Exhibit 99.(i)(1)
VARIABLE PRODUCTS COMPLIANCE AND ACCOUNTING AGREEMENT
THIS VARIABLE PRODUCTS COMPLIANCE AND ACCOUNTING AGREEMENT is made and executed
by and between EquiTrust Investment Management Services, Inc. ("EquiTrust"), a
Delaware corporation having its principal offices at 0000 Xxxxxxxxxx Xxxxxx,
Xxxx Xxx Xxxxxx, Xxxx; and CC Services, Inc. ("CCSI "), an Illinois corporation
with its principal offices at 0000 Xxxxxxx Xxx., Xxxxxxxxxxx, Xxxxxxxx 00000.
RECITAL
CC Services, Inc. provides and obtains services on behalf of its affiliated
insurer, COUNTRY Investors Life Assurance Company ("CILAC") (CCSI and CILAC
collectively referred to herein as "COUNTRY").
COUNTRY desires to have EquiTrust provide accounting and compliance services to
COUNTRY, as described herein, with respect to CILAC's variable annuity contracts
and variable life insurance contracts which are underwritten and sold by
COUNTRY.
NOW THEREFORE, in consideration of the mutual covenants and obligations
hereinafter expressed and for the consideration recited herein, CCSI and
EquiTrust hereby covenant, stipulate and agree as follows:
PART 1 - SERVICES
1.1 SCOPE OF SERVICES. From and after the date of this Agreement, EquiTrust
agrees to provide to COUNTRY certain compliance and accounting functions with
respect to the variable annuity contracts and variable life insurance contracts
issued by CILAC, as identified and listed in the schedule of contract and policy
forms and riders annexed hereto as Schedule A. Such compliance and accounting
functions shall consist of the activities set forth and described in the
Description of Services and Fees annexed hereto and incorporated herein as
Schedule B. Schedules A and B may be amended from time to time by mutual written
agreement of CCSI and EquiTrust.
1.2 ADDITIONAL SERVICES. EquiTrust shall review any additional compliance or
accounting requirements at the request of COUNTRY and EquiTrust will provide
COUNTRY with a written proposal to include specific services to be provided, an
implementation schedule and any associated fees and expenses.
1.3 COMPENSATION. In consideration of the services provided under this Agreement
for and on behalf of COUNTRY, CCSI will pay EquiTrust the Total Compliance &
Accounting amount shown on Schedule B, in quarterly installments, plus any
additional hourly expenses required by Schedule B. EquiTrust agrees that the
compensation payable pursuant to Schedule B shall be accepted by EquiTrust as
full compensation from COUNTRY for the services described in Schedule B for such
year. EquiTrust may adjust the expenses in Schedule B once annually, subject to
the annual cap of increase in Schedule B. In addition, regulatory changes may
result in mid-term fee increases (e.g., 1999 SEC plain English requirement).
1.4 COUNTRY DIRECTIVES. EquiTrust shall, in all cases and at all times, to the
extent there is reasonable notice thereof, observe and obey the rules,
regulations, instructions and directives of COUNTRY as COUNTRY may, from time to
time, promulgate for its operations, and shall not
1
bind COUNTRY in contravention of any such rules, regulations, instructions or
directives. EquiTrust shall not, however, upon reasonable prior notice to
COUNTRY, be responsible for observing or obeying any rule, regulation,
instruction or directive of COUNTRY, if in so doing, EquiTrust, in the opinion
of its counsel, would be in violation of any statute, rule or regulation
promulgated by any governmental authority with jurisdiction thereover.
1.5 REFERRAL OF COMMUNICATIONS. EquiTrust shall handle all correspondence of a
routine nature and other general functions necessary to provide compliance and
accounting services pursuant to this Agreement and shall maintain files relative
thereto. EquiTrust shall immediately forward to COUNTRY copies of all attorney
letters or other communications notifying EquiTrust of threatened or actual
litigation against EquiTrust or COUNTRY. COUNTRY shall forward to EquiTrust,
immediately upon receipt, all complaints and inquiries, and all attorney letters
containing complaints received by COUNTRY but appropriate for EquiTrust
response. EquiTrust will dispatch responses within a reasonable period or as
required by appropriate law, whichever is sooner, and will copy COUNTRY on such
responses to all complaints. COUNTRY shall have an opportunity to review
EquiTrust's response to all attorney letters and EquiTrust will not mail or
otherwise transmit any such written responses to such attorney letters without
the prior approval of COUNTRY.
1.6 INVESTMENT AUTHORITY. Any Officer, Senior Mutual Funds Accountant, Senior
Accountant or Mutual Funds Staff Accountant of EquiTrust is authorized to
purchase or sell, using COUNTRY authorized bank accounts, CILAC Variable
Universal Life Account shares and CILAC Variable Annuity Account shares in
mutual funds with which COUNTRY has Participation Agreements.
PART 2 - STANDARDS OF PERFORMANCE
2.1 LICENSURE. EquiTrust will be properly licensed with each state or other
jurisdiction as required in order to provide the services covered by this
Agreement.
2.2 GENERAL STANDARD. All services to be provided by EquiTrust under this
Agreement shall be performed in a professional manner consistent with industry
standards and in accordance with all applicable laws and regulations.
2.3 RESERVATION OF MANAGEMENT AUTHORITY. Services as are rendered by EquiTrust
are subject to the express limitation that they shall in no way constitute a
relinquishment of the management responsibility of COUNTRY, which shall not be
relieved of any obligation or liability to which it would otherwise be subject
by law as a result of these services being rendered. The authority granted and
delegated in Schedule B can be removed by terminating this Agreement pursuant to
section 3.2 or amended, in the sole discretion of CCSI.
2
2.4 REPRESENTATIONs. EquiTrust represents and warrants that it will perform its
duties hereunder in compliance with all applicable federal, state, and local
laws and that any regulatory filings made by EquiTrust on behalf of COUNTRY
shall conform in all material respects to the requirements of applicable laws
and regulations. This representation shall not apply to any statement or
omission made in reliance upon and in conformity with information furnished in
writing to EquiTrust by COUNTRY. Further, this representation shall not apply to
any non-compliance resulting from COUNTRY's action or inaction.
PART 3 - EFFECTIVE DATE, TERM; TERMINATION
3.1 EFFECTIVE DATE; TERM. This Agreement shall become and be effective on and as
of January 1, 2004 and, unless sooner terminated pursuant to Section 3.2 hereof,
shall thereafter continue in full force and effective for a term of five (5)
years thereafter, terminating on and as of December 31, 2008; provided, however,
after the initial five-year term, this Agreement, and all of its terms and
provisions, as the same may have previously been amended by the parties, shall
be automatically renewed and reconducted for successive 12 month renewal terms
unless one party shall, not less than one year prior to the conclusion of the
initial or any renewed term, advise the other party in writing of its intent
that this Agreement terminate as of the conclusion of any such term.
3.2 TERMINATION. After the conclusion of the initial or any renewed or extended
term, this Agreement may be terminated:
a. by either party with respect to new business, upon one year prior
written notice to the other party;
b. by CCSI, with respect to business in force, upon one year prior written
notice to EquiTrust;
c. by CCSI, with respect to new business and/or business in force, upon
written notice to EquiTrust in the event of the bankruptcy or insolvency
of EquiTrust, or
d. by either party upon prior written notice to the other party specifying
the other party's breach or default in the performance of any material
covenant or obligation of this Agreement and failure to cure or remedy
such breach or non-performance within 30 days of the date on which
notice of such breach or default is received, or such longer period as
may be permitted by the party giving notice.
Prior to the completion of the initial term of this Agreement, this Agreement
may be terminated only for the reasons stated in subparagraphs "c" and "d"
above, or by the express written agreement of the parties.
3.3 RIGHTS AND OBLIGATIONS UPON TERMINATION. Upon the termination of this
Agreement, EquiTrust shall supply COUNTRY with all information necessary to
provide the compliance and accounting services related to the business covered
by this Agreement, including data electronically stored.
PART 4 - INDEMNIFICATION
4.1 MUTUAL INDEMNIFICATION. EquiTrust agrees to indemnify and hold COUNTRY
harmless from any liability, damages or losses which COUNTRY may incur as a
result of any claims, actions or judgments, negligent or intentional, in
connection with EquiTrust's provision of services to COUNTRY; provided, however,
EquiTrust shall not be responsible for decisions
3
made by COUNTRY or for actions as directed by COUNTRY in writing. COUNTRY
similarly agrees to indemnify and hold EquiTrust harmless for decisions made by
COUNTRY or actions as directed by COUNTRY in writing. Each party warrants to the
other that its services and obligations as performed under this Agreement,
including, but not limited to the materials used therein, will not infringe upon
the proprietary interests or rights of third parties and each party will further
indemnify, hold harmless and defend the other party, its directors, officers,
agents and employees, against any infringement liability, claim or action as a
result of the actions of the indemnifying party.
4.2 NOTICE OF CLAIM. If any claim is made by a party which would give rise to a
right of indemnification under Section 4.1, the party entitled to
indemnification (the "Indemnified Party") promptly will give notice of the claim
to the party required to provide indemnification (the "Indemnifying Party"). The
Indemnified Party will permit the Indemnifying Party to participate in such
defense at the Indemnifying Party's expense. The Indemnifying Party will not, in
the defense of any such claim or litigation, consent to entry or any judgment or
enter into any settlement without the written consent of the Indemnified Party
which will not be withheld unreasonably. The Indemnified Party shall cooperate
fully with the Indemnifying Party and make available to the Indemnifying Party
all pertinent information under its control relating thereto.
PART 5 - GENERAL PROVISIONS
5.1 AUTHORIZED OFFICERS. CCSI represents that the CILAC officers identified in
Schedule C, attached hereto and incorporated herein by reference (hereinafter
referred to as "Authorized Officers"), are authorized within the scope of the
officers' authority as described in Schedule C, to: (i) coordinate
communications with EquiTrust with respect to this Agreement; (ii) provide to
EquiTrust written requests and instructions with respect to the services
provided for herein; and (iii) clarify with EquiTrust the specific scope and
timing of records maintained, reports prepared and other services performed by
EquiTrust. CILAC's Vice President Life/Health Operations is authorized to agree
in writing with EquiTrust on changes in the compensation payable by COUNTRY to
EquiTrust to reflect changes in the scope and timing of the services. If
EquiTrust receives any letter or other writing from an Authorized Officer of
COUNTRY authorizing an officer of COUNTRY to sign documents on behalf of
COUNTRY, then such officer shall be considered an Authorized Officer for
purposes of this Agreement and Schedule C shall be considered amended
accordingly. CCSI may amend Schedule C from time to time by giving notice to
EquiTrust of the amendment.
5.2 CONFIDENTIAL INFORMATION. In performing the obligations arising under this
Agreement, each party may have access to and receive disclosure of certain
confidential or proprietary information of the other party (hereinafter
"Confidential Information"). Each party shall take all reasonable steps
necessary to protect the confidential and proprietary nature of all Confidential
Information of the other party by affording thereto the same types of protection
which the party in possession of Confidential Information of the other party
affords its own confidential and proprietary information. Each party has adopted
reasonable business practices to limit access and unauthorized disclosure of
Confidential Information. The parties will only disclose Confidential
Information with those having a sufficient reason to know such information and
shall limit employee, vendor, agent and other third party access in accordance
with the terms of this Agreement. Except as provided in this Agreement or as
reasonably required to perform the services referenced herein, neither party
shall, directly or indirectly, disclose or make available to
4
any third party, or use for any purpose, any Confidential Information belonging
to the other party. Notwithstanding the foregoing, Confidential Information
shall not include: (i) any information which is or becomes generally available
to the public or the insurance industry, other than as a result of a breach of
this Agreement by the party obtaining the Confidential Information; (ii) any
information which is lawfully obtained by the party from a third party, provided
that the third party is not, to the knowledge of the party obtaining the
information, bound by a nondisclosure agreement with respect thereto; or (iii)
any information which subsequently develops from independent sources.
5.3 ANTI-MONEY LAUNDERING. The parties agree to cooperate in order to ensure
compliance with the USA PATRIOT Act and any and all other related laws and
regulations related to money laundering and financing of terrorism, including
without limitation customer identification, and filing suspicious activity
reports. Based upon their respective duties under this Agreement, the parties
will coordinate in the development, implementation and monitoring of policies
and procedures to comply with such requirements in the sale of the variable
products described in this Agreement.
5.4 UNDERLYING FUNDS. In the performance of its duties under this Agreement and
the Administrative Services Agreement, EquiTrust shall perform its services in
such a manner that it is compliant with the responsibilities and mandates set
forth in the Participation Agreements entered between COUNTRY and any underlying
mutual fund participating in the products of COUNTRY. EquiTrust shall maintain
compliance with said Participation and Administrative Services agreements or
other applicable contract between COUNTRY and the participating mutual funds.
5.5 COUNTRY PROPERTY. All contract and policy forms, records and supplies
furnished by COUNTRY to EquiTrust, shall remain the property of COUNTRY and
shall be turned over to COUNTRY promptly on demand. All other contract and
policy forms or other supplies, and all underwriting files or other files
pertaining to an annuitant's or insured's coverage, whether retained by COUNTRY
or EquiTrust, shall be copied upon request and said copies provided to the other
party. All licenses and other materials relating to government licensing or
authorizations of COUNTRY with respect to this Agreement shall be and remain the
property of COUNTRY and shall be turned over to COUNTRY by EquiTrust promptly
upon demand.
5.6 INSPECTION OF BOOKS AND RECORDS. COUNTRY, or others on its behalf, shall
have the right at any reasonable time to inspect all books and documents
relating to the services provided pursuant to this Agreement. EquiTrust shall
provide any and all information concerning the services provided hereunder which
may be required in order to administer this Agreement and to permit COUNTRY to
comply with governmental regulations, examinations, audits and inspections.
5.7 CORPORATE AUTHORITY. EquiTrust and CCSI expressly represent and warrant that
each has the authority to enter into this Agreement and that each is not or will
not be, by virtue of entering into this Agreement or otherwise, in breach of any
other agreement with any other company, association, firm, person or
corporation.
5.8 OFFICER AUTHORITY. The officers signing this Agreement on behalf of CCSI and
EquiTrust represent and warrant that they are authorized to execute this
document on behalf of such corporations pursuant to their bylaws or a resolution
of their boards of directors.
5.9 INDEPENDENT CONTRACTOR. EquiTrust is an independent contractor. Nothing
contained in this Agreement shall be construed to create the relationship of
employer and employee between
5
COUNTRY and EquiTrust, nor shall EquiTrust's employees be considered employees
of COUNTRY for any purposes.
5.10 ARBITRATION. In the event of any dispute arising between EquiTrust and
COUNTRY with reference to the rights or liabilities of either party under this
Agreement, the dispute shall be referred to three arbitrators (other than
present or former officers or employees of EquiTrust, COUNTRY, any affiliated
company or any company with a monetary interest in the dispute) familiar with
the business of insurance. One of the arbitrators shall be chosen by EquiTrust,
another by COUNTRY and a third by the first two. The decision of the arbitrators
shall be binding and final. The standards to be used in the proceedings will be
the Commercial Arbitration Rules of the American Arbitration Association. Each
party shall initially pay the costs and fees of the arbitrator it selects, and
the costs and fees of the third arbitrator shall be divided equally by the
parties; PROVIDED, HOWEVER, that the prevailing party in any arbitration
proceeding conducted pursuant to this Section shall be entitled to recover from
the other party any costs or expenses incurred by the prevailing party in
connection with the arbitration, including the fees of arbitrators and the
reasonable fees of attorneys, actuaries, accountants and other experts.
5.11 ASSIGNMENT. Neither party may assign or delegate all or any part of its
rights and duties under this Agreement without the prior written consent by an
Authorized Officer of the granting party.
5.12 NON-WAIVER. The waiver of any breach of any term, covenant or condition of
this Agreement shall not be deemed a waiver of any subsequent breach of the same
or any other term, covenant or condition. No term, covenant or condition of this
Agreement shall be deemed to have been waived unless such waiver is in writing
and signed by the party charged therewith.
5.13 NOTICES. Any notice required or permitted under this Agreement shall be
deemed sufficiently given and effective five (5) business days after deposit
with the United States Postal Service, postage-prepaid, registered or certified,
return-receipt-requested, by facsimile or other electronic transmission or upon
receipt if delivered personally. Such notice shall be directed as follows:
EQUITRUST INVESTMENT MANAGEMENT CC SERVICES, INC.
SERVICES, INC.
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Chief Executive Officer Chief Operating Officer
0000 Xxxxxxxxxx Xxxxxx 0000 Xxxxxxx Xxx.
Xxxx Xxx Xxxxxx, Xxxx 00000 Xxxxxxxxxxx, Xxxxxxxx 00000
With a Copy to:
Xxxx X. Xxxxxx
Secretary & General Counsel
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
6
5.14 TITLES AND HEADINGS. The titles and headings appearing in this Agreement
are included for convenience only and shall not be taken into account in the
interpretation, construction or application of this Agreement.
5.15 AMENDMENT. Any amendment to this Agreement shall be in writing and signed
by authorized representatives of both parties.
5.16 ENTIRE AGREEMENT. This Agreement, together with the several Schedules
appended hereto and incorporated herein, constitutes the entire agreement
between the parties relative to the subject matter hereof, superseding any and
all prior understandings or agreements between the parties and any subsidiary,
parent or affiliated company and may not be amended except by written instrument
executed by the parties.
7
IN WITNESS WHEREOF, EquiTrust and CCSI have caused this Agreement to be
subscribed and executed, in duplicate original, by their undersigned officers,
duly authorized hereunto, on the dates hereinafter indicated.
EQUITRUST INVESTMENT MANAGEMENT CC SERVICES, INC.
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Chief Executive Officer Chief Operating Officer
Date: December 23, 2003 Date: December 26, 2003
8
Schedule A
SCHEDULE CONTRACT, POLICY FORMS AND RIDERS
DESCRIPTION POLICY FORM NUMBER
--------------------------------------------------------------------------------
Variable Universal Life Insurance Policy
Variable Annuity Policy
9
Schedule C
CILAC AUTHORIZED OFFICERS
TITLE
Vice President, Life/Health Operations
Chief Life/Annuity Actuary
Director, Individual Life/Health Administration
Controller
10
