the form number of any policy advertised. Such file shall
be subject to inspection by the Office of Commissioner of Insurance of the
State of Georgia. All such advertisements shall be maintained in said file
for a period of not less than five (5) years. Administrator shall file with
the Commissioner on or before March 1 in each year, a certification
executed by an authorized officer of Administrator wherein it is stated
that to the best of his knowledge, information and belief, the
advertisements disseminated by Administrator during the preceding calendar
year compiled, or were made to comply in all respects, with the advertising
regulations of Georgia.
20. Special Rules for Use of Advertising Materials in Idaho. Customer shall
have the prior approval of the Director of the Department of Insurance,
State of Idaho, before approving advertising for use by Administrator.
21. Additional Requirements Applicable to Maine Residents. All
contributions and premiums received or collected by Administrator from
residents of Maine that Administrator holds more than thirty (30) days or
deposits into an account that is not under the control of Customer, shall
be held by the Administrator in a fiduciary capacity and will not be used
as general operating funds of the Administrator. All money received by
Administrator to pay claims will be held in a fiduciary capacity. If the
Customer authorizes the Administrator to make deposits to pay claims from
accounts not under the control of Customer, the Administrator shall follow
all the Maine statutes and regulations regarding the establishment and use
of ATF and/or CASA as those terms are defined under Maine Applicable Law.
To the extent that Administrator administers claims and provides payment or
reimbursement for diagnosis or treatment of a condition or a complaint by a
licensed health care practitioner, Administrator must accept the current
standardized claim form for professional services approved by the Federal
Government and submitted electronically. To the extent that Administrator
administers claims and provides payment or reimbursement for diagnosis or
treatment of a condition or a complaint by a licensed hospital,
Administrator must accept the current standardized claim form for
professional or facility services, as applicable, approved by the federal
government and submitted electronically. Administrator may not be
EXHIBIT 5.5(b)- 5
required to accept a claim submitted on a form other than the applicable
form specified above and may not be required to accept a claim that is not
submitted electronically, except from certain exempt health care
practitioners.
22. Michigan - Benefit Plans - Notices to Participants.
22.1. Pursuant to MCL 550.932(1), in connection with a "benefit plan,"
as defined by MCL 550.902(b), for which Administrator is performing
Administration Services under this Agreement, if any, Customer shall
be responsible for providing written notice to each individual covered
by the benefit plan, which written notice shall contain the following
information: (a) what benefits are being provided; (b) of changes in
benefits; (c) the fact that individuals covered by the benefit plan
are not insured or are only partially insured, as the case may be; (d)
if the benefit plan is not insured, the fact that in the event the
benefit plan or the benefit plan sponsor does not ultimately pay
medical expenses that are eligible for payment under the benefit plan
for any reason, the individuals covered by the benefit plan may be
liable for those expenses; (e) the fact that Administrator merely
processes claims and does not insure that any medical expenses of
individuals covered by the benefit plan will be paid; and (f) the fact
that complete and proper claims for benefits made by individuals
covered by the benefit plan will be promptly processed but that in the
event there are delays in processing claims, the individuals covered
by the benefit plan shall have no greater rights to interest or other
remedies against Administrator than as otherwise afforded them by law.
22.2. The written notice required by subsection (1) shall be
prominently displayed in the summary plan description or in a separate
document. The notice shall be communicated to the individuals covered
by the benefit plan within 60 days after becoming covered, upon each
republication of the summary plan description, and in any case not
less than every 5 years in a manner calculated to be received and
understood by the average individual covered by the benefit plan. As
used in subsections (1) and (2), "individual covered by a plan"
includes only 1 individual per family covered by the benefit plan.
23. Nevada - Fiduciary Accounts.
23.1. If Administrator is or is required to be licensed or registered
as a third party service provider in Nevada, then, to the extent
required by NRS 683A.0877, funds relating to Nevada policyholders
shall be deposited in an account established and maintained by
Customer with a financial institution located in Nevada. Customer and
Administrator shall cooperate with one another in good faith as may
reasonably be necessary to comply with such requirement, potentially
including establishing a deposit account in Nevada and consenting to
Administrator's establishment of a related lockbox arrangement in
Nevada.
23.2. Money shall be remitted within 15 days to the person or persons
entitled to it, or shall be deposited within 15 days in a fiduciary
bank account established and maintained by the Administrator within
the state. The fiduciary account shall be separate from the personal
or business account from Administrator.
EXHIBIT 5.5(b)- 6
24. Special Rule for Connecticut - Notice to Policyholders. When the
services of a third-party Administrator are utilized for Connecticut
policyholders, such third-party Administrator shall issue a benefits
identification card to each insured that includes disclosure of, and
relationship among, the third-party Administrator, the policyholder and the
insurer.
25. Special Rule for West Virginia - Retention Period for Books and
Records. Administrator shall maintain and make available to Customer
complete books and records of all transactions performed on behalf of
Customer. The books and records shall be maintained in accordance with
prudent standards of insurance recordkeeping and shall be maintained for a
period of not less than ten (10) years from the date of their creation. If
this Agreement terminates prior to the passage of such ten (10) year
period, Administrator may satisfy the forgoing obligation by tendering such
books and records to Customer or to the replacement provider of such
services. Customer shall reimburse Administrator for reasonable costs
incurred in retaining or tendering such records.
EXHIBIT 5.5(b)- 7
