1
EXHIBIT 1.A.(9)(a)
FIRST AMENDMENT TO THE SERVICE AGREEMENT
This FIRST AMENDMENT to the Service Agreement dated as of
December 31, 1990, by and between TANDEM INSURANCE GROUP, INC., an Illinois
insurance corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ("Tandem") and MONARCH LIFE INSURANCE COMPANY, a Massachusetts
life insurance company with offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Monarch").
WITNESSETH:
WHEREAS, the parties have entered into a Service Agreement,
dated as of November 14, 1990 (the "Service Agreement"); and
WHEREAS, the parties desire to amend the terms and conditions
of the Service Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
other terms and conditions herein set forth, MLIC and Monarch agree as follows:
1. DEFINITIONS
Any terms capitalized but not defined herein shall have the
meaning set forth in the Service Agreement.
2. AMENDMENTS TO WHEREAS CLAUSES.
2
2.1 In the second WHEREAS clause in line 6 after the
word "certain" insert "office furniture, fixtures,". In line 7 after the word
"systems" insert "and certain copies of software installed in the equipment".
2.2 In the second WHEREAS clause in line 12 delete the
word "facility" and insert "service center (the "Service Center")". In the
second WHEREAS clause in line 13 delete the word "agreements" and insert the
word "agreement". In the second WHEREAS clause in line 14 delete the word
"Agreements" and insert "Agreement".
2.3 In the fourth WHEREAS clause, in line one, after
the word "WHEREAS" insert "Monarch and" and after "Royal Tandem Life Insurance
Company" insert ("RTLIC")".
2.4 In the fourth WHEREAS clause in line 8 after
"policies" insert ", including all riders and endorsements associated
therewith,".
2.5 The fifth WHEREAS clause shall become the sixth
WHEREAS clause and the following clause shall be inserted as the fifth WHEREAS
clause:
"WHEREAS, Monarch and Tandem wish to assure that
the use of facilities and all charges for services
incurred hereunder are reasonable and in
accordance
2
3
with the requirements of applicable state
regulations; and"
3. AMENDMENTS TO SECTION 2.5
3.1 In the second line of Section 2.5 after the word
"Date" insert "(as defined in Section 13.1 below)".
3.2 In Section 2.5(I) in the second line, delete the
word "facility" and insert "Service Center".
3.3 In Section 2.5(ii) in the third line delete the
word "facility" and insert "Service Center".
3.4 In Section 2.5(iii) in the third line delete the
word "Facility" and insert "Service Center".
3.5 Insert at the beginning of Section 2.5(iv) "Except
as otherwise contemplated herein,". In addition, in line 3 delete "SDC" and
insert "MFSI".
3.6 In Section 2.5(v), on the third line delete the
word "purchasing" and insert the word "packaging" and on the fifth line, delete
"service center" and insert "Service Center".
4. AMENDMENTS TO SECTION 3.1.
On line 10 before the word "fee" insert the words "one-time".
In addition, in line 11 after the word "to" delete the word "the" and insert
the word "each". Also, in line 11, after the words "issuance of" delete the
word "each" and insert the word "a".
5. AMENDMENTS TO SECTION 3.2.
3
4
In line 10, after the words "Monarch a" insert "one-time". In
addition in line 10, after the word "each" insert "issuance of a".
6. AMENDMENT TO SECTION 4.
In line 8 after the word "party" delete ", whether" and in
line 9 delete "or otherwise".
7. AMENDMENT TO SECTION 6.
In line 23, delete "Each" and insert "Notwithstanding the
foregoing provisions of this Section 6, with respect to the duplication of
existing records of any Covered Policy in force on the Reinsurance Closing
Date, each". In line 15, after the word "receive" insert the word "extra".
8. AMENDMENT TO SECTION 7.
In line 3, insert the word "as" after the word "only". In
line 12, delete "Monarch" and insert "TANDEM".
9. AMENDMENT TO SECTION 8.1.
9.1 In Section 8.1(I), first line, delete
"corporation" and insert "Massachusetts insurance company".
9.2 In Section 8.1(vi), at the beginning of that
paragraph insert "except as otherwise contemplated by this Agreement,".
4
5
9.3 In Paragraph 8.1(viii), in the first line, delete
the word "the". In the second line, delete "New York" and insert "Illinois".
9.4 In Section 8.2, in the heading delete "Crown" and
insert "TANDEM".
9.5 In Section 8.2(I), first line, delete "a
corporation" and insert "an Illinois insurance company".
10. AMENDMENT TO SECTION 10.
In the second line delete "Monarch" and insert "the other".
11. AMENDMENT TO SECTION 11.1
In line 14 delete "SDC" and insert "MFSI" and after
"available" insert "following the implementation of the plan as contemplated by
Section 11.2 below." In line 16 delete the word "provision" and insert the
word "provisions".
12. AMENDMENT TO SECTION 11.2.
In line 2 delete the word "establish" and insert the word
"implement" and delete "60" and insert "180".
13. AMENDMENTS TO SECTION 13.2.
13.1 In Section 13.2(b), in the last line after "(ii)"
insert ")".
13.2 In Section 13.2(g) in the last line delete "or".
5
6
13.3 In addition, in Section 13.2(h), in the second
line, delete "applies" and insert "apply."
13.4 In Section 13.2(I) in the first line, delete
"Landlord" and insert "MFSI" and before "Lease" insert "Holyoke". In the
second line delete "the provision of such Lease" and insert "Section 2.5
above".
14. AMENDMENTS TO SECTION 13.2(c).
14.1 Beginning in the second line delete "its failure
to perform the Services pursuant to the terms of this Agreement and in strict
compliance with the standards set forth in the Exhibit C and D" and insert "a
default under Section 13.2(a) or (b) of this Agreement".
In addition, beginning in line 12 delete "fails to perform the
Services in accordance with Exhibits C and D" and insert "defaults under
Section 13.2(a) or (b) of this Agreement".
14.2 In addition, Section 13.3(C) should end on line 13
after the word "Agreement" and a new Section 13.3(d) should begin with the
words "In the event that an order for relief" on line 13.
15. AMENDMENT TO SECTION 13.4.
In line 6 delete "by either party thereto by Monarch or
otherwise or by" and insert "or".
16. AMENDMENT TO SECTION 14.
In line 9 delete "Tandem" and insert "RTLIC".
6
7
17. AMENDMENT TO SECTION 15.1.
Section 15.1 should be deleted in its entirety and a new
Section 15.1 should read as follows:
"15.1 TRANSITION. If this Agreement is terminated by
either party pursuant to any Section of this Agreement or the
Agreement expires by its own terms, each of the parties will
cooperate with the other in all reasonable respects to ensure
that, at all times during and after the Transition Period,
each shall be able to continue to perform its obligations to
others without interruption as a result of the termination of
this agreement and in any event, for a period of one year
following any such termination, neither party shall take any
action whatsoever with respect to assets owned, leased, or
licensed by it (including, without limitation, the Monarch
leased IBM mainframe computer and iciest to such mainframe) or
with respect to any of its personnel which would in any way
hinder or prevent Monarch or RTLIC from performing their
respective obligations to others as a result of the
termination of this Agreement."
18. AMENDMENT TO SECTION 15.5.
At the end of Section 15.5 add ", the applicable provisions of
this Agreement being deemed to survive to the extent necessary for this
purpose".
19. AMENDMENT TO SECTION 16.
In line 3 delete "processing data" and insert "data
processing". In addition, in line 14, delete "particular".
20. AMENDMENT TO SECTION 18.2.
At the end of Section 18.2 insert ", which approval shall not
be unreasonably withheld".
21. AMENDMENT TO SECTION 18.5.
7
8
In section 18.5(b) in line 6 delete "Copies" and insert "With
a copy". In line 9 delete "Copies" and insert "With a copy".
22. AMENDMENT TO 18.6.
In the first line insert a comma after the word "Agreement".
In line 3 delete "Agreements" and insert "Agreement".
23. AMENDMENT TO 18.7.
In line 3 insert "and Audit" after "Inspection". In line 8
insert "of Policyholders" after "Non-Solicitation".
24. AMENDMENT TO "IN WITNESS WHEREOF" CLAUSE.
In line 3 delete "and their respective corporate seals to be
affixed hereto,".
25. AMENDMENT TO EXHIBITS TO THE SERVICE AGREEMENTS.
The Exhibits to the Service Agreements are hereby replaced in
their entirety by the Exhibits annexed to this First Amendment Agreement.
26. SUBLEASE AND TERMINATION OF HOLYOKE LEASE.
The Holyoke Lease referred to in the Service Agreement has
been terminated effective December 31, 1990 and ML Group and MFSI have entered
into an Agreement of Sublease dated as of December 31, 1990 (the "Sublease")
relating to the same space at the Service Center as in Holyoke Lease and for
purposes of the Service Agreement, any reference to the Holyoke Lease shall be
deemed to mean the Sublease.
8
9
27. OTHER TERMS AND CONDITIONS.
All other terms and conditions of the Service Agreement shall
remain in full force and effect.
28. COUNTERPARTS.
This First Amendment to the Service Agreement may be executed
in separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment Agreement to be executed by their respective officers duly authorized
to do so as of the date first above written.
TANDEM INSURANCE GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Attorney-In-Fact
MONARCH LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
9
10
EXHIBIT A
DESCRIPTION OF THE SERVICES FOR
INSURER*/ VARIABLE LIFE PRODUCTS
Monarch shall provide the following Services using reasonable diligence. In
the course of performing such Services, with respect to information which is
not furnished to Monarch by third parties, Monarch shall provide materially
correct information to Tandem and its Policyholders:
I. SELECTION, UNDERWRITING, AND ISSUANCE SERVICES
A. Application handling - Receive application or copy of
application and evidence of premium payment, including amount
and date of payment; enter information into computer system.
B. Based on Tandem underwriting requirements as communicated to
Monarch from time to time, request information from marketing
firm, agent, applicant, doctor, or inspection company and pay
all applicable fees for such information requests.
C. Furnish underwriting support and advisory services, which
include reviewing policy applications in an advisory capacity
(including M.I.B. medical review) using Tandem underwriting
standards, and recommend decisions to Tandem for Tandem's
final determination; promptly upon receipt of Tandem's final
determination, enter decision into computer system.
D. If application must be declined or closed out, forward
explanatory letter and arrange for refund drawn on an Insurer
bank account and notify Tandem of such results.
E. Assembly and mailing
-----------------------------------
*/ For Covered Policies other than Assumed Policies, the term "Insurer," for
purposes of this Exhibit A only, shall mean Monarch. For Assumed Policies and
Direct Issue Policies, the term "Insurer," for purposes of this Exhibit A only,
shall mean Tandem.
1
11
1. Assemble computer-printed Insurer policies with
materials pertinent to Insurer and to the product
(wallets, issue letters, identification cards,
illustrations, etc.)
2. Forward mailing package to policyholder or to
general agent for delivery.
3. Send ▇▇▇ of policy face sheet to Insurer and
Indemnify Reinsurer**/
F. Correspondence and forms
Use Insurer's forms and stationary in all correspondence
related to underwriting and policy issue.
G. Documents and reports
Provide Insurer and Indemnity Reinsurer at least once a month
with copies of all selection, underwriting, and issuance
documents and reports processed and produced by Monarch in
support of Insurer, in either original paper document form or
microfiche form, as deemed appropriate by Insurer or Indemnity
Reinsurer under the circumstances. All original documents and
reports are the property of Insurer. The Indemnity Reinsurer
shall have the right to retain all copies of such documents.
H. To the extent there are newly issued policies for which
reinsurance applies, take customary ministerial steps
necessary for reinsurance by third parties to cover risks
under Direct Issue Policies pursuant to the terms of
applicable automatic or facultative reinsurance treaties or
agreements.
II. POLICY SERVICE
Monarch will be responsible for arranging for the handling of such
requests and for maintaining all records related to them.
----------------------------------
**/ The term "Indemnity Reinsurer" shall mean Tandem to the extent it is
providing indemnity reinsurance for Covered Policies under the Reinsurance and
Assumption Agreement.
2
12
A. Be prepared to provide on request on a daily basis a record
for each policyholder summarizing the name and address of the
policyholder, policy number, investment base, allocation among
the various investment divisions of the investment base. Such
records shall be delivered to Insurer or Indemnity Reinsurer
promptly upon request.
B. Billing
1. Send to the contract owner premium notices and
return envelopes bearing Insurer's name and, at
direction of Insurer, Insurer's or its lock box
mailing address.
2. Implement automatic bank withdrawals, wire
transfers or similar transfers for deposit in
Insurer bank accounts or as otherwise required by
the Reinsurance and Assumption Agreement.
3. Update records based on notices and accompanying
payments.
4. Provide services as needed for clarification and
maintenance of billing records.
5. Transfer to an Insurer bank account or as
otherwise required by the Reinsurance and
Assumption Agreement the amount of any premium
sent in error to Monarch.
C. Distribute to policyholders quarterly and annual reports and
prospectuses.
D. Follow standards in Prospectus with regard to surrender and
policyholder loans.
E. Communication, correspondence and forms
There will be an 800 number, or similar telephone made
available, for communication between policyholders and
Monarch. Insurer's forms and stationery will be used in al
correspondence related to policy services. Any 800 number
will be answered in the name of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Insurance Group,
by personnel trained by Monarch to response to any questions
from policyholders relating to
3
13
their variable life policies with Insurer, or by means of a
voice response system designed to answer in another name not
identifying any insurer and to direct callers to such
personnel or provide information directly to callers. All
correspondence, other than that addressed to Insurer's lock
box or as otherwise required by the Reinsurance and Assumption
Agreement, will use a return address of Insurer in its home
state.
F. Documents and reports
Provide Insurer and Indemnity Reinsurer at least once a month
with copies of all policy service documents and reports
processed and produced by Monarch in support of Insurer, in
either original paper document form or microfiche form, as
deemed appropriate by Insurer or Indemnity Reinsurer under the
circumstance. All documents and reports are the property of
Insurer.
G. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps
necessary to provide the policy services described above for
such policies.
III. CLAIMS
Claims service will originate with Tandem, who will authorize Monarch
to assume responsibility for supporting all functions related to the
receipt, processing and payment of Tandem's policy claims.
A. Identify the insured.
B. Investigate and process claims based upon Tandem's claims
guidelines, and make a recommendation to Tandem as to the
disposition of the claim.
C. Give prompt notice by facsimile transmission to Insurer and
Tandem of each claim with respect to a benefit payment under
any of its policies and a recommendation as to disposition of
such claim. If requested by Tandem within five business days
of receipt of a notice of claim, promptly provide the file, or
a copy thereof, to Tandem. Tandem shall instruct Monarch
whether to contest
4
14
such claim within five business days of receipt of such file
or copy thereof.
D. Subject to Tandem's prior approval, pay all claims, whether
settled or adjudicated.
E. Adjudicate claims based upon Tandem's claims guidelines,
PROVIDED, HOWEVER, that Tandem reserves the rights to assume
the defense of any claims.
F. Audit claims processed.
G. If requested by Insurer, send Insurer drafts and/or
correspondence to payee or to policyholders.
H. Send daily record of claim activity via facsimile transmission
to Insurer and Indemnity Reinsurer.
1. Maintain copies of all original claims on
microfiche for any future claim processing.
2. Maintain computer system records of claims
information.
I. Provide reports, perform maintenance, and assure all records
are accurate and balanced to the appropriate accounting
records.
J. Communication, Correspondence and Forms.
1. Maintain telephone service area to respond to any
claims questions or provide current status of
claims.
2. Insurer will authorize the use of an 800 number
for communication between policyholders and
Monarch.
3. Use Insurer's forms and stationery in all
correspondence related to policy claims.
K. Documents and reports
Provide Insurer and Indemnity Reinsurer at least once a month
upon Tandem's request with copies of all policy
5
15
claims documents and reports processed and produced by Monarch
in support of Insurer, in either original paper document form
or microfiche form, as deemed appropriate by Insurer or
Indemnity Reinsurer under the circumstances. All documents
and reports are the property of Insurer.
L. With respect to in force policies under which automatic or
facultative reinsurance treaties or agreements apply, collect
amounts due on any claims on behalf of the Insurer and
Indemnity Reinsurer.
IV. CASH ACCOUNTING
All cash received at Monarch will be deposited into Insurer's account
or at Insurer's lock box which may be maintained by Monarch. If cash
is received at Insurer, copies of original documents such as
applications, deposit slips, etc. will be forwarded to Monarch for
records processing. If cash is received at Insurer's lock box, copies
of original documents such as applications, deposit slips, and copies
of the checks, if applicable, will be forwarded to Monarch for records
processing.
All bank statements and deposit slips are to be received directly by
Monarch, which will promptly send copies thereof to Insurer as
instructed. Unless otherwise designated by Insurer, all disbursements
checks must have the signature of an officer of Insurer and satisfy
other requirements contained in the Reinsurance and Assumption
Agreement.
In the event Insurer maintains the lock box account, Insurer will be
responsible for all aspects of maintaining such lock box, including
reconciling all accounts, and will forward copies of all applicable
documentation, including checks, to Monarch.
A. Monitor transfer of funds to: (I) verify that all monies due
Insurer are deposited in Insurer's bank accounts and (ii)
verify that all monies payable by Monarch on behalf of Insurer
through these accounts have been disbursed.
B. Obtain information where available regarding all receipts and
disbursements flowing through Insurer's bank accounts
6
16
so that Insurer may make proper accounting entries on its
books.
C. Obtain where available bank statements from Insurer's banks
for reconciliation and processing.
D. Commission
Handle all commission processing and payment for Insurer and
maintain all commission records customarily maintained by
Monarch.
E. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps to
perform the cash accounting services described above.
F. Provide lock box facility services.
V. ACCOUNTING
Provide the following accounting services to Insurer and Indemnity
Reinsurer:
A. Corporate Records
1. Maintain a complete set of Insurer's and Indemnity
Reinsurer's records relating to the variable life
insurance policies reflecting the Services
provided hereunder.
2. maintain general ledger, premium receipts journal,
cash receipts and disbursements journals,
investment records, commission records, chart of
accounts, financial reports, and any other records
and information necessary to support accounting
and responsibilities for Insurer and Indemnity
Reinsurer as identified by Insurer.
3. Maintain, and provide to Insurer and Indemnity
Reinsurer on a monthly basis, all accounting
records necessary for the preparation and timely
filing of Insurer's and Indemnity Reinsurer's
financial statements as required for compliance
with applicable laws and regulations promulgated
7
17
thereunder and under generally accepted accounting
principles as identified by Insurer and/or
Indemnity Reinsurer (i.e., for both internal and
external reporting purposes).
4. Assist Insurer and Indemnity Reinsurer in the
preparation of all accounting-related forms and
special filings (including premium taxes) required
by Insurer's and Indemnity Reinsurer's home state
and any other regulatory bodies.
B. Reporting
Provide to Insurer and Indemnity Reinsurer sufficient
information to meet the requirements of its home state's
Insurance Department, and any other state's laws and
regulations, and enable any examinations to be conducted and
fully completed within the home state.
C. At Insurer's and Indemnity Reinsurer's request, provide
management information services, including, but not limited
to, loss ratios, mortality experiences, regional sales,
regional lapse rates, reports and such other information as
Insurer and Indemnity Reinsurer reasonably deem necessary for
the management of their respective businesses.
D. Provide actuarial valuation services.
E. Provide assistance to Insurer and Indemnity Reinsurer in
connection with any filings or other compliance activities
required by any state insurance department, the Securities and
Exchange commission or any other governmental agency.
F. Correspondence and forms
use Insurer's or Indemnity Reinsurer's forms and stationery
(or those of the insurance group to which Insurer belongs),
where appropriate, in all correspondence related to
accounting.
G. Documents and reports
8
18
Provide Insurer and Indemnity Reinsurer at least once a month
with copies of all accounting documents and reports processed
and produced by Monarch in support of Insurer or Indemnity
Reinsurer, in either original paper document form or
microfiche form, as deemed appropriate by Insurer or Indemnity
Reinsurer under the circumstances. All documents and reports
are the property of Insurer.
VI. PURCHASING, PRINTING, AND MAIL SUPPORT
A. Prepare and produce all forms, stationery and other printed
material for Insurer and Indemnity Reinsurer consistent with
forms currently provided using ▇▇▇▇▇▇▇ ▇▇▇▇▇ logos or service
marks.
B. Submit all forms and stationery prepared for Insurer and
Indemnity Reinsurer to Insurer and Indemnity Reinsurer for
approval prior to use.
C. Maintain separate purchasing records.
D. Maintain a unique Identification Number System (form numbers)
to facilitate management of a separate inventory.
E. Prepare, handle and process all mailings associated with the
day to day administration of variable life products for
Insurer and Indemnity Reinsurer.
F. Correspondence and forms
Use Insurer's or Indemnity Reinsurer's forms and stationery,
where appropriate, in all correspondence related to
purchasing, printing, and mail support.
G. Documents and reports
Provide Insurer and Indemnity Reinsurer at least once a month
with copies of all purchasing, printing, and mail support
documents and reports processed and produced by Monarch in
support of Insurer or Indemnity Reinsurer, in either original
paper document form or microfiche form, as deemed appropriate
by Insurer or Indemnity Reinsurer under the circumstances.
All documents and reports are the property of Insurer.
9
19
VII. DATA PROCESSING AND SOFTWARE DEVELOPMENT
A. Maintain a distinct data processing code for Insurer as it
relates to the Agreement.
B. COMPUTER SOFTWARE AND HARDWARE
Insurer shall have rights to all updates, enhancements and
modifications of the computer software and of hardware and to
all releases relating to the services provided hereunder.
C. Computer Software Development - Discretionary Development
In the event that Tandem has particular needs for certain
software development, Monarch, upon Tandem's request, shall
submit a proposal for developing new software or a derivative
of existing software. Tandem requests for software
development shall be handled in accordance with procedures set
forth below.
1. Phase I - Tandem shall send a written request for
software development to Monarch identifying
specific business needs.
2. Phase II - Tandem and Monarch will jointly develop
the scope and expectations of the project.
Monarch will develop a plan outline and high level
cost estimate.
3. Phase III - Monarch and Tandem will jointly
develop detailed business requirements. Monarch
will produce a projected plan with a total
estimated cost.
4. If the project plan, projected start date and
total estimated costs are unacceptable to Tandem,
Tandem shall have the right to develop the
software itself or approach an independent third
party to perform such development work.
5. Monarch has the right to retain consultants in
order to satisfy Tandem requirements.
10
20
D. Provide computer-produced reports necessary to support
Insurer's and Indemnity Reinsurer's variable life business.
E. Correspondence and forms
Use Insurer's and Indemnity Reinsurer's forms and stationery,
where appropriate, in all correspondence related to data
processing.
F. Documents and reports
Provide Insurer and Indemnity Reinsurer at least once a month
with copies of all data processing documents and reports
processed and produced by Monarch in support of Insurer or
Indemnity Reinsurer, in either original paper document form or
microfiche form, as deemed appropriate by Insurer or Indemnity
Reinsurer under the circumstances. All documents and reports
are the property of Insurer.
VIII. ADMINISTRATIVE SERVICES
Perform the following administrative services in accordance with the
Performance Standards:
A. Effect written confirmation of transactions and prepare
quarterly statements of transactions
B. Effect reallocations for policyholders
C. Prepare policy histories including a complete accounting for
policyholders
D. Effect loans and partial withdrawals, surrenders and premium
refunds of policies, including delivery of conservation kits,
where appropriate
E. Effect beneficiary and ownership changes in all policies
F. Respond to customer complaints
G. Effect death claims
H. Prepare general correspondence
11
21
I. Effect processing for all declined, withdrawn and incompleted
cases
J. Inspect all policy forms for accuracy
IX. RECORDKEEPING SYSTEMS
Prepare the following transaction files, forms and reports in
form and substance satisfactory to Insurer and Indemnity Reinsurer:
DAILY OUTPUT
# Name Contents
1 Job 4 All daily financial activity, payments, withdrawals, etc. for each
fund
2 Job 2 master file update error report
Micro Batch
error report
3 UV cacl system Daily price report
4 Job 4 All transactions processed against each investment vehicle
5 Job 3 Maintenance Journals
Micro After Batch
Report
6 SV1DP150 Gains, Losses and activity by contract. (Only Vantage lists gains
and losses by contract)
7 Manually Produced List ▇▇▇▇ activity
8 Job 0 Daily Batch Balance (No Units on our report)
9 Job 2 Unprocessed transactions
Micro Batch Error
Report
10 Microlink register Daily Check withdrawal register
12
22
11 Microlink report Daily Check reconciliation register, currently available daily, but
only printed monthly
12 Job 4 Daily transaction journal by policy
Micro Batch report
SV1DP151
13 ADBEVAN1 Agent Maintenance journal
14 CWA Logs New cash recap report
15 ACF/2 Maintenance Security Maintenance Report N/A for LAN maintenance
16 ACF/2 Violation Security Violation Report N/A for LAN violations
MONTHLY OUTPUT
A General Acct Journal Monthly Production activity report
B RHFMP852 Monthly Reserve Report
C ▇▇▇▇▇ Extract Premium Tax Report
D General Acct Journal Cash Recap Report
CUSTOM FORM OUTPUT
All sent to Client on a daily basis
1. Confirmation statements
2. Contract Specification Page
3. Contract Delivery Letter
4. Commission Statements (Weekly B/D)
5. Commission Checks (Weekly to B/D)
6. Distribution Checks
X. OTHER SERVICES
A. Product Development Services
Monarch will make recommendations to Insurer and Indemnity
Reinsurer from time to time with respect to new services which
will enhance Insurer's variable life business. Such
recommendations will only be adopted with
13
23
the prior written consent of Tandem. Tandem shall have the
right to acquire rights to ▇▇▇ any new products developed by
Monarch or its affiliates at a price to be mutually agreed
upon by the parties in good faith.
B. Marketing Services
Upon Tandem's request, assist Insurer in reviewing promotional
literature and advertising materials for the marketing and
promotion of Insurer's variable life business.
14
24
EXHIBIT B
SYSTEM SERVICES
It is the intent that Monarch shall be responsible for
managing, operating and maintaining all physical and environmental facilities
(space, electrical power, steam, HVAC, cooling water, lighting, fire safety,
etc.) ("Physical and Environmental Facilities"), all physical technological
devices (processors, input and output devices, storage devices, networks,
communications devices, media, etc.) ("Physical Technological Devices"), all
logical technological components systems, report generators, interface
software, etc.) ("Logical Technological Components"), all application specific
logic components and all data assets pertinent to Tandem's products
("Application Specific Logic").
1. Physical and Environmental Facilities
A. Physical and Environmental Facilities shall
at all times be in accordance with current or
future engineering, building or other codes
as required by applicable regulatory
authorities.
B. Physical and Environmental Facilities shall
at all times satisfy the specifications
issued by the vendors of any Physical
Technological Devices employed in providing
system services to Tandem.
C. If Physical and Environmental Facilities fail
at any time to meet the requirements of
applicable regulatory authorities or the
specifications of present or future vendors
of Physical Technological Devices employed in
providing system services to Tandem, Monarch
will use its best efforts to make such
changes as are necessary to the Physical and
Environmental Facilities.
2. Physical Technological Devices
A. Monarch will supply sufficient types and
numbers of devices as are necessary to meet
the system services Performance Standards set
forth in Exhibit D of this Agreement.
1
25
B. All devices will be operated by trained
experienced personnel in the manner approved
by the vendors of each device.
C. Monarch will establish and maintain a regular
schedule of preventive maintenance on all
equipment employed in providing system
services to Tandem using a maintenance
service provider authorized by the
manufacturer of the equipment or Monarch will
maintain the equipment itself.
D. Monarch will maintain an appropriate level of
spares and backup devices as necessary to
meet the system services Performance
Standards set forth in Exhibit D of this
Agreement.
E. Failed devices will be repaired or replaced
as promptly as possible.
F. Monarch will promptly notify Tandem if any
major device failure exists for over eight
hours.
3. Logical Technological Components
A. Monarch will establish and maintain a
software maintenance agreement with the
software owner or authorized representative
for all Logical Technological Components
employed in providing system services to
Tandem or Monarch will maintain the software
itself.
B. Monarch will provide Tandem with a
responsibilities chart listing all Logical
Technological Components and maintenance of
not less than two staff member who are
trained in and capable of providing support
services for the component.
C. Monarch will notify Tandem of any
implementation of fixes and new releases
relating to the Logical Technological
Components.
2
26
4. Application Specific Logic
A. Monarch will maintain at least two
application programmers who are knowledgeable
and experienced in the application logic of
each application system pertinent to Tandem's
product.
B. Monarch will timely resolve any logical or
data exception which interferes with the
execution of Tandem's applications in the
production environment. The appropriate
resolution staff (application programmers,
special software support teams, coverage
programmers, etc.) will be accessible at all
times each application is to be executed
whether scheduled or unscheduled.
C. Monarch will implement change and maintenance
control following accepted system practice
for applications software or such other
system practices as are otherwise reasonably
required by Tandem at all times.
D. Monarch will provide Tandem with an up to
date copy of all requisite documentation and
program libraries for archival purposes.
Monarch will provide a copy of all emergency
and scheduled changes as they are applied to
production libraries.
5. Data Assets
A. Monarch will maintain appropriate on-site
data set backups on an ongoing basis to
ensure the ability to timely recover any
failed execution of an application without
loss or duplication of records and/or
erroneous results.
b. Monarch will maintain appropriate off-site
data set backups on an ongoing basis to
ensure the ability to restore the subject
data files to their status at close of
business on the preceding day.
3
27
6. General
A. Monarch will maintain an appropriate
infrastructure (hot lines, call lists,
trouble reports, change notices, etc.) such
that any unplanned service interruption can
be timely reported and addressed.
B. Monarch will follow good practice in
implementing changes such that reversion to
the previous operation is expeditiously
performed if the results of changes are
unexpected or such other practices as are
otherwise reasonably requested by Tandem.
C. Monarch will follow accepted security
practice with regard to Tandem's programs,
logic, documentation and data, exercising a
standard of care at least equal to that
employed with Monarch's own similar
materials, or such other security practices
as are otherwise reasonably requested by
Tandem.
4
28
EXHIBIT C
ADMINISTRATIVE SERVICE
PERFORMANCE STANDARDS
Monarch shall meet the administrative service Performance
Standards set forth in the table below and will provide performance reports
satisfactory to table below and will provide performance reports satisfactory
to Tandem in form and substance comparing actual results to the standards
described below. The measurement period for each standard set forth below with
respect to each type of Service shall be monthly. The reports will be issued
monthly not more than six business days following the end of each calendar
month. Monarch will submit a proposed form of report to Tandem for its
approval on or before the Reinsurance Closing Date.
TYPE OF SERVICE STANDARD
Incoming customer calls via 800 70% without going into queue
numbers including Periphonics
Average daily queue for incoming 70 seconds
calls via 800 numbers
Abandoned calls Not more than 5% of total ACD and Periphonics calls
Written Confirmations of Mailed within 24 hours of
Transactions and Quarterly completion of transaction
Statements or processing close of Quarter
Reallocations 98% of instructions received prior to 4:00 PM will be processed same day and
confirmed in writing within 24 hours; 100% of instructions will be processed and
confirmed in writing within 48 hours; 98% of instructions received after 4:00 PM
will be processed next day and confirmed in writing within 24 hours; 100% of
instructions received after 4:00 PM will be processed and
1
29
confirmed in writing within 48 hours.
2
30
TYPE OF SERVICE STANDARD
Policy Histories (Complete Confirm request within three
Accounting for Policyholders) business days and include
estimated completion date
Loans/Partial Withdrawals 98% processed on same day of
request; 100% processed by
second day; all money sent
within seven calendar days
Beneficiary and Ownership 10 calendar days after
Changes receipt of signed request
Surrenders and premium 98% processed on day of
refunds request; 100% processed by
second day; all money sent
within seven calendar days
Free look refunds 98% processed on day of
request; 100% processed by
second day; all money sent
within seven calendar days
Address Changes Five calendar days from
receipt of request
Customer Complaints Acknowledged within two
calendar days
Death Claims 98% acknowledged with "claim
kit" within one business day;
100% acknowledged by second
day; 98% of noncontestable
claims paid within one
business day after receipt of
approval from Tandem; 100% of
non-contestable claims paid
by second business day after
receipt of approval from
Tandem
General Respond within 14 calendar
Correspondence days
3
31
Enter Submitted Applications 98% on same date of receipt;
with cash into system 100% submitted by second day
Enter Submitted Applications Second day of receipt
without cash into system
4
32
TYPE OF SERVICE STANDARD
Receipt of Application to Seven calendar days from
Underwriting Decision - receipt
Nonmedical Cases
Medical Cases
- Phase I - Pre-Underwriting Five calendar days from
Support and initial review receipt of application in good order
- Phase II - Review all medical Four calendar days from
requirements and issue and receipt of last underwriting
deliver to Tandem for final requirement
approval
Issues Three calendar days from
underwriting approval
Inspection and Mailing Two calendar days
of Policies
Processing Declined, Three calendar days from
Withdrawn, Incompleted and dates of action
Not Taken Cases
CMA Link to Three calendar days from
Products receipt of request
Requests for Policyholder Mailed three calendar days
Services Forms from receipt of request
Marketing Services incoming 70% without going into
producer calls via 800 numbers queue
Average Daily Queue for 45 seconds
Marketing Services Incoming
Calls via 800 numbers
5
33
EXHIBIT D
SYSTEM SERVICES
PERFORMANCE STANDARDS
Monarch will submit to Tandem for its approval a detailed description
of application systems and each of the System Services, report i.e., Daily
Reports, Weekly Reports, etc.) and contents of transmission and transfer filed
listed in the chart on the following page.
1
34
SYSTEM SERVICES
PERFORMANCE STANDARDS
Monarch will provide system services at a minimum level which
meet the standards described in the table below. Performance reports
satisfactory to Tandem in form and substance comparing actual results to such
standards will be issued monthly not more than six business days following the
end of each calendar month. Monarch will submit a proposed form of report to
Tandem for its approval on or before the Reinsurance Closing Date.
2
35
Avail-
Service Schedule bility Response
------------------------------------------------------------------------------------------------------
Mainframe 7:30AM - 6:30PM 98% Five seconds for 95%
On Line Monday - Friday of transactions
System
Microcomputer 7:30AM - 5:30PM 98% N/A
Administrative Monday - Friday
Systems
Accounting & 7:30AM - 7:00PM 98% Five seconds for 95%
Accounts Monday - Friday of transactions
Payable On
Line Systems
CEO 7:00AM - 8:00PM 98% RT transaction
On Line Monday - Friday execution will complete in
five seconds or less 95% of
the time
Problem 24 hours per day 95% N/A
Help Desk Monday - Friday
IBX Switching 24 hours per day 100% Resolution of problem
reports not Equipment requiring vendor
support within eight business
hours from problem report
Substitute problem is still
unresolved within 48 hours
from problem report
Telecommunication Upon request 98% Seven business days turnaround
Work Orders
Telecommunication 8:00AM - 5:00PM 98% On-site response within two
Systems Problem Monday - Friday hours of problem report
Weekday 24 hours prior 98% As per System (See Note 2)
Extensions notice
Weekend or 36 hours prior 98% As per System (See Note 2)
Holiday
Extensions
3
36
File Transfers Start within 2 98% N/A
file availability
Office Automation On request as 98% On-site response within two
Systems agreed hours of problem report; 48 hour
turnaround of work requests and
establishing new terminal connections
or operation ID's
Microfiche 9:00AM 98% N/A
Tapes Available Monday - Friday
for Courier
Daily Reports 7:30AM 90% N/A
Early Group Monday - Friday
Daily Reports 10:00AM 95% N/A
Early Group Monday - Friday
Weekly Reports 7:30AM 98% N/A
Early Group Monday
Weekly Reports 10:00AM 98% N/A
Later Group Monday
Monthly Reports 7:30AM 2nd 98% N/A
Early Group business day of
month
Monthly Reports 10:00 2nd
Later Group business day of 98% N/A
month
On Request next day 95% N/A
Critical Group
Transmit Daily 6:00AM 98% N/A
Transaction File Monday - Friday
Transmit 9:00PM 98% N/A
Monthly Statement Monday - Friday
File (See Note 4)
--------------------------------------------------------------------------------
NOTE: 1. All times shall refer to Eastern Standard Time.
2. All system services will be made available to Tandem, Monday
through Friday and not an weekends or any of the following
nationally recognized holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
4
37
Day, Thanksgiving Day and Christmas Day subject to the
following sentence. As indicated above, system services will
be made available on weekends and holidays upon providing
Monarch with 36 hours prior notice of such extended service
requirements.
3. Monarch will provide Tandem with three days prior notice of
any scheduled system maintenance activities or any other
events which will not permit routine availability or extended
weekday, weekend or holiday system services performance.
4. Dependent upon Monarch receiving prior day's processed
transaction file from CMA no later than 10 AM on statement
transmission dates.
5
38
EXHIBIT E
DISASTER RECOVERY PLAN
Within 90 days following execution of this Agreement, Monarch
shall provide Tandem with a disaster recovery plan prepared in consultation
with and approved by Tandem which protects Monarch's ability to process the
Tandem work as described below and shall implement the plan and cause the
disaster recovery facilities to become fully operational by not later than 90
days from the date the disaster recovery plan is approved by Tandem. The plan
shall also provide that Monarch shall use facilities owned and/or operated by
Tandem or a Tandem affiliate or third party facilities designated by Monarch
that are acceptable to Tandem in Tandem's sole discretion. The parties
acknowledge and agree that time is of the essence in finalizing the terms of a
Disaster Recovery Plan and implementing the plan.
A. BUSINESS REQUIREMENTS:
The plan shall be predicated on recovery and restoration of
all client functional capabilities required to conduct
Tandem's business in or more than 24 hours following cessation
of the Services.
B. SCOPE OF INITIAL RECOVERY CAPABILITY:
The plan will provide for the immediate initial recovery of
the following client services described in Exhibit A of this
Agreement at the performance standards described in Exhibit C
of this Agreement:
Section I - A, B, C, D, E and F
Section II - A, B, C, D
Section III - A, B, C, D, E, G
Section IV - A, B, C, D and E
Section VI - D, E
Section VIII - all subdivisions
The extent of "disaster" shall not be limited to destruction
or denial of access to the occupied space in which Tandem's
business or dependent functions are
1
39
conducted, but shall extend to interruption of services vital
to the conduct of Tandem's business such as telephone
communications or environmental facilities.
C. RESTORATION OF NORMAL PERFORMANCE LEVEL:
The plan will provide for augmenting the initial recovery of
facilities to provide full functional capabilities (except for
software development) as set forth in Exhibit A within not
more than 72 hours following cessation of the Services. The
Services shall be restored to the extent practicable under the
circumstances to perform in accordance with the Performance
Standards described in Exhibits C and D.
D. DURATION OF EMERGENCY OPERATION:
The plan will provide for operation on a continuing basis out
of the emergency facilities for a minimum period of at least
60 days to the extent practicable under the circumstances.
E. MAINTENANCE OF DISASTER RECOVERY PLAN:
Monarch will maintain the Disaster Recovery Plan to reflect
updates in technological hardware, peripherals and/or software
and will provide Tandem with a copy of such updated plan on an
annual basis commencing one year from the date of Tandem's
approval of the disaster recovery plan.
F. SOFTWARE INSTALLATION AND PERFORMANCE:
Provided that the hardware and related software environment
have been approved by Monarch, such approval not to be
unreasonably withheld or delayed, Monarch will take all steps
necessary to ensure that all software licensed pursuant to the
Software License Agreement will operate on the hardware at the
disaster recovery site to the complete satisfaction of Tandem
permitting, to the extent practicable under the circumstances,
performance of all of the Services in conformance with the
Performance Standards set forth in Exhibits C and D.
2
40
EXHIBIT F
TRANSITION PERIOD ASSISTANCE
It is the intent that Monarch shall assist Tandem in effecting a transition
from Monarch to an operation supported by Tandem or its designee without
interruption in any of the Services provided under this Agreement. The parties
acknowledge and agree that time is of the essence in connection with the
performance of their respective obligations during the Transition Period.
Monarch will specifically assist Tandem in a timely fashion as follows:
A. PHYSICAL FACILITIES
1. Provide type, quantity, physical and environmental information
for all physical devices of the systems necessary for
continuous support of Tandem's products.
2. Provide detailed connection diagrams for all physical
components of the systems necessary for support of Tandem's
products.
3. Provide technical expertise to Tandem as needed to install the
requisite equipment as necessary to replicate Monarch's
equipment operation servicing Tandem.
B. SOFTWARE
1. Provide current copies of owned or transferrable software
presently active in the Monarch system to Tandem and to the
extent possible, the most up to date version of the source
code of such software.
2. Provide detailed identification and ordering information,
i.e., sources of supply, for all non-transferrable software
required by Tandem to replicate Monarch's software
environment.
3. Provide technical expertise to Tandem as needed to install the
requisite software as necessary to replicate the Monarch
software operation servicing Tandem.
4. Provide Tandem with detailed information describing the change
history of all software.
1
41
C. DATA
1. Provide Tandem with the most recent back-up of all data files
required by the systems supporting Tandem's products.
2. Provide Tandem with transaction journals of all transactions
which updated data files used by Monarch to provide the
Services to Tandem hereunder from the point at which the most
recent back-up was performed until the point at which Tandem
assumed system responsibilities.
3. Provide technical expertise and requisite assistance to Tandem
in applying journal transactions to the back-up files and
reconciling Tandem's files to Monarch's files at the start of
the parallel period (the "Parallel Period").
D. PARALLEL PERIOD
1. Assist Tandem in operating Tandem's system on a parallel basis
with Monarch's system for a minimum two week period which
shall cross over from the end of one month to the beginning of
the next to ensure that Tandem's monthly processing services
during the Parallel Period are completely operational.
2. Provide technical assistance and expertise in applying
Monarch's journal transactions to Tandem's data and
reconciling the results of Tandem's operations to the results
of Monarch's operations.
3. Tandem will assume responsibility for ongoing operation of the
system upon satisfactory conclusion of the Parallel Period.
E. RECORDS
1. Provide Tandem with all records relating to the system and its
management.
2. Provide technical expertise in interpreting all such records
as requested by Tandem.
F. TRAINING AND EDUCATION
2
42
1. Provide Tandem with training and education which Tandem deems
to be adequate for each clerical employee, systems employee,
operations employee and technical employee engaged by Tandem
to operate the system and provide requisite services.
2. Provide Tandem with copies of all training programs, manuals
and materials used or prepared by Monarch for all system
services.
G. CUTOVER COVERAGE
During the period following the end of the Transition Period, provide
tandem with one on-site individual qualified in each area of specialty services
(computer operations, terminal operations, new business issuance, policyholder
service, balancing and reconciliation, reporting, etc.) for the first 25
business days of operation following Tandem's assumption of system
responsibilities.
3