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AMENDMENT NO. 3
TO
SERVICE AGREEMENT
WHEREAS, Presidential Life Insurance Company ("Presidential") and Integrated
Administrative Services Corporation ("IASC") entered into that certain Service
Agreement dated as of October 14, 1987 and amended by Amendment No. 1 dated as
of December 1, 1988 and Amendment No. 2 (the "Service Agreement") concerning
administrative services to be performed by IASC for certain variable annuity
contracts issued by Presidential;
WHEREAS, IASC subsequently changed its name to Anchor National Services, Inc.
("ANSI"); and
WHEREAS, ANSI subsequently notified Presidential that effective
September 3, 1991 it was assigning its rights and obligations under the Service
Agreement to its affiliated company, First SunAmerica Life Insurance Company
("First SunAmerica") pursuant to Section 11.01 of the Service Agreement;
NOW, THEREFORE, Presidential and First SunAmerica acknowledge that such
assignment has been made; and
First SunAmerica agrees to assume ANSI's rights and obligations under the
Service Agreement, provided that the acceptance of such assignment or the
execution of this Amendment No. 3 by First SunAmerica does not affect in any way
First SunAmerica's or ANSI's position set forth in: 1) the letter dated March
22, 1991 from Xxxxxx Xxxx to Xxxxxxx Xxxxxx; 2) the letter dated April 17, 1991
from Xxxxxx X. Xxxxxxxx to Xxxxxxx Xxxx; or 3) the letter dated October 15, 1991
from Xxxxxx X. Xxxxxxxx to Xxxxxxx Xxxx.
IN WITNESS WHEREOF, Presidential and First SunAmerica have caused this
Amendment No. 3 to the Service Agreement to be executed by and through their
duly authorized officers as of the date set forth below.
Presidential Life Insurance Company
Date: March 30, 1993
By: [SIG]
----------------------------------
Name:
Title:
First SunAmerica Life Insurance Company
Date: March 23, 1993 By: /s/ XXXXX XXXXXX
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President & Controller
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SERVICE AGREEMENT
AGREEMENT made as of the 14th day of October, 1987, by and between
the Presidential Life Insurance Company ("Presidential"), a New York
corporation, having its principal office and place of business at 00 Xxxxxxxx
Xxxxxx, Xxxxx, Xxx Xxxx, and Integrated Administrative Services Corporation
("IASC"), a Delaware corporation, having its principal office and place of
business at 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx.
WHEREAS, IASC is in the business of performing administrative
services in connection with certain variable annuity contracts issued by life
insurance companies affiliated with IASC and;
WHEREAS, IASC has contracted for the use of one or more computerized
data processing recordkeeping systems for annuity processing and administration
(hereinafter sometimes referred to as the "IASC System") and has the necessary
data processing equipment and personnel (hereinafter sometimes referred to as
the "Facilities" or "IASC's Facilities") to provide and support remote terminal
access to the IASC System and Facilities for the maintenance of annuity records,
processing of information and the generation of output and reports with respect
thereto; and
WHEREAS, Presidential desires to appoint and retain IASC as its
agent to perform the administrative services set forth in
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this Agreement with respect to certain variable annuity contracts to be offered
by it (the "Contracts") and IASC desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1 Appointment of IASC
1.01 Subject to the provisions of this Agreement, Presidential
hereby appoints and retains IASC as its agent to perform the administrative
services described in Exhibit A with respect to the Contracts, and IASC hereby
agrees to perform such administrative services, subject to the provisions of
this Agreement. IASC hereby agrees to use such System and Facilities to maintain
records of information and data transmitted to it by Presidential with respect
to the Contracts and to deliver or transmit to Presidential and/or its
policyholders such output as is described on Exhibit A.
1.02 Presidential shall provide to IASC at IASC's Facilities in
Denver, Colorado, such information and data as is required to maintain the
records and generate the output and perform the administrative services required
hereunder with respect to the Contracts.
1.03 IASC agrees to use its best efforts to provide training for
Presidential personnel at Denver, Colorado in connection with the use and
operation of the IASC System. IASC shall provide, without cost to Presidential,
any necessary training at IASC's Facility. All travel and out-of-pocket expense
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incurred by Presidential personnel in connection with and during training at
IASC's Facility shall be borne by Presidential.
1.04 IASC will make on-line access to the IASC System available to
Presidential between the hours of 6:00 a.m. and 6:00 p.m., Mountain Time, Monday
through Friday, except for such holidays as are indicated in the prospectus for
any Contract subject to this Agreement. Access to the System at other times will
be by mutual agreement.
SECTION 2 Term
2.01 Subject to termination as hereinafter provided, this Agreement
shall remain in force and effect for an initial term of three (3) years plus the
interval from the date of this Agreement to the date when the first Contract is
actually issued, and shall continue in force and effect from year to year
thereafter until terminated as herein provided, each such additional year being
an additional term of this Agreement.
2.02 To the extent that this Agreement is terminated as hereinafter
provided, IASC agrees that, in order to assist in providing uninterrupted
service to Presidential, IASC shall provide necessary assistance to Presidential
in converting the records of Presidential from the IASC System to whatever
service or system is selected by Presidential (subject to reimbursement to IASC
for its out-of-pocket expenses such as postage and special request charges
levied by vendors in rendering such assistance), except that all records, files,
and documents relating to the Contracts, both machine readable and non-machine
readable, are the property of Presidential and shall be given to Presidential at
no charge.
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SECTION 3 Fees and Expenses
3.01 Presidential shall pay to IASC the fees and charges described
in Exhibit B, as modified in accordance with the provisions of Section 9.03
hereof, if applicable.
3.02 Presidential shall also reimburse IASC for all reasonable
out-of-pocket expenses incurred by IASC in the performance of this Agreement
(except that the start up costs related to commencement of services hereunder
shall be borne by IASC). Such out-of-pocket expenses shall include, without
limitation, the cost of obtaining customized letterhead, envelopes, forms and
other stock bearing the name of Presidential, provided that such expenses
relating to Presidential stock are approved in advance by Presidential. While it
is anticipated that Presidential will make its own arrangements for the
installation of transmission facilities or equipment at Presidential's
locations, in the event that Presidential requests IASC to obtain any such
facilities or equipment for Presidential they shall be provided at cost;
provided that such expenses are approved in advance by Presidential.
SECTION 4 Representations and Warranties of IASC
IASC represents and warrants to Presidential as follows:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware.
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4.02 It is empowered under applicable laws and by its charter and
bylaws to enter into and perform the services contemplated in this Agreement.
4.03 All requisite corporate proceedings have been taken to
authorize it to enter into and perform the services contemplated in this
Agreement.
4.04 It has and will continue to have and maintain the necessary
facilities, systems, equipment, and personnel to perform its duties and
obligations under this Agreement, including but not limited to outputs and
services as outlined on Exhibit A in accordance with the prospectus and
applicable State and Federal laws and regulations.
SECTION 5 Representations and Warranties of Presidential
Presidential represents and warrants to IASC as follows:
5.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of New York.
5.02 It is qualified and licensed to carry on its business in those
jurisdictions in which it transacts business and is required to be qualified or
licensed.
5.03 It is empowered under the applicable laws and regulations and
by its charter and bylaws to enter into and perform this Agreement, subject to
appropriate SEC clearance and New York State Insurance Department approval.
5.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
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5.05 Each registration statement required under the Securities Act
of 1933, as amended, with respect to the Contracts will, so long during the term
hereof as such Contracts are offered, be, in effect.
5.06 Each Separate Account relating to the Contracts will, so long
during the term hereof as such Separate Account is outstanding, continue to be
registered under the Investment Company Act of 1940, as amended.
5.07 It will comply and will continue to be in compliance in all
material respects with insurance or securities laws applicable to it and the
offering, sale and maintenance of the Contracts.
SECTION 6 Indemnification
6.01 IASC shall not be responsible for, and Presidential shall
indemnify and hold IASC and its officers, directors, shareholders, employees and
agents harmless from and against, any and all costs, expenses, losses, damages,
charges, counsel fees, payments and liabilities arising out of or attributable
to:
a) Any actions taken by IASC in good faith and due diligence in
compliance with the terms of this Agreement;
b) Any failure by Presidential to comply with Federal, state or
local laws or regulations with respect to the Contracts or
records maintained, which is not
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caused, directly or indirectly, by IASC's acts or failure to
act;
c) Presidential's willful refusal or failure to comply with the
terms of this Agreement, or which arise out of Presidential's
gross negligence or willful misconduct or which arise out of
the breach of any representation or warranty of Presidential
hereunder;
d) Presidential's errors and mistakes in the use of the System,
Facilities and control procedures;
e) IASC's reliance on, or use of, in performing its duties and
obligations hereunder, information, data, records and
documents received by IASC from Presidential;
f) The reliance on, or the carrying out of, any instructions or
requests of Presidential pertaining to the normal day-to-day
operations and functions of the IASC System made by any
persons whose names are furnished to IASC as "Authorized
Personnel" by Presidential from time to time.
6.02 Presidential shall not be responsible for, and IASC shall
indemnify and hold Presidential and its officers, directors, shareholders,
employees and agents harmless from and against, any
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and all costs, expenses, losses, damages, charges, counsel fees, payments and
liabilities arising out of or attributable to:
a) Any actions taken by Presidential in good faith and due
diligence in compliance with the terms of this Agreement;
b) IASC'S willful refusal or failure to comply with the terms of
this Agreement, or which arise out of IASC's gross negligence
or willful misconduct or which arise out of the breach of any
representation or warranty of IASC hereunder;
c) IASC's errors and mistakes in the System, Facilities and
control procedures, or in the use thereof;
d) Presidential's reliance on or use of, in performing its duties
and obligations hereunder, information, data, records and
documents received by Presidential from IASC;
e) Any breach by IASC of the terms of this Agreement.
6.03 Upon receiving notice of a claim for which one party (the
"Indemnifying Party") may be required to indemnify the other (the "Indemnified
Party"), the Indemnified Party shall promptly give notice thereof to the
Indemnifying Party; provided,
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however, that the obligation of the Indemnifying Party shall not be reduced on
account of the failure or delay of the Indemnified Party to give such notice,
except to the extent of the failure or delay. The Indemnifying Party may
participate in the defense of such claim, and if it elects to so participate,
the Indemnified Party will not compromise or settle such claim without the
prior written consent of the Indemnifying Party.
6.04 Any provision of this Agreement to the contrary
notwithstanding, IASC shall have no liability to Presidential arising out of any
action or failure to act by IASC:
(a) Based upon any opinion of Presidential's counsel, any
instruction furnished to it by Presidential or any order or
decree of any court, regulatory body or administrative agency;
(b) Caused by any act of God, strike, equipment or transmission
failure or damage, or other event beyond its control; or
(c) In connection with any legal obligation as a result of
services provided hereunder to register, qualify or obtain a
license to act as a broker/dealer, transfer agent, insurance
company, or agency thereof, unless Presidential is materially
and adversely affected thereby.
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6.05 In the event IASC is unable to perform its obligations under
the terms of this Agreement because of any act of God, strike, equipment or
transmission failure or damage, or other event beyond its control, IASC will use
its best efforts to assist Presidential to obtain alternate sources of service.
6.06 At any time IASC may apply to a person whose name has been
furnished to IASC by Presidential as a person authorized to give instructions
under this section with respect to any matter arising in connection with this
Agreement. IASC shall not be liable for, and shall be indemnified by
Presidential against, any action taken or omitted by IASC in good faith in
reliance upon such instructions.
6.07 Presidential shall immediately provide IASC with written notice
of any change of authority of persons authorized to provide IASC with
instructions or directions relating to services to be performed by IASC under
this Agreement.
6.08 In the event malfunction of the IASC System causes an error or
mistake in any record, report, data, information or output under the terms of
this Agreement, IASC shall at its expense immediately correct and reprocess such
records; provided that Presidential shall, upon detection of an error or
mistake, promptly notify IASC of such error or mistake, such notice to be
subsequently confirmed in writing.
SECTION 7 Covenants of IASC
7.01 IASC shall maintain the appropriate computer files of all
information and data provided by Presidential. It is
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expressly understood that all such data provided by Presidential and maintained
remains the exclusive property of Presidential.
7.02 IASC shall assure that back up computer tape files are
maintained on a daily basis stored in an off-premises locations and that
alternative equipment and transmission facilities are available in the event the
primary equipment or transmission facilities are damaged or unavailable for
whatever reason. The purpose of back up and recovery procedures is to permit
file recovery in the event of destruction of normal processing files.
Presidential may review the procedures in effect and inspect the storage
facility upon demand.
7.03 IASC shall maintain in effect the insurance coverages described
in Exhibit C attached hereto provided that such coverage is available from a
domestic insurance carrier at a reasonable cost to IASC. Reasonable cost shall
mean the cost of similar coverage in like amounts to similar entities. IASC
shall not voluntarily cause any termination, reduction or alteration of these
coverages without thirty (30) days prior written notice to Presidential.
7.04 All information furnished by Presidential to IASC hereunder is
confidential and IASC shall not disclose such information, directly or
indirectly to any third party except to the extent that it is necessary for IASC
to do so in order to perform its duties and obligations under this Agreement or
to the extent that IASC is required by law to make such disclosure.
7.05 IASC will obtain in writing the consent of the owners of the
one or more computerized data processing recordkeeping systems for annuity
processing and administration referred to in this Agreement to use such systems
for the benefit
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of Presidential in accordance with the terms of this Agreement. Such written
consents shall be secured from existing and future providers of systems to IASC
when they are so contracted and a copy thereof shall be furnished to
Presidential.
SECTION 8 Covenants of Presidential
8.01 Presidential shall utilize and employ, as applicable, all
control procedures available under the IASC System of which Presidential is
advised and Presidential shall promptly advise IASC of any errors or mistakes in
the data or information provided to IASC, the records maintained or output
generated hereunder.
8.02 Presidential shall provide to IASC, in the formats and form
specified by IASC, all information and data necessary or required in connection
therewith so that the output produced by the system shall be complete and
accurate when it is generated by IASC's System and Facilities.
8.03 In the event Presidential shall erroneously provide information
or shall provide incorrect information or data to IASC, Presidential shall
correct such information and data promptly.
8.04 Presidential acknowledges that IASC has certain rights in and
to the IASC System and that the IASC System constitutes confidential material
and trade secrets of IASC; and it agrees to maintain the confidentiality of the
IASC System.
8.05 Presidential shall use its best efforts to cause the
registration statement under the Securities Act of 1933 relating to the
Contracts to become effective and the Contracts,
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and the Separate Account relating thereto, to be approved by the New York
Insurance Department.
SECTION 9 Termination of Agreement
9.01 This Agreement may be terminated or amended by mutual agreement
in writing at any time.
9.02 This Agreement may be terminated by either party by written
notice to the other not less than 180 days prior to the end of the initial term
or any subsequent one-year term; provided, however, that any such notice of
termination by Presidential shall be inapplicable to Variable Annuity Contracts
issued prior to the effective date of such termination. Except as may otherwise
be agreed by the parties, IASC shall continue to service all Presidential
Contracts outstanding on the effective date of such termination for as long as
any of such Contracts remains outstanding and the provisions of this Agreement
shall continue in all respects to govern the relationship between Presidential
and IASC with respect to such Contracts.
9.03 At least ninety (90) days prior to the end of any term hereof,
IASC shall give Presidential written notice if IASC desires to increase its fees
or charges to Presidential, or to change the manner of payment, commencing with
the next term. IASC shall only be allowed to raise such fees which are paid
directly by policyholders. if IASC and Presidential do not agree to fees and
charges before the end of the term during which such notice is given by IASC,
this Agreement shall terminate at the end of such term.
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9.04 If either of the parties hereto shall materially breach this
Agreement or be materially in default in the performance of any of its duties
and obligations hereunder (the defaulting party), the other party hereto may
give written notice thereof to the defaulting party and if such default or
breach shall not have been remedied within thirty (30) days after such written
notice is given, then the party giving such written notice may terminate this
Agreement by giving thirty (30) days written notice of such termination to the
defaulting party, provided, however, that, if IASC elects to terminate this
Agreement for other than nonpayment of fees and charges and if Presidential
shall so request in writing, IASC shall continue to provide the services
described herein to Presidential for a period of six (6) months following such
termination, such service to be provided in accordance with the terms of this
Agreement and at 100 percent of the fees in effect for the term immediately
preceding such six (6) month period. Termination of this Agreement by default or
breach by Presidential shall not constitute a waiver of any rights of IASC in
reference to services performed prior to such termination or rights of IASC to
be reimbursed for out-of-pocket expenditures; termination of this Agreement by
default or breach by IASC shall not constitute a waiver by Presidential of any
other rights it might have under this Agreement.
SECTION 10 Changes and Modifications
10.01 During any term of this Agreement, IASC will make available
for Presidential's use without additional cost all modifications and
improvements to the IASC System and, at
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Presidential's expense, IASC will use its best efforts to make any reasonable
changes requested by Presidential. Incremental operating charges attendant to
such system changes requested by Presidential shall be determined by mutual
agreement, except that changes occasioned by the requirements of any regulatory
agency having jurisdiction over the parties or the contracts shall be borne by
IASC.
10.02 IASC shall have the right, at any time, and from time to time,
to alter and modify any systems, programs, procedures or facilities used or
employed in performing its duties and obligations hereunder; provided that
alterations or modifications which may materially change or affect the
operations and procedures of Presidential in using or employing IASC's System or
Facilities thereunder shall be discussed with Presidential prior to commencement
in order that the parties be given the opportunity to explore alternatives that
will prove less disruptive, and further provided that such alterations or
modifications are consistent with the requirements outlined in Exhibit A and the
other provisions of this Agreement.
SECTION 11 Assignment
11.01 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party hereto without the prior written
consent of the other; provided, however, that IASC may assign this Agreement,
upon notification to Presidential, to any affiliated company that agrees in
writing to perform all of IASC's obligations hereunder and has administrative
capabilities at least equal to IASC, unless the New York Insurance Department
objects to such assignment.
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11.02 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
11.03 IASC has disclosed to Presidential that it will subcontract
for some services with DST, Inc. and/or its subsidiary, Policyholder Service
Corporation, as well as other vendors. In the event of such subcontracting, IASC
shall remain primarily responsible for the performance of such services. In the
event that this Agreement is terminated, IASC will not take any action to
preclude Presidential from obtaining services from DST, Inc. or any of its
subsidiaries, or at Presidential's discretion from acquiring such services from
any other vendor.
SECTION 12 Arbitration
12.01 Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in New York City
in accordance with the rules of the American Arbitration Association. IASC and
Presidential, before entering into arbitration, shall each appoint an arbitrator
to be a member of the panel. Should the two arbitrators not be able to agree on
a choice of the third, then the American Arbitration Association shall make the
appointment of a person who is neutral to the parties in controversy. None of
the arbitrators shall be a current or former officer or employee of the parties
to this Agreement or their affiliates. If either party fails to choose an
arbitrator within 30 days after receiving the written request of the other party
to do so, the latter shall choose both arbitrators, who shall choose the third
arbitrator.
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The arbitrators shall be impartial and shall be present or former officers of
life insurance or life reinsurance companies.
12.02 The party requesting arbitration (the "Petitioner") shall
submit its brief to the arbitrators with 30 days after notice of the selection
of the third arbitrator. Upon receipt of the Petitioner's brief, the other party
(the "Respondent") shall have 30 days to file a reply brief. On receipt of the
Respondent's brief, the Petitioner shall have 20 days from the receipt of
Respondent's brief to file its rebuttal brief. The arbitrators may extend the
time for filing of briefs at the request of either party.
12.03 The arbitrators are relieved from judicial formalities and, in
addition to considering the rules of law and the customs and practices of the
insurance and reinsurance business, shall make their award with a view to
effecting the intent of this Agreement. The decision of the majority shall be
final and binding upon the parties.
12.04 The costs of arbitration, including the fees of the
arbitrators, shall be shared equally unless the arbitrators decide otherwise.
12.05 The arbitration shall be held at the times and places agreed
upon by the arbitrators.
12.06 The arbitration award shall be in writing and shall be signed
by at least a majority of the arbitrators. The award shall be made promptly by
the arbitrators and, unless otherwise agreed by the parties, shall be delivered
to the parties either personally or by mail not later than 30 days from the date
of the close of the arbitration proceedings.
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SECTION 13 Miscellaneous
13.01 Presidential or its duly authorized independent auditors will
have the right under this Agreement to perform on-site audits of records and
accounts directly pertaining to the annuity policies serviced by IASC's
Facilities hereunder at IASC's Facilities in accordance with reasonable
procedures and at reasonable frequencies. At the request of Presidential, IASC
will make available to Presidential's auditors and representatives of the
appropriate regulatory agencies all reasonably requested records, data, and
access to operating procedures.
13.02 The parties hereto agree that all tapes, books, reference
manuals, instructions, records, information and data pertaining to the business
of the other party, IASC's System and the policyowners serviced by Presidential
hereunder which are exchanged or received pursuant to the negotiation of and/or
the carrying out of this Agreement shall remain confidential and shall not be
voluntarily disclosed to any other person, except to the extent that it is
necessary for IASC or Presidential to do so in order to perform their duties and
obligations under this Agreement or to the extent that IASC is required by law
to do so, and that all such tapes, books, reference manuals, instructions,
records, information and data in the possession of each of the parties hereto
shall be returned to the party from whom it was obtained upon the termination or
expiration of this Agreement.
13.03 It is understood and agreed that all services performed
hereunder by IASC shall be as an independent contractor and not as an employee
of Presidential.
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13.04 The consideration due hereunder does not include any amount
for taxes. IASC will be responsible for the payment of any sales, use, excise or
other tax arising from this Agreement.
13.05 Any notice, request, instruction or other communication at any
time hereunder required or permitted to be given or furnished by either party
hereto to the other shall be effective if in writing and mailed by registered
mail, return receipt requested, or actually delivered to the party to be
notified. The addresses of the parties hereto for the foregoing purposes are as
set forth on the first page of the Agreement, unless either party notifies the
other as provided herein.
13.06 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof, whether oral or written, and this Agreement may not be modified
except in a written instrument executed by both of the parties hereto.
13.07 This Agreement shall be governed by the laws of the State of
New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by and through their duly authorized officers as of the day and
year first above written.
PRESIDENTIAL LIFE INSURANCE COMPANY
By: [SIG]
-------------------------------------
INTEGRATED ADMINISTRATIVE SERVICES
CORPORATION
By: [SIG]
-------------------------------------
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EXHIBIT A
PRESIDENTIAL LIFE INSURANCE COMPANY
VARIABLE ANNUITY RECORDKEEPING SYSTEM
OUTPUTS AND SERVICES
DAILY OUTPUT
1. Daily Cash Recap
2. Daily Unit Recap
3. Master File Update Error Report
4. Control Totals
5. Daily Price File Update
6. As Of Transaction Report
7. Daily Production Report
8. Maintenance Journals
9. Investment Vehicle Earnings Report
10. Daily Batch Balance
11. Error Listing
12. Annuity New Policy Register
13. Daily Disbursement Check Register
14. Daily Check Reconciliation Update Register
15. Contract Preparation and issue
MONTHLY OUTPUT
1. Monthly Production Report
2. Monthly Reserve Report
3. Premium Tax Report
4. Monthly Recap of Daily Transaction Reports
CUSTOM FORM OUTPUT
1. Confirmation Statements
2. Specification Page
3. Commission Statements
4. Commission Checks
5. Disbursement Checks
ADDITIONAL SERVICES
1. Error Rectification
2. Policyholder Inquiries
3. Broker/Agent Inquiries
4. Contract Filing and Registration Assistance
5. Training
6. Licensing
7. Marketing Assistance
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CONTRACT ISSUE
1. Review application for completeness and apply issue criteria to
application. Print and maintain supply of policies.
2. Prepare contract data page, issue contract and confirmation for
paid business and mail to policyholders and/or agents .
3. Establish and maintain all policyholder records, as applicable,
on computer and microfilm systems.
4. Notify agent or PRESIDENTIAL LIFE INSURANCE COMPANY of any error
or missing data needed to establish policyholder records and
attempt to clarify before third business day after receipt.
5. Deposit monies received with application into appropriate
accounts.
6. Print and maintain inventory of all issue-related forms,
policies, endorsements, and transaction request forms.
BILLING AND COLLECTION
1. Receive purchase payments and process amount paid to
policyholder records and appropriate accounts.
2. Prepare and mail confirmations.
3. Update the master records and all other records to reflect
payments received, and perform accounting distribution of each
payment received.
BANKING
1. Balance, edit, endorse and prepare daily deposit.
2. Place deposits into a depository account.
3. Prepare checks for partial and full surrenders, as well as for
death claims.
4. Transfer funds from and to the appropriate accounts.
5. On dishonored items, reverse all transactions, prepare reports
and communicate with policyholder or agent.
ACCOUNTING/AUDITING
1. Prepare daily account reports for all policies for each day with
cash transactions.
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2. Retain system-generated reports in accordance with a retention
schedule to be mutually established. Provide access to such
reports for internal and external auditing.
VALUATION OF POLICIES
1. Calculate cash value, when needed, based on variable interest
rates, cash transactions, and appropriate deductions.
2. Deduct cost of mortality, expenses and administration based on
contract provisions.
POLICYHOLDER SERVICE/RECORD MAINTENANCE
1. Receive and implement all policyholder service requests and
changes of any other information maintained on the system other
than those undertaken by Presidential Life.
2. Research all inquiries using both data stored in the system and
microfilm records. Respond directly to any questions or
inquiries as mutually defined.
3. Prepare a set of daily journals confirming all changes made to
policyholder records. Microfilm or file all copies of
communications from policyholders.
4. Originate and review forms. Print and maintain adequate supply.
DISBURSEMENTS (SURRENDERS, LOANS AND CLAIMS)
1. Receive requests for partial or full surrenders and death claims
from policyholder, agent or home office. Retain and account for
any policy administrative charges.
2. Process all surrender requests and death claims on policyholder
master files.
3. Prepare checks for surrenders and death claims and forward to
policyholder or beneficiary (including confirmation).
4. Prepare reports on surrenders and death claims.
5. Review and maintain adequate supply of checks and confirmations.
6. Prepare appropriate I.R.S. forms as required for disbursements.
COMMISSIONS
1. Calculate commissions based on tables agreed to by PRESIDENTIAL
LIFE INSURANCE COMPANY.
2. Report commissions semi-monthly.
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PERIODIC REPORTS TO POLICYHOLDERS
1. Prepare and mail statement of account to each policyholder
quarterly, or more often as agreed to.
REGULATORY STATEMENT REPORTS
1. Provide data for Separate Account Exhibit for PRESIDENTIAL LIFE
INSURANCE COMPANY'S annual reporting.
2. Prepare appropriate I.R.S. reports for withdrawals and
distributions and mail to policyholder and IRS.
PREMIUM TAXES
1. Collect and account for premium taxes as appropriate.
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EXHIBIT B
PRESIDENTIAL LIFE INSURANCE COMPANY
FEE SCHEDULE
ONGOING SERVICE FEE:
$30.00 - Per Contract Per Year - Flat
IASC will xxxx 1/12th the annual charge on a monthly basis for any policy that
contains assets at any time during the month; plus
.435% per year of the aggregate assets held under the Contracts, payable monthly
based upon the value of such assets as of the close of each month.
EXPENSES:
IASC will xxxx out-of-pocket expenses as they are incurred. "Out-of-pocket
expenses" shall include charges by outside vendors for services specifically
requested by Presidential.
-25-
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EXHIBIT C
INSURANCE COVERAGE
Insurance Coverages Maintained with respect to IASC and the IASC System:
TYPE LIMITS DEDUCTIBLE DATE CARRIER BROKER
----------------------------------------------------------------------------------------------------------------------------
Directors & Officers $10,000,000 $1,000,000 7/31/88 National Union Xxxxxx Xxxx Associates, I
Liability
----------------------------------------------------------------------------------------------------------------------------
Crime 1,000,000 2,500 12/31/87 Fidelity & Deposit Xxxx X. Xxxxx & Co.
Co. of Maryland
----------------------------------------------------------------------------------------------------------------------------
Excess Crime 5,000,000 -- 6/1/88 National Union Xxxxxx Xxxx Associates, I
----------------------------------------------------------------------------------------------------------------------------
Comprehensive General 1,000,000 2,500 11/1/87 Atlas Assurance Xxxx X. Xxxxx & Co.
Liability Company
----------------------------------------------------------------------------------------------------------------------------
Umbrella Liability 10,000,000 -- Various Various Xxxxxx Xxxx Associates, In
----------------------------------------------------------------------------------------------------------------------------
Property Blanket 10,000 Various Various Xxxxxx Xxxx Associates, In
----------------------------------------------------------------------------------------------------------------------------
28
AMENDMENT NO. 1
TO
SERVICE AGREEMENT
WHEREAS, Presidential Life Insurance Company ("Presidential") and
Integrated Administrative Services Corporation ("IASC") entered into a Service
Agreement dated as of October 14, 1987 (the "Service Agreement") with respect to
the performance of administrative services by IASC in connection with certain
variable annuity contracts to be issued by Presidential; and
WHEREAS, Presidential and IASC wish to make certain changes in the
fees payable to IASC under the Service Agreement;
NOW, THEREFORE, the parties agree that, effective as of December 1,
1988, Exhibit B to the Service Agreement shall be amended to read in its
entirety as set forth on the following page.
PRESIDENTIAL LIFE INSURANCE
COMPANY
by /s/ XXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx
President
INTEGRATED ADMINISTRATIVE
SERVICES CORPORATION
by /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx
President
29
EXHIBIT B
PRESIDENTIAL LIFE INSURANCE COMPANY
FEE SCHEDULE
ONGOING SERVICE FEE:
1. $30.00 per contract per year. IASC will xxxx 1/12th the annual
charge on a monthly basis for any Contract that contains assets at any time
during the month; plus
2. $25.00 for each transfer of a Contract Owner's interest from one
Separate Account Division to another which is made within thirty (30) days of a
prior transfer or within thirty (30) days of the Issue Date; plus
3. .355% per year of the aggregate assets held under all Contracts in
force for more than three (3) years, payable monthly based upon the value of
such assets as of the close of each month; plus
4. An amount equal to 20% of all Withdrawal Charges payable under the
Contracts as a result of partial withdrawals made by Contract Owners in excess
of Free Withdrawal Amounts and Contract surrenders within six (6) years of the
Issue Date, such amounts to be paid to IASC as they become due and payable.
EXPENSES:
IASC will xxxx out-of-pocket expenses as they are incurred.
"out-of-pocket expenses" shall include charges by outside vendors for services
specifically requested by Presidential.
As amended
effective
12/1/88
30
AMENDMENT NO. 2
TO
SERVICE AGREEMENT
WHEREAS, Presidential Life Insurance Company ("Presidential") and
Integrated Administrative Services Corporation ("IASC") entered into a Service
Agreement dated as of October 14, 1987, and amended as of December 1, 1988, (the
"Service Agreement") with respect to the performance of administrative services
by IASC in connection with certain variable annuity contracts ("Contracts") to
be issued by Presidential; and
WHEREAS, Presidential desires to expand the options available under
the Contracts to permit the allocation of assets to its General Account; and
WHEREAS, Presidential and IASC wish to make certain changes to the
Schedule of Services to be provided by IASC and to the Schedule of fees payable
to IASC under the Service Agreement in light of the foregoing;
NOW, THEREFORE, the parties agree that Exhibits A and B to the
Service Agreement shall be amended to read as set forth on the attached five (5)
pages.
PRESIDENTIAL LIFE INSURANCE
COMPANY
by [SIG]
------------------------------------
President
INTEGRATED ADMINISTRATIVE
SERVICES CORPORATION
by /s/ XXXXXX X. XXXXXXXX, XX.
--------------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
Executive Vice President
31
EXHIBIT A
PRESIDENTIAL LIFE INSURANCE COMPANY
VARIABLE ANNUITY RECORDKEEPING SYSTEM
OUTPUTS AND SERVICES
DAILY OUTPUT
1. Daily Cash Recap
2. Daily Unit Recap
3. Master File Update Error Report
4. Control Totals
5. Daily Price File Update
6. As of Transaction Report
7. Daily Production Report
8. Maintenance Journals
9. Investment Vehicle Earnings Report
10. Daily Batch Balance
ll. Error Listing
12. Annuity New Policy Register
13. Daily Disbursement Check Register
14. Daily Check Reconciliation Update Register
15. Contract Preparation and issue
MONTHLY OUTPUT
1. Monthly Production
2. Monthly Reserve Report
3. Premium Tax Report
4. Monthly Recap of Daily Transaction Reports
CUSTOM FORM OUTPUT
1. Confirmation Statements
2. Specification Page
3. Commission Statements
4. Commission Checks
5. Disbursement Checks
ADDITIONAL SERVICES
1. Error Rectification
2. Policyholder Inquiries
3. Broker/Agent Inquiries
4. Contract Filing and Registration Assistance
5. Training
6. Licensing
7. Marketing Assistance
-21-
32
CONTRACT ISSUE
1. Review application for completeness and apply issue criteria to
application. Print and maintain supply of policies and all
endorsements and riders thereto.
2. Prepare contract data page, issue contract, appropriate riders
or endorsements, confirmation for paid business and mail to
policyholders and/or agents.
3. Establish and maintain all policyholder records, as applicable,
on computer and microfilm systems.
4. Notify agent or PRESIDENTIAL LIFE INSURANCE COMPANY of any error
or missing data needed to establish policyholder records and
attempt to clarify before third business day after receipt.
5. Deposit monies received with application into appropriate
accounts.
6. Print and maintain inventory of all issue-related forms,
policies, endorsements, and transaction request forms.
BILLING AND COLLECTION
1. Receive purchase payments and process amount paid to
policyholder records and appropriate accounts.
2. Prepare and mail confirmations.
3. Update the master records and all other records to reflect
payments received, and perform accounting distribution of each
payment received.
BANKING
1. Balance, edit, endorse and prepare daily deposit.
2. Place deposits into a depository account.
3. Prepare checks for partial and full surrenders, as well as for
death claims.
4 Transfer funds from and to the appropriate accounts.
5. On dishonored items, reverse all transactions, prepare reports
and communicate with policyholder or agent.
ACCOUNTING/AUDITING
1. Prepare daily account reports for all policies for each day with
cash transactions.
-22-
33
2. Retain system-generated reports in accordance with a retention
schedule to be mutually established. Provide access to such
reports for internal and external auditing.
VALUATION OF POLICIES
1. Calculate cash value, when needed, based on variable interest
rates, General Account interest rate, cash transactions, and
appropriate deductions.
2. Deduct cost of mortality, expenses and administration based on
contract provisions.
POLICYHOLDER SERVICE/RECORD MAINTENANCE
1. Receive and implement all policyholder service requests and
changes of any other information maintained on the system other
than those undertaken by Presidential Life.
2. Research all inquiries using both data stored in the system and
microfilm records. Respond directly to any questions or
inquiries as mutually defined.
3. Prepare a set of daily journals confirming all changes made to
policyholder records. Microfilm or file all copies of
communications from policyholders.
4. Originate and review forms. Print and maintain adequate supply.
DISBURSEMENTS (SURRENDERS, LOANS AND CLAIMS)
1. Receive requests for partial or full surrenders and death claims
from policyholder, agent or home office. Retain and account for
any policy administrative charges.
2. Process all surrender requests and death claims on policyholder
master files.
3. Prepare checks for surrenders and death claims and forward to
policyholder or beneficiary (including confirmation).
4. Prepare reports on surrenders and death claims.
5. Review and maintain adequate supply of checks and confirmations.
6. Prepare appropriate I.R.S. forms as required for disbursements.
COMMISSIONS
1. Calculate commissions based on tables agreed to by PRESIDENTIAL
LIFE INSURANCE COMPANY.
2. Report commissions semi-monthly.
-23-
34
PERIODIC REPORTS TO POLICYHOLDERS
1. Prepare and mail statement of account to each policyholder
quarterly, or more often as agreed to.
REGULATORY STATEMENT REPORTS
1. Provide data for Separate Account Exhibit for PRESENDENTIAL LIFE
INSURANCE COMPANY'S annual reporting.
2. Prepare appropriate I.R.S. reports for withdrawals and
distributions and mail to policyholder and IRS.
PREMIUM TAXES
1. Collect and account for premium taxes as appropriate.
-24-
35
EXHIBIT B
PRESIDENTIAL LIFE INSURANCE COMPANY
FEE SCHEDULE
ONGOING SERVICE FEE:
1. $30.00 per contract per year. IASC will xxxx 1/12th the annual
charge an a monthly basis for any Contract that contains assets, at any time
during the month; plus
2. $25.00 for each transfer of a Contract Owner's interest among
Presidential's General Account or the Separate Account Divisions which is made
within thirty (30) days of a prior transfer or within thirty (30) days of the
Issue Date; plus
3. .355% per year of the aggregate assets allocated to the Separate
Account and held under all Contracts in force for more than three (3) years,
payable monthly based upon the value of such assets as of the close of each
month; plus
4. .50% per year of the aggregate assets allocated to Presidential's
General Account and held under all Contracts during their first three (3)
Contract Years, and .855% per year of such aggregate assets thereafter. In all
Contract Years, this fee is payable monthly based upon the value of such assets
as of the close of each month; plus
5. An amount equal to 20% of all Withdrawal Charges payable under the
Contracts as a result of partial withdrawals made by Contract Owners in excess
of Free Withdrawal Amounts and Contract surrenders within six (6) years of the
Issue Date, such amounts to be paid to IASC as they become due and payable.
EXPENSES:
IASC will xxxx out-of-pocket expenses as they are incurred.
"Out-of-pocket expenses" shall include charges by outside vendors for services
specifically requested by Presidential.
As amended
effective
/ /89
