EXHIBIT 10.2
EXPENSE AND INDEMNITY AGREEMENT
This Expense and Indemnity Agreement (this "Agreement") is entered into as
of [__], 2005, by and between ING USA Annuity and Life Insurance Company, an
Iowa insurance company ("ING USA"), and Citibank, N.A., as indenture trustee,
registrar, transfer agent, paying agent and calculation agent ("Citibank").
WHEREAS, in consideration of Citibank providing services to each Trust
created in connection with the Program and pursuant to the Program Documents
under which Citibank will have certain duties and obligations, ING USA hereby
agrees to the following compensation arrangements and terms of indemnity.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms not otherwise defined
herein will have the meanings set forth in the Standard Indenture Terms attached
as Exhibit [__] to Registration Statement on Form S-3 (File No. [___________])
filed with the Securities and Exchange Commission by ING USA on [____________],
as may be amended. The following terms, as used herein, have the following
meanings:
"Excluded Amounts" means (i) any obligation of any Trust to make any
payment to any Holder in accordance with the terms of the applicable Indenture
or such Trust's Notes, (ii) any obligation or expense of any Trust to the extent
that such obligation or expense has actually been paid utilizing funds available
to such Trust from payments under the applicable Funding Agreement, (iii) any
cost, loss, damage, claim, action, suit, expense, disbursement, tax, penalty or
liability of any kind or nature whatsoever resulting from or relating to any
insurance regulatory or other governmental authority asserting that: (a) any
Trust's Notes are, or are deemed to be, (1) participations in the applicable
Funding Agreement or (2) contracts of insurance, or (b) the offer, purchase,
sale and/or transfer of any Trust's Notes and/or the pledge and collateral
assignment of the applicable Funding Agreement by any Trust to Citibank on
behalf of the Holders of such Trust's Notes (1) constitutes the conduct of the
business of insurance or reinsurance in any jurisdiction or (2) requires such
Trust or any Holder of such Trust's Notes to be licensed as an insurer,
insurance agent or broker in any jurisdiction, (iv) any cost, loss, damage,
claim, action, suit, expense, disbursement, tax, penalty or liability of any
kind or nature whatsoever imposed on Citibank that results from the bad faith,
willful misconduct or negligence of Citibank, (v) any costs and expenses
attributable solely to Citibank's administrative overhead unrelated to the
Program, (vi) any tax imposed on fees paid to Citibank, (vii) any withholding
taxes imposed on or with respect of payments made under the applicable Funding
Agreement, the applicable Indenture or a Trust's Note and (viii) any Additional
Amounts paid to any Holder.
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"Fees" means the fees agreed to between ING USA and Citibank as set forth
in the fee schedule attached as Exhibit A to this Agreement.
"Obligation" means any and all (i) costs and expenses reasonably incurred
(including the reasonable fees and expenses of counsel) relating to the
offering, sale and issuance of the Notes by each Trust under the Program, (ii)
costs and expenses reasonably incurred (including the reasonable fees and
expenses of counsel) as expressly authorized under the applicable Indenture and
any of the other Program Documents and (iii) costs, expenses and taxes of each
Trust; provided, however, that Obligations do not include Excluded Amounts.
ARTICLE II
SERVICES AND FEES
Section 2.01 Fees. ING USA hereby agrees to pay Citibank its Fees. Such
Fees may be subject to amendment in the event of a substantive change in the
nature of Citibank's duties under the Program, as may be agreed to in writing
from time to time by Citibank and ING USA.
Section 2.02 Payment of Obligations.
(a) In the event that Citibank delivers written notice and evidence,
reasonably satisfactory to ING USA, of any Obligation, ING USA shall, upon
receipt of such notice, promptly pay such Obligation. Notice of any Obligation
(including any invoices) should be sent to ING USA at its address set forth in
Section 4.04, or at such other address as ING USA shall hereafter furnish to
Citibank in writing.
(b) At the written request and expense of ING USA, Citibank will (i) from
time to time execute all such instruments and other agreements and take all such
other actions as may be reasonably necessary or desirable, or that ING USA may
otherwise reasonably request in writing, to protect any interest of ING USA with
respect to any Obligation or to enable ING USA to exercise or enforce any right,
interest or remedy it may have with respect to any such Obligation, and (ii)
release to ING USA any amount received from a party other than ING USA in
connection with any Obligation or any portion thereof, promptly after any such
amount is received by Citibank.
(c) ING USA and Citibank hereby agree that all payments due under this
Agreement in respect of any Obligation shall be effected, and any responsibility
of ING USA to pay such Obligation pursuant to this Agreement shall be
discharged, by the payment by ING USA to the account of the person to whom such
Obligation is owed. For the avoidance of doubt, amounts due hereunder from ING
USA to Citibank are not subject to the cap set forth in Section 6.06 of the
Indenture.
ARTICLE III
INDEMNIFICATION
Section 3.01 Indemnification. Subject to the remaining sections of this
Article III, ING USA covenants to fully indemnify and defend Citibank and its
executive officers, directors and agents (each, an "Indemnified Person") for,
and to hold it harmless against, any and all loss, liability, claim, damage or
reasonable expense (including the reasonable compensation, expenses
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and disbursements of its counsel) arising out of the acceptance by Citibank, in
its capacity as Indenture Trustee or as an Agent, of administration of the
applicable Indenture or any Trust and/or the performance of its duties and/or
the exercise of its respective rights under the applicable Indenture, including
the reasonable costs and expenses of defending itself against or investigating
any claim of liability in the premises, except to the extent such loss,
liability, claim, damage or expense arises out of or is related to the bad
faith, willful misconduct or negligence of Citibank. Notwithstanding anything to
the contrary, ING USA shall have no obligation to indemnify or defend Citibank
for any loss, liability, claim, damage or expense relating to (i) any costs and
expenses attributable solely to Citibank's administrative overhead unrelated to
the Program or (ii) any tax imposed on the Fees paid to Citibank.
Section 3.02 Proceedings. An Indemnified Person shall give prompt written
notice to ING USA of any action, suit or proceeding commenced or threatened
against the Indemnified Person. In case any such action, suit or proceeding
shall be brought involving an Indemnified Person, ING USA may, in its sole
discretion, elect to assume the defense of the Indemnified Person, and, if it so
elects, ING USA shall, in consultation with such Indemnified Person, select
counsel, reasonably acceptable to the Indemnified Person, to represent the
Indemnified Person and pay the reasonable fees and expenses of such counsel. In
any such action, investigation or proceeding, the Indemnified Person shall have
the right to retain its own counsel but ING USA shall not be obligated to pay
the fees and disbursements of such counsel unless (i) ING USA and the
Indemnified Person shall have mutually agreed in writing to the retention of
such counsel, (ii) the named parties to any such action, investigation or
proceeding (including any impleaded parties) include both ING USA and the
Indemnified Person and the Indemnified Person shall have reasonably and in good
faith concluded that representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(iii) ING USA fails, within ten (10) days prior to the date the first response
or appearance is required to be made in any such proceeding, to assume the
defense of such proceeding with counsel reasonably satisfactory to the
Indemnified Person; provided, that ING USA has received written notice of such
action, investigation or proceeding at least sixty (60) days prior to the date
the first response or appearance is required to be made. It is understood that
ING USA shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons.
Section 3.03 Contribution. Solely to the extent, if any, that the
indemnification provided for herein is finally determined by a court of
competent jurisdiction to be invalid or unenforceable, in whole or in part, in
accordance with its terms, then ING USA shall contribute to the amount paid or
payable by an Indemnified Person as a result of such invalidity or
unenforceability in such proportion as is appropriate to reflect the relative
benefits received by ING USA, on one hand, and Citibank, on the other hand, from
the transactions contemplated by the Program Documents. For this purpose, the
benefits received by ING USA shall be the aggregate value of the relevant
Collateral, and the benefits received by Citibank shall be the Fees it has been
paid up to that point, less costs and unreimbursed expenses incurred by it, as
Indenture Trustee, in relation to such Collateral. If, however, the allocation
provided by the immediately preceding two sentences is not permitted by
applicable law, then ING USA shall contribute to such amount paid or payable by
the Indemnified Person in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of ING USA, on
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the one hand, and Citibank (but solely to the extent such fault results from or
is attributable to Citibank's bad faith, willful misconduct or negligence), on
the other hand, in connection with the actions or omissions which resulted in
such liability.
Section 3.04 Subrogation. ING USA shall be subrogated to any right of the
Indemnified Person in respect of the matter as to which and to the extent that
any indemnity was paid hereunder.
Section 3.05 Settlement. The Indemnified Person may not settle any action,
investigation or proceeding without the consent of ING USA, not to be
unreasonably withheld.
Section 3.06 Survival. Notwithstanding any provision contained herein to
the contrary, the obligations of ING USA under this Article III to any
Indemnified Person shall survive the termination of this Agreement and the
discharge of the applicable Indenture.
Section 3.07 General. The indemnification provided for herein supercedes
in all respects any indemnification obligation of ING USA contained in any other
Program Document to which the Indenture Trustee and ING USA are or become
parties.
ARTICLE IV
MISCELLANEOUS
Section 4.01 Waiver. No waiver, modification or amendment of this
Agreement shall be valid unless executed in writing by the parties hereto.
Section 4.02 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles.
Section 4.03 Termination. This Agreement shall terminate and be of no
further force and effect upon the date on which (i) there are no Fees or any
Obligation (other than any Obligation directly related to the indemnification
obligations of ING USA set forth in Article III hereof) due and payable under
this Agreement and (ii) each Program Document has terminated; provided, however,
that this Agreement shall continue to be effective or shall be reinstated, as
the case may be, if at any time Citibank must restore payment of any sums paid
under any Obligation or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 4.04 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon either party
hereto shall be in writing (including by facsimile transmission) and shall be
hand delivered or sent by guaranteed overnight delivery or by facsimile
transmission (to be followed by hand or guaranteed overnight delivery) and shall
be deemed to be given for purposes of this Agreement on the day that such
writing is received by the intended recipient thereof in accordance with the
provisions of this Section 4.04. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 4.04,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties thereto at their respective
addresses (or their respective facsimile numbers) indicated below:
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To Citibank:
Citibank, N.A.
Agency & Trust
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
To ING USA:
ING USA Annuity and Life Insurance Company
c/o ING Institutional Markets
0000 Xxxxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 and (000) 000-0000
With a copy to:
ING Institutional Markets
0000 Xxxxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx XxxXxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 and (000) 000-0000
Section 4.05 Certificates and Reports. Citibank shall provide to ING USA,
as an exhibit to each Trust's Annual Reports on Form 10-K (each a "10-K") filed
on behalf of each such Trust by ING USA under the Securities Exchange Act of
1934, as amended or regulations thereunder (the "Exchange Act"), a compliance
certificate (each, a "Compliance Certificate") substantially in the form
attached to this Agreement as Exhibit B. ING USA, at its own expense, shall
select a registered independent public accounting firm that is a member of the
American Institute of Certified Public Accountants (the "Accounting Firm") and
cause the Accounting Firm to furnish to the management of ING USA, Citibank and
to the Trustee a report (the "Auditor's Report") substantially in the form
attached to this Agreement as Exhibit C. ING USA shall cause the Compliance
Certificate and the Auditor's Report to be filed as exhibits to each Trust's
10-K(s). ING USA also hereby undertakes that, in the event that Citibank, in
connection with any Indenture or any Trust, may be required to file or furnish
any reports (other than any Compliance Certificate) pursuant to the Exchange Act
(the "Depositor Reports") and the Exchange Act authorizes the party serving as
the depositor, sponsor or issuer of the Program to file or furnish or cause to
be filed or furnished such Depositor Reports, then ING USA will, to the extent
permissible under applicable law, file or furnish or cause to be filed or
furnished such Depositor Reports pursuant to the Exchange Act at its own
expense.
[The remainder of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties have executed this Expense and Indemnity
Agreement by their duly authorized officers as of the date hereof.
ING USA ANNUITY AND LIFE INSURANCE
COMPANY
By: ________________________
Name:
Title:
CITIBANK, N.A.
By: ________________________
Name:
Title:
EXHIBIT A
FEES
[To be inserted]
A-1
EXHIBIT B
ANNUAL STATEMENT OF COMPLIANCE
I, [identify the certifying individual], a duly elected and acting officer
of Citibank, N.A. (the "Indenture Trustee"), do hereby certify on behalf of the
Indenture Trustee, that:
1. I have reviewed and examined the performance by the Indenture Trustee
of the application of trust money collected by the Indenture Trustee pursuant to
Section 5.02 and, if applicable, Section 6.06 of the Indenture pursuant to which
the Trust's notes (the "Notes") were issued during the fiscal year ended
December 31, 200? (the "Relevant Year"); and
2. based upon my review and examination described in Section 1. above, and
except as provided in the Report of Independent Accountants on Applying
Agreed-Upon Procedures, dated ?, 200?, prepared by the Trust's independent
public accountants in accordance with Section 4.05 of the Expense and Indemnity
Agreement, to the best of my knowledge, the application of trust money collected
by the Indenture Trustee pursuant to Section 5.02 and, if applicable, Section
6.06 of the Indenture was performed in accordance with the terms of the
Indenture throughout the Relevant Year.
CITIBANK, N.A., as Indenture Trustee
By: _________________________
Name:
Title:
Date: _________________________
B-1
EXHIBIT C
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON COMPLIANCE
The Board of Directors
ING USA Annuity and Life Insurance Company
We have examined management's assertion, included in the accompanying report
titled Report of Management on Compliance, that ING USA Annuity and Life
Insurance Company (the "Company") complied with the specified standards
identified in Exhibit A to the Report of Management on Compliance (the
"Specified Standards") with respect to the secured notes issued by ING USA
Global Funding Trust - during the year ended December 31, 20__. Management is
responsible for the Company's compliance with those Specified Standards. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was conducted in accordance with attestation standards
established by the Public Company Accounting Oversight Board (United States)
and, accordingly, included examining, on a test basis, evidence about the
Company's compliance with the Specified Standards and performing such other
procedures as we considered necessary in the circumstances. We believe that our
examination provides a reasonable basis for our opinion. Our examination does
not provide a legal determination on the Company's compliance with the Specified
Standards.
In our opinion, management's assertion that ING USA Annuity and Life Insurance
Company complied with the aforementioned Specified Standards during the year
ended December 31, 20__, is fairly stated, in all material respects.
/s/ Ernst & Young LLP
Date ____, 20__
C-1
REPORT OF MANAGEMENT ON COMPLIANCE
I, as a member of management of ING USA Annuity and Life Insurance Company (the
"Company"), am responsible for complying with the standards identified in the
attached Exhibit A (the "Specified Standards") with respect to the secured notes
issued by ING USA Global Funding Trust -. I am also responsible for establishing
and maintaining effective internal control over compliance with these specified
standards. I have performed an evaluation of the Company's compliance with the
Specified Standards as of December 31, 20__ and for the year then ended. Based
on this evaluation, I assert that during the year ended December 31, 20__, the
Company complied, in all material respects, with the Specified Standards.
-------------------------
[Title]
Date ____, 20__
C-2
EXHIBIT A
SPECIFIED STANDARDS
I. FUNDING AGREEMENT PAYMENTS
Funding agreement payments have been:
1. calculated according to the terms of the Funding Agreement; and
2. promptly paid, within two business days of the due date, to the Indenture
Trustee at the direction of the appropriate ING USA Global Funding Trust.
II. PAYMENTS UNDER INDENTURE
Confirmed that the Indenture Trustee has used the amounts described in I.1. to
pay, within two business day of the due date, amounts due on the secured notes
to the Depository Trust Company in accordance with the terms of the Indenture.
C-3
