Exhibit 7
Form of Assumption Reinsurance Agreement
ASSUMPTION REINSURANCE AGREEMENT
by and between
ACACIA NATIONAL LIFE INSURANCE COMPANY,
SELLER,
and
AMERITAS VARIABLE LIFE INSURANCE COMPANY,
PURCHASER,
Dated as of April 1, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................1
ARTICLE II BUSINESS ASSUMED.............................................1
ARTICLE III NOTICES; ASSUMPTION CERTIFICATES; NOVATIONS.................2
ARTICLE IV TERRITORY....................................................3
ARTICLE V CONTRACT ADMINISTRATION.......................................3
ARTICLE VI PREMIUMS; RECOVERIES.........................................4
ARTICLE VII TRANSFER OF ASSETS..........................................4
ARTICLE VIII OFFSETS....................................................4
ARTICLE IX ERRORS AND OMISSIONS.........................................5
ARTICLE X DUTY OF COOPERATION...........................................5
ARTICLE XI ARBITRATION..................................................5
ARTICLE XII MISCELLANEOUS PROVISIONS....................................6
Section 1.01. Notices..........................................6
Section 1.02. Amendment........................................7
Section 1.03. Counterparts.....................................7
Section 1.04. No Third Party Beneficiaries.....................7
Section 1.05. Assignment.......................................7
Section 1.06. Governing Law....................................7
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Form of Contractholder Notice
EXHIBIT C Form of Certificates of Assumption
EXHIBIT D Form of Rider
SCHEDULES
SCHEDULE 1.01 Policies
SCHEDULE 1.02 Purchaser New Separate Account
SCHEDULE 1.03 Seller Separate Account
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ASSUMPTION REINSURANCE AGREEMENT
THIS ASSUMPTION REINSURANCE AGREEMENT (this "Agreement"),
dated as of April 1, 2002, is made by and between Acacia National Life Insurance
Company, a District of Columbia domiciled stock life insurance company
("Seller"), and Ameritas Variable Life Insurance Company, a Nebraska domiciled
stock life insurance company ("Purchaser").
WHEREAS, Seller has agreed to cede and transfer to Purchaser
the Policies (as defined below) and Purchaser has agreed to assume the rights,
obligations and liabilities of Seller under the Policies; and
WHEREAS, Seller and Purchaser are, concurrently with the
execution of this Agreement, entering into a Coinsurance Agreement (the
"Coinsurance Agreement") whereby Seller will cede and Purchaser will reinsure,
on an indemnity reinsurance basis, the obligations of Seller under the Policies
pending the assumption of the Policies by Purchaser under this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein and upon the terms and conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings given them in Exhibit A hereto.
ARTICLE II
BUSINESS ASSUMED
Upon the terms and subject to the conditions and other
provisions of this Agreement and any required governmental and regulatory
consents and approvals, Seller hereby agrees to cede to Purchaser and Purchaser
hereby agrees to accept and assume the Policies.
ARTICLE III
NOTICES; ASSUMPTION CERTIFICATES; NOVATIONS
Purchaser shall prepare for mailing to each Contractholder
that is resident in a state where Seller and Purchaser have obtained all
required regulatory approvals for the assumption of the Policies, a notice
substantially in the form attached hereto as Exhibit B (such option letters are
hereinafter referred to as the "Contractholder Notices"). The Contractholder
Notices shall be mailed by Purchaser to each such Contractholder, at the sole
expense of Purchaser, on the date when all required regulatory approvals have
been obtained for the assumption of each such Policy by Purchaser or as soon as
practicable thereafter. Each Contractholder Notice shall be dated the date upon
which it is mailed.
Subject to regulatory requirements of the various states with
respect to Contractholders resident in such states, Seller and Purchaser agree
that a Contractholder will remain a Contractholder of Seller if a rejection of
the assumption is delivered by such Contractholder to Seller or Purchaser prior
to the expiration of the 30-day period which will commence on the date that the
Contractholder Notice is sent to such Contractholder.
Purchaser shall also prepare and mail certificates of
assumption in the form attached hereto as Exhibit C (the "Certificates of
Assumption").
Policies assumed by Purchaser hereunder as provided for above
shall be deemed to have been assumed by novation and shall be defined herein as
"Novated Contracts." Except as set forth below in this Article III, the
assumption and novation of a Policy shall be effective upon the date specified
in the Certficate of Assumption sent in respect of such Policy, which date shall
be (i) if the Certificate of Assumption is mailed on or prior to the 25th day of
any month, the first day of the second month following the month in which such
certificate is mailed, and (ii) if the Certificate of Assumption is mailed after
the 25th day of any month, the first day of the third month following the month
in which such certificate is mailed. With respect to a Policy held by a
Contractholder resident in a state where the regulatory requirements provide for
a novation procedure different from the novation procedure set forth in the
preceding sentence, the effective date of assumption and novation shall be as
set forth in the Certificate of Assumption sent to such Contractholder, such
notice to be prepared in accordance with such regulatory requirements.
Notwithstanding the foregoing, the effective date of assumption and novation of
a Policy that has Seller Separate Account Liabilities related thereto shall be
no earlier than the date upon which the assets supporting such Seller Separate
Account Liabilities are transferred to the Purchaser New Separate Account.
Purchaser shall be the successor to Seller under the Novated
Contracts as if the Novated Contracts were direct obligations originally issued
by Purchaser. Purchaser shall be substituted in the place and stead of Seller,
and each Contractholder under a Novated Contract shall be entitled to disregard
Seller as a party thereto and treat Purchaser as if it had been
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originally obligated thereunder. Each such Contractholder shall have the right
to file claims arising under the Novated Contracts on or after the Assumption
Date of such novation directly with Purchaser and shall have a direct right of
action for Policy Liabilities reinsured thereunder against Purchaser, and
Purchaser hereby consents to be subject to direct action taken by any
Contractholder under a Novated Contract. Purchaser accepts and assumes the
Novated Contracts subject to any and all defenses, setoffs and counterclaims to
which Seller would be entitled in relation to the Policy Liabilities, it being
expressly understood and agreed by the parties hereto that no such defenses,
setoffs or counterclaims are waived by the execution of this Agreement or the
consummation of the transactions contemplated hereby and that Purchaser shall be
fully subrogated to all such defenses, setoffs and counterclaims.
Seller and Purchaser agree that, where the regulatory
requirements of a particular state provide for a novation procedure different
from that set forth in this Article III, Policies owned by a Contractholder
resident in such state will be novated in accordance with such procedure. In
addition, notwithstanding the form of the Exhibits referred to above in this
Article III, the parties agree that such Exhibits will be modified for use in
the various states to the extent required to comply with local regulatory
requirements or as agreed by the parties.
As soon as practicable after the Closing Date, Purchaser
shall, in lieu of providing a Contractholder Notice to owners of Policies issued
thereafter, cause a rider substantially in the form attached hereto as Exhibit D
to be provided to the Contractholder upon original issuance of each such Policy.
ARTICLE IV
TERRITORY
This Agreement shall apply to Policies covering lives and
risks wherever resident or situated.
ARTICLE V
CONTRACT ADMINISTRATION
Following the respective Assumption Dates of the Novated
Contracts, Purchaser shall have sole responsibility for the administration and
servicing of the Novated Contracts. Seller agrees that, after the respective
Assumption Dates of the Novated Contracts, it will forward to Purchaser
immediately upon receipt all notices and other written communications received
by it relating to Novated Contracts (including, without limitation, all
inquiries or complaints from state insurance regulators, agents, brokers and
insureds and all notices of claims, suits and actions for which it receives
service of process).
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ARTICLE VI
PREMIUMS; RECOVERIES
Seller shall remit to Purchaser or Purchaser shall retain, as
applicable, 100% of all premiums, contract loan repayments and other amounts
received by Seller or Purchaser with respect to the Novated Contracts on or
after the respective Assumption Dates including, but not limited to, all
administrative expense and deposit charges deducted from the remittance of
premiums or other amounts billed separately, asset charges collected, market
value adjustments collected and back-end loadings collected under the Novated
Contracts.
Effective on the respective Assumption Dates, Purchaser shall
have sole direct responsibility for billing and collecting premiums in respect
of, and principal and interest payments on Policy loans under, the Novated
Contracts.
ARTICLE VII
TRANSFER OF ASSETS
Seller shall, on the Assumption Date of each Policy which has
Separate Account Liabilities related thereto, transfer to the appropriate
Purchaser New Separate Account the Policy Account of the Seller Separate Account
which supports the Separate Account Liabilities arising under each Novated
Contract.
In the event that assets are transferred to the Purchaser New
Separate Account with respect to a Novated Contract which is subsequently
determined not to have been novated, Purchaser shall transfer to the Seller
Separate Account the assets in the Purchaser New Separate Account relating to
the separate account liabilities arising under such Policy on the date of
transfer.
ARTICLE VIII
OFFSETS
Any debts or credits between Seller and Purchaser arising
under this Agreement, the Asset Purchase Agreement and the Coinsurance Agreement
are deemed mutual debts or credits, as the case may be, and shall be netted or
set off, as the case may be, and only the balance shall be allowed or paid
hereunder.
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ARTICLE IX
ERRORS AND OMISSIONS
Inadvertent delays, errors or omissions made by either Seller
or Purchaser in connection with this Agreement or any transaction hereunder
shall not relieve the other party from any liability which would have attached
to such party had such delay, error or omission not occurred, provided that the
party causing such delay error or omission rectifies the same as soon as
possible after its discovery thereof.
ARTICLE X
DUTY OF COOPERATION
Each party hereto shall cooperate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement.
This duty to cooperate shall include, without limitation, (i) obtaining the
governmental and regulatory consents and approvals and taking the other steps
necessary for the assumption of the Policies, as described in Article III
hereof, (ii) making any required agent or registered representative
appointments, assignments of participation agreements and other agreements with
mutual fund organizations and (iii) otherwise ensuring a smooth transition of
the Business to Purchaser as the assumption reinsurance becomes effective.
ARTICLE XI
ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement or any breach of this Agreement, including any controversy or claim as
to its arbitrability or rescission, shall be finally settled by arbitration
administered by the American Arbitration Association ("AAA") in accordance with
its Commercial Arbitration Rules and the Federal Arbitration Act. If the AAA is
not then in existence, the arbitration shall be governed by the Commercial
Arbitration Rules last in effect. Any party seeking arbitration must give the
other 30 days written notice of that intent. The arbitrators shall be active or
retired officers of insurance or reinsurance companies domiciled in the United
States; the arbitrators shall not have a personal or financial interest in the
result of the arbitration. A single arbitrator or, in the case of a dispute in
which the amount in controversy exceeds $100,000, a panel of 3 arbitrators (one
chosen by each party and the third selected by the 2 arbitrators so chosen)
shall interpret this Agreement pursuant to Nebraska law and shall base any
decision or award on applicable law and judicial precedent. Any arbitration
shall be conducted in Lincoln, Nebraska, unless the parties mutually agree to
another location. The arbitrator(s) shall not, under any circumstances, have any
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authority to award punitive or exemplary damages.
All expenses associated with obtaining and utilizing the
services of the AAA and the arbitrator(s), and as otherwise provided in the
Commercial Arbitration Rules, shall be shared equally by the parties hereto, and
the arbitrator(s) shall request payment separately from each party for said
expenses. Each party shall bear its own expenses of preparing for and
participating in the arbitration, including attorney and witness fees and
discovery costs.
The parties may engage in discovery, pursuant to the Federal
Rules of Civil Procedure, to the extent such discovery is consistent with the
purpose of the arbitration and is permitted by the arbitrator(s).
The decision or award of the arbitrator(s) shall be final,
binding, and enforceable. The decision of the arbitrator(s) shall be in writing
and shall set forth in reasonable detail the basis for the decision. Application
may be made to any court of competent jurisdiction for judicial acceptance of
the arbitration award and enforcement, as the law of the state having
jurisdiction may require or allow.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01 Notices. All notices or communications required or permitted under this
Agreement will be in writing and be deemed given: (i) five (5) Business Days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; (ii) one (1) Business Day after deposit with a
commercial overnight carrier, with written verification of receipt; or (iii)
when sent via facsimile with confirmation. Notice sent by any other method shall
be effective only upon actual receipt. All communications will be sent to the
parties at the addresses set forth below:
(i) If to Seller to:
Acacia National Life Insurance Company
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
and a copy to: General Counsel
(ii) If to Purchaser to:
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Ameritas Variable Life Insurance Company
5900 "O" Xxxxxx
XXXXX, Xxxxxxxx 00000
Attn: President
and a copy to: General Counsel
With a copy to:
AmerUs Life Insurance Company
000 0xx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Any party may, by notice given in accordance with this
Agreement to the other party, designate another address or person for receipt of
notices hereunder.
12.02 Amendment. This Agreement may not be modified, changed,
discharged or terminated, except by an instrument in writing signed by an
authorized officer of each of the parties hereto.
12.03 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
12.04 No Third Party Beneficiaries. Except as otherwise
specifically provided for herein, nothing in this Agreement is intended or shall
be construed to give any Person, other than the parties hereto, their successors
and permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12.05 Assignment. 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 hereunder, may be assigned by either party (in whole or in part) without
the prior written consent of the other party hereto.
12.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Nebraska, without giving
effect to the principles of conflicts of laws thereof.
12.07 Construction. Each party has participated to a
significant degree in the drafting and preparation of this Agreement. No
provision of this Agreement shall be construed against any party on the basis of
that party being the "drafter."
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IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the Effective Date.
Ameritas Variable Life Insurance Company Acacia National Life Insurance Company
By:____________________________________ By: _______________________________
Xxxxxxx X. Xxxxxxxx, President Xxxxxxx X. Xxxxx, Chairman &
Chief Executive Officer
Attest: Attest:
By: __________________________________ By: _______________________________
Xxxxxx X. Xxxxxxx Printed Name:_______________________
Title: _________________________________ Title: ____________________________
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EXHIBIT A
to Asset Transfer Agreement, Coinsurance Agreement and
Assumption Reinsurance Agreement, each dated as of April 1, 2002
DEFINITIONS
"180-Day Treasury Rate" means the annual yield rate, on the date to which the
180-Day Treasury Rate relates, of actively traded U.S. Treasury securities
having a remaining duration to maturity of six months, as such rate is published
under "Treasury Constant Maturities" in Federal Reserve Statistical Release
H.15(519).
"1940 Act" means the Investment Company Act of 1940, as amended, and all rules
and regulations thereunder.
"Accrued Liabilities" has the meaning set forth in Section 2.03(b) of the Asset
Transfer Agreement.
"Affiliate" means, with respect to any Person, at the time in question, any
other Person controlling, controlled by or under common control with such
Person.
"Annual Rate" means the value of r in the expression (1 + r)n/365 - 1, where "n"
is equal to the number of days for which interest is to be computed and the
result of the expression is the interest factor for computing the applicable
interest amounts.
"Annual Statement" means the NAIC Annual Statement Blank filed with the District
of Columbia for the applicable year(s).
"Applicable Law" means any federal, state, local or foreign law (including
common law), statute, ordinance, rule, regulation, order, writ, injunction,
judgment, permit, governmental agreement or decree applicable to a Person or any
such Person's subsidiaries, properties, assets, or to such Person's officers,
directors, managing directors, employees or agents in their capacity as such.
"Asserted Liability" has the meaning set forth in Section 10.02 of the Asset
Transfer Agreement.
"Asset Transfer Agreement" means the Asset Transfer Agreement entered into by
and between Purchaser and Seller dated as of April 1, 2002.
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"Assumption Date" means that date with respect to particular policies on which
the assumption reinsurance of the particular policies becomes effective pursuant
to a Certificate of Assumption and relevant state law.
"Assumption Reinsurance Agreement" means the Assumption Reinsurance Agreement
between Purchaser and Seller in the form of Exhibit D to the Asset Transfer
Agreement.
"Books and Records" means all records and all other data and information (in
whatever form maintained) in the possession or control of Seller and relating
primarily to the Business as currently conducted, including administrative
records, claim records, policy files, sales records, files and records relating
to regulatory matters, reinsurance records, underwriting records and accounting
records, but excluding any Tax Returns and work papers; provided, however, that
if any such financial or accounting records contain information which does not
relate to the Business, such information shall not constitute "Books and
Records".
"Business" has the meaning set forth in the preamble.
"Business Day" shall mean each day on which a valuation of the Seller Separate
Accounts is required by Applicable Law or the terms of the Policies, which as of
the Effective Date of these agreements was each day that the New York Stock
Exchange is open for trading.
"Certificates of Assumption" has the meaning set forth in Article III of the
Assumption Reinsurance Agreement.
"Claims Notice" has the meaning set forth in Section 10.02 of the Asset Transfer
Agreement.
"Closing" means the closing of the transactions provided for in the Asset
Transfer Agreement, which shall include the execution and delivery of each of
the Related Agreements.
"Closing Balance Sheet" means the closing balance sheet set forth as Exhibit B
to the Asset Transfer Agreement, as described in Section 2.02 of such agreement.
"Closing Date" means the first day of the month following the month in which the
last of the conditions set forth in the Asset Transfer Agreement has been
satisfied or waived in writing, or such other date as the parties may agree to
in writing; provided, however, if such date is not a Business Day, the Closing
Date shall be the immediately succeeding Business Day.
"Closing Material Adverse Effect" means a material adverse effect on the
financial condition and results of operations of the Business taken as a whole;
provided, however, that the following shall be excluded from the definition of
"Closing Material Adverse Effect" and from any determination as to whether a
Closing Material Adverse Effect has occurred or may occur: (i) any adverse
change or effect that is caused by or that arises out of conditions affecting
the economy or financial, banking, currency or capital markets in general; (ii)
any adverse change
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or effect that is caused by or that arises out of conditions affecting the life
insurance industry, the variable insurance products industry or the insurance or
financial services industry generally; (iii) any adverse change or effect that
is caused by or that arises out of any downgrade or potential downgrade of the
financial strength, claims paying ability, insurance or other ratings of Seller
or any of its Affiliates; and (iv) any adverse change or effect resulting from
the announcement or the pendency of the transactions contemplated by the Asset
Transfer Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
"Coinsurance Agreement" means the Coinsurance Agreement between Purchaser and
Seller in the form of Exhibit C to the Asset Transfer Agreement.
"Consideration Amount" has the meaning set forth in Section 2.01 of the Asset
Transfer Agreement.
"Contractholder Notices" has the meaning set forth in Article III of the
Assumption Reinsurance Agreement.
"Contractholders" means owners of the Policies.
"DAC Tax Credit" means the present value at a 12% discount rate of the
unamortized portion of the capitalized policy acquisition expenses under Section
848 of the Code at April 1, 2002 on the Business times the maximum applicable
marginal corporate federal income tax percentage (35%), as set forth in Section
11 of the Internal Revenue Code.
"Effective Date" means April 1, 2002.
"Enforceability Exceptions" has the meaning set forth in Section 3.02 of the
Asset Transfer Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extra Contractual Obligations" shall mean all liabilities and obligations for
consequential, extra-contractual, exemplary, punitive, special or similar
damages (other than those arising under the express terms and conditions of the
Policies) which arise from any real or alleged act, error or omission, whether
or not intentional, in bad faith or otherwise, including, without limitation,
any act, error or omission relating to (1) the marketing, underwriting,
production, issuance, cancellation or administration of the Policies, (2) the
investigation, defense, trial, settlement or handling of claims, benefits, or
payments under the Policies, or (3) the failure to pay or the delay in payment
of benefits, claims or any other amounts due or alleged to be due under or in
connection with the Policies.
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"Final Balance Sheet" has the meaning given in Section 2.03(c) of the Asset
Transfer Agreement.
"General Account" means the General Account of Seller.
"General Account Reserves" means the General Account statutory reserves of
Seller with respect to the Policies determined pursuant to SAP, as such reserves
would have been included in [lines 10.1, 10.2 or 10.3] of the Liabilities,
Surplus and Other Funds page of the NAIC Annual Statement Blank (2001 format),
including any general account statutory reserve adjustments in relation to
Separate Account Liabilities.
"GAAP" shall mean generally accepted accounting principles consistently applied
throughout the specified period and in the comparable period in the immediately
preceding year.
"Governmental Entity" means any foreign, federal, state, local, municipal,
county or other governmental, quasi-governmental, administrative or regulatory
authority, body, agency, court, tribunal, commission or other similar entity
(including any branch, department, agency or political subdivision thereof).
"Governmental Order" means any legally binding order or directive issued by a
Governmental Entity.
"Income Tax" means any Tax that is, in whole or in part, based on or measured by
gross or net income or gains.
"Indemnity Cap" shall have the meaning set forth in Section 10.01(a) of the
Asset Transfer Agreement.
"Indemnity Threshold" means $50,000.
"Knowledge of Purchaser" or similar words or phrases means the actual knowledge
of any director, officer, manager or supervisor of Purchaser or such knowledge
which should have been obtained by any such individual in the normal course of
performing the duties attendant to his or her position.
"Knowledge of Seller" or similar words or phrases means the actual knowledge of
any director, officer, manager or supervisor of Seller or such knowledge which
should have been obtained by any such individual in the normal course of
performing the duties attendant to his or her position.
"Lien" means any lien, pledge, security interest, encumbrance, restriction,
easement, limitation, claim, charge or defect of title; provided that such term
shall not include restrictions imposed by any applicable insurance holding
company act or state or federal securities laws.
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"Losses" and individually "Loss" has the meaning set forth in Section 10.01(a)
of the Asset Transfer Agreement.
"Novated Contracts" shall mean Policies assumed by Purchaser under the
Assumption Reinsurance Agreement, as defined in Article III thereof.
"Permits" means all licenses, permits, orders, approvals and non-disapprovals,
registrations, authorizations, qualifications and filings with and under all
federal, state, local or foreign laws and governmental or regulatory bodies.
"Permitted Liens" mean, as to any asset, means each of the following: (i) Liens
for Taxes, assessments and governmental charges or levies not yet due and
payable or which are being contested in good faith; (ii) Liens imposed by law,
including without limitation materialmen's, mechanics', carriers', workmen's and
repairmen's liens and other similar liens arising in the ordinary course of
business; (iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations; (iv) Liens related to deposits to secure policyholders' obligations
as required by the insurance departments of the various states; (v) Liens that
do not in the aggregate materially detract from the value or materially
interfere with the present or reasonably contemplated use of such asset in the
Business; and (vi) minor survey exceptions, reciprocal easement agreements and
other customary encumbrances on title to real property.
"Person" means any individual, corporation, limited liability company,
partnership, limited partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental, judicial or
regulatory body or other entity.
"Policy Account" shall mean, for each Policy, an amount equal to the account
value thereof invested on a variable basis and held by Seller in the Seller
Separate Accounts.
"Policy Liability" or "Policy Liabilities" shall mean the liability of the
Seller based upon or arising out of the express written terms of the Policies,
but shall not include any Extra Contractual Obligations based on acts, errors or
omissions by the Seller or any of its officers, employees, agents or
representatives (including any Person performing services, including without
limitation administrative or management services, for Seller prior to the
Closing Date), and any attorneys' fees incurred by the Seller related to such
Extra Contractual Obligations. Without limiting the foregoing, the term "Policy
Liabilities" shall include, without limitation, any and all of the Seller's
liability:
(1) For liabilities and obligations in respect of the Policies, including
Extra Contractual Obligations based on acts, errors or omissions by the
Purchaser or any of its officers, employees, agents or representatives
(including any Person performing services, including without limitation
administrative or management services, for Purchaser with
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respect to the Business on and after the Closing Date), and any
attorneys' fees incurred by the Seller related to such liabilities and
obligations; and
(2) For premium Taxes arising on account of premiums received by the Seller
in respect of the Policies and remitted to the Purchaser or otherwise
received by the Purchaser at or after the Effective Date (paid to
Seller as an agreed-upon ceding allowance pursuant to the Coinsurance
Agreement); and
(3) For non-amortizable guaranty fund assessments and similar charges
imposed based upon premiums paid with respect to the Policies; and
(4) For returns or refunds of premiums (irrespective of when due) under
the Policies payable at or after the Effective Date; and
(5) For commission payments and other compensation, if any, payable to or
for the benefit of agents and brokers arising on account of premiums
received by the Seller in respect of the Policies and remitted to the
Purchaser or otherwise received by the Purchaser at or after the
Effective Date (paid to Seller as an agreed-upon ceding allowance
pursuant to the Coinsurance Agreement); and
(6) For all liabilities (other than Extra Contractual Obligations) arising
out of any changes to the terms or conditions of the Policies mandated
by Applicable Law; and
(7) For all unclaimed property liabilities arising under or relating to the
Policies; and
(8) Any payments the Seller fails to collect under the Third Party
Reinsurance Agreements; and
(9) For Policy claims incurred but not reported prior to the Effective Date
and Policy claims in course of settlement as of the Effective Date.
"Policy" or "Policies" shall mean all binders, policies, endorsements, riders,
certificates and other contracts of insurance and annuity contracts issued by
the Seller that are either in force as of the Closing Date or issued thereafter
at the request of Purchaser within one year of the Effective Date and are on
forms identified in Exhibit C to the Coinsurance Agreement, a copy of which is
attached as Schedule 1.01 to the Assumption Reinsurance Agreement, and which is
made a part hereof by reference. Also included in the definition of "Policies"
are any such insurance policies, certificates and contracts that have lapsed and
that otherwise would be eligible for inclusion herein, subject to reinstatement
pursuant to reinstatement procedures contained in such policies, certificates
and contracts.
"Post-Effective Date Accounting" shall have the meaning set forth in Section
8.03 of the Coinsurance Agreement.
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"Pre-Paid Items and Receivables" shall have the meaning set forth in Section
2.03(b) of the Asset Transfer Agreement.
"Purchaser" shall have the meaning set forth in the introductory paragraph of
the Asset Transfer Agreement.
"Purchaser Existing Separate Accounts" means the separate accounts of Purchaser
established in connection with Purchaser's Policies.
"Purchaser Extra Contractual Obligations" shall mean all liabilities and
obligations for consequential, extra-contractual, exemplary, punitive, special
or similar damages (other than those arising under the express terms and
conditions of the Purchaser's Policies) which arise from any real or alleged
act, error or omission, whether or not intentional, in bad faith or otherwise,
including, without limitation, any act, error or omission relating to (1) the
marketing, underwriting, production, issuance, cancellation or administration of
the Purchaser's Policies, (2) the investigation, defense, trial, settlement or
handling of claims, benefits, or payments under the Purchaser's Policies, or (3)
the failure to pay or the delay in payment of benefits, claims or any other
amounts due or alleged to be due under or in connection with the Purchaser's
Policies.
"Purchaser Indemnitees" shall have the meaning set forth in Section 10.01(a) of
the Asset Transfer Agreement.
"Purchaser Material Adverse Effect" means a material adverse effect on the
financial condition and results of operations of the Purchaser's Business taken
as a whole; provided, however, that the following shall be excluded from the
definition of "Purchaser Material Adverse Effect" and from any determination as
to whether a Purchaser Material Adverse Effect has occurred or may occur: (i)
any adverse change or effect that is caused by or that arises out of conditions
affecting the economy or financial, banking, currency or capital markets in
general; (ii) any adverse change or effect that is caused by or that arises out
of conditions affecting the life insurance industry, the variable insurance
products industry or the insurance or financial services industry generally;
(iii) any adverse change or effect that is caused by or that arises out of any
downgrade or potential downgrade of the financial strength, claims paying
ability, insurance or other ratings of Purchaser or any of its Affiliates; and
(iv) any adverse change or effect resulting from the announcement or the
pendency of the transactions contemplated by the Asset Transfer Agreement.
"Purchaser New Separate Accounts" means the separate accounts of Purchaser
listed on Schedule 1.01(a) to the Asset Transfer Agreement, a copy of which is
attached to the Assumption Reinsurance Agreement as Schedule 1.02.
"Purchaser's Business" means the variable annuity and variable life insurance
policies issued by and in the name of Purchaser.
15
"Purchaser's Policies" means all binders, policies, endorsements, riders,
certificates and other contracts of insurance and annuity contracts issued by
and in the name of Purchaser that are in force as of the Closing Date.
"Purchaser Statutory Statements" has the meaning set forth in Section 4.09(a) of
the Asset Transfer Agreement.
"Reinsurance Period" shall mean the period of time from the Effective Date
through the termination of the Coinsurance Agreement.
"Related Agreements" means the Coinsurance Agreement and the Assumption
Reinsurance Agreement.
"Related Assessment" has the meaning set forth in Section 3.01(a) of the
Coinsurance Agreement.
"SAP" means statutory accounting practices prescribed or permitted by the
insurance regulatory authorities of the District of Columbia or the State of
Nebraska, as applicable.
"Securities Act" means the Securities Act of 1933, as amended, and all rules and
regulations thereunder.
"Seller" shall have the meaning set forth in the introductory paragraph of the
Asset Transfer Agreement.
"Seller Indemnitees" shall have the meaning set forth in Section 10.01(b) of the
Asset Transfer Agreement.
"Seller Separate Accounts" means the separate accounts of Seller listed on
Schedule 1.01(b) to the Asset Transfer Agreement, a copy of which is attached to
the Assumption Reinsurance Agreement as Schedule 1.03.
"Seller's Share" shall have the meaning set forth in Section 10.01(b) of the
Asset Transfer Agreement.
"Separate Account Liabilities" means those Policy Liabilities that are reflected
in the Seller Separate Accounts.
"Statutory Statements" has the meaning set forth in Section 3.10(a).
"Statutory Reserve" shall mean all reserves computed in accordance with
statutory reserving requirements.
16
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" (or "Tax" as the context may require) means all federal, state, county,
local foreign and other taxes or withholding (including, without limitation,
Income Tax, payroll and employee withholding, unemployment insurance, social
security, premium, excise, sales, use, gross receipts, franchise, ad valorem,
severance, capital and property taxes, and other governmental charges and
assessments), and includes interest, additions to tax and penalties with respect
thereto.
"Transferred Assets" means (i) the cash and securities referred to in Section
2.02 of the Asset Transfer Agreement; (ii) assets held in the Seller Separate
Accounts that relate to the Policies and are equal to the Separate Account
Liabilities as to which the Coinsurance Agreement and the Assumption Reinsurance
Agreement are effected; (iii) the Policy loans and all of Seller's rights and
interests under the Policies to receive principal and interest paid on Policy
loans on or after the Closing Date; (iv) an amount equal to the Accrued
Liabilities; (v) an amount equal to the DAC Tax Credit of $1,706,000; (vi) all
of Seller's rights and interests to premiums due or to become due under or in
connection with the Policies, premiums deferred and uncollected, premium
adjustments and any premium amounts held, received or collected by Seller on or
after the Effective Date, except to the extent any of the foregoing are included
in the cash and securities referred to in Section 2.02 of the Asset Purchase
Agreement; and (vii) Books and Records.
"Third Party Reinsurance Agreements" shall mean all reinsurance agreements to
which the Seller is a party and pursuant to which it cedes a portion of its risk
under the Policies (other than the Asset Transfer Agreement and the Related
Agreements).
17
Exhibit B
FORM OF CONTRACTHOLDER NOTICE
ACACIA NATIONAL LIFE INSURANCE COMPANY
____________, 2002
[Contractholder address]
Re: [Policy Number]
[Name of Contractholder]
Dear Contractholder:
Effective April 1, 2002, Ameritas Variable Life Insurance Company
("AVLIC") has agreed to become the insurer under the [life insurance/annuity]
policy identified above, which was issued by Acacia National Life Insurance
Company ("ANLIC"). We assure you that the provisions of your policy will remain
exactly the same.
The reason for this change is that ANLIC has decided to no longer
market or be in the business of variable life and annuity policies. Because
AVLIC specializes in this type of product, you can be assured of continued
quality service. AVLIC has been writing variable life insurance since ________
and has a reputation of good products and service. Their people are insurance
professionals who will work hard to please you. We think you will find it a
pleasure to work with them.
This assumption has been approved by the Departments of Insurance of
the District of Columbia and the State of Nebraska, the insurance departments of
the jurisdictions of domicile of ANLIC and AVLIC, respectively.
Whenever you need assistance with your policy, please contact AVLIC
directly.
Ameritas Variable Life Insurance Company
[address]
[phone]
Any premium deposit or loan repayment should be directed to AVLIC at
the above address and should be made payable to AVLIC.
18
Enclosed with this letter is a Certificate of Assumption. Please read
it carefully. This letter and the enclosed certificate should be filed with your
policy for future reference.
Thank you for the continued opportunity of serving you.
Sincerely,
Acacia National Life Insurance Company
By:______________________________
19
Exhibit C
FORM OF CERTIFICATE OF ASSUMPTION
AMERITAS VARIABLE LIFE INSURANCE COMPANY
A Stock Company
[address]
CERTIFICATE OF ASSUMPTION
[Contract Number]
You are hereby notified that Ameritas Variable Life Insurance Company
("AVLIC") has, effective as of 12:01 a.m. on __________, 200_ (the "Effective
Date"), assumed liability for your contract of insurance (your "Policy") with
Acacia National Life Insurance Company ("ANLIC").
From and after the Effective Date, all references in the Policy to
ANLIC are hereby changed to AVLIC. AVLIC has assumed all rights and duties under
your Policy. ANLIC no longer has any obligations to you under your Policy.
Except for the substitution of AVLIC for ANLIC as your insurer, your
rights and duties under your Policy will not change as a result of the
assumption of your Policy.
All correspondence and inquiries such as deposits, contract changes,
and notices of claims should be submitted to AVLIC at the following address:
Ameritas Variable Life Insurance Company
0000 "X" Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
The policyowner has given consent to this transaction by either payment
of premium or by failing to send written notice of rejection to ANLIC or AVLIC
within ten (10) days from the date of mailing of this Certificate of Assumption.
This Certificate of Assumption, as of the Effective Date, forms a part
of and should be attached to your Policy issued to you by Acacia National Life
Insurance Company.
IN WITNESS WHEREOF, AVLIC has caused this Certificate of Assumption to
be duly signed and issued.
-------------------- --------------------
Secretary President
Exhibit D
FORM OF RIDER
RIDER
Contract issued to:
----------------------------------
Effective date of rider: [Policy] Date
-----------------------------
Attached to and forming part of your [Policy/Contract] No. ___________ (herein
called the "Contract") issued by Acacia National Life Insurance Company
("ANLIC")
Your Contract will be assumed by AMERITAS VARIABLE LIFE INSURANCE
COMPANY ("AVLIC") shortly after it receives approval for its policy form in the
State of ____________________ and obtains any other required regulatory
approvals for such assumption. Thereafter AVLIC will be the insurer and promptly
after the effectiveness of such assumption it will issue a Certificate of
Assumption in the form attached hereto.
In the event that AVLIC does not obtain all such approvals, ANLIC will
remain as your insurer and your Contract will remain with ANLIC.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the
Contract other than as above stated.
IN WITNESS WHEREOF, ANLIC and AVLIC have each executed this Rider.
ACACIA NATIONAL LIFE INSURANCE COMPANY
___________________________________ ________________________________________
Secretary President
AMERITAS VARIABLE LIFE INSURANCE COMPANY
___________________________________ ________________________________________
Secretary President
2
SCHEDULE 1.01
Policies
Variable Annuities
------------------
8850 Allocator 2000
8888 Designer Unbundled
Variable Life
--------------
8010 Allocator 2000
8020 Executive Select - NQDC
8065 Regent 2000 - Survivorship
SCHEDULE 1.02
Purchaser New Separate Accounts
-------------------------------
Ameritas Variable Separate Account VL
Ameritas Variable Separate Account VA
SCHEDULE 1.03
Seller Separate Accounts
------------------------
Acacia National Variable Life Insurance Separate Account I
Acacia National Variable Annuity Separate Account II