EXHIBIT 10.03
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of December 29, 1998, by and among Seaboard Life Insurance
Company, a Canadian federal insurance company ("SLIC-Canada"), Seaboard Life
Insurance Company (USA), an Indiana insurance company and a direct wholly owned
Subsidiary of SLIC-Canada (the "Seller"), and Life Reassurance Corporation of
America, a Connecticut insurance company ("the Administrator").
RECITALS:
WHEREAS, the Seller and the Administrator are concurrently herewith
entering into a purchase agreement (the "Purchase Agreement"), which agreement
calls for, among other things, the provision of administrative services
described in this Agreement;
WHEREAS, the Seller and the Administrator are concurrently herewith
entering into an indemnity reinsurance agreement (the "Indemnity Reinsurance
Agreement"), pursuant to which the Seller shall cede to the Administrator, on a
100% coinsurance basis, the Seller's rights, liabilities, and obligations in
respect of the life insurance and annuity products identified in the Indemnity
Reinsurance Agreement (the "Reinsured Policies");
WHEREAS, in connection with the Indemnity Reinsurance Agreement, the
parties hereto desire that the Administrator perform, after the date which is
180 days after the Closing Date (the "Service Transition Date"), all services
required for complete support and administration of the Reinsured Policies on
behalf of the Seller in accordance with the terms and subject to the conditions
of this Agreement; and
WHEREAS, SLIC-Canada is currently performing certain administrative
services with respect to the Reinsured Policies of the Seller;
WHEREAS, the parties hereto desire to cooperatively provide for an orderly
transition in the performance of administrative services to the Administrator,
and the Seller and SLIC-Canada are willing to provide certain transitional
services from and after the Closing Date to the Service Transition Date so as to
enable the Administrator
to provide Administrative Services (as hereinafter defined) with respect to the
Reinsured Policies.
NOW, THEREFORE, in consideration of the transactions contemplated pursuant
to the Purchase Agreement and the Indemnity Reinsurance Agreement and the mutual
covenants and promises contained herein and for other good and valuable
consideration, and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
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Unless otherwise defined herein, capitalized terms used herein shall
have the meanings given them in the Purchase Agreement and the Indemnity
Reinsurance Agreement.
ARTICLE II
SERVICES; COMPENSATION
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SECTION 2.1. Support Services. During the period from the Closing
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Date to the Service Transition Date (the "Transition Period"), SLIC-Canada shall
provide to the Seller all services being provided by SLIC-Canada to Seller as of
the date hereof, including but not limited to the services set forth on Exhibit
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A hereto (the "Support Services"), it being understood that any and all previous
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arrangements between SLIC-Canada and the Seller regarding services to be
rendered are terminated and replaced by this Agreement.
SECTION 2.2. Compensation for Support Services. As compensation for
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the Support Services provided by SLIC-Canada hereunder, the Seller shall pay, or
cause to be paid, to SLIC-Canada a fee equal to 100% of SLIC-Canada's actual
cost of performing such Support Services (including without limitation any fees
or expenses paid by SLIC-Canada to consultants or other third parties in
connection with the provision of the Support Services). In determining such
actual cost, it is understood that the Seller will be charged for the actual
cost of any materials required for the rendering of Support Services, plus an
allocable portion (based on time devoted to the rendering of Support Services)
of the salaries of SLIC-Canada employees engaged, and the indirect expenses
(including without limitation the following expense categories: employee
benefits, payroll, taxes, rent, supplies and other overhead expenses incurred
by SLIC-Canada, in the rendering of Support Services), (such costs,
collectively, being referred to as SLIC-Canada's "Fully Loaded Costs").
SECTION 2.3. Data Conversion Services.
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(a) Data Conversion Services. During the Transition Period, SLIC-
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Canada will (i) provide the Administrator with reasonable access for the
Administrator, through its own efforts, to plan and move the data associated
with the Reinsured Policies from SLIC-Canada's computer systems to the
Administrator's computer systems, (ii) respond to the Administrator's questions
on product design and/or processing logic and (iii) provide a reasonable amount
of business analyst/system expertise to consult in the data migration effort
(collectively, the "Data Conversion Services"). SLIC-Canada is making such Data
Conversion Services available to the Administrator as an accommodation and, in
no event, will SLIC-Canada's liability for any damages whatsoever arising from
SLIC-Canada's delivery of, or failure to deliver, the Data Conversion Services
exceed the total price actually paid by the Seller for the Data Conversion
Services.
(b) Transition Matters.
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(i) SLIC-Canada will provide the Data Conversion Services for
the Transition Period.
(ii) Prior to the Closing Date, the Administrator and SLIC-Canada
will use their respective commercially reasonable efforts to jointly develop a
detailed plan for the data conversion contemplated by Section 2.3(a).
(c) Fees for Data Conversion Services. The fees charged by SLIC-
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Canada for the Data Conversion Services will not exceed SLIC-Canada's Fully
Loaded Costs for providing such services.
(d) Orderly Transfer. SLIC-Canada will use its commercially
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reasonable efforts to assist and cooperate with the Administrator in the orderly
transfer of the Business. SLIC-Canada will provide the Administrator a
reasonable level of access to SLIC-Canada's personnel skilled in delivering the
Data Conversion Services for purposes of general consultation and knowledge
transfer related to the Business. All costs of such transfer, including all
applicable taxes, will be borne by the Administrator.
(e) Data. The Administrator acknowledges that SLIC-Canada will
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archive all data related to the Business consistent with its current practices.
SECTION 2.4. Transition Services. From and after the Closing Date
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and until the Service Transition Date, the Seller shall provide, or arrange to
provide all services (excluding the Support Services and the Data Conversion
Services) required for complete support and administration of all Reinsured
Policies (the "Transition Services").
SECTION 2.5. Compensation for Services. As compensation for the
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Transition Services provided by the Seller hereunder, the Administrator shall
pay, or cause to be paid, to the Seller a fee equal to 100% of the Seller's
actual cost of performing such Transition Services (including without limitation
any fees or expenses paid by the Seller to consultants or other third parties in
connection with the provision of the Transition Services). In determining such
actual cost, it is understood that the Administrator will be charged for the
actual cost of any materials required for the rendering of Transition Services,
plus an allocable portion (based on time devoted to the rendering of Transition
Services) of the salaries of the Seller's employees engaged, and the indirect
expenses (including without limitation the following expense categories:
employee benefits, payroll, taxes, rent, supplies and other overhead expenses
incurred by the Seller, in the rendering of Transition Services), such costs,
collectively, being referred to as the Seller's "Fully Loaded Costs." In
addition, the Administrator shall pay to Seller the amount of fees paid by
Seller to SLIC-Canada under Section 2.2 and 2.3; provided, that in no event
shall the aggregate amount paid by the Administrator pursuant to this Section
2.5 exceed the expense levels reflected in the "Actuarial Appraisal of Seaboard
Life Insurance Company (USA) dated May 12, 1998 as of December 31, 1997 prepared
by Xxxxxxxx & Xxxxxxxxx."
SECTION 2.6. Payment Procedures. On or before the 15th day of each
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month, SLIC-Canada shall provide the Seller with a reasonably detailed invoice
setting forth amounts due with respect to the Support Services and Data
Conversion Services provided hereunder during the immediately preceding month.
On or before the 20th day of each month, Seller shall provide the Administrator
with a reasonably detailed invoice setting forth amounts due with respect to the
Transition Services, Support Services and Data Conversion Services provided
hereunder during the immediately preceding month. Within ten Business Days
after receipt by the Administrator of each such invoice, the Administrator shall
pay to the Seller in cash the amounts payable to Seller and SLIC-Canada. Within
twenty Business Days after receipt by the Seller of SLIC-Canada's invoice
required by the first sentence of this Section 2.6, Seller shall pay to SLIC-
Canada the amounts payable to SLIC-Canada as reflected in such invoice.
SECTION 2.7. Administrative Services. From and after the Service
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Transition Date the Administrator shall provide to the Seller all services
required for complete support and administration of all Reinsured Policies,
including without limitation the services set forth on Exhibit B hereto (the
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"Administrative Services").
SECTION 2.8. Compensation for Administrative Services. The
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Administrator shall provide the Administrative Services in consideration of the
execution and delivery by the Seller of the Purchase Agreement and the Indemnity
Reinsurance Agreement and the consummation of the transactions contemplated
thereby, and the Administrator shall neither impose on the Seller nor otherwise
be entitled to receive any additional or separate consideration for the
provision of Administrative Services in accordance with this Agreement.
ARTICLE III
PERFORMANCE STANDARDS; AUTHORITY
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SECTION 3.1. Performance Standards. SLIC-Canada shall provide the
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Support Services, the Seller shall provide the Transition Services, and the
Administrator shall provide the Administrative Services (i) at a level of
accuracy and responsiveness not less favorable than the practices of such party
in administering products comparable to the Reinsured Policies issued by it or
serviced by it for other companies prior to and during the term of this
Agreement, (ii) in accordance with all applicable Laws and insurance department
requirements, (iii) in accordance with industry standards in effect as of the
date hereof and (iv) as the parties may agree in writing from time to time.
SECTION 3.3. Authority. The Administrator shall perform the
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Administrative Services in the name and on behalf of the Seller only as provided
in this Agreement or as directed by the Seller in writing. Except as
specifically set forth in this Agreement or authorized by the Seller in writing,
the Administrator shall not have authority to issue new insurance policies or
annuity contracts in the name of the Seller (except for reinstatements,
conversion policies or riders currently provided for under the Reinsured
Policies) or enter into any agreements on the Seller's behalf. None of the
terms or provisions of this Agreement shall prohibit the Administrator or any of
its affiliates from conducting business of whatever nature in their own names
and on behalf of any person or entity other than the Seller.
ARTICLE IV
SUPERVISION; PERSONNEL; FACILITIES AND COSTS
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SECTION 4.1. Supervision by Board of Directors. The Administrator
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acknowledges that the Board of Directors of the Seller is vested with the power,
authority and responsibility for managing the business and affairs of the
Seller, including administrative services. The Administrator acknowledges that
any and all actions or services, whether supervisory or ministerial, taken or
provided pursuant to this Agreement by the Administrator shall be subject to the
continuous supervision by the Board of Directors of the Seller and, to the
extent designated by such Board of Directors, the appropriate designated
officers of the Seller.
SECTION 4.2. Personnel. The Administrator shall furnish all
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personnel necessary to provide the Administrative Services.
SECTION 4.3. Facilities. The Administrative Services shall be
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performed by Administrator using furniture, fixtures, and equipment (including
computer hardware) owned or leased by the Administrator (collectively, the
"Facilities"). All Facilities owned by Administrator shall remain the property
of Administrator, and the Seller acknowledges and agrees that it shall not have
any right, title, or interest in or to the Facilities.
SECTION 4.4. Systems. The Administrator shall furnish all Systems
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(as hereinafter defined) that are necessary for the Administrator to provide the
Administrative Services. The term "Systems" shall mean all computer programs
and programming aids (together with supporting documentation), including without
limitation input and output formats, program listings, systems flow charts,
narrative descriptions, operating instructions, and the tangible media upon
which such programs are recorded.
SECTION 4.5. Costs. The Administrator shall pay all personnel and
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other costs and expenses to provide the Administrative Services (including
without limitation all applicable filing and similar fees).
ARTICLE V
MAINTENANCE OF RECORDS
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SECTION 5.1. Transfer of Records. Within ten Business Days after the
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Service Transition Date or on such other date as the parties may agree, the
Seller shall forward to the Administrator (at the Administrator's expense) all
reports, records, underwriting files, policy files, claims files and information
in any form in its possession relating to the Reinsured Policies (the
"Transferred Records"). All of such Transferred Records shall remain the
property of the Seller or the party on whose behalf the Seller is maintaining
such records, as applicable. Such Transferred Records
shall be available (at their place of keeping) for inspection, examination, and
audit by the Seller (and its representatives) at all reasonable times. The
Administrator shall provide to the Seller (a) at the Administrator's expense,
copies of such Transferred Records as may be reasonably required in connection
with the preparation of the Seller's financial statements, state and federal
income and other tax returns, and any other filings or reports required to be
filed with, or requested by, state or federal regulatory authorities or any
rating agencies and (b) at the Seller's expense, copies of such Transferred
Records for any other reason.
SECTION 5.2. Maintenance of Records. The Administrator agrees to (a)
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maintain a true and complete set of books and records relating to all
transactions under this Agreement and (b) preserve such books and records for
the term of this Agreement plus five years thereafter (or such longer period as
may be required by applicable Law). The Administrator shall maintain such books
and records and the Transferred Records at the Administrator's expense and in
accordance with prudent standards of insurance recordkeeping and all applicable
Laws. The books and records shall be available (at their place of keeping) for
inspection, examination, and audit by the Seller and state and federal
regulatory authorities (in each case together with their respective
representatives) at all reasonable times. The Administrator shall furnish to
the Seller (i) at the Administrator's expense, copies of any books or records
relating to the transactions under this Agreement as may be reasonably required
by the Seller in connection with the preparation of the Seller's financial
statements, state and federal income and other tax returns, and any other
filings or reports required to be filed with, or requested by, state or federal
regulatory authorities or any rating agencies and (ii) at the Seller's expense,
copies of any such books and records for any other reason.
ARTICLE VI
REGULATORY MATTERS
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SECTION 6.1. Compliance with Applicable Laws. Each of the parties
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hereto agrees to comply with all applicable Laws as they apply to the
performance of such party's obligations under this Agreement.
SECTION 6.2. Licensing. The Administrator hereby represents and
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warrants to the Seller that the Administrator has all licenses, qualifications,
and other authorizations necessary to provide the Administrative Services to or
on behalf of the Seller. At all times during the term of this Agreement, the
Administrator shall maintain in full force and effect all licenses,
qualifications, and other authorizations necessary under applicable Laws to
provide the Administrative Services to or on behalf
of the Seller. The Administrator agrees to provide the Seller with copies of any
such documents upon request.
SECTION 6.3. Regulatory Approvals; Closing Under Purchase Agreement.
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The effectiveness of this Agreement is conditioned upon (i) the receipt of all
required regulatory approvals and (ii) the closing of the transactions
contemplated by the Purchase Agreement.
ARTICLE VII
TERM; TERMINATION
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SECTION 7.1. Term. This Agreement shall be effective as of the
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Effective Date, and shall remain in full force and effect until terminated in
accordance with Section 7.2 below.
SECTION 7.2. Termination by the Seller. The Seller may terminate
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this Agreement immediately, by delivery of written notice to the Administrator,
upon the occurrence of any of the following events:
(a) The Administrator pursuant to or within the meaning of Title 11,
U.S. Code, or any similar federal, state or foreign Law for the relief of
debtors, including without limitation any state insolvency or rehabilitation
statutes (collectively, "Bankruptcy Laws"):
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against it in
an involuntary case or proceeding;
(3) consents to the appointment of a custodian of it or for all
or for a substantial part of its property;
(4) makes a general assignment for the benefit of its creditors;
or
(5) fails to contest any involuntary case or proceeding filed
against it within the time period fixed by any applicable
rules, and any extensions granted by the court where such
involuntary case or proceeding is pending; or
(b) A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that remains unstayed and in effect for 60 days and that:
(1) is for relief against the Administrator in an involuntary
case or proceeding;
(2) appoints a custodian of the Administrator or a custodian for
all or for a substantial part of the property of the
Administrator; or
(3) orders the liquidation of the Administrator; or
(c) Failure by the Administrator to comply with any material
provision of this Agreement which has not been corrected within 60 days after
written notice thereof is delivered to the Administrator by the Seller.
SECTION 7.3. Effect of Termination. Upon termination of this
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Agreement, Administrator shall take all steps necessary to arrange for a third-
party administrator reasonably acceptable to the Seller to provide all services
required to be provided hereunder, such services to be performed pursuant to an
agreement reasonably acceptable to the Seller, all at the cost of the
Administrator. In addition, in the event of any such termination, (i) no party
hereto shall be relieved of any liability for any breach of any provision of
this Agreement, (ii) any amounts owing hereunder by either party hereto to the
other party hereto shall be immediately due and payable (pro-rated for any
partial periods), and (iii) all rights and obligations hereunder will terminate
except that Articles V, VIII and IX and Sections 7.3, 10.2 and 10.4 hereof will
continue to survive any such termination.
ARTICLE VIII
INDEMNIFICATION
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SECTION 8.01. Indemnification between the Seller and the
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Administrator. The indemnification rights of the Seller and the Administrator
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are set forth in the Purchase Agreement.
SECTION 8.02. Indemnification among SLIC-Canada, Seller and the
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Administrator. (a) From and after the Closing Date, SLIC-Canada hereby agrees
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to indemnify, defend and hold harmless Seller and the Administrator and each of
their respective directors, officers, employees, representatives, Affiliates,
successors and permitted assigns from and against all Losses (as hereinafter
defined) asserted against,
imposed upon or incurred by such person arising from (i) any breach or
nonfulfillment by SLIC-Canada of, or any failure by SLIC-Canada to perform, any
of the covenants, terms or conditions of, or any of its duties or obligations
under, this Agreement; and (ii) any enforcement of this indemnity.
(b) From and after the Closing Date, the Administrator hereby agrees
to indemnify, defend and hold harmless SLIC-Canada and its respective directors,
officers, employees, representatives, Affiliates, successors and permitted
assigns from and against all Losses (as hereinafter defined) asserted against,
imposed upon or incurred by such person arising from (i) any breach or
nonfulfillment by the Administrator, of, or any failure by the Administrator to
perform, any of the covenants, terms or conditions of, or any of its duties or
obligations under, this Agreement, or (ii) any enforcement of this indemnity.
(c) From and after the Closing Date, Seller hereby agrees to
indemnify, defend and hold harmless SLIC-Canada and its respective directors,
officers, employees, representatives, Affiliates, successors and permitted
assigns from and against all Losses (as hereinafter defined) asserted against,
imposed upon or incurred by such person arising from (i) any breach or
nonfulfillment by Seller, of, or any failure by Seller to perform, any of the
covenants, terms or conditions of, or any of its duties or obligations under,
this Agreement, or (ii) any enforcement of this indemnity.
(d) As used in this Section, "Loss" and/or "Losses" shall mean
actions, claims, losses, liabilities, damages, costs, expenses (including
reasonable attorneys' fees), interest and penalties. The parties shall follow
the procedures set forth in Sections 9.3 and 9.4 of the Purchase Agreement with
respect to any claim for indemnification under the terms of this Agreement.
ARTICLE IX
CONFIDENTIALITY
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SECTION 9.1. Administrator's Confidentiality Obligation. From and
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after the date hereof, the Administrator shall refrain, and shall cause its
officers, directors, employees, agents, auditors, counsel, affiliates and other
representatives (collectively, the "Administrator's Representatives") to
refrain, from directly or indirectly:
(a) disclosing to any person or entity (other than the Administrator's
Representatives) the terms and conditions of this Agreement or any records,
files,
documents, data (including without limitation claims or loss data), or
information concerning the Seller or its affiliates that the Administrator
prepares, maintains, uses, or receives in connection with the transactions
contemplated by this Agreement, unless (i) disclosure is compelled by any court
or administrative agency or by other applicable requirements of Law or (ii) such
records, files, documents, data, or information can be shown to have been (x)
generally available to the public other than as a result of a disclosure by the
Administrator or the Administrator's Representatives or (y) available to the
Administrator on a non-confidential basis from a source other than the Seller or
its Representatives, provided that such source is not known by the Administrator
to be bound by a confidentiality agreement with, or other obligation of secrecy
of, the Seller or another party; or
(b) using such records, files, documents, data or information for any
purpose (including without limitation directly or indirectly competing with the
Seller or any affiliate thereof) except pursuant to this Agreement.
Notwithstanding the foregoing, the Administrator shall be entitled to
use information concerning, derived from, or related to the Business for any
lawful purpose in connection with the transaction of the Administrator's
business under the Indemnity Reinsurance Agreement, provided that the
Administrator shall comply with all Laws applicable to the use of such
information (including, without limitation, Laws relating to the use of such
information that would otherwise be applicable to the Seller as the issuer of
the Reinsured Policies).
SECTION 9.2. Seller's and SLIC-Canada's Confidentiality Obligation.
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From and after the date hereof, the Seller and SLIC-Canada shall refrain, and
shall cause their respective officers, directors, employees, agents, auditors,
counsel, affiliates and other representatives (collectively, the
"Representatives") to refrain, from directly or indirectly:
(a) disclosing to any person or entity (other than the Seller's or
SLIC-Canada's Representatives) the terms and conditions of this Agreement or any
records, files, documents, data (including without limitation claims or loss
data), or information concerning the Administrator or its affiliates that the
Seller or SLIC-Canada prepares, maintains, uses, or receives in connection with
the transactions contemplated by this Agreement, unless (i) disclosure is
compelled by any court or administrative agency or by other applicable
requirements of Law or (ii) such records, files, documents, data, or information
can be shown to have been (x) generally available to the public other than as a
result of a disclosure by the Seller, SLIC-Canada or their respective
Representatives or (y) available to the Seller or SLIC-Canada on a non-
confidential basis from a source other than the Administrator or the
Administrator's Representatives, provided that such source is not known by the
Seller or SLIC-Canada
to be bound by a confidentiality agreement with, or other obligation of secrecy
of, the Administrator or another party; or
(b) using such records, files, documents, data or information for any
purpose (including without limitation directly or indirectly competing with the
Administrator or any affiliate thereof) except pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS
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SECTION 10.1. Power of Attorney. The Seller grants to the
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Administrator authority in all matters relating to risk management and
administration of the Policies to the extent such authority (a) may be granted
pursuant to applicable Law and (b) is reasonably necessary for the Administrator
to provide the Administrative Services hereunder. In order to assist and to
more fully evidence this authority, the Seller hereby nominates, constitutes,
and appoints the Administrator as its attorney-in-fact with respect to the
rights, duties, privileges, and obligations of the Seller in, to and under the
Reinsured Policies, with full power and authority to act in the name, place, and
stead of the Seller with respect to the Reinsured Policies, including, without
limitation, the power, without reservation, to service all Reinsured Policies,
to adjust, to defend, to settle, and to pay all claims and benefits and to take
such other and further actions as may be reasonably necessary to effect the
transactions contemplated by this Agreement, the Purchase Agreement and the
Indemnity Reinsurance Agreement.
SECTION 10.2. Notification. The Seller shall forward promptly to
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SLIC-Canada and the Administrator all notices and other written communications
received by or served upon the Seller relating to the Administrative Services or
the Reinsured Policies, including, without limitation (a) all inquiries or
complaints from state insurance regulators, agents, brokers and insureds and (b)
all notices of claims, suits and actions for which the Seller receives service
of process. The Seller shall be entitled to retain copies of all such
materials.
The Administrator shall forward promptly to the Seller copies of all
notices and other written communications received by or served upon the
Administrator relating to the Administrative Services or the Reinsured Policies
including, without limitation (a) all inquiries or complaints from state
insurance regulators, agents, brokers and insureds and (b) all notices of claims
(excluding routine claim notices), suits and actions for which the Administrator
receives service of process.
SECTION 10.3. Notice. Any notice or communication given pursuant to
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this Agreement must be in writing and (a) delivered personally, (b) sent by
facsimile transmission, (c) delivered by overnight express, or (d) sent by
registered or certified mail, postage prepaid as follows:
If to the Administrator: Life Reassurance Corporation of America
000 Xxxx Xxxxx Xxxx, Xxxxxxxx XX 00000
Attention: General Counsel
Facsimile No.: (000)000-0000
If to the Seller: Seaboard Life Insurance Company (USA)
000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President
Facsimile No: (000) 000-0000
If to SLIC-Canada: Seaboard Life Insurance Company
0000 Xxxx Xxxxxxxx
P.O. Box 5900
Vancouver BC
Canada V6B 5H6
Attention: Chief Financial Officer
Fax: (000) 000-0000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section 10.3 shall (i) if delivered
personally or by overnight express, be deemed given upon delivery; (ii) if
delivered by facsimile transmission, be deemed given when electronically
confirmed; and (iii) if sent by registered or certified mail, be deemed given
when received. Any party from time to time may change its address for notice
purposes by giving a similar notice specifying a new address, but no such notice
shall be deemed to have been given until it is actually received by the party
sought to be charged with the contents thereof.
SECTION 10.4. Expenses. Except as otherwise expressly provided
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herein, each of the parties hereto shall pay its own costs and expenses in
connection with this Agreement and its respective obligations hereunder.
SECTION 10.5. Governing Law. This Agreement shall be governed by and
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construed in accordance with the Laws of the State of Indiana, regardless of the
Laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.6. Integration. This Agreement (including the Exhibits
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hereto), together with the Purchase Agreement and the Indemnity Reinsurance
Agreement, contain the entire agreement and understanding among the parties with
respect to the transactions contemplated hereby and thereby, and supersede all
prior agreements and understandings, written or oral, with respect thereto.
SECTION 10.7. Assignment; Binding Effect. Neither this Agreement nor
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any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by any of the parties hereto without the prior
written consent of the other parties in their sole discretion, and any such
assignment that is attempted without such consent shall be null and void.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the parties and their respective
successors and permitted assigns.
SECTION 10.8. Amendment. This Agreement may only be amended or
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modified by a written instrument executed on behalf of all the parties hereto.
SECTION 10.9. Independent Contractors. The Administrator and SLIC-
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Canada shall be deemed independent contractors of the Seller for all purposes
hereunder. This Agreement shall not be construed to create an employment,
partnership, or joint venture relationship between any of the parties hereto.
SECTION 10.10. Headings; Interpretation. The headings used in this
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Agreement have been inserted for convenience and do not constitute matter to be
construed or interpreted in connection with this Agreement. Unless the context
of this Agreement otherwise requires, (a) words using the singular or plural
number also include the plural or singular number, respectively; (b) the terms
"hereof," "herein," "hereby," "hereto," and derivative or similar words refer to
this entire Agreement (including the exhibits hereto); (c) the term "Section"
refers to the specified Section of this Agreement; (d) the term "party" means
any one of the Seller, SLIC-Canada or the Administrator, as the case may be; and
(e) with respect to any party, the term "affiliate" shall include, without
limitation, any person or entity that becomes an affiliate of such party after
the date of this Agreement.
SECTION 10.11. Remedies. Any term or condition of this Agreement may
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be waived in writing at any time by the party that is entitled to the benefit
thereof. A waiver on one occasion shall not be deemed to be a waiver of the
same or any other
breach or nonfulfillment on a future occasion. All remedies, either under this
Agreement, or by Law or otherwise afforded, shall be cumulative and not
alternative.
SECTION 10.12. Severability. If any provision of this Agreement is
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held to be illegal, invalid, or unenforceable under any present or future Law,
and if the rights or obligations of the parties hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision shall be
fully severable; (b) this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
and (c) the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom.
SECTION 10.13. Counterparts. This Agreement may be executed in two
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or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
SECTION 10.14. No Third Party Beneficiary. Except as otherwise
--------------------------
provided herein, the terms and provisions of this Agreement are intended solely
for the benefit of the parties hereto, and their respective successors or
permitted assigns, and it is not the intention of the parties to confer third-
party beneficiary rights upon any other person, and no such rights shall be
conferred upon any person or entity not a party to this Agreement.
SECTION 10.15. Subcontracting. The Administrator may subcontract the
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services to be performed by it under this Agreement to a subcontractor
reasonably acceptable to the Seller; provided, that the Administrator shall not
be released by any such subcontracting arrangement from its obligations
hereunder; provided, further, that the Cybertek Corporation shall be deemed to
be acceptable to the Seller as a subcontractor.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the date first set forth above.
SEABOARD LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
SEABOARD LIFE INSURANCE COMPANY
(USA)
By:
------------------------------------
Name:
Title:
LIFE REASSURANCE CORPORATION OF
AMERICA
By:
------------------------------------
Name:
Title:
Exhibit A
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Support Services
1. Investment management
2. Accounting
3. Computer Systems Support
Exhibit B
---------
Administrative Services
The Administrator shall provide the following services to the Seller:
1. Premium Collection. The Administrator shall xxxx and collect all premiums
due under the Reinsured Policies, return any unearned premiums or other
premiums to be refunded, and reconcile amounts paid with returned billing
statements or other remittance media. The Administrator shall update the
contract owner master records and all other records to reflect payments
received.
2. Premium Auditing. The Administrator shall audit premium payments with
respect to the Reinsured Policies to ensure the accuracy and acceptability
of such payments.
3. Records Maintenance. The Administrator shall maintain applications,
policyholder, annuitant, participant, contract owner, premium, and other
necessary records, including all computer records, to determine the true
and accurate status of the Reinsured Policies. Such records on any
Reinsured Policy are and shall remain the property of the Seller. Upon
request of the Seller or any state or federal regulatory authorities, the
Administrator shall forward a complete copy of any record to the requesting
party by overnight delivery.
4. Lapse of Coverage. The Administrator shall inform policyholders of any
lapse in coverage under the Reinsured Policies.
5. Provision of Forms. The Administrator shall provide, at the Administrator's
own expense, forms and supplies necessary to the performance of the
Administrator's obligations under this Agreement including, without
limitation, policy holder reports and issue-related forms, contracts,
endorsements, and adoption agreements.
6. Claims Administration. The Administrator shall administer claims on the
Reinsured Policies as appropriate, including the following:
(a) Reviewing and paying all claims for benefits which the Administrator's
review determines to be qualified for payment in accordance with
applicable Reinsured Policy provisions. Any such payments shall be
made within the time periods and in the manner prescribed by
applicable law. Each payment made by the Administrator with respect
to claims subject to this Agreement shall, where appropriate, be made
in full and final discharge of the obligations of the Seller or the
Administrator under the applicable Reinsured Policy with respect to
such payment;
(b) Reviewing and compromising or denying, as is appropriate based on the
guidelines of the Seller in effect immediately prior to the Effective
Date, all claims for benefits which the Administrator's review
determines to be qualified for such denial or compromise, in reliance
on applicable Reinsured Policy provisions. In the event of non-
payment of claims on account of incomplete or insufficient data, the
Administrator shall acknowledge such fact to the claimant by the
earlier of (i) ten working days from date of receipt of the claim or
(ii) the number of days provided by applicable law;
(c) Communicating with claimants with respect to the submission, approval
and payment, compromise or denial of claims made under the Reinsured
Policies administered under this Agreement;
(d) Maintaining such files and records as are necessary to enable the
Seller, at any time, to determine the true and accurate claim
experience on the Reinsured Policies. Said files and records on any
Reinsured Policy are and shall remain the property of the Seller;
(e) Conforming to the reasonable requirements set by the Seller for
monthly submission of claims reports;
(f) Performing such other claim services as may be reasonably required in
connection with the support and administration of the Reinsured
Policies;
(g) Preparing all required Federal and state tax reports, including
without limitation 1099-R, W-2P, W-2 and 5498 for contract owners and
beneficiaries as required and distributing the same to contract owners
and beneficiaries and appropriate authorities;
(h) Responding to any requests from plan administrators or trustees for
policy information affecting the plan or participants for qualified
plans; and
(i) Responding to requests for calculations applicable to annuity payments
as may be necessary for tax calculations.
7. Litigation.
(a) The Administrator shall defend and prosecute in a manner consistent
with all applicable Law, at its sole cost and expense, all suits,
actions and proceedings arising out of underwriting of the Reinsured
Policies and
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claims for benefits thereunder. The Seller shall have the right, at
its sole cost and expense, to participate in any suit, action or
proceeding arising under the Reinsured Policies. Notwithstanding any
provision in this Agreement to the contrary, the Administrator shall
have final authority with respect to such defense and prosecution,
including any settlement or compromise thereof without the consent of
the Seller, so long as all amounts for which the Seller may be held
liable are 100% reinsured under the Indemnity Reinsurance Agreement
and any such settlement or compromise releases the Seller from all
liability for or in connection with such suit, action or proceeding
and does not materially and adversely impair the ability of the Seller
to carry on its business and does not contain any admission of
wrongdoing on the part of the Seller.
(b) As soon as practicable after receipt by the Administrator of notice or
threat of the commencement of any suit, action or proceeding naming
the Seller as a party, the Administrator shall provide a copy of all
documentation received in respect thereof (with, where appropriate,
notation as to time and place of service and the identity of the
person served) to the Seller. If the Seller receives notice or threat
of the commencement of any suit, action or proceeding naming the
Administrator as a party, the Seller shall promptly deliver all
documentation received in respect thereof (with, where appropriate,
notation as to time and place of service and the identity of the
person served) to the Administrator. The Seller shall have the right,
at its sole cost and expense, to examine all files and papers relating
to all claims, suits, actions or proceedings arising under the
Reinsured Policies, and the Administrator shall cooperate in such
examination and consultation. The parties shall provide each other
with a quarterly statement of litigation in progress. The
Administrator shall not file any complaint or initiate any legal
proceeding in the name of the Seller without the written consent of
the Seller.
8. Policyholder Services. The Administrator shall provide general policyholder
services to individuals under the Reinsured Policies, including, but not
limited to, the following:
(a) Responding to inquiries with respect to the scope and amounts of
coverage provided under the Reinsured Policies;
(b) Supplying claimants, policyowners and insureds with appropriate
instructions and forms for reporting claims and for submitting
relevant information;
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(c) Issuing timely reports, statements, and confirmations as required by
the Reinsured Policies or the Seller's practices in effect immediately
prior to the Effective Date;
(d) Issuing tax reporting forms and other information as required by
applicable regulatory rules;
(e) Processing and recording changes in the Reinsured Policies (such
changes may include but are not limited to, (i) changes of ownership,
beneficiary, amount of insurance, options under the Reinsured
Policies, and (ii) changes in name, changes in address and changes in
other data related to the policyowners and insureds under the
Reinsured Policies), reissuances, and transfer requests (i.e., from
one subaccount to another);
(f) Processing policy loans, surrenders, policy conversions and
reinstatements;
(g) Complying with Seller guidelines in effect immediately prior to the
Effective Date (subject to adjustment as required by applicable Law)
with respect to replacements and exchange requests; and
(h) Calculating (on a daily basis) the mortality and expense charges,
administrative charges, and cost of insurance in accordance with the
provisions of the Reinsured Policies.
9. Agent Compensation. The Administrator shall, on behalf of the Seller, pay
the compensation due from the Seller to the agents or brokers of record for
the Reinsured Policies as determined pursuant to any agreements under which
any payments become due after the Effective Term and make any required tax
filings with respect to such compensation.
10. Accounting and Reporting Services. With respect to the Reinsured Policies,
the Administrator shall perform all accounting and reporting of direct and
ceded premiums, claims and other policyholder disbursements, reserves,
policy loans, commissions, and premium tax payments and accruals. Such
services shall include all accounting and reporting necessary to provide
the Seller with all required statutory and regulatory data needed for
financial statements and filings and state and federal income and premium
tax reporting and filings.
11. Agent Licensing. The Administrator shall (i) maintain the appointment of
all necessary resident/countersignature and other agents used by the Seller
and (ii) remit compensation
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to such agents in accordance with the terms and provisions of their
agreements with the Seller.
12. Actuarial Services. The Administrator shall provide the Seller with the
following actuarial services:
(a) Calculation of all actuarial reserves and liabilities and other
actuarial items necessary to prepare SAP financial statements and
supporting exhibits and tax filings and schedules;
(b) Calculation of tax reserves;
(c) Preparation of all necessary actuarial opinions, memoranda and/or
certifications for annual and quarterly statements;
(d) Maintenance of product files on system;
(e) Ongoing support, as necessary, to compliance function;
(f) Providing responses to state regulators as required;
(g) Providing miscellaneous support to policyowner service; and
(h) Providing the formal actuarial opinions and related reports required
by the NAIC Annual Statement blank and other state requirements, or
any other regulatory authorities, and external auditors.
13. Compliance Services. The Administrator shall provide the Seller with the
following compliance services:
(a) Federal and state regulatory review and compliance;
(b) Subject to the restrictions set forth in Section 2.3 of the Agreement,
the development and filing of policy forms, riders, endorsements, and
disclosure statements as may be required from time to time by
applicable Law;
(c) Filing of rate changes, as required;
(d) Review and approval of customer communications;
(e) Coordination of special mailings;
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(f) Handling complaints;
With respect to the Reinsured Policies:
(i) The Administrator shall advise the Seller of any customer
complaint threatening the commencement of legal action or
regulatory action or of any inquiry or complaint received from or
forwarded by a state insurance department or other government
agency, better business bureau or an attorney representing any
customer (collectively, a "customer complaint") within 24 hours
of receipt, if possible, but in no instance later than five
business days after receipt thereof, and shall, if requested by
the Seller, provide the Seller with copies of all pertinent files
and correspondence relating thereto.
(ii) The Administrator shall be responsible for the investigation and
preparation of responses to all customer complaints and
regulatory inquiries or complaints, provided that no response to
a customer complaint threatening the commencement of legal action
or regulatory action or an inquiry or complaint received from or
forwarded by a state insurance department or other government
agency, better business bureau or any attorney representing any
customer shall be sent to said customer, government agency,
better business bureau or attorney if the Seller promptly
notifies the Administrator that the Seller intends to respond to
such complaint.
(iii) Subject to the foregoing, all customer complaints shall be
handled in accordance with applicable Law (including without
limitation any response time requirements applicable thereto).
With respect to each customer complaint, the Administrator shall
use all commercially reasonable efforts to resolve or acknowledge
such customer complaint by the fifth Business Day after receipt
thereof (with respect to customer complaints from state insurance
departments, other regulatory agencies, or attorneys threatening
legal or regulatory action) or by the tenth Business Day after
receipt thereof (with respect to customer complaints from
consumers or others). A record of all customer complaints shall
be maintained in a log showing the date received, the nature of
the complaint, the action taken (if any) and the date of the
response.
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(iv) As used herein, a "customer complaint" shall be deemed to include
any written communication primarily expressing a grievance
against the Seller or the Administrator.
(g) Making all filings and obtaining all regulatory approvals required
with regard to advertising of the Reinsured Policies;
(h) Providing regulatory supervision and compliance, to the extent the
Reinsurer is legally permitted, as to all servicing functions
contemplated by this Agreement;
(i) Monitoring statutes and regulations of the insurance departments in
the various states in which the policy owners or Reinsured Policies
are located to ensure compliance therewith and to ensure that any
actions or communications required by such regulations or statutes are
properly made;
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(j) Monitoring the federal tax and labor statutes and the rules,
regulations, orders, and interpretations thereunder and the tax and
labor statutes and rules, regulations, orders, and interpretations
thereunder of the various states in which policy owners or Reinsured
Policies are located to ensure compliance therewith and to ensure that
any actions or communications required thereby are properly made; and
(k) Providing such services as the Seller may require under its direction
in connection with responding to inquiries from the NAIC or the
insurance departments of the various states in which the policy owners
or the Reinsured Policies are located.
14. Data Processing. The Administrator shall provide all data processing
services, software, and facilities necessary to provide the Services.
15. General Services and Oversight. The Administrator shall provide
appropriate management oversight of the financial performance and monitor
significant activities relating to the Reinsured Policies, providing
appropriate data to the Seller in an agreed upon format, including the
following:
(a) Making all records relating to the Reinsured Policies available to the
Seller for audit upon reasonable notice and during the regular
business hours of the Administrator. Such records shall include, but
not be limited to, federal tax documentation, policyholder records,
in-force listings, premium records, claim forms, itemized xxxxxxxx,
eligibility documentation, and agent records and files; and
(b) Performing such other administrative services as may be reasonably
required in connection with the support and administration of the
Reinsured Policies.