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EXHIBIT (8)(f)
ADMINISTRATIVE SERVICES AGREEMENT
Administrative Services Agreement, dated as of October 1, 1998, by and between
▇▇▇▇▇▇ Investors Life Insurance Company, an Illinois insurance company (together
with its successors and permitted assigns, the "Company") and Life Insurance
Solutions, L.L.C., a Delaware limited liability company (together with its
successors and permitted assigns, the "Administrator").
WHEREAS, the Company is the issuer of the life insurance and annuity products
identified on Schedules A, B, and C to the Agreement (the "Policy or Policies")
as such Schedules may be amended from time to time; and
WHEREAS, the Company and the Administrator desire to enter into this Agreement
whereby the Administrator agrees to perform administrative services in
connection with the Policy, as specified herein.
NOW, THEREFORE, in consideration of these premises, the parties hereto mutually
agree as follows:
SECTION 1 - RESPONSIBILITY
The Company hereby appoints and designates the Administrator to be the
administrator of the Policies.
The Administrator hereby agrees to assume responsibility for the performance of
"administrative services," as hereinafter described.
SECTION 2 - ADMINISTRATIVE SERVICES
The term "administrative services" as used in this Agreement shall mean the
performance by the Administrator of the following functions:
1. Billing - The Administrator shall prepare all premium statements and
distribute them to each owner of a Policy ("policyholder").
2. Reports - The Administrator shall furnish to the Company premium reports,
including information as to covered employees, additions to and
terminations of coverage, total gross premium billed, full and partial
surrenders, loans, as well as any other information about the Policy or the
policyholder the Company may reasonably request, including, but not limited
to, the timely provision of information necessary to permit the Company to
determine the payments required to be made pursuant to paragraph 8 of
Section 3 hereof. The Administrator shall furnish to the Company all
information and reports necessary to enable compliance with Internal
Revenue Code Section 7702 and Section 7702A and with any other tax
reporting obligations the Company might have relating to the Policies. The
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Company shall have the sole and exclusive right to interpret the Internal
Revenue Code and determine its tax and other liabilities and
responsibilities thereunder.
3. Policyholder Communications and Other Services - The Administrator shall
prepare statements for policyholders showing account values and other
transactions, including surrenders. Such statements shall be furnished
annually to each policyholder or more often as such policyholder may
reasonably request. The Administrator shall perform such other services
customarily associated with insurance policy administration, including but
not limited to processing changes in the amount of insurance, and
communication with the policyholder.
4. Office and Supplies - The Administrator shall maintain, at its own expense,
an office and the Company will provide the necessary supplies of forms for
the administration of the Policy.
5. Reports - Any forms or reports developed by the Administrator for the
administration of the Policy for distribution to policyholders must be
approved by the Company prior to use.
6. Reserve Calculations - The Administrator shall perform all calculations of
reserves in connection with the Policy and shall furnish reserve
information to the Company at such times requested by the Company and in
such format agreed to by the Company and the Administrator.
7. Loans and Surrenders - The Administrator shall process all requests for
loans and full and partial surrenders under the Policy.
8. Additional Services - The Administrator shall also provide those services,
with respect to a Policy, described in Schedule E to the Agreement as such
Schedule may be amended from time to time by the parties.
The Company agrees to provide the Administrator with such information and
materials as the Administrator may reasonably request in connection with the
performance of the Administrator's performance of its obligations hereunder.
SECTION 3 - GENERAL PROVISIONS
1. Standard of Care - The Administrator agrees to perform, in a timely manner
consistent with reasonable industry practice, faithfully and in accordance
with applicable law, the duties as set forth herein. The Administrator
represents that it meets all applicable requirements to enter into this
agreement including any required state licenses and agrees to take such
action as may be required under any applicable law to perform its
obligations under this agreement. In performing the services set forth
herein, the Administrator shall direct its efforts towards advancing the
business and interests of the Company to the best of its ability. The
Administrator may delegate any or all of the obligations that the
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Administrator is required to perform hereunder; provided, that the
Administrator remains obligated to perform such services; and provided,
further, that the Administrator has received the prior written consent of
the Company (which consent shall not be unreasonably withheld or delayed).
2. Indemnification - The Administrator agrees to indemnify the Company and
hold the Company harmless from any and all losses, damages, and expenses,
including reasonable legal fees and expenses, which the Company may incur
as a result of or arising out of any acts or omissions, whether dishonest,
fraudulent, criminal or negligent, of the Administrator or its employees,
or any party with which the Administrator may contract for the performance
of services hereunder, acting alone or in collusion with others.
The Company agrees to indemnify the Administrator and hold the
Administrator harmless from any and all losses, damages, and expenses,
including reasonable legal fees and expenses, which the Administrator may
incur as a result of or arising out of any acts or omissions, whether
dishonest, fraudulent, criminal or negligent, of the Company or its
employees, acting alone or in collusion with others.
The Administrator shall maintain in effect an errors and omissions
liability policy in the amount of no less than $1,000,000 per occurrence,
$3,000,000 annual aggregate limit, providing for indemnification of the
Company to cover any loss arising as a result of any real or alleged
dishonest, fraudulent or negligent conduct on the part of the
Administrator's officers, agents or employees in any aspect of the
performance of the Administrator's services under this Agreement. The
Administrator shall cause the issuer of said policy to name the Company as
a loss payee under such policy and to deliver to the Company evidence of
the existence of such policy. The Administrator shall also cause the issuer
to give 30 days' written notice prior to the cancellation of or any
material change in the policy.
3. Termination - This Agreement shall become effective as of the date it has
been duly executed by all parties and shall continue in effect until
terminated pursuant to paragraph a or b below.
a. This Agreement may be terminated by the Company or the Administrator
by giving written notice to the other at least ninety days prior to
the termination date, provided that, in the event of a termination by
the Administrator pursuant to this sentence, the Company shall have
the right in its sole discretion to extend the term of this Agreement
for up to an additional 270 days (i.e., so that this Agreement would
not be terminated on less than 360 days prior written notice by the
Administrator).
b. Notwithstanding any other provision herein to the contrary, this
Agreement may be terminated immediately by the Company for any of the
following reasons:
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i. The Administrator fails to perform any of its obligations under
Section 2 of this Agreement which failure to perform shall continue
without cure for not less than 30 days following the Administrator's
receipt of written notice from the Company of the Administrator's
failure to perform; or
ii. The occurrence of an event described in Section 14 of this
Agreement.
Notwithstanding any other provision herein to the contrary, this
Agreement may be terminated by the Administrator if the Company fails
to make a payment required to be made by this Agreement to the
Administrator and such failure has not been cured within 30 days after
notice (specifying that it is a notice of termination being given
pursuant to this Section 3b) has been sent by the Administrator to the
Company, provided that with respect to this paragraph of Section 3b,
written notice is given in the manner provided in Section 20 below,
and, additionally concurrent telephone confirmation of such notice is
given personally directly to any of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇.
c. Upon termination of this Agreement for any reason, the Administrator
agrees that for a period of five years from the date of termination,
neither it nor any of its affiliates will (i) take any action designed
or calculated to result in the transfer or exchange of Policies or
(ii) provide administrative services or otherwise use or offer its
systems for use in administering policies issued by an insurance
company other than the Company where the cash values of such policies
are the result of transfers or exchanges from a Series I Private
Placement Variable Life Insurance Policy issued by the Company and
listed on Schedule A that (x) is administered under this Agreement and
(y) has total premiums that are expected to be paid over a five-year
pay-in period for such Policy equal to or greater than $250,000,000.
4. Independent Contractor - The execution of this Agreement does not serve to
indicate any relationship of employer and employee between the Company and
the Administrator, and it is understood that the Administrator is an
independent contractor.
5. Delivery to Policyholder - Any policies, certificates, booklets,
termination notices or other written communications delivered by the
Company to the Administrator for delivery to the policyholder, shall be
delivered by the Administrator, at the Company's expense, promptly after
receipt of instructions from the Company to do so.
6. Legal or Administrative Proceedings - If any notice of the commencement of
any legal proceeding involving any policyholder is received by the
Administrator, or if it receives any communication from any Insurance
Department or other administrative agency or any other person identifying a
complaint by a policyholder or calling a hearing involving any Company
insuring practice, the Administrator shall immediately thereafter forward
any correspondence or necessary files to the Company's Home Office for
handling by the Company.
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7. Records - The Administrator shall hold and possess, as the property of the
Company, all papers, books, files, correspondence, and records of all kinds
which at any time shall come into its possession or under its control
relating to transactions by or for the Company. Such records will be
maintained during the duration of this Agreement and six years thereafter.
Upon termination of this Agreement or upon prior request, the Administrator
shall surrender this property to the Company or its designee provided the
Company is the underwriter on such date. If this Agreement is terminated
because the Company is replaced as the underwriter with respect to all
Policies, then all such property (except that relating to the payment of
claims which shall remain the property of the Company) shall inure to the
new underwriter at no charge by the Company; however, the Company will have
access to such property to the extent needed to fulfill its contractual
obligations and any other legal obligations which may arise.
Notwithstanding the foregoing, the Administrator shall have the right to
retain copies of all papers, books, files, correspondence and records of
all kinds relating to this Agreement upon termination of this Agreement for
any reason.
8. Compensation - The Company will pay the Administrator the fees set out in
Schedule D. The Company and the Administrator may by mutual consent add,
delete, or change the fees shown in Schedule D from time to time. The
provisions contained in this Agreement shall survive termination of this
Agreement.
9. Policy Amendment - The Administrator shall have no authority to alter or
amend the Policy, nor to modify, waive or extend any of its provisions.
10. Advertising, Etc. - It is expressly agreed that the Administrator shall
have no authority to prepare or distribute any advertising, promotional or
descriptive material relating to the Policy without first obtaining the
Company's written approval of same. The Administrator shall not use the
Company name, trademarks, logo or the name of the affiliated company in any
way or manner not specifically authorized in writing by the Company.
11. Furnishing Information: Audit, Etc.
a. Administrator shall furnish the Company with all reasonably requested
information regarding any and all matters or transactions or
activities pertaining to the Policy. The Administrator shall furnish
such information, including information requested for financial
reporting purposes, at such times requested by the Company, and in a
format mutually agreed upon. The Company shall have the right to
inspect any documents, books and records of the Administrator
pertaining to the Policy or any activities of the Administrator in
connection therewith. Any right on the part of the Company to have
access to the offices of the Administrator or to inspect, audit or
photocopy any of the Administrator's documents, books or records shall
be
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subject to reasonable advance notice, shall be conducted during the
Administrator's normal business hours in a manner which will not
unreasonably interfere with the Administrator's conduct of its
business and shall be conducted at the sole expense of the Company.
b. The Administrator shall provide access and cooperation to duly
authorized representatives of the Company and Insurance Department
representatives (and representatives of other regulatory authorities),
for the purpose of conducting examinations or audits of its books and
accounts necessary to comply with applicable law, and the
Administrator shall make full disclosure, without reservation of any
kind, necessary to enable the Company to determine fully whether the
Administrator is faithfully performing its obligations under this
Agreement. Any right on the part of the Company to have access to the
offices of the Administrator or to inspect, audit or photocopy any of
the Administrator's books or records shall be subject to reasonable
advance notice, shall be conducted during the Administrator's normal
business hours in a manner which will not unreasonably interfere with
the Administrator's conduct of its business and shall be conducted at
the sole expense of the Company.
c. The Company shall have the right to conduct the periodic audits
referred to in paragraphs 11(a) and 11(b) above at the Company's
office or at the office of the Administrator. If the Company chooses
to conduct an audit at its own offices, the Administrator shall
immediately ship copies of all records required to be provided under
paragraphs 11(a) or 11(b) above to the designated Company office at
the sole expense of the Company. Any right on the part of the Company
to conduct periodic audits at the offices of the Administrator shall
be subject to reasonable advance notice, shall be conducted during the
Administrator's normal business hours in a manner which will not
unreasonably interfere with the Administrator's conduct of its
business and shall be conducted at the sole expense of the Company.
12. Assignment - The Administrator shall not assign any of its administrative
functions, duties, or responsibilities without the prior written approval
of the Company or to an affiliate of the Administrator. The Company shall
have the right to refuse approval for any reason whatsoever at its sole
discretion. Notwithstanding the foregoing, the Administrator may delegate
any or all of the obligations that the Administrator is required to perform
hereunder; provided that the Administrator remains obligated to perform
such services; ; and provided, further, that the Administrator has received
the prior written consent of the Company (which consent shall not be
unreasonably withheld or delayed). The Company may not assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the Administrator.
13. No Other Agreements - The Administrator shall have no authority to make any
agreement binding upon the Company, except as otherwise provided in this
Agreement, with respect to the Policy or premiums payable thereon unless
previously agreed upon in advance and in writing between the Administrator
and the Company.
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14. Insolvency, Etc. - In the event the Administrator shall become insolvent,
make a general assignment for the benefit of creditors, or if any
proceeding of any nature under the Federal Bankruptcy Act, as amended, or
under any state insolvency statute, be commenced by or against the
Administrator (or one of its joint ventures) or if a receiver be appointed
therefore, and such proceeding remains in effect and unstayed for a period
of not less than 90 days, the Administrator shall immediately notify the
Company pursuant to Section 20 hereof, and upon the request of the Company:
a. cease and desist all administrative services provided for herein;
b. promptly relinquish and turn over to the Company all records as may be
requested by the Company; and,
c. provide to the Company whatever additional information or assistance
may be requested by the Company.
15. Arbitration: Submission to Jurisdiction - Any dispute arising out of or
relating to this Agreement or the breach, termination or validity hereof
shall be settled by arbitration before one arbitrator in Chicago, Illinois
in accordance with the commercial arbitration rules then in effect of the
American Arbitration Association. The parties hereby consent and submit to
the personal jurisdiction of any federal court sitting in Chicago, Illinois
and of any Illinois State court of competent jurisdiction sitting in
Chicago, Illinois in any suit, action or proceeding in connection with
arbitration arising out of or relating to this Agreement. The award entered
by the arbitrator shall be final and binding on all parties to arbitration.
Each party shall bear its respective arbitration expenses and each shall
pay its pro rata portion based on the number of parties participating in
such arbitration of the arbitrator's charges and expenses. The arbitrator
shall not award punitive, exemplary or consequential damages.
Notwithstanding the foregoing, this agreement to arbitrate shall not bar
any party hereto from seeking temporary or provisional remedies in any
court having jurisdiction thereof.
16. Headings - The headings and captions in this Agreement are inserted for
convenience only and shall not be considered in the construction of any
provisions.
17. Entire Contract - This Agreement, and any related confidentiality
agreements, constitutes the entire contract between the parties hereto with
respect to the subject matter hereof. Any amendment or modification of this
Agreement, including any Schedule hereto, will not be effective unless made
in writing and signed by the parties hereto.
18. Governing Law - This Agreement shall be construed and enforced according to
the laws of the State of Illinois.
19. Miscellaneous - This Agreement shall be binding upon the Company and the
Administrator, and inure to the benefit of the parties hereto and their
respective successors
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and permitted assigns. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. No failure or
delay in exercising any right, power or privilege hereunder will operate as
a waiver thereof, nor will any single or partial exercise thereof preclude
any other further exercise thereof or the exercise of any right, power or
privilege hereunder.
20. Notices - All notices and other communications hereunder shall be in
writing and shall be sent by registered or certified mail, return receipt
requested, posted prepaid, by hand delivery or by telecopier, as follows:
If to Company: ▇▇▇▇▇▇ Investors Life Insurance Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No: 847.969.3529
If to Administrator: Life Insurance Solutions, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: 212.859.2671
or to such other person or address as any party shall specify by like
notice to each of the other parties. All such notices and communications
shall be deemed to have been duly given or made (i) when delivered by hand,
(ii) when mailed, five business days after being deposited in the mail,
postage prepaid and (iii) when telecopied, receipt acknowledged.
21. Limitations on Authority - Except as directed by the Company, the
Administrator is not authorized to and shall not establish or adjust the
level of any discretionary deductions such as cost of insurance charges or
the build-up of amounts such as claim stabilization reserve levels.
IN WITNESS WHEREOF, this Agreement has been duly executed by an authorized
representative of each of the parties hereto, on the dates indicated below.
LIFE INSURANCE SOLUTIONS, LLC ▇▇▇▇▇▇ INVESTORS LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ -------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Operating Officer Title: Sr. Vice President
Date: 11/30/98 Date: 11/24/98
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SCHEDULE E
ADMINISTRATIVE SERVICES
SERVICES
Loading all appropriate parameters to establish the Policies in the
Administrator's environment.
Implementation of the premium collection process as directed by the Company in
writing.
Implementation of accounting as directed by the Company in writing, including
the establishment of a chart of accounts as submitted by the Company, Company
specific accounting procedures and necessary reports and data files.
Implementation and development of appropriate and mutually agreed upon
management reporting.
Development and documentation of mutually agreed upon Company specific
administrative procedures and service levels.
Collections of Premiums. All premiums shall be deposited into a Company owned
and controlled lockbox or wire transferred to the Company's designated account.
Any premiums that are received directly by the Administrator shall be deposited
into such lockbox or wire transferred to the Company's designated account on a
daily basis. The deposit information and accompanying data respecting such
lockbox shall be delivered by the bank to the Administrator. Upon receipt of
this data, the Administrator shall balance the collections to the bank deposit
record and enter such data into the administrative system as credited to the
policyholder's policy.
Lapse Notices. The administrator shall be responsible for generating and mailing
lapse warnings and notices for applicable life insurance policies.
Policyholder Services. In accordance with Company procedures, the Administrator
shall answer routine policyholder and agent questions to support the client
service "800" number. Additionally, the Administrator shall respond to written
inquiries regarding particular policies.
Requests for address changes, beneficiary changes, title changes, assignments
and policy changes shall be processed by the Administrator using Company forms
and letters to confirm completion of requests.
Requests for policy disbursements, death benefit claims, medical waiver claims
and accelerated death benefit claims, shall be processed and forwarded to the
Company by the Administrator. These include cancellations and free-look
surrenders.
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Requests for fund transfers shall be processed by the Administrator. This
includes, but is not limited to adhoc requests as well as regularly scheduled
transfers such as dollar-cost-averaging, Automatic Portfolio Rebalancing and
End-of-Free-look period transfers.
New Business Issue. The Administrator shall be responsible for entering the
applicable information into the administration system, including the correct
mortality and expense charges applicable to a policy, and assembling and
forwarding the policies. For any Policies designated by the Company, the
Administrator shall be responsible for preparing and printing policies but shall
not use or modify the policy forms without prior Company approval.
Delivery receipts. The Administrator shall send one (1) follow up letter and
then send to the Company's Home Office for disposition if the receipt is not
obtained.
Underwriting Requirements. Follow-up for outstanding underwriting requirements
is the responsibility of the Administrator. All case requirements must be
received by the Company within 75 days of pre-application submission, otherwise
the case will be closed.
Reinsurance Administration. The Administrator shall be responsible for
maintaining adequate records and providing reports as may be required under
reinsurance agreements related to the Policies and requested by the Company. The
Company shall advise the Administrator of the reinsurance administration
requirements for which the Administrator shall be responsible.
Record Keeping. The Administrator shall maintain a complete policy file on
record, either in the form of a paper file or microfiche. The Administrator
shall provide Company with copies of each policy file on paper on a mutually
agreed upon schedule. All originals are to be forwarded to Company on a mutually
agreed upon schedule.
All production cycles, which include accounting reports, quarterly and annual
statements, and confirmation statements shall be maintained by the
Administrator.
Accounting. Administrator's basic account support for the Company includes:
- Setting up one (1) chart of accounts, as submitted by the Company;
- Balancing the daily cycles for completeness and accuracy;
- Receiving NAVs from each fund company or investment manager;
- Preparing and transmitting trade purchase and redemption reports
and daily activity reports to each fund company and investment
manager for the Company; and
- Preparing/posting M&E daily from the trade system.
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Report Production: The Administrator shall produce the following periodic
reports daily with respect to the prior period's activities:
Purchase/Redemption. This daily report displays amounts or units to be
traded by each fund company. This report must be received by the
Company by 8:30 A.M. CST to trade at previous day closing NAV.
Distribution Report. This daily report displays all payment
transactions. This report needs to be received by 12:00 Noon CST.
Accounting Report. This daily transactional report produces the
accounting for that cycle.
Telephone Report. This quarterly report shows information about calls
received on the client service 800#. It includes but is not limited to
the number of calls received, queue times, abandon rate and call times.
New Business. This monthly report lists policies awaiting initial
premium. In addition to the company, policy number and policy effective
date, the expected premium is also reported. Expected premium is the
schedule billed premium, not necessarily the balance of the initial
premium not yet received.
Paid New Business. This monthly report lists policies that changed from
pending initial premium to active status during the reporting period.
Sales Activity by Product/Plan/LOB. This monthly report details the
sales activity by product, plan and line of business.
Reserves. This monthly report generates a reserve extract file and
report containing detailed reserve calculations on all products.
Premium and Premium Tax Report by State.
Death Report. This monthly report displays information on all death
claims.
Monthly Reinsurance Report and Extract.
