EXHIBIT 10.9
INSURANCE ADMINISTRATION, SERVICES AND REFERRAL AGREEMENT
THIS INSURANCE ADMINISTRATION, SERVICES AND REFERRAL AGREEMENT (the
"Agreement") is made as of the day of , 1998 by and between THE
SCOTTISH ANNUITY COMPANY (CAYMAN) LTD., a Cayman Islands insurance company
("Scottish Annuity"), and SCOTTISH LIFE ASSURANCE (CAYMAN) LTD., a Cayman
Islands insurance company ("Scottish Life").
W I T N E S S E T H:
WHEREAS, Scottish Annuity, an affiliate of Scottish Life, is engaged
in the issuance of variable annuity products (the "Products").
WHEREAS, Scottish Annuity wishes to retain Scottish Life to provide
certain administrative and accounting services, and Scottish Life is willing to
furnish such services.
WHEREAS, Scottish Annuity wishes to use office space and the services
of Scottish Life for certain administrative, clerical and accounting tasks and
to transfer certain office equipment to Scottish Life;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
Scottish Annuity hereby appoints Scottish Life to provide certain
insurance, administrative, clerical and accounting services to Scottish Annuity
for the period and on the terms set forth in this Agreement. Scottish Life
accepts such appointment and agrees to furnish the services herein set forth in
return for the compensation as provided in Section 4 of this Agreement and in
consideration of the covenants set forth in Section 9 hereof.
Scottish Life hereby agrees to sublease certain space to provide
Scottish Annuity with office space and to perform services referred to herein,
on the terms and subject to the conditions set forth in this Agreement, and
Scottish Annuity agrees to transfer certain office equipment to Scottish Life.
2. ADMINISTRATIVE SERVICES.
(a) Scottish Life agrees to provide to Scottish Annuity the following
insurance, administrative, clerical and accounting services during the term of
this Agreement:
(i) investment fund accounting reporting for Products;
(ii) monitoring compliance with the diversification, investor
control and other requirements of Section 817 of the Internal Revenue Code
of 1986, as amended;
(iii) administrative and clerical services in the issuance by
Scottish Annuity of Products and documents related thereto;
(iv) administrative preparation and delivery (after issuance by
Scottish Annuity) of Products;
(v) servicing of Products after issuance by Scottish Annuity,
including, but not limited to, preparation and delivery of monthly account
statements, administrative processing of loans, administrative processing
of change of owner and beneficiary requests, and administrative processing
of transfers among investment funds in which assets of holders of Products
are invested and contract surrenders (total and partial); and
(vi) administrative and clerical services relating to calculation
of annuity benefits.
(b) Scottish Annuity will be responsible for all other business and
administrative services related to Products, including (i) determinations as to
whether purchasers of annuity products are qualified purchasers; (ii)
investigating investment managers selected by purchasers; and (iii) negotiation
and issuance of Products.
3. ACCOUNTING SERVICES.
Scottish Life will perform general accounting functions (including,
without limitation, the following services) for Scottish Annuity during the term
of this Agreement:
(a) accounting for investment, capital and income and expense
activities and maintenance of individual ledgers for
investment funds in which each Product is invested;
(b) preparing of financial statements of Scottish Annuity;
(c) controlling of all disbursements from Scottish Annuity and
authorizing such disbursements upon instructions from
Scottish Annuity;
(d) preparing of tax returns and similar filings for Scottish
Annuity;
(e) preparing of forms and reports required to be filed by
Scottish Annuity under statutes, rules and other applicable
laws and regulations
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(including insurance laws and regulations) of the Cayman
Islands or the British West Indies; and
(f) keeping of the books and records of accounts of Scottish
Annuity and of premiums paid with respect to the Products.
The books and records pertaining to Scottish Annuity which are in the
possession of Scottish Life shall be the property of Scottish Annuity.
4. COMPENSATION; EXPENSE REIMBURSEMENT.
(a) As compensation for the services rendered by Scottish Life
during the term of this Agreement, Scottish Annuity will pay
to Scottish Life, for each annuity contract issued by
Scottish Annuity after the date of this Agreement, an amount
payable in U.S. dollars, equal to the lesser of (a) 50% of
the policy account value under the annuity contract (measured
at the end of a contract year) and (b) 50% of the mortality
and expense of other administrative charge ("M&E Expense")
payable to Scottish Annuity under all annuity contracts,
provided that such amount shall not be less than U.S.$25,000
(the "Minimum Amount"). Payment shall be made by Scottish
Annuity to Scottish Life within 10 days of the date Scottish
Annuity deducts each M&E Expense under the annuity contract,
provided that any amount to be paid by Scottish Annuity other
than from M&E Expenses under the annuity contract shall be
paid by Scottish Annuity within 10 days of the date Scottish
Annuity deducts the last M&E Expense under the annuity
contract during the contract year in which the Minimum Amount
is in effect.
(b) In addition, Scottish Annuity shall reimburse Scottish Life,
quarterly in arrears, for all out-of-pocket fees, costs and
expenses incurred or advanced by Scottish Life on behalf of
Scottish Annuity in connection with this Agreement. Scottish
Life shall present Scottish Annuity with a written request
detailing such fees, costs and expenses, from time to time as
Scottish Annuity deems necessary. Payment of such fees, costs
and expenses shall not be deemed satisfaction of Scottish
Annuity's obligation to pay to Scottish Life the
administrative and clerical fees due pursuant to Section
4(a).
5. CONFIDENTIALITY.
Each party agrees that it will keep confidential and not disclose any
information provided to the other in connection with the services being rendered
hereunder to any other person without the consent of the party from whom the
information was obtained, unless the information is known or becomes known to
the public other than through the breach of any provision of this Agreement or
such disclosure is required by law. Upon termination of this Agreement, each
party agrees to return all information to the other person, including all copies
thereof, unless the returning
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person is otherwise required to retain such information by law. Scottish Annuity
agrees that this agreement may be described in Scottish Life Holdings Ltd.'s
registration statement on Form S-1 filed with the Securities and Exchange
Commission of the United States relating to the initial public offering of
ordinary shares of Scottish Life Holdings, Ltd, and this agreement may be filed
as an exhibit to such registration statement and otherwise as required by law.
6. DEFAULT.
In the event that Scottish Annuity fails to pay any part of the
amounts set forth in Sections 4(a) and 4(b) above when and as due, and Scottish
Annuity does not cure such failure within 10 days after the date on which notice
of default is given by Scottish Life, then Scottish Annuity shall be in default
under this Agreement. Scottish Annuity agrees to reimburse Scottish Life for any
and all costs and expenses incurred by Scottish Life, including reasonable
counsel fees and expenses, in connection with such default and any litigation or
other proceedings instituted for the collection of payments due hereunder.
7. INDEMNIFICATION.
Scottish Annuity shall indemnify and hold harmless Scottish Life and
its directors, officers, employees, agents and controlling persons (each being
an "Indemnified Party") from and against any and all losses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject under any applicable Cayman Islands or U.S. federal or state law, or
otherwise, relating to or arising out of the provision of services contemplated
by this Agreement. Scottish Annuity shall reimburse any Indemnified Party for
all costs and expenses, including reasonable counsel fees and expenses, incurred
in connection with the investigation of, preparation for or defense of any
pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party. Scottish Annuity shall not be
liable under the foregoing indemnification provision to the extent that any
loss, claim, damage, liability or expense is found in a final judgment by a
court of competent jurisdiction to have resulted primarily from the bad faith or
gross negligence of Scottish Life.
8. DURATION AND TERMINATION.
This Agreement shall continue in effect until December 31, 1999, and
shall thereafter be automatically renewed for successive one-year periods, each
commencing January 1 of the renewed term year, unless canceled by either party
in writing not less than 60 days prior to the commencement of a renewed term.
Notwithstanding the foregoing, this Agreement shall terminate earlier upon the
earlier of:
(a) a material breach or default of any of the material
obligations under this Agreement by either party which breach
or default is not cured within 10 days after written notice
to such party by the other party; or
(b) either party is declared insolvent or bankrupt by a court of
competent jurisdiction or liquidation proceedings are
commenced by or against
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either party and such proceedings are not dismissed within 30
days after the commencement of such proceedings.
9. PERMISSIBLE AND IMPERMISSIBLE ACTIVITIES; REFERRALS.
(a) Except as set forth in subsection (b) below, nothing herein
shall in any way preclude Scottish Life from engaging in any
activities, including activities competitive with the
business of Scottish Annuity, or from performing services for
its own account or for the account of others.
(b) During the term of this Agreement:
(i) Scottish Annuity shall not, directly or indirectly, offer
or sell (or enter into any contract to sell) any life
insurance product, whether the benefit thereunder is
fixed or variable; and
(ii) Scottish Life shall not, directly or indirectly, offer or
sell (or enter into any contract to sell) any variable
annuity product which does not contain a life insurance
component.
(c) During the term of this Agreement:
(i) Scottish Annuity agrees to refer only to Scottish Life
any opportunity or inquiry Scottish Annuity may receive
to issue and sell any life insurance product, whether the
requested benefit thereunder may be fixed or variable;
and
(ii) Scottish Life agrees to refer only to Scottish Annuity
any opportunity or inquiry Scottish Life may receive to
issue and sell any annuity product which would not
contain a life insurance component.
10. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
11. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF THE CAYMAN ISLANDS, BRITISH WEST INDIES
WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES OF SUCH LAWS.
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12. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters covered hereby and supersedes all prior
agreements and understandings between the parties.
13. ASSIGNMENT.
This Agreement shall not be assignable by operation of law or
otherwise without the prior written consent of each party hereto, provided that
Scottish Life may assign its rights under this Agreement to any wholly-owned,
direct or indirect subsidiary of Scottish Life or any person that controls or is
under common control with Scottish Life.
14. AMENDMENT; SUCCESSORS; COUNTERPARTS.
(a) The terms of this Agreement shall not be waived, altered,
modified, amended or supplemented in any manner whatsoever
except by written instrument signed by both parties hereto.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors.
(c) This Agreement may be executed in several counterparts, each
of which shall be deemed an original hereof.
15. CAPTIONS.
The captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
THE SCOTTISH ANNUITY COMPANY
(CAYMAN) LTD.
By /s/ XXXXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx
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Title: Manager of Finance and Administration
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SCOTTISH LIFE ASSURANCE (CAYMAN) LTD.
By /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
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Title: Chairman of the Board and Chief
Executive Officer
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