ADMINISTRATIVE SERVICES AGREEMENT
between
Southland Life Insurance Company
and
Golden American Life Insurance Company
This Administrative Services Agreement (the "Agreement") is made as of the 2 day
of May 2000, by and between Southland Life Insurance Company ("SLIC"), of ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Golden American Life
Insurance Company ("GALIC"), of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WHEREAS, SLIC is a licensed insurance company and issuer of variable annuity
contracts ("Contracts"), and
WHEREAS, GALIC, or any of its affiliates as designated by GALIC (hereafter
referred to collectively as "GALIC") shall provide data processing and other
administrative services to SLIC pursuant to the terms and conditions of this
Agreement and such other terms and conditions as the parties may agree upon in
written amendments to this Agreement,
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree as follows:
SECTION 1 TERMS OF APPOINTMENT
1.1 Subject to the conditions set forth in this Agreement, SLIC
hereby appoints GALIC as its Administrative Services Agent.
1.2 GALIC agrees to provide at its own expense the necessary
facilities, equipment, software and personnel to perform its
duties and obligations hereunder in accordance with accepted
industry practice, and in full compliance with the rules and
regulations of state insurance departments, and all other
regulatory bodies with jurisdiction over SLIC, ING America
Equities, Inc. ("INGAE") or GALIC.
1.3 GALIC agrees that it shall perform, according to procedures
and policies approved by SLIC, those Administrative Services
as set forth in Exhibit B attached hereto and incorporated
herein by reference, which may be amended by mutual
agreement from time to time. GALIC shall have only the
authority necessary or incident to the performance of those
Administrative Services expressly set forth in this
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Agreement or in Exhibit B and shall have no other express or
implied authority or right to act on behalf of SLIC or to
bind SLIC Confidential and Proprietary Information with
regard to any statement, representation or undertaking.
GALIC shall perform those Administrative Services in a
manner that is reasonable and consistent with then current
prevailing standards of the insurance and annuity industry
and the Contracts; provided, however, that GALIC shall have
the discretion to make such changes to the procedures and
policies as GALIC deems appropriate, so long as such
Administrative Services continue to be provided in a manner
that is reasonable and consistent with then current
prevailing standards of the insurance and annuity industry
and the Contracts. GALIC shall have no authority to alter,
amend or waive any material contractual provision on behalf
of SLIC without SLIC's express written authorization. GALIC
shall be limited to act only in the capacities in which it
is licensed.
SECTION 2 TERM
2.1 Unless terminated as hereinafter provided, this Agreement
shall remain in full force and effect for a period of five
(5) years, the initial term of the Agreement. This Agreement
shall be renewed automatically for additional successive
terms of eighteen (18) months at the end of the initial term
and at the end of each renewal term, subject to the
provisions of Section 9.2 below, unless terminated.
SECTION 3 FEES AND EXPENSES
3.1 SLIC shall pay to GALIC such fees, charges and expenses as
are set forth in Exhibit A attached hereto and incorporated
herein by reference.
3.2 GALIC may impose a late payment charge of 1.5% per month on
undisputed balances of fees, charges or expenses outstanding
for more than 45 days.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF GALIC
GALIC represents and warrants to SLIC that it or its designated
affiliate:
4.1 Is a corporation duly organized and in good standing under
the laws of the state of its incorporation.
4.2 Is empowered under all applicable laws to enter into and
perform the services contemplated by this Agreement.
4.3 Has taken all requisite corporate proceedings to authorize
it to enter into and perform the services contemplated by
this Agreement.
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4.4 Has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
4.5 Has and will maintain a minimum capital and surplus of at
least $50,000 during the term of this Agreement. GALIC will
provide to SLIC upon request, a copy of its most recent
audited financial statement.
4.6 Has in place a plan and will be Year-2000 compliant in
systems and operations prior to December 31, 1999.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF SLIC
SLIC represents and warrants to GALIC:
5.1 It is a corporation duly organized and in good standing
under the laws of the State of Texas.
5.2 It is empowered under the applicable laws to enter into and
perform this Agreement.
5.3 It has taken all requisite corporate proceedings to
authorize it to enter into and perform this Agreement.
5.4 No policy or other form will be provided by SLIC to be
administered by GALIC unless it has been duly filed as
necessary and approved by all applicable state insurance
departments and other regulatory bodies with jurisdiction
over SLIC, and is in compliance with all federal and state
laws regulations.
SECTION 6 COVENANTS OF GALIC
6.1 GALIC shall maintain facilities and procedures for the
safekeeping of check forms and facsimile signature
imprinting devices, and all other documents, reports,
records, books, files, and other materials relative to this
Agreement.
6.2 It is expressly understood and agreed that all documents,
reports, records, books, files and other materials relative
to this Agreement shall be the sole property of SLIC and
INGAE and that such property shall be held by GALIC, as
agent, during the effective terms of this Agreement.
6.3 GALIC shall maintain back-up computer files, as necessary.
The purpose of back-up and recovery is to permit file
recovery in the event of destruction of normal processing
files and the continuation of business in full compliance
with regulatory requirements. SLIC may review the procedures
in effect and inspect the storage facility upon demand. A
copy of GALIC's current procedures is attached hereto as
Exhibit D and incorporated herein by reference.
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6.4 All charges or premiums received by GALIC on behalf of SLIC
from SLIC's lockbox account shall be promptly remitted to
the person entitled to it or deposited in a fiduciary
account. Any payments received by GALIC for insurance on
behalf of SLIC shall be deemed received by SLIC, shall be
held in a separate SLIC trust account and shall be
administered as set forth in Exhibit B.
6.5 No advertising or sales literature shall be utilized by
GALIC in connection with the Contracts unless it has been
approved in writing by SLIC prior to such use.
6.6 Except as specifically provided to the contrary in this
Agreement, GALIC shall be responsible for providing all
technical and operational support, office space, all
equipment and paying all costs and expenses associated with
its provision of administrative services to SLIC hereunder,
including, but not limited to, all rents, salaries and other
overhead expenditures.
6.7 If GALIC receives any notice from any source (including, but
not limited to, the contract owner or any regulatory agency)
of a lawsuit or other legal or administrative complaint or
proceeding being brought against SLIC or involving the
business administered for SLIC by GALIC, or the threat of
any such lawsuit, hearing or proceeding, GALIC shall
immediately notify SLIC and send a copy of all documents,
correspondence and other relevant material to which GALIC
reasonably has access to SLIC. Further, GALIC agrees to
cooperate fully with SLIC in connection with any suit,
hearing or proceeding and shall provide SLIC with all books,
records, documents and data requested by SLIC in connection
therewith; provided, however, GALIC shall be entitled to
review such requests with its counsel prior to furnishing
SLIC with such materials so long as such review is done in a
timely manner.
6.8 GALIIC will conduct its business and perform its obligations
in accordance with all applicable federal and state laws,
rules and regulations and in a manner which will not put
SLIC's or its affiliates' registrations and licenses in any
jeopardy of revocation or suspension or cause SLIC or any of
its affiliates to sustain any disciplinary action of any
nature.
6.9 GALlC acknowledges, covenants and agrees that all books and
records maintained by GALIC in connection with the Contracts
shall be maintained and preserved in conformity with the
requirements of Rules 17a-3 and 17a-4 of the Securities
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Exchange Act of 1934 (the "1934 Act"), to the extent that
such requirements are applicable to the Contracts; that all
such books and records are maintained and held by GALIC on
behalf of SLIC and INGAE, whose property they are and shall
remain. GALIC further acknowledges and agrees that all such
books and records are subject to inspection by the
Securities and Exchange Commission ("SEC") in accordance
with Section 17(a) of the 1934 Act, and undertakes to permit
examination of such books and records at any time and from
time to time during business hours by representatives or
designees of the SEC or National Association of Securities
Dealers, Inc. ("NASD"), and to provide true, correct,
complete and current copies of any or all or any part of
such books and records.
6.10 GALIC acknowledges, covenants and agrees that it shall issue
payments, including commission payments to retail
broker-dealers, on behalf of and on the account(s) of SLIC,
as a purely ministerial service for and on behalf of INGAE,
and that the records in respect of such payments shall be
properly reflected by GALIC on the books and records
maintained by it for SLIC and INGAE.
6.11 GALIC acknowledges, covenants and agrees that it will send a
confirmation for each transaction which constitutes the sale
of a security to the contract owned as required by
applicable law, regulation or rule in such form as required
by applicable law, regulation or rule.
6.12 GALIC shall provide SLIC with reasonable access as
reasonably requested, during ordinary business hours, to all
documents, records, reports, books, files and other
materials relative to this Agreement which are maintained by
GALIC.
6.13 GALIC shall furnish to SLIC any information or reports in
connection with its services to SLIC, which the Texas
Department of Insurance may request in order to ascertain
whether the operations of SLIC are being conducted in a
manner consistent with applicable Texas law, regulations and
rules.
SECTION 7 COVENANTS OF SLIC
7.1 SLIC shall, on a reasonably prompt basis, provide GALIC with
current forms of contracts, prospectuses and applications,
names and states of licenses of all insurance and/or
broker-dealer agents and representatives authorized to sell
the Contracts.
7.2 All contracts subject to the services performed under this
Agreement are underwritten by SLIC.
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7.3 SLIC shall immediately provide GALIC with written notice of
any change of authority of persons authorized and enumerated
in Exhibit C, attached hereto and incorporated herein by
reference, to provide GALIC with instructions or directions
relating to services to be performed by GALIC under this
Agreement.
SECTION 8 INDEMNIFICATION
8.1 GALIC shall not be responsible for and SLIC shall indemnify
and hold GALIC harmless from and against, any and all costs,
expenses, losses, damages, charges, reasonable attorney's
fees, payments and liability, which may be asserted against
GALIC or for which it may be held to be liable, arising out
of or attributable to:
a. SLIC's failure to comply with the terms of this
Agreement, or to act in a reasonable or customary
manner in connection with this Agreement, or which
arise out of SLIC's negligence or misconduct or the
breach of any representation or warranty of SLIC
hereunder;
b. Reliance on or use by GALIC of such information and
materials provided by or at the direction of SLIC and
instructions or directions given by the authorized
individuals described in Exhibit C for purposes of
providing services under this Agreement;
c. Any failure by SLIC to comply with federal, state or
local laws or regulations with respect to the offering
and/or sale of any insurance products or securities; or
d. Any matters associated with SLIC or its Contracts or
the sale of such Contracts which are unrelated to the
services provided by GALIC.
8.2 GALIC shall be responsible for and shall indemnify and hold
SLIC harmless from and against any and all losses, damages,
costs, charges, reasonable attorney's fees, payments,
expenses and liability which may be asserted against SLIC,
or for which it may be held liable arising out of or
attributable to GALIC's failure to comply with or perform
any duties or obligations under the terms of this Agreement,
GALIC's failure to act in a reasonable manner in connection
with this Agreement, any failure by GALIC to comply with
federal, state or local regulations with respect to the
books and records maintained by GALIC, or which arise out of
GALIC's negligence or misconduct or which arise out of the
breach of any representation or warranty of GALIC hereunder.
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8.3 At any time GALIC may apply to a person indicated on SLIC's
"Schedule of Authorized Personnel" set forth in Exhibit C as
a person authorized to give instructions under this Section
8 with respect to any matter arising in connection with this
Agreement. GALIC shall not be liable for any action taken or
omitted by GALIC in good faith and in the exercise of due
care and diligence in reliance upon such instructions.
8.4 In the event malfunction of any GALIC system causes an error
or mistake in any record, report, data, information or
output under the terms of this Agreement, GALIC shall at its
expense correct and reprocess such records.
8.5 If either party believes it is entitled to indemnification
hereunder, it shall, within five business (5) days of the
commencement of any action or threat of any action, give
written notice to the other party of any claim for which it
believes it is entitled to indemnification; provided,
however, that the failure to provide timely notice shall not
relieve the indemnifying party of any liability which it may
have to the other party as long as such notice is not
unreasonably withheld.
8.6 Subject to the provisions of this Section 8.6, the parties
shall cooperate with each other concerning any defense and
give each other all information and assistance which either
may reasonably request in defending any matter hereunder.
Each party shall exchange information subject to the
protection of the attorney-client, work product and other
applicable privileges. Any information derived therefrom
shall be used solely for purposes of developing joint
positions and strategies concerning issues that may
ultimately be resolved through arbitration or litigation. No
party shall disclose any information obtained from the other
party to any third party in any negotiations, discussions or
exchange of information, without the written consent of the
other party. In addition, no party shall disclose any
information in any threatened or pending legislative,
administrative or judicial proceeding, whether civil or
criminal, unless ordered to do so by a court of competent
jurisdiction. Furthermore, any materials shared by either
party shall be returned upon request and no copies shall be
retained. The parties hereto agree that the exchange of any
information and materials will be protected from disclosure
by the attorney-client, work product or other applicable
privileges and is not intended to waive any applicable
privilege or protection. Neither party shall have the
authority to waive any applicable privilege or doctrine on
behalf of the other party; nor shall any waiver of an
applicable privilege or doctrine by the conduct of either
party be construed to apply to the other party.
8.7 The provisions of this Section 8 shall not be deemed to be a
limitation upon a party's right to injunction, specific
performance or any other legal or equitable remedy to which
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either party may be entitled by virtue of this Agreement or
to prevent any breach or threatened breach of this
Agreement.
8.8 In no event and under no circumstances, shall either party
to this Agreement be liable to the other party under any
provision of this Agreement for lost profits or for
exemplary, special, punitive or consequential damages.
8.9 The provisions of this Section 8 shall survive termination
of this Agreement.
SECTION 9 TERMINATION OF AGREEMENT
9.1 Either party may terminate this Agreement at the end of the
initial term or any renewal term by providing at least 180
days prior written notice to the other party.
9.2 This Agreement may be terminated at any time upon the mutual
written consent of the parties hereto.
9.3 This Agreement may be terminated upon written notice of one
party to the other hereto in the event of bankruptcy or
insolvency of such party to which notice is given.
9.4 This Agreement shall automatically be terminated in the
event of its assignment, unless such assignment is made to
an affiliate of the assigning party subject to the
provisions of Section 10.1 below.
9.5 At least 180 days prior to the end of the initial or any
renewal term hereof, GALIC shall give SLIC written notice if
GALIC desires to increase its fees or charges to SLIC or to
change the manner of payment. If GALIC and SLIC do not agree
to fees and charges before the end of the term during which
such notice is given by GALIC, this Agreement shall
terminate at the end of such term.
9.6 This Agreement shall terminate at SLIC's option because of:
a. fraud, misrepresentation, conversion or unlawful
withholding of funds by GALIC; or
b. the dissolution or disqualification of GALIC to do
business under any applicable federal, state or local
laws or regulations; or
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c. the suspension or revocation of any material license or
permit held by GALIC by the appropriate governmental
agency or authority; or
d. the sale (without the prior written consent of SLIC,
which consent shall not be unreasonably withheld) of
GALIC's business to an unaffiliated person or entity,
whether by merger, consolidation, or sale of
substantially all of GALIC's assets or stock or
otherwise, during the term of, and any extension to,
this Agreement.
9.7 This Agreement shall terminate at GALIC's option because of
fraud, misrepresentation, conversion, or withholding of
funds belonging to GALIC by SLIC.
9.8 If either of the parties hereto shall breach this Agreement
or be 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 ninety (90) days after such
written notice is given, then the party giving such written
notice may terminate this Agreement by giving ninety (90)
days written notice of such termination to the defaulting
party.
9.9 Termination of this Agreement by default or breach by SLIC
shall not constitute a waiver of any rights of GALIC, in
reference to services performed prior to such termination,
to be reimbursed for out-of-pocket expenditures and to
collect fees; termination of this Agreement by default or
breath by GALIC shall not constitute a waiver by SLIC of any
other rights it might have under this Agreement.
9.10 During the period between the date of any notice of
intention to terminate given pursuant to this Section 9 and
the date of actual termination of the Agreement, each party
shall continue to perform its duties and obligations under
this Agreement.
9.11 During any transition period, GALIC agrees to cooperate with
SLIC to effectuate an orderly transfer of all policy records
and materials to SLIC or its designee. For services
performed during the transition period, GALIC shall be
compensated for its services pursuant to Exhibit A of this
Agreement.
9.12 The parties hereto agree that following a termination of
this Agreement, for a period reasonable to effect an orderly
transition, they will continue to perform each and every
duty and obligation hereunder.
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SECTION 10 ASSIGNMENT
10.1 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior
written consent of the other.
10.2 This Agreement shall inure to the benefit of and be binding
upon the parties, hereto, INGAE and their respective
successors and assigns, provided that any assignment is
performed in accordance with Section 10.1 above.
SECTION 11 CONFIDENTIALITY
11.1 The parties hereto agree that all tapes, books, reference
manuals, instructions, records, information and data
pertaining to the business of the other party, GALIC's
systems, and the contract owners serviced by GALIC
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
disclosure thereof may be required by law. 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.
11.2 GALIC shall maintain the confidentiality of all trade
secrets and other confidential information obtained from
SLIC or its affiliates, (collectively "SLIC" for purposes of
this Section 11). GALIC shall use all reasonable precautions
and take all necessary steps to prevent any information
obtained by GALIC provided to it hereunder from being
acquired by any unauthorized persons. GALIC acknowledges
that such information has been disclosed by SLIC only to
enable GALIC to provide the services hereunder and that
disclosure thereof would be damaging to SLIC if such
information were obtained by any competitor of SLIC.
11.3 SLIC shall maintain the confidentiality of all trade secrets
and other confidential information obtained from GALIC. SLIC
shall use all reasonable precautions and take all necessary
steps to prevent any information obtained by SLIC provided
to it hereunder from being acquired by an unauthorized
persons. SLIC acknowledges that such information has been
disclosed by GALIC only to enable GALIC to provide the
services hereunder and that disclosure thereof would be
damaging to GALIC if such information were obtained by any
competitor of GALIC.
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SECTION 12 INSURANCE
12.1 ERRORS AND OMISSIONS INSURANCE. GALIC, as a member of the
ING Group, is currently self insured for errors and
omissions coverage. Such coverage is for amounts up to and
in excess of One Million Dollars ($1,000,000.00) per claim.
12.2 SURVIVAL. If this Agreement terminates for any reason, GALIC
shall use its best efforts to maintain the insurance
coverage required by this Section 12 in force for three (3)
years following termination. GALIC shall give SLIC at least
thirty (30) days prior written notice of any change or
cancellation of such insurance.
SECTION 13 ARBITRATION
13.1 Any dispute which arises between the parties with respect to
any of the terms of this Agreement, whether such dispute
arises during the term of the Agreement or after
termination, shall be resolved through binding arbitration.
Arbitration shall be conducted in accordance with the
commercial rules of the American Arbitration Association
("AAA"). Each party agrees to waive its right, if any, to a
jury trial. Each party shall bear its own cost in the
arbitration proceedings. The judgment of the AAA may be
entered in and enforced by any court of competent
jurisdiction. The judgment of the AAA shall be final and
binding and there shall be no appeal therefrom. This
arbitration provision shall survive the termination or
cancellation of this Agreement.
SECTION 14 MISCELLANEOUS
14.1 SLIC and its duly authorized independent auditors have the
right under this Agreement to perform on-site audits of
records and accounts directly pertaining to the Contracts
serviced by GALIC at GALIC's facilities in accordance with
reasonable procedures and at mutually agreeable dates and
time, but at least once annually. At the request of SLIC,
GALIC shall make available to SLIC's auditors and any
representatives of regulatory agencies all reasonably
requested records and data.
14.2 This Agreement constitutes the entire agreement between the
parties hereto and may not be modified except by written
instrument executed by both parties hereto. If any section
herein contained shall be found to be unenforceable as
contrary to the current law, that section shall be severed
and the remaining sections of this Agreement shall continue
to be enforceable.
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14.3 Neither party shall be liable for damages due to delay or
failure to perform any duty or obligation under this
Agreement if such delay or failure results directly or
indirectly from circumstances beyond the control and without
the fault or negligence of such party.
14.4 It is understood and agreed that all services performed
hereunder by GALIC shall be as an independent contractor and
not as an employee of SLIC.
14.5 This Agreement shall be governed by the laws of the State of
Texas.
14.6 Notices under this Agreement to either party must be in
writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt),
(b) sent by facsimile (with written confirmation of
receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the
location identified in the preamble to this Agreement, Attn:
Office of the General Counsel, or to such other address as
supplied in writing by either party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, in their names and on their behalf by and through their duly
authorized officers as of the day and year first above written.
SOUTHLAND LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Title: Executive Vice President
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
Title: Executive Vice President
--------------------------------------------------
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Exhibit A
EXHIBIT A
FEE SCHEDULE
Contracts:
----------
Individual variable annuity products of Southland Life Insurance Company
("SLIC").
Fees:
-----
1. Policy Contract Processing/Servicing and Storage for all Contracts: $12.50
per policy, per month.
2. Out-of-Pocket Expenses:
In addition to the fees set forth above, GALIC will ▇▇▇▇ out-of-pocket
expenses as they are incurred. Out-of-pocket expenses are expenditures for
the items such as those listed below and any other items agreed to by the
parties:
1. The cost of long distance telephone calls including toll-free "800"
lines and facsimile (fax) transmissions to or from SLIC, and to or
from contract owners. Costs of any lines installed for network
communications between GALIC and SLIC, including CRT's and related
minicomputer equipment. Costs of telecommunication lines and equipment
installed to provide primary and back-up support for on-line access to
the administrative system, including transmission capabilities between
GALIC and SLIC.
2. Cost of postage for mailing forms, reports, contracts, bills,
statements, prospectuses, and other Materials to contract owners or
agents, and the cost of postage and overnight delivery for any other
communication to contract owners or GALIC or SLIC.
3. Cost of printing blank stock and the cost of set-up and printing
(including per impression costs) confirmation statements, contract
file folders, checks, tax reporting forms, contract pages,
specification pages, envelopes, proxy or voting instruction cards,
periodic contract owner statements, separate account statements,
individual and list bills, and any other required formats or reports.
Cost of labor for folding, inserting and mailing functions.
4. Cost of microfilm and microfiche supplies and the cost of transferring
all necessary information to microfilm and/or microfiche or such other
document imaging and record system as may be used.
5. Costs involved with on- or off-site storage for SLIC records,
documents, correspondence and other items.
Exhibit A, 1
6. Normal and reasonable travel, meal and lodging expenses incurred
during GALIC's performance of its duties and obligations under this
Agreement, if any.
7. Costs incurred by Equitable of Iowa or other affiliates or vendors
which are allocated to GALIC as a result of services provided on
behalf of SLIC.
3. ▇▇▇▇▇▇▇▇ for all fees and expenses shall be made monthly.
4. Errors
1. GALIC shall be responsible for reporting, accounting for, and
correcting all losses which are a result of errors or wrongful
activity by GALIC or its employees. GALIC shall be responsible for all
such losses which exceed One Thousand Dollars ($1,000.00) per instance
or which exceed One Thousand Dollars ($1,000.00) in the aggregate.
2. SLIC shall be responsible for all losses which result from errors or
wrongful activity by SLIC or its employees.
E. Annual Review
The parties agree to review this Fee Schedule annually and to negotiate any
appropriate changes. In the event the parties determine that this Fee
Schedule should be amended, such amendments shall be subject to the prior
approval of the Texas Department of Insurance.
Exhibit A, 2
EXHIBIT B
OPERATIONAL PLAN
5. Systems
1. Calculate and process periodic charges as specified in product
prospectuses.
2. Calculate and process valuations as specified by product
prospectus(es).
3. Calculate and process withdrawals (partial, full, periodic) as
specified.
4. Calculate and process annuity payout amounts.
5. Calculate and process periodic transactions, including dollar cost
averaging, and automatic rebalance transfers as specified in the
appropriate SLIC product prospectus.
6. Produce reports including confirmations, client statements, daily
transactions, notification of upcoming maturities, qualified plan
reporting; and reports on activities such as trades, terminations, and
agent licensing.
7. Produce required extract files or reports including accounting, daily
unit values tax reporting, production, electronic funds transfer,
check writing (distributions, commissions, and annuity payouts),
reinsurance, valuation, SLIC client alpha index, and proxy
solicitation.
8. Produce reports required to transact daily business with the mutual
funds and for periodic reconciliations; and daily trade blotter for
SLIC.
9. Accept import of unit values (accumulation and annuity) from prior
administrative system.
10. Accommodate other product features described in prospectus as may be
updated from time to time.
11. Maintain current information and procedures on the administrative
system for state approvals by product and by company. SLIC will do the
actual product filings, and information regarding approvals will be
provided to GALIC.
12. Store and provide access to agent licensing information. As SLIC will
do the actual agent appointments, information on appointments,
licenses, broker-dealers,
Exhibit B, 1
addresses, etc. will be provided to GALIC via mail, electronic mail,
or facsimile. If GALIC receives such information from any source other
than SLIC, GALIC shall promptly forward such information to SLIC.
13. Accommodate SLIC and regulatory audit requirements.
14. Maintain client account history as required to process transactions
and administer contract provisions.
15. Systems will automatically interface with SLIC and accessory systems.
A scheduled time for data transmission will be determined and daily
user involvement will not be required.
16. Provide information necessary for proxy preparation and mailings.
17. Provide automated voice response 1. Inquiry for account values. 2.
Transactions which update the account.
18. Provide interfaces, reporting requirements and special requests from
outside entities to include, at a minimum: 1. Lipper 2. Morningstar 3.
SLIC Website 4. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇. Provide electronic funds transfer capabilities 1. Draw from accounts
for purchase payments. 2. Deposit disbursements to accounts. 3.
Deposit commission payments to appropriate accounts.
6. Contract Maintenance
1. Review change requests, apply criteria developed by SLIC for annuity
contract. Verify license status of broker-dealers and agents based on
information supplied by SLIC.
2. Prepare a new contract data page, issue contract for paid business and
mail to contract owners or agents. Policy page production to be
automated as agreed upon by SLIC and GALIC.
3. Establish and maintain annuitant and contract owner records, as
applicable, on computer and manual systems.
4. Notify broker-dealers and agents of any error or missing data needed
to process changes to annuitant or contract owner records.
Exhibit B, 2
5. Produce and mail required confirmation statements.
6. Receive remittance information in accordance with processing
requirements and deposit monies received into depository account.
7. Promptly process purchase payments received to customer accounts.
8. Prepare and mail required confirmation of transactions.
9. Transmit daily accounting and bank transfer authorization summaries
prepared for each valuation period.
10. Prepare and mail refunds, if any, as appropriate.
11. For policies being exchanged from another company or ▇▇▇ funds being
transferred, GALIC will request the funds from the other insurance
company (or ▇▇▇ custodian) using forms supplied by SLIC. SLIC will
establish signing authority for GALIC personnel.
7. Banking
1. Photocopy checks received directly by GALIC and assign them a control
number. Balance, edit, endorse and prepare daily deposit. Reconcile
bank lockbox deposits to payments recorded on the administrative
system and to the general ledger.
2. Deposits are placed into a depository account.
3. Transfer funds to or from the depository account to or from one of the
following, as appropriate:
1. Operating Account of SLIC
2. Mutual Fund Custodian Account(s)
3. Variable Disbursement Accounts of SLIC and INGAE
4. Variable Receipts Account of SLIC
5. Bank accounts and mutual fund accounts to be established by SLIC
with appropriate signing and trading authorizations established
for GALIC personnel.
4. Promptly identify all funds received directly or indirectly by GALIC
into any bank account administered by GALIC.
5. Generate from the system daily cash journal summary reports and
maintain detail of activity.
6. Process disbursement transactions for policyowner or beneficiary,
surrenders, withdrawals, annuity payouts, and death claims. Death
claims are processed by GALIC.
Exhibit B, 3
7. A Supplemental Contract is the contract issued when an annuity is in
the payout phase. The actual form of the contract is to be supplied by
SLIC.
8. Check production will be through a GALIC checkwriting system.
9. SLIC will maintain balances in the appropriate SLIC bank accounts
necessary to meet administrative needs identified in the contract.
10. SLIC will obtain the appropriate authorizations to allow GALIC to
transfer funds among certain SLIC accounts.
11. Reprocess dishonored items. Reverse associated transactions, prepare
reports and communicate with contract owners.
12. Reconcile disbursement accounts to checks issued and general ledger.
13. Review, cause to have printed, and maintain adequate supply of checks.
8. Accounting/Auditing
1. Generate daily accounting extracts for all contract activity.
2. Maintain adequate documentation to support all accounting entries to
ledgers.
3. Reconcile all bank accounts, clearing accounts, suspense counts, and
investment accounts, etc., used to process the business to the general
ledger. Clear reconciling items on a timely basis. Provide copies of
reconciliations to SLIC.
4. Retain systems generated reports in accordance with a set retention
schedule mutually agreed upon and as required by regulatory
authorities. Provide access to such reports for internal and external
auditing. Destruction of records is permitted only by specific,
written authority from SLIC.
5. Cooperate in periodic audits of separate account financial statements
conducted for purposes of financial statement certification and
publication and accommodate SLIC or regulatory audits, as required.
9. Trading Obligations
1. Determine the "Net Amount Available for Investment" into mutual funds
and issue fund purchase/redemption orders. Receive confirmation of
mutual fund investments.
2. Daily, reconcile inventory of mutual fund shares owned to reports of
mutual fund shares owned supplied by mutual funds.
Exhibit B, 4
3. Daily, reconcile units owned by each contract owner as shown on the
administrative system to units owned as shown on the investment
system.
10. Pricing/Valuation
1. GALIC's administrative system will be updated with the calculated unit
values, daily.
2. Assist in identification of any pricing errors. Process and confirm
success of pricing error corrections.
11. Contract Owner Service/Record Maintenance
1. Receive and implement contract owner service requests including
information requests, beneficiary changes, transfer of funds between
eligible mutual funds, payout or withdrawal requests, exchange of
policies, and changes of any other information maintained on the
system according to procedures approved by SLIC.
2. Research contract owner inquiries using both data stored in the system
and paper records. Responds directly to any questions or inquiries.
3. Generate a set of daily journals and blotters confirming financial
changes made to annuity accounts.
4. Produce contract owner tax reporting.
12. Disbursement (Surrenders, Partial Withdrawals, Annuity Payouts)
1. Receive requests for systematic, partial and full surrenders, ▇▇▇
minimum required distributions, and annuity payouts from contract
owners. Account for any contract administrative charges which shall be
periodically deposited into the appropriate SLIC account.
2. Deduct applicable premium taxes. Produce accounting information.
Premium tax reporting and payment will be done by SLIC.
3. Process all surrender requests against the contract owner files
according to procedures approved by SLIC.
4. Produce check production extract file for surrenders and forward to
contract owner in accordance with applicable law. Check production
will be through a GALIC checkwriting system.
5. Prepare and mail confirmation statements of disbursement transactions
to contract owners.
Exhibit B, 5
6. Generate a report on surrenders.
7. Contact policyowner regarding tax withholding procedures, if required.
8. Backup withholding will be coordinated between GALIC and SLIC.
13. Claims
1. Requests for death claims are received by GALIC from contract owners
and beneficiaries. Any death claim notification which is received by
SLIC from any other source regarding a policy administered by GALIC
will be communicated immediately to GALIC to freeze the account and
process the claim.
2. If multiple life and annuity policies are involved, SLIC and GALIC
will coordinate sending claim forms.
3. Deduct applicable premium taxes. Produce accounting information.
Premium tax reporting arid payment will be done by SLIC.
4. Request funds from SLIC required for disbursements greater than
account value.
5. Produce check production extract file for disbursements. Check
production will be through a GALIC checkwriting system.
6. Make changes to owner and/or annuitant information where no payout is
required.
7. Generate reports on death claims.
14. Commissions
1. Verify license status of broker-dealers and agents based on
information supplied by SLIC.
2. Produce detailed commission/marketing allowance transactions for each
policy financial transaction processed including premium application
or reversal, cancellation, etc. for which a commission/marketing
allowance is required.
3. Prepare commission/marketing allowance statements for broker-dealer
firms. Produce check production extract file for any required checks.
Check production will be through a GALIC checkwriting system.
4. Create tax reporting forms, if required.
5. Provide detailed reports of all commissions paid by or due to SLIC
monthly.
6. Reconcile commission accounts to the general ledger.
Exhibit B, 6
15. Annuity Benefit Processing
1. Notify owner of approaching annuitization approximately ninety (90)
days before annuitization date.
2. Receive information regarding annuitants going into the annuity
(payout) phase.
3. Calculate the amount of the initial annuity payment for variable
payout based on tables supplied by SLIC. Calculate fixed payout based
on information supplied by SLIC.
4. Deduct applicable premium taxes. Premium tax reporting and payment
will be done by SLIC.
5. Establish and maintain annuitant records.
6. Withhold appropriate federal and state income tax.
7. GALIC will record all required accounting entries related to
annuitization and annuity benefits including any manual adjustments
not supported by the system.
8. Maintain inventory of variable and fixed annuity units on annuitant
master files.
9. Produce check production or electronic fund transfer extract file for
payment of amount due to annuitant in accordance with applicable law.
Check production will be through a GALIC checkwriting system.
10. Issue supplemental contracts as defined in the variable annuity
contract. Actual form of contract to be supplied by SLIC. Contract
filing to be done by SLIC.
11. GALIC will generate contract owner tax reporting. SLIC will make all
payments to the appropriate regulatory agencies for any taxes withheld
and will effect all necessary associated reports.
16. Proxy Processing
1. Proxy processing may be subcontracted to Equitable of Iowa or another
SLIC- approved provider.
2. Receive record date information from the underlying mutual funds.
Receive proxy solicitation material from underlying mutual funds.
3. Prepare proxy cards, if applicable.
4. Mail solicitation and resolicitations, if necessary.
Exhibit B, 7
5. Maintain all proxy registers and other required proxy material.
6. Provide all necessary information for preparation of proxy cards, if
applicable.
7. Tabulate returned proxy cards and transmit results to underlying
mutual funds.
17. Periodic Reports to Contract Owners
1. Preparation of periodic reports to contract owners may be
subcontracted to Equitable of Iowa or another SLIC-approved provider.
2. Prepare and mail statement of account to each contract owner. Mail on
a set schedule to be supplied by SLIC.
3. Insert and mail semi-annual and annual reports to contract owners, as
required, both underlying mutual fund and separate account reports.
Filing of reports with NASD and SEC will be done by SLIC. Printing of
reports will be done by SLIC.
4. Mail prospectuses, prospectus supplements, and other announcements and
materials prepared or supplied by SLIC to each contract owner.
18. Regulatory/Statement Reports
1. Prepare IRS reports for contract owners who received annuity payments
or distributions. Mail to contract owners and transmit to IRS.
2. Prepare other IRS reports as required for IRAs (i.e., 5498s).
3. Respond to requests for calculations applicable to annuity payments as
may be necessary for tax calculations.
19. Actuarial and Management Reports
1. Provide, on a set schedule to be provided by SLIC, extracts listed
below:
1. Reserve Extracts
2. Premium Tax Extracts
3. Surrender Extracts
4. Death Claims Report
5. Assets by Division Report
6. Inforce Policy Data Summary
7. Guaranteed Interest Division Data
Exhibit B, 8
EXHIBIT C
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized by Southland Life Insurance Company to
give instructions or direction to Golden American Life Insurance Company with
respect to matters arising in connection with the servicing to be performed
under this Agreement:
X ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
X ▇▇▇▇ ▇▇▇
X B. ▇▇▇▇▇ ▇▇▇▇▇▇ (Legal)
X ▇▇▇ ▇▇▇▇▇▇▇ (Compliance)
X ▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇ Minimum distribution,
1099's, annuity payout)
X ▇▇▇▇▇ ▇▇▇▇▇▇▇
(Accounting and Finance)
Exhibit C, 1
EXHIBIT D
BACKUP PROCEDURES
Current backup practices and procedures are described herein and may be changed
upon mutual agreement of Southland Life Insurance Company ("SLIC") and Golden
American Life Insurance Company ("GALIC").
! Disaster recovery will be performed in accordance with the Golden
American Life Insurance Company Business Continuity Plan
! Backup procedures used by GALIC for SLIC business shall be:
X Full backups shall be performed nightly
X Daily backups shall be kept for 5 weeks
X Weekly backups shall be kept indefinitely
X All backups shall be kept off-site
Exhibit D, 1
