Exhibit (8)(a)
MASTER SERVICES AGREEMENT
BY AND AMONG
SUNAMERICA ANNUITY AND LIFE ASSURANCE COMPANY, AMERICAN GENERAL LIFE INSURANCE
COMPANY OF DELAWARE AND THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF
NEW YORK
AND
SE(2), INC.
DATED FEBRUARY 1, 2011
TABLE OF CONTENTS
Page
1. SERVICES .............................................................. 1
1.1. General ........................................................ 1
1.2. Scope of Services............................................... 1
1.3. Payments and Collections........................................ 3
1.4. Service Levels.................................................. 5
1.5. Error Detection and Correction.................................. 6
1.6. Other State TPA Requirements.................................... 7
1.7. Notice to Contract Holders...................................... 7
1.8. Further Cooperation............................................. 7
1.9. Data Backup..................................................... 7
1.10. Excused Obligations............................................. 8
1.11. Additional Services and Change Procedures....................... 9
2. CUSTOMER RESPONSIBILITIES ............................................. 10
2.1. Performance of Other Functions ................................. 10
2.2. Operating Guidelines; Changes................................... 10
2.3. Customer Modifications.......................................... 11
2.4. Compliance with Applicable Law.................................. 11
2.5. Interpretations of and Changes to Applicable Law................ 12
2.6. Cooperation..................................................... 13
2.7. Policies and Procedures; Changes................................ 13
2.8. Benefits, Premiums and Underwriting Criteria; Underwriting
and Claims Payment Procedures; Reinsurance...................... 13
2.9. Additional Information.......................................... 14
2.10. Direction; Authorized Personnel................................. 14
2.11. Customer Personnel.............................................. 14
2.12. Control and Supervision of Customer Personnel................... 14
3. RECORDKEEPING AND AUDIT RIGHTS ........................................ 14
3.1 Recordkeeping - Contract Related Information ................... 14
3.2. Return of Contract Accounting Books and Records................. 15
3.3. Historical (Pre-Statement of Work) Hard Copy Records............ 15
3.4. Back-up Storage Location........................................ 16
(i)
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3.5. Segregation..................................................... 16
3.6. Recordkeeping - Other Records................................... 16
3.7. Litigation Holds................................................ 16
3.8. Audits - General................................................ 17
3.9. Access.......................................................... 17
3.10. Cooperation..................................................... 17
3.11. Audit Support Expenses and Charges.............................. 18
3.12. Scope of Audits................................................. 18
3.13. Overcharges..................................................... 18
3.14. No Interference................................................. 18
3.15. Exit Conference................................................. 19
3.16. Undercharges.................................................... 19
3.17. SAS 70 Audits................................................... 19
4. ADMINISTRATOR RESOURCES AND SECURITY .................................. 19
4.1. Facilities, Equipment, and Software ............................ 19
4.2. System Modifications............................................ 20
4.3. Security........................................................ 20
4.4. Personnel....................................................... 21
5. PROPRIETARY RIGHTS .................................................... 22
5.1. Ownership of Administrator Materials ........................... 22
5.2. Ownership of Customer Materials................................. 22
5.3. Other Developed Materials....................................... 23
5.4. Administrator License........................................... 23
5.5. Customer License................................................ 24
5.6. Ownership of Consumer Confidential Information and Contract
Holder Data .................................................... 24
6. CONFIDENTIALITY / PRIVACY ............................................. 24
6.1. General ........................................................ 24
6.2. Permitted Use and Disclosures................................... 25
6.3. Confidential Information........................................ 26
6.4. Exceptions...................................................... 26
6.5. Separation...................................................... 27
6.6. Additional Exceptions........................................... 27
(ii)
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6.7. Return or Destruction of Confidential Information............... 29
6.8. Unauthorized Acts............................................... 29
6.9. Action by Parties............................................... 30
6.10. GLB Compliance; Information Security Management Procedures...... 30
7. FEES AND PAYMENT ...................................................... 31
7.1. General ........................................................ 31
7.2. Proration....................................................... 31
7.3. Increases....................................................... 31
7.4. Estimates....................................................... 31
7.5. Pass-Through Expenses........................................... 32
7.6. Expenses Reimbursement.......................................... 32
7.7. Payment Disputes................................................ 32
7.8. Taxes........................................................... 32
7.9. Invoices........................................................ 34
7.10. Payment Terms................................................... 35
7.11. Interest........................................................ 35
8. REPRESENTATIONS, WARRANTIES AND COVENANTS ............................. 35
8.1. Administrator .................................................. 35
8.2. Mutual.......................................................... 36
9. INDEMNIFICATION AND REIMBURSEMENT FOR DATA ERRORS ..................... 36
9.1. Administrator Indemnity ........................................ 36
9.2. Customer's Indemnity............................................ 37
9.3. Special Indemnification Relating to Infringement................ 37
9.4. Acts of Employees and Subcontractors............................ 38
9.5. Indemnification Procedures...................................... 38
9.6. Variances....................................................... 40
10. DISCLAIMERS, LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES ....... 41
10.1. Disclaimer of Implied Warranties ............................... 41
10.2. Certain Damages Excluded........................................ 41
10.3. Limitation on Liability......................................... 41
10.4. Exceptions...................................................... 42
11. OTHER RIGHTS AND OBLIGATIONS. ......................................... 43
(iii)
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11.1. Independent Contractor ......................................... 43
11.2. Subcontracting.................................................. 43
11.3. Service Locations............................................... 44
12. DISPUTE RESOLUTION. ................................................... 44
12.1. Informal Dispute Resolution .................................... 44
12.2. Formal Dispute Resolution....................................... 45
12.3. Continued Performance........................................... 45
12.4. Payment Dispute................................................. 45
13. TERM AND TERMINATION. ................................................. 46
13.1. Term ........................................................... 46
13.2. Termination by Customer......................................... 46
13.3. Termination for Insolvency...................................... 48
13.4. Termination by Administrator.................................... 48
13.5. Termination Pursuant to a Statement of Work..................... 49
14. INSURANCE ............................................................. 49
14.1. Required Insurance ............................................. 49
14.2. Evidence of Coverage............................................ 50
14.3. Additional Insured.............................................. 50
14.4. Waiver of Subrogation........................................... 50
14.5. Non-Limitation of Insurance..................................... 50
14.6. Contravention of Insurance...................................... 50
15. FORCE MAJEURE ......................................................... 50
15.1. Force Majeure Event ............................................ 50
15.2. No Payment for Unperformed Services............................. 51
15.3. Disaster Recovery Plan And Crisis Management.................... 51
16. TERMINATION ASSISTANCE ................................................ 52
16.1. Termination Assistance Services ................................ 52
16.2. Exit Rights..................................................... 55
16.3. Termination of License to Customer Software..................... 57
17. GENERAL ............................................................... 57
17.1. Divestiture Rights ............................................. 57
17.2. Separation...................................................... 58
17.3. No Publicity.................................................... 59
(iv)
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Page
17.4. No Waiver; Remedies............................................. 59
17.5. Certain Acknowledgments......................................... 59
17.6. Severability.................................................... 59
17.7. Assignment...................................................... 60
17.8. Governing Law................................................... 60
17.9. Forum........................................................... 60
17.10. Waiver of Trial by Jury......................................... 61
17.11. Notices......................................................... 61
17.12. Survival........................................................ 62
17.13. EEO Requirements................................................ 62
17.14. Non-Solicitation................................................ 62
17.15. Services Provided Prior to Effective Date....................... 62
17.16. Legal Fees...................................................... 62
17.17. Headings........................................................ 63
17.18. Governing Order; Subsequent Modifications....................... 63
17.19. Construction.................................................... 63
17.20. Counterparts.................................................... 63
17.21. Third Party Beneficiaries....................................... 64
17.22. Entire Agreement................................................ 64
(v)
MASTER SERVICES AGREEMENT
This MASTER SERVICES AGREEMENT (this "Agreement") is made this First day of
February, 2011 (the "Effective Date") by and among SunAmerica Annuity and Life
Assurance Company ("SAAL"), American General Life Insurance Company of Delaware
("AGL DE"), The United States Life Insurance Company in the City of New York
("AI Life") and se(2), inc. ("Administrator"). Capitalized terms used in this
Agreement are defined in the Glossary attached as Appendix A to this Agreement
hereto and incorporated herein by reference. References throughout this
Agreement to "Customer" shall refer to each SAAL, AGL DE and AI Life, with
respect to the Services provided or to be provided under each Statement of Work
hereto, to which each is a party, as to be stated more fully in each such
applicable SOW.
RECITALS
1. Customer issued annuity contracts and administers such policies.
2. Administrator provides certain business process outsourcing services
with respect to annuity contracts.
3. Administrator agrees to perform the services described in this Agreement
and in mutually acceptable Statements of Work executed by Customer and
Administrator and incorporated by reference into this Agreement (collectively,
the "Statements of Work" or "SOWs" and each, a "Statement of Work" or "SOW").
4. Pursuant to the Letter Agreement, Administrator commenced providing
Services on approximately April 1, 2010 and the Parties intend for this
Agreement to govern all such services which may have been provided prior to the
Effective Date.
5. The parties acknowledge that Administrator's Affiliate, Security
Distributors, Inc., ("SDI") may provide to Customer under one or more SOWs
certain "Brokerage Services", as that term will be defined in each applicable
SOW, in which case SDI shall become a party to this Agreement with respect to
only such SOW and the applicable Brokerage Services.
1. SERVICES
1.1. General.
(a) Administrator will provide the Services to Customer for the
fees or compensation set forth in this Agreement and as stated
in the applicable Statement of Work, in a form similar to the
form attached hereto as Exhibit 12.
(b) As more fully described in the Agreement, Customer shall have
the rights and duties under this Agreement only to the extent
of the Services described or provided in the Statement of Work
executed by Customer, except as may be expressly stated
otherwise in this Agreement.
1.2. Scope of Services. Administrator shall be obligated to provide only
those Services, expressly listed as such in a Statement of Work;
there shall be no implied Services except for tasks reasonably
necessary to complete the Services within the scope of services
specifically listed.
(a) Underwriting and Claims. Administrator shall not be called
upon to (and shall have no responsibility to) establish any
underwriting criteria, benefits, or premium rates, to perform
or conduct any actuarial or other services related to
underwriting, or to establish any claims payment criteria or
policies, other than to the extent expressly set forth in a
Statement of Work. Administrator will perform only such
underwriting and claims related services as are contained in
detailed written procedures provided to it by Customer;
provided that: (i) in no event shall Administrator be called
upon in such procedures to provide any underwriting or claims
services that would require Administrator to be registered
with any Governmental Authority other than such registration
or licensure as is otherwise required to perform the
administrative Services otherwise described herein, (ii)
Administrator may refuse to perform a service set forth in
such procedures if it reasonably concludes that performing
such service would require additional registration or
licensure, and (iii) such procedures must effectively render
Administrator's provision of underwriting or claims related
services ministerial in nature and do not require
Administrator to exercise judgment or discretion.
(b) Transition Services - General. Administrator will perform
those Services relating to transitioning the Contracts from
Customer or its current service provider to Administrator (the
"Transition Services") described in the Statement of Work for
such services, if applicable, which will incorporate by
reference therein the Transition Plan.
(i) Each Party will appoint a "Project Manager" for each
Statement of Work for Transition Services to
coordinate the Transition Services.
(ii) The Parties acknowledge that the Transition Plan will
be modified regularly as the Project Managers for the
Parties mutually agree. Each Party will perform those
activities described in the Transition Plan as being
assigned to the particular Party.
(iii) Customer is responsible for assuring that the
activities described in the Transition Plan assigned
to Customer Designees and any other third parties,
other than Administrator and its Affiliates, are
completed accurately and timely.
(iv) As part of the Transition Services, the
Administrator's Project Manager will confer regularly
with the Customer's Project Manager regarding the
progress, status and risks of Transition Plan.
Promptly upon receiving information indicating that a
Party has not performed its responsibilities or met
the timetable set forth in the Transition Plan or may
not be able to perform its responsibilities or meet
the timetable set forth in the Transition Plan,
Administrator's Project Manager will review such
information with Customer's Project Manager to
consider specific measures to address such delay and
mitigate the risks associated therewith.
(v) As a regular part of performing the Transition
Services, Administrator will request Customer to
review and approve the accuracy and completeness of
certain information and the
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modeling of other information. Where information
provided by Customer or the prior administrator may
not be complete or accurate, Administrator may request
Customer to review and approve certain assumptions or
work-arounds relating to such information. In any
case, where Administrator requests Customer to review
and approve information and Customer does approve such
information, Administrator may rely on such approvals
and shall not be liable for the inaccuracy of
information presented to and approved by Customer
unless such inaccuracy of information is due to the
acts or omissions of the Administrator.
1.3. Payments and Collections.
(a) Premium and Other Deposit Accounts. As applicable:
(i) Establishment; No Withdrawals by Administrator.
Customer shall establish and maintain, as determined
in consultation with Administrator in connection with
transfer of the administration of the Contracts to
Administrator, one bank account upon which the Parties
shall agree into which Administrator shall deposit, or
cause to be deposited, all premiums, contributions,
investments, and charges and other moneys collected or
received by it on behalf of, for or as agent of
Customer with respect to the Contracts. Administrator
shall not have any right under any circumstance to
make any disbursements or withdrawals from any such
deposit account, except to the extent that any
account(s) contemplated to receive moneys as a result
of the settlement of fund trades may also be
designated by Customer as disbursement accounts for
purposes of the making of payments in connection with
the settlement of fund trades. For the avoidance of
doubt, the return of deposits to Administrator because
the related check did not clear shall not be regarded
as withdrawals or disbursements from deposit accounts
by Administrator.
(ii) Fiduciary Accounts. 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,
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
under Applicable Law and Section 1.3(c) of 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.
(b) Disbursement Accounts. As applicable:
(i) Establishment. Customer shall establish and maintain,
as determined in consultation with Administrator, one
or more bank
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accounts with such bank(s) upon which the Parties
shall agree from which Administrator shall be
authorized to, and shall (insofar as such accounts are
funded by Customer), make disbursements and
withdrawals, according to such written account
guidelines as shall be reasonably agreed by
Administrator, and Customer in connection with
transfer of the administration of the Contracts to
Administrator for purposes of performing the Services,
including paying claims as directed by Customer
pursuant to written instructions furnished by Customer
or as Customer may otherwise direct, and to return
premium overpayments for and on behalf of Customer
(the "Account Guidelines") and otherwise as Customer
may instruct in writing.
(ii) Funding. Administrator shall from time to time
instruct Customer regarding the funding of such
disbursement accounts as necessary to ensure that
sufficient funds are in the appropriate accounts to
pay claims and other disbursements in respect of the
Contracts. Customer shall fund such accounts as
reasonably instructed by Administrator. Such
instructions shall be furnished by Administrator, and
such funding shall be effected by Customer, according
to such procedures, including advance notice
requirements, as Administrator, and Customer shall
reasonably agree in connection with transfer of the
administration of the Contracts to Administrator.
Administrator shall not be obligated to cover on
behalf of Customer any disbursement account funding
shortfalls that result from Customer's failure
sufficiently to fund a disbursement account in
accordance with its reasonable and timely funding
instructions to Customer; provided that Customer
shall, upon request, immediately reimburse, by wire,
in accordance with wiring instructions furnished for
such purpose, Administrator for any moneys it may
elect to advance to cover a disbursement account
funding shortfall, without interest if reimbursement
is made the same day, with interest at the Fed Funds
overnight rate if payment is made the next business
morning, or otherwise with interest at the prime rate
of interest as published in THE WALL STREET JOURNAL on
the day the advance is extended.
(c) Form of Payments. All claims, disbursements, or payments paid
by Administrator on behalf of a Customer shall be paid only on
checks, drafts or wire transfers of and as authorized in
accordance with the Account Guidelines.
(d) Operation of Accounts. Administrator shall operate all
disbursement accounts in accordance with the Account
Guidelines.
(e) 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 the date received and the amount deposited,
the mode of payment, the Contract number, the name of Contract
Holder,
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individual premium or other consideration, other contributions
or investment amounts, and agent or other selling
representative.
(f) 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 date of disbursement;
(iii) the person to whom the disbursement was made; (iv) the
amount disbursed; and (v) ledger account number. If the amount
disbursed does not agree with the amount processed in the
policy administration system, Administrator shall prepare a
written record as to the discrepancy.
(g) Daily Accounting. Administrator shall send daily files of cash
activity for deposits to Customer detailing all
Contract-related transactions processed in the policy
administration system and GL feed and unit activity and unit
ending balances.
(h) Currency. All transactions will be paid and reported in U.S.
dollars. Administrator is under no obligation to accept
premium or annuity payments, fees, or charges in any currency
other than U.S. dollars.
1.4. Service Levels.
(a) Adjustment of Service Levels and Redefinition of Adjustment
Formulae. Exhibit 9 hereto sets forth the "Service Levels" and
"Service Level Credits" for the Services. The Service Levels
will be subject to adjustment in accordance with the terms of
Exhibit 9. The Service Credits and other express remedies
stated in Exhibit 9 shall be Customer's sole remedy for
Administrator's failure to attain the Performance Standards
with respect only to the timeliness of such Services.
Otherwise, this Section shall not (a) relieve Administrator
from its obligations to perform all Services in accordance
with this Agreement and (b) shall not prejudice Customer's
rights to pursue any other remedies expressly stated in this
Agreement with respect to Services which Administrator failed
to provide in accordance with this Agreement.
(b) Root-Cause Analysis. Upon Administrator's failure to provide
the Services in accordance with the applicable Service Levels,
Administrator will promptly: (i) perform a root-cause analysis
to identify the cause of such failure; (ii) provide Customer
with a report detailing the cause of, and procedure for
correcting, such failure; (iii) provide to Customer the
proposed procedure for correcting such failure; (iv) correct
such failure in accordance with such procedure; (v) provide
weekly (or more frequent, if appropriate) reports on the
status of the correction efforts; and (vi) upon completion of
the remedial steps, provide Customer with such confirmation.
In addition, Administrator shall provide to Customer access to
review Administrator's compliance with the remedial steps or
otherwise monitor Administrator's performance as otherwise
described in Section 3 of the Agreement.
(c) Measurement and Monitoring Tools. Prior to the Commencement
Date, Administrator will implement the measurement and
monitoring tools and procedures required to measure and report
Administrator's performance of
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the Services against the applicable Service Levels. Such
measurement and monitoring tools and procedures will: (i)
permit reporting at a level of detail sufficient to verify
compliance with the Service Levels; and (ii) be subject to
audit by Customer in accordance with the terms of the
Agreement.
(d) Default Performance Standards. If Administrator is liable for
failing to meet the "Default Performance Standards" as set
forth in Exhibit 9, in addition to any other remedies
available to Customer, Customer may terminate this entire
Agreement in whole or in part under Section 13.2(a)(iv)
provided that Customer provides notice to Administrator within
one year after the failure to meet the Default Performance
Standards. In addition, Customer may revoke its consent(s)
provided under Sections 11.3 with respect to a particular
subcontractor (other than an Affiliate of Administrator) and
with respect to any Services if the subcontractor's
involvement contributed to the Faults that make up the Default
Performance Standards, by providing Administrator thirty (30)
days prior written notice.
1.5. Error Detection and Correction.
(a) If either Party discovers any error or mistake in any record,
report, data, information, or output related to this
Agreement, that Party will promptly inform the other Party,
including, to the extent practicable, the details of such
error or mistake necessary for Administrator or Customer, as
the case may be, to identify the scope of such error or
mistake. The Parties will reasonably cooperate to correct such
error or mistake to mitigate the harm caused.
(b) To the extent Customer was the cause of such error or mistake,
including errors or mistakes based on inaccurate or incomplete
information provided or approved during the Transition
Services, Administrator shall be entitled to reasonable
compensation at its then-applicable time and materials rates
for its efforts relating to investigating and resolving such
error or mistake as well as for correcting all related data.
To the extent Administrator was the cause of such error or
mistake, Administrator will not be entitled to any
compensation for assisting in investigating and resolving such
error or mistake and Customer, subject to the other provisions
of this Agreement, including those in Article 10 below, shall
be entitled to reasonable compensation for its efforts
relating to investigating and resolving such error or mistake.
Such compensation paid or owed by Administrator shall be
considered as damages for purposes of calculating the
limitations of liability in Article 10.
(c) From time to time, Administrator may provide reports to
Customer for the express purpose of asking Customer to verify
the accuracy and completeness of such reports and the
supporting data. The Parties will cooperate on a reasonable
basis to evaluate such reports. Customer acknowledges the need
for Administrator to rely on the information contained in such
reports to perform the Services under this Agreement and that
if Customer does not respond on a timely basis to
Administrator's reasonable requests for verification,
Administrator will be excused from performing
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Services dependent on such timely verification until such time
verification is provided.
1.6. Other State TPA Requirements. The Parties acknowledge and
understand that Applicable Law may provide additional rights to,
and/or impose additional duties and obligations on, the Parties
arising from the Applicable Law governing third party
administrators ("Applicable TPA Laws"). Exhibit 1 describes those
provisions required by the Applicable TPA Laws to be in an
agreement between a third party service provider and an insurance
company with respect to the Services provided under this Agreement,
as determined by Administrator, which provisions are not otherwise
in this Agreement. The provisions of Exhibit 1 are incorporated
herein by reference. To the extent that an Applicable TPA Law in
Exhibit 1 conflicts with an actual Applicable TPA Law, then the
actual Applicable TPA Law shall govern to the extent of such
conflict. To the extent that an Applicable TPA Law is not
identified on Exhibit 1 or is modified, amended or subsequently
enacted or applicable to the Administrator, then such law shall be
deemed to be included in Exhibit 1. Administrator shall notify
Customer of any changes in Applicable TPA 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 service provider and an insurance company, by providing an
updated Exhibit 1, with a reasonable explanation of the basis for
such changes and if any such change in Applicable TPA Laws
conflicts with the provisions, or otherwise impacts the terms and
conditions, of this Agreement, a detailed description of such
conflicts and/or impacts shall also be provided. To the extent the
Applicable TPA Laws impose obligations on Administrator which
Administrator believes may conflict with Administrator's
obligations expressly stated in this Agreement, Administrator shall
notify Customer's designated authorized officer in writing of such
conflicts and such changes shall be considered a change in
Applicable Law as described in Section 2.5 below.
1.7. Notice to Contract Holders. To the extent Applicable TPA Laws
require Administrator to provide written notice to each Contract
Holder advising them of the identity of and the applicable
relationship among Administrator, the Contract Holder and Customer,
Administrator shall do so at Administrator's expense. If Customer
will be sending to the Contract Holders any other communication
within the time required for Administrator to send such notice, the
Parties will mutually agree upon the form of notice to be sent in
lieu of Administrator sending a separate notice to Contract Holders
as contemplated above.
1.8. Further Cooperation. Administrator will cooperate with Customer in
connection with assistance outside the scope of the Services under
this Agreement, but to the extent such cooperation requires
material additional effort or resources by Administrator for which
Administrator seeks additional compensation, such services or
resources shall be provided in accordance with the Change
Procedures.
1.9. Data Backup. Administrator will implement and comply with (a)
generally accepted industry practices for data and system backup,
and (b) Customer's backup requirements set forth in the applicable
Statement of Work (and if there are any inconsistencies, Customer's
requirements will control). The foregoing
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policies, practices and requirements may be updated pursuant to the
Change Procedures.
1.10. Excused Obligations.
(a) Subject to Section 1.10(b), Administrator's failure to perform
its obligations under this Agreement, including failure to
attain any Service Levels, will be excused to the extent
caused by any of the following:
(i) The failure of Customer, a Customer Designee or their
respective employees or agents, to perform their
respective obligations under this Agreement or the
applicable Statement of Work;
(ii) violations of Applicable Law by Customer, a Customer
Designee, the issuer of a Contract, any broker-dealer,
agent, representative or other person on behalf of
Customer in connection with a Contract, or the failure
of any Contract to comply with the terms of Applicable
Law to achieve the intended purpose of such Contract;
(iii) failure of the Operating Guidelines as approved by
Customer in accordance with this Agreement to comply
with Applicable Law;
(iv) Administrator's reliance upon Operating Guidelines
approved by Customer or upon any additional policies,
processes, interpretations of applicable laws and
regulations, unique to administering the Contracts as
provided in writing by Customer to the extent such
policies, processes and interpretations were not, at
the time of Administrator's reliance, superseded by a
later version of the Operating Guidelines approved by
Customer, all in accordance with this Agreement;
(v) actions or omissions by any previous administrator of
the Contracts;
(vi) any action taken by Administrator, its Affiliate or
any Permitted Subcontractor, at the request or
direction of Customer or a Customer Designee or action
not taken by Administrator, its Affiliate or any
Permitted Subcontractor as a result of Customer not
providing the appropriate written direction to act;
(vii) errors in the Customer Software other than those
caused by Administrator, its Affiliates, or its
Permitted Subcontractors;
(viii) failures to meet any Service Level as a result of a
decision by Customer or a Customer Designee;
(ix) any matters for which Administrator is expressly
excused under this Agreement from the Service Level
Defaults;
(x) Customers or its agents' (including Customer
Designees'), breach of the terms of any Contract or
any other agreement relating to a
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Contract, including any agreement relating to the sale
of the Contract, commissions paid or payable relating
to such Contract, the reinsurance of such Contract,
provided that Administrator otherwise performed in all
material respects with this Agreement; or
(xi) failures caused by inaccurate or incomplete
information or data provided to Administrator,
including such information provided by Customer or a
Customer Designee or a Contract Holder.
(b) Upon learning of the occurrence or likely occurrence of any of
the foregoing, such Party will inform the other and the
Parties will cooperate to develop and implement a mutually
acceptable plan to minimize the adverse effects caused by such
circumstances, in accordance with the Change Procedures.
1.11. Additional Services and Change Procedures.
(a) During the term of a Statement of Work, Customer may wish to
obtain additional services from Administrator, to change the
Services or Service Levels, or to enhance or reduce the level
of Services. Likewise, Administrator may wish to change the
Services or Service Levels or to reduce the level of Services
or Service Levels. Any and all requests for additional
services or changes or reductions in services or Service
Levels, shall be made in writing to the other Party on a
Change Request Form substantially in the format set forth as
Attachment A to Exhibit 7 to this Agreement.
(b) Promptly upon receiving a written request from Customer for
the performance of additional or an enhanced level of services
pursuant to a Statement of Work, Administrator shall respond
in writing to Customer regarding its ability and willingness
to perform such additional or enhanced level of services, the
schedule pursuant to which it could perform any or all such
additional or an enhanced level of services, any impact to the
Services, the additional fees and/or personnel, facilities,
equipment, software, or other assets required to perform the
additional or enhanced level of services, any relevant
additional Service Levels, and any other matters relevant to
the request for the performance of additional or enhanced
level of services.
(c) Promptly upon receiving a request for a change or reduction of
the level of Services or Service Levels, the receiving Party
shall respond to the requesting Party in writing regarding its
ability and willingness to agree to the change or reduction
requested, the effect of such change or reduction on, in the
case of Administrator, it or its ability to perform the
Services or, in the case of Customer, its ability to meet its
needs and its obligations, an estimate of the charges
(increased or decreased) for the Services as proposed to be
changed or reduced insofar as the receiving Party is agreeable
to the proposed change or reduction, and other relevant
matters.
(d) No proposed additional services by Customer, or change in or
enhancement or reduction of Services or Service Levels to be
provided or met by Administrator shall be effective unless and
until the Parties shall agree in a
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written amendment to a Statement of Work, or a change order,
executed and delivered by each Party, and no Party shall be
obligated for additional services or to any change or
reduction of the Services or Service Levels to be provided;
provided that Administrator and Customer shall negotiate in
good faith in respect of any and all such requests by Customer
or Administrator, particularly so if and to the extent any
such requests are necessitated by any changes to Applicable
Law.
(e) The services to be provided by Administrator, if and as
amended and changed, shall thereupon be the "Services" for the
remainder of the term of the Statement of Work, unless and
until such Statement of Work is further amended in a manner
that amends or changes the Services.
2. CUSTOMER RESPONSIBILITIES
2.1. Performance of Other Functions. Customer shall, and shall cause its
personnel, agents, suppliers, clients and its other representatives
to perform the functions and tasks as set forth herein and set
forth in the applicable Statement of Work, if any. Furthermore,
Customer acknowledges that Administrator's performance of Services
may be dependent on Customer's personnel, agents, suppliers,
clients and its other representatives to continue to perform all
functions and tasks, if any, with respect to the Contracts that are
not among the functions to be performed by Administrator. Customer
shall maintain computer hardware and software capable of
interfacing with Administrator's systems (insofar as contemplated
for purposes of a Statement of Work), maintain telephone lines,
network access and other equipment and services necessary to
transmit data to and to receive data from Administrator
electronically.
2.2. Operating Guidelines; Changes.
(a) As part of the Transition Services, Customer and, with
assistance as directed by Customer, Administrator shall
prepare the first version of the Operating Guidelines. All
changes to the Operating Guidelines shall be made in
accordance with the Change Procedures. Each of the Parties
agrees to comply with the Operating Guidelines approved in
writing as the same may be updated in writing during the Term
of the applicable Statement of Work.
(b) Subject to compliance with the Change Procedures, the Parties
will implement such additional policies, procedures, and
updates to the Operating Guidelines that: (i) are mandated by
law, rule, regulation, or changes thereto for Administrator
properly and legally to perform the Services; (ii) relate to
additional interpretations or directions provided by Customer
in writing; or (iii) so long as they are lawful and would not
impose incremental cost on Customer, are requested by
Administrator to enable Administrator to more efficiently
perform the Services.
(c) Administrator shall comply with and, in accordance with the
Change Procedures, incorporate promptly into the Operating
Guidelines such interpretations and directions provided by
Customer in writing. Administrator shall provide Customer a
reasonable opportunity to review such revised
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Operating Guidelines. If Customer does not approve such
revisions to the Operating Guidelines in writing by the time
reasonably set by Administrator, such revisions shall be
deemed rejected by Customer, in which case the then-current
version of the Operating Guidelines shall govern until and
unless revisions to the Operating Guidelines are approved by
Customer in writing. Administrator shall consult with Customer
to determine the most efficient means to implement such
interpretations and directions into the Operating Guidelines.
(d) In performing the Services, Administrator shall be entitled to
rely upon such documented Operating Guidelines approved by
Customer.
2.3. Customer Modifications.
(a) Customer may modify its facilities, equipment, software, or
other resources accessed which are used by Administrator in
connection with performing the Services. Customer shall use
reasonable efforts to consult with Administrator in advance
about any such modifications that may materially impact
Administrator's performance hereunder. Administrator shall use
reasonable efforts to identify promptly the level of impact on
the Services of Customer's proposed modifications.
(b) To the extent Administrator would be required to incur
additional time or resources as a result of modifications
proposed by Customer as described above, Administrator shall,
via the Change Procedures, inform Customer of the estimated
costs in connection with such modifications reasonably
incurred by Administrator as soon as practical in light of the
nature of the proposed change. If Customer implements such
proposed modifications, Customer shall reimburse Administrator
for the reasonable costs identified in writing by
Administrator within such time of being notified by Customer
in advance of Customer initiating such changes.
(c) To the extent Customer materially modifies such facilities,
equipment, software, or other resources accessed and used by
Administrator in connection with performing the Services and
does not inform Administrator in writing in advance as stated
above, Customer shall pay Administrator on a time and
materials basis at the rates set forth in the applicable
Statement of Work for the reasonable costs incurred by
Administrator modifying its software or other resources to the
extent reasonably necessary to conform to Customer's
modifications and Administrator shall be excused from
performing in accordance with this Agreement to the extent
caused by Customer's changes.
2.4. Compliance with Applicable Law.
(a) In connection with performing the Services, Administrator
shall comply with all Applicable Law. Administrator shall not
be responsible for any violation of, or failure to comply
with, such Applicable Law if Administrator's acts or omissions
result from relying on information provided by Customer or a
Customer Designee. If Administrator has any specific requests
for legal and regulatory information from Customer, such
requests shall be submitted to
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Customer via a designated representative of Customer and
Customer will respond within a commercially reasonable time.
(b) The Parties acknowledge and agree that this Section is not
intended to create an attorney-client relationship between the
Parties.
2.5. Interpretations of and Changes to Applicable Law.
(a) Administrator shall use commercially reasonable efforts to
monitor Applicable Law relating to the Services and changes to
such laws. Administrator shall inform Customer of any changes
in Applicable Law which may relate to the Services promptly
after Administrator identifies such changes.
(b) Customer shall be ultimately responsible for identifying,
interpreting and complying with the requirements of Applicable
Law that apply to the Services (other than Applicable TPA
Laws), including those activities performed for Customer by
Administrator and shall provide appropriate written direction
to Administrator with respect to Administrator's compliance
with such requirements. Customer shall provide to
Administrator Customer's written interpretations of such
Applicable Law as requested by Administrator or as determined
to be appropriate by Customer. Administrator shall comply with
any such direction and interpretation provided by Customer in
writing to Administrator.
(c) Administrator and Customer shall work together, via the Change
Procedures, to identify the impact of changes in Applicable
Law on how Customer receives, and Administrator provides, the
Services to determine the most efficient means to implement
such changes into the Operating Guidelines and other
procedures used by Administrator.
(d) Administrator shall perform the Services regardless of changes
in Applicable Law. If such changes prevent Administrator from
performing its obligations under this Agreement, Administrator
shall develop and, upon Customer's written approval, implement
suitable alternative arrangements that will enable
Administrator to perform its obligations under this Agreement.
(e) Administrator shall implement Normal Changes into
Administrator's procedures and into the Operating Guidelines
for no additional charges.
(f) Administrator shall implement Extraordinary Changes into
Administrator's procedures and into the Operating Guidelines
at the then applicable time and materials rates based upon a
reasonable allocation of costs to incorporate such changes
into Administrator's policies, processes, workflows,
procedures and into the Operating Guidelines, as the parties
shall negotiate expeditiously and in good faith. In
negotiating such allocation of expenses, the following factors
are to be considered: (i) the relative benefit each party
receives from incorporating such changes; (ii) the marginal
costs Administrator would incur to make such changes taking
into account amounts received and to be received from other
users, customers or licensees; (iii) the re-usability or
leveragability of such changes by each
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party; and (iv) the amount each party would be required to
incur in the absence of this Agreement, to make such changes
and incorporate such changes into its policies, processes,
workflows, procedures and other systems. Notwithstanding the
foregoing, to the extent other customers of Administrator
benefit from such changes, Customer shall pay not more than a
pro-rata share of the costs of the Extraordinary changes,
using a reasonable method of allocation, based on the nature
of the change.
(g) As used in this Section, the following defined terms shall
apply: A "Normal Change" is a change in the Applicable Law as
described in writing by Customer governing Services which: (i)
when combined with other Normal Changes during a given
calendar year, require not more than one-hundred and twenty
(120) person hours to implement into the workflows, procedures
and Operating Guidelines or into the Services; (ii) applies
equally to Administrator's Affiliates or other customers; or
(iii) is a change to the Applicable TPA Laws. An
"Extraordinary Change" is a change in the Applicable Law as
described in writing by Customer governing Services which: (i)
when combined with other Normal Changes during a given
calendar year, require more than one-hundred and twenty (120)
person hours to implement into the workflows, procedures and
Operating Guidelines or into the Services; (ii) requires
Administrator to devote additional personnel on a permanent
basis to perform the Services following such a change; (iii)
is specific to the Services to be provided under this
Agreement; or (iv) is not a Normal Change.
2.6. Cooperation. Customer shall, in addition, cooperate and cause its
personnel to cooperate with Administrator as reasonably necessary
or requested by Administrator in order to enable Administrator to
perform the Services as and when contemplated herein, including by
provision of reasonable remote or onsite access to Customer's
facilities, personnel, hardware, and/or software.
2.7. Policies and Procedures; Changes. Customer agrees to implement any
policies, procedures, and updates that (a) are mandated by law,
rule, regulation, or changes thereto for Administrator to properly
and legally to perform the Services; or (b) so long as they are
lawful and would not impose a material cost on Customer regardless
of whether monetary or in time and effort relative to the benefits
to be realized under this Agreement and all affected Statement of
Work, are requested by Administrator to enable Administrator to
more efficiently perform the Services. Such policies and procedures
or changes shall be implemented by Customer promptly after
Administrator's request, or such longer period as shall be
reasonable under the circumstances. If Customer objects to any
policies, procedures, or updates as requested by Administrator, or
believes it needs more than sixty (60) days to implement such
policies and procedures or changes, Customer shall, after receiving
Administrator's request, so inform Administrator and the Parties
shall work promptly and in good faith to resolve Customer's
objections taking into consideration the bases for Administrator's
request and Customer's objections, the costs and benefits of
adherence or non-adherence to the request, and potential
alternatives.
2.8. Benefits, Premiums and Underwriting Criteria; Underwriting and
Claims Payment Procedures; Reinsurance. Customer acknowledges and
agrees that it is solely
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responsible for determining the benefits, premium rates,
underwriting criteria, and underwriting and claims payment
procedures that apply to the Contracts. Customer further
acknowledges that it is solely responsible for securing reinsurance
and for the competent administration of its benefit programs.
2.9. Additional Information. Customer shall, from time to time, provide
Administrator with current forms of the Contracts, prospectuses,
applications, and other documents and information relating to the
Contracts, including the names and jurisdictions of license and/or
registration of all insurance agents and representatives and
broker-dealers authorized to sell or solicit the Contracts, and
such other additional information as Administrator may reasonably
request in connection with the provision of the Services.
2.10. Direction; Authorized Personnel. Customer personnel listed in a
Statement of Work as Customer authorized personnel, as such list
may be amended by Customer from time to time by notice to
Administrator, shall be authorized to provide Administrator with
instructions or directions on behalf of Customer relating to
Administrator's normal day-to-day provision of the Services under
the applicable Statement of Work. Customer shall promptly provide
Administrator notice of any change in the authority of any such
person to provide such instructions and directions.
2.11. Customer Personnel. All costs incurred by Customer in respect of
its personnel in connection with the policies, including all
salaries, wages, benefits (including, but not limited to,
compensation, insurance, disability insurance, employees' pension
plan, employee welfare benefit plan, unemployment insurance,
vacations or leave), and employment-related taxes, shall, as
between Administrator and Customer, be borne solely, exclusively,
and entirely by Customer. The Parties do not intend, under this
Agreement or otherwise, that Administrator shall be required to
create, maintain, or provide any benefits or rights for any of
Customer's personnel.
2.12. Control and Supervision of Customer Personnel. Persons employed by
Customer shall be employees of Customer and not Administrator.
Customer shall be solely responsible for the control, supervision,
and direction of, and shall have sole authority to control,
supervise, and direct, Customer personnel in respect of the
services related to the Contracts. Customer shall in addition have
sole authority and responsibility with respect to the selection,
hiring, promotion, demotion, dismissal, firing, training, and
setting of salaries, wages, and benefits of its personnel, and with
respect to any complaints of its personnel. Administrator shall not
have any obligation or right or authority or responsibility to
supervise, direct, discharge, or discipline any of Customer's
personnel.
3. RECORDKEEPING AND AUDIT RIGHTS.
3.1. Recordkeeping - Contract Related Information. Administrator shall
establish and maintain facilities and procedures for the
safekeeping of complete Contract accounting books and records of
all transactions of any nature performed by Administrator on behalf
of Customer (collectively, "Contract Accounting Books and
Records"). Contract Accounting Books and Records generated and
maintained by Administrator includes the information required for a
person to
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administer the Contracts in accordance with Applicable Law, but
Contract Accounting Books and Records excludes all other
information generated or maintained by Administrator which is not
reasonably necessary to administer the Contracts in accordance with
Applicable Law, such as the fees and charges under this Agreement.
All such Contract Accounting Books and Records shall be maintained
in accordance with Applicable Law with respect to the Services.
Copies of Contract Accounting Books and Records shall be maintained
by Administrator for the longer of any period that may be required
by Applicable Law. Records must be kept for the life of the
policies and for so long as required by Customer recordkeeping
policies unless a replacement third party assumes, in writing and
on terms reasonably acceptable to Administrator, responsibility to
maintain such records for such period of time. Notwithstanding the
foregoing, Administrator may satisfy the foregoing by tendering
such Contract Accounting Books and Records to Customer at the end
of this Agreement, at such time as a Contract is rendered inactive,
when Administrator no longer needs immediate access to such Books
and Records, or at the end of the applicable Statement of Work in a
non-proprietary format reasonably acceptable to Customer.
3.2. Return of Contract Accounting Books and Records. Promptly following
the termination or expiration of a Statement of Work, Administrator
shall deliver to Customer, or to a Customer Designee identified by
Customer, all Contract Accounting Books and Records of all
transactions performed in connection with such Statement of Work.
Such Contract Accounting Books and Records shall be reasonably
cataloged or indexed and in a reasonably commercially accessible
format at all times and when so delivered to the Customer.
3.3. Historical (Pre-Statement of Work) Hard Copy Records.
(a) Any hard copy, non-electronic records with respect to the
Contracts that were prepared or made prior to the date of a
Statement of Work that: (i) Administrator needs to perform the
Services; or (ii) Customer desires to transfer possession and
control of to Administrator, and which Administrator agrees in
writing shall be transferred into its possession or control,
shall be delivered by Customer or a Customer Designee, to
Administrator, or Administrator Personnel, at such times as
the Parties shall agree in writing, catalogued or indexed and
maintained in such manner as the Parties shall agree, all at
Customer's expense.
(b) Upon Administrator's receipt of such historical records, such
historical records shall be Contract Accounting Books and
Records. Administrator shall not be required to catalogue or
index such records beyond which they are catalogued or indexed
when delivered to Administrator. Administrator shall only be
obligated to maintain such records in the format in which
delivered by Customer or a Customer Designee to Administrator.
(c) Subject to Customer's prior approval, Administrator may image,
or cause to be imaged hard copy historical records, upon the
occurrence of which such images shall be subject to the
requirement that they be reasonably catalogued and indexed and
in a reasonably accessible format at all times and when so
delivered to Customer or a Customer Designee, just as the
other complete books and records of all transactions of any
nature
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performed by Administrator on behalf of Customer. Hardcopy
records shall be maintained by Administrator or by a third
party approved by Customer, and shall be returned to Customer
upon Customer's request. In lieu of retaining such hardcopy
records, Administrator may tender them to Customer.
(d) Customer acknowledges that Administrator's ability to perform
the Services in accordance with this Agreement is dependent on
Customer providing complete and accurate historical data to
Administrator in a usable format. Further, from time to time,
Administrator may request Customer to review and approve the
accuracy and completeness of certain historical data. Where
such historical information provided by Customer or the prior
administrator may not be complete and accurate, Administrator
may request Customer to review and approve certain assumptions
or work-arounds relating to such information. To the extent
Administrator is required to devote additional time and
resources assembling, analyzing or re-formatting such
historical data in connection with the Services to be
provided, Customer shall compensate Administrator for such
additional time and resources at the rates set forth herein or
the applicable Statement of Work. In any case, where
Administrator requests Customer to review and approve
information and Customer does approve such information,
Administrator may rely on such approvals and shall not be
liable for the inaccuracy of information presented to and
approved by Customer.
3.4. Back-up Storage Location. Administrator may send back-up tapes to
one or more off-site storage facilities provided that:(a)
Administrator shall inform Customer in advance of the name and
location of any replacement or new off-site facility; and (b) each
new or additional off-site facility shall maintain at least the
same level of security as required by this Agreement. Upon
Customer's reasonable request, authorized personnel or designated
representatives of Customer shall be permitted access to the
off-site facilities at which Administrator's back-up tapes are kept
during normal business hours and subject to any reasonable security
procedures or other restrictions in effect at the off-site
facilities at the time of the access.
3.5. Segregation. Administrator shall at all times keep logically
segregated the Customer Contract Accounting Books and Records and
items in process from those of Administrator's Affiliates and other
customers and from those of Administrator themselves.
3.6. Recordkeeping - Other Records. Administrator shall maintain books
and records in accordance with Applicable Law and general industry
standards, including those records relating to the areas identified
in Section 3.12 below. Such books and records shall be maintained
during the Term and for a period of six (6) years thereafter. The
books and records to be maintained pursuant to this Section 3.6 do
not include Contract Accounting Books and Records governed by
Section 3.1 above.
3.7. Litigation Holds. In the event of any dispute arising under or with
respect to this Agreement or in the event that Customer issues a
"record hold order" in writing, the applicable retention period
will be extended until the resolution of such
- 16 -
dispute becomes final and non-appealable and all obligations of the
Parties hereto have been satisfied in full. Administrator will, and
will cause its Permitted Subcontractors to, comply with any such
record hold orders issued by Customer requiring preservation of
certain records for legal, regulatory or other purposes.
3.8. Audits - General. Upon ten (10) Business Days notice to
Administrator and during normal business hours, and no more than
twice each calendar year unless it is reasonably necessary or
appropriate, Customer or a Customer Designee may, in compliance
with the Administrator's security regulations and the further
provisions hereof, audit Administrator for the purposes set forth
in this Section 3. Customer may conduct audits itself or with the
assistance of a Customer Designee (provided that such third party
executes a confidentiality agreement that contains protections for
Confidential Information comparable to those set forth in this
Agreement and provided further that such third party shall not be
any person that Administrator deems in its reasonable discretion to
be an Administrator Competitor), at Customer's expense, subject to
the provisions below. No such audit may be performed by any person
compensated on a contingency fee basis. The foregoing shall not
restrict the number of audits which may be conducted by
Governmental Authorities having jurisdiction over Customer or any
Customer Designee and the exception for "good cause" referred to
above shall apply to audits conducted by Customer in connection
with any breach of this Agreement by Administrator or any failure
of Administrator to attain the Service Levels.
3.9. Access.
(a) Customer. During any audit in relation hereto, Administrator
shall provide reasonable access to Customer and Customer
Designees (including their respective internal audit and
compliance staff), inspectors, consultants, and other
representatives, who are not Administrator Competitors to: (i)
facilities where the Services are being performed; (ii) its
personnel and subcontractors; and (iii) data and records in
the possession of Administrator relating to its performance of
the Services. Customer, the Customer Designees and their
respective auditors, inspectors, consultants, and other
representatives shall adhere to Administrator's reasonable and
customary security and safety policies.
(b) Customer's Regulators. Administrator shall provide any
Governmental Authority of any nature whatsoever having
regulatory authority over Customer or Customer Designees
on-site access during Administrator's ordinary business hours
to: (i) facilities where the Services are being performed;
(ii) their personnel and subcontractors; and (iii) data and
records in the possession of Administrator relating to its
performance of any of the Services. Customer shall request
such representatives of such Governmental Authority to comply
with Administrator's reasonable and customary security and
safety policies.
3.10. Cooperation. Administrator shall cooperate fully with and assist
Customer, Customer Designees, and their respective auditors,
inspectors, consultants, and other representatives, and any
Governmental Authority, in connection with audits
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in relation hereto and/or to any Statement of Work and shall, on a
reasonably timely basis, furnish each with all information
reasonably requested.
3.11. Audit Support Expenses and Charges. Customer shall reimburse
Administrator for the reasonable costs incurred by Administrator
and for the time devoted by Administrator Personnel in connection
with such audits which are beyond the Baseline Audit Support at the
rate stated in Exhibit 6. "Baseline Audit Support" means the cost
incurred and the time devoted by Administrator Personnel in
providing audit assistance and access to Customer, Customer
Designees and Governmental Authorities during each calendar year
(or pro rata portion) during the Term of up to one hundred twenty
(120) hours of such assistance. The time devoted by Administrator
Personnel in providing such audit assistance and access to Customer
relating to Administrator's failure to perform in accordance with
this Agreement, including the Service Levels will be provided at no
charge to Customer (and is not included in the calculation of
Baseline Audit Support
3.12. Scope of Audits. Audits shall be limited to information relating to
Administrator's provision of the Services in compliance with its
obligations under this Agreement and, except for audits conducted
in connection with, in anticipation of, or relating to, requests
by, or inquiries from Governmental Authorities, shall be limited to
the period of the then current calendar year and the immediately
preceding two (2) calendars years in connection with: (a)
Administrator's practices and procedures, including procedures to
maintain the confidentiality of Confidential Information; (b)
Administrator's controls and security measures and procedures; (c)
Administrator's disaster recovery and back-up plans and procedures;
(d) any matter necessary to ensure that Administrator or Customer
has met or is meeting requirements of Applicable Law; (e)
Administrator's compliance with its Service Level obligations;
and/or (f) Administrator's charges for the Services, including
expenses and taxes invoiced with respect thereto, and any credits
provided or that should have been provided. The foregoing time
limitation shall not restrict Customer from requesting information
directly relating to Administrator's performance in prior periods
where Customer's examination of the information for the then
current calendar year and the immediately preceding two (2)
calendars years reveals an error under this Agreement by
Administrator in the more recent period, provided that Customer
identify in writing such error alleged to have occurred in the more
current period.
3.13. Overcharges. If, as a result of any such an audit, Customer
determines that Administrator overcharged it, Customer shall notify
Administrator in writing of its determination, including the amount
of the overcharge and the basis for its conclusion, and
Administrator shall promptly pay to Customer the reasonable out of
pocket costs incurred by Customer with respect to the audit, the
amount of the overcharge, plus interest at the rate of the prime
rate published by THE WALL STREET JOURNAL on the day after the day
on which it receives such notice (but in no event to exceed the
highest lawful rate of interest), calculated from the date of
payment of the overcharged amount until the date of payment to
Customer, unless such claim of overcharge is promptly (but in any
event within forty-five (45) days) disputed by Administrator in
writing, in good faith.
3.14. No Interference. All audits shall be performed in a manner to
minimize disruption to Administrator's business. In no event shall
Customer, while conducting
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an audit, materially interfere with Administrator's ability to
perform the Services or any of its other obligations under this
Agreement or any Statement of Work or to conduct its other
operations in the ordinary course of business.
3.15. Exit Conference. Following any audit by Customer, Customer shall
conduct (in the case of an internal audit), or request its external
auditors to conduct, a conference with Administrator to discuss the
preliminary conclusions from such audit with Administrator.
Customer shall report, in writing, to Administrator any actual or
suspected deficiencies identified in such audit within sixty (60)
days from the conclusion of the audit. To the extent that
Administrator is not performing in accordance with this Agreement,
Administrator shall promptly take all such actions as are
appropriate to correct such deficiencies and otherwise perform in
accordance with this Agreement.
3.16. Undercharges. Subject to Section 7.8(d) below, if, as a result of
Administrator's audit of its charges to Customer, Administrator
determines that it has undercharged Customer for Services provided
by it, Administrator may specially invoice Customer for such amount
but in no event shall Customer be liable for amounts that would
have otherwise been due more than twelve months prior to the
discovery of the undercharges.. Any such invoice shall include
evidence that the amount was not previously charged to Customer.
Upon receipt of this information and evidence, Customer shall
promptly pay to Administrator the amount of the undercharge that it
does not promptly (but in any event within sixty (60) days), in
writing, dispute in good faith.
3.17. SAS 70 Audits. At least annually, at no additional charge to
Customer, Administrator shall provide to Customer a copy of a SAS
70 Type II report or the successor thereof for the twelve (12)
months ending September 30, with the first report being provided
for the twelve (12) months ending September, shall be for the
September period beginning immediately prior to the first
Commencement Date unless otherwise already provided. Administrator
shall deliver to Customer such final report as soon as possible
after December 1, but no later than December 31. Such report shall
be prepared by a nationally recognized firm for Administrator's
facility or facilities from which it (including, as applicable, its
Affiliates and subcontractors) is providing Services. Such reports
provided by Administrator under this Section shall be considered
Administrator Confidential Information. Administrator may redact
from such reports, those portions containing confidential
information of third parties.
4. ADMINISTRATOR RESOURCES AND SECURITY
4.1. Facilities, Equipment, and Software. Administrator shall provide
the Services from facilities, and using office furniture, office
supplies, equipment, and, subject to Section 2.1, software,
supplied and furnished by Administrator at no additional charge
beyond those set forth in a Statement of Work. Administrator shall
provide the Services from the Administrator Service Location(s)
identified in a Statement of Work as those from which the Services
in respect of the Statement of Work are to be provided; provided
that Administrator, upon written notice to and the approval of
Customer change the Administrator Service Location(s) so long as
such facilities meet the Security Regulations (see Section 4.3,
below) and subject to Administrator's business resumption plan or
the equivalent and
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performance of the Services in accordance with the applicable
service levels (see Section 1.4, above). Administrator shall bear
all costs of any change of the Administrator Service Location(s),
including any costs reasonably incurred by Customer associated with
any such change, except to the extent such change involves a system
modification and Customer is responsible for any of its cost
related to such system modification pursuant to the terms of
Section 4.2. Administrator shall in addition bear any costs of
connectivity for its facilities, equipment, and software to the
internet.
4.2. System Modifications.
(a) Right to Make. Subject to the express limitations hereof,
Administrator may alter and modify the facilities, equipment,
software, and systems used or employed by them in performing
the Services; provided that no such alterations or
modifications: (i) shall materially adversely affect the
levels of service being provided under a Statement of Work; or
(ii) subject to Section 4.2(b), shall require Customer to
incur additional expenses relative to this Agreement and all
Statement of Work, taken in aggregate, without Customer's
prior written consent. Administrator shall consult with
Customer in advance about any alterations or modifications
that will require changes to Customer's facilities or systems.
(b) Required or Modernizing in Nature. If Administrator's proposed
alterations or modifications are the result of changes or
requirements made by Administrator's suppliers or vendors
(including changes in software or hardware), and Administrator
has no commercially reasonable alternatives other than to make
such alterations or modifications, or if such alterations or
modifications represent reasonable modernization of
Administrator's facilities, equipment, software, or systems,
Customer agrees, on ninety (90) days written notice to it from
Administrator, to make such changes in its facilities or
systems as are lawful and reasonably necessary to conform to
Administrator's alterations and modifications.
(c) Not Required or Modernizing in Nature. If Administrator's
proposed alterations or modifications neither are the result
of changes or requirements made by Administrator's suppliers
or vendors nor represent reasonable modernization of
Administrator's facilities, equipment, software, or systems,
Customer shall, upon reasonable written notice to it from
Administrator in light of the severity of the proposed
changes, make changes in its facilities, equipment, software,
and systems if and to the extent that they are lawful and will
not impose cost on Customer relative to this Agreement and all
Statement of Work, taken in aggregate.
4.3. Security. During the term of a Statement of Work, Administrator
shall maintain and enforce security regulations at the facilities
it utilizes to provide the Services which are: (a) in accordance
with Exhibit 3 (the "Security Regulations"); and (b) at least as
rigorous as those security procedures in effect at such facilities
as of the date of each applicable Statement of Work. Administrator
may from time to time amend or supplement the Security Regulations
so long as such amendment or supplement does not lessen the
protections afforded by the Security Regulations as in effect up to
the time of such amendment or supplement.
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4.4. Personnel.
(a) General. Administrator shall provide the Services utilizing
individuals who, by reason of their education, skills,
abilities, training and/or experience, are qualified based on
industry standards to perform the particular services
Administrator assigns them to perform to or for the benefit of
Customer. In any event, each individual shall be duly
licensed, certified, or registered if necessary to perform the
duties assigned to him or her. Administrator will use
commercially reasonable efforts to ensure the continuity of
Administrator's employees assigned to perform Services.
(b) Control and Supervision. Persons employed by Administrator
shall be employees of Administrator and not Customer.
Administrator shall be solely responsible for the control,
supervision, and direction of, and shall have sole authority
to control, supervise, and direct, Administrator personnel in
respect of their provision of the Services on behalf of
Administrator to or for the benefit of Customer. Administrator
shall in addition have sole authority and responsibility with
respect to the selection, hiring, promotion, demotion,
dismissal, firing, training, and setting of salaries, wages,
and benefits of its personnel, and with respect to any
complaints of their respective personnel. Notwithstanding the
foregoing, in the event that any Administrator personnel
performing Services hereunder is found to be unacceptable to
Customer for any lawful reason articulated to Administrator
(including demonstration that he or she is not qualified to
perform or has provided false information on his or her
resume), Customer may notify Administrator of such facts
(without waiving any other rights or remedies it may have
hereunder) and Administrator shall promptly evaluate whether
to remove such personnel from performing Services under the
applicable Statement of Work and, if requested by Customer,
provide a replacement with similar experience, suitable
ability and suitable qualifications, at no additional cost to
Customer. Customer's identification to Administrator of
unqualified or unsuitable Administrator personnel and
Administrator's corrective steps in response thereto shall not
relieve Administrator of its performance obligations
hereunder.
(c) Assignment of Personnel. Customer hereby acknowledges that
Administrator personnel working on Statement of Work may
perform the same or similar services from time to time for
others, and that neither this Agreement nor a Statement of
Work shall prevent Administrator from performing such similar
services or assigning such personnel to perform the same or
similar work for other parties; provided that Administrator
and such personnel perform and comply with Administrator's
obligations hereunder and under any Statement of Work,
including the obligations to maintain confidential and not use
Customer's Confidential Information in any manner prohibited
hereby or pursuant to a Statement of Work; and provided
further that Administrator make commercially reasonable effort
to honor any specific requests of Customer with regard to the
assignment of particular Administrator personnel to perform
Services.
(d) Key Personnel. Notwithstanding Sections 4.4(b) and 4.4(c), if
a Statement of Work lists any personnel or positions as key in
respect of Administrator's
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performance thereof, then Administrator shall, prior to
adding, removing, or replacing any such personnel or
positions, or their responsibilities, inform Customer of such
proposed action; provided that Administrator agrees to provide
Customer reasonable opportunity, upon request, to interview
such replacement key personnel prior to Administrator
assigning such person to perform Services directly relating to
Customer. In the event of an emergency, Administrator shall
inform Customer as promptly as reasonably practicable, may
appoint a qualified replacement, or assign the duties of such
key personnel to one or more other qualified personnel, on an
interim basis, to mitigate against interruption in Service,
and shall commence diligently to work to nominate a permanent
replacement and/or reassign one or more of the duties of the
individual or position to one or more other individuals or
positions.
(e) Personnel Costs. All costs incurred by Administrator in
respect of personnel directly or indirectly utilized by
Administrator to provide Services, including all salaries,
wages, benefits (including, but not limited to, compensation,
insurance, disability insurance, employees' pension plan,
employee welfare benefit plan, unemployment insurance,
vacations or leave), and employment-related taxes, shall, as
between Administrator and Customer, be borne solely,
exclusively, and entirely by Administrator. The Parties do not
intend, under this Agreement or otherwise, that Customer shall
be required to create, maintain, or provide any benefits or
rights for any of Administrator's personnel.
(f) Direction; Authorized Personnel. Administrator personnel
listed in a Statement of Work as Administrator authorized
personnel, as such list may be amended by Administrator from
time to time by notice to Customer, shall be authorized to
provide Customer with instructions or directions on behalf of
Administrator relating to Customer's normal day-to-day
provision of the Services under the applicable Statement of
Work. Administrator shall promptly provide Customer notice of
any change in the authority of any such person to provide such
instructions and directions.
5. PROPRIETARY RIGHTS
5.1. Ownership of Administrator Materials. Excluding Customer
Information, all (a) Administrator Materials, (b) modifications,
enhancements and derivative works thereof without regard to whether
such modifications, enhancements and derivative works were
developed by Administrator or jointly by Customer, Customer
Designees and Administrator, and (c) all intellectual property
rights with respect thereto, shall be, as between Customer and
Administrator, the exclusive property of Administrator.
5.2. Ownership of Customer Materials. Excluding Administrator Materials,
all: (a) Customer Information; (b) modifications, enhancements and
derivative works thereof without regard to whether such
modifications, enhancements and derivative works were developed by
Customer or jointly by Customer, Customer Designees and
Administrator; (c) all intellectual property rights with respect
thereto; and (d) those policies, processes, work flows, and
interpretations of Applicable Law unique to administering the
Contracts as may be reasonably
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specified in writing by Customer in accordance with this Agreement,
shall be, as between Customer and Administrator, the exclusive
property of Customer. For the avoidance of doubt, Customer
Information shall include all materials provided by Customer or
Customer Designees to Administrator in connection with the
Transition Services or provided thereafter, including among other
things, Customer's business requirements to complete such
Transition Services.
5.3. Other Developed Materials. Excluding all information described in
Sections 5.1 and 5.2 and all intellectual property rights with
respect thereto, except as may be otherwise expressly set forth in
any Statement of Work, the following shall govern:
(a) Any Systems, materials, techniques, policies, practices,
procedures, processes, work flows, ideas and know-how, which
are jointly developed by Administrator, Customer and/or
Customer Designees (the "Jointly Developed Materials") and all
intellectual property rights with respect thereto, shall, as
between the Parties, be the exclusive property of
Administrator.
(b) Customer irrevocably and unconditionally assigns to
Administrator all its right, title and interest in and to the
Jointly Developed Materials, including, without limitation,
all intellectual property rights with respect thereto.
(c) Customer shall have a non-exclusive, non-assignable,
non-transferable, perpetual, royalty-free right to use the
Jointly Developed Materials in its business, without any
further obligation to Administrator with respect to such
Jointly Developed Materials.
(d) For the avoidance of doubt: (i) nothing in this Section 5.3
shall give Customer any ownership, license or other rights in
or to any Administrator Software; and (ii) nothing in this
Section 5.3 shall give Administrator any ownership, license or
other rights in or to any Customer Information.
(e) Notwithstanding the above, from time to time Customer may
request Administrator to assist Customer in developing Jointly
Developed Materials which may contain ideas or know-how 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
writing in accordance with the Change Procedures ("Competitive
Developments"), if Administrator develops such Competitive
Developments, the rights and obligations of the Parties shall
be as specified in such writing executed in accordance with
the Change Procedures.
5.4. Administrator License. Subject to the provisions of Section 6,
Customer hereby grants Administrator (and Permitted Subcontractors)
a non-exclusive, royalty-free right to use, modify, enhance, copy,
publish, transmit, perform, display, create derivative works from
and otherwise use Customer Information solely to the extent
necessary to perform the Services under this Agreement. Except as
expressly authorized in writing by Administrator, Customer shall
not be entitled to access any Administrator Software.
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5.5. Customer License.
(a) Subject to the provisions of Section 6, Administrator hereby
grants Customer a non-exclusive, non-assignable, royalty-free
right to use, modify, enhance, copy, perform, display, create
derivative works from, and otherwise use, Administrator
Materials which include or reflect Customer specific
requirements in documents created during the term of the
Letter Agreement, together with such other procedures and
processes to the extent necessary for Customer: (i) to receive
the Services during the Term; and (ii) for Customer to receive
the Termination Assistance Services during the Termination
Assistance Period in accordance with Section 16 below.
Furthermore, Administrator hereby consents to the disclosure
of such Administrator Materials to third parties subject to
execution of a nondisclosure agreement between any such third
party and Administrator in a form reasonably acceptable to the
Parties.
(b) Subject to the provisions of Section 6, and to the extent not
otherwise Customer Information, Administrator hereby grants
Customer a non-exclusive, non-assignable, royalty-free right
to use, modify, enhance, copy, perform, display, create
derivative works from and otherwise use, and the right to
authorize the Customer Designees to use, modify, enhance,
copy, perform, display, create derivative works from and
otherwise use, the Operating Guidelines: (i) to the extent
necessary for Customer to receive the Services during the
Term; (ii) to receive the Termination Assistance Services in
accordance with Section 16 below; or (iii) for those Contracts
administered by Administrator as of the End Date, to the
extent necessary for Customer to administer those Contracts
after the End Date.
(c) The foregoing licenses shall exclude all Administrator
Software and materials incorporating or reflecting
Administrator Software.
5.6. Ownership of Consumer Confidential Information and Contract Holder
Data. As between Administrator and Customer, Customer shall be the
exclusive owner of all Consumer Confidential Information and all
Contract Holder Data. All Contract Holder Data is, will be and will
remain the property of Customer or Customer Designees and will be
deemed Confidential Information of such parties. Customer or such
Customer Designees will have all right, title and interest in and
to, including worldwide ownership of trade secret rights,
copyrights, patents and other proprietary rights in the Contract
Holder Data and all copies thereof.
6. CONFIDENTIALITY / PRIVACY
6.1. General. In the course of the performance of Services,
Administrator may receive or have access to confidential and
proprietary information, and Administrator's engagement by Customer
may bring it into close contact with confidential and proprietary
information of Customer or third parties with whom Customer
conducts business. Similarly, Administrator may provide Customer
with confidential and proprietary information, including data,
information, specifications, procedures, software, technical
processes and formulas, source code and other unpublished financial
information and business plans, or other confidential and
proprietary information of Administrator. Customer Confidential
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Information and Administrator Confidential Information are
collectively referred to as "Confidential Information" as that term
is more fully defined below. In recognition of the foregoing, each
Party agrees that:
(a) it will keep and maintain the Confidential Information of the
other Party in strict confidence, using such degree of care to
protect against unauthorized access to, or prohibited
disclosure or use of, the other Party's Confidential
Information that it uses to protect its own Confidential
Information of a similar type, but in any event no less than a
reasonable standard of care;
(b) it will use and, subject to compliance with Section 6.2,
disclose Confidential Information of the other Party solely
for the purposes described in Section 6.2(c) and will not use
or disclose Confidential Information of the other Party for
its own purposes, for the benefit of any third party or for
any other purpose;
(c) it will not, directly or indirectly, disclose Confidential
Information of the other Party to any third party, except with
prior written consent of the other Party or as permitted under
the express terms of this Agreement;
(d) as between the Parties, Customer shall retain all ownership
rights in Customer Confidential Information and Administrator
shall retain all ownership rights in Administrator
Confidential Information; and
(e) it will notify the other Party promptly of learning of
unauthorized access to, disclosure of, or breach in the
security of, the other Party's Confidential Information.
6.2. Permitted Use and Disclosures.
(a) Customer may disclose the Administrator's Confidential
Information to its employees, Customer Designees, contractors,
agents and advisors, but excluding Administrator Competitors,
having a need to know such information solely in connection
with Customer receiving the Services under this Agreement and
who have been obligated to protect such Confidential
Information on terms no less protective than those contained
in this Agreement. Administrator may disclose Customer's
Confidential Information only to its employees, Affiliates,
and its Permitted Subcontractors and other suppliers having a
need to know such information in connection with the Services
and who have been obligated to protect such Confidential
Information on terms no less protective than those contained
in this Agreement. Each Party shall instruct all of its
permitted recipients having access to the other Party's
Confidential Information as to their obligations to protect
such Confidential Information on terms no less protective than
those contained in this Agreement.
(b) Each Party shall be responsible for its permitted recipients'
compliance with the terms of this Agreement. Exhibit 2 sets
forth the form of non-disclosure agreement that Administrator
and its Affiliates require their employees to sign as a
condition of employment.
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(c) Customer shall use Administrator's Confidential Information
solely for the purpose of receiving the Services under this
Agreement and for no other reason. Administrator shall use
Customer's Confidential Information solely for the purpose of
performing the Services under this Agreement and for no other
reason.
6.3. Confidential Information. "Confidential Information" means (a) the
pricing and service level terms and conditions of this Agreement or
any Statement of Work, (b) any Nonpublic Information or Consumer
Confidential Information that is disclosed (whether in writing,
orally, visually, electronically, by physical delivery or permitted
observation or inspection, or otherwise) by one Party, any of its
Affiliates, or any of its or their officers, directors, employees,
agents, or other representatives (the "Disclosing Party") to the
other Party or any of its or their officers, directors, employees,
agents, or other representatives (the "Recipient Party") in
connection with this Agreement or any Statement of Work, and (c)
any Nonpublic Information as defined by GLB and Reg S-P of third
parties in the possession of the Disclosing Party that is disclosed
(whether in writing, orally, visually, electronically, by physical
delivery or permitted observation or inspection, or otherwise) by
the Disclosing Party to the Recipient Party in connection with this
Agreement or any Statement of Work. Each Party's Confidential
Information includes all business and other proprietary information
of such Party, written or oral, including, as applicable:
(a) information relating to planned or existing businesses or
business initiatives, organizational restructuring plans, and
actual and projected sales, profits and other financial
information;
(b) information relating to technology, such as computer systems
and systems architecture, including computer hardware,
computer software, source code, object code, documentation,
methods of processing and operational methods;
(c) information that describes insurance, annuities and financial
services products and strategies, including actuarial
calculations, product designs, product administration and
management; tax interpretations, tax positions and treatment
of any item for tax purposes;
(d) confidential information, software and material of third
parties with whom that Party conducts business; and
(e) information about that Party's employees, agents, contractors
and representatives.
6.4. Exceptions. Confidential Information shall not include information
that:
(a) has been widely disseminated, or becomes widely disseminated,
in the general public domain other than as a result of a
disclosure by a Recipient Party in violation of this
Agreement;
(b) has been filed by a Party, any of its Affiliates, or any of
its or their officers, directors, employees, agents, or other
representatives with, and is available
- 26 -
to the other Party from, a Governmental Authority and is not
otherwise subject to a protective order;
(c) was demonstrably known to the Recipient Party or any of its
officers, directors, employees, agents, or other
representatives previously, without a duty of confidentiality
of any nature to the other Party;
(d) is independently developed by a Recipient Party or any of its
officers, directors, employees, agents, or other
representatives without use of or access to the Confidential
Information of the Disclosing Party; or
(e) is rightfully obtained by a Recipient Party from one or more
third parties without, to the knowledge of the Recipient
Party, breach by such third party of a duty of confidentiality
of any nature to the other Party.
The foregoing exceptions shall not supersede the respective
obligations of the Parties set forth in Section 6.10 with respect
to Consumer Confidential Information.
6.5. Separation. If a Recipient Party is required to disclose
information relating to itself or other persons, but not the
Disclosing Party, Recipient Party shall use commercially reasonable
efforts to separate all Disclosing Party's Confidential Information
from tapes, files or other records containing the requested
information, so that Disclosing Party's Confidential Information is
not disclosed.
6.6. Additional Exceptions.
(a) Governmental Authority. Notwithstanding anything in this
Article 6 to the contrary, a Recipient Party may disclose this
Agreement, a Statement of Work, and other Confidential
Information to any Governmental Authority if required to do so
in connection with an examination of the Recipient Party by
such Governmental Authority, if required to do so in
connection with the filing of any application for or for
renewal of any license or registration issued by the
Governmental Authority required to be possessed by such Party
pursuant to applicable law, if otherwise required to do so by
law, or if requested to do so by any such authority. If the
Confidential Information disclosed will or is likely to be
made public or publicly available, Recipient Party (to the
extent permitted by applicable law) shall: (i) immediately
notify Disclosing Party of the existence, terms, and
circumstances surrounding such request; (ii) consult with
Disclosing Party on the advisability of taking legally
available steps to resist or narrow such request and cooperate
with Disclosing Party on any such steps Disclosing Party
considers advisable and determines to take to attempt to
prevent, limit, or protect the disclosure; (iii) if disclosure
of the Confidential Information is required or deemed
advisable, exercise its best efforts to obtain an order,
stipulation, or other reliable assurance acceptable to
Disclosing Party that confidential treatment shall be accorded
to the portion of the Confidential Information to be
disclosed; and (iv) limit disclosure to only that information
required to be disclosed pursuant to the subpoena or inquiry.
Disclosures of Confidential Information made pursuant to and
in accordance with this Section shall be excepted from the
prohibitions set forth in this Article 6. Notwithstanding the
foregoing,
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Administrator may disclose all or part of this Agreement to
one or more Governmental Authorities as required by the
Applicable TPA Laws.
(b) Legal Process. If Recipient Party is requested to disclose all
or any part of any Confidential Information under a subpoena
or inquiry issued by a court of competent jurisdiction, by a
judicial or administrative agency or legislative body or
committee, or in a proceeding before any such court, body, or
committee, Recipient Party shall (to the extent permitted by
applicable law): (i) immediately notify Disclosing Party of
the existence, terms, and circumstances surrounding such
request; (ii) consult with Disclosing Party on the
advisability of taking legally available steps to resist or
narrow such request and cooperate with Disclosing Party on any
such steps Disclosing Party considers advisable and determines
to take steps to attempt to prevent, limit, or protect the
disclosure; (iii) if disclosure of the Confidential
Information is required or deemed advisable, exercise its best
efforts to obtain an order, stipulation, or other reliable
assurance acceptable to Disclosing Party that confidential
treatment shall be accorded to the portion of the Confidential
Information to be disclosed; and (iv) limit disclosure to only
that information required to be disclosed pursuant to the
subpoena or inquiry. Disclosures of Confidential Information
made pursuant to and in accordance with this Section shall be
excepted from the prohibitions set forth in this Article 6.
(c) Residual Knowledge. Notwithstanding any other provision of
this Agreement to the contrary, each Party shall be free to
use in its business, and to disclose to the extent reasonably
necessary to use in its business, the Residuals (as defined
below) from any deliverable, work product, or Confidential
Information produced or disclosed under this Agreement or a
Statement of Work, including processing techniques, concepts,
methods, practices, ideas, and know-how, subject only to the
obligation not otherwise to disclose, publish, or disseminate
such information. The term "Residuals" means ideas, concepts,
know-how, methodologies, processes, technologies, algorithms
or techniques retained in the unaided mental impressions of
such Party's personnel relating to the Services which either
Party, individually or jointly, develops or discloses under
this Agreement. The foregoing shall not, however, authorize
either Party to disclose:
(i) the source of the Residual information or any
information reasonably likely to reveal the source of
such information;
(ii) any Confidential Information of the other Party;
(iii) any confidential information of a third party; or
(iv) information intentionally committed to the memory of a
person so as to reduce it to intangible form to avoid
the obligations otherwise contained in this Agreement.
- 28 -
6.7. Return or Destruction of Confidential Information.
(a) General. Promptly following the expiration or termination of
this Agreement or a Statement of Work (or earlier if requested
by the Disclosing Party), the Recipient Party shall, at its
cost, return to the Disclosing Party or its designee or
destroy such that the Confidential Information is unreadable
or undecipherable by any means, as directed by the Disclosing
Party, all Confidential Information disclosed by the
Disclosing Party to the Recipient Party (excluding, for
purposes of this Section, this Agreement or a Statement of
Work) and shall, at its cost, destroy such that such
Confidential Information is unreadable or undecipherable by
any means other Confidential Information that, to Recipient
Party's knowledge, is in Recipient Party's possession or
control, and shall, if requested by the Disclosing Party,
furnish Disclosing Party a certificate signed by Recipient
Party in form and substance reasonably satisfactory to the
Disclosing Party, stating that all the Confidential
Information of Disclosing Party required to be returned or
destroyed pursuant to this Section has in fact been returned
or destroyed.
(b) Commercially Reasonable Limit on Duty. If such information
described in (a) above is not, using commercially reasonable
efforts, available to return or destroy, the Recipient Party
shall nevertheless, to the extent the Recipient Party retains
such Confidential Information in any format or stored on any
medium, be permitted to retain copies of the Confidential
Information in accordance with its record retention program
and shall destroy all such retained Confidential Information
such that it is unreadable or undecipherable in accordance
with its record retention program. All such Confidential
Information retained by Recipient Party pursuant to this
Section shall continue to be accorded confidential treatment
pursuant to and in accordance with this Agreement for so long
as such information is retained by Recipient Party and shall
be returned or destroyed if and when such information can
commercially reasonably be returned or destroyed. This Section
shall survive the termination or expiration of the Agreement
or applicable Statement of Work.
(c) Legal Duty to Retain. Notwithstanding the Section above,
Recipient Party is not required to return or destroy
Confidential Information that it is legally required to
maintain for so long as such legal requirement remains. Any
Confidential Information retained by Recipient Party pursuant
to this Section shall continue to be accorded confidential
treatment pursuant to and in accordance with this Agreement
for so long as such information is retained by Recipient Party
and shall be returned or destroyed (in the manner required
under Section 6.7(a)) if and when Recipient Party is no longer
legally required to maintain such information.
6.8. Unauthorized Acts. To the extent Recipient Party has access to
Disclosing Party's Consumer Confidential Information, Recipient
shall notify Disclosing Party promptly and without unreasonable
delay of learning of unauthorized access to, disclosure of, or
breach in the security of the Disclosing Party's Consumer
Confidential Information may have occurred (a "Security Incident").
Recipient Party's obligation to notify the Disclosing Party arises
from the time Recipient Party actually determines or reasonably
should have determined that Disclosing
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Party's Consumer Confidential Information was in fact involved in
the actual or suspected Security Incident. Thereafter, Recipient
Party shall:
(a) promptly furnish to Disclosing Party full details of the
Security Incident;
(b) assist and cooperate fully with Disclosing Party's
investigation of Recipient Party's personnel or third parties
related to the Security Incident, including providing
Disclosing Party with physical access to the facilities and
operations affected, facilitating interviews with personnel
and others involved in the matter, and making available all
relevant records, logs, files, and data;
(c) cooperate with Disclosing Party in any litigation or other
formal action against third parties deemed necessary by
Disclosing Party to protect its rights; and
(d) promptly use all commercially reasonable best efforts to
prevent a recurrence of any such Security Incident.
6.9. Action by Parties. The Recipient Party shall not commence any legal
action or proceeding against a third party in respect of any
unauthorized act within the meaning of Section 6.8 hereof purported
to have been committed by the third party without the prior written
consent of the Disclosing Party, which will not be unreasonably
withheld.
6.10. GLB Compliance; Information Security Management Procedures.
(a) Administrator agrees not to: (i) use any Consumer Confidential
Information disclosed by Customer or directly or indirectly by
customers of Customer; or (ii) disclose any such information
to any third party, in either case without the express prior
written consent of Customer, except as required by Applicable
Law or as reasonably necessary for the performance of the
Services; provided in the case of disclosure to a third party,
other than Permitted Subcontractors as permitted by this
Agreement.
(b) Administrator shall implement and maintain measures designed
to: (i) ensure the security and confidentiality of Consumer
Confidential Information disclosed to it by Customer, Customer
Designees, or directly or indirectly by customers of Customer;
(ii) protect against any anticipated threats or hazards to the
security or integrity of such information; and (iii) protect
against unauthorized access to or use of such information that
could result in substantial harm or inconvenience to the
Contract Holder or person applying for a Contract or any other
individual to whom such information relates. Without limiting
the generality of the foregoing, Administrator shall implement
and maintain the information security management procedures
and obligations detailed in the Security Regulations during
the Term of this Agreement.
(c) It is understood and agreed that, in the event of a breach of
this Section 6, damages are likely to be immeasurable and
irreparable and thus there may not be an adequate remedy at
law and accordingly that the non-breaching Party shall be
entitled to apply for injunctive and other equitable relief to
- 30 -
restrain any such breach, threatened or actual. Each Party
agrees to be responsible for breaches of this Section 6 caused
by its and its Affiliates' directors, officers, employees,
agents or other representatives, whether then current or
former directors, officers, employees, agents, Permitted
Subcontractors or other representatives of such Party or an
Affiliate of such Party, including all losses and damages
caused thereby.
7. FEES AND PAYMENT
7.1. General. In return for the Services rendered by Administrator,
Customer shall pay the fees and charges set forth in such Statement
of Work; provided that in no event may Administrator's compensation
be contingent upon Administrator's claim expenses with respect to
the Contracts, or upon savings effected in the adjustment,
settlement, and/or payment of losses or claims covered under the
Contracts.
7.2. Proration. Except for amounts payable under Section 7.5 and as set
forth on Exhibit 6, all periodic fees or charges under this
Statement of Work are to be computed on a calendar month basis and
will be prorated on a per diem (Business Day) basis for any partial
month. If a Contract is transitioned for Administrator to begin
providing Services during a calendar month, the fees for such
Contract shall be based on the status of the Contract, as of the
Commencement Date for such Contract, and shall be prorated based on
the number of Business Days remaining in the month relative to the
total number of Business Days in such month. The fees shall be
similarly prorated for the last calendar month Services are
provided under the applicable Statement of Work if the End Date is
not the last day of a calendar month.
7.3. Increases. Administrator may increase the fees and charges under a
Statement of Work once every twelve (12) months, but not with
effect before the first January 1 following the first anniversary
date of the effective date of each such Statement of Work, in
accordance with the United States Department of Labor Consumer
Price Index - All Urban Consumers (1982-84 = 100) since the later
of (a) the date of the Statement of Work or (b) the date of the
last increase of such fees and charges for the Statement of Work
pursuant to this Section. Provided, however, if the percentage
increase for any single year is greater than five percent (5%), the
amount of the increase shall be the sum of five percent (5%) plus
one-half (1/2) of the increase above five percent (5%).
7.4. Estimates. From time to time, Administrator may provide to Customer
estimates relating to requested additional services. Administrator
shall use good faith in developing estimates and shall provide
Customer with a reasonable basis for such estimates. Customer
acknowledges that unless otherwise agreed in writing clearly
designating that a quoted amount or estimated amount is a fixed
price, a not-to-exceed price, or that Administrator's then-current
fees would be subject to adjustment in some other fashion, all
quotes or estimates provided by Administrator are just estimates,
not subject to any caps or other adjustments provided that if
during the course of a given project, Administrator anticipates
exceeding such estimate by an amount more than the tolerance level
stated in the estimate approved by Customer, Administrator shall
first receive Customer's prior written (or via email) consent for
the amount in excess of such tolerance
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amount, otherwise Customer is not obligated to pay for amounts that
exceeded such estimate plus such tolerance. If no such tolerance
amount is identified then the tolerance amount shall be deemed to
be zero.
7.5. Pass-Through Expenses. To the extent Service Provider has received
invoices from the providers of such Pass-Through Expenses, the
monthly invoice delivered by Administrator will include the
Pass-Through Expenses. Service Provider will use commercially
reasonable efforts to obtain such invoices in a timely manner. In
connection with entering a new SOW which involves Pass-Through
Expenses, the parties will review the details surrounding the
expected Pass-Through Expenses, including the steps Administrator
has taken to obtain, in light of all surrounding circumstances,
favorable terms, including pricing, for such suppliers of
Pass-Through Expense items.
7.6. Expenses Reimbursement. Customer shall reimburse Administrator for
documented "out-of-pocket" and travel expenses that are reasonably
incurred and necessary for Administrator's performance of the
Services which are approved in advance by Customer. If travel is
required, Administrator will comply with Customer's travel
policies. Under no circumstances will Customer reimburse
Administrator for first class or business class travel.
Administrator will support all requests for reimbursement of travel
expenses in excess of twenty-five dollars ($25.00) with original
receipts. Subject to Section 4.1, Customer shall reimburse
Administrator for all other out-of-pocket expenses incurred by
Administrator for which Customer is responsible pursuant to a
Statement of Work. Administrator shall furnish evidence of such
reimbursable expenses, such as copies of receipts, to Customer
reasonably promptly upon request.
7.7. Payment Disputes. Payment disputes shall be resolved as stated in
Section 12.4.
7.8. Taxes.
(a) General. Prices in Statement of Work do not include any
applicable sales, use, ad valorem or similar taxes (each, a
"Sales Tax" and collectively, "Sales Taxes") regardless of the
taxing authority. Customer shall pay applicable Sales Taxes on
the fees and charges payable under a Statement of Work, unless
there is an applicable exemption from such Sales Tax. To the
extent Administrator is required by law to collect such Sales
Taxes, one hundred percent (100%) of such Sales Taxes shall be
added to invoices as separately stated charges and paid in
full by Customer, unless Customer is exempt from such Sales
Taxes and furnishes Administrator a certificate of exemption.
Administrator shall be responsible for all taxes imposed on
its income, franchise, or property and Administrator shall be
responsible for all taxes and all obligations to withhold
taxes with respect to its directors, officers, agents,
employees and other persons who may be involved in providing
Services on its behalf.
(b) Contest by Customer. If Customer disagrees with
Administrator's determination that any Sales Tax is due with
respect to Services, Customer shall have the right to seek an
administrative determination from the applicable taxing
authority, or, alternatively, Customer shall have the right to
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contest any asserted claim for such Sales Taxes, subject to it
agreeing to indemnify Administrator for the entire amount of
such contested Sales Tax (including any associated interest
and/or late penalties) should such Sales Tax be deemed
applicable. Administrator agrees to fully cooperate with
Customer in the event Customer determines to contest any such
Sales Taxes. Administrator agrees to provide Customer with
copies of all communications from any tax authority relating
to the Customer's Sales Tax.
(c) Additional Taxes. Customer and Administrator shall promptly
inform each other in writing of any assertion by a taxing
authority of any tax liability with respect to the Services,
in addition to those taxes which have, prior to such notice
from such taxing authority, been identified previously by the
parties. Any legal proceedings or any other action against
Administrator with respect to such asserted liability shall be
under Administrator's direction; provided that Administrator
shall promptly inform Customer of all material developments.
The parties will cooperate to minimize the amount of such
additional taxes imposed. If the resolution or settlement of
such proceeding or action could cause Customer to pay any
additional Sales Taxes or other amounts, Customer, at its
option and expense, may participate in and jointly control
with Administrator such proceeding or action with
Administrator's cooperation. Any legal proceedings or any
other action against Customer with respect to such asserted
liability shall be under Customer's direction; provided that
Customer shall promptly inform Administrator, of all material
developments; and further provided that, if the resolution or
settlement of such a proceeding or action could cause
Administrator to pay any amounts, Administrator, at its option
and expense, may participate in and jointly control with
Customer such proceeding or action with Customer's
cooperation. In any event, Customer and Administrator shall
fully cooperate with each other as to the asserted liability.
Each Party shall bear all the reasonable costs of any action
undertaken by the other at that Party's request.
(d) Failure Timely to Invoice. If any Sales Taxes payable by
Customer that are required to be collected by Administrator
pursuant to Section 1.3 are not invoiced by Administrator (or
are invoiced on a date such that Administrator are not
reasonably able to deliver the amount of such Sales Taxes to
the relevant taxing authority in a timely fashion), and it is
ultimately determined that such Sales Taxes are due and
payable, then Customer shall reimburse Administrator for the
amount of such Sales Taxes; provided that, in such event,
Administrator shall indemnify and hold harmless Customer from
and against any and all interest and other penalties assessed
as a result of such Sales Taxes not being paid in a timely
manner.
(e) Failure Timely to Report or Pay. Customer shall not be
required to pay or otherwise be liable or responsible for, and
Administrator shall indemnify, defend, and hold harmless
Customer from and against, any penalty, additional tax, costs,
or interest that may be assessed or levied by any taxing
authority as a result of the failure of Administrator to file
any return, form, or information statement that may be duly
required from Administrator by such taxing authority or to pay
any tax amounts collected from Customer hereunder, unless such
failure is caused by failure of Customer to provide necessary
information, upon request, to Administrator or to timely pay
any
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Sales Tax amounts, upon request, to Administrator that
Customer is required to pay to Administrator pursuant to this
Section 7.8 for payment to the applicable taxing authority.
(f) Refunds. If Administrator receives a refund as a result of a
payment by Customer under this Section, then Administrator
shall credit Customer an amount equal to such refund on its
next invoice to Customer for fees and charges, or if the
relevant Statement of Work has terminated, shall refund such
amount to Customer.
(g) Invoicing. Any and all invoices from Administrator to Customer
shall comply with the requirements of each relevant taxing
authority and shall contain data sufficient under applicable
law to enable Customer to (i) obtain appropriate credit if
available under the law for any Sales Taxes charged on such
invoices (ii) verify the Administrator's computation of the
Sales Tax. If any Sales Taxes are assessed on Administrator's
provision of Services, Administrator shall segregate all
invoices between taxable and nontaxable Services.
(h) Withholding by Customer. If Customer believes that it is
required under applicable law to deduct or withhold any taxes
("Withholding Taxes") from or in respect of a payment to
Administrator, it shall notify Administrator in writing and in
a timely manner. Customer may deduct and withhold any
Withholding Tax that Customer reasonably determines is
required by applicable law to be deducted and withheld at the
lowest rate statutorily permitted, and may make any payment to
Administrator pursuant to a Statement of Work net of such
Withholding Tax. Any Withholding Tax so deducted and withheld
shall be treated for all purposes of a Statement of Work as a
payment duly and timely made by Customer to Administrator.
Administrator shall provide Customer such forms or other
documentation as may be required to establish any reduction in
or exemption from any such Withholding Tax.
7.9. Invoices. On or about the beginning of each calendar month,
Administrator shall send to Customer, at the address specified in
the applicable Statement of Work by U.S. mail, postage pre-paid, by
nationally recognized express courier, or by electronic mail, an
invoice and/or a billing statement, as applicable, in respect of a
Statement of Work containing the following items:
(a) the period covered by the invoice;
(b) any fixed fees due for such calendar month for the Services
and/or Brokerage Services;
(c) any additional Service or Brokerage Service fees and charges
(in reasonable detail and in amount) due;
(d) any credits owed (in reasonable detail and in amount);
(e) any expenses to be reimbursed (in reasonable detail and in
amount);
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(f) any Sales Taxes or other taxes to be paid by Customer (in
reasonable detail and in amount); and
(g) the total amount due.
7.10. Payment Terms. Payment of all invoiced or billed amounts not
disputed by Customer in accordance with Section 7.7 shall be due
within 30 days of receipt by Customer.
7.11. Interest. Commencing on the first day following the day on which
payment of an invoice is due, Customer shall be liable for interest
on any unpaid amounts at the prime rate of interest as published on
such day (or the nearest business day) in THE WALL STREET JOURNAL,
or, if less, the highest rate permitted by law.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1. Administrator. Administrator represents, warrants or covenants to
Customer that:
(a) it has the expertise and resources to perform the Services in
a professional and workmanlike manner, and it will perform the
Services in accordance with the provisions of this Agreement
and the applicable Statement of Work;
(b) the Administrator Personnel are and will be properly educated,
trained and qualified for the Services they are to perform;
(c) all Work Product conforms to the specifications or
descriptions thereof in the applicable Statement of Work;
(d) it will not introduce into any Customer Information any
Malicious Code and will use commercially reasonable efforts to
prevent any such Malicious Code from entering Customer
Information under the control of Administrator or otherwise
accessed or used by Administrator in the performance of this
Agreement;
(e) all Services and Administrator Materials: (i) are original to
Administrator (or its subcontractors, as the case may be) or
are the subject of one or more licenses authorizing
Administrator to use such materials as contemplated hereby;
(ii) which are owned by Administrator, do not violate any
patent, copyright, trade secret or other property right of any
other Party; and (iii) for other materials to which
Administrator has only a license to use, Administrator's use
is in accordance with Administrator's license for such
materials;
(f) it has obtained and will at all times during the Term maintain
all applicable consents, permits and/or licenses necessary to
perform the Services;
(g) it has not paid or caused to be paid and will not pay or cause
to be paid, directly or indirectly, any wages, compensation,
gifts or gratuities to any employee or agent of Customer or to
any government agent, official, or employee for the purpose of
influencing any decisions with respect to the
- 35 -
making of this Agreement, or in connection with any Services
contemplated hereby; and
(h) all Administrator Personnel are eligible to legally work and
accept employment in the United States or such other country
from which the Services will be provided; and
8.2. Mutual. Each Party represents and warrants that, as of the
Effective Date:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the state in which it is
incorporated, and is in good standing in each other
jurisdiction where the failure to be in good standing would
have a material adverse affect on its business or its ability
to perform its obligations under this Agreement.
(b) It has all necessary corporate power and authority to own,
lease and operate its assets and to carry on its business as
presently conducted and as it will be conducted pursuant to
this Agreement.
(c) It has all necessary corporate power and authority to enter
into this Agreement and to perform its obligations hereunder,
and the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate
actions on its part.
(d) This Agreement constitutes a legal, valid and binding
obligation of such Party, enforceable against it in accordance
with its terms.
(e) It is not a party to, and is not bound or affected by or
subject to, any instrument, agreement, charter or by-law
provision, law, rule, regulation, judgment or order which
would be contravened or breached as a result of the execution
of this Agreement.
(f) It has and shall maintain all the licenses, permits, and
approvals from governmental agencies required to perform its
obligations under this Agreement.
9. INDEMNIFICATION AND REIMBURSEMENT FOR DATA ERRORS
9.1. Administrator Indemnity. Subject to Section 9.5 below and to the
limitations, exclusions and exceptions in Article 10,
Administrator, at its own expense, shall indemnify, defend and hold
harmless Customer, and its directors, officers, employees and
agents (collectively, the "Customer Indemnitees"), from and against
Indemnified Damages relating to or arising from any loss, claim,
demand, suit, action or proceeding (collectively, a "Claim")
brought by a third party (a person which is not an Affiliate of any
Customer Indemnitee) against any of the Customer Indemnitees to the
extent based upon:
(a) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') breach of the terms or warranties
contained herein;
- 36 -
(b) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') gross negligence, fraud or willful
misconduct; or
(c) Administrator's or its agents' (including its Affiliates' and
Permitted Subcontractors') breach of Article 5 (Proprietary
Rights) or Article 6 (Confidentiality/Privacy).
9.2. Customer's Indemnity. Subject to Section 9.5 below and to the
limitations, exclusions and exceptions in Article 10, Customer, at
its own expense, shall indemnify, defend and hold harmless
Administrator, and its directors, officers, employees and agents
(collectively, the "Administrator Indemnitees"), from and against
Indemnified Damages relating to or arising from any Claim brought
by a third party (a person which is not an Affiliate of any
Administrator Indemnitee) against any of the Administrator
Indemnitees to the extent based upon:
(a) Customer's or its agents' (including Customer Designees')
breach of Customer's warranties in Section 8.2;
(b) Customer's or its agents' (including Customer Designees')
gross negligence, fraud or willful misconduct;
(c) Customer's or its agents' (including Customer Designees')
breach of Article 5 (Proprietary Rights) or Article 6
(Confidentiality/Privacy) above;
(d) Any of the matters in Section 1.10(a) for which Administrator
is not liable for under this Agreement;
(e) Customers or its agents' (including Customer Designees'),
breach of any other agreement relating to a Contract,
including any agreement relating to the sale of the Contract,
commissions paid or payable relating to such Contract, the
reinsurance of such Contract, provided that Administrator
otherwise performed in all material respects with this
Agreement; or
(f) Administrator's performance under this Agreement in conformity
with: (i) any written policies, processes, interpretations or
other written instructions provided by individuals designated
in writing by Xxxxxxx Still (or his successor) for SAAL and
Xxxxxx Xxxx (or his successor) for AI Life AGL DE (for
purposes of performance of the Services to the extent such
processes, interpretations or other instructions were not, at
the relevant time, superseded by a later version of the
Operating Guidelines approved by Customer in accordance with
this Agreement; (ii) the Operating Guidelines approved by
Customer; or (iii) this Agreement, including the Statement of
Work and attachments thereto.
9.3. Special Indemnification Relating to Infringement. Subject to
Section 9.5 below and to the limitations, exclusions and exceptions
in Article 10:
(a) Administrator shall defend, hold harmless and indemnify the
Customer Indemnitees from all Indemnified Damages which arise
out of a Claim brought by a third party that is not an
Affiliate of Customer against Customer
- 37 -
arising from the actual or alleged infringement by such
Administrator Materials of the rights of such third party.
(b) Customer shall defend, hold harmless and indemnify the
Administrator Indemnitees from all Indemnified Damages which
arise out of a Claim brought by a third party that is not an
Affiliate of Administrator against Administrator arising from
the actual or alleged infringement by Customer Information of
the rights of such third party.
(c) Notwithstanding the provisions above, neither Party shall be
obligated to indemnify or defend the other or settle any Claim
of infringement: (i) asserted by an Affiliate of the other
Party, (ii) caused by the other Party's (including its
suppliers, designees, Affiliates, vendors or any other third
parties who may perform certain services for the benefit of
the other Party) additions to, changes in, or modification of
Administrator Materials or Customer Information, as
applicable; (iii) caused by the other Party's use of such
information in combination with information provided by third
parties; or (iv) caused by the other Party breaching Article 5
or Article 6 of this Agreement.
9.4. Acts of Employees and Subcontractors. Subject to Section 9.5 below
and to the limitations, exclusions and exceptions in Article 10,
each Party shall indemnify, defend and hold harmless, the other
Party and its respective indemnitees from any and all Indemnified
Damages which arise out of a Claim brought by a third party that is
not an Affiliate of either Party, by reason of personal injury,
death or tangible personal property damage of any nature or kind
arising, in whole or in part, out of, as a result of, or in
connection with, the negligent acts or omissions of the
indemnifying Party's employees, agents, subcontractors, or in the
case the case of Customer, Customer Designees.
9.5. Indemnification Procedures.
(a) If any third party brings a Claim against a Party and such
Party reasonably believes that such Claim is or may be covered
by the indemnification obligations under this Agreement (the
"Indemnified Party"), such Indemnified Party shall promptly
deliver to the other Party (the "Indemnifying Party") a
written notice (a "Claims Notice"), including a brief
description of the amount and basis of the Claim, if known;
provided, however, that the failure of the Indemnified Party
to give prompt notice shall not relieve the Indemnifying Party
of any of its obligations hereunder, except to the extent such
failure materially prejudices the Indemnifying Party.
(b) The Indemnifying Party shall, at its own expense, be entitled
to assume and control the defense of any such Claim on the
Indemnified Party's behalf by written notice to the
Indemnified Party within fifteen (15) days after receipt of a
Claims Notice. To assume the defense of such Claim, the
Indemnifying Party shall first have acknowledged (via the
foregoing notice) to the Indemnified Party the Indemnifying
Party's unconditional obligation to indemnify fully the
Indemnified Party for the matter in accordance with this
Agreement. In the absence of such assurance, the Indemnified
Party shall control the defense of such claim, without
prejudicing in any way its right to recover Indemnified
Damages under this Section in accordance with this
- 38 -
Agreement. If so specified in such notice, the Indemnifying
Party, in the event that the Indemnifying Party is entitled to
indemnification from a third party for such claim ("Third
Party Indemnitor") in respect of the same underlying subject
matter, facts, or circumstances as the Claim asserted, may
assign the defense of such Claim hereunder to such Third Party
Indemnitor. The Indemnified Party shall cooperate fully with,
and assist the Indemnifying Party or Third Party Indemnitor in
the defense and all related settlement negotiations of the
Claim. The Indemnifying Party shall pay all reasonable costs
incurred by the Indemnified Party related to the Indemnified
Party's assistance in defense of a Claim.
(c) The Indemnified Party shall have the right to join in the
defense of such Claim and employ its own separate counsel in
any action, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party; provided, however,
that: (i) if the Parties agree that it is advantageous to the
defense for the Indemnified Party to employ its own counsel;
(ii) if the Indemnified Party shall have reasonably concluded
that there may be a conflict of interest between the
Indemnifying Party or Third Party Indemnitor and the
Indemnified Party in the conduct of the defense of the claim
(in which case the Indemnifying Party and/or Third Party
Indemnitor shall not have the right to direct or participate
in the defense of such claim on behalf of the Indemnified
Party), or (iii) the claim is an action, proceeding, inquiry,
or investigation commenced by a Governmental Authority and the
Indemnified Party elected to control the defense of such
claim, then, in each such instance, the reasonable fees and
expenses of counsel for such Indemnified Party shall be borne
by the Indemnifying Party. The Party controlling the defense
of a Claim for which indemnification is available pursuant
hereto shall keep the other Party reasonably apprised at all
times as to the status of its defense of the claim.
(d) Notwithstanding anything in this Article 9 to the contrary, in
the event the Claim is an action, proceeding, inquiry, or
investigation commenced by a Governmental Authority, the
Indemnified Party shall have the right to control the defense
of such Claim.
(e) If the Indemnifying Party shall fail to notify the Indemnified
Party of its desire to assume the defense of the Claim within
the prescribed period of time, shall notify the Indemnified
Party that it will not assume the defense of the Claim, or
shall fail to assume the defense of the Claim, then the
Indemnified Party must defend the Claim in any such manner as
it may deem appropriate. The Indemnifying Party shall also be
permitted to join in the defense of the Claim and employ
counsel at its own expense. Neither the Indemnifying Party nor
any Indemnified Party shall be liable for any settlement of
any Claim effected without its prior written consent.
(f) Notwithstanding the foregoing, the Indemnified Party shall
retain, assume, or reassume sole control over, and all
expenses relating to, every aspect of the defense that it
believes is not the subject of the indemnification provided
for in this Agreement and upon such retention, assumption, or
reassumption, the Indemnifying Party will be relieved of
responsibility for indemnifying the
- 39 -
Indemnified Party for such defense or the Claim to which such
defense relates.
(g) In any Claim as to which the Indemnifying Party is entitled
pursuant to this Section to assume and control the defense
thereof, until both: (i) the Indemnified Party receives notice
from the Indemnifying Party that it will defend the Claim or,
as permitted, assign such defense to a Third Party Indemnitor;
and (ii) the Indemnifying Party assumes or so assigns such
defense, the Indemnified Party may, at any time after
notifying the Indemnifying Party of the Claim, resist the
Claim or, after consultation with and the consent of the
Indemnifying Party, settle or otherwise compromise or pay the
Claim. The Indemnifying Party shall pay all reasonable costs
of the Indemnified Party actually incurred arising out of or
relating to that defense and any such settlement, compromise,
or payment.
(h) Following indemnification as provided herein, the Indemnifying
Party shall be subrogated to all rights of the Indemnified
Party with respect to the matters with respect to which
indemnification has been furnished.
9.6. Variances.
(a) Correction. In the event of a discrepancy or other error
arising in the execution or recording of an investment
transaction during the Term, including a portfolio allocation
or reallocation transaction (a "Variance"), Administrator
shall, promptly upon learning of the Variance, reconcile the
Variance by crediting or debiting the applicable Contract
Holder's account such that the Contract Holder shall not have
lost or gained any amounts as a result of the Variance.
(b) Reporting. Promptly after the end of each calendar month,
Administrator shall furnish Customer a detailed, itemized
report listing of (a) Variances caused by Administrator's
errors (each, a "Type A Variance") and (b) Variances that are
not caused by Administrator's errors (each, a "Type B
Variance"); provided that Administrator shall promptly inform
Customer of any Variance from any discrepancy or other error
that results in a net gain or net loss in excess of five
thousand dollars ($5,000), whether a Type A Variance or a Type
B Variance.
(c) Annual Settle-Up. If, as of the last day of each calendar year
during the Term of this Agreement, there is a Net Loss, as
defined below, for that calendar year, Administrator shall pay
the amount of that Net Loss to Customer. Provided, however,
the amount Administrator is obligated to pay Customer for a
given calendar year shall be reduced by the amount of Net
Gains, as defined below, from prior calendar years during the
Term of this Agreement to the extent such Net Gains were not
credited against Net Losses from prior periods. Such payment
will be due and payable on February 1.
(d) "Net Loss" means the amount by which the losses from Type A
Variances were greater than the gains from the Type A
Variances that occurred during that prior calendar year, when
reduced by the amount of net gains, if any,
- 40 -
from Type B Variances in excess of the losses from Type B
variances for that same calendar year. For the avoidance of
doubt, if the losses from Type B Variances are greater than
the gains from Type B Variances, such difference SHALL NOT
increase the Net Loss.
(e) "Net Gain" means the amount by which the gains from the Type A
Variances were greater than the losses from the Type A
Variances that occurred during that prior calendar year, when
combined with the net gain or loss, as the case may be,
between the gains from Type B Variances and losses from Type B
Variances for that same calendar year. For the avoidance of
doubt, if the losses from Type B Variances are greater than
the gains from Type B Variances, such difference SHALL REDUCE
the Net Gain.
(f) A Type A Variance shall be deemed to have occurred on the date
the transaction occurs (or should have occurred) that results
in the discrepancy or other error.
(g) Administrator shall, as reasonably requested by Customer,
assist Customer to recover Type B Variances that are the fault
of a mutual fund unaffiliated with Customer.
10. DISCLAIMERS, LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES
10.1. Disclaimer of Implied Warranties. THE WARRANTIES EXPRESSLY STATED
IN THIS AGREEMENT AND IN ONE OR MORE STATEMENTS OF WORK ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS, AND
FITNESS FOR A PARTICULAR PURPOSE.
10.2. Certain Damages Excluded. SUBJECT TO SECTION 10.4, IN NO EVENT
SHALL A PARTY OR ITS AFFILIATES BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING LOST PROFITS
OR LOSS OF GOODWILL, OR EXEMPLARY, PUNITIVE, OR SPECIAL DAMAGES ON
ANY CLAIM OR DEMAND AGAINST IT BY ANOTHER PARTY ITS AFFILIATES OR
ANY OTHER PERSONS, WHETHER IN CONTRACT, EQUITY, TORT (INCLUDING
BREACH OF WARRANTY, NEGLIGENCE, AND STRICT LIABILITY IN TORT) OR
OTHERWISE, EVEN IF, AND WHETHER OR NOT, SUCH PARTY OR ITS
AFFILIATES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN
ADVANCE.
10.3. Limitation on Liability.
(a) SUBJECT TO SECTION 10.4 BELOW, THE TOTAL AGGREGATE LIABILITY
OF ADMINISTRATOR AND ITS AFFILIATES IN RESPECT OF ANY AND ALL
CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT IN
THE AGGREGATE, INCLUDING ANY AND ALL STATEMENTS OF WORK,
WHETHER IN CONTRACT, EQUITY, TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT) OR
OTHERWISE, DURING AND AFTER THE TERM, SHALL IN NO EVENT
EXCEED, WHEN AGGREGATED WITH ALL
- 41 -
OTHER CLAIMS HEREUNDER: (A) WITH RESPECT TO CLAIMS WHICH ARISE
AFTER THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE, THE FEES
AND CHARGES PAID FOR THE SERVICES HEREUNDER DURING THE ONE (1)
YEAR IMMEDIATELY PRECEDING THE FIRST EVENT GIVING RISE TO ANY
CLAIM OR $1 MILLION, WHICHEVER IS GREATER, OR (B) WITH RESPECT
TO CLAIMS WHICH ARISE BEFORE THE FIRST ANNIVERSARY OF THE
EFFECTIVE DATE, THE FEES AND CHARGES PAID HEREUNDER DURING
SUCH FIRST YEAR ANNUALIZED FOR A ONE (1) YEAR PERIOD) OR $1
MILLION, WHICHEVER IS GREATER, OR (C) WITH RESPECT TO CLAIMS
WHICH ARISE AFTER THE END OF THE TERM OF THIS AGREEMENT, THE
FEES AND CHARGES PAID DURING THE LAST ONE (1) FULL YEAR DURING
WHICH THIS AGREEMENT WAS IN EFFECT OR $1 MILLION, WHICHEVER IS
GREATER. PAYMENTS MADE SHALL BE DEEMED MADE OUT OF SUCH
AMOUNTS DRAWING FROM ONE YEAR PRIOR TO THE EVENT GIVING RISE
TO THE CLAIM MOVING FORWARD TO SUCH EVENT.
(b) SUBJECT TO SECTION 10.4 BELOW, THE TOTAL AGGREGATE LIABILITY
OF CUSTOMER AND ITS AFFILIATES TO ADMINISTRATOR, ITS
AFFILIATES AND OTHER PERSONS IN RESPECT OF ANY AND ALL CLAIMS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT IN THE
AGGREGATE, INCLUDING ANY AND ALL STATEMENTS OF WORK, WHETHER
IN CONTRACT, EQUITY, TORT (INCLUDING BREACH OF WARRANTY,
NEGLIGENCE AND STRICT LIABILITY IN TORT) OR OTHERWISE, DURING
AND AFTER THE TERM, SHALL IN NO EVENT EXCEED, WHEN AGGREGATED
WITH ALL OTHER CLAIMS HEREUNDER: (A) WITH RESPECT TO CLAIMS
WHICH ARISE AFTER THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE,
THE FEES AND CHARGES PAID OR PAYABLE FOR THE SERVICES DURING
THE ONE (1) YEAR IMMEDIATELY PRECEDING THE FIRST EVENT GIVING
RISE TO ANY CLAIM OR $1 MILLION WHICHEVER IS GREATER, OR (B)
WITH RESPECT TO CLAIMS WHICH ARISE BEFORE THE FIRST
ANNIVERSARY OF THE EFFECTIVE DATE, THE FEES AND CHARGES PAID
OR PAYABLE BY CUSTOMER DURING SUCH FIRST YEAR ANNUALIZED FOR A
ONE (1) YEAR PERIOD OR $1 MILLION, WHICHEVER IS GREATER, OR
(C) WITH RESPECT TO CLAIMS WHICH ARISE AFTER THE END OF THE
TERM OF THIS AGREEMENT, THE FEES AND CHARGES PAID OR PAYABLE
DURING THE LAST ONE (1) FULL YEAR DURING WHICH THIS AGREEMENT
WAS IN EFFECT OR $1 MILLION, WHICHEVER IS GREATER. SUCH SUMS
SHALL ONLY BE AVAILABLE ONCE TO PAY ANY AND ALL SUCH CLAIMS.
PAYMENTS MADE SHALL BE DEEMED MADE OUT OF SUCH AMOUNTS DRAWING
FROM ONE YEAR PRIOR TO THE EVENT GIVING RISE TO THE CLAIM
MOVING FORWARD TO SUCH EVENT.
(c) References above to "fees and charges" paid or payable shall
not include any Pass-Through Expenses, taxes, or reimbursed
expenses.
10.4. Exceptions. Notwithstanding Sections 10.2 and 10.3, no limitation
on liability or exclusion of damages shall apply with respect to:
- 42 -
(a) Losses suffered by breach of Article 5 (Proprietary Rights) or
Article 6 (Confidentiality/Privacy);
(b) Losses suffered by gross negligence, fraud or willful
misconduct of the other Party, including any claim brought
under Section 9.1(b) or under Section 9.2(b);
(c) any claim brought under Section 9.1(c) or under Section 9.2(d)
or (e);
(d) any claim brought under Section 9.3(a) or under Section
9.3(b);
(e) Losses suffered by reason of personal injury or damage to
tangible personal property, including any claim brought under
Section 9.4;
(f) Invoiced fees, charges and other amounts that are due and
owing to Administrator under this Agreement.
(g) Losses suffered by Customer relating to or arising from
Administrator's (i) breach of Section 15.3 (Disaster Recovery)
or (ii) its intentional breach or gross disregard of its
obligations under Article 16 (Termination Assistance).
11. OTHER RIGHTS AND OBLIGATIONS.
11.1. Independent Contractor. In connection with this Agreement, each
Party is an independent contractor. This Agreement establishes and
will only be construed as establishing a contract between unrelated
business entities for the provision and purchase of certain
services and does not and will not be deemed to create a joint
venture, partnership, fiduciary or agency relationship between the
Parties for any purpose. With respect to its own personnel, each
Party is independently responsible for all obligations incumbent
upon an employer. Customer is not responsible for payment of
workers' compensation, disability benefits or unemployment
insurance, nor is Customer responsible for withholding or paying
employment related taxes for Administrator or any of its employees.
11.2. Subcontracting.
(a) Administrator will not subcontract any Restricted Activities
without the prior written consent of Customer. Administrator
will not subcontract to a Customer Competitor in any event.
Customer's consent under this Section is not required with
respect to Administrator's Affiliates.
(b) Prior to entering into any subcontract in respect of
Restricted Activities, Administrator will inform Customer of
the proposed subcontract and will obtain Customer's consent of
such proposed subcontractor. Permitted Subcontractors who will
perform Restricted Activities as of the Effective Date are
listed in Exhibit 4. Customer consents to such listed
Permitted Subcontractors performing the Restricted Activities.
(c) No subcontracting will release Administrator from its
responsibility for its obligations under this Agreement or any
Statement of Work. Administrator will be Customer's sole point
of contact with respect to the Services.
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(d) With respect to any Services performed by a Permitted
Subcontractor, Administrator hereby assumes all liability and
responsibility for such subcontractors' compliance with and
breach of the terms of this Agreement and Statement of Work,
and for all acts and omissions of such subcontractors.
(e) For those third parties providing services which give rise to
Pass-Through Expenses for a given Statement of Work,
Administrator shall: (i) use commercially reasonable efforts
to negotiate favorable terms and conditions in the contract
with such suppliers; and (ii) consult with Customer with
respect to the source of such services and the commercial
terms and conditions and (iii) such Pass-Through Expenses will
be agreed to in writing by Customer in the applicable
Statement of Work.
11.3. Service Locations.
(a) Notwithstanding any consent that Customer may have provided to
Administrator to subcontract all or a portion of Services,
under no circumstances will Administrator perform or cause to
be performed, directly, indirectly or by agents or
subcontractors, any Restricted Activities outside of the
continental United States of America unless it obtains the
prior written consent of Customer with respect to performance
of the Services from such location.
(b) Regardless of whether Customer's consent is or is not required
and regardless of whether it did consent to Administrator
changing an Administrator Service Location, Administrator, and
not Customer, shall bear the costs of such change in
Administrator Service Location.
(c) Notwithstanding any consent that Customer may have provided to
Administrator to subcontract all or a portion of any
Restricted Activities, Administrator may not change the
location from where such Restricted Activities are being
performed from an on-shore location to an off-shore location
or from an off-shore location to a different off-shore
location, unless it obtains the prior written consent of
Customer with respect to such change in location.
12. DISPUTE RESOLUTION.
12.1. Informal Dispute Resolution. Prior to the initiation of any formal
dispute resolution procedures, the Parties shall first attempt to
resolve any dispute with respect to this Agreement or a Statement
of Work as follows:
(a) Upon the request of a Party, each Party to any such dispute
shall promptly vest a designated representative with authority
to settle the dispute. Such representatives shall meet one or
more times, as they deem necessary or advisable, and attempt
in good faith to resolve the dispute. The meeting(s) will be
held reasonably promptly after the request therefore is
furnished at an agreed location or via conference call. If the
designated representatives cannot resolve the matter within
thirty (30) Business Days after the request for attempt at
informal resolution pursuant to this Section is furnished by
the
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requesting Party to the receiving Party, or for such longer
period upon which the Parties respective representatives may
agree in writing to continue to attempt to resolve the dispute
informally, then either Party may elect to submit the dispute
for resolution in accordance with the formal dispute
resolution procedure specified below.
(b) During the negotiations, all reasonable requests made by one
Party to the other for non-privileged information reasonably
related to the dispute shall be promptly honored. Any
information, discussions, or offers exchanged between the
Parties shall be privileged, confidential, and without
prejudice to a Party's legal position in any formal
proceedings. All such information, discussions, and offers
will be considered settlement discussions and inadmissible in
any subsequent proceedings.
(c) This Section shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period or to seek an injunction or any other
equitable remedy.
12.2. Formal Dispute Resolution. In the event that the Parties are unable
to resolve a dispute under the provisions set forth herein, either
Party may institute such actions as may be permitted at law or in
equity.
12.3. Continued Performance. Subject Customer's compliance with Sections
12.4 and 16.1(d), pending the resolution of a good faith dispute
between Customer, on the one hand, and Administrator, on the other
hand, under this Agreement or a Statement of Work, Administrator
and Customer shall continue to perform hereunder and under any
Statement of Work.
12.4. Payment Dispute. The following provisions shall apply where one
Party disputes in good faith that it owes an amount to the other
Party, which the other Party claims is payable under this
Agreement:
(a) The Party disputing ("Disputing Party") that it owes the other
Party amounts under this Agreement shall provide to the other
Party ("Billing Party") a detailed written explanation of
Disputing Party's basis for disputing in good faith the
amounts claimed due by Billing Party. Disputing Party shall
pay Billing Party the undisputed amounts due. Disputing Party
shall provide such notice within thirty (30) business days of
receiving the invoice containing disputed charges.
(b) Upon receipt of any notice of disputed fees, each Party shall
promptly and diligently cooperate with each other to resolve
the disputed amounts. At such time as the Billing Party
determines that the Parties have reached an impasse regarding
such disputed amounts, the Billing Party shall provide a
written notice to the Disputing Party stating that the parties
have reached an impasse with respect to the disputed amount
described in such letter.
(c) Within fifteen (15) calendar days of the date of Disputing
Party's receipt of the notice provided for in Section 12.4(b),
if the amount(s) in dispute exceeds $50,000 in the aggregate,
the Disputing Party shall deposit the
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entire disputed amount into an interest bearing escrow account
for the benefit of the Billing Party, on terms as set forth by
the Billing Party providing that such deposited amounts shall
be released only: (a) as the parties may jointly direct the
escrow agent; or (b) pursuant to a final resolution in
accordance with this Agreement. If Disputing Party is Customer
and if Customer has not deposited such amounts into an escrow
account as described in this Section, subject to such amounts
in dispute being due and payable as asserted by Administrator,
Administrator may immediately discontinue providing Services
until the parties mutually agree upon terms for Administrator
to be paid for the continuing Services provided or Customer
deposits such amounts into an escrow account as described
above. If Disputing Party is Administrator and if
Administrator has not deposited such amounts into an escrow
account as described in this Section, Customer shall have the
right to reduce amounts payable to Administrator under this
Agreement on a dollar-for-dollar basis the amount disputed by
Administrator without prejudicing Customer's rights under this
Agreement and such withholding by Customer shall not entitle
Administrator, under any circumstances, to stop performing any
Services under this Agreement.
(d) Nothing contained herein shall prevent Administrator from
terminating this Agreement for breach and ceasing to provide
Services if Customer is unwilling or unable to comply with the
terms of this Section 12.
(e) In lieu of depositing amounts in the escrow account as
described above, Customer may pay Administrator such disputed
amounts and seek to recover such amounts.
13. TERM AND TERMINATION.
13.1. Term. The initial term of this Agreement, including all Statements
of Work, shall be for ten (10) years from the Effective Date,
unless terminated earlier in accordance with this Agreement or the
applicable Statement of Work and thereafter, shall renew
automatically for successive one (1) year terms, unless either
Party notifies the other in writing at least six (6) months in
advance of such Party's election to terminate at the end of the
initial ten (10) year term, or at the end of a successive one (1)
year term (collectively, the "Term").
13.2. Termination by Customer. At any time during the Term, Customer may
terminate this Agreement and/or any Statement of Work, in
accordance with the following provisions:
(a) Termination for Cause.
(i) Customer may, at its option, terminate (1) this
Agreement and all Statement of Work at any time during
the Term or Termination Assistance Period if
Administrator materially breaches this Agreement or a
Statement of Work and such breach is not cured within
thirty (30) days after written notice thereof to
Administrator, (2) a specific Statement of Work at any
time during the Term or Termination Assistance Period
if Administrator materially breaches such Statement of
Work and such breach is not cured
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within thirty (30) days after written notice thereof
to Administrator, or (3) a Statement of Work only with
respect some but not all of the Services to which
Administrator's material breach directly relates, and
such breach is not cured in all material respects
within thirty (30) days after written notice thereof
to Administrator. Such written notice of breach by
Customer shall be provided promptly after Customer is
aware of such breach, but in no circumstances, more
than six (6) months following Customer's awareness of
such breach. If, after Customer has provided the
notice of breach above, Administrator has not cured
the specified breach in all material respects, for so
long as Administrator has still not cured the
specified breach in all material respects, Customer
may terminate as permitted above by providing
Administrator thirty (30) days notice of termination.
If Customer delivers notice terminating specific
Services of one or more Statement of Work, Customer is
not thereafter entitled to terminate the Statement of
Work with respect to the continuing Services or this
Agreement as a whole as a result of the same events.
Customer shall provide notice of termination under
this Section within two (2) years after the date
Customer sent the notice of breach for which Customer
is exercising such right to terminate.
(ii) To the extent not contrary to applicable law, if a
governmental agency issues a written order revoking,
suspending or otherwise terminating Administrator's
license as may be required to perform the Services and
such revocation, suspension or termination, if capable
of cure, is not cured within thirty (30) calendar days
after Administrator's receipt of such written order.
In such case, the party receiving such order shall
promptly provide to the other a copy of such order and
the effective date of such termination, if the
revocation, suspension or termination is not cured as
provided herein, shall be as set forth in such order.
(iii) Customer may terminate this Agreement in whole or in
part for Administrator's failure to meet the Default
Performance Standards as stated in Section 1.4(d).
(b) Termination Without Cause. Customer may terminate this
Agreement (and all Statements of Work) in its entirety, in its
sole discretion upon six (6) months prior written notice to
Administrator and upon payment of the "Early Termination
Fee(s)" set forth in each Statement of Work, if any. The terms
of payment of any Early Termination Fee(s) shall be as set
forth in the applicable Statement of Work.
(c) No Statements of Work. If there is no Statement of Work in
effect, either Party may terminate this Agreement at any time
upon ten (10) days written notice to the other Party.
(d) Partial Termination Process. If Customer terminates less than
the entire Agreement pursuant to Section 13.2(a) above:
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(i) The Parties will negotiate the appropriate amendment
to each affected Statement of Work to remove from each
such affected Statement of Work the affected Services,
adjust the fees and charges to reflect the revised
scope of Services to be performed, reduce the scope of
Services provided under each affected Statement of
Work, revise any affected Service Levels, including
revising the scope of Service Levels to reflect the
revised responsibilities of Administrator, and make
all other reasonable and equitable revisions to each
Party's rights and duties to reflect the change in
scope and nature of Services to be performed by
Administrator. Until the Parties agree in writing in
accordance with the Change Procedures for such
adjustments, Administrator shall invoice the amount
reasonably adjusted by Administrator to reflect the
changes in the Services to be performed and Customer
shall pay all such amounts. To the extent there is any
dispute regarding how the adjusted amount was
determined and invoiced by Administrator, the
provisions of Section 12.4 shall govern.
(ii) Pending execution of a mutually agreed upon amendment
as contemplated above, with effect from the date the
specific Services are terminated pursuant to Section
13.2(a), Administrator shall not be liable for failure
to meet the Service Levels for the terminated Services
or any other Services the performance of which is
affected by the termination of the terminated
Services, or for any other breach of this Agreement to
the extent directly caused by the termination of the
terminated Services. Administrator shall inform
Customer of which Services and/or Service Levels are
affected by the termination of the Terminated Services
as promptly as practicable after receipt of Customer's
notice of termination.
13.3. Termination for Insolvency. Subject to Applicable Law, Customer may
terminate this Agreement and all Statement of Work in the event of
Insolvency of Administrator by providing sixty (60) days written
notice and such Insolvency is not cured within sixty (60) days
after written notice thereof.
13.4. Termination by Administrator. Administrator may terminate the
affected Statement of Work if Customer fails to pay undisputed
amounts due thereunder and does not cure such breach in all
material respects within thirty (30) days of receipt of
Administrator's notice. Administrator may consider Customer's
failure to comply with the payment dispute provisions of Section
12.4 above a material breach of this Agreement, in which case,
Administrator may terminate the affected Statement of Work if
Customer does not cure such breach within thirty (30) days of
receipt of Administrator's notice. Administrator may terminate this
Agreement if Customer materially breaches Article 5 or Article 6 of
this Agreement and does not cure such breach in all material
respects within thirty (30) days of receipt of Administrator's
notice. If after Administrator has provided the notice of breach
above Customer has not cured the specified breach in all material
respects within the time specified above and Administrator seeks to
terminate as permitted above, Administrator shall provide to
Customer sixty (60) days notice of termination. Even in the event
of a termination under this section,
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Administrator shall provide Customer with Termination Assistance
Services as detailed in Section 16.1.
13.5. Termination Pursuant to a Statement of Work. In addition to the
termination rights in this Section 13, either Party may terminate a
Statement of Work at any time during the Term or Termination
Assistance Period as may be expressly stated in such Statement of
Work.
14. INSURANCE.
14.1. Required Insurance. Administrator will obtain from a company or
companies (other than Customer Affiliates ) having a current A.M.
Best Rating of A- VIII or better, and maintain in force during the
Term and for not less than two (2) years thereafter, the following
insurance coverages in the minimum amounts indicated:
TYPE OF COVERAGE REQUIRED AMOUNT
-------------------------------------------------------------------------------------------------------
Workers Compensation providing coverage to all Worker's Compensation - Statutory Limits as
employees in all states where operations will be mandated under the Worker's Compensation laws
performed. of the state or Federal body having
jurisdiction over the location of the project
or operation
-------------------------------------------------------------------------------------------------------
Employer's Liability (Bodily injury by disease per $1,000,000
person, by accident policy limit, by disease policy
limit)
-------------------------------------------------------------------------------------------------------
Internet Media Security & Privacy Liability insurance $2,000,000 limit providing 3rd party liability
a/k/a Cyber Risk Insurance coverage
-------------------------------------------------------------------------------------------------------
Comprehensive General Liability Insurance including $1,000,000 combined single limit/General
Broad Form Contractual, Broad Form Property Damage, Aggregate $2,000,000 for bodily injury and
Personal Injury and Advertising Liability, Completed property damage liability
Operation and Products coverage
-------------------------------------------------------------------------------------------------------
Medical Payments $5,000 per person
-------------------------------------------------------------------------------------------------------
Comprehensive Auto Liability including Owned, $1,000,000 combined single limit
Non-owned and Hired Motor Vehicles coverage which are
operated on behalf of Administrator pursuant to
Administrator's activities hereunder
-------------------------------------------------------------------------------------------------------
Umbrella/Excess Liability on a following form basis $20,000,000 each occurrence/general aggregate
-------------------------------------------------------------------------------------------------------
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TYPE OF COVERAGE REQUIRED AMOUNT
-------------------------------------------------------------------------------------------------------
Professional Liability $10,000,000 each occurrence/general aggregate
-------------------------------------------------------------------------------------------------------
Blanket Fidelity Bond Minimum amount $10,000,000
-------------------------------------------------------------------------------------------------------
14.2. Evidence of Coverage. Administrator will, upon request, provide
Customer with a Certificate or Certificates of Insurance evidencing
that the above insurance requirements have been satisfied.
Administrator shall deliver to Customer certificates of insurance
as evidence of the insurance and limits stipulated above, with
provisions for not less than thirty (30) days prior written notice
to Customer in the event of material alteration which may be
detrimental to Customer's interest, cancellation or non-renewal of
such insurance.
14.3. Additional Insured. Where applicable, the above policies will name
Customer and/or Customer as additional insureds. The Automobile and
General Liability insurance coverage shall be extended to Customer
as additional insured. The coverage so extended will protect the
Customer only against claims arising out of and caused by
Administrator's operation.
14.4. Waiver of Subrogation. The Automobile, General Liability and
Workers' Compensation policies shall provide standard waiver of
subrogation, which prohibits the Administrator's insurer from
seeking redress from Customer, except in jurisdictions, and to the
extent where prohibited by law.
14.5. Non-Limitation of Insurance. It is understood that the above may
not be all the types of insurance or bonds normally carried by
vendors in similar operation or size for their commercial
activities. Therefore, compliance with any of the type and limits
of insurance stipulated in this contract will not in itself be
construed to be limitation of liability of Administrator or its
sub-contractors. All insurance required of Administrator will be
primary, and not excess over or contributing with any insurance
maintained Customer.
14.6. Contravention of Insurance. Administrator will not intentionally
do, allow or permit anything to be done for Customer or on or about
Customer's premises that will affect, impair or contravene any
policies of insurance that may be carried by Customer or Customer's
client , against loss of any kind.
15. FORCE MAJEURE
15.1. Force Majeure Event. If and to the extent that a Party's
performance of any of its obligations pursuant to a Statement of
Work is prevented, hindered or delayed directly or indirectly by
the other Party or its agents (except to the extent such Party or
agents are acting in accordance with the other Party's specific
instructions), or fire, flood, earthquake, elements of nature or
acts of God, acts of war, terrorism, riots, civil disorders,
rebellions, revolutions, strikes or any other causes of a similar
nature 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 the taking of all reasonable precautions
by the non-performing,
- 50 -
hindered or delayed Party, then the non-performing, hindered or
delayed Party will be excused for such nonperformance, 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 efforts consistent with industry
standards and practices to recommence performance whenever and to
whatever extent possible without delay, including through the use
of alternate sources, workaround plans or other means. The Party
whose performance is prevented, hindered or delayed by a Force
Majeure Event will immediately inform the other Party of the
occurrence of the Force Majeure Event, describing in reasonable
detail the nature of the Force Majeure Event. The occurrence of a
Force Majeure Event will not excuse, limit or otherwise affect
Administrator's obligation to provide normal recovery procedures or
any other disaster recovery services described in an applicable
Statement of Work.
15.2. No Payment for Unperformed Services. If Administrator fails to
provide any Services in accordance with the applicable Statement of
Work as a result of a Force Majeure Event, Customer will not be
responsible for the payment of fees relating to the Services that
Administrator fails to provide.
15.3. Disaster Recovery Plan And Crisis Management.
(a) Administrator has provided to Customer, prior to the Statement
of Work Execution Date, a copy of the se2 Business Recovery
Plan which plan includes the procedures to be followed by
Administrator with respect to its continued provision of
Services in the event any facility used by Administrator to
provide the Services is unavailable for use by Administrator
because it has been destroyed, significantly damaged, or is
otherwise inoperable as a result of or is the subject of a
disaster (the "DRP") to such an extent that Administrator is
unable to provide any portion of the Services. Administrator
or its parent corporation(s), may modify or change the DRP at
any time; provided, however, that no such change or
modification shall adversely affect Administrator's ability to
restore or resume its provision of Services. Administrator or
its parent corporation(s), shall: (i) test the DRP at least
once every calendar year during the Term, beginning the first
calendar year following the Commencement Date, and promptly
advise Customer of the test results: (ii) consult with
Customer regarding the priority to be given to restoration of
Administrator's performance of the Services during the
pendency of any such disaster or other applicable occurrence;
and (iii) implement the DRP in the event of a disaster or
other applicable occurrence. Administrator agrees to use
commercially reasonable efforts to resume as promptly as
practicable functions identified by Customer as critical.
(b) If "Critical Services," as defined in Exhibit 11, are not
reinstated within seventy-two (72) HOURS from the event
disabling Administrator's ability to perform the Services or
if the other Services are not reinstated in accordance with
the time frames in such DRP, Customer may terminate the
applicable Statement of Work pursuant to Section 13.2(a)
immediately upon notice to Administrator without regard to the
thirty (30) day notice and cure period or the thirty (30) day
notice of termination period.
(c) If a Force Majeure Event prevents, hinders or delays
performance of the Services for more than one hundred and
twenty (120) hours or within the
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time frames in such DRP, Customer may procure such affected
Services from an alternate source.
16. TERMINATION ASSISTANCE
16.1. Termination Assistance Services. The following applies with respect
to Services under each Statement of Work, unless set forth
otherwise in the applicable Statement of Work:
(a) Notices and Duration. At least ninety (90) days before
expiration of the Term of this Agreement or a Statement of
Work, or in the case of a termination of this Agreement or one
or more Statement of Work for any reason other than as
described in Section 16.1(i) below, Customer may request
Administrator to provide Termination Assistance Services.
Unless otherwise specified in writing by Customer, the
Termination Assistance Period shall commence on the date such
notice is received by Administrator and shall continue for
twenty-four (24) consecutive calendar months thereafter, but
under no circumstances shall the Termination Assistance Period
extend beyond the end of the Term of this Agreement or the
applicable Statement of Work. Provided, however, Customer may
request Administrator, and Administrator shall provide,
additional services after the Term as reasonably requested by
Customer, at Administrator's then-current time and materials
rates. At any time during the Termination Assistance Period,
Customer may terminate all remaining Services by providing
sixty (60) days written notice.
(b) Fees During Termination Assistance Period. All Services
performed during the Termination Assistance Period shall be
performed at the rates then in effect under the applicable
Statement of Work for Services described in such Statement of
Work and for Termination Assistance Services, Customer shall
pay Administrator's then current time and materials rates. To
the extent Administrator is entitled to receive any minimum
fees under a Statement of Work for the Services, Customer's
obligation to pay such minimum fees shall continue for the
duration of the performance of the Services.
(c) Nature of the Services Provided During Termination Assistance
Period. Administrator shall not be obligated to perform
Services beyond the Term stated in the applicable Statement of
Work, as such Term may be extended in accordance with this
Agreement. Subject to the preceding sentence, in addition to
providing such Services, Administrator shall continue to
perform during the Termination Assistance Period such Services
on the same terms and conditions then in effect, except as the
Parties may agree in accordance with the Change Procedures as
part of the Termination Assistance Services. Services above
and beyond Services shall be provided as the Termination
Assistance Services for which Customer shall pay Administrator
at the time and materials rates set forth in the applicable
Statement of Work.
(d) Right to Hire. If Customer terminates this Agreement pursuant
to Sections 13.2(a) and (c), 13.3 or 13.5, upon Customer's
written request, Administrator will promptly provide Customer
with reasonable access to its key personnel dedicated
exclusively to performing Services for Customer and
information related to Permitted Subcontractors as Customer
may reasonably request so
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that Customer may extend offers of engagement to such persons.
For any such person hired by Customer, Administrator shall
waive any prohibitions in any employment or other agreements
with such persons that may restrict such individuals from
accepting such offers from Customer. The foregoing shall not
obligate Administrator to release such persons from any
confidentiality obligations or restrictive covenants for the
benefit of any third party, if any. Administrator will
cooperate with Customer to identify whether any such persons
are bound to any restrictive covenants for the benefit of any
third parties, other than confidentiality obligations.
(e) Termination Assistance. In addition to continuing to provide
Services during the Termination Assistance Period,
Administrator will, upon the request of Customer during the
Termination Assistance Period, meet with Customer personnel
to: (i) explain how the Services are provided: and (ii)
provide training and the Operating Guidelines and the other
materials in accordance with Section 5.5 above, all as may be
necessary and reasonably requested by Customer for Customer to
transition to a replacement provider of such Services.
Administrator shall not be obligated to provide Customer with
any other Administrator Materials.
(f) Data Extracts. Administrator will, upon written request of
Customer during the Termination Assistance Period, provide
Customer with an extract of all data relating to the
Contracts, including, Contract Accounting Books and Records,
which are then retained by Administrator in non-proprietary
form and format as may be requested by Customer.
(g) Other Books and Records. Administrator will, upon the request
of Customer during the Termination Assistance Period, make
available all Contract Accounting Books and Records created
for Customer in the course of performing the Services in the
form and format retained by Administrator, including, without
limitation, tendering to Customer, by assigning related
agreements or by promptly providing reasonable access to
Customer, the physical copies of records which may be retained
in one or more off-site storage locations. Such access
provided by Administrator shall include access to and use of
appropriate retrieval tools, such as indices of how and where
the books and records are archived, to the extent available to
Administrator.
(h) Further Cooperation. Until the End Date, Administrator will
promptly: (i) answer questions from Customer or Customer's
Agents regarding the Services; and (ii) deliver to Customer
any remaining reports and documentation still in
Administrator's possession.
(i) Obligation to Provide. Subject to Customer's compliance with
the payment obligations in Section 16.1(b) above and Section
16(j) below, Administrator will provide the Termination
Assistance Services regardless of the reason for expiration or
termination of the applicable Statement of Work.
Notwithstanding the foregoing, to the extent Customer has: (1)
"Materially Breached" (as hereinafter defined) its obligations
under Article 5 or Article 6, and such breach is capable of
being cured, and (2) Customer fails to cure such breach in all
material respects after notice from Administrator,
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Administrator shall not be obligated to provide any Services,
including any Termination Assistance Services impacted by such
material breach or if providing such Services or Termination
Assistance Services would cause Administrator further losses,
provided that Administrator seeks and receives a temporary
restraining order and / or a preliminary restraining order (or
such other order by a Governmental Authority having
jurisdiction over Customer) requiring Customer to cure the
Material Breach, and Customer fails to cure such Material
Breach in all material respects within three (3) calendar days
from the issuance of such order or mandate. Solely for
purposes of this subsection (i), a "Material Breach" of
Article 5 or Article 6 means a breach that would: (y) endanger
the trade secret status or confidentiality status of
Administrator Materials; or (z) cause Administrator to breach
or remain in breach of its contractual obligations or
statutory duties to one or more third parties in connection
with the Administrator Materials which are the subject of such
breach by Customer. Administrator shall not be required to
post any security in connection with its pursuit of the
request for the order or mandate described above and the
parties will be deemed to have stipulated that immediate and
irreparable injury, loss, and damages will result if the
temporary restraining order and/ or a preliminary restraining
order sought by the moving party is not granted.
(j) Termination by Administrator. The following shall govern if
Administrator terminates this Agreement or a Statement of Work
in accordance with Sections 13.3, 13.4 or 13.5:
(i) Within thirty (30) days from receipt of
Administrator's notice of termination, Customer may
request Administrator to provide Termination
Assistance Services for up to twenty-four (24) months
from the effective date of termination specified in
Administrator's notice of termination. At any time
during the Termination Assistance Period, Customer may
terminate all remaining Services by providing sixty
(60) days written notice.
(ii) If the basis for termination is Customer's failure to
pay any undisputed amounts to Administrator in
accordance with the terms of the Agreement or failure
to comply with Section 12.4 with respect to disputed
amounts, Customer must pay Administrator all amounts
due to Administrator, plus one (1) month of estimated
(as determined in good faith by Administrator) fees
and charges and Pass-Through Expenses (or, if a
shorter period of extension is specified, estimated
fees, charges, and Pass-Through Expenses in respect of
the period by which the Agreement or applicable
Statement of Work is to be extended).
(iii) Administrator's obligation to continue performing any
Services shall be conditioned on Customer paying, in
advance, the full amount reasonably estimated by
Administrator for the following calendar month. Such
first payment to Administrator must be delivered to
Administrator not less than thirty (30) days from
receipt of Administrator's notice of termination.
Customer must thereafter continue diligently to cure
(if the basis for the
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termination is curable) and otherwise to perform under
the Agreement and/or Statement of Work and, if the
basis for termination is Customer's failure to pay any
undisputed amounts to Administrator in accordance with
the terms of the Agreement, shall be required to pay
estimated fees, charges, and Pass-Through Expenses to
Administrator for the Services in advance as
Administrator shall reasonably determine and invoice.
16.2. Exit Rights. With respect to Customer's rights to access the
"Source Code Materials" and the "Other Software List", as those
terms are defined below:
(a) Administrator does hereby grant to Customer a non-exclusive,
non-assignable, license to use, and to the extent the
Administrator Software includes source code, the right to
modify and use Administrator Software specific to performing
the Services, as defined in the applicable Statement of Work
which Administrator owns or has a license to use with the
right to sublicense. The foregoing license shall be for two
years or the remainder of the Term following termination of
this Agreement as result of Administrator's Insolvency.
Customer's license to such Administrator Software shall be
limited to performing for itself such Services with respect to
those Contracts for which Administrator is performing such
Services at the time of Administrator's Insolvency. The
license granted herein shall remain subject to the provisions
of Article 5 and Article 6. As to the Administrator Software
for which Administrator does not own or have a license with
right to sublicense (including without limitation third party
tools such as compilers and utilities used by Administrator in
connection therewith), a list of such software (the "Other
Software List") will be maintained in escrow pursuant to
Section 16.2 above.
(b) As to the Administrator Software which is known as the
"Accenture Life Insurance Platform", Administrator shall use
commercially reasonable efforts (excluding the payment of
additional license fees) to assist Customer in obtaining from
Accenture in the name of Customer the right for Customer to be
able to use the version of such Administrator Software then
used by Administrator for no less than two (2) years following
termination or the remaining period in the Term, whichever is
greater, of this Agreement as a result of Administrator's
Insolvency for Customer to perform for itself such Services
with respect to those Contracts for which Administrator is
performing such Services at the time of Administrator's
Insolvency. To the extent Customer requests, Administrator
shall use commercially reasonable efforts to have Accenture
migrate the Contracts from the Accenture Life Insurance
Platform to a platform designated by Customer, at Customer's
expense. In connection with such use of the Accenture Life
Insurance Platform, Customer, and not Administrator, shall be
responsible for any and all obligations under such license.
(c) Administrator shall maintain in escrow, pursuant to an escrow
arrangement sponsored by Administrator (at Administrator's
expense) with a mutually acceptable escrow agent, and
participation or beneficiary agreements consistent herewith
signed by Customer, no later than sixty (60) days following
the date Contracts are first administered by Administrator,
the
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Other Software List, and a copy, as described in the next
sentence, of the Software as to which Administrator owns or
has a license to use with right of sublicense, in the form
used by Administrator from time to time to provide Services,
and the source code from which such executable copy was
compiled (except with respect to any third party Software for
which Administrator does not have source code). The escrow
shall include Software source code (in the case of Software
licensed by Administrator, to the extent possessed by
Administrator), the Other Software List, the hardware used by
Administrator configurations thereof and any other components
and other information that reasonably skilled programmers and
other technicians would need to build and utilize the same
applications in the same manner as Administrator in its
provision of Services to Customer. All of the foregoing
components (including the object code and the Other Software
List) of the escrow shall be updated in escrow on each major
release cycle and in any event not less frequently than once
every twelve (12) months. Customer will bear all costs and
expenses associated with its participation in the escrow
arrangement to be established by Administrator pursuant to
this Section.
(d) Customer may access, and the above-referenced source code
escrow agreement shall provide for, on usual and customary
terms of such a source code escrow agreement, the Source Code
Materials and the Other Software List only on Administrator's
Insolvency.
(e) Administrator shall: (a) update and deliver the Source Code
Materials and Other Software List in strict compliance with
the terms and conditions of this Agreement and of the Escrow
Agreement, (b) take commercially reasonable efforts to ensure
that the media on which the Source Code Materials and Other
Software List are delivered to the Escrow Agent will be free
from defects in workmanship and materials and viruses and (c)
take commercially reasonable efforts to ensure that at the
time of each delivery, the Source Code Materials and Other
Software List provided to the Escrow Agent will constitute a
complete, correct and accurate set of the Other Software List
and Source Code Materials for the Administrator Software or
applicable Release, as applicable, which are the only
materials required to render the Administrator Software
readable and usable in the event of the occurrence of a
Release Condition.
(f) Prior to each delivery of the Source Code Materials to the
Escrow Agent, Administrator will conspicuously label for
identification each magnetic tape, disk or other tangible
media upon which the Source Code Materials are written or
stored. In addition, upon each such delivery, Administrator
will provide an itemized list of the Source Code Materials
contained in the delivery.
(g) At Customer's expense, from time to time, Customer may direct
that the Source Code Materials be reviewed and tested for
completeness and accuracy. If such review or test indicates
that the Source Code Materials, including any component
thereof, are incomplete or inaccurate, then upon notice from
Customer or its designee, Administrator will promptly
redeliver
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the Source Code Materials in accordance with the terms and
conditions of this Agreement and of the Escrow Agreement.
(h) The parties agree that the Source Code Materials and
Administrator Software provided hereunder is intellectual
property, as defined in section 101 of title 11, United States
Code (the "Bankruptcy Code") and that this Agreement is
governed by section 365(n) of the Bankruptcy Code.
Administrator acknowledges that if it, as a debtor in
possession or a trustee in bankruptcy in a case under the
Bankruptcy Code, rejects this Agreement, then Customer may
elect to retain its rights under this Agreement as provided in
section 365(n) of the Bankruptcy Code. Administrator agrees
and acknowledges that enforcement by Customer of any rights
under section 365(n) of the Bankruptcy Code in connection with
this Agreement shall not violate the automatic stay of section
362 of the Bankruptcy Code and waives any right to object on
such basis. Upon rejection of this Agreement by Administrator
or the bankruptcy trustee in a bankruptcy case under the
Bankruptcy Code and written request of Customer to
Administrator or the bankruptcy trustee pursuant to section
365(n) of the Bankruptcy Code, Administrator or such
bankruptcy trustee shall: (a) provide Customer the
Administrator Software, the Source Code Materials and any
intellectual property otherwise required to be provided to
Customer under this Agreement held by Administrator or such
bankruptcy trustee; and (b) not interfere with the rights of
Customer provided in this Agreement to the Administrator
Software, the Source Code Materials and any intellectual
property provided under such agreements, including any right
to obtain the Administrator Software, the Source Code
Materials and any such intellectual property from another
entity, but only where such use by Customer is in strict
compliance with this Agreement.
(i) If such Administrator Software is software to which
Administrator has only a license, the license created by this
Section shall not extend beyond the remaining term of the
applicable license held by Administrator.
16.3. Termination of License to Customer Software. Upon the End Date,
with respect to any terminated or expired Statement of Work, any
software license rights granted to Administrator by Customer in the
applicable Statement of Work will immediately terminate and
Administrator will promptly (a) deliver to Customer, at no cost to
Customer, a current copy of all such software, if any, in the form
in use as of the End Date, and (b) comply with the provisions of
Section 6.7 with respect to all other copies of all such software
in Administrator's possession.
17. GENERAL.
17.1. Divestiture Rights. "Divested Entity" means any Affiliate of
Customer which is divested, spun-off or otherwise ceases to meet
the definition of Affiliate as a result of a disposition or sale
after the Effective Date. Customer shall notify Administrator in
writing within ten (10) days of an Affiliate of Customer whose
Contracts are governed by this Agreement becoming an Divested
Entity. If an Affiliate becomes a Divested Entity, upon written
notification to Administrator:
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(a) Administrator will, at Customer's election (in Customer's sole
discretion), allow such Divested Entity: (i) for a period not
to exceed twenty four (24) months from the date an entity
becomes a Divested Entity to continue to receive the license
and obtain the Services hereunder subject to and in accordance
with the terms and conditions of the Agreement and the
applicable Schedule; and/or (ii) to obtain the license or
Services under a separate agreement, on the same terms as
contained in this Agreement, in each case commencing on the
date an entity becomes a Divested Entity, in any event,
conditioned on the Divested Entity agreeing in writing with
Administrator to be bound to the terms and conditions of this
Agreement.
(b) Administrator will, at Customer's election (in Customer's sole
discretion), allow the Divested Entity to terminate the
Schedule (notwithstanding anything to the contrary set forth
in this Agreement and/or in the Schedule) without such
Divested Entity being obligated to pay any early termination
fee under this Agreement, but without relieving Customer of
the obligation to pay such early termination fee or the
obligation to continue paying any fees due and payable, as may
be stated in this Agreement as of the applicable date the
entity becomes a Divested Entity.
(c) If under (a) or (b) above, the Divested Entity seeks to
terminate this Agreement as it applies to it, Administrator
will provide Termination Assistance on the terms stated in
Article 16 above.
(d) As a condition to Administrator performing any of the
obligations under this Section, Customer or the Divested
Entity shall have agreed in writing to compensate
Administrator, at Administrator's then-current time and
materials rates for the Services to be reasonably rendered in
connection with the separation for the Divested Entity, for
the additional services necessary for Administrator to
administer the Contracts of the Divested Entity on a
segregated basis, all as to be stated in a written project
plan executed by Customer, the Divested Entity and
Administrator in accordance with the Change Procedures. Such
mutually agreed project plan will contain the additional
activities to be performed by Administrator in connection with
the segregation associated with the Divested Entity.
17.2. Separation.
(a) Upon the written request of Customer or an Affiliate, without
charging any additional fees (except to the extent permitted
under this Agreement), Administrator will enter into separate
agreements with Affiliates of Customer, under the same terms
and conditions, including the same rates, as this Agreement
(each, an "Affiliate Agreement"). The license and Services
provided by Administrator to Customer and/or an Affiliate
under an Affiliate Agreement shall be provided uninterrupted
to Customer and/or its Affiliates. Any fees paid and/or
payable pursuant to each Affiliate Agreement shall be
aggregated with the fees paid and/or payable by Customer under
this Agreement for purposes of computing any discounts,
credits or otherwise, if and as applicable to Customer and its
Affiliates under this Agreement.
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(b) Upon the execution of an Affiliate Agreement, Customer shall
have no further liability or obligations in connection with
the license or Services transferred to the Affiliate under
such Affiliate Agreement, including, without limitation, any
payment obligations, but excluding the obligation of Customer
to pay fees payable under this Agreement which may have
accrued prior to the effective date of the Affiliate
Agreement.
(c) As a condition to Administrator performing any of the
obligations under this Section, Customer or the Affiliate
shall have agreed in writing to compensate Administrator, at
Administrator's then-current time and materials rates for the
Services to be reasonably rendered in connection with the
Affiliate Agreement, for the additional services necessary for
Administrator to administer the Contracts of the Affiliate on
a segregated basis, all as to be stated in a written project
plan executed by Customer, the Affiliate and Administrator in
accordance with the Change Procedures. Such mutually agreed
project plan will contain the additional activities to be
performed by Administrator in connection with the segregation
associated with the Affiliate added under the Affiliate
Agreement.
17.3. No Publicity. Except in the course of performing the Services,
Administrator will not use the name, trademark, service xxxx, trade
name, logo or other commercial or product designations of Customer
in any way, in print or electronic format or on a web or internet
site, without the prior written consent of Customer in each
instance, which may be withheld regardless of Section 17.19
17.4. No Waiver; Remedies. A Party may not waive a right or remedy except
pursuant to a writing executed by such Party. No failure or delay
in exercising any right or remedy or requiring the satisfaction of
any condition under this Agreement, and no course of dealing
between the Parties, operates as a waiver or estoppel of any right,
remedy or condition. A waiver made in writing on one occasion is
effective only in that instance and only for the purpose that it is
given and is not to be construed as a waiver on any future
occasion. No single or partial exercise of any right or remedy
under this Agreement precludes the simultaneous or subsequent
exercise of any other right or remedy. The rights and remedies of
the Parties set forth in this Agreement are not exclusive of, but
are cumulative to, any rights or remedies now or subsequently
existing at law, in equity or by statute.
17.5. Certain Acknowledgments. The Parties acknowledge and agree that
they have mutually negotiated the terms and conditions of this
Agreement and each Statement of Work and that any provision
contained herein or therein with respect to which an issue of
interpretation or construction arises shall not be construed to the
detriment of the drafter on the basis that such Party or its
professional advisor was the drafter. THE PARTIES FURTHER
ACKNOWLEDGE THAT AN AUTHORIZED OFFICIAL OF EACH HAS READ THIS
AGREEMENT, UNDERSTANDS IT AND AGREES ON BEHALF OF THE PARTY TO BIND
THE PARTY BY ITS TERMS.
17.6. Severability. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid, illegal or
unenforceable under any applicable statute or rule of law, such
provision is to that extent deemed omitted, and the balance of
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the Agreement remains in full force if the essential terms and
conditions of this Agreement for each Party remain valid, binding
and enforceable.
17.7. Assignment.
(a) Administrator may not assign any of its rights, except as
otherwise permitted herein, or delegate any performance under
this Agreement, voluntarily or involuntarily, whether by
merger, consolidation, dissolution, change of control,
operation of law or any other manner, except with the prior
written consent of Customer. Any other purported assignment by
Administrator of rights or delegation of performance without
Customer's prior written consent is void, and Customer is
entitled to terminate this Agreement effective as of the date
Customer obtains knowledge of the purported assignment or
delegation without prejudice to Customer's claims for damages.
(b) Customer may not assign any of its rights, except with the
prior written consent of Administrator, unless to Customer's
Affiliate in connection with a corporate restructuring, so
long as such assignee Affiliate is as financially sound as
Customer as determined by such Affiliate having an a financial
rating by a nationally recognized credit rating agency, such
as AM BEST, Moodys, or S&P. which is equivalent to or better
than Customer as the time of assignment, or Customer otherwise
remains liable for the Customer's obligations hereunder in the
case of an insolvency of such assignee Affiliate. Any
purported assignment by Customer of rights without
Administrator's prior written consent is void, and
Administrator is entitled to terminate this Agreement
effective as of the date Administrator obtains knowledge of
the purported assignment without prejudice to Administrator's
claims for damages.
(c) This Agreement is binding upon the Parties' respective
successors and permitted assigns.
17.8. Governing Law. The laws of the State of New York, without giving
effect to its choice of law principles, govern all matters arising
under or relating to this Agreement and all of the transactions it
contemplates, including, without limitation, its validity,
interpretation, construction, performance and enforcement. The
Parties further agree that the Uniform Computer Information
Transactions Act (UCITA) does not apply to this Agreement.
17.9. Forum. Each Party irrevocably agrees that any legal action, suit or
proceeding brought by it in any way arising out of this Agreement
must be brought solely and exclusively in the United States
District Court for the Southern District of New York or, in the
state courts of the State of New York if the legal action, suit or
proceeding lacks the subject matter jurisdiction to be brought in
such District Court, and irrevocably accepts and submits to the
sole and exclusive in personam jurisdiction of each of the
aforesaid courts, generally and unconditionally with respect to any
action, suit or proceeding brought by it or against it by the other
Party. Notwithstanding the foregoing, either party may pursue the
relief described in Section 16.1(i) in any United States District
Court in the State of Kansas, in which case, notwithstanding
Section 17.8 above, the laws
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of the State of Kansas. without giving effect to its choice of law
principles, shall govern such proceedings.
17.10. Waiver of Trial by Jury. EACH PARTY, TO THE EXTENT PERMITTED BY
LAW, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS IT CONTEMPLATES.
EACH PARTY ACKNOWLEDGES THAT IT HAS RECEIVED THE ADVICE OF
COMPETENT COUNSEL.
17.11. Notices.
(a) Each Party will deliver any notices required or desired
pursuant to this Agreement in writing. Notices are deemed
given: (i) if by hand delivery, upon receipt thereof; (ii) if
mailed, five (5) days after deposit in the U.S. mails, postage
prepaid, certified mail, return receipt requested; or (iii) if
sent via overnight courier upon receipt. Customer will address
all notices to the Administrator at the address at 0000 XX 0xx
Xxxxxx, Xxxxxx, Xxxxxx 00000-0000 to the attention of its
General Counsel. Administrator will address all notices to
Customer at the addresses indicated below, to the attention of
its General Counsel. (In the case of notice to an Affiliate of
Customer who may have executed a Joinder Agreement, then at
the addresses indicated in the Joinder Agreement, to the
attention of its General Counsel.) Either Party may change its
address by giving written notice to the other Party in
accordance with the terms of this paragraph.
Customer Addresses for Notice:
SunAmerica Annuity and Life Assurance Company
Attn: General Counsel
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
American General Life Assurance Company of Delaware
Attn: General Counsel
0000 Xxxxx Xxxxxxx, XX00
Xxxxxxx, Xxxxx 00000
The United States Life Insurance Company in the City of New York
Attn: General Counsel
0000 Xxxxx Xxxxxxx, XX00
Xxxxxxx, Xxxxx 00000
(b) The Parties acknowledge that only certain individuals are
authorized to act on their behalf and on behalf of one or more
of their respective Affiliates. Customer shall notify
Administrator in writing of the name and title of each officer
of Customer, as well as the name and title of each individual
to act on behalf of each Customer Designee, and the
limitations on each such individual's authority, to act on
behalf of Customer. Administrator shall notify Customer in
writing, on behalf of Administrator and each relevant
Affiliate of
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Administrator, the name and title of each authorized
representative of Administrator and its Affiliates and the
limitations on each such individual's authority to act on
behalf of Administrator.
17.12. Survival. All provisions hereof relating to proprietary rights,
confidentiality and non-disclosure, indemnification and limitation
of liability survive the completion of the Services or any earlier
termination, expiration or rescission of this Agreement.
17.13. EEO Requirements. To the extent applicable, the equal employment
opportunity and affirmative action requirements set forth in 41
C.F.R. Part 60-1.4(a) (women and minorities), 41 C.F.R. Part
60-250.5(a) (covered veterans) and 41 C.F.R. Part 60-741.5(a)
(individuals with disabilities) are hereby incorporated by
reference into this Agreement.
17.14. Non-Solicitation. The Parties agree that, unless otherwise agreed
to by the Parties in writing, during the term of this Agreement and
for a period of one (1) year after the expiration or termination of
this Agreement, neither Party shall directly or indirectly solicit
for hire as an employee or engagement as an independent contractor
an employee of the other Party who is or was, within one year,
involved with the provision of the Services or receipt of the
benefits thereof provided under this Agreement; provided that this
prohibition shall not apply in respect of: (a) any such employee
who responds to general advertisements or solicitations or
recruitment searches not specifically targeted by the Party or any
of its Affiliates at any of the other Party's employees or who is
referred by search firms or employment agencies or similar entities
so long as such entities have not been instructed by the Party or
any of its Affiliates or representatives to solicit such employees;
(b) who approaches the Party of his or her own initiative, without
any direct or indirect solicitation by the other Party or any of
its Affiliates or search firms, employment agencies or similar
entities engaged by them; (c) who has been given or has given
notice of termination or resignation to the other Party prior to
commencement of employment discussions between the Party and such
specific employee; or (d) with whom the Party or any of its
Affiliates are currently having employment discussions prior to the
date of this Agreement, or any hires made by the Party pursuant to
any of the foregoing. The Parties agree that, in the event of any
violation of this provision, the liquidated damages to be paid by
the breaching Party, as its sole obligation, shall be fifty percent
(50%) of the individual's annual base salary or one hundred
twenty-five thousand dollars ($_______), whichever is less.
17.15. Services Provided Prior to Effective Date. All services provided by
Administrator which were rendered prior to the Effective Date
(including services provided under the Letter Agreement) in
anticipation of the Parties executing this Agreement shall be
governed solely by this Agreement.
17.16. Legal Fees. In any litigation or proceeding between the Parties
hereto arising out of or in connection with this Agreement, the
prevailing Party is entitled to recover its costs, legal fees and
expenses (including allocated costs of in-house staff counsel).
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17.17. Headings. The section headings are used in this Agreement for
reference and convenience only and do not affect this Agreement's
construction or interpretation.
17.18. Governing Order; Subsequent Modifications. In the event of a
conflict between:
(a) this Agreement and any Exhibit to this Agreement, the terms of
the Exhibit shall prevail;
(b) this Agreement and a Statement of Work, the terms of the
Statement of Work shall prevail;
(c) this Agreement, a Statement of Work and an Attachment to a
Statement of Work, the Statement of Work will prevail (as
between the Statement of Work and any Attachment to the
Statement of Work, the Attachment will prevail specifically
and only with respect to the additional or different terms
that are included in such Attachment); and
(d) this Agreement, a Statement of Work, an Attachment to a
Statement of Work and the Operating Guidelines, the Operating
Guidelines will prevail.
17.19. Construction. In this Agreement and the Statement of Work, Exhibits
and Attachments to this Agreement:
(a) references to any law, legislative act, rule or regulation
mean references to such law, legislative act, rule or
regulation in changed or supplemented form or to a newly
adopted law, legislative act, rule or regulation replacing a
previous law, legislative act, rule or regulation;
(b) references to and mentions of the word "including" or
"include" or the phrase "E.G." will mean "including, without
limitation" or "include, without limitation;"
(c) unless otherwise specifically provided: (i) in the computation
of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding," (ii) the word
"dollar" and the symbol "$" refer to United States Dollars,
and (iii) the word "day" means calendar day unless otherwise
specified; and
(d) unless otherwise specifically set forth in this Agreement, all
consents and approvals to be given by either Party under this
Agreement shall not be unreasonably withheld, delayed, denied
or conditioned and each Party shall make only reasonable
requests under this Agreement.
17.20. Counterparts. 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. The signatures of all of the Parties need not
appear on the same counterpart, and delivery of an executed
counterpart signature page by facsimile is as effective as
executing and delivering this Agreement in the presence of the
other Party to this Agreement. This Agreement is effective upon
delivery of one executed
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counterpart from each Party to the other Party. Any Party
delivering an executed counterpart of this Agreement by facsimile
will also deliver a manually executed counterpart of this Agreement
as soon as reasonably practicable following transmittal by
facsimile, but the failure to do so does not affect the validity,
enforceability or binding effect of this Agreement.
17.21. 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, including without limitation any
Governmental Authority, Permitted Subcontractor and Customer
Designee.
17.22. Entire Agreement. This Agreement, together with the exhibits,
schedules, attachments and Statement of Work, constitutes the
entire agreement between the Parties in connection with the subject
matter hereof and supersedes all prior and contemporaneous
agreements (including the Letter Agreement), understandings,
negotiations and discussions, whether oral or written, of the
Parties, and there are no warranties, representations and/or
agreements between the Parties in connection with the subject
matter hereof except as set forth in this Agreement. The Parties
also understand, acknowledge and agree that, unless otherwise
specified in a written instrument signed by an officer of each
Party, no additional terms or changes to these terms are valid or
binding on the Parties, even if such additional terms or changes
contain provisions to the contrary. Additionally, the Parties
specifically agree that any language or provisions contained on
Administrator's web site, statements of work or other Service
documents, or contained in any "shrinkwrap" or "clickwrap" provided
with a Work Product is of no force and effect.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
SE(2), INC. SUNAMERICA ANNUITY AND LIFE ASSURANCE
COMPANY
By: /s/ Xxxxx X. Scrlmark By: /s/ Xxx X. Still
----------------------------------- ----------------------------------
Print Name: Xxxxx X. Scrlmark Print Name: Xxx X. Still
Title: CFO Title: SVP & COO
Date: 2-24-11 Date: 2/18/11
AMERICAN GENERAL LIFE INSURANCE THE UNITED STATES LIFE INSURANCE
COMPANY OF DELAWARE COMPANY IN THE CITY OF NEW YORK
By: /s/ Xxx X. Xxxxxxxx By: /s/ Xxx X. Xxxxxxxx
----------------------------------- ----------------------------------
Print Name: Xxx X. Xxxxxxxx Print Name: Xxx X. Xxxxxxxx
Title: SVP & CFO Title: SVP & CFO
Date: 2/22/11 Date: 2/22/11
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APPENDIX A
GLOSSARY
"Account Guidelines" has the meaning specified in Section 1.3(c)(i) of the
Agreement.
"Administrator" has the meaning specified in the preamble of the Agreement.
"Administrator Competitor" means any of the entities listed in Exhibit 10.
"Administrator Indemnitees" has the meaning specified in Section 9.2 of the
Agreement.
"Administrator Materials" means: (1) the Administrator Software; (2)
Administrator Confidential Information; (3) materials (including related
customizations, modifications and training materials) that reflect or
incorporate ideas from Administrator Software or Administrator's Confidential
Information; and (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 developed
by Administrator prior to the Effective Date or independently from this
Agreement.
"Administrator Personnel" means the employees, agents, subcontractors and
representatives of Administrator performing Services under this Agreement.
"Administrator Service Location(s)" means the facility or facilities owned or
operated by Administrator and from which the Services are provided.
"Administrator Software" means depending on the context, a single System or
collectively all the Systems owned or licensed directly from third parties by
Administrator or any of its Affiliates and used from time to time by
Administrator to perform the Services herein, including all modifications,
enhancements and derivative works thereof, whenever made.
"Affiliate" means a person or entity that directly, or indirectly through one or
more intermediaries, Controls, is Controlled by or is under common Control with
another person or entity or beneficially owns or has the power to vote or direct
the vote of at least a majority of the voting stock (or of any form of voting
equity interest in the case of a person that is not a corporation) of such other
entity
"Agreement" has the meaning specified in the preamble of the Agreement.
"Applicable Law" means all laws, common laws, rules, regulations, codes,
statutes, judgments, injunctions, orders, agreements, decrees, policies and
other requirements of all Governmental Authorities applicable to the person,
place and situation in question.
"Applicable TPA Laws" has the meaning specified in Section 1.6 of the Agreement.
"Baseline Audit Support" has the meaning specified in Section 3.11 of the
Agreement.
"Billing Party" has the meaning specified in Section 12.3(b) of this Agreement.
"Business Days" means any day other than a Saturday, Sunday, that the New York
Stock Exchange is open for trading.
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"Change Procedures" means the change control procedures set forth in Exhibit 7.
"Claim" has the meaning specified in Section 9.1 of the Agreement.
"Claims Notice" has the meaning specified in Section 9.5 of the Agreement.
"Commencement Date" means the date set forth in the applicable Transition Plan
on which Administrator assumes full responsibility for delivery of the Contract
administrative Services described in the applicable Statement of Work.
"Competitive Developments" has the meaning specified in Section 5.3(e) of the
Agreement.
"Confidential Information" has the meaning specified in Sections 6.1 and 6.3 of
the Agreement.
"Consumer Confidential Information" means all individually identifiable
information about a consumer, in connection with a Contract issued, reinsured,
or processed by Customer or its Affiliates, or in connection with the
application, issuance or administration of such Contracts, and includes
Underwriting Information about such consumers. A "consumer" is a Contract Holder
as well as prospective, current and former employees and contractors of Customer
or its Affiliates and shall also include personally identifiable financial
information, or the equivalent, as defined by Title V of the Xxxxx-Xxxxx-Xxxxxx
Act ("GLB"), as amended from time to time, or any other similar Applicable Law,
including applicable state law equivalents, or any other similar Applicable Law,
including applicable state law equivalents, pertaining to any past, current, or
future Contract Holder in respect of any Contract or applicant therefor, or any
other person, including former or current employees or contractors of
Administrator and its Affiliates.
"Contract" means those annuity contracts identified in the applicable Statement
of Work, together with all other terms and conditions of such annuity contracts,
including the related prospectuses.
"Contract Accounting Books and Records" has the meaning set forth in Section 3.1
of this Agreement.
"Contract Holder" means a prospective, current or former insured or annuitant
and includes the owner of a Contract, applicant for a Contract, the person who
is insured under a Contract, the beneficiary under a Contract, or representative
of any of the foregoing.
"Contract Holder Data" means all data relating to the rights and obligations of
Customer and the Contract Holder under the Contracts which is required to be
maintained, processed or generated by Administrator in connection with
administration of the Contracts.
"Control" (including, with correlative meanings, the terms "Controlled by" and
"under common Control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by contract or otherwise.
"Customer" has the meaning specified in the preamble to the Agreement.
"Customer Client" means a person or entity with which Customer or an Affiliate
of Customer has a business relationship for which Customer or such Affiliate has
assumed responsibility to provide
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services and which Customer or such Affiliate will have Administrator provide a
subset of the Services under the Agreement.
"Customer Competitor" means an entity which, either itself or has an Affiliate
which, issues life insurance or annuities or provides administrative services
similar to those provided by Customer.
"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 or a Customer Designee, excluding Consumer
Confidential 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 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, as well as Systems which may be owned, acquired or licensed by
Customer, other than Customer Software.
"Customer Designee" means a person (including that person's employees, agents,
contractors and suppliers) who is identified by Customer as a person acting on
behalf of or for the benefit of Customer relating to the Services.
"Customer Information" means all Customer Confidential Information, Consumer
Confidential Information, Customer Content, Customer Software, Contract Holder
Data, Contract Account Books and Records and Underwriting Information.
"Customer Indemnitees" has the meaning specified in Section 9.1 of the
Agreement.
"Customer Software" means any System owned or licensed by Customer or its
Affiliates (including any software modules, modifications and enhancements
thereto) which is listed in Exhibit 5, and for which Administrator has been
authorized by Customer or its Affiliates to utilize in performing the Services
hereunder, but excluding any Administrator Software which Customer or its
Affiliates have licensed.
"Default Performance Standards" has the meaning set forth in Section 1.4(d).
"Disputing Party" has the meaning specified in Section 12.3(b) of this
Agreement.
"DRP" has the meaning specified in Section 15.3(a) of the Agreement.
"Early Termination Fee(s)" has the meaning specified in Section 13.2(b) of the
Agreement.
"Effective Date" has the meaning specified in the preamble to the Agreement.
"End Date" means the later of (1) the expiration or termination of the
applicable Statement of Work and (2) the last day of the Termination Assistance
Period.
"Extraordinary Change" has the meaning specified in Section 2.5(g) of the
Agreement.
"Force Majeure Event" has the meaning specified in Section 15.1 of the
Agreement.
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"Governmental Authority" means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision, any governmental or quasi-governmental authority of any
nature (including any division, department, agency, commission, instrumentality,
official, organization, unit, body or entity), and any non-governmental
organization which has promulgated compliance standards applicable to the
Services to be provided hereunder.
"Indemnified Damages" means all liabilities, losses and damages incurred,
expenses reasonably incurred by an Indemnified Party (including reasonable fees
of attorneys and other professional advisors and of expert witnesses incurred
prior to the Indemnifying Party assuming the defense of a claim in accordance
with this Agreement) and final judgments (regardless of how such monetary
damages payable to a third party are characterized as part of such judgments,
but subject to the limitations and exclusions in this Agreement), settlements
and court costs.
"Indemnified Party" has the meaning specified in Section 9.5(a) of the
Agreement.
"Indemnifying Party" has the meaning specified in Section 9.5(a) of the
Agreement.
"Insolvency" means an event which results in a Party: (1) ceasing to carry on
business as a going concern, making a general assignment for the benefit of
creditors, filing a voluntary petition in bankruptcy petitioning for or
instituting a liquidation under any bankruptcy, insolvency, incorporation or
other applicable laws; or (2) having a petition in bankruptcy or any other case
or proceeding in bankruptcy involving liquidation, dissolution or winding-up is
filed, commenced or instituted against the other and remains undismissed for a
period of thirty (30) calendar days; or (3) having a receiver or trustee is
appointed for all or substantially all of the property and assets of the other.
"Jointly Developed Materials" has the meaning specified in Section 5.3(a) of the
Agreement.
"Letter Agreement" means that certain letter agreement between the Parties dated
August 4, 2010.
"Losses" means any and all damages, fines, penalties, deficiencies, losses,
liabilities (including settlements and judgments) and expenses (including
interest, court costs, reasonable fees and expenses of attorneys, accountants
and other experts and professionals or other reasonable fees and expenses of
litigation or other proceedings or of any claim, default or assessment).
"Malicious Code" means (1) any code, program, or sub-program whose knowing or
intended purpose is to damage or interfere with the operation of the computer
system containing the code, program or sub-program, or to halt, disable or
interfere with the operation of the software, code, program, or sub-program,
itself, or (2) any device, method, or token that permits any person to
circumvent the normal security of the software or the system containing the
code.
"Net Loss" has the meaning specified in Section 9.6(c) of the Agreement.
"Nonpublic Information" means all designs, concepts, ideas, requirements,
specifications, calculations, drawings, diagrams, maps, charts, software,
network structures, configurations, interfaces, components, processes,
practices, policies, procedures, protocols, methodologies, reports, lists,
analyses, compilations, data, studies, and other similar materials regarding the
property, products, services, customers, or the existing or planned businesses
or operations or
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any parts thereof of a Party, any one or more of its Affiliates, disclosed by
the Disclosing Party to the Recipient Party in connection with this Agreement or
any Statement of Work by whatever means, including orally, visually,
electronically, or by physical delivery, regardless whether specifically
identified as "confidential" but which the Recipient Party knows or reasonably
ought to know is confidential; however, in the case of Nonpublic Information
orally or visually disclosed by Administrator, Administrator will, within ten
(10) days of the date of disclosure confirm that such information is Nonpublic
Information in writing.
"Normal Change" has the meaning specified in Section 2.5(g) of the Agreement.
"Operating Guidelines" means the work flows and procedures used by Administrator
to perform the Services, as defined in the applicable Statement of Work, in
conformity with: (i) Applicable Law as interpreted by Customer in accordance
with the terms of this Agreement; and (ii) those procedures and interpretations
of Applicable Law specific to Customer as may be reasonably specified in writing
by Customer in accordance with this Agreement and subsequently revised in
accordance with this Agreement.
"Other Software List" has the meaning specified in Section 16.2(c) of the
Agreement.
"Party" or "Parties" means Customer and Administrator, as signatories to this
Agreement.
"Pass-Through Expenses" means the out-of-pocket expenses identified as
'Pass-through Expenses' in Exhibit 6, which amounts are passed through at
Administrator's cost without any administrative or other markup.
"Payment Threshold Amount" has the meaning specified in Section 12.4(d) of this
Agreement.
"Permitted Subcontractors" means subcontractors that Administrator uses to
provide the Services.
"Person" whether capitalized or not, includes an individual or any corporation,
joint stock company, limited liability company, association, partnership
(general or limited), joint venture, financial institution, firm, organization
or unincorporated organization, individual, business or other trust or any other
entity, or organization of any kind or character, including a Governmental
Authority.
"Residuals" has the meaning specified in Section 6.6(c) of the Agreement.
"Restricted Activities" means any activity which would require or permit: (1) a
Permitted Subcontractor's employees to: (a) have direct phone, face-to-face,
email or other real-time communications with Contract Holders, Customer clients,
or Customer personnel in connection with the Services, other than by means of
"pre-formatted responses" (as defined below); or (b) access, use or transmit to
any local storage device or print, any Consumer Confidential Information; or (2)
a Permitted Subcontractor to perform services directly relating to this
Agreement for which Administrator would reasonably likely pay such person five
hundred thousand dollars ($500,000) or more annually. "Pre-formatted responses"
means those responses which have been approved by Customer and are automatically
generated by Administrator Software based on the following inputs and any other
inputs that have been approved by Customer: acknowledgements of receipt,
completion of a task, request for additional information, or reminder, whether
such acknowledgement is sent via email or other correspondence.
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"Sales Tax" and "Sales Taxes" have the meaning specified in Section 7.8(a) of
the Agreement.
"Security Incident" has the meaning specified in Section 6.8 of the Agreement.
"Security Regulations" has the meaning specified in Section 4.3 of the
Agreement.
"Statement of Work" means any schedule attached to and made a part of this
Agreement describing the specific Services to be provided to Customer and any
other terms and conditions applicable to the performance of such Services.
"Services" means, collectively, the Administrator's services, as set forth in
this Agreement and in the Statements of Work, the Transition Services, and the
Termination Assistance Services.
"Service Level" or "Service Levels" has the meaning specified in Section 1.4(a)
of the Agreement.
"Service Level Credit" has the meaning specified in Section 1.4(a) of the
Agreement.
"Statement of Work" has the meaning specified in the recitals to the Agreement.
"System" is a collective reference to the hardware and computer software systems
which may be the property of Administrator, Customer or a third party. A
"System" includes all hardware, peripheral devices, software systems, databases
and materials related thereto, which may include, without limitation,
documentation, file layouts, firmware, computer software languages, utilities,
flow charts, logic diagrams, source codes, object codes, and materials of any
type whatsoever (tangible or intangible and machine or human readable) which
incorporate or reflect the design, specifications, or workings of such programs
and any changes, additions or modifications thereto.
"Term" has the meaning specified in Section 13.1 of the Agreement.
"Termination Assistance Period" means a period of time designated by Customer
within thirty (30) days of the notice of termination of the applicable Statement
of Work, commencing on the date such notice of termination is delivered to
Administrator if Customer is the terminating Party, or to Customer, if
Administrator is the terminating Party, for up to twenty-four (24) months after
the delivery of notice as referred to above, during which Administrator will
provide the Termination Assistance Services in accordance with Section 16.
"Termination Assistance Services" means (1) the Services (and any replacements
thereof or substitutions therefore) other than the Services as may be described
in the applicable Statement of Work, to the extent Customer requests in writing
such additional Services during the Termination Assistance Period, (2)
Administrator's reasonable cooperation with Customer and/or any successor
service provider designated by Customer to facilitate the transfer of the
Services under the applicable Statement of Work to Customer or such other
service provider, and (3) any additional or new services requested by Customer
in writing to facilitate the transfer of the Services under the applicable
Statement of Work to Customer or such other service provider.
"Third Party Indemnitor" has the meaning specified in Section 9.5(b) of the
Agreement.
"Threshold Amount" has the meaning specified in Section 12.4(b) of the
Agreement.
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"Transition Services" has the meaning specified in Section 1.2(c)(i) of the
Agreement.
"Transition Plan" means a plan setting for the respective obligations of
Administrator, Customer, Customer Designees and other third parties to
transition the administrative services to be provided hereunder from Customer or
a third party service provider, to Administrator, as such plan is approved in
writing (or via email) by the Project Managers for Administrator and Customer, a
summary of which, as of the Effective Date, is attached to the Statement of Work
for Transition Services.
"Type A Variance" has the meaning specified in Section 9.6(b) of the Agreement.
"Type A Net Loss" has the meaning specified in Section 9.6(c) of the Agreement.
"Type B Variance" has the meaning specified in Section 9.6(b) of the Agreement.
"Variance" has the meaning specified in Section 9.6(a) of the Agreement.
"Underwriting Information" means the information obtained from a consumer or
from a third party provider of information which is used in underwriting an
application processed by Customer or its Affiliates which may or may not be a
"consumer report," as that term is defined in the federal Fair Credit Reporting
Act or any other applicable federal or state law.
"Withholding Taxes" has the meaning specified in Section 7.8(h) of the
Agreement.
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INDEX OF EXHIBITS AND SCHEDULES
Exhibit 1 TPA Mandatory Terms
Exhibit 2 Form of Nondisclosure Agreement for Administrator Personnel
Exhibit 3 Security Procedures
Attachment A to Exhibit 3 Basic Employee Background Investigation
Policy Requirements
Attachment B to Exhibit 3 Background Check Disqualifying Standards
Attachment C to Exhibit 3 Additional Safeguards
Exhibit 4 Permitted Subcontractors
Exhibit 5 Customer Software
Exhibit 6 Fees and Charges
Attachment A to Exhibit 6 Standard Rates
Exhibit 7 Change Procedures
Attachment A to Exhibit 7 Project Change Request
Exhibit 8 Policy Administration and Processing Services (Standard and
Optional)
Exhibit 9 Service Levels and Service Level Credits
Exhibit 10 Administrator Competitors
Exhibit 11 Disaster Recovery
Exhibit 12 Forms of Statements of Work
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