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TRANSITION AND INTEGRATION SERVICES AGREEMENT
by and between
Security Life of Denver Insurance Company
and
Scottish Re (US), Inc.
Dated as of December 31, 2004
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TABLE OF CONTENTS
Section 1.
Definitions.......................................................1
Section 2. Services to be
Provided...........................................3
Section 3. Standard of Services, Review
Procedures and Penalties.............9
Section 4.
Subcontracting...................................................11
Section 5. Consideration for Services;
Fee Dispute Resolution...............12
Section 6. Term and
Termination.............................................14
Section 7. Transition Project
Management....................................18
Section 8. Relationships Among the
Parties..................................18
Section 9. Compliance With and Changes
to Laws and Policies.................18
Section 10. Inability to Perform Services;
Technology Changes................19
Section 11. Covenants and Other
Agreements...................................20
Section 12. Dispute
Resolution...............................................21
Section 13.
Indemnification..................................................22
Section 14. Ownership, Data and
Security.....................................22
Section 15. Force
Majeure....................................................23
Section 16.
Survival.........................................................25
Section 17.
Notices..........................................................25
Section 18. Binding Effect;
Assignment.......................................26
Section 19. Execution in
Counterparts........................................26
Section 20. Waivers and
Amendments...........................................26
Section 21. Exhibits;
Schedules..............................................26
Section 22.
Arbitration......................................................26
Section 23. Governing Law and
Jurisdiction...................................28
Section 24. Sole
Agreement...................................................28
Section 25. Waiver of Jury Trial; Multiplied
and Punitive Damages............28
Section 26.
Confidentiality..................................................28
Section 27.
Captions.........................................................30
Section 28.
Severability.....................................................30
Section 29. No Third Party
Beneficiaries.....................................30
Section 30. Equitable
Rights.................................................30
Schedules
Schedule 2(a)(i) Scheduled
Services
Schedule 2(e) Transition
Employees
Schedule 2(g)
Retained Employees, Retained Contractors & Designated
Services
Schedule 4(a)
Current Subcontracted Services and Current Subcontractors
Schedule 5(a)(i) Cost of
Transition Employees
Schedule 5(a)(iii) Hourly Rates for IT
Services
Schedule 5(a)(iv) Loaded Costs for
non-IT Transition Services
Schedule 5(a)(v) Cost of
Retained Employees and Retained Contractors
Schedule 5(a)(vi) Estimated Direct
Costs
Schedule 7(a)
Transition Project Managers
Schedule 9(c)(i) Privacy
Policies
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This TRANSITION SERVICES AND INTEGRATION AGREEMENT (this
"Agreement"),
dated as of December 31, 2004 (the
"Effective Date"), is entered into by and
among Security Life of Denver Insurance
Company, a Colorado corporation
(collectively with any of its Affiliates
that may provide services hereunder,
"Provider"), and Scottish Re (US), Inc., a
Delaware corporation ("Recipient")
for itself and for the benefit of Purchaser
Affiliates (collectively, the
"Recipient Transition Group").
W I T N E S S E T H:
WHEREAS, Provider and Security Life of Denver International
Limited,
on the one hand, and Scottish Re Group
Limited and Recipient, on the other hand,
have entered into that certain Asset
Purchase Agreement, dated October 17, 2004
(hereinafter, the "Asset Purchase
Agreement"); and
WHEREAS, the execution and delivery of this Agreement is a
condition
precedent to the parties' obligation to
consummate the transactions contemplated
by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions
and
agreements set forth in this Agreement, and
other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged, the
parties hereby agree as follows:
Section 1. Definitions. All capitalized terms used but not
otherwise
defined herein shall have the meanings
ascribed to them in the Asset Purchase
Agreement. With respect to all defined
terms, whenever the singular term is
used, the same shall include the plural,
and whenever the plural is used, the
same shall include the singular, where
appropriate.
"Added Scheduled
Services" shall have the meaning set forth in Section
2(a)(i).
"Asset Purchase Agreement" shall have the meaning set forth in
the
Recitals.
"Confidential Information" shall have the meaning set forth in
Section
26.
"Current Subcontracted Services" shall have the meaning set forth
in
Section 4(a).
"Current Subcontractor" shall have the meaning set forth in
Section
4(a).
"Designated Services" shall have the meaning set forth in
Section
2(g).
"Force Majeure Events" shall have the meaning set forth in
Section
15(b).
"IT Services" means all Transition Services relating to
information
technology.
"Integration Services" means such services (i) as are required
to
transition the Business to Recipient, which
may include, without limitation,
knowledge transfer, process migration, data
conversion, parallel testing and
special project support and (ii) as
mutually agreed-upon by the parties pursuant
to Section 2(a)(iii) hereof.
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"New Subcontractor" shall have the meaning set forth in Section
4(b).
"Other Party" shall have the meaning set forth in Section
6(c)(i).
"Privacy Policy" means the Provider Privacy Policy or the
Recipient
Privacy Policy, as applicable.
"Provider Indemnified Parties" shall have the meaning set forth
in
Section 13(b).
"Provider Privacy Policy" means the privacy policies of
Provider,
copies of which have been provided to
Recipient.
"Recipient Indemnified Parties" shall have the meaning set forth
in
Section 13(a).
"Recipient Privacy Policy" means the privacy policies of
Recipient,
copies of which have been provided to
Provider.
"Retained Contractor Retention Period" shall have the meaning
set
forth in Section 2(g).
"Retained Contractors" shall have the meaning set forth in
Section
2(g).
"Retained Employee Retention Period" shall have the meaning set
forth
in Section 2(g).
"Retained Employees" shall have the meaning set forth in Section
2(g).
"Retention Termination Date" shall have the meaning set forth
in
Section 2(g).
"Scheduled Services" means each service listed on Schedule 2(a)(i)
of
this Agreement (as such schedule may be
revised from time to time upon mutual
agreement of the parties in accordance with
Section 2.1(a)(i)).
"Service Shortfall" shall have the meaning set forth in Section
3(d).
"Shortfall
Notice" shall have the meaning set forth in Section 3(d).
"Special Project" means any service that Recipient requests
Provider
to provide and Provider has agreed in
writing to provide pursuant to Section
2(b) hereof, which service does not fall
within (i) the scope of the Transition
Services identified in Section 2(a) or (ii)
the scope of the Designated Services
identified pursuant to Section 2(g).
"Subcontractor" means any Current Subcontractor (as defined in
and
permitted by Section 4(a) hereof) and/or
any New Subcontractor (as defined in
and permitted by Section 4(b) hereof).
"Taxes" shall have the meaning set forth in Section 5(e).
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"Technology Change" means a material change to the technology
infrastructure or applications used to
provide any Transition Service, which
change has a material adverse impact on any
Transition Service or on another
party's technology infrastructure or
applications.
"Termination Assistance" shall have the meaning set forth in
Section
6(e).
"Third Party Vendors" means those third party vendors with
which
Provider has in effect as of the Effective
Date contractual arrangements to
provide general services that may relate to
the Transition Services. For the
avoidance of doubt, no Third Party Vendors
shall be deemed to be Subcontractors
hereunder.
"Third Party Vendor Services" means the reasonable cooperation
by
Provider described in Section 2(a)(ii).
"Transition Assistance" shall have the meaning set forth in
Section
6(e).
"Transition Employees" means the employees or independent
contractors
of Provider or an Affiliate of Provider
identified on Schedule 2(e) (any
independent contractors are identified as
such on Schedule 2(e)) who will serve
Provider or an Affiliate of Provider
full-time in the provision of the
Transition Services (each such employee or
independent contract is individually
referred to herein as a "Transition
Employee"). Transition Employees shall not
include any Retained Employees or Retained
Contractors.
"Transition Plan" shall have the meaning set forth in Section
6(e).
"Transition Project Managers" means the two individuals, one
designated by Provider and one designated
by Recipient, who are primarily
responsible for administering this
Agreement as described in Section 7.
"Transition Services" means the Scheduled Services, the Added
Scheduled Services, the Integration
Services, the Third Party Vendor Services
and Transition Assistance, and, for the
avoidance of doubt, does not include any
Designated Services.
"TSA Monthly Invoice" means an invoice setting forth the fees
payable
by Recipient for all services provided
hereunder, which invoice shall be
delivered pursuant to Section 5(c) of this
Agreement.
"TSA Records" shall have the meaning set forth in Section 5(f).
"Unauthorized Access" shall have the meaning set forth in Section
26.
Section 2. Services to
be Provided.
(a) Transition Services.
(i) Scheduled Services. Subject to Recipient's obligations
pursuant to
Section 2(h), and for the period of time described in Section 6
hereof, Provider
shall provide or cause to be provided in accordance with
the terms
hereof, to Recipient
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Transition Group
all Scheduled Services. In addition, for so long as the
Transition
Services are being provided hereunder, Provider shall provide
Recipient with
reasonable access to all available service operating manuals
and other
relevant and existing materials reasonably required to use and
receive such
Transition Services and copies of any supplements or updates
to such manuals
and materials. During the period of time beginning on the
Effective Date
and ending sixty (60) days thereafter, Schedule 2(a)(i) may
be amended from
time to time upon the written request of Recipient to add
as "Scheduled
Services" any services that were being provided to the
Business
immediately prior to the Effective Date which services (A) were
not previously
identified in a writing (including electronic mail messages)
between the
parties as services being provided to the Business as of the
Closing Date and
(B) can, using commercially reasonable efforts, be
provided to
Recipient by Provider or its Affiliates (such requested
services that
meet the criteria set forth in clauses (A) and (B) above are
collectively
referred to herein as the "Added Scheduled Services"). For the
avoidance of
doubt, Added Scheduled Services shall be considered Scheduled
Services
hereunder. Provider shall have ten (10) Business Days from the
date of receipt
of a valid request to provide an Added Scheduled Service to
commence the
provision of such service in accordance with the terms and
conditions of
this Agreement. At such time, Schedule 2(a)(i) shall be
amended to
reflect the Added Scheduled Service, and the amended Schedule
2(a)(i) shall be
initialed by the Transition Project Manager of each party
and attached to
this Agreement.
(ii) Third Party Vendor Services. Upon Recipient's reasonable
written request,
Provider shall cooperate with Recipient in Recipient's
negotiation for
a direct agreement with any Third Party Vendor.
(iii) Integration Services. As soon as practicable following
the
Effective Date,
the parties shall use commercially reasonable efforts to
agree upon and
document the terms applicable to the delivery of the
Integration
Services, including the services descriptions, pricing,
specific
milestones and deadlines. If Provider and Recipient fail to
agree
upon the terms
applicable to the delivery of the Integration Services
within ninety
(90) days after the Effective Date, the parties will resolve
their dispute
concerning the terms applicable to the delivery of such
Integration Services
in accordance with Section 12(a). Any such dispute
shall be
resolved taking into account (A) the nature of this Agreement,
(B)
Recipient's
business needs and obligations under this Agreement and the
Administrative
Services Agreement and (C) Provider's capacity limitations
in light of its
need to support its ongoing business operations and to
provide other
Transition Services hereunder.
(iv) Failure to Provide Services or Meet Applicable Standard
Levels. To the
extent that Provider fails to provide or fails to timely
provide any
Transition Service as required under this Agreement or fails to
meet the
applicable standard of service for any Transition Service as
set
forth herein,
unless such failure was caused primarily by the act or
omission of
Recipient Transition Group, and such failure is the primary
cause of
Recipient's inability to provide any services in accordance
with
its obligations
under the Administrative Services Agreement, Recipient
shall have no
liability under the Administrative Services Agreement for its
failure to meet
its obligations to provide such affected Administrative
Services until
such time as the earlier
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of the
following: (A) Provider cures such failure hereunder to the
extent
required to
enable Recipient to resume providing such services in
accordance with
its obligations under the Administrative Services
Agreement, or (B)
Recipient, using commercially reasonable efforts, finds
an alternative
source for such Transition Service or a work-around
sufficient to
enable Recipient to resume providing such services in
accordance with
its obligations under the Administrative Services
Agreement, the
incremental costs associated with which shall be reimbursed
by Provider.
(b) Special Projects. If Recipient requests in writing that
Provider
provide a Special Project, which request
shall include a description of the
service(s) required to be performed in
conjunction with such Special Project,
Provider shall (i) within five (5) Business
Days after the date of receipt of
the request provide Recipient with written
notice of receipt of the request and
(ii) within ten (10) Business Days after
the date of receipt of such request,
provide Recipient with either (A) a written
proposal for such Special Project,
giving reasonable priority to other demands
on Provider's resources under this
Agreement and otherwise, or (B) written
notice of its decision not to accept
such Special Project, in which case
Provider shall have no further obligation
under this Agreement with respect to such
Special Project, it being understood
that Provider shall not be required to
accept any requested Special Project and
provide a written proposal therefor unless
(x) with respect to Special Projects
that constitute IT Services, Provider is
the only reasonably-available source of
information or expertise needed to
undertake such Special Project, and such
Special Project can be completed by
Provider using commercially reasonable
efforts and without any adverse impact on
the Transition Services being provided
or on Provider's or its Affiliates' other
businesses, taking into account
resource limitations and the other demands
on the time of the individuals needed
to undertake such Special Project in
conjunction with the Transition Services
and Provider's and its Affiliates' other
businesses, and (y) with respect to any
other Special Projects, Provider determines
in good faith that it can perform
such Special Project using commercially
reasonable efforts using Transition
Employees employed at the time Provider
receives the request to perform the
Special Project and without any adverse
impact on the Transition Services being
provided or on Provider's or its
Affiliates' other businesses. For purposes of
determining whether Provider is the only
reasonably-available source of
information or expertise under clause (x)
of the foregoing sentence, it is
specifically acknowledged and agreed that
Provider will not be deemed to have
access to or use of the Retained Employees
or Retained Contractors. Each written
proposal for a Special Project submitted by
Provider pursuant to clause (ii)(A)
above shall refer to the description
provided by Recipient, include the
estimated time and price of performing the
Special Project (including any
third-party consents necessary to perform
the Special Project), and include any
potential impact on then-existing
Transition Services. If the parties agree on
such proposal, Provider shall perform such
Special Project in accordance with
the terms of this Agreement. If the parties
do not agree on such proposal within
fifteen (15) Business Days after the date
it is delivered to Recipient, Provider
shall have no further obligation under this
Agreement with respect to such
Special Project. All work product created
or delivered by Provider (alone or
with others) pursuant to any Special
Project, together with associated
intellectual property rights, shall, unless
otherwise indicated in an applicable
Special Project proposal, be owned by
Recipient, except that Recipient shall
acquire no right thereby in confidential
information or trademarks, service
marks, or logos of Provider or its
Affiliates. To the extent that Provider fails
to provide any Special Project required to
be provided by Provider under this
Section 2(b), unless such failure was
caused primarily by the act or omission of
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Recipient Transition Group, and such
failure is the primary cause of Recipient's
inability to provide any services in
accordance with its obligations under the
Administrative Services Agreement,
Recipient shall have no liability under the
Administrative Services Agreement for its
failure to meet its obligations to
provide such affected Administrative
Services until such time as the earlier of
the following: (A) Provider cures such
failure hereunder to the extent required
to enable Recipient to resume providing
such services in accordance with its
obligations under the Administrative
Services Agreement, or (B) Recipient, using
commercially reasonable efforts, finds an
alternative source for such Special
Project or a work-around sufficient to
enable Recipient to resume providing such
services in accordance with its obligations
under the Administrative Services
Agreement, the incremental costs associated
with which shall be reimbursed by
Provider.
(c) No Obligation to Provide Other Services. Except for the
Transition
Services, the Designated Services (as
defined in Section 2(g) below), and any
Special Projects agreed upon in accordance
with Section 2(b) above, Provider
shall have no obligation to provide any
other services to Recipient pursuant to
this Agreement.
(d) Non-Exclusivity. Nothing herein shall prevent Recipient
Transition
Group during the term of this Agreement
from obtaining any of the Transition
Services or Designated Services from any
other Person or from providing any
Transition Service or Designated Service to
itself using its own facilities and
employees; provided, however, that the
foregoing shall not excuse Recipient from
complying with the provisions regarding
notice of termination set forth in
Section 6(b) of this Agreement or from its
payment obligations with respect to
Transition Services previously
rendered.
(e) Transition Employees. The parties acknowledge and agree that
the
Transition Employees are employees or
independent contractors of the particular
Seller or Affiliate of Sellers for whom
such employee works, and not employees
of Recipient. In all cases, Provider
reserves the right to give direction and
make final decisions with regard to any and
all work assignments and employment
matters. In the event of any question or
conflict, the instruction of Provider
shall be binding. During the term of this
Agreement, Provider will use
commercially reasonable efforts to (i)
retain the Transition Employees to the
extent such employees continue to be
required to perform Transition Services and
(ii) manage the number of Transition
Employees so as to be commensurate with the
level of services being provided at any
time. On or about the first Business Day
of each calendar month, the Transition
Project Managers of each party shall meet
(in person or telephonically) to discuss
staffing levels, and shall consider in
good faith each other's suggestions with
respect thereto. Provider will give
Recipient thirty (30) days notice prior to
terminating any Transition Employee,
and Recipient will have the opportunity to
request that such Transition Employee
be retained for a longer period of time
(subject to the payment obligations
described in Section 6(b) below), in which
case Provider will use commercially
reasonable efforts to retain such
Transition Employee or replace such Transition
Employee with another employee of
appropriate skill and knowledge; provided,
that in no event will Provider be obligated
to retain any Transition Employee
beyond the date that is eighteen (18)
months after the Effective Date, unless
the transition period is extended beyond
such date by mutual agreement of the
parties in accordance with Section 6(a)
hereof, in which case Provider will use
commercially reasonable efforts to retain
such Transition Employee or replace
such Transition Employee with another
employee of appropriate skill and
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knowledge. The inability to retain any
particular Transition Employee(s) shall
not excuse Provider from its obligation to
provide the Transition Services
hereunder. Recipient may, in its reasonable
discretion, provide notice to
Provider of its determination that the
number of Transition Employees performing
a particular Transition Service is in
excess of that reasonably required to
perform such Transition Service then being
performed or that such Transition
Service is no longer required and that,
therefore, one or more Transition
Employees should be terminated. Within five
(5) Business Days of such notice,
Provider shall advise Recipient in writing
(to include electronic mail
correspondence) of the impact, if any, that
the termination of such Transition
Employee(s) would have on the Transition
Services and Special Projects, if any,
then being provided and any impact on the
standard of services therefor.
Recipient will thereafter notify Provider
of its election to either (A) have
Provider terminate one or more Transition
Employees or (B) have Provider
continue to retain one or more Transition
Employees. If Recipient notifies
Provider that it elects to have one or more
Transition Employees terminated, (x)
Recipient shall have no obligation to pay
for such number of Transition
Employees from and after the date that is
thirty (30) days after the date of
Recipient's notification to Provider and
(y) from and after the date that is
thirty (30) after the date of Recipient's
notification to Provider, Provider
shall have no liability under this
Agreement for any adverse impact on the
Transition Services and Special Projects
(including but not limited to failure
to provide or timely provide or perform the
same and failure to meet required
service levels), which adverse impact was
described to Recipient in writing
(including by electronic mail
correspondence) prior to such termination. In no
event shall any such adverse impact on the
Transition Services that was
described to Recipient in writing
(including by electronic mail correspondence),
including but not limited to failure to
provide or timely provide or perform the
same and failure to meet required service
levels, resulting directly or
indirectly from the termination of one or
more Transition Employees at
Recipient's request or direction excuse
Recipient from the performance of any of
its duties or obligations under the
Administrative Services Agreement.
(f) No Requirements. Nothing in this Agreement requires
Recipient
Transition Group (or any of its successors
and assigns) to request any
particular quantity or level of any
Transition Service provided under this
Agreement.
(g) Retained Employees and Retained Contractors.
(i) Retained Employees. In lieu of utilizing the Retained
Employees (as
defined below) to provide certain Scheduled Services,
Provider agrees
to second the employees listed on Schedule 2(g) (the
"Retained
Employees" and, each, a "Retained Employee") to Recipient to
perform such
services as may be required by Recipient relating to the
projects and
objectives described on Schedule 2(g) (collectively, the
"Designated
Services"). During the Retained Employee Retention Period (as
defined below),
Provider agrees to retain the Retained Employees as
Provider
employees, and Provider will use reasonable efforts consistent
with past
practice to preserve positive employer/employee relationships
with the
Retained Employees but will not be required to pay any
retention
bonuses other
than those reflected on Schedule 5(a)(v) or otherwise take
any actions
beyond what would be taken to preserve employer/employee
relationships
with employees who are not Retained Employees. Provider is
not required to
retain any Retained Employee who (A) voluntarily resigns
from employment
with Provider, (B) is terminated by Provider for gross or
willful
misconduct that causes
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demonstrable and
serious injury to Provider or has an adverse impact on
Provider's
standing and reputation, (C) is terminated by Provider for
materially and
continually failing to perform his or her duties and
responsibilities, or (D) becomes unable to perform the essential
functions
of his or her
position due to a disability that cannot be reasonably
accommodated.
For purposes of this Agreement, the "Retained Employee
Retention
Period" for each Retained Employee will begin on January 1,
2005
and will
continue until June 30, 2006 or the Retention Termination Date
(as
defined below)
for such Retained Employee, whichever occurs earlier. During
the Retained
Employee Retention Period, Provider will assign the Retained
Employees to the
provision of the Designated Services. Recipient may, in
its reasonable
discretion, provide notice to Provider of its determination
that the number
of Retained Employees performing the Designated Services is
in excess of
that reasonably required to perform such Designated Services
then being
performed or that certain Designated Services are no longer
required and
that, therefore, one or more specific Retained Employees
should be
removed from the roster of Retained Employees. From and after
the
date that is
thirty (30) days after the date of Recipient's notification to
Provider that
one or more Retained Employees should be removed from the
roster of
Retained Employees (the "Retention Termination Date"),
Recipient
shall have no
obligation to pay for the Retained Employees so identified
and Provider
shall have no liability under this Agreement to second or
otherwise make
such Retained Employees available to Recipient pursuant to
this Section
2(g). Notwithstanding the foregoing, it is the intent of the
Parties that
throughout the Retained Employee Retention Period, (x) each
Retained
Employee engaged hereunder shall continue to be employed solely
by
Provider,
continue to report to Provider for purposes of payroll,
employee
benefits and
other administrative matters, and continue to be subject to
Provider's
employment policies and procedures; (y) Recipient shall have no
authority to
hire, fire, discipline or otherwise affect the employment
relationship of
the Retained Employees with Provider, and will not in any
case be
considered to be an employer or joint employer of such Retained
Employees or to
assume any responsibilities or obligations of such an
employer; and
(z) Provider will continue to be fully responsible with
regard to
worker's compensation, unemployment compensation, payroll tax,
severance, and
related matters with respect to all Retained Employees. The
foregoing shall
in no way limit Recipient's obligations under Section 5 and
Section 13(b)
with respect to the Retained Employees. The provisions of
this Section 2(g) shall in no way
affect Provider's responsibility to
provide or cause
to be provided the Transition Services.
(ii) Retained Contractors. During the Retained Contractor
Retention Period
(as defined below), Provider agrees to make those
independent
contractors listed on Schedule 2(g) (the "Retained Contractors"
and, each, a
"Retained Contractor") available to Recipient full-time to
perform, at
Recipient's direction, the Designated Services. During the
Retained
Contractor Retention Period, Provider will use commercially
reasonable
efforts to retain the Retained Contractors to the extent such
contractors
continue to be required to perform Designated Services. Each of
Recipient and
Provider will cooperate and use commercially reasonable
efforts either
to (A) assign (and obtain, as necessary, the consent of each
Retained
Contractor to the assignment of) each contract between Provider
or
its Affiliate
and any of the Retained Contractors to Recipient or (B)
negotiate a
direct agreement between Recipient and each of the Retained
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Contractors on
substantially the same or better terms as those currently in
effect under the
applicable contract between Provider or its Affiliate and
such Retained
Contractor, as promptly as possible after the Closing Date.
The "Retained
Contractor Retention Period" for each Retained Contractors
will begin on
January 1, 2005 and will continue until the earliest to occur
of (x) June 30,
2006, (y) the date on which the contract between Provider
or its Affiliate
and such Retained Contractor is assigned to Recipient or
Recipient enters
into a direct agreement with such Retained Contractor, or
(z) the date
that is thirty (30) days following the date Provider receives
written
notification from Recipient that such Retained Contractor should
be
removed from the
roster of Retained Contractors. All benefits that inure to
Provider or its
Affiliate under Provider's or such Affiliate's contractual
arrangements
with any Retained Contractor shall be passed through to
Recipient to the
extent such benefits relate to the Designated Services
provided by such
Retained Contractor.
(h) Reasonable Assistance. As necessary in connection with the
Transition Services and any agreed-upon
Special Projects, and provided that
Provider complies with Recipient's security
procedures and privacy policies as
then in effect, Recipient shall provide
Provider with any reasonable assistance,
including providing to Provider such
information, data, access to premises,
management decisions, access to and
reasonable cooperation of any Transferred
Employees, Retained Employees and Retained
Contractors with particular skills or
expertise, approvals and acceptances, as
may be reasonably required to permit
Provider to provide the Transition
Services, Designated Services and any
agreed-upon Special Projects hereunder.
(i) Recipient Employees. It is expressly understood that, except
as
otherwise provided herein, any services
rendered by Recipient employees after
the Effective Date shall not be considered
Transition Services, and Provider
shall not be responsible for providing the
same.
(j) Access. As necessary in connection with the Transition
Services,
the Designated Services, and any
agreed-upon Special Projects, and provided that
Recipient complies with Provider's security
procedures and privacy policies as
then in effect, Provider shall give
Recipient reasonable access to the servers
and other information technology systems
used to provide the Transition
Services, the Designated Services, and any
agreed-upon Special Projects; all
requests for such access shall be made in
advance by Recipient's Transition
Project Manager to Provider's Transition
Project Manager. Nothing in this
Agreement shall require Provider to provide
any third party with access to its
systems, its computing environment or its
confidential information other than on
commercially reasonable terms regarding
privacy, security, confidentiality and
timing.
Section 3. Standard of Services, Review Procedures and
Penalties.
(a) Standard of Services for Transition Services. Provider agrees
that
it shall provide the Transition Services
or, if Provider is utilizing a
Subcontractor (as permitted under Section 4
hereof), Provider shall cause such
Subcontractor to provide such Transition
Services, at least (i) with respect to
IT Services, at the same service levels at
which such services were performed
within or for the Business immediately
prior to the Effective Date or, with
respect to any other Transition Services,
using at least the same standard of
care that Provider or
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a Current Subcontractor used immediately
prior to the Effective Date in
performing such services within or for the
Business, (ii) in substantial
compliance with Applicable Law, and (iii)
in compliance with industry standards.
Provider agrees (w) to provide Recipient
with documentation describing with
reasonable specificity, and pass through to
Recipient Transition Group, any
Current Subcontractor obligations to meet
service levels for Current
Subcontracted Services, and (x) to enforce
all contractual provisions with such
Current Subcontractors with respect to
their obligations to meet such service
levels or otherwise ensure that all
applicable service level standards are met.
Provider agrees (y) to provide Recipient
with documentation describing with
reasonable specificity, and to pass through
to Recipient Transition Group, any
New Subcontractor obligations to meet
service levels with respect to Transition
Services to be provided by New
Subcontractors (as permitted under Section 4
hereof), if any, and (z) to enforce all
contractual provisions with such New
Subcontractors with respect to their
obligations to meet such service levels or
otherwise ensure that all applicable
service level standards are met. As of the
Effective Date, IBM is the only Current
Subcontractor that is obligated to meet
service levels for Current Subcontracted
Services, and a true and correct copy
of such service level obligations
applicable to the Current Subcontracted
Services provided by IBM has been provided
to Recipient.
(b) Change in IT Services. Provider reserves the right to make
any
changes to (i) the manner in which the IT
Services are provided and (ii) the
location from which the IT Services are
provided, including any changes to
personnel involved in the provision of such
IT Services, provided that Provider
shall not, without Recipient's prior
written consent, such consent not to be
unreasonably withheld, thereby cause any
adverse change in service levels
required hereunder or functionality being
supported, or result in any additional
costs to Recipient.
(c) Monthly Meeting. For the first twelve (12) weeks after the
Effective Date, the Transition Project
Managers of each party shall meet at
least once weekly, or more frequently if
mutually agreed upon, (in person or
telephonically) to discuss the status of
the transition, manage open issues,
discuss any planned termination dates for
particular Transition Services, and
review service levels achieved and missed
in the previous month, to the extent
such information is available, as well as
non-achievement of targets and
corrective actions taken or planned.
Thereafter, such meetings shall be held (in
person or telephonically) on at least a
monthly basis, or more frequently if
mutually agreed upon. Once per month,
during the first twelve (12) weeks after
the Effective Date and thereafter, in
advance of each such monthly meeting,
Provider's Transition Project Manager shall
provide to Recipient's Project
Manager a written report summarizing all
available current information on
compliance with and deviation from the
service levels and technology management
standards as are applicable in accordance
with the provisions of Section 3(a).
(d) Failure to Meet Standards for Services. If Recipient
provides
Provider with written notice ("Shortfall
Notice") of any failure to meet the
standards for Transition Services required
by Section 3(a) hereof ("Service
Shortfall"), as determined by Recipient in
good faith, Provider shall rectify
such failure as soon as possible using
commercially reasonable efforts. Provider
shall be responsible for all internal and
out-of-pocket costs incurred by
Recipient in curing the Service Shortfall.
In addition, if such Service
Shortfall is not cured (i) for particular
Transition Services provided by IBM,
within the time frames required by the
service
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level obligations of IBM described in the
last sentence of Section 3(a) above or
(ii) for any other Transition Service,
within the cure window for such
Transition Service as set forth on Schedule
2(a)(i), if any, or, if no cure
window is set forth on Schedule 2(a)(i),
within a commercially reasonable time,
then Provider shall reimburse Recipient for
all incremental costs incurred by
Recipient in procuring an alternative
provider of such services (in excess of
the costs expected to be incurred by
Recipient hereunder) and confer upon
Recipient the benefit of any applicable
service level credits on amounts paid to
Provider hereunder, which service level
credits shall be determined in
accordance with Provider's contract with
IBM, as it relates to the Transition
Services provided by IBM. Neither Provider
nor its Affiliates will take any
action to cause IBM to treat the Business,
Provider or Security Life of Denver
International Limited any less favorably
under that certain Information
Technology Services Agreement between ING
North America Insurance Corporation
and IBM dated December 16, 2003 than such
entities were treated by IBM
immediately prior to the Effective
Date.
Section 4. Subcontracting.
(a) Current Subcontractors. Provider reserves the right to continue
to
subcontract the performance of those
Transition Services that are being
subcontracted immediately prior to the
Effective Date ("Current Subcontracted
Services") to such subcontractor that is
not an Affiliate of Provider and that
is providing those Current Subcontracted
Services to the Business immediately
prior to the Effective Date ("Current
Subcontractor"), which Current
Subcontracted Services shall be listed on
Schedule 4(a) along with the
applicable Current Subcontractor; provided,
that Provider (i) shall remain
primarily responsible under this Agreement
for any and all obligations with
respect to such Current Subcontracted
Services as are undertaken by such Current
Subcontractor and (ii) shall be responsible
for compliance by any Current
Subcontractor with the terms and conditions
of this Agreement and for any acts
or omissions of such Current Subcontractor,
other than such acts or omissions at
the request or direction of Recipient.
Notwithstanding the foregoing, and except
as set forth in Section 4(d) hereof, under
no circumstances shall Provider have
any liability or responsibility for any act
or omission of any Current
Subcontractor that can be characterized as
a failure to adequately or
appropriately perform any Current
Subcontracted Services if the applicable
Current Subcontracted Services otherwise
meet the service level standards
described in Section 3(a) hereof.
(b) New Subcontractors. Except in connection with a global,
enterprise-wide or multi-business unit
contracting arrangement entered into by
Provider or its Affiliates, or as otherwise
provided in Section 4(a), Provider
may not subcontract the performance of any
obligations of Provider hereunder to
any subcontractor that is not an Affiliate
of Provider without Recipient's prior
written approval, such approval not to be
unreasonably withheld or delayed.
Provider shall notify Recipient if it does
not or cannot secure the right to
disclose to Recipient those portions of a
contract between Provider (or an
Affiliate of Provider) and such
subcontractor relating to service levels and the
remedies for failing to achieve such
service levels for applicable Transition
Service(s), and Provider's failure to
obtain such approval shall be deemed a
reasonable basis for Recipient to withhold
its approval hereunder. Each such
subcontractor approved by Recipient in
accordance herewith shall be referred to
as a "New Subcontractor." Provider (i)
shall remain primarily responsible under
this Agreement for any and all obligations
undertaken by any such New
Subcontractor and (ii) shall be responsible
for compliance by any
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New Subcontractor with the terms and
conditions of this Agreement and for any
acts or omissions of such New
Subcontractor, other than such acts or omissions
at the request or direction of Recipient.
Notwithstanding the foregoing, and
except as set forth in Section 4(d) hereof,
under no circumstances shall
Provider have any liability or
responsibility for any act or omission of any New
Subcontractor that can be characterized as
a failure to adequately or
appropriately perform any New Subcontracted
Services if the applicable New
Subcontracted Services otherwise meet the
service level standards described in
Section 3(a) hereof. Notwithstanding the
foregoing, if Recipient contracts
directly with any subcontractor for the
provision of any Transition Services,
Provider shall have no further obligations
or responsibilities with respect to
such Transition Services, and Provider
shall have no liability whatsoever for
any acts or omissions of such
subcontractor. Provider will provide reasonable
advance notice to Recipient of any new
subcontractor permitted hereunder but not
required to be approved in advance by
Recipient, and any Transition Services
provided by any such new subcontractor will
be provided on the same terms and
conditions as such new subcontractor is
contractually bound to provide any
similar services to Provider and/or its
Affiliates generally. As of the date of
this Agreement, to Provider's Knowledge, no
global, enterprise-wide or
multi-business unit arrangement with a new
subcontractor that would result in
the provision of Transition Services by
such new subcontractor is currently
anticipated.
(c) Right to Disclose. Provider shall use commercially
reasonable
efforts to procure from IBM and each other
Subcontractor the rig
