Exhibit 10.27




 





 


 


BUSINESS SERVICES AGREEMENT


 


dated
               ,
2004


 


between


 


GNA CORPORATION


 


and


 


UNION FIDELITY LIFE INSURANCE COMPANY


 


 


 


CONFIDENTIAL TREATMENT REQUESTED


 


CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL
TREATEMENT HAS BEEN REQUESTED IS OMITTEED AND IS NOTED WITH “**”.


AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED


SEPARATELY WITH THE SECURITIES AND


EXCHANGE COMMISSION.


 




 





 


 

















 


	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  
	
  SECTION 1.01.

  	
  Certain Defined Terms

  	
   

  
	
  SECTION 1.02.

  	
  Other Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  SERVICES AND TERMS

  	
   

  
	
  SECTION 2.01.

  	
  Services; Scope

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  COSTS AND DISBURSEMENTS

  	
   

  
	
  SECTION 3.01.

  	
  Costs and Disbursements.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  STANDARD FOR SERVICE; COMPLIANCE WITH LAWS;
  LIMITED LIABILITY

  	
   

  
	
  SECTION 4.01.

  	
  Standard for Service

  	
   

  
	
  SECTION 4.02.

  	
  Compliance with Laws

  	
   

  
	
  SECTION 4.03.

  	
  Limited Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  DISPUTE RESOLUTION

  	
   

  
	
  SECTION 5.01.

  	
  General Provisions

  	
   

  
	
  SECTION 5.02.

  	
  Consideration by Senior Executives

  	
   

  
	
  SECTION 5.03.

  	
  Mediation

  	
   

  
	
  SECTION 5.04.

  	
  Arbitration

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  TERMINATION

  	
   

  
	
  SECTION 6.01.

  	
  Termination of the Agreement.

  	
   

  
	
  SECTION 6.02.

  	
  Termination with Respect to Any Reinsured
  Business

  	
   

  
	
  SECTION 6.03.

  	
  Effect of Termination

  	
   

  
	
  SECTION 6.04.

  	
  Survival

  	
   

  
	
  SECTION 6.05.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  GENERAL PROVISIONS

  	
   

  
	
  SECTION 7.01.

  	
  Subcontractors

  	
   

  
	
  SECTION 7.02.

  	
  Additional Services; Books and Records.

  	
   

  
	
  SECTION 7.03.

  	
  Taxes.

  	
   

  
	
  SECTION 7.04.

  	
  Confidential Information

  	
   

  
	
  SECTION 7.05.

  	
  Non-disclosure; Privilege; Conflicts of
  Interest

  	
   

  
	
  SECTION 7.06.

  	
  Headings and Schedules

  	
   

  
	
  SECTION 7.07.

  	
  Notices

  	
   

  
	
  SECTION 7.08.

  	
  Successors and Assigns

  	
   

  
	
  SECTION 7.09.

  	
  Execution in Counterpart

  	
   

  
	
  SECTION 7.10.

  	
  Currency

  	
   

  
	
  SECTION 7.11.

  	
  Amendments

  	
   

  
	
  SECTION 7.12.

  	
  Governing Law

  	
   

  
	
  SECTION 7.13.

  	
  Entire Agreement; Severability

  	
   

  
	
  SECTION 7.14.

  	
  No Waiver; Preservation of Remedies

  	
   

  
	
  SECTION 7.15.

  	
  Cooperation

  	
   

  



 

















 


	
  SECTION 7.16.

  	
  Third Party Beneficiary

  	
   

  
	
  SECTION 7.17.

  	
  Negotiated Agreement

  	
   

  
	
  SECTION 7.18.

  	
  Interpretation

  	
   

  
	
  SECTION 7.19.

  	
  No Right to Set-Off

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  A

  	
  Services

  	
   

  
	
  SCHEDULE
  B

  	
  Reinsured
  Businesses

  	
   

  
	
  SCHEDULE
  C

  	
  Service
  Charges

  	
   

  
	
  SCHEDULE D

  	
  Business Associate Addendum

  	
   

  



 


ii

















 


This Business Services Agreement, dated
         , 2004 (this “Agreement”),
is made by and between GNA CORPORATION, a Washington corporation (“GNA”)
and UNION FIDELITY LIFE INSURANCE COMPANY, an insurance company organized under
the laws of the State of Illinois (the “Company”).


 


RECITALS


 


A.                                   WHEREAS, GNA,
General Electric Company, a New York corporation (“General  Electric”),
and certain of its other affiliates entered into a Master Agreement, dated as
of          , 2004 (the “Master
Agreement”); and


 


B.                                     WHEREAS, it is
contemplated by the Master Agreement that after the date hereof GNA will
continue to perform, or GNA will cause its Subsidiaries and Affiliates to
continue to perform, certain administrative and support services with respect
to the Reinsured Businesses (as defined below) in accordance with the terms and
subject to the conditions set forth herein.


 


NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:


 


ARTICLE
I


 


DEFINITIONS


 


SECTION 1.01.      Certain Defined Terms. 
Unless otherwise defined herein, all capitalized terms used herein shall
have the same meaning as in the Master Agreement.


 


The following capitalized terms used in this Agreement
shall have the meanings set forth below:


 


“CPR Arbitration Rules” shall have the meaning
specified in Section 5.04(a)


 


“GEFA” means GE Financial Assurance Holdings,
Inc.


 


“Governmental Authority” means any foreign or
national government, any state or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.


 


“Initial Notice” shall have the meaning
specified in Section 5.02.


 


“Long-Term Care Retroceded Business” means the
long-term care insurance business reinsured by the Company pursuant to those
Reinsurance Agreements identified as numbered items 7 and 8 on Schedule B
hereto.


 


“Reinsurance Agreements” means those
reinsurance agreements relating to the Reinsured Businesses and which are
listed on Schedule B hereto.


 


“Reinsured Businesses” means collectively, the
Long-Term Care Retroceded Business, the Structured Settlement Annuity Reinsured
Business and the Variable Annuity Reinsured Business.


 

















 


“Response” shall have the meaning specified in
Section 5.02.


 


“Structured Settlement Annuity Reinsured Business”
means the structured settlement annuity business reinsured by the Company
pursuant to those Reinsurance Agreements identified as numbered items 1 through
6 on Schedule B hereto.


 


“Termination Date” means the effective date of
any termination, in whole or in part, of this Agreement as provided in Section
6.01.


 


“Variable Annuity Reinsured Business” means the
variable annuity business reinsured by the Company pursuant to those
Reinsurance Agreements identified as numbered items 9 and 10 on Schedule B
hereto.


 


SECTION 1.02.      Other Terms.  For
purposes of this Agreement, the following terms have the meanings set forth in
the sections or agreements indicated.


 




	
  Term

  	
   

  	
  Section

  
	
  Affiliate

  	
   

  	
  Master Agreement

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Closing

  	
   

  	
  Master Agreement

  
	
  Company

  	
   

  	
  Recitals

  
	
  Force Majeure

  	
   

  	
  Master Agreement

  
	
  GE Confidential Information

  	
   

  	
  Master Agreement

  
	
  General Electric

  	
   

  	
  Preamble

  
	
  Genworth Confidential Information

  	
   

  	
  Master Agreement

  
	
  Laws

  	
   

  	
  Master Agreement

  
	
  Master Agreement

  	
   

  	
  Recitals

  
	
  Services

  	
   

  	
  Section 2.01(a)

  
	
  Service Charges

  	
   

  	
  Section 3.01(a)

  
	
  Service Provider

  	
   

  	
  Section 4.03

  
	
  Standard for Services

  	
   

  	
  Section 4.01

  
	
  Subsidiary

  	
   

  	
  Master Agreement

  
	
  Taxes

  	
   

  	
  Section 7.03

  
	
  Third Party Claim

  	
   

  	
  Master Agreement

  






 


ARTICLE
II


 


SERVICES AND TERMS


 


SECTION 2.01.      Services; Scope


 


(a)           During
the period commencing on the date hereof and ending on the Termination Date,
subject to the terms and conditions set forth in this Agreement, GNA shall
perform, or cause its Subsidiaries and Affiliates to perform, with respect to
the Reinsured Businesses the services listed in Schedule A hereto (the “Service(s)”).


 


(b)           The
Services shall include, and the Service Charges reflect charges for, such
maintenance, support, error correction, training, updates and enhancements
normally and


 


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customarily performed by
GNA or its applicable Subsidiaries and Affiliates in connection with providing
such services.


 


(c)           The
Services shall not include any services GNA and its Subsidiaries and Affiliates
performs or causes to be performed pursuant to (i) that certain Transition
Services Agreement, dated as of
         , 2004, by and among
General Electric Company, General Electric Capital Corporation, GEI, Inc.,
GEFAHI, GE Asset Management Incorporated, Genworth Financial, Inc., and GNA or
(ii) the Reinsurance Agreements.


 


ARTICLE
III


 


COSTS AND DISBURSEMENTS


 


SECTION 3.01.      Costs and Disbursements.


 


(a)           As
reimbursement for expenses incurred by GNA and its Subsidiaries and Affiliates
in performing the Services with respect to the Reinsured Businesses, the
Company shall pay to GNA with respect to each calendar month ending after the
Inception Date of each reinsurance agreement listed on Schedule B
hereto, a service charge (the “Service Charges”) in an amount calculated
in accordance with Schedule C hereto, as subsequently adjusted, in part,
in accordance with the methodology and procedures set forth in Schedule C.


 


(b)           GNA
shall deliver an invoice to the Company on a monthly basis in arrears for the
Service Charges due to GNA under this Agreement.  The Company shall pay the amount of such invoice to GNA in U.S.
dollars within seventy-five (75) days of the date of such invoice.  In the event that all or any portion of any
payment due GNA pursuant to this Agreement becomes overdue, the portion of the
amount overdue shall bear interest at an annual rate equal to the then current
thirty (30) day U.S. Treasury Bill discount rate on the date that the payment
becomes overdue plus 200 basis points, for the period that the amount is
overdue.  As soon as practicable after
receipt by GNA of any reasonable written request by the Company, GNA shall
provide the Company with reasonably detailed data and documentation sufficient
to support the calculation of any amount due to GNA under this Agreement for
the purpose of verifying the accuracy of such calculation.  If, after reviewing such data and
documentation, the Company disputes GNA’s calculation of any amount due to GNA,
then the dispute shall be resolved pursuant to Article V.


 


ARTICLE
IV


 


STANDARD FOR SERVICE; COMPLIANCE
WITH LAWS; LIMITED LIABILITY


 


SECTION 4.01.      Standard for Service. 
Except as otherwise provided in this Agreement (including in Schedule A
hereto), GNA shall perform, or cause its Subsidiaries and Affiliates to
perform, the Services (a) in the same manner as they conduct their own
businesses not subject to this Agreement and (b) in accordance with the
administrative performance standards of GNA and its applicable Subsidiaries and
Affiliates in effect on the date hereof, with such revisions to such standards
as are made in the ordinary course (the “Standard for Services”).


 


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SECTION 4.02.      Compliance with Laws. 
GNA shall comply, and shall cause its Subsidiaries and Affiliates to comply,  with all applicable Laws when providing the
Services or when performing obligations under this Agreement.  Nothing in this Agreement shall require GNA
or its Subsidiaries or Affiliates to act or refuse to act other than in
compliance with Law.


 


SECTION 4.03.      Limited Liability. 
Notwithstanding the provisions of Section 4.01, GNA and its Subsidiaries
and Affiliates and their respective directors, officers or employees (or any of
the heirs, executors, successors or assigns of any of the foregoing) (each, a “Service
Provider”) shall have no liability to the Company or its Subsidiaries and
Affiliates in excess of $10,000,000 in the aggregate for any and all claims in
contract, tort or otherwise for or in connection with any breach of its
obligations under this Agreement; provided, however, that such limitation on
liability shall not extend to or otherwise limit any liabilities that result
directly from such Service Provider’s gross negligence or willful misconduct.


 


ARTICLE
V


 


DISPUTE RESOLUTION


 


SECTION 5.01.      General Provisions. 
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement or the validity, interpretation, breach or termination thereof or
otherwise relating to any of the Services performed hereunder (a “Dispute”),
shall be resolved in accordance with the procedures set forth in this Article
V, which shall be the sole and exclusive procedures for the resolution of any
such Dispute unless otherwise specified below.


 


(b)           Commencing
with the request contemplated by Section 5.02, all communications between the
parties or their representatives in connection with the attempted resolution of
any Dispute, including any mediator’s evaluation referred to in Section 5.03,
shall be deemed to have been delivered in furtherance of a Dispute settlement
and shall be exempt from discovery and production, and shall not be admissible
in evidence for any reason (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the Dispute.


 


(c)           In
connection with any Dispute, the parties expressly waive and forego any right
to (i) special, indirect, punitive, incidental or consequential, lost profits,
exemplary, statutorily-enhanced or similar damages, losses or expenses
(provided that any such liability with respect to a Third Party Claim (as
defined in the Master Agreement) shall be considered direct damages) and (ii)
trial by jury.


 


(d)           The
specific procedures set forth below, including but not limited to the time
limits referenced therein, may be modified by agreement of the parties in
writing.


 


(e)           All
applicable statutes of limitations and defenses based upon the passage of time
shall be tolled while the procedures specified in this Article V are
pending.  The parties will take such
action, if any, required to effectuate such tolling.


 


SECTION 5.02.      Consideration by Senior Executives.  If a Dispute is not resolved in the normal
course of business at the operational level, the parties shall attempt in


 


4

















 


good faith to resolve
such Dispute by negotiation between executives who hold, at a minimum, the
office of President and CEO of the respective business entities involved in
such Dispute.  Either party may initiate
the executive negotiation process by providing a written notice to the other
(the “Initial Notice”).  Fifteen (15)
days after delivery of the Initial Notice, the receiving party shall submit to
the other a written response (the “Response”). The Initial Notice and the
Response shall include (i) a statement of the Dispute and of each party’s
position, and (ii) the name and title of the executive who will represent that
party and of any other person who will accompany the executive. Such executives
will meet in person or by telephone within thirty (30) days of the date of the
Initial Notice to seek a resolution of the Dispute.


 


SECTION 5.03.      Mediation.  If a
Dispute is not resolved by negotiation as provided in Section 5.02 within
forty-five (45) days from the delivery of the Initial Notice, then either party
may submit the Dispute for resolution by mediation pursuant to the CPR
Institute for Dispute Resolution (the “CPR”) Model Mediation Procedure
as then in effect. The parties will select a mediator from the CPR Panels of
Distinguished Neutrals, but such mediator must
have prior U.S. reinsurance experience either as a lawyer or as a present or
former officer or management employee of a reinsurance company, but not of GNA,
or the Company, or any of their respective affiliates.  Either party at commencement of the
mediation may ask the mediator to provide an evaluation of the Dispute and the
parties’ relative positions.


 


SECTION 5.04.      Arbitration.  (a)
If a Dispute is not resolved by mediation as provided in Section 5.03 within
thirty (30) days of the selection of a mediator (unless the mediator chooses to
withdraw sooner), either party may submit the Dispute to be finally resolved by
arbitration pursuant to the CPR Rules for Non-Administered Arbitration as then
in effect (the “CPR Arbitration Rules”). 
The parties consent to a single, consolidated arbitration for all known
Disputes existing at the time of the arbitration and for which arbitration is
permitted.


 


(b)           The
neutral organization for purposes of the CPR Arbitration Rules will be the CPR.
The arbitral tribunal shall be composed of three arbitrators who are each
experienced in the U.S. reinsurance business, of whom each party shall appoint
one in accordance with the “screened” appointment procedure provided in Rule
5.4 of the CPR Arbitration Rules.  The
non-party appointed arbitrator must have prior U.S. reinsurance experience as a
present or former officer or management employee of a reinsurance company, but
not of GNA or the Company or any of their respective affiliates.  The arbitration shall be conducted in New
York City.  Each party shall be
permitted to present its case, witnesses and evidence, if any, in the presence
of the other party. A written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine the Dispute in
accordance with the law of Illinois, without giving effect to any conflict of
law rules or other rules that might render such law inapplicable or
unavailable, and shall apply this Agreement according to its terms, provided
that the provisions relating to arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. §§ 1 et seq.


 


(c)           The
parties agree to be bound by any award or order resulting from any arbitration
conducted hereunder and further agree that judgment on any award or order
resulting from an arbitration conducted under this Section 5.04 may be entered
and enforced in any court having jurisdiction thereof.


 


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(d)           Except
as expressly permitted by this Agreement, no party will commence or voluntarily
participate in any court action or proceeding concerning a Dispute, except (i)
for enforcement as contemplated by Section 5.04(c) above, (ii) to restrict or
vacate an arbitral decision based on the grounds specified under applicable
law, or (iii) for interim relief as provided in paragraph (e) below.  For purposes of the foregoing the parties
hereto submit to the non-exclusive jurisdiction of the courts of the State of
New York.


 


(e)           In
addition to the authority otherwise conferred on the arbitral tribunal, the
tribunal shall have the authority to make such orders for interim relief,
including injunctive relief, as it may deem just and equitable.  Notwithstanding paragraph (d) above, each
party acknowledges that in the event of any actual or threatened breach of
certain of the provisions of this Agreement, the remedy at law would not be
adequate, and therefore injunctive or other interim relief may be sought
immediately to restrain such breach.  If
the tribunal shall not have been appointed, either party may seek interim
relief from a court having jurisdiction if the award to which the applicant may
be entitled may be rendered ineffectual without such interim relief. Upon
appointment of the tribunal following any grant of interim relief by a court,
the tribunal may affirm or disaffirm such relief, and the parties will seek
modification or rescission of the court action as necessary to accord with the
tribunal’s decision.


 


(f)            Each
party will bear its own attorneys fees and costs incurred in connection with
the resolution of any Dispute in accordance with this Article V.


 


ARTICLE
VI


 


TERMINATION


 


SECTION 6.01.      Termination of the Agreement.


 


(a)           This
Agreement will terminate in its entirety on the earliest of:


 


(i)            the
date the Company’s liability under all of the Reinsurance Agreements is
terminated in accordance with the terms thereof;


 


(ii)           the
date that all of the Reinsurance Agreements are terminated in accordance with
the terms thereof; or


 


(iii)          the
date that this Agreement has been terminated with respect to all of the
Reinsured Businesses under Section 6.02(d).


 


(b)           This
Agreement is subject to immediate termination at the option of the Company,
upon written notice to GNA, on the occurrence of any of the following events:


 


(i)            A
voluntary or involuntary proceeding is commenced in any jurisdiction by or
against GNA or its Subsidiaries or Affiliates performing Services pursuant to
this Agreement for the purpose of conserving, rehabilitating or liquidating GNA
or such Subsidiaries or Affiliates, but only if the Services performed by the
subject of such proceeding are not assumed or performed by GNA or its
Subsidiaries or Affiliates that are not the subject of such proceeding; or


 


6

















 


(ii)           GNA
or its Subsidiaries and Affiliates are unable to perform the services required
under this Agreement for a period of thirty (30) consecutive days for any
reason other than as a result of a Force Majeure.


 


(c)           This
Agreement may be terminated at any time upon the mutual written consent of the
parties hereto, which writing shall state the effective date of termination.


 


SECTION 6.02.      Termination with Respect to Any Reinsured Business.  The term of this Agreement will terminate
with respect to the portion of any Reinsured Business under any given
Reinsurance Agreement on the earliest of:


 


(a)           the
date the Company’s liability under such Reinsurance Agreements is terminated in
accordance with the terms thereof;


 


(b)           the
date that such Reinsurance Agreement is terminated in accordance with the terms
thereof;


 


(c)           the
date that the Company or its assignee becomes entitled to assume administration
of the portion of the Reinsured Business reinsured under such Reinsurance
Agreement;


 


(d)           seventy-five
(75) days following written notice by the Company of GNA’s willful, material
breach of its obligations under Articles II and IV of this Agreement with
respect to such Reinsured Business (provided that the Company shall not have
the right to terminate this Agreement (A) for so long as the GNA and its
Subsidiaries and Affiliates are making good faith effort to cure such breach,
not to exceed an additional one hundred eighty (180) days or (B) during the
pendency of any dispute resolution proceedings as set forth in Article V regarding
an alleged material breach); or


 


(e)           such
other date as agreed by the Company and GNA.


 


SECTION 6.03.      Effect of Termination. 
Upon termination of this Agreement in accordance with its terms, GNA
will have no further obligation to perform any Service, and the Company will
have no obligation to pay any Service Charges relating to any Service or make
any other payments under this Agreement (other than for Services performed
prior to such termination).  Upon termination
of this Agreement with respect to a Reinsured Business in accordance with this
Agreement’s terms, GNA will have no further obligation to perform, or cause its
Subsidiaries or Affiliates to perform any Service with respect to such
Reinsured Business, and the Company will have no obligation to pay any Service
Charges relating to any Service with respect to such Reinsured Business or make
any other payments under this Agreement with respect to such Reinsured Business
(other than for Services performed prior to such termination).


 


SECTION 6.04.      Survival. 
Article III (Costs and Disbursements) (but only in connection with
Service Charges incurred and accrued as of the date of termination of this
Agreement and the terms of Section 3.01(b) as applied to such Service Charges),
Section 4.03 (Limitation of Liability), Article V (Dispute Resolution),
Section 6.03 (Effect of Termination),


 


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Section 6.04
(Survival), and Article VII (General Provisions) shall survive the
expiration or other termination of this Agreement and remain in full force and
effect.


 


SECTION 6.05.      Force Majeure. 
GNA (and any Person acting on its behalf including its Subsidiaries and
Affiliates) shall not have any liability or responsibility for failure to
fulfill any obligation under this Agreement so long as and to the extent to
which the fulfillment of such obligation is prevented, frustrated, hindered or
delayed as a consequence of circumstances of Force Majeure.  As soon as reasonably practicable after the
occurrence of any such event GNA shall: 
(a) notify the Company of the nature and extent of any such Force
Majeure condition and (b) use commercially reasonable efforts to remove any
such causes and resume performance under this Agreement as soon as feasible.


 


ARTICLE
VII


 


GENERAL PROVISIONS


 


SECTION 7.01.      Subcontractors. 
GNA and its Subsidiaries and Affiliates may hire or engage one or more
subcontractors to perform any or all of its obligations under this Agreement; provided
that if such subcontractors are used solely in connection with the Reinsured
Business, then the prior written consent of the Company to the use of any such
subcontractors shall be required, which consent will not be unreasonably
withheld; provided  further that GNA shall in all cases remain
liable for all its obligations under this Agreement, including, without
limitation, with respect to the scope of the Services, the Standard for
Services and the content of the Services performed in respect of the Reinsured
Businesses.  Under no circumstances
shall the Company be responsible for making any payments directly to any
subcontractor engaged by GNA or its Subsidiaries or Affiliates.


 


SECTION 7.02.      Additional Services; Books and Records.


 


(a)           If, during the term of this Agreement, either party
identifies any additional or other service that GNA or its Subsidiaries or
Affiliates are performing or that is necessary for GNA to start performing in
respect of the Reinsured Businesses, the parties hereto agree to negotiate in
good faith with respect to the Service Charge for such service (provided that
such services are of a type generally performed in respect of business like the
Reinsured Businesses) and the applicable service fees, payment procedures, and
other rights and obligations with respect thereto.  To the extent practicable, such additional or other services
shall be performed on terms substantially similar to those applicable to
Services of similar types and otherwise on terms consistent with those
contained in this Agreement.


 


(b)           All
books, records and data maintained by GNA and its Subsidiaries and Affiliates
with respect to the performance of a Service with respect to the Reinsured
Businesses shall be the exclusive property of GNA and its applicable
Subsidiaries and Affiliates.  The
Company, at its sole cost and expense, shall have the right to inspect, and
make copies of, any such books, records and data during regular business hours
upon reasonable advance notice to the Company.


 


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SECTION 7.03.      Taxes.


 


(a)           Each
party shall be responsible for any personal property taxes on property it owns
or leases, for franchise and privilege taxes on its business, and for taxes
based on its net income or gross receipts.


 


(b)           The
Company may report and (as appropriate) pay any sales, use, excise,
value-added, services, consumption, and other taxes and duties (“Taxes”)
directly if the Company provides GNA with a direct pay or exemption
certificate.


 


(c)           The
parties agree to cooperate with each other to enable each to more accurately
determine its own tax liability and to minimize such liability to the extent
legally permissible.  GNA’s invoices
shall separately state the amount of any Taxes GNA is proposing to collect from
the Company.


 


(d)           GNA
shall promptly notify the Company of any claim for Taxes asserted by applicable
taxing authorities for which the Company is alleged to be financially
responsible hereunder.  GNA shall
coordinate with the Company the response to and settlement of, any such
claim.  Notwithstanding the above, the
Company’s liability for such Taxes is conditioned upon GNA providing the
Company notification within twenty (20) business days of receiving any proposed
assessment of any additional Taxes, interest or penalty due by GNA.


 


(e)           The
Company shall be entitled to receive and to retain any refund of Taxes paid to
GNA pursuant to this Agreement.  In the
event GNA shall be entitled to receive a refund of any Taxes paid by the
Company to GNA, GNA shall promptly pay, or cause the payment of, such refund to
the Company.


 


SECTION 7.04.      Confidential
Information.  GNA agrees to maintain
and safeguard, and cause its Subsidiaries and Affiliates to maintain and
safeguard, all GE Confidential Information pursuant to Section 6.2 of the
Master Agreement and the Company agrees to maintain and safeguard, and cause
its Subsidiaries and Affiliates to maintain and safeguard, all Genworth
Confidential Information pursuant to Section 6.2 of the Master Agreement and
each party hereto agrees that Section 6.2 of the Master Agreement is hereby
incorporated by reference into, and made a part of, this Agreement.  The parties hereto agree to comply with the
terms of the Business Associate Addendum attached as Schedule D.


 


SECTION 7.05.      Non-disclosure; Privilege; Conflicts of Interest.  Neither GNA, the Company nor any of their
respective Subsidiaries or Affiliates shall be required to disclose any of
their respective trade secret information or other information that provides
GNA and its Subsidiaries and Affiliates, or the Company and its Subsidiaries
and Affiliates, as applicable, a significant competitive advantage.  Further, neither GNA, the Company, nor any
of their respective Subsidiaries or Affiliates will be required to provide any
information in connection with this Agreement if the provision of such
information would serve as a waiver of any attorney-client privilege or other
applicable privilege afforded such information.  In no event will GNA or its Subsidiaries and Affiliates be required
to perform any Services if doing so would constitute a conflict of interest or
a breach of any applicable ethical rules governing the conduct of attorneys; provided
that GNA shall use its commercially reasonable efforts to resolve any such
conflict of interest or prevent any breach of any such ethical rules.


 


9

















 


SECTION 7.06.      Headings and Schedules. 
Headings used herein are not a part of this Agreement and shall not
affect the terms hereof.  The attached
Schedules are a part of this Agreement.


 


SECTION 7.07.      Notices.  All
notices, requests, demands and other communications under this Agreement must
be in writing and will be deemed to have been duly given or made as
follows:  (a) if sent by registered or
certified mail in the United States return receipt requested, upon receipt; (b)
if sent by reputable overnight air courier, two business days after mailing;
(c) if sent by facsimile transmission, with a copy mailed on the same day in
the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered, and shall be delivered as follows:


 


If to GNA:


 


[                          ]

[                          ]

[                          ]

Facsimile:  [                          ]

Attention:  [                          ]


 


With a copy
to:


 


[                          ]

[                          ]

[                          ]

Facsimile:  [                          ]

Attention:  [                          ]


 


If to the
Company:


 


Union Fidelity
Life Insurance Company

200 North Martingale Road

Shaumburg, IL 60173-2096

Facsimile: (847) 330-3404

Attention: Chief Financial Officer


 


With a copy
to:


 


Union Fidelity
Life Insurance Company

200 North Martingale Road

Shaumburg, IL 60173-2096

Facsimile:  (847) 605-3044

Attention:  General Counsel


 


or to such other address or to such other Person as
either party may have last designated by notice to the other party.


 


10

















 


SECTION 7.08.      Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, permitted assigns and legal
representatives.  Neither this
Agreement, nor any right or obligation hereunder, may be assigned by any party
without the prior written consent of the other party hereto.  Any assignment in violation of this Section
7.08 shall be void and shall have no force and effect.


 


SECTION 7.09.      Execution in Counterpart.  This Agreement may be executed by the parties hereto in any
number of counterparts, and by each of the parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.


 


SECTION 7.10.      Currency. 
Whenever the word “Dollars” or the “$” sign appear in this Agreement,
they shall be construed to mean United States Dollars, and all transactions
under this Agreement shall be in United States Dollars.


 


SECTION 7.11.      Amendments.  This
Agreement may not be changed, altered or modified unless the same shall be in
writing executed by GNA and the Company.


 


SECTION 7.12.      Governing Law. 
This Agreement will be construed, performed and enforced in accordance
with the laws of the State of Illinois without giving effect to its principles
or rules of conflict of laws thereof to the extent such principles or rules
would require or permit the application of the laws of another jurisdiction.


 


SECTION 7.13.      Entire Agreement; Severability.  (a) 
This Agreement constitutes the entire agreement between the parties
hereto relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, statements, representations and
warranties, negotiations and discussions, whether oral or written, of the
parties and there are no general or specific warranties, representations or
other agreements by or among the parties in connection with the entering into
of this Agreement or the subject matter hereof except as specifically set forth
or contemplated herein.


 


(b)           If
any provision of this Agreement is held to be void or unenforceable, in whole
or in part, (i) such holding shall not affect the validity and
enforceability of the remainder of this Agreement, including any other
provision, paragraph or subparagraph, and (ii) the parties agree to
attempt in good faith to reform such void or unenforceable provision to the
extent necessary to render such provision enforceable and to carry out its
original intent.


 


SECTION 7.14.      No Waiver; Preservation of Remedies.  No consent or waiver, express or implied, by
any party to or of any breach or default by any other party in the performance
by such other party of its obligations hereunder shall be deemed or construed
to be a consent or waiver to or of any other breach or default in the
performance of obligations hereunder by such other party hereunder.  Failure on the part of any party to complain
of any act or failure to act of any other party or to declare any other party
in default, irrespective of how long such failure continues, shall not
constitute a waiver by such first party of any of its rights hereunder.  The rights and remedies provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or equity.


 


11

















 


SECTION 7.15.      Cooperation. 
Each party hereto shall cooperate fully with the other in all reasonable
respects in order to accomplish the objectives of this Agreement including
making available to each their respective officers and employees for interviews
and meetings with Governmental Authorities and furnishing any additional
assistance, information and documents as may be reasonably requested by a party
from time to time.


 


SECTION 7.16.      Third Party Beneficiary.  Nothing in this Agreement will confer any rights upon any Person
that is not a party or a successor or permitted assignee of a party to this
Agreement.


 


SECTION 7.17.      Negotiated Agreement. 
This Agreement has been negotiated by the parties and the fact that the
initial and final draft will have been prepared by either party or an
intermediary will not give rise to any presumption for or against any party to
this Agreement or be used in any respect or forum in the construction or
interpretation of this Agreement or any of its provisions.


 


SECTION 7.18.      Interpretation. 
Wherever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”  In addition,
interpretation of this Agreement shall be governed by the following rules of
construction:  (a) words in the singular
shall be held to include the plural and vice versa and words of one gender
shall be held to include the other gender as the context requires, (b)
references to the terms Article, Section, paragraph, and Schedule are
references to the Articles, Sections, paragraphs, and Schedules to this
Agreement unless otherwise specified, (c) provisions shall apply, when
appropriate, to successive events and transactions, and (d) this Agreement
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.


 


SECTION 7.19.      No Right to Set-Off. 
The Company shall pay the full amount of costs and disbursements
incurred under this Agreement, and shall not set-off, counterclaim or otherwise
withhold any other amount owed to GNA on account of any obligation owed by GNA
to the Company.


 


[SIGNATURE PAGE FOLLOWS]


 


12

















 


IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first written above by their respective duly authorized
officers.


 


	
   

  	
  GNA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNION FIDELITY LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


13

















 


SCHEDULE A


 


SERVICES


 


The Services are broadly defined as activities performed by GNA and its
Subsidiaries and Affiliates that benefit the Reinsured Businesses.  The Services are more fully defined, without
limitation, below by functional area under the general headings “Business Overhead
Services” and “Corporate Overhead Services.”


 


Business Overhead Services


 


The services below will be provided by the “WIM” business unit of GNA
and its Subsidiaries and Affiliates with regards to the Structured Settlement
Annuity Reinsured Business and the Variable Annuity Reinsured Business:


 


Executive:

General support, counsel, strategy and leadership provided by WIM’s Chief
Executive Officer.


 


Human Resources:

General business level Human Resource related activities including but not
limited to leadership development, employee recruitment and staffing,
implementation of compensation policies and practices, payroll and benefit
administration, organizational communication, training, general security and
employee issue resolution and guidance.


 


Finance:

Cost of finance activities including but not limited to product financial
support and analysis, account reconciliations, state reporting, product
profitability analysis, investment income planning & analysis, expense
management, audit support, statutory & GAAP accounting, reporting &
analysis and ad hoc financial analysis.


 


Legal/Compliance:

Cost of support and coordination of litigation, government relations, human
resource, intellectual property, insurance regulatory, consumer privacy,
contract, compliance, and public relations matters.


 


Risk:

Cost of Risk Management and reinsurance support—Monitor production vs.
authority limits, monitor and review key risk measures.  General oversight of inforce product
performance analysis and reviews. 
Reinsurance oversight and treaty management including settlement with
reinsurers.


 

















 


Facilities:

Campus expenses including building rent and maintenance, parking garage,
cafeteria, campus lawn care and utilities.


 


Information Technology:

General business technology infrastructure costs including but not limited to
general management, help desk assistance, data center management, disaster
recovery plans and digitization of processes.


 


Six Sigma Quality:

Costs including business project management and process improvement coaching,
execution and leadership.


 


Product Management:

Costs for product line managers to manage inforce policies and general product
line maintenance activities such as risk assessment, return on equity (“ROE”)  variance analysis and related ROE
improvement projects.


 


Operations:

Costs including management, project leadership and administrative support for
service operations supporting customers, policyholders and other stakeholders.


 


Other:

Costs including corporate insurance allocation to product lines (e.g.,
cost of building insurance and other property, plant and equipment).


 


Retention:

Costs including monitoring of inforce policy retention levels, design and
execute programs to retain inforce business.


 


Corporate Overhead Services


 


The services listed below will be provided by the “HQ” or corporate
functions at GNA with regard to each of the Reinsured Businesses:


 


Executive Office:

Costs including general support, counsel, strategy and leadership provided by
CEO, various HQ business insurance charges and allocations.


 


Human Resources:

Costs of general HR related activities such as leadership development, employee
recruitment and


 


2

















 


staffing, compensation policies and practices, payroll and benefit
administration, organizational communication, that which is currently known as
the “GEFA University” learning center including online course development and
administration, physical security of the business locations and employee issue
resolution and guidance.


 


Actuarial Department and Capital Management:

Costs including rating agency coordination such as answering queries, making
presentations, and providing other required information for rating agencies;
state insurance department regulatory support, NAIC lobbying and investor
relations, including issues related to risk based capital; completion of
various actuarial and capital management functions such as: reserve
calculations, experience analysis, asset/liability management, cash flow
testing support, dividend forecasting, capital management, reinsurance and
capital markets support.


 


Finance:

HQ related finance costs, such as business level financial planning and
analysis, Statutory and GAAP accounting, reinsurance accounting, reporting and
analysis, annual statement (“blue book”) preparation and related disclosures
and schedules, statutory audit support, tax information needed to prepare
returns, treasury services, financial systems related support, maintenance and
infrastructure, technical accounting expertise.


 


Product Management:

Costs including general product management and product marketing compliance,
support pricing and retention initiatives.


 


Legal:

Costs including support and coordination of litigation, government relations,
human resource, intellectual property, insurance regulatory, consumer privacy,
contract, compliance, and public relations matters.


 


Risk:

Costs including business risk policies (currently known as “Policy 5.0/6.0”)
development and monitoring, treaty management, reinsurance and controllership
oversight.  These policies are developed
and implemented by the Risk team with others at Headquarters to manage assets
and liabilities, control business risks associated with investments,
controllership, systems infrastructure, process management, etc. Various
metrics are used to “trigger” leadership decision points in an effort to reduce
business risks.   Includes the
leadership of projects to reduce the business risks associated with various
systems and processes across the business.


 


Sourcing (Purchasing) and Facilities:

Costs including sourcing related services including Purchasing card (“P-card”)
Administration, Oracle sourcing/purchasing/receiving system (know as the “SSS
System”) Administration, requisition processing, competitive bidding/auction
services, spend data tracking/analysis, and


 


3

















 


contract definition/negotiation. 
Leadership of certain expense reduction projects currently known as
“Bullet Trains” (which focus across the business on reducing individual expense
categories (PC leasing, postage, consulting, telecommunications, office
supplies, etc.) and other projects related to the increase in purchasing
efficiency and reduction of costs.


 


IT and e-Solutions:

General management costs associated with IT infrastructure, management of on
and off shore contractors, help desk, asset management (PC’s, printers,
servers, etc.), email service, Wide Area Networks (WAN), desktop support
(visiting actual users to assist them with IT needs), web hosting, Unix and NT
system administration, global computer operations, intellectual property,
contract and licenses of software, services and hardware, U.S.-based consulting
and control over remote infrastructure (for example, those systems currently
housed in Alpharetta, GA).


Costs of HQ security team, who provides disaster recovery, including
risk analysis & coordination of all IT associated with Disaster
Recovery.  In addition, security
includes coordination with all local business security officers, relating to
intrusion detection, anti-virus and other protections of systems.


Costs including project management, oversight and project manager
certification, using several industry standard processes including Six Sigma
“DMAIC” process improvement and other process improvement/development regimes.

Costs of developing and monitoring architectural plans for future operations
including technology related standards, guidelines and polices.


Costs of IT Vendor Management — includes negotiations and oversight for
vendor agreements on hardware, software and services.


Costs of IT Solutions — delivers IT solutions that meet business needs
through digitization of processes and deployment of web applications.


 


Operations Excellence:

Costs of Consolidation, Analysis, Management Strategy, and Leadership for Operations
and Shared Services.  Provide strategic
leadership and oversight to all operations departments, ensuring that best
practices are shared.


Costs of managing services used by all GEFA businesses, including Xerox
(current outsourced document processing provider), “1-800 Think GE” call center
(a point of contact for all GEFA products), and One Front Door (inbound imaging
strategy).


 


Changes in Services


 


The Business Overhead Services and Corporate Overhead Services shall
include such other comparable and/or successor Services implemented or
maintained from time to time by GNA and its Subsidiaries and Affiliates.


 


4

















 


SCHEDULE B


 


REINSURED BUSINESSES


 


Structured Settlement Annuities


 


1.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and GE Life and
Annuity Assurance Company, a Virginia domiciled life insurance company


 


2.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and Federal Home
Life Insurance Company, a Virginia domiciled life insurance company


 


3.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and First Colony
Life Insurance Company, a Virginia domiciled life insurance company


 


4.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and General Electric
Capital Assurance Company, a Delaware domiciled life insurance company


 


5.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and GE Capital Life
Assurance Company of New York, a New York domiciled life insurance company


 


6.               Coinsurance Agreement, dated as of
    , 2004, by and between the Company and American
Mayflower Life Insurance Company of New York, a New York domiciled life
insurance company


 


Long Term Care


 


7.               Retrocession Agreement, dated as of
   , 2004, by and between the Company and General Electric
Capital Assurance Company, a Delaware domiciled life insurance company


 


8.               Retrocession Agreement, dated as of
   , 2004, by and between the Company and GE Capital Life Assurance
Company of New York, a New York domiciled life insurance company


 


Variable Annuities


 


9.               Reinsurance Agreement, dated as of
   , 2004, by and between the Company and GE Life and Annuity
Assurance Company, a Virginia domiciled life insurance company


 


10.         Reinsurance Agreement, dated as of
   , 2004, by and between the Company and GE Capital Life
Assurance Company of New York, a New York domiciled life insurance company


 

















 


SCHEDULE C


 


SERVICE CHARGES


 


The “Annual
Expense Reimbursement Factors” used to calculate the Service Charges for each
respective line of business are as follows:


 


	
  Structured Settlement Annuity Reinsured Business:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Corporate
  Overhead Factor

  	
   

  	
  $** per
  Annum

  
	
   

  	
   

  	
   

  
	
  Business
  Overhead Factor

  	
   

  	
  $** per
  Policy

  
	
   

  	
   

  	
   

  
	
  Variable Annuity Reinsured Business

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Corporate
  Overhead Factor

  	
   

  	
  $** per
  Annum

  
	
   

  	
   

  	
   

  
	
  Business
  Overhead Factor

  	
   

  	
  $** per
  Policy

  
	
   

  	
   

  	
   

  
	
  Long-Term Care Retroceded Business

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Corporate
  Overhead Factor

  	
   

  	
  $** per
  Annum

  



 


The Service Charges will be determined quarterly and billed to the
Company in three equal installments at the end of the month during the
quarter.  Each monthly installment
billed for a particular line of business will be determined by (a) multiplying
the actual number of units at the beginning of the quarter covered by this
Agreement times the Business Overhead Factor (divided by twelve), if
applicable, and (b) adding the applicable Corporate Overhead Factor (divided by
twelve).


 


The Annual Expense Reimbursement Factors for each respective line of
business will be adjusted (i) for the year beginning January 1, 2005 and,
thereafter, every three (3) years during the term of this Agreement based on a
triennial cost/time study prepared in accordance with the methodology set forth
below (the “Triennial Study”) and (ii) for the years between the
Triennial Studies based on a report setting forth the Annual Expense
Reimbursement Factors prepared in accordance with the methodology set forth
below (the “Annual Expense Reimbursement Factors Report”).


 


(a) Triennial Study.  As soon
as practicable (and in any event within sixty (60) days) prior to January 1,
2005 and prior to the beginning of every third calendar year thereafter during
the term of this Agreement, GNA shall cause to be prepared and delivered to the
Company the Triennial Study which sets forth the Annual Expense Reimbursement
Factors for the next calendar year, together with all supporting data used in
preparing the Triennial Study and work papers, in reasonable detail, setting
forth the determination of such Annual Expense Reimbursement Factors based on
such Triennial Study (such documents, together with the Triennial Study, the “Triennial
Study Documents”).


 

















 


(b) Annual Expense Reimbursement Factors Report.  As soon as practicable (and in any event
within thirty (30) days) prior to January 1, 2006 and prior to the beginning of
each calendar year thereafter in which no Triennial Study is prepared, GNA
shall cause to be prepared and delivered to the Company the Annual Expense
Reimbursement Factors Report, together with all supporting data used in
preparing the Annual Expense Reimbursement Factors Report and work papers, in
reasonable detail, setting forth the determination of such Annual Expense
Reimbursement Factors for the next calendar year (such documents, together with
the Annual Expense Reimbursement Factors Report, the “Annual Expense
Reimbursement Factors Documents”).


 


(c) Methodology.  At the
time of the Triennial Study, historical costs (to include costs for those
services identified as Business Overhead Services and Corporate Overhead
Services in Schedule A and any changes thereto pursuant to Schedule A)  will be determined for the Annual Expense
Reimbursement Factors identified above. 
For a given Business Overhead Factor (identified above in this Schedule C)
the identified or allocated costs, as applicable, will be divided by the total
number of remaining Reinsured Policies or Reinsured Contracts (as such terms
are defined in the applicable Reinsurance Agreement), as applicable, and the
Company’s current in-force business to derive an historical cost per unit.  The historical cost per unit will be used as
a prospective cost per unit for the next calendar year.  For the purposes of allocating costs of
providing Business Overhead Services, actual identified costs allocable to each
of the lines of business specified above (Structured Settlement Annuity
Reinsured Business and Variable Annuity Reinsured Business) shall be allocated
to such lines of business.  For the
purpose of allocating costs of providing the Corporate Overhead Services, the
historical costs of such services shall be allocated equally to each of the
lines of business specified above.


 


For the two
succeeding years in the period between the Triennial Studies the historical
dollar amounts by Annual Expense Reimbursement Factors will be adjusted (rolled
forward) for current year cost changes agreed to by GNA and the Company (in
accordance with the procedures set forth above).  The costs for Business Overhead Services will then be divided by
the total number of remaining Reinsured Policies or Reinsured Contracts (as
such terms are defined in the applicable Reinsurance Agreement) for the current
period to determine a prospective cost per unit for the next calendar
year.  The costs for Corporate Overhead Services
shall be allocated equally to each of the lines of business specified above.


 


An additional
adjustment, positive or negative, to the prospective cost per unit for Business
Overhead Services or per annum for Corporate Overhead Services determined by
either the Triennial Study or the two succeeding years may be negotiated
between the parties.  The additional
adjustment is for special projected costs or benefits of productivity, process
improvements, inflation, loss of scale, and any other cost variation which was
not included in the prior Triennial Study or the succeeding roll forward.


 


The combined
prospective unit cost, per annum cost and additional adjustment for a
respective line of business is the Annual Expense Reimbursement Factor for that
line of business.


 


(d) Review of Documents.  Following the delivery of the Annual Expense
Reimbursement Factors Documents or the Triennial Study Documents, as
applicable, GNA shall (i) provide to


 


2

















 


the Company or its designated representative copies of
such additional work papers and other documents relating to its preparation of
the Annual Expense Reimbursement Factors Report or Triennial Study, as
applicable, as the Company or its designated representative may reasonably
request, including, without limitation, claims files and practices and (ii)
cooperate with, and make its personnel and facilities reasonably available to,
the Company and the Company’s designated representative for the purpose of
providing such other information as the Company or the Company’s designated
representative may reasonably request concerning Annual Expense Reimbursement
Factor Documents or the Triennial Study Documents, as applicable, and the
calculation of the Annual Expense Reimbursement Factors.


 


(e) Notice of Disagreement.  In the event that the Company has any
disagreement with any of the Annual Expense Reimbursement Factor Documents or
the Triennial Study Documents, as applicable, the Company shall give written
notice of all such disagreements (a “Notice of Disagreement”) to GNA
within thirty (30) days after the Annual Expense Reimbursement Factors
Documents or the Triennial Study Documents, as applicable, are delivered to the
Company.  Any Notice of Disagreement
shall set forth each item in disagreement and shall provide reasonable
specificity as to the basis for each disagreement and shall specify the total
adjustment to the Annual Expense Reimbursement Factors as proposed by GNA as a
result of such items in disagreement.


 


(f) Dispute Resolution.  If the Company does not deliver a Notice of
Disagreement to the Company within such thirty (30) day period, the Annual
Expense Reimbursement Factors Documents and the Triennial Study Documents, as
applicable, shall be final and binding upon the parties hereto and shall
constitute the final calculation of the Annual Expense Reimbursement Factors
for the next calendar year.  If the
Company delivers a Notice of Disagreement to GNA within such thirty (30) day
period, the parties shall (and shall cause their respective designated
representatives to) negotiate in good faith to resolve all disagreements as
promptly as practicable.  Any changes in
the Annual Expense Reimbursement Factors, if any, that are agreed to by the
Company and GNA within sixty (60) days of the aforementioned delivery of the
Annual Expense Reimbursement Factors Documents or the Triennial Study
Documents, as applicable, shall be incorporated into a final calculation of the
Annual Expense Reimbursement Factors. 
If the parties and their respective designated representatives are
unable to resolve all disagreements within sixty (60) days of delivery of the
Annual Expense Reimbursement Factors Documents or the Triennial Study
Documents, as applicable, then all unresolved disagreements will be submitted
within ten (10) days after the end of such sixty (60) day period for resolution
in accordance herewith to an independent certified public accounting firm of
national standing and reputation (the “Accounting Firm”) mutually
acceptable to the Company and GNA.  The
parties shall cooperate in good faith with the Accounting Firm and shall give
the Accounting Firm access to all data and other information requested by the
Accounting Firm for purposes of such resolution.  The Accounting Firm shall, within thirty (30) days after its
engagement, deliver to the Company and GNA a definitive calculation of the
Business Overhead Factors, which shall be final and binding upon the parties
hereto and shall be so reflected in the calculation of the Business Overhead
Factors.  The Company and GNA shall each
pay one-half of the fees and expenses of the Accounting Firm.


 


(g) Service Charges Pending Resolution.  In the event of a dispute with respect to
any Annual Expense Reimbursement Factors for the next succeeding Calendar year,
the Company and GNA


 


3

















 


agree that the Annual Expense Reimbursement Factors then in effect
under this Agreement shall remain in effect pending resolution of such dispute
and adjustment, if any, in accordance with the dispute resolution procedure set
forth in paragraph (f) above.


 


4

















 


SCHEDULE D


 


BUSINESS ASSOCIATE ADDENDUM


 


I               Purpose.


 


In order to disclose certain information to GNA (for
purposes of this Addendum, the “Provider”) under this Addendum, some of which
may constitute Protected Health Information (“PHI”) (defined below), the
Company (for purposes of this Addendum, the “Recipient”) and Provider mutually
agree to comply (and Provider shall cause its Subsidiaries and Affiliates
performing Services to comply) with the terms of this Addendum for the purpose
of satisfying the requirements of the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) and its implementing privacy regulations
at 45 C.F.R. Parts 160-164 (“HIPAA Privacy Rule”).   These provisions shall apply to Provider and its Subsidiaries
and Affiliates to the extent that any or Provider or its Subsidiaries and Affiliates
is considered a “Business Associate” under the HIPAA Privacy Rule and all
references in this section to Business Associates shall refer to Provider or
such Subsidiary or Affiliate. 
Capitalized terms not otherwise defined herein shall have the meaning
assigned in the Agreement.  Notwithstanding
anything else to the contrary in the Agreement, in the event of a conflict
between this Addendum and the Agreement, the terms of this Addendum shall
prevail.


 


II             Permitted Uses and Disclosures.


 


Business Associate agrees to use or disclose Protected
Health Information (“PHI”) that it creates for or receives from Recipient or
its Subsidiaries only as follows.  The
capitalized term “Protected Health Information or PHI” has the meaning set
forth in 45 Code of Federal Regulations Section 164.501, as amended from time
to time.  Generally, this term means
individually identifiable health information including, without limitation, all
information, data and materials, including without limitation, demographic,
medical and financial information, that relates to the past, present, or future
physical or mental health or condition of an individual; the provision of
health care to an individual; or the past present, or future payment for the
provision of health care to an individual; and that identifies the individual
or with respect to which there is a reasonable basis to believe the information
can be used to identify the individual. 
This definition shall include any demographic information concerning
members and participants in, and applicants for, Recipient’s or its
Subsidiaries’ health benefit plans.  All
other terms used in this Addendum shall have the meanings set forth in the
applicable definitions under the HIPAA Privacy Rule.


 


A.    Functions and Activities on Company’s Behalf.  Business Associate is permitted to use and
disclose PHI it creates for or receives from Recipient or its Subsidiaries only
for the purposes described in this Addendum or the Agreement that are not
inconsistent with the provisions of this Addendum, or as required by law, or
following receipt of prior written approval from whichever of the Recipient or
its Subsidiary or Affiliate for which the relevant PHI was created or from
which the relevant PHI was received.  In
addition to these specific requirements below, Business Associate may use or
disclose PHI only in a manner that would not violate the HIPAA Privacy Rule if
done by the Recipient or its Subsidiaries.


 

















 


B.    Business
Associate’s Operations.  Business
Associate is permitted by this Agreement to use PHI it creates for or receives
from Recipient or its Subsidiaries: (i) if such use is reasonably necessary for
Business Associate’s proper management and administration; and (ii) as
reasonably necessary to carry out Business Associate’s legal responsibilities.
Business Associate is permitted to disclose PHI it creates for or receives from
Recipient or its Subsidiaries for the purposes identified in this Section only
if the following conditions are met:


 


(1)  The disclosure is required
by law; or


 


(2) The disclosure is reasonably necessary to Business
Associate’s proper management and administration, and Business Associate
obtains reasonable assurances in writing from any person or organization to
which Business Associate will disclose such PHI that the person or organization
will:


 


a. Hold such PHI as confidential and use or further
disclose it only for the purpose for which Business Associate disclosed it to
the person or organization or as required by law; and


 


b. Notify Business Associate (who will in turn
promptly notify whichever of the Recipient or its Subsidiary or Affiliate for
which the relevant PHI was created or from which the relevant PHI was received)
of any instance of which the person or organization becomes aware in which the
confidentiality of such PHI was breached.


 


C.    Minimum
Necessary Standard.  In performing
the functions and activities on Recipient’s or its Subsidiaries’ behalf
pursuant to the Agreement, Business Associate agrees to use, disclose or
request only the minimum necessary PHI to accomplish the purpose of the use,
disclosure or request.  Business
Associate must have in place policies and procedures that limit the PHI
disclosed to meet this minimum necessary standard.


 


D.    Prohibition on Unauthorized Use or Disclosure. 
Business Associate will neither use nor disclose PHI it creates or
receives for or from Recipient, its Subsidiaries, or from another business
associate of Recipient or its Subsidiaries, except as permitted or required by
this Addendum or the Agreement that are not inconsistent with the provisions of
this Addendum, or as required by law, or following receipt of prior written
approval from whichever of the Recipient or its Subsidiary or Affiliate for
which the relevant PHI was created or from which the relevant PHI was received.


 


E.     De-identification of Information.  Business Associate agrees neither to de-identify PHI it creates
for or receives from Recipient or its Subsidiaries or from another business
associate of Recipient or its Subsidiaries, nor use or disclose such de-identified
PHI, unless such de-identification is expressly permitted under the terms and
conditions of this Addendum or the Agreement and related to Recipient’s or its
Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care
operations”, as those terms are defined under the HIPAA Privacy Rule.  De-identification of PHI, other than as
expressly permitted under the terms and conditions of the Addendum for Business
Associate to perform services for Recipient or its Subsidiaries, is not a
permitted use of PHI under this Addendum.


 


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Business Associate further agrees that it will not
create a “Limited Data Set” as defined by the HIPAA Privacy Rule using PHI it
creates or receives, or receives from another business associate of Recipient
or its Subsidiaries, nor use or disclose such Limited Data Set unless: (i) such
creation, use or disclosure is expressly permitted under the terms and
conditions of this Addendum or the Agreement that are not inconsistent with the
provisions of this Addendum; and such creation, use or disclosure is for
services provided by Business Associate that relate to Recipient’s or its
Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care
operations”, as those terms are defined under the HIPAA Privacy Rule.


 


F.     Information Safeguards.  Business
Associate will develop, document, implement, maintain and use appropriate
administrative, technical and physical safeguards to preserve the integrity and
confidentiality of and to prevent non-permitted use or disclosure of PHI
created for or received from Recipient or its Subsidiaries.  These safeguards must be appropriate to the
size and complexity of Business Associate’s operations and the nature and scope
of its activities.  Business Associate
agrees that these safeguards will meet any applicable requirements set forth by
the U.S. Department of Health and Human Services, including (as of the
effective date or as of the compliance date, whichever is applicable) any
requirements set forth in the final HIPAA security regulations.  Business Associate agrees to mitigate, to
the extent practicable, any harmful effect that is known to Business Associate
resulting from a use or disclosure of PHI by Business Associate in violation of
the requirements of this Addendum.


 


III            Conducting Standard Transactions.  In the course of performing services for
Recipient or its Subsidiaries, to the extent that Business Associate will
conduct Standard Transactions for or on behalf of Recipient or its Subsidiaries,
Business Associate will comply, and will require any subcontractor or agent
involved with the conduct of such Standard Transactions to comply, with each
applicable requirement of 45 C.F.R. Part 162. 
“Standard Transaction(s)” shall mean a transaction that complies with
the standards set forth at 45 C.F.R. parts 160 and 162.  Further, Business Associate will not enter
into, or permit its subcontractors or agents to enter into, any trading partner
agreement in connection with the conduct of Standard Transactions for or on
behalf of the Recipient or its Subsidiaries that:


 


a.               Changes
the definition, data condition, or use of a data element or segment in a
Standard Transaction;


 


b.              Adds
any data element or segment to the maximum defined data set;


 


c.               Uses
any code or data element that is marked “not used” in the Standard
Transaction’s implementation specification or is not in the Standard
Transaction’s implementation specification; or


 


d.              Changes
the meaning or intent of the Standard Transaction’s implementation
specification.


 


IV            Sub-Contractors, Agents or Other Representatives.   Business Associate will require any of its subcontractors, agents
or other representatives to which Business Associate is permitted by this
Addendum or the Agreement (or is otherwise given Recipient’s or the relevant
Subsidiary’s or Affiliate’s prior written approval) to disclose any of the PHI
Business Associate creates or


 


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receives
for or from Recipient or its Subsidiaries, to provide reasonable assurances in
writing that subcontractor or agent will comply with the same restrictions and
conditions that apply to the Business Associate under the terms and conditions
of this Addendum with respect to such PHI.


 


V             Protected Health Information
Access, Amendment and Disclosure Accounting.


 


G.    Access.  Business Associate
will promptly upon Recipient’s or its Subsidiary’s or Affiliate’s request make
available to Recipient, its Subsidiary, its Affiliate, or, at Recipient’s or
such Subsidiary’s or Affiliate’s direction, to the individual (or the
individual’s personal representative) for inspection and obtaining copies any
PHI about the individual which Business Associate created for or received from
Recipient or its Subsidiary or Affiliate and that is in Business Associate’s
custody or control, so that Recipient or its Subsidiary or Affiliate may meet
its access obligations under 45 Code of Federal Regulations § 164.524.


 


H.    Amendment.  Upon Recipient’s or its
Subsidiary’s or Affiliate’s request Business Associate will promptly amend or
permit Recipient or its Subsidiary or Affiliate access to amend any portion of
the PHI which Business Associate created for or received from Recipient or its
Subsidiary or Affiliate, and incorporate any amendments to such PHI, so that
Recipient or its Subsidiary or Affiliate may meet its amendment obligations
under 45 Code of Federal Regulations § 164.526.


 


I.      Disclosure Accounting.  So that Recipient or its Subsidiaries or Affiliates may meet their
disclosure accounting obligations under 45 Code of Federal Regulations §
164.528:


 


1.     Disclosure
Tracking.  Business Associate will
record for each disclosure, not excepted from disclosure accounting under
Section V.C.2 below, that Business Associate makes to Recipient or its
Subsidiaries of PHI that Business Associate creates for or receives from
Recipient or its Subsidiaries, (i) the disclosure date, (ii) the name and
member or other policy identification number of the person about whom the
disclosure is made, (iii) the name and (if known) address of the person or
entity to whom Business Associate made the disclosure, (iv) a brief description
of the PHI disclosed, and (v) a brief statement of the purpose of the
disclosure (items i-v, collectively, the “disclosure information”).  For repetitive disclosures Business
Associate makes to the same person or entity (including Recipient or its
Subsidiaries) for a single purpose, Business Associate may provide a) the
disclosure information for the first of these repetitive disclosures, (b) the
frequency, periodicity or number of these repetitive disclosures and (c) the
date of the last of these repetitive disclosures.  Business Associate will make this disclosure information
available to Recipient or its Subsidiaries promptly upon Recipient’s or its
Subsidiaries’ request.


 


2.     Exceptions
from Disclosure Tracking.  Business
Associate need not record disclosure information or otherwise account for
disclosures of PHI that this Addendum or Recipient or the relevant Subsidiary
or Affiliate in writing permits or requires (i) for the purpose of Recipient’s
or its Subsidiaries’ treatment activities, payment activities, or health care
operations, (ii) to the individual who is the subject of the PHI disclosed or
to that individual’s personal representative; (iii) to persons involved in that
individual’s


 


4

















 


health care or payment for health care; (iv) for
notification for disaster relief purposes, (v) for national security or
intelligence purposes, (vi) to law enforcement officials or correctional
institutions regarding inmates; or   (vii) pursuant to an
authorization; (viii) for disclosures of certain PHI made as part of a Limited
Data Set; (ix) for certain incidental disclosures that may occur where
reasonable safeguards have been implemented; and (x) for disclosures prior to
April 14, 2003.


 


3.     Disclosure
Tracking Time Periods.  Business
Associate must have available for Recipient and its Subsidiaries the disclosure
information required by this section for the 6 years preceding Recipient’s or
its Subsidiaries’ request for the disclosure information (except Business
Associate need have no disclosure information for disclosures occurring before
April 14, 2003).


 


VI            Additional Business Associate
Provisions


 


J.     Reporting
of Breach of Privacy Obligations. 
Business Associate will provide written notice to whichever of the
Recipient or its Subsidiary or Affiliate for which the relevant PHI was created
or from which the relevant PHI was received of any use or disclosure of PHI
that is neither permitted by this Addendum nor given prior written approval by
Recipient or the relevant Subsidiary or Affiliate promptly after Business
Associate learns of such non-permitted use or disclosure.  Business Associate’s report will at least:


 


(i)            Identify
the nature of the non-permitted use or disclosure;


 


(ii)           Identify
the PHI used or disclosed;


 


(iii)          Identify
who made the non-permitted use or received the non-permitted disclosure;


 


(iv)          Identify
what corrective action Business Associate took or will take to prevent further
non-permitted uses or disclosures;


 


(v)           Identify
what Business Associate did or will do to mitigate any deleterious effect of
the non-permitted use or disclosure; and


 


(vi)          Provide such other information, including a written
report, as Recipient or the relevant Subsidiary or Affiliate may reasonably
request.


 


K.    Amendment.  Upon the effective date
of any final regulation or amendment to final regulations promulgated by the
U.S. Department of Health and Human Services with respect to PHI, including,
but not limited to the HIPAA privacy and security regulations, this Addendum
and the Agreement will automatically be amended so that the obligations they
impose on Business Associate remain in compliance with these regulations.


 


In addition, to the extent that new state or federal
law requires changes to Business Associate’s obligations under this Addendum,
this Addendum shall automatically be amended to include such additional
obligations, upon notice by Recipient or its Subsidiaries to Business Associate
of such obligations.  Business
Associate’s continued performance of services under the Agreement shall be
deemed acceptance of these additional obligations.


 


5

















 


L.     Audit and Review of Policies and Procedures.  Business
Associate agrees to provide, upon Recipient request, access to and copies of
any policies and procedures developed or utilized by Business Associate
regarding the protection of PHI.  Business
Associate agrees to provide, upon Recipient’s request, access to Business
Associate’s internal practices, books, and records, as they relate to Business
Associate’s services, duties and obligations set forth in this Addendum and the
Agreement(s) under which Business Associate provides services and / or products
to or on behalf of Recipient or its Subsidiaries, for purposes of Recipient’s
or its Subsidiaries’ review of such internal practices, books, and records.


 


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