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FULL SERVICE AGREEMENT
AGREEMENT (this "Agreement" or "Service Agreement") made as of the _____
day of ____________, 1996, by and between United Investors Life Insurance
Company ("Client"), 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, and
Alliance-One Services, L.P. ("Alliance-One"), 0000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
WHEREAS, Alliance-One uses a computerized data processing recordkeeping
system known as "Vantage-One" for certain life and annuity contracts (the
"Vantage-One System") and has the data processing equipment and administrative
support personnel (the "Facilities" or "Alliance-One's Facilities") to provide
and support administrative processing using the Vantage-One System and
Facilities for the maintenance of records, processing of information, and the
generation of output with respect thereto; and
WHEREAS, Client desires to appoint Alliance-One as Recordkeeping Service
Agent for certain of its life and annuity products (the "Contracts"), as
described in Exhibit A attached hereto, and Alliance-One desires to accept such
appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
SECTION 1 Terms of Appointment
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1.1 Subject to the conditions set forth in this Agreement, Client hereby
appoints Alliance-One as its Recordkeeping Service Agent for the Contracts and
Alliance-One hereby accepts such appointment.
1.2 Alliance-One agrees to provide the facilities, equipment, and personnel
to perform those Recordkeeping Service Functions set forth in Exhibit B1 and
Exhibit B2 in accordance with standard industry practice.
1.3 If requested to do so, Alliance-One will make on-line access to the
Vantage-One System available to Client between the hours of 7:00 a.m. and 7:00
p.m., Central Time, Monday through Friday, except for such holidays as are
observed by the New York Stock Exchange. Access to the Vantage-One System at
other times will be by mutual agreement.
1.4 The Contracts are underwritten by Client and Alliance-One shall not
provide any underwriting services.
1.5 Client shall be responsible for determining the benefits, premium
rates, adjudication of claims, and claims payment procedures applicable to such
coverage; all rules pertaining to these matters must be provided, in writing, by
Client to Alliance- One.
1.6 Alliance-One and Client may agree to a service arrangement for
additional services by signing a Work Assignment that references this Agreement.
Additional services may include:
. System Interfaces . Training Classes
. Model Office . Addition of New Plans
. Conversion Activities
. Customizations
. Ad hoc reporting Programs
1.6.1 Each Work Assignment will describe the work to be done and any
special provisions applicable to the project. In the event of a conflict
between the term of this Agreement and the term of a Work Assignment, the
term of the Work Assignment shall prevail.
1.6.2 If a Work Assignment states that services will be provided on a
"Time and Materials Basis," Alliance-One's charges for the services will be
determined by the amount of Alliance-One personnel time, computer time, and
materials used in providing the services, plus reimbursable expenses,
rather than by the results achieved. Client bears the risk of cost overruns
and delays on work performed on a Time and Materials Basis.
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1.6.3 Alliance-One will try to accommodate Client's requests
concerning the assignment of personnel to Client's projects, but Alliance-
One reserves the right to determine the assignment of its personnel.
1.6.4 If Alliance-One provides Client with an estimate of the cost or
timeframe for any additional services to be provided by Alliance-One, the
estimate will be made in good faith based on the information known to
Alliance-One.
SECTION 2 Fees and Expenses
-----------------
2.1 During the Initial Term (as defined in Section below) of this
Agreement, Client shall pay to Alliance-One upon receipt of Alliance-One's
statement the fees and charges in the amounts as set out in Exhibit A attached
hereto and made a part hereof. Alliance-One shall not be entitled to any
compensation or other payments except as expressly set forth on Exhibit A or
otherwise agreed in writing between the parties. For each renewal term of this
Agreement Alliance-One shall be entitled to receive such fees and charges as
shall be agreed upon by the parties prior to commencement of each such term,
pursuant to Section hereof.
2.2 Alliance-One may impose a late payment charge of one and one-half
percent (1 1/2%) per month, or the highest rate permitted by law, whichever is
lower, on balances outstanding for over thirty (30) days.
2.3 Amounts payable to Alliance-One are payable in full, in United States
dollars, without deduction, and are net of all sales, use, property and related
taxes and duties. Client shall pay directly or to Alliance-One sums equal to all
such taxes and duties paid or payable by reason of this Agreement or the
parties' performance hereunder, exclusive of taxes based upon the net income of
Alliance-One. Client shall not deduct from payments due Alliance-One hereunder
any amounts paid or payable to third parties for duties or taxes, however
designated, including withholding taxes (except for garnishments, tax levies,
and similar orders). All taxes payable by Client hereunder shall become due when
billed by Alliance-One to Client, 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.
SECTION 3 Payments and Collections
------------------------
3.1 The payment to Alliance-One of any premiums or charges for insurance
and deposits by or on behalf of an insured or contract owner shall be deemed to
have been received by Client, and the payment of return premiums or claims by
Client to Alliance-One shall not be deemed payment to the insured or claimant
until such payments are received by such insured or claimant. Premiums for this
Section shall include all deposits and contractual charges.
3.2 Alliance-One will hold in a fiduciary capacity any premiums or charges
for insurance and deposits collected by it on behalf of or for Client with
respect to insureds and annuitants, and return premiums received from Client.
Alliance-One shall comply with all applicable fiduciary account statutes and
regulations. Alliance-One will immediately (and in any event within fifteen
days) remit such funds to the person or persons entitled thereto, or shall
promptly deposit (and in any event within fifteen days) them in a fiduciary
account established and maintained by Alliance-One in the name of Client.
Alliance-One shall require the bank in which such fiduciary account is
maintained to keep records clearly recording the deposits in and withdrawals
from such account on behalf of or for each insurer for which Alliance-One may
collect charges or premiums. Alliance-One shall promptly obtain and keep copies
of all such records and, upon request of Client, furnish Client with copies of
such records pertaining to deposits and withdrawals on behalf of or for Client.
Alliance- One may make withdrawals from such account for:
a. remittance to Client when entitled thereto;
b. transfer to and deposit in a claims paying account, with claims
to be paid as provided in Section below; or
c. remittance of return premiums to the person or persons entitled
thereto.
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3.3 All claims paid by Alliance-One from funds collected on behalf of
Client shall be paid only on checks or drafts of and as authorized by Client.
SECTION 4 Representations and Warranties of Alliance-One
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Alliance-One represents and warrants to Client as follows:
4.1 It is a limited partnership duly organized and existing and in good
standing.
4.2 It is empowered under applicable laws and by its charter and bylaws to
enter into and perform the services contemplated in this Agreement.
4.3 All requisite corporate proceedings have been taken to authorize it to
enter into and perform the services contemplated in this Agreement.
4.4 It has and will continue to have and maintain the necessary facilities,
equipment, and personnel to perform its duties and obligations as set forth
under this Agreement.
4.5 Whenever required by a state, it shall maintain a deposit or a bond in
favor of such state to be held in trust for the benefit and protection of
insureds and insurers whose monies Alliance-One handles. In addition,
Alliance-One shall comply with any other bond and insurance requirements of
applicable state law.
4.6 THESE WARRANTIES STATED IN THIS SECTION ARE IN LIEU OF ALL OTHER
WARRANTIES AND ALLIANCE-ONE DISCLAIMS ANY OTHER EXPRESS OR IMPLIED WARRANTIES,
INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
SECTION 5 Representations and Warranties of Client
----------------------------------------
Client represents and warrants to Alliance-One as follows:
5.1 It is a corporation duly organized and existing and in good standing.
5.2 It is empowered under the applicable laws and regulations and by its
charter and bylaws to enter into and perform this Agreement.
5.3 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
5.4 As between Client and Alliance-One, Client shall be responsible for all
compliance with all laws with respect to the Contracts and all filings with
regulatory agencies in connection with the offer, sale, or administration of the
Contracts.
5.5 It shall fulfill all lawful obligations with respect to Contracts
affected by this Agreement, regardless of any dispute between Client and
Alliance-One.
SECTION 6 Term; Termination
-----------------
6.1 Subject to termination as hereinafter provided, this Agreement shall
remain in force and effect for a period of five (5) years (the "Initial Term").
This Agreement shall be renewed automatically for additional successive terms of
one year at the end of the Initial Term and the end of each renewal term unless
terminated by either party by prior written notice to the other at least one
hundred eighty (180) days prior to the end of the Initial Term or the renewal
term.
6.2 At least ninety (90) days prior to the end of any term hereof,
Alliance-One shall give Client written notice if Alliance-One desires to
increase its fees or charges to Client or to change the manner of payment or to
change any of the other terms and conditions of this Agreement. If Alliance-One
and Client do not agree to such changed fees and charges, the manner of payment
before the end of the term during which such notice is given by Alliance-One, or
if Alliance-One does not withdraw the proposed changes, this Agreement shall
terminate at the end of such term.
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6.3 Either party may terminate this Agreement at the end of the Initial
Term or any renewal term by one hundred eighty (180) days written notice to the
other. This Agreement may be terminated or amended by mutual agreement of the
parties in writing at any time.
6.4 Either party may terminate this Agreement for cause upon written
notice sent by certified mail to the other party. "For cause" shall mean a
material breach of this Agreement or material default in the performance of any
of a party's duties and obligations hereunder which is not remedied within
thirty (30) days after written notice documenting the default is given by the
nondefaulting party.
6.5 If Alliance-One elects to terminate this Agreement for other than
nonpayment of fees and charges and if Client shall so request in writing,
Alliance-One shall continue to provide the services described herein to Client
for a period of six (6) months following such termination, such service to be
provided in accordance with the terms of this Agreement and at one hundred
twenty-five percent (125%) of the fees in effect for the term immediately
preceding such six (6) months period.
6.6 In the event that this Agreement is terminated, Alliance-One agrees
that, in order to assist in providing uninterrupted service to Client,
Alliance-One shall offer reasonable assistance to Client in converting the
records of Client from the Vantage- One System to whatever service or system is
selected by Client, subject to reimbursement to Alliance-One for such assistance
at its standard rates and fees in effect at that time.
6.7 Client shall give Alliance-One thirty (30) days advance written notice
of any termination or cancellation of this Agreement as required by applicable
law. In addition, Client 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 this Agreement as required by
Arizona law.
6.8 Upon termination of this Agreement, Client will return to Alliance-One
all documentation and information relating to the Vantage-One System, and any
other similar or related materials (and any copies thereof) confidential to
Alliance-One. Subject to Section hereof, Alliance-One will return all of the
data and files of Client to it. Client agrees to allow Alliance-One reasonable
access to all such returned records in the event such access is requested by
Alliance-One for any reasonable and legitimate purpose, including as a result of
any litigation or any similar proceeding.
SECTION 7 Limitation of Liability
-----------------------
7.1 In the event malfunction of the Vantage-One System causes an error or
mistake in any record, report, data, information or output under the terms of
this Agreement, Alliance-One shall at its expense correct and reprocess such
records, provided that once Client is aware of or should have been aware of the
error or mistake Client shall promptly notify Alliance-One in writing of such
error or mistake.
7.2 Where Client's claim relates to a defect in any service, Client will
give Alliance-One a reasonable opportunity to correct the defect. If
Alliance-One is able to correct the defect within a reasonable period of time,
Alliance-One will not be liable for any damages.
7.3 In case of any claim by Client against Alliance-One related to this
Agreement or any transaction under this Agreement, regardless of the basis of
the claim, Alliance-One will be liable only for:
7.3.1 Bodily injury (including death) and damage to real property and
tangible personal property; and
7.3.2 For any other loss or injury not included in section 7.3.1, the
amount of actual loss or damage suffered by Client, up to a cumulative
aggregate of the fees paid to Alliance-One by Client under this Agreement
during the three months immediately preceding the occurrence of the claim.
7.4 Notwithstanding anything to the contrary herein, Alliance-One shall,
for the
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protection and benefit of Client, maintain errors and omissions liability
insurance coverage in an amount of at least $10,000,000 total aggregate
liability.
7.5 Notwithstanding anything to the contrary herein, Alliance-One shall not
be responsible for, and Client 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 or for
which it may be held liable, arising out of or attributable to:
7.5.1 Any actions taken by Alliance-One in good faith and due
diligence in compliance with the terms of this Agreement;
7.5.2 Any failure by Client to comply with Federal, state or local
laws or regulations with respect to the offering and/or sale of the
Contracts or the records maintained, and/or Client's failure to use and
employ Alliance-One's System and Facilities in accordance with the
procedures set forth in the reference manuals delivered to Client, Client's
failure to utilize the control procedures set forth and described therein,
and Client's failure to verify promptly reports received through use of the
Vantage-One System and Facilities;
7.5.3 Client's refusal or failure to comply with the terms of this
Agreement, or which arise out of Client's action or willful misconduct or
which arise out of the breach of any representation or warranty of Client
hereunder;
7.5.4 Client's errors and mistakes in the use of the Vantage-One
System, Facilities and control procedures;
7.5.5 Third party claims against Client for loss or damage (including,
but not limited to, Client's policyholders and shareholders) unless caused
by the willful or grossly negligent acts of Alliance-One;
7.5.6 Alliance-One's reliance on, or use of, in performing its duties
and obligations hereunder, information, data, records and documents
received by Alliance-One from Client, its custodian or other agents; or
7.5.7 The reliance on, or the carrying out of, any instructions or
requests of Client pertaining to the normal day-to-day operations and
functions of the Vantage-One System made by any persons listed on a
"Schedule of Authorized Personnel" to be furnished to Alliance-One by
Client upon execution of this Agreement and attached as Exhibit C, and as
amended from time to time in writing by Client. Client shall immediately
provide Alliance-One with written notice of any change of authority of
persons authorized and enumerated in Exhibit C to provide Alliance-One with
instructions or directions relating to services to be performed by
Alliance-One under this Agreement.
7.6 In the event Alliance-One is unable to perform its obligations under
the terms of this Agreement because of natural disaster, strikes, equipment or
transmission failure or damage, or other causes beyond its control, Alliance-One
will use its best efforts to assist Client to obtain alternate sources of
service. Alliance-One will not be liable for any damages resulting from such
causes.
7.7 IN NO EVENT SHALL ALLIANCE-ONE BE LIABLE TO CLIENT FOR ANY CLAIM,
DAMAGE OR OTHER CAUSE OF ACTION, WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE, FOR EXEMPLARY, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.
7.8 The limitations of liability in this Section 7 will be enforced even if
any exclusive remedy fails of its essential purpose.
SECTION 8 Books and Records
-----------------
8.1 This Agreement shall be retained as part of the official records of
both parties for its duration and seven years thereafter.
8.2 Where a policy is issued to a trustee or trustees, a copy of the trust
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agreement and any amendments thereto is to be furnished to Client. Both parties
will retain such documents as part of their official records for the duration of
the policy and seven years thereafter.
8.3 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, Client, and insureds, which shall include the identity and
addresses of policyholders and certificate holders (collectively, "Books and
Records"). Alliance-One shall maintain the Books and Records at its principal
administrative office, for the duration of this Agreement and seven years
thereafter, and in accordance with prudent standards of insurance recordkeeping
and as required by applicable law.
8.4 Client and any applicable insurance regulator shall have full and free
access, during ordinary business hours, to the Books and Records, which shall be
in a form usable by them. Client and the applicable insurance regulator shall
keep confidential any of Alliance-One's confidential information or trade
secrets contained in the Books and Records, provided that the applicable
insurance regulator may use such information in a proceeding instituted against
Client or Alliance-One.
Client or its duly authorized independent auditors have the right under
this Agreement to perform on-site audits of the Books and Records directly
pertaining to the Contracts serviced by Alliance-One's Facilities hereunder at
Alliance-One's Facilities in accordance with reasonable procedures and at
reasonable frequencies. Client shall reimburse Alliance-One for all of its costs
and expenses (including personnel time and materials) incurred in connection
with such audits.
8.5 It is expressly understood and agreed that the Books and Records, but
excluding information confidential to Alliance-One as identified in Section
below, shall be the sole property of Client and that such property shall be held
by Alliance- One, as agent, during the term of this Agreement. All information
furnished by Client to Alliance-One hereunder is confidential and Alliance-One
shall not disclose such information, directly or indirectly to any third party
except to the extent that Alliance-One is required by law to make such
disclosure or as authorized by Client.
8.6 Alliance-One may use only such advertising pertaining to the business
underwritten by Client as has been approved in writing by Client in advance of
their use.
8.6.1 Client shall have the prior approval of the Director of the
Department of Insurance, State of Idaho, before approving advertising for
use by Alliance- One.
8.6.2 Alliance-One will maintain at its principal administrative
office a complete file of all advertisements, regardless of the author,
created or designed, which were used in the course of Alliance-One's
business in the State of 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 years.
Alliance-One shall file with the Commissioner of Insurance of the State of
Georgia on or before March 1 each year, a certification executed by an
authorized officer of Alliance-One wherein it is stated that to the best of
his or her knowledge, information and belief, the advertisements
disseminated by Alliance-One during the preceding calendar year complied,
or were made to comply in all respects, with the advertising regulations of
Georgia.
8.7 Client acknowledges that an affiliate of Alliance-One has proprietary
rights in and to the Vantage-One System and that the Vantage-One System
(including the program code, documentation, specifications, logic, and design of
the Vantage-One System) constitutes confidential material and trade secrets of
Alliance-One's affiliate.
8.7.1 Client agrees to maintain the confidentiality of, and not
disclose to any third party, the Vantage-One System, or any information
about the internal
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affairs, business plans, and business practices of Alliance-One or its
affiliates.
8.7.2 Alliance-One or its affiliate shall be the owner and copyright
holder of all work product that results from programming services performed
by Alliance- One for Client, including, but not limited to, program code,
documentation, specifications, logic, and design.
8.7.3 Alliance-One shall have the right, at any time, and from time to
time, to alter and modify the Vantage-One System and any systems, programs,
procedures or facilities used or employed in performing its duties and
obligations hereunder, provided that no such alterations or modifications
shall materially change or affect the operations and procedures of Client
in using or employing Alliance- One's System or Facilities hereunder
without the consent of Client, which such consent shall not be unreasonably
withheld.
8.8 Client shall, from time to time, provide Alliance-One with current
forms of contracts, prospectuses, and applications, names and states of license
of all insurance and/or broker-dealer agents and representatives authorized to
sell the Contracts.
SECTION 9 Miscellaneous
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9.1 Client may not assign or sublicense or otherwise transfer voluntarily,
or by operation of law, any rights or obligations under this Agreement without
Alliance- One's prior written consent. Alliance-One may not assign this
Agreement if prohibited by applicable law nor without the consent of Client,
which consent shall not be unreasonably withheld; provided that if Client does
so reasonably withhold consent, then Alliance-One shall have the right to assign
this Agreement and Client shall then have the right to terminate this Agreement
early with at least ninety (90) days prior written notice to Alliance-One. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
9.2 With respect to Wyoming residents, Alliance-One will not:
9.2.1 Solicit applications for insurance or annuities for Client,
negotiate insurance or annuities on behalf of Client, or carry out and
countersign insurance policies unless licensed in Wyoming as an agent;
9.2.2 On behalf of Client, for compensation or fee, solicit, negotiate
or procure insurance or the renewal or continuance thereof for Wyoming
insureds or prospective insureds unless licensed in Wyoming as a broker; or
9.2.3 Adjust claims in Wyoming for Client by investigating and
negotiating settlements unless licensed in Wyoming as an adjuster, or an
agent or broker who adjusts or assists in the adjustment of losses arising
under policies issued by the insurers represented by that agent or through
that broker. Nothing herein shall be interpreted as to prohibit
Alliance-One from engaging in ministerial or clerical activities relating
to the payment of claims.
9.3 It is understood and agreed that all services performed hereunder by
Alliance- One shall be as an independent contractor and not as an employee of
Client.
9.4 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written, and this Agreement may not be modified except
in a written instrument executed by both of the parties hereto.
9.5 All notices and requests in connection with this Agreement shall be
given or made upon the respective parties in writing and shall be deemed as
given as of the date deposited in the U.S. mails, postage prepaid, certified or
registered, return receipt requested, and addressed to the address listed on the
first page of this Agreement or to such other address as a party to receive the
notice or request so designates by written notice to the other.
9.6 This Agreement is to be construed in accordance with the laws of the
State of Missouri, without regard to conflicts of law principles.
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CLIENT
By:
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Name:
-----------------------------
(printed)
Title:
-----------------------------
Date:
-----------------------------
Alliance-One Services, L.P.
By:
------------------------------
Name:
-----------------------------
(printed)
Title:
-----------------------------
Date:
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