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EXHIBIT 10.S
TABLE OF CONTENTS
TO
PRODUCT DEVELOPMENT
AND ADMINISTRATIVE SERVICES AGREEMENT
ARTICLE TITLE PAGE
------- ----- ----
1 PRODUCT DEVELOPMENT 1
2 SERVICES 4
3 COMPUTER SYSTEM AND PROPRIETARY RIGHTS 7
4 CONFIDENTIALITY AND AUDIT RIGHTS 8
5 RECORDS AND DATA MAINTENANCE 10
6 ALLMERICA FINANCIAL'S OBLIGATIONS 11
7 CANADA LIFE'S OBLIGATIONS 13
8 ACCEPTANCE TESTING 14
9 ADDITIONAL REPRESENTATIONS AND WARRANTIES 15
10 INDEMNITIES AND LIABILITY 15
11 TERM AND TERMINATION 18
12 MISCELLANEOUS 20
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PRODUCT DEVELOPMENT
AND
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT, effective this ___ day of _________, 2000 (the "Effective Date"), by
and between First Allmerica Financial Life Insurance Company ("Allmerica
Financial"), a life insurance company organized and existing under the laws of
the Commonwealth of Massachusetts, with a principal place of business at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Canada Life Insurance
Company of America ("Canada Life"), a life insurance company organized and
existing under the laws of the State of Michigan, with a principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
RECITALS:
WHEREAS, Allmerica Financial, directly and through its affiliate, Allmerica
Financial Life Insurance and Annuity Company ("AFLIAC"), has developed and is
marketing various variable universal life insurance policy forms; and
WHEREAS, through such development and marketing efforts Allmerica Financial has
acquired significant expertise in developing, designing and servicing variable
universal life insurance products; and
WHEREAS, through such development and marketing efforts Allmerica Financial has
also acquired significant expertise in obtaining necessary state regulatory
approvals for the sale of variable universal life insurance policies; and
WHEREAS, Canada Life and Allmerica Financial have agreed that Allmerica
Financial shall provide assistance to Canada Life in developing and bringing to
market a flexible premium variable universal life insurance policy (the
"Policy", collectively the "Policies") and certain related forms, as described
herein; and
WHEREAS, Canada Life and Allmerica Financial have also agreed that Allmerica
Financial shall contract with Canada Life to provide, on behalf of Canada Life,
Policy underwriting, claims, and other administrative services;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PRODUCT DEVELOPMENT
1.01 Development of Policy Forms. Prior to the Effective Date of this
Agreement, Canada Life, with the assistance of Allmerica Financial,
drafted the standard Policy, Policy applications and Policy riders,
which are referred to herein collectively as the "Policy Forms". Such
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Policy Forms are based on the AFLIAC Policy Forms listed on
Schedule 1.01 hereto. Canada Life acknowledges that it
approved the final drafts of the standard Policy Forms prior
to the Effective Date of this Agreement.
When required, Allmerica Financial shall appropriately modify
the standard Policy Forms for each jurisdiction in which the
Policy Forms will be offered for sale. Such modifications
shall represent Allmerica Financial's best judgment as to what
changes to the Policy Forms will be necessary in order to
secure insurance department approval. Notwithstanding
anything in this Agreement to the contrary, it is understood
and agreed by Canada Life that Allmerica Financial makes no
representation that the Policy Forms will be approved for sale
by any particular jurisdiction.
1.02 Policy Form Filings and Submission Dates. All insurance
department filings will be made by Allmerica Financial on
behalf of Canada Life. It is the intent of the parties that the
Policy Forms will be filed in ____ jurisdictions. Such
jurisdictions are listed on Schedule 1.02. Canada Life
understands and agrees that Canada Life will be responsible
for all insurance department filing fees, although such fees
will be advanced by Allmerica Financial. Canada Life agrees
to reimburse Allmerica Financial for the amount of any
advanced filing fees within 30 days of receipt of a written
request for reimbursement. Canada Life understands and agrees
that late payments of such reimbursements shall be assessed a
late payment charge at the rate of 12% per annum.
Allmerica Financial acknowledges that prior to the Effective
Date of this Agreement that Canada Life delivered to Allmerica
Financial the following:
(i) The standard Policy Forms in final print,
(ii) The Policy Actuarial Memorandum,
(iii) A draft Policy prospectus, and
(iv) Any other information deemed necessary by
Allmerica Financial for the filing of the
Policy Forms which is not to be prepared by
Allmerica Financial.
Allmerica Financial agrees that prior to the Effective Date of
this Agreement that it will have submitted the Policy Forms to
the ___ jurisdictions listed on Part A of Schedule 1.02 where
Canada Life is licensed to sell variable life insurance
products. Allmerica Financial agrees to submit the Policy
Forms to each of the remaining ___ jurisdictions listed on
Part B of Schedule 1.02 within 10 business days following the
later of (i) the date it is notified in writing by Canada Life
that Canada Life has received a license to sell variable life
insurance products in the jurisdiction and (ii) the date that
Canada Life has furnished Allmerica Financial with all
documentation and other materials which Allmerica Financial
deems
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necessary for it to finalize the Policy Form submission.
1.03 Development and Filing of Policy Prospectus and Registration
Statement; Separate Account State Regulatory Approvals. The
parties understand and agree that the Policy Prospectus and
1940 Act Registration Statement development, printing and
filing with the SEC will be the responsibility of Canada Life,
which will also be responsible for all SEC filing fees.
Further, the parties understand and agree that Canada Life is
responsible for obtaining any necessary state regulatory
approvals of the separate account or accounts that will be
offered as funding choices under the Policy.
1.04 State Submission Follow-Up Assistance. After filing the
insurance department Policy Form submissions contemplated by
this Agreement, Allmerica Financial shall provide all
necessary follow-up to insurance department correspondence in
a prompt manner in order to secure insurance department
approvals on behalf of Canada Life. However, Allmerica
Financial makes no representation that Policy Form approvals
will be obtained from all jurisdictions. Allmerica Financial
understands and agrees that Canada Life must approve all
material changes to Policy Forms requested or required by
insurance departments.
Allmerica Financial agrees to provide Canada Life weekly
written status reports of the approval status of each state
filing.
1.05 Product Development Compensation. For the product development
services described in this Agreement, Canada Life agrees to
pay Allmerica Financial for assistance in developing and
bringing to market the Policy Forms.
The fee shall be paid to Allmerica Financial, as follows:
(i) was paid by Canada Life during December, 1999.
Allmerica Financial acknowledges receipt of such
payment; and
(ii) the remainder, ____, shall be paid by Canada Life
within 30 days following the date of issuance of the
first Policy.
Allmerica Financial and Canada Life each understand and agree
that the aggregate fee set forth herein is based upon
specifications contained in a Financial Proposal prepared by
Allmerica Financial dated September 10, 1999. If such
Proposal is modified, the parties understand and agree that
the fee shall be appropriately adjusted upward or downward.
1.06 Ownership of Policy Forms. Allmerica Financial hereby
transfers all of its right, title and interest in the Policy
Forms, including the actuarial basis for the Policy Forms to
Canada Life.
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1.07 New Products, Product Enhancements, etc. At any time and from
time to time while this Agreement remains in force, Canada
Life may request that Allmerica Financial enhance, modify or
otherwise change the Policy Forms ("Product Changes") or
develop new variable life insurance products ("New Products"),
including New Products to be developed for sale in the State
of New York. After receipt of any such request Allmerica
Financial agrees to negotiate in good faith with Canada Life
the terms and conditions (including compensation and delivery
time frames) under which Allmerica Financial shall develop
and, if so requested, file with the various insurance
departments the requested Product Changes or New Products.
ARTICLE 2
SERVICES
2.01 In General. During the term of this Agreement, Allmerica
Financial shall provide Canada Life the Policy underwriting,
issue, servicing, claims, computer system and other Policy
administrative services described in detail in Schedule 2.01A,
Section 2.02, Section 2.03 and in Article 3 (collectively, the
"Policy Services") in support of the Policies, subject to the
terms and conditions set forth in this Agreement. The
performance of Policy Services shall occur in three (3)
phases described as follows, in accordance with the schedule
of events set forth in Schedule 2.01B hereto. Throughout each
such phase, the parties agree to discharge their respective
obligations as further specified herein. The phases shall
consist of:
(a) The Implementation Phase. This phase will consist of the
recruitment and hiring by Allmerica Financial of any
additional personnel deemed necessary by Allmerica
Financial to perform its Policy Services obligations
hereunder, personnel training and the installation
(including any necessary modifications) by Allmerica
Financial of the Computer System (as defined in Section
3.01(a)) necessary for Allmerica Financial to perform
Policy Services, Computer System testing, business
workflow testing, financial control and compliance testing
and Allmerica Financial/Canada Life systems interface
testing and implementation and delivery of the Computer
System, as described in Articles 3 and 8.
(b) The Operational Phase. This phase will consist of
Allmerica's performance of Policy Services utilizing the
accepted Computer System. all Policy Services to be
accomplished in accordance with the Service Standards
listed on Schedule 2.01C hereto. Whenever the parties have
not agreed to a Service Standard for a particular Policy
Service, Allmerica Financial agrees that the Service
shall be performed utilizing the same service standard as
is then applicable to its own variable life insurance
business.
If at any time Allmerica Financial's performance of a
Policy Service does not meet the applicable Service
Standard listed on Schedule 2.01C or described in the
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preceding paragraph, Allmerica Financial shall use its
best efforts to take necessary curative actions to bring
its performance into compliance within thirty (30) days of
Canada Life giving Allmerica Financial written notice of
its non-compliance. Provided, however, that if the
non-compliance occurs as a result of an unanticipated
event, such as an unanticipated increase in new Policy
sales above the projections set forth below or an
unanticipated level of Policy Service activity, the
parties understand and agree that even with Allmerica's
best efforts, it may not be possible to cure the problem
within such thirty (30) day period.
Notwithstanding anything on this Agreement to the
contrary, Canada Life and Allmerica Financial each
understand and agree that Allmerica Financial shall have
the unilateral right, at any time and from time to time
upon at least thirty days' written notice to Canada Life,
to modify the Service time frames and Service Standards
listed on Schedule 2.01C. Provided, however, Allmerica
Financial agrees that at no time shall the Service time
frames or the Service Standards for the Policy Services
described in this Agreement be less rigorous than the
service time frames or the service standards that are then
applicable to the servicing of Allmerica Financial's own
variable life insurance business.
(c) The Conversion Phase. Upon termination of this Agreement
for any reason (including a default by either party),
Allmerica Financial and Canada Life shall promptly return
all Property (as defined in Section 3.01(b)) held by the
other party, including, but not limited to, data, records,
files, materials and supplies and computer software. A
cooperative conversion work plan and program will be
developed by Allmerica Financial and Canada Life to
accomplish the transfer of records and other Property.
Each party will work in good faith to effect the
conversion and minimize the cost of business interruption
resulting from the conversion. If and to the extent
requested by Canada Life, during the Conversion Phase
Allmerica Financial agrees to continue to provide Policy
Services in accordance with the Service Standards listed
on Schedule 2.01C hereto. If Policy Services are being
provided during the Conversion Phase, Canada Life's rights
under the Agreement to receive such Services and Allmerica
Financial's obligations under the Agreement to provide
such Services shall continue and remain in effect on the
same basis and to the same extent as such rights and
obligations existed under the Agreement prior to its
termination. If Allmerica Financial continues to provide
Policy Services during the Conversion Phase, Canada Life
understands and agrees that it will continue to compensate
Allmerica Financial for such Services as provided in
Section 2.04 hereto, even if the Agreement is being
terminated by Canada Life for cause in accordance with
Sections 11.03 or 11.05 hereof.
All expenses incurred by Canada Life as a result of
termination of this Agreement, including expenses incurred
in connection with the return of Canada Life's Property,
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shall be borne by Canada Life.
Upon completion of the Conversion Phase, each party shall
certify to the other that all records and other Property
has been returned to its owner.
2.02 Policy Underwriting. All Policy underwriting services shall be
performed by Allmerica Financial on behalf of Canada Life.
Policies shall be underwritten based upon Canada Life's
underwriting criteria, requirements and standards ("Underwriting
Standards"). Canada Life's Underwriting Standards relating to
the Policies must be satisfactory to Allmerica Financial, and
cannot be changed without Allmerica Financial's written consent,
which consent shall not be unreasonably withheld. Copies of
Canada Life's underwriting manuals and other relevant materials
necessary for Allmerica Financial to perform its Policy
underwriting obligations hereunder shall be furnished to
Allmerica Financial at Canada Life's expense. Canada Life
underwriting personnel (to be specified by Canada Life) shall be
made available at Canada Life's expense to answer any questions
that might arise from Allmerica Financial's underwriters
relating to Canada Life's Underwriting Standards. Vendors used
for medical underwriting services must be acceptable to both
parties. The costs of medical underwriting shall be paid by
Canada Life.
In addition to the foregoing, in the case of a proposed
underwriting declination, which declination is not clearly a
medical decline described in Canada Life's underwriting manual,
Allmerica Financial shall communicate the proposed declination
to appropriate Canada Life personnel who must agree with and
approve the proposed declination before the underwriting
decision is finalized. Allmerica Financial will communicate
appropriate details of any proposed declination in accordance
with notification procedures to be jointly developed by the
parties. If no response is received within five (5) days of the
transmission, Allmerica Financial shall have the right to
proceed on the basis that Canada Life is in agreement with the
decision to decline the risk.
2.03 Policy Claims. All Policy claims processing services shall be
performed by Allmerica Financial on behalf of Canada Life. All
Policy claims shall be investigated, processed and paid in
accordance with Canada Life's claims processing rules and
requirements. Copies of Canada Life's claims manuals and other
relevant materials necessary for Allmerica Financial to perform
its Policy claims investigation, processing and payment
obligations hereunder shall be furnished to Allmerica Financial
at Canada Life's expense. Canada Life claims personnel (to be
specified by Canada Life) shall be made available at Canada
Life's expense to answer any questions that might arise from
Allmerica Financial's claims personnel relating to the
investigation, processing or payment of Policy claims.
In addition of the foregoing, in the case of a decision by
Allmerica Financial that a Policy claim should be denied,
Allmerica Financial shall communicate its proposed action to
appropriate Canada Life personnel who must agree with and
approve the proposed claim
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denial before the claims decision is finalized. Allmerica Financial will
communicate appropriate details of any proposed Policy claim denial in
accordance with notification procedures to be jointly developed by the
parties. If no response is received within five (5) days of the
transmission, Allmerica Financial shall have the right to proceed on the
basis that Canada Life is in agreement with the decision to deny the
claim.
2.04 Compensation and Reimbursement for Policy Services. For the Policy
Services described in this Agreement, while this Agreement remains in
force Canada Life agrees to pay Allmerica the following amounts:
Compensation and reimbursements described in this Section 2.04 shall be
payable to Allmerica Financial on such basis and at such time or times as
shall be mutually agreeable to the parties. Provided, however, that in no
event shall compensation and reimbursements payable for a calendar month
be paid later than ten business days from the date of receipt by Canada
Life of Allmerica Financial's ▇▇▇▇ for the month. Canada Life understands
and agrees that late payments shall be assessed a late payment charge at
the rate of 12% per annum.
ARTICLE 3
COMPUTER SYSTEM AND PROPRIETARY RIGHTS
3.01 Definitions. As used in this Agreement, the following terms shall have the
following meanings.
(a) "Administrative Computer System" or "Computer System" shall refer to
all computer systems and related materials used by Allmerica
Financial to administer the Policies, including Allmerica Financial
proprietary software, third party licensed software and the LifeCAD
MP policy administration system, which system is the property of
NaviSys.
Allmerica Financial's proprietary software and the third party
software used to administer the Policies shall be listed on Schedule
3.01 attached hereto. Such Schedule shall be updated from time to
time to reflect the addition or deletion of software used in the
administration of the Policies.
(b) "Property" shall mean all property of either party related to the
Policies, including, but not limited to, data records, materials,
supplies, computer software, customer records, premium information,
underwriting files, customer lists, sales data, policyholder and
insured data, data on agents, agencies and distribution systems.
3.02 Policy Administration. Canada Life understands and agrees that Allmerica
Financial will initially perform the day-to-day administration of the
Policies utilizing the LifeCAD MP policy administration system, which is a
proprietary computer system owned and maintained by NaviSys. Canada Life
agrees that at any time while this Agreement remains in force, that
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Allmerica Financial may, in its sole discretion, choose to license the
LifeCAD MP system or administer the Policies by using any other suitable
software of Allmerica's choice.
In the event Allmerica Financial decides to replace the LifeCAD MP system,
Allmerica Financial agrees to test the replacement software to be certain
that it will properly perform the Policy Services contemplated by this
Agreement.
ARTICLE 4
CONFIDENTIALITY AND AUDIT RIGHTS
4.01 Confidentiality. Except as otherwise provided in this Agreement, all
information communicated by Canada Life to Allmerica Financial and by
Allmerica Financial to Canada Life pursuant to this Agreement shall be and
is received in confidence and shall be used only for purposes of this
Agreement. No such information shall be disclosed by Allmerica Financial,
by Canada Life or by their respective agents or employees without the prior
written consent of the non-disclosing party, except as may be necessary by
reason of legal, accounting, or regulatory requirements beyond the
reasonable control of the disclosing party. The provisions of this Section
4.01 shall survive termination or expiration of this Agreement for any
reason.
Allmerica Financial and Canada Life each agree not to disclose to any
person, firm or corporation or to utilize or reproduce for their own use
any proprietary or confidential information concerning the business or data
of the other party which it may have acquired pursuant to or in the course
of the performance of its obligations under this Agreement. Proprietary
information shall include, but not be limited to, data, marketing
information and materials, sales data, customer lists, financial plans,
investment strategies, policyholder and insured data, data on agents,
agencies and distribution systems. The foregoing notwithstanding, the
following shall not be considered proprietary information for purposes of
this Agreement: (i) information publicly available or generally known
within the life insurance industry; (ii) information obtained from other
sources, to the knowledge of Allmerica Financial or Canada Life, as the
case may be, not under a duty of confidentiality to Canada Life or
Allmerica Financial with respect to such information; and (iii) information
that is developed or created independently by either party without breach
of this Agreement.
In addition to the foregoing, Allmerica Financial agrees that during the
term of this Agreement and thereafter it shall not, directly or indirectly,
or through any third party utilize confidential information obtained
pursuant to this Agreement to recruit or attempt to recruit any Canada Life
insurance agents, brokers, general agents or other producers.
In addition to the foregoing, Canada Life agrees that during the term of
this Agreement and thereafter it shall not, directly or indirectly, or
through any third party utilize confidential
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information obtained pursuant to this Agreement to recruit or attempt
to recruit any Allmerica Financial or AFLIAC insurance agents, brokers,
general agents or other producers.
4.02 Audit Rights. Allmerica Financial shall provide reasonable access
during normal business hours to any Allmerica Financial location from
which Allmerica Financial conducts its business and provides Policy
Services to Canada Life pursuant to this Agreement to auditors
designated in writing by Canada Life for the purposes of performing
audits for Canada Life. Canada Life shall give reasonable advance
written notice of an audit and include in that notice the matters which
it will audit. Allmerica Financial shall provide the auditors any
assistance they may reasonably require. Such auditors shall have the
right during normal business hours to audit any business record,
activity, procedure or operation of Allmerica Financial that is
reasonably related to the provision the Policy Services provided under
this Agreement, including the right to interview any Allmerica
Financial personnel involved in providing or supporting such Policy
Services.
If Canada Life determines, following an audit, that errors have been
made in Allmerica Financial's records, procedures or operations,
Allmerica Financial will make prompt correction and forward evidence of
such correction to Canada Life. Allmerica Financial will use its best
efforts to make all such corrections within thirty (30) business days.
ARTICLE 5
RECORDS AND DATA MAINTENANCE
5.01 Maintenance of Allmerica Financial Records. Allmerica Financial records
relating to Policies and the Policy Services provided under this
Agreement will be maintained at Allmerica Financial's principal
administrative office and at other storage facilities used for
maintenance of records relating to Allmerica Financial's variable life
insurance business. Such records shall be maintained: (i) in the case
of records relating to a particular Policy, while the Policy remains in
force and for a period of seven (7) years following termination of the
Policy and (ii) for all other such records, for the duration of this
Agreement and, for any records not transferred to Canada Life after
termination of this Agreement, for a period of seven (7) years
following such termination.
Notwithstanding the foregoing, voice recording tapes shall only be
maintained for one (1) year from the date of the call.
5.02 Records and Data Management. Allmerica Financial shall:
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(i) maintain all Policy paper-based files provided to Allmerica
Financial on behalf of Canada Life, including, but not
limited to, Policy applications, transaction documents and
authorizations, correspondence, beneficiary designations and
all other relevant Policy servicing documents.
(ii) maintain voice recording tapes for all telephone based
service requests;
(iii) maintain Policy records, including values, options, status
and payments;
(iv) store Canada Life Computer System data under Allmerica
Financial's retention schedule, as mutually agreed upon, on
magnetic tapes and disc packs when in the possession or
custody of Allmerica Financial in accordance with the
confidentiality and security safeguards specified in this
Agreement;
(v) maintain all records and files relating to Policies and
Policy Services as the Property of Canada Life and promptly
return such Property to Canada Life upon termination of this
Agreement, as provided in Subsection 2.01(c) hereof;
(vi) maintain all such records and files in an accessible and
useable form; and
(vii) not destroy any such records and files without the approval
of Canada Life and only after 30 days' written notice to
Canada Life of the proposed destruction.
5.03 Canada Life's Records. Canada Life's files, records, and documents
described in this Agreement and the data contained therein shall be and
remain Canada Life's Property and shall be returned to Canada Life
promptly upon request or the expiration or termination of this
Agreement or, with respect to any particular data files and data, on
the earlier date the data files and data are no longer required by
Allmerica Financial to provide services to Canada Life pursuant to this
Agreement.
At any time and from time to time, Canada Life may request Allmerica
Financial for copies of Canada Life's files, records and documents then
in the possession of Allmerica Financial. Unless prohibited by its
license agreement with a software vendor, Allmerica Financial shall
promptly comply with any such request for copies. Canada Life
understands and agrees that any costs or expenses, including personnel
costs, incurred by Allmerica Financial in complying with any such
requests for copies shall be reimbursed by Canada Life. Any such
reimbursement shall be paid by Canada Life within 30 business days of
its receipt of a written request for reimbursement.
5.04 Safeguarding Canada Life Data and Records. In order to properly
safeguard Canada Life data and records in its possession, Allmerica
Financial will establish and maintain full and
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complete safeguards no less rigorous than those in effect at Allmerica
Financial to protect its own confidential data and records against
destruction, loss, alteration or unauthorized access.
ARTICLE 6
ALLMERICA FINANCIAL'S OBLIGATIONS
6.01 Implementation Duties and Responsibilities. Allmerica Financial shall, in
accordance with the time schedules set forth in Article I and in Schedule
2.01B:
(a) Assist Canada Life in its development of the Policy Forms and
perform its additional duties and responsibilities as set forth in
Article 1.
(b) Jointly develop with Canada Life the Computer System interfaces to
Canada Life's Atlanta Georgia Principal Office. The Allmerica
Financial time frames for completion of such interfaces will be
negotiated by the parties. Canada Life understands and agrees
that, to the extent compatible, Allmerica Financial intends to
utilize file formats currently in use in developing such
interfaces. Canada Life further understands and agrees that if
customized file formats need to be developed for such interfaces,
that Canada Life shall reimburse Allmerica Financial for any costs
and expenses incurred by Allmerica Financial in developing such
customized file formats, including, but not limited to, employee
personnel costs.
(c) Modify and implement the Administrative Computer System as
necessary to support the Policy and Policy Services covered by
this Agreement. The time frames for Computer System modification
and implementation will be negotiated by the parties.
(d) Develop sales support software to be used with the Policy Forms,
as more fully described in Section 6.04.
6.02 Computer System Operation. Upon the successful completion of acceptance
testing and the implementation of the Computer System, Allmerica
Financial shall provide Canada Life the following Computer System
services:
(a) Process Canada Life business and data in accordance with Schedule
2.01A to achieve the Service Standards called for in Schedule
2.01C.
(b) Provide all necessary man-hours to install new releases of the
Computer System and maintain the Computer System by making routine
corrections and by accomplishing ordinary day-to-day changes to
the Computer System.
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(c) Store Canada Life data, as provided in clause (iv) of Section 5.02
hereof.
6.03 Computer System Maintenance Changes and Enhancements. Allmerica Financial
agrees to perform normal Computer System maintenance at no additional
cost to Canada Life. At any time and from time to time while this
Agreement remains in force Canada Life may request that Allmerica
Financial modify, enhance, make corrections or otherwise make changes to
the Computer System ("System Changes") other than changes required as
part of Allmerica Financial's responsibility to perform normal Computer
System maintenance. After receipt of any such request, Allmerica
Financial agrees to negotiate in good faith with Canada Life the terms
and conditions (including compensation and delivery time frames) under
which Allmerica Financial shall develop and implement any such requested
Systems Change.
6.04 Sales Support Software. Allmerica Financial agrees to develop certain
sales support software to be used with the Policy Forms. Canada Life
understands and agrees that such software shall be substantially similar
to the sales support software currently used by Allmerica Financial in
its variable life insurance business. Allmerica Financial agrees that
such software shall be finalized by Allmerica Financial within a mutually
agreeable time frame.
6.05 Acknowledgement and Additional Responsibilities of Allmerica Financial.
Allmerica Financial shall have no authority, nor shall it represent
itself as having such authority, other than as specifically set forth in
this Agreement. Without limiting the generality of the foregoing
sentence, Allmerica Financial specifically agrees that it will not do any
of the following without the prior written consent of Canada Life:
(a) Litigation. Institute or prosecute and legal proceedings in
connection with any matter pertaining to the Policy Services
provided pursuant to this Agreement or Canada Life's business or
accept service of process on behalf of Canada Life.
(b) Alterations. Waive, amend, modify, alter, terminate or change any
term, provision or condition stated in any Policy Form or
discharge any contract in the name of Canada Life, except as
otherwise specifically provided in this Agreement.
(c) Advice to Policyholders/Prospective Policyholders. Offer tax,
legal, or investment advice to any Policyholder or prospective
Policyholder of Canada Life under any circumstances, with respect
to a Policy or the Policy Services provided pursuant to this
Agreement.
6.06 Administrative Services Provided. Allmerica Financial shall perform the
administrative services specified in Schedule 2.01A within the time
frames and Service Standards specified in Schedule 2.01C.
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6.07 Records and Data Maintenance. Allmerica Financial shall provide the
records and data maintenance, management and other services described in
Article 5.
6.08 Personnel. Allmerica Financial shall use its best efforts to ensure that
adequate personnel are assigned to perform the services required under
this Agreement, to include a Project/Account Manager and the staffing
levels needed in order to achieve the Service Standards specified in
Schedule 2.01C.
ARTICLE 7
CANADA LIFE'S OBLIGATIONS
7.01 Canada Life's Duties and Responsibilites. Canada Life shall:
(a) Develop the Policy Forms, with the assistance of Allmerica
Financial and perform its additional duties and responsibilities
set forth in Article 1, including, but not limited to, Canada
Life's securities law responsibilities outlined in Section 1.03.
(b) Jointly develop with Allmerica Financial an implementation plan
and schedule as set forth in Schedule 2.01B.
(c) Provide designated Canada Life personnel dedicated to work with
Allmerica Financial personnel in the performance of this Agreement
and all other reasonable and necessary cooperation and support.
(d) Provide all the requirements for the operation of the
Administrative Computer System at Canada Life's facilities
necessary for Computer System interfaces and output.
(e) Provide necessary input data for the operation of the Computer
System.
(f) Jointly develop with Allmerica Financial the interface
specifications for the Computer System and Canada Life systems.
(g) Assist Allmerica Financial in the development of the sales support
software described in Section 6.04.
(h) Make all necessary payments due under the terms of this Agreement
upon receipt of a monthly settlement report, the form of which
shall be agreed to by the parties.
ARTICLE 8
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ACCEPTANCE TESTING
8.01 Contents. Allmerica Financial and Canada Life shall conduct tests of the
Computer System. The standard to be used to determine the successful
completion for all tests shall be the Computer System's performance of
those functions and features which will enable Allmerica Financial to
perform those Services described in Schedule 2.01A in accordance with the
Service Standards set forth in Schedule 2.01C.
8.02 Usability Testing. Allmerica Financial and Canada Life shall conduct a
joint usability test as follows:
(a) The test will be performed utilizing Allmerica Financial's
existing test environment.
(b) A test sample of Policies and business transactions shall be
determined and processed by Allmerica Financial and will be made
available to Canada Life for review.
(c) Allmerica Financial and Canada Life will jointly review the test
results to determine completeness, accuracy and performance.
(d) Canada Life will process all Allmerica Financial generated system
interface files to determine successful use by internal Canada
Life systems.
(e) Allmerica Financial and Canada Life will evaluate overall business
and system processing flow for capability to meet operational
performance standards.
(f) Allmerica Financial and Canada Life will make all necessary
revisions to business and technical systems identified in the
usability test.
(g) In order to satisfy usability testing, the Computer System must
process all sample Policies and related transactions to such
standards as would be acceptable to Allmerica Financial in the
processing of AFLIAC's variable life insurance business. Canada
Life and Allmerica Financial must mutually agree that usability
testing has been succesfully accomplished.
ARTICLE 9
ADDITIONAL REPRESENTATIONS AND WARRANTIES
9.01 Corporate Authority, etc. Allmerica Financial represents and warrants:
(a) That it is a corporation duly organized and existing in good
standing under the laws of the Commonwealth of Massachusetts.
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(b) That Allmerica Financial has the power and authority under the laws
of the Commonwealth of Massachusetts and under its charter and
by-laws to enter into and perform the Product Development and
Policy Services contemplated in this Agreement.
(c) That all requisite corporate and other acts or proceedings
required to be taken to authorize the execution, delivery and
performance of this Agreement have been or will be taken.
(d) That it has and will use its best efforts to continue to have and
maintain the necessary facilities to perform Policy Services in
accordance with the provisions of this Agreement.
9.02 Survivability. The warranties provided for in this Article 9 shall
survive termination of this Agreement.
ARTICLE 10
INDEMNITIES AND LIABILITY
10.01 Cross Indemnity. Each party shall indemnify, defend and hold harmless the
other, and the other's subsidiaries, parent and affiliates, from and
against any and all claims, actions, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and expenses), arising out
of the death or bodily injury of any agent, employee, customer, business
invitee or business visitor of the indemnitor occurring on premises under
the control of the indemnitor or its parent or one of its subsidiaries or
affiliates.
10.02 Allmerica Financial Limitation of Liability: Indemnification by Canada
Life. Allmerica Financial, its subsidiaries, parent, affiliates and its
or their officers, directors, employees and agents (collectively
"Allmerica Indemnitees") shall not be responsible for, and Canada Life
shall indemnify and hold harmless Allmerica Indemnitees from and against
any and all claims, demands, losses, damages, charges, costs, expenses
(including reasonable attorneys' fees and expenses), judgments, awards
and settlements, including any punitive, consequential, special or
indirect damages (herein "Losses") arising out of or attributable to:
(a) All actions of Allmerica Indemnitees related to Policy
underwriting or the investigation, processing, denial or payment
of Policy claims, including death claims, provided that:
(i) in the case of an underwriting matter, Allmerica Financial
properly utilized Canada Life's Underwriting Standards (as
described in Section 2.02) in underwriting, rating or
declining an applicant for insurance and, in the event
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of the declination of a proposed insured, which declination
is not clearly a medical decline described in Canada Life's
underwriting manual, that the matter was communicated to
authorized Canada Life personnel who agreed with and
approved the declination; and
(ii) in the case of a Policy claim, Allmerica Financial followed
Canada Life's claims investigation and processing rules and
requirements and, in the event of the denial of a claim,
that the matter was communicated to authorized Canada Life
personnel who agreed with and approved the denial.
Allmerica Financial will communicate appropriate details of any
required communication described in (a)(i) and (ii) above in
accordance with notification procedures to be jointly developed by
the parties. If no response is received within five (5) days from
the day of the transmission, Allmerica Financial shall have the
right to proceed on the basis that Canada Life is in agreement
with the decision to decline the risk or deny the payment of the
claim and will proceed with appropriate action.
(b) A claim against an Allmerica Indemnitee by any third party, to the
extent it arises out of or results from any act or omission of
Canada Life, its employees, agents, brokers or representatives
relating to the sale or servicing of any Policy.
(c) A claim against an Allmerica Indemnitee by any third party, to the
extent it arises out of or results from the reasonable reliance of
an Allmerica Indemnitee on information, records or documents
furnished to it by or on behalf of Canada Life.
(d) A claim against an Allmerica Indemnitee by any third party, to the
extent it arises out of or results from the reasonable reliance
on, or the carrying out of by an Allmerica Indemnitee of, any
instructions of authorized personnel of Canada Life.
10.03 Canada Life Limitation of Liability; Indemnification by Allmerica
Financial. Canada Life, its subsidiaries, affiliates and its or their
officers, directors, employees and agents (collectively "Canada Life
Indemnitees") shall not be responsible for, and Allmerica Financial shall
indemnify and hold harmless Canada Life Indemnitees from and against any
and all Losses arising out of or attributable to:
(a) A breach or negligent failure of Allmerica Financial to perform
any of Allmerica Financial's representations, warranties,
covenants or obligations set forth in this Agreement.
(b) A claim against a Canada Life Indemnitee by any third party, to
the extent it arises out of or results from the reasonable
reliance of a Canada Life Indemnitee on
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information, records or documents furnished to it by or on behalf
of Allmerica Financial.
(c) A claim against a Canada Life Indemnitee by any third party, to
the extent it arises out of or results from the reasonable
reliance on, or the carrying out of by a Canada Life Indemnitee
of, any instructions of authorized personnel of Allmerica
Financial.
10.04 Notice and Opportunity to Defend. Promptly after receipt by any party
hereto of notice of the assertion of any claim for a Loss with respect to
which such party hereto expects to make a request for indemnification
hereunder, such party shall give the party which may become obligated to
provide indemnification hereunder (the "Indemnifying Party") written
notice describing such claim in reasonable detail. The Indemnifying Party
shall have the right, at its option and at its own expense and by its own
counsel, to participate in the defense of any such claim, provided that
the Indemnifying Party shall have agreed in writing to indemnify the
party seeking indemnification hereunder (the "Indemnified Party").
Notwithstanding the foregoing, the Indemnifying Party shall not have the
right to control or to represent the Indemnified Party in the defense of
any claim.
10.05 Processing Liability. Notwithstanding the provisions of Sections 10.02
and 10.03, in the event of any liability incurred by Allmerica Financial
or Canada Life as a result of Policy processing errors made by Allmerica
Financial, Allmerica Financial shall be liable for 50% (or the applicable
Quota Share Reinsurance percentage in effect at the applicable time under
the Reinsurance Agreement in effect between the parties) of such amount
and Canada Life shall be liable for the remaining portion of such amount.
For purposes of this Agreement, the term "processing errors" shall mean
and include:
(i) errors or delays relating to the processing of Policy premium
payments;
(ii) errors or delays relating to the processing of Policy fund
transfer requests;
(iii) errors or delays related to the processing of Policy changes
(e.g., processing of title changes, beneficiary changes or
insurance increases or decreases);
(iv) errors or delays related to the processing of Policy surrenders,
exchanges or withdrawals;
(v) errors or delays related to the processing of Policy loans; and
(vi) other errors or delays related to the Policy Administration
functions described in Part B of Schedule 2.01C.
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10.06 Acknowledgment. Allmerica Financial and Canada Life expressly acknowledge
that the limitations contained in this Article 10 represent the express
agreement of the parties with respect to allocation of risks between the
parties, including the level of risk to be associated with the provision
of the Policy Services described herein as related to the amount of the
payments to be made to Allmerica Financial for such Services, and each
party fully understands and accepts such limitations.
10.07 Survivability. The indemnifications provided for in this Article 10
shall survive termination of this Agreement for any reason.
ARTICLE 11
TERM AND TERMINATION
11.01 Term. The Product Development obligations of the parties and the Policy
Services Implementation Phase shall commence upon the Effective Date of
this Agreement. The Implementation Phase shall expire upon successful
completion of all acceptance testing of the Computer System under Article
8. The Operational Phase shall commence on the date the first Policy is
issued and shall expire sixty (60) full calendar months from such date,
unless terminated earlier or extended in accordance with the provisions
of this Agreement. For example, if the first Policy is issued on July
15, 2000, the Agreement shall expire on July 31, 2005 unless earlier
terminated or extended.
11.02 Extension. This Agreement shall continue in force after the initial
60-month termination date specified in Section 11.01 unless either party
elects to terminate the Agreement on said initial termination date by
notifying the other party in writing of its intention to do so. Such
notice must be given at least twelve months prior to said initial
termination date unless both parties agree to accept a later date of
notification. If this Agreement is continued beyond said initial
termination date, Canada Life and Allmerica Financial shall each have the
right to cancel this Agreement on any date thereafter upon twelve months'
written notice to the other party.
11.03 Termination for Cause. Except as otherwise provided in this Agreement,
in the event either party defaults in the performance of any of that
party's material duties or obligations under this Agreement, which
default shall not be substantially cured within thirty (30) days after
written notice is given to the defaulting party specifying the default
or, with respect to those defaults which cannot reasonably be cured
within (30) days, should the defaulting party fail to proceed within
sixty (60) days to commence curing the default and thereafter to
proceed with all due diligence to substantially cure the default,
the party not in default may terminate this Agreement for cause by
giving written notice to the defaulting party.
For purposes of this Agreement, material breach shall include, but not be
limited to, the
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following events: (i) fraud, material misrepresentation, conversion or
unlawful withholding of funds by either party; (ii) the disqualification
by either party to do business under any applicable state or federal law
where its ability to do business is materially impaired; and (iii) any
breach of confidentiality by either party or the use of confidential
information by either party in a competitive manner. Circumstances
described in clause (i) shall not be subject to the cure provisions
described in the preceding paragraph.
In the event this Agreement is terminated for cause, the party materially
breaching the Agreement shall be liable for all damages incurred by the
aggrieved party as a result of the breach. In the event either party
terminates the Agreement for cause, Canada Life agrees to pay Allmerica
Financial the balance of any compensation for Product Development
required to be paid to Allmerica Financial under Section 1.05 and to pay
compensation for Policy Services rendered, required to be paid to
Allmerica Financial under Section 2.04. In the event that either party
terminates this Agreement for cause, Allmerica Financial and Canada Life
shall jointly develop and implement a cooperative conversion workplan
under Subsection 2.01(c) of this Agreement.
11.04 Termination for Nonpayment. In the event Canada Life defaults in payment
of any amount due Allmerica Financial under this Agreement and does not
cure the default within thirty (30) days after written notice of the
default, Allmerica Financial may terminate this Agreement for cause by
giving thirty (30) days written notice to Canada Life.
11.05 Termination for Insolvency. In the event either party becomes or is
declared insolvent or bankrupt, is the subject of any proceedings
relating to its liquidation, insolvency or for the appointment of a
receiver or similar officer for it, makes an assignment for the benefit
of all or substantially all of its creditors, or enters into an agreement
for the continuation, extension, or readjustment of all or substantially
all of its obligations, the other party may immediately terminate this
Agreement for cause.
11.06 Termination in the Event of Reinsurance Recapture. In the event Canada
Life exercises its right under Section 1 of the Reinsurance Agreement in
effect between the parties to recapture amounts reinsured by Allmerica
Financial, Allmerica Financial shall have the right to terminate this
Agreement at any time after the effective of such recapture, upon at
lest thirty (30) days' written notice to Canada Life. Such termination
shall not be a termination for cause.
In the event Allmerica Financial elects to terminate this Agreement
pursuant to this Section 11.06, Canada Life agrees to pay Allmerica
Financial the balance of any compensation for Product Development
required to be paid to Allmerica Financial under Section 1.05 and to pay
compensation for Policy Services rendered, required to be paid to
Allmerica Financial under Section 2.04. In addition, Allmerica Financial
agrees to jointly develop with Canada Life and implement a cooperative
conversion workplan under Subsection 2.01(c) of this
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Agreement.
ARTICLE 12
MISCELLANEOUS
12.01 Binding Nature and Assignment. This Agreement shall be binding on the
parties and their respective successors and assigns. Neither party may
assign this Agreement without the prior written consent of the other,
which shall not be unreasonably withheld.
12.02 Notices. Any notice or other instrument authorized or required by this
Agreement shall be deemed given upon receipt and shall be effective only
if it is in writing and delivered personally, by facsimile transmission
with telephone confirmation, by registered or certified return receipt
mail, postage prepaid, or by nationally recognized overnight courier
service addressed as set forth below or to such other person or address
as each party may from time to time designate by notice to the other
party.
IN THE CASE OF ALLMERICA FINANCIAL:
Allmerica Financial Life Insurance and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
IN THE CASE OF CANADA LIFE:
Canada Life Insurance Company of America
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
-----------------
--------------------
A party may from time to time change its address or designees for
notification purposes by giving the other party prior notice in the
manner specified above of the new address or the new designee and the
subsequent date upon which the change shall be effective.
12.03 Amendment. This Agreement may be amended or modified only by a written
agreement executed by both parties, as evidenced in writings signed by a
Vice President of Allmerica Financial and Canada Life.
12.04 Counterparts. This Agreement may be executed simultaneously in multiple
counterparts,
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22
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
12.05 Certain Construction Rules; Governing Law. All Schedules attached hereto
and referred to herein, are hereby incorporated in and made a part of
this Agreement as if set forth herein. Any matter disclosed on any
Schedule referred to herein shall be deemed also to have been disclosed
on any other applicable Schedule referred to herein. All Section titles
or captions contained in this Agreement or in any Schedule are for
convenience only, shall not be deemed a part of this Agreement and shall
not affect the meaning or interpretation of this Agreement. Any
reference to a "Section" or "Schedule" shall be deemed to refer to a
Section of this Agreement or Schedule attached to this Agreement. The
recitals set forth on the first page of this Agreement are incorporated
into and made a part of this Agreement. Unless the context clearly
indicates, words used in the singular include the plural, and words in
the plural include the singular.
This Agreement is to be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts and without regard to the
conflicts of laws principles thereof.
12.06 Relationship of Parties. Canada Life understands and agrees that
Allmerica Financial in furnishing services to Canada Life is acting only
as an independent contractor. Unless otherwise provided in this
Agreement, Allmerica Financial has the sole right and obligation to
supervise, manage, contract, direct, procure, perform or cause to be
performed all work to be performed by Allmerica Financial pursuant to
this Agreement.
12.07 Approvals and Similar Actions. Where agreement, approval, acceptance,
consent or similar action is required by any provision of this Agreement,
such action shall not be unreasonably delayed or withheld.
12.08 Force Majeure. Each party shall be excused from performance for any
period and to the extent that the party is prevented from performing any
services, in whole or in part, as a result of delays caused by an act of
God, war, civil disturbance, court order, labor dispute, or other cause
beyond that party's reasonable control, including failures or
fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment and such nonperformance shall not be a
default or a ground for termination.
12.09 Severability. The provisions of this Agreement are severable and the
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision hereof.
In addition, in the event that any provision of this Agreement (or
portion thereof) is determined by a court of competent jurisdiction to be
unenforceable as drafted by virtue of the scope, duration, extent or
character of any obligation contained therein, it is the mutual
agreement of the parties that such provision (or
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portion thereof) shall, to the extent equitable, be constructed in a
manner designed to effectuate the purposes of such provision to the
maximum extent enforceable under applicable law.
12.10 Construction and Representation by Counsel. The parties hereto represent
that in the negotiation and drafting of this Agreement they have been
represented by and relied upon the advice of counsel of their choice. The
parties affirm that their counsel have had a substantial role in the
drafting and negotiation of this Agreement and, therefore, the rule of
construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of
this Agreement or any Schedule attached hereto.
12.11 Media Releases. Canada Life and Allmerica Financial shall consult with
each other as to the form, substance and timing of any press release or
other public disclosure of matters related to this Agreement or any of
the transactions contemplated hereby, and no such press release or other
public disclosure shall be made without the consent of the other party,
which shall not be unreasonably withheld or delayed; provided, however,
that either party may make such disclosures as are required by legal,
accounting or regulatory requirements after making reasonable efforts in
the circumstances to consult in advance with the other party.
12.12 Reinsurance Agreement. The parties understand and agree that certain
policy expenses and mortality risks assumed under the Policies serviced
under this Agreement will be reinsured by Allmerica Financial pursuant to
the terms of a separate Reinsurance Agreement to be negotiated between
the parties.
12.13 Agreement Relating to Additional Services. The parties understand and
agree that certain investment accounting, separate account and treasury
services to be provided by Allmerica Financial will be set forth in a
separate agreement to be negotiated by the parties.
12.14 Waiver. No delay or omission by either party to exercise any right or
power shall impair such right or power or be construed as a waiver. A
waiver by either of the parties of any of the covenants to be performed
by the other or any breach shall not be construed to be a waiver of any
succeeding breach or of any other covenant.
12.15 Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof. There are no
representations, understandings or agreements which are not fully
expressed in this Agreement. No change, waiver, or discharge shall be
valid unless in writing and signed by an authorized representative of the
party against whom such change, waiver or discharge is sought to be
enforced.
12.16 Hiring of Employees. During the term of this Agreement and for one (1)
year thereafter, Canada Life and Allmerica Financial and any of their
affiliates shall not, directly or indirectly, solicit for employment any
person employed or working on the services provided
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hereunder within the preceding twelve (12) months by the other party or
any affiliate of the other party without the prior written consent of the
other party, which shall not be unreasonably withheld; provided, however,
that (i) in the event either party uses the services of a professional
recruiter and provides such recruiter solely with generic job duties and
job descriptions (without making any reference to the other party or the
other party's affiliates) and such recruiter contacts a qualified
candidate who happens to be an employee of the other party and that
candidate initiates contact through the recruiter with that party, then
that party may employ that employee, or (ii) in the event an employee of
the other party responds to a general advertisement placed by a party,
then that party may employ that employee.
12.17 Taxes. Any taxes or similar assessments charged against Allmerica
Financial or charged in connection with the services provided under this
Agreement shall be the responsibility of Allmerica Financial, whether
such tax or assessment is imposed by the Federal government, a state, a
municipality or an administrative organization thereof.
12.18 Arbitration. All disputes and differences between the parties with
respect to this Agreement will be decided by arbitration, regardless of
the insolvency of either party, unless the conservator, receiver,
liquidator, or statutory successor is specifically exempted from an
arbitration proceeding by applicable state law. Either party may initiate
arbitration by providing written notification to the other party. Such
written notice shall set forth a brief statement of the issue(s), the
failure of the parties to reach agreement, and the date of the
demand for arbitration.
An arbitration panel shall be chosen consisting of three arbitrators. The
arbitrators must be impartial and must be or must have been officers of
life insurance companies other than the parties or their affiliates. Each
party shall select an arbitrator within thirty days from the date of the
demand. If either party shall refuse or fail to appoint an arbitrator
within the time allowed, the party that has appointed an arbitrator may
notify the other party that, if it has not appointed its arbitrator
within the following ten days, the arbitrator will appoint an arbitrator
on its behalf. The two arbitrators shall select a third arbitrator
within thirty days of the appointment of the second arbitrator. If the
two arbitrators fail to agree on the selection of the third arbitrator
within the time allowed, either party may ask ▇▇▇▇▇*US to appoint the
third arbitrator. However, if ▇▇▇▇▇*US is unable to appoint an arbitrator
who is impartial and who is or was an officer of a life insurance company
other than the parties or their affiliates, then either party may ask a
court to appoint the third arbitrator pursuant to the Uniform Arbitration
Act or any similar statute empowering the court to appoint an arbitrator.
The arbitration panel shall interpret this Agreement as an honorable
engagement rather than merely a legal obligation, and shall consider
practical business and equitable principle as well as industry custom and
practice. The panel is released from judicial formalities and
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shall not be bound by strict rules of procedure and evidence.
The arbitration panel shall determine all arbitration schedules and
procedural rules. Organizational and other meetings shall be held in
Worcester, Massachusetts, unless the panel shall select another
location. The panel shall decide all matters by majority vote.
Decisions of the arbitration panel shall be final and binding on both
parties. The panel may, at its discretion, award costs and expenses it
deems appropriate, including but not limited to attorney's fees and
interest. Judgment may be entered upon the final decision of the panel
in any court of competent jurisdiction. The panel may not award
exemplary or punitive damages. Unless the panel decides otherwise, each
party will be separately responsible for paying all fees and expenses
charged by its respective counsel, accountants, actuaries, and other
representatives in connection with the arbitration, and the parties
shall bear equally the fees and expenses of the arbitrators and any
ancillary expenses associated with a hearing (e.g., any rental fee for
use of the hearing room, etc.).
12.19 Legal Proceedings and Complaints. If Allmerica Financial receives:
(a) notice of the commencement of any legal proceeding involving any
of Canada Life's customers; or
(b) a communication from any insurance department, other
administrative agency or any other person identifying a complaint
by any Canada Life customer or calling a hearing involving any
Canada Life practice; or
(c) written or oral complaints from customers of Canada Life; or
(d) a demand or request by any court, government agency or regulatory
body to examine any of the books and records of Canada Life
relating to Policies or Policy Services;
Allmerica Financial will use its best efforts to notify Canada Life
within one (1) business day. Allmerica Financial will send copies of any
necessary documentation to Canada Life within two (2) business days.
Allmerica Financial and Canada Life will jointly develop a complaint
handling process.
Allmerica Financial will maintain a file containing any correspondence
relating to complaints received from Canada Life customers or service
providers for a period of seven (7) years from receipt of the complaint
letter.
12.20 Trademarks and Tradenames. Allmerica Financial will not use Canada
Life's name, trademarks, logo, or the name of any affiliate of Canada
Life in any way or manner not
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specifically authorized in writing by Canada Life.
Canada Life will not use Allmerica Financial's name, trademarks, logo or
the name of any affiliate of Allmerica Financial in any way or manner
not specifically authorized in writing by Allmerica Financial.
12.21 Advertisement. Allmerica Financial shall not advertise the existence of
this Agreement or announce its existence to other insurance companies or
broker-dealers without the express written consent of Canada Life.
Notwithstanding the foregoing, Canada Life agrees that Allmerica
Financial may disclose the existence of this Agreement to insurance
companies or other organizations that are prospective purchasers of
services similar to the product development and administrative services
to be provided under this Agreement.
12.22 Continuation. Sections 1.05, 1.06, 2.01(c), 3.02, 4.01, 5.01, 12.15,
12.16, 12.17, 12.18, 12.19, 12.20, and Articles 9 and 10 shall survive
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to take
effect on the effective date specified above.
CANADA LIFE INSURANCE FIRST ALLMERICA FINANCIAL LIFE
COMPANY OF AMERICA INSURANCE COMPANY
By: By:
--------------------- ----------------------
Name: Name:
------------------- --------------------
Title: Title:
------------------ -------------------
Date: Date:
------------------- --------------------
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LIST OF SCHEDULES
TO
PRODUCT DEVELOPMENT
AND ADMINISTRATIVE SERVICES AGREEMENT
Schedule 1.01 AFLIAC Policy Forms
Schedule 1.02 Jurisdictions Where Policy Forms Are
to be Initially Submitted and
Jurisdictions Where Policy Forms Are
to be Submitted when Canada Life is
Licensed
Schedule 2.01A Inventory of Services and Functions
Schedule 2.01B Policy Services - Project Schedule of
Events
Schedule 2.01C Service Standards
Schedule 3.01 Computer System Software
28
SCHEDULE 1.01 TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY ("ALLMERICA
FINANCIAL") AND CANADA LIFE INSURANCE COMPANY OF AMERICA ("CANADA LIFE"),
EFFECTIVE _______________ .
AFLIAC POLICY FORMS
The Canada Life Policy, Policy Application and related Policy forms contemplated
by the Agreement will be substantially the same as the following Allmerica
Financial Life Insurance and Annuity Company ("AFLIAC") forms:
Name of AFLIAC Form AFLIAC Form Numbers
------------------- -------------------
1. Flexible Premium Variable Life 1033-99
Insurance Policy
2. Policy Application Forms 11060, VUL2001,
IAM-97
3. Term Insurance Rider 1103-99
4. Other Insured Term Insurance Rider 1088-95
5. Waiver of Payment Rider 1086-94
6. Guaranteed Death Benefit rider 1099-97
29
SCHEDULE 1.02 TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY ("ALLMERICA
FINANCIAL") AND CANADA LIFE INSURANCE COMPANY OF AMERICA ("CANADA LIFE"),
EFFECTIVE ________________ .
A. JURISDICTIONS WHERE POLICY FORMS ARE TO BE INITIALLY SUBMITTED
Alabama Kentucky Oklahoma
Arkansas Maryland Oregon
Connecticut Minnesota Rhode Island
Delaware Mississippi South Carolina
District of Columbia Missouri South Dakota
Florida Montana Tennessee
Hawaii Nebraska Utah
Idaho Nevada Virginia
Illinois New Hampshire Washington
Indiana New Jersey Wisconsin
Iowa New Mexico Wyoming
Kansas North Dakota
B. JURISDICTIONS WHERE POLICY FORMS ARE TO BE SUBMITTED WHEN CANADA LIFE IS
LICENSED
California Ohio
Georgia Pennsylvania
Louisiana Texas
Maine Vermont
Massachusetts West Virginia
North Carolina U.S. Virgin Islands
30
SCHEDULE 2.01A TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY ("ALLMERICA FINANCIAL")
AND CANADA LIFE INSURANCE COMPANY OF AMERICA("CANADA LIFE"),
EFFECTIVE ____________ .
INVENTORY OF SERVICES AND FUNCTIONS
REGISTERED REPRESENTATIVE LICENSING/SELLING FUNCTIONS...............................Canada Life
PRODUCT MARKETING ILLUSTRATION SUPPORT FUNCTONS.....................................Canada Life
RECEIPT OF INITIAL APPLICATION FOR BUSINESS AND INITIAL PREMIUM.............Allmerica Financial
BUSINESS SUITABILITY................................................................Canada Life
UNDERWRITING REVIEW/APPROVAL................................................Allmerica Financial
PROCESS INCOMPLETES/DECLINES................................................Allmerica Financial
POLICY ISSUE................................................................Allmerica Financial
POLICY PRINTING.............................................................Allmerica Financial
POLICY MAILING..............................................................Allmerica Financial
(POLICY LEVEL) FUND ALLOCATION..............................................Allmerica Financial
INITIAL PREMIUM COLLECTION..................................................Allmerica Financial
FREE LOOK REFUNDS/NOT TAKENS................................................Allmerica Financial
COMMISSION PROCESSING/PAYMENT.......................................................Canada Life
BILLING (ANNUAL, SEMI ANNUAL, QUARTERLY)....................................Allmerica Financial
COLLECTIONS.................................................................Allmerica Financial
LOCK BOX MANAGEMENT.........................................................Allmerica Financial
MONTHLY AUTOMATIC PREMIUM...................................................Allmerica Financial
FUND TRANSFER/REALLOCATIONS.................................................Allmerica Financial
800-LINE TELEPHONE CUSTOMER SERVICES........................................Allmerica Financial
POLICY HISTORY REQUESTS.....................................................Allmerica Financial
BENEFICIARY AND OWNER CHANGES...............................................Allmerica Financial
CUSTOMER CONFIRMATIONS (FINANCIAL TRANSACTIONS).............................Allmerica Financial
31
POLICY CHANGES..............................................................Allmerica Financial
INVENTORY OF SERVICES AND FUNCTIONS(Continued)
-----------------------------------
ADDRESS CHANGES.............................................................Allmerica Financial
LOANS/PARTIAL WITHDRAWALS...................................................Allmerica Financial
1035 EXCHANGES..............................................................Allmerica Financial
SURRENDERS..................................................................Allmerica Financial
CONSERVATION........................................................................Canada Life
WRITTEN CORRESPONDENCE
PRE SALE (i.e. BEFORE APPLICATION SIGNED).....................................Canada Life
POST SALE.............................................................Allmerica Financial
DEATH AND OTHER POLICY CLAIMS
NOTIFICATION..........................................................Allmerica Financial
SYSTEM PROCESSING.....................................................Allmerica Financial
INVESTIGATION/REVIEW..................................................Allmerica Financial
SETTLEMENT OPTIONS..................................................................Canada Life
ANNUAL STATEMENTS...........................................................Allmerica Financial
INSURANCE ACCOUNTING (i.e., POLICY GAAP AND STATUTORY ACCOUNTING)...........Allmerica Financial*
TAX WITHHOLDING AND INFORMATION REPORTING...................................Allmerica Financial
EXCESS REINSURANCE ADMINISTRATION...........................................Allmerica Financial
* Initially Allmerica Financial's function. This function does not include
Canadian valuation (PPM) accounting The Policy GAAP accounting function will be
assumed by Canada Life no later than January 1, 2002.
32
SCHEDULE 2.01B TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY ("ALLMERICA FINANCIAL")
AND CANADA LIFE INSURANCE COMPANY OF AMERICA("CANADA LIFE"),
EFFECTIVE ____________ .
POLICY SERVICES - PROJECT SCHEDULE OF EVENTS
--------------------------------------------
DEVELOPMENT OF DETAILED BUSINESS SPECIFICATIONS.......................................................February 16, 2000
ALLMERICA FINANCIAL AND CANADA LIFE
INTERFACE SYSTEMS PROGRAMMING AND SYSTEM TESTING...................... .....Anticipated to be completed by July 1, 2000
BUSINESS ACCEPTANCE AND MODEL OFFICE TESTING................................Anticipated to be completed by July 1, 2000
IMPLEMENTATION OF OPERATIONAL PHASE.........................................Anticipated to be completed by July 1, 2000
33
SCHEDULE 2.01C TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY AND CANADA LIFE
INSURANCE COMPANY OF AMERICA, EFFECTIVE ____________ .
SERVICE STANDARDS
-----------------
Service Standard
-------- --------
A. Underwriting
------------
Initial Underwriting Review....................................3 Business Days
Final Action...................................................2 Business Days
B. Policy Administration
---------------------
Premium Payments Applied.......................................98% Applied Within 1 Business Day
Fund Transfers/Reallocations Processed.........................98% Applied Within 1 Business Day
New Business*..................................................98% Issued Within 1 Business Day
1035 Exchanges*................................................98% Mailed Within 3 Business Days
Loans/Partial Withdrawals......................................98% Processed Within 2 Business Days
Policy Changes(i.e. increases, decreases
reinstatements)*..............................................98% Processed Within 5 Business Days
Policy Surrenders..............................................98% Processed Within 5 Business Days
Address Changes................................................95% Processed Within 5 Business Days
Beneficiary and Owner Changes..................................95% Processed Within 5 Business Days
C. Customer Service
-----------------
Average Speed to Answer.......................................80% of calls answered within 20 Seconds
Return Calls ...........................................................Within 3 Hours or as Promised
Correspondence..............................Letter to Inquirer within 5 Business Days or as Promised
Complaint Handling..................................Acknowledge within 1 Business Day, Final Response
to be sent within a mutually acceptable time
frame intended to meet all state regulatory
requirements
D. Death and Other Policy Claims.............. Policy claims will be processed within mutually acceptable
----------------------------- time frames intended to meet all state regulatory
requirements
*Measured from the date of Policy underwriting approval
Note: As provided in Subsection 2.01(b), Allmerica Financial reserves the right
to modify the above Service Standards. Provided, however, that at no time shall
the Service Standards for the Policy Services described in this Agreement be
less rigorous than the service standards that are then applicable to the
servicing of Allmerica Financial's own variable life insurance business
34
SCHEDULE 3.01 TO PRODUCT DEVELOPMENT AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY AND CANADA LIFE
INSURANCE COMPANY OF AMERICA, EFFECTIVE ____________ .
1. LifeCAD MP (Version 4.0) This system is the property of NaviSys and is not
currently licensed to Allmerica Financial
2. Variable Product Administration System - Licensed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
3. Triton Valuation System - Licensed by Price Waterhouse
4. R(2) Reinsurance System - Licensed by The Actuarial Network
5. Life Underwriting System - Licensed by Lincoln National
6. Asset Allocator - Allmerica Financial**
7. PeopleSoft General Ledger - Allmerica Financial
** Software that Allmerica Financial is developing specifically for
Canada Life. Canada Life understands and agrees that the source codes
for this software are proprietary to Allmerica Financial and will not
be given to Canada Life under any circumstances.