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EXHIBIT 8(b)
SERVICE AGREEMENT
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SERVICE AGREEMENT
THIS AGREEMENT, dated at Toronto, this 30th day of December, 1988, by and
between:
THE CANADA LIFE ASSURANCE COMPANY, a Company incorporated under the laws of the
late Province of Canada and having its Head Office in the City of Toronto in the
Municipality of Metropolitan Toronto,
(Hereinafter called "CLA")
OF THE FIRST PART;
and
CANADA LIFE INSURANCE COMPANY OF AMERICA, a Company incorporated under the laws
of Michigan having its Principal Office in the City of Lansing in the State of
Michigan,
(Hereinafter called "CLICA")
OF THE SECOND PART;
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WHEREAS CLA and CLICA entered into an oral agreement effective January 1,
1988 with respect to fees and expenses incident to the incorporation of CLICA
and with respect to costs of administrative and operating functions to be
performed by CLA on behalf of CLICA;
AND WHEREAS Resolution Number 10 of the Inaugural Resolutions of the Board
of Directors of CLICA, dated July 22, 1988, authorizes officers of the
corporation to pay all reasonable fees and expenses incident to the organization
of the corporation;
AND WHEREAS Resolution Number 11 of the Inaugural Resolutions of the Board
of Directors of CLICA, dated July 22, 1988, authorizes officers of the
corporation to enter into a written service agreement with CLA;
NOW THEREFORE in consideration of the covenants and agreements herein
contained, CLICA and CLA agree as follows:
APPLICATION OF TERMS
1. This agreement documents the terms of an oral agreement entered into by
CLICA and CLA effective January 1, 1988.
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2. The terms of this agreement shall apply to the following costs incurred by
CLA:
(a) All costs incurred prior to August 1, 1988 incidental to the
incorporation of CLICA, including legal and organizational costs, and
costs of the Information Systems Department of CLA for the development
of a computer system to assist CLICA in the management of its variable
product business.
(b) All costs of service functions as defined below, performed by CLA, on
and after August 1, 1988 and identifiable as expenses incurred
directly and exclusively for the benefit of CLICA and any of its
subsidiaries.
(c) All costs of service functions defined below, performed by CLA for
CLICA and any of its subsidiaries, on and after August 1, 1988 and not
identifiable as expenses incurred directly and exclusively for the
benefit of CLICA and any of its subsidiaries.
SERVICE FUNCTIONS
3. CLA shall perform such functions for CLICA and any of its subsidiaries as
the parties may from time to time designate in writing and including the
functions listed hereunder, hereinafter referred to as "service functions".
All service functions performed by CLA for CLICA and any of its
subsidiaries shall be governed by the terms of this agreement.
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The service functions performed by CLA shall include:
1. Marketing
2. Agency
3. Field Service
4. Underwriting and Policy Issue
5. Actuarial
6. Investment
7. Policyholder Service
8. Policy Accounting
9. General Accounting
10. Claim Payment
11. Information Systems
12. Corporate Services
13. Reinsurance
4. Activities carried out by CLICA which are in the nature of auditing
and verification of service functions performed by CLA shall be at the
sole expense of CLICA.
COST CHARGES FOR SERVICE FUNCTIONS
5. The method of allocating costs hereunder shall be determined in the
following manner:
a) The costs of service functions performed by CLA that are
identifiable as expenses incurred directly and exclusively for
the benefit of CLICA or any of its subsidiaries shall be charged
directly to CLICA.
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b) The cost of service functions performed by CLA for the benefit of
CLICA and any of its subsidiaries but that are not identifiable
as expenses incurred directly and exclusively for the benefit of
CLICA or any of its subsidiaries shall be allocated to CLICA by
CLA as follows:
(i) Until CLA notifies CLICA otherwise, the cost of service
functions performed by CLA shall be calculated on a time log
and xxxx basis, that is, as a percentage of the salary of
CLA personnel attributable to the service functions.
(ii) Upon written notice by CLA to CLICA, the cost of service
functions shall be calculated by CLA in accordance with its
Functional Cost Accounting System whereby departments
performing service functions for CLICA or any of its
subsidiaries shall allocate an appropriate percentage of
their time and other costs to CLICA.
At CLICA's request and expense, CLA shall prepare and make
available to CLICA, all documents necessary to enable CLICA to
verify the accuracy of CLA's calculations.
The manner of calculation of costs of service functions shall be
reviewed and amended by the parties as necessary from time to
time.
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6. (a) CLICA shall reimburse CLA no later than December 31, 1988 for
all costs referred to in 2(a) above.
(b) CLICA shall reimburse CLA for all costs of the service
functions referred to in 2(b) and 2(c) above, performed by
CLA, at least quarterly throughout each fiscal year at the
request of CLA. At the end of the period for which CLA
requests payment, CLA shall estimate the total costs for that
period, and CLICA shall promptly pay the amount of the
estimate. Within 30 days after the completion of CLA's annual
cost analysis, CLA shall provide to CLICA, an accurate and
final statement of the costs of service functions performed by
CLA in the fiscal year. Any adjustment resulting from the
final statement shall be made between the parties within 30
days after CLICA receives the final statement.
7. CLICA shall pay an additional fee to CLA if it is determined that the
cost of service functions performed by CLA payable under this
agreement is less than an arm's length charge. Such additional fee
shall be equal to an arm's length charge determined by analysis of
prevailing market conditions relating to charges for similar services
provided to other service recipients less the cost of the service
functions performed by CLA otherwise allocated under this agreement.
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ADMINISTRATION AND RECORD-KEEPING
8. CLA shall maintain all internal record-keeping and general office
administration incidental to or necessary for the proper performance
of its service functions in accordance with this Agreement. At CLICA's
expense in accordance with CLA's Functional Cost Accounting System,
CLA shall maintain books and records relating to all CLICA policies,
which shall be available for inspection by CLICA and properly
constituted governmental authorities, and which shall be in such form
that upon termination of this Agreement they can be delivered to CLICA
or to another party at CLICA's request. Any such records required to
be produced for the Securities and Exchange Commission shall be so
delivered within 14 days of request therefor. Such materials shall be
in satisfactory form if they both (i) meet relevant legal requirements
and (ii) are in a form approved by CLICA.
MANAGEMENT OF CLICA AND ACCESS TO RECORDS
9. Notwithstanding any other provision in this agreement, CLICA, through
its Board of Directors and its Officers, shall retain full management
authority over decisions affecting its business and affairs and shall
own and have access to all records of its business that may from time
to time be held by CLA.
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NOTICES
10. In the event that service of any notice(s) is required, such service
shall be sufficiently made if delivered personally to an Officer or
Director of the party upon whom service is required, as follows:
Canada Life Insurance Company of America
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxx Xxxxxx Life Assurance Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
TERMINATION
11. Either party may terminate this agreement upon 90 days written notice
to the other party.
BINDING NATURE
12. The covenants and agreements contained in this Agreement shall be
binding upon, extend to and enure to the benefit of the parties
hereto, their and each of their successors and assigns respectively.
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COMPLIANCE WITH LAW
13. CLICA and CLA mutually covenant and agree to comply with all
municipal, provincial, state and federal government laws and
regulations where applicable including, where required, the
reporting of income to the necessary tax authorities.
GOVERNING LAW
14. The laws of the Province of Ontario shall govern the terms of this
Agreement.
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IN WITNESS WHEREOF the parties hereto have set their hands and seals on the
date first above written.
CANADA LIFE INSURANCE COMPANY OF AMERICA
By /s/
---------------------------------------
Secretary
By /s/
---------------------------------------
Assistant Secretary
THE CANADA LIFE ASSURANCE COMPANY
By /s/
---------------------------------------
Executive Vice-President
and Secretary
By /s/
---------------------------------------
Associate Treasurer
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SERVICE AGREEMENT
FIRST AMENDMENT
THIS FIRST AMENDMENT made as of this___ day of___, 1989, by and between THE
CANADA LIFE ASSURANCE COMPANY (CLA), a Canadian Corporation, CANADA LIFE
INSURANCE COMPANY OF AMERICA (CLICA), a Michigan corporation, and CANADA
LIFE OF AMERICA FINANCIAL SERVICES, INC. (CLAFS), a Georgia corporation,
(this "Amendment") to the Service Agreement dated December 30, 1988
(collectively referred to as this "Agreement").
WITNESSETH:
WHEREAS CLICA finds it in the best interest of the corporation to obtain a
person to perform certain administrative and functional services for the
corporation;
WHEREAS by resolutions of the Boards of Directors or otherwise each of the
parties hereto has corporate authority to enter into this Amendment;
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WHEREAS CLA has the facilities and experience to provide administrative and
functional services to facilitate the operations of an insurer;
WHEREAS CLAFS has the facilities and experience to provide administrative
and functional services with respect to variable insurance products;
WHEREAS this Agreement is intended to be a limited service agreement and
not to cover reinsurance and appointment and cancellation of agencies; and
WHEREAS the parties to the Service Agreement find it in their best interest
to further define their relationship and make CLAFS a party to this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and of the mutual expectations of benefit accruing from the activities
contemplated herein, the parties hereto agree as follows:
1. General. Notwithstanding any other provision of this Agreement, it is
understood that the business and affairs of CLICA shall be managed by
its Board of Directors or, as may otherwise be appropriate, by its
officers. CLA in providing
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services hereunder shall not have management prerogatives with respect
to such business and affairs of CLICA. CLICA shall own all records of
its business and shall have access to any such records which may, from
time to time, be in custody of CLA. To the extent that this Agreement
relates to services provided with respect to variable annuities, or
with respect to other products registered with the Securities and
Exchange Commission (the "SEC"), the provisions of Section 20 of this
Agreement shall govern.
2. Practices and Procedures. CLA in providing Services hereunder intends
to provide substantially the same services as it provides with respect
to its own plans of insurance, which CLICA has evaluated and found to
be satisfactory. Without prior consent of CLICA, CLA shall not depart
from these practices, work-flow, procedures and services in a way
which materially affects the nature of the services provided under
this Agreement. CLA shall use its best efforts to effect such
reasonable changes in practices, work-flows, procedures and services
hereunder as are requested by CLICA on reasonable notice, with CLICA
agreeing to pay all reasonable costs incurred by CLA with respect to
such changes which individually or in the aggregate materially
increase the cost to CLA of providing services hereunder.
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3. Forms, Notices, etc. Subject to Section 20 of this Agreement, CLA in
providing services hereunder shall use such forms, notices, reports,
checks and other similar instruments as CLA and CLICA may agree upon
from time to time. CLICA shall provide reasonable advance notice to
CLA of any changes in such forms, notices, reports, checks or other
similar instruments which it may request, with CLICA agreeing to pay
all reasonable costs incurred by CLA with respect to such changes
which individually or in the aggregate materially increase the cost to
CLA of providing services hereunder.
4. Selling Services; Sales Aids. Subject to Section 20 of this Agreement,
CLA shall provide such selling services for CLICA and provide such
sales aid to such persons as CLA and CLICA may agree upon from time to
time. CLA shall charge the recipient of sales aids provided in
accordance with this Section 4 either (i) such rates as are published
from time to time by CLA in schedules of sales aids which are
generally made available by CLA, or (ii) reasonable rates established
by CLA with respect to sales aids developed and made available
specifically for CLICA.
5. Selection, Issue, Underwriting and Cancellation. CLA shall provide
selection, issue and underwriting services for CLICA
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policies. Selection, issue and underwriting decisions made by CLA
shall be in accordance with the standard selection, issue and
underwriting practices of CLICA, provided that CLA personnel shall
consult with CLICA personnel in unusual selection, underwriting issue
or situations or upon request of CLICA personnel. CLICA shall have
final authority over the selection, issue and underwriting of
applications. Furthermore, CLA shall provide cancellation services for
CLICA polices. Cancellation decisions made by CLA shall be in
accordance with the standard cancellation practices by CLICA provided
that CLA personnel shall consult with CLICA personnel in unusual
situations or upon request of CLICA personnel. CLICA shall have final
authority over the cancellation of policies.
6. Premium Billing and Collection. CLA shall provide premium and billing
services utilizing its premium billing and collection system to xxxx
and collect all premiums on CLICA policies in the name of CLICA, and
shall disburse amounts so collected to or on behalf of CLICA at the
earliest practicable time. CLA shall at all times maintain records
which identify CLICA funds separately from all other funds, shall hold
such funds in an account in the name of CLICA and within twenty (20)
days, or within such lesser period as may be required by law, shall
account for such funds to CLICA.
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7. Commissions. To the extent commissions are due and owing to employees
and agents of CLAFS, CLICA, itself or through CLA as its agent, shall
perform calculations and make payment of commissions to such CLAFS
sales personnel.
8. Claims and Other Policy Payments. CLA shall provide all claims and
other policy payment services, including loss adjustment,
investigation, adjustment and defense of claims arising from any CLICA
policy of insurance, and shall make all claims, loss adjustment and
other policy payments with respect to CLICA policies, including
payments representing claims, policy loans, surrenders, and amounts
paid under policy or contract settlement options. In matters involving
claims decisions, CLA claims personnel shall consult with CLICA
personnel in unusual situations involving disputed claims or upon
request of CLICA personnel. Further, officers of CLICA shall monitor
the CLA claims handling service and shall retain ultimate authority
for adjustment and claims payments made on CLICA's behalf. Claims
payments made by CLA following such consultation shall be final and
conclusive.
9. Field Administration. CLA shall provide such field administration
services, product development, advertising
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and sales promotion services to CLICA as may be reasonably requested
by CLICA from time to time.
10. Functional Services. CLA shall provide such actuarial, financial,
statistical, and accounting and taxation services as may be reasonably
requested by CLICA from time to time. To the extent CLA does not
provide taxation services, CLICA shall be responsible for calculating
its own taxes. In any event, CLICA will be responsible for payment of
any taxes due and owing.
11. Personnel Services. In addition to other services provided hereunder,
CLA shall provide such executive, clerical and other services as may
be reasonably requested by CLICA FROM time to time. CLA shall be
responsible for the employment and discharge of such personnel after
appropriate consultation with CLICA.
12. Administration and Record-Keeping. CLA shall provide internal
record-keeping and general office administration incidental to or
necessary for the proper rendering of services performed in accordance
with this Agreement. CLA (i) shall maintain books and records relating
to performance under this Agreement, and (ii) shall maintain records
and files relating to CLICA policies, which materials will be
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available to CLICA and to properly constituted governmental
authorities, and which shall be in such form that upon termination of
this Agreement they can be delivered to CLICA or to another party at
CLICA's request. Any such records required to be produced for the SEC
shall be so delivered within 1 business day of request therefor. Such
materials shall be in satisfactory form if they both (i) meet relevant
legal requirements and (ii) are in a form approved by CLICA. In
addition, CLICA shall keep such accounts and records as may be
necessary in the conduct of its business as an independent entity and
shall own and have custody of such accounts and records.
13. Investment Services. CLA shall provide to CLICA such investment and
investment accounting services (including summary and detail
accounting, general ledger entry for all investment activity, and
monthly accrual of investment income and expenses, and preparation of
annual statement schedules) as may be requested from time to time.
CLICA nevertheless shall at all times have entire control, ownership
and management of its investable assets.
14. Cost Allocation. In return for the services rendered to CLICA by CLA
in accordance with this Agreement, CLICA shall reimburse CLA in an
amount developed by the cost allocation
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system in use by CLA based upon time and expenses spent by CLA
personnel in providing services. The cost allocation system used by
CLA is intended to allocate only the costs associated with the
services CLA provides under this Agreement. In addition, out-of-pocket
expenses (including, for example, printing costs, the costs of
insurance department examinations, travel expenses, direct data
processing charges, etc.) incurred on behalf of CLICA in performing
the services covered by this Agreement shall be charged to CLICA at
their actual cost to CLA.
15. General Overhead. A CLICA will be charged for a portion of CLA's
overhead. CLA will allocate overhead costs to CLICA based on the cost
allocation system referred to in SECTION 14 hereto. In addition, CLICA
will incur certain overhead items in its own right. CLICA will have
complete control over these overhead items and will pay for them
directly.
16. Examinations, Governmental and Trade Association Fees and Expenses.
The expenses of examinations and other governmental expenses as well
as fees and expenses in connection with trade associations and bureaus
shall be paid by CLA. CLA shall be reimbursed by CLICA for such costs
pursuant to Section 14 hereof.
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17. General Accounting. CLA shall deliver to CLICA each quarter an
itemized statement of all amounts owed to it by CLICA for services
rendered during the preceding quarter. CLICA shall pay all amounts
owed CLA for the precedinq quarter within 30 days following delivery
of such an itemized account. The itemized statements shall indicate
any amounts which are estimated. Within 60 days after the end of each
fiscal year, CLA shall deliver to CLICA an accurate and final
statement of any costs which were estimated during such year. CLICA
shall pay all amounts in such final statements within 30 days.
18. Office Space and Furniture. CLA shall lease to CLICA such office space
and furniture as may be reasonably required by CLICA at such rates and
on such other terms as may be mutually agreed by CLA and CLICA.
19. Competition. The operations of CLA and CLICA are designed to be
generally complementary to each other and it is therefore understood
that neither is expected to be in any substantial competition with the
other. CLA shall recognize the proprietary nature of CLICA customer
lists and shall not utilize them for its own benefit nor shall it
disclose them to others without CLICA's written consent.
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20. Special Provisions Relating to the Servicing of Variable Insurance
Products. To the extent that services rendered under this Agreement
relate to variable annuity contracts or variable life insurance
policies (the "Policies") issued by one or more separate accounts of
CLICA, the following provisions will apply:
a) CLAFS shall assume full responsibility for the securities
activities of, and for securities law compliance by, any "person
associated" (as that term is defined in Section 3(a)(18) of the
Securities Exchange Act of 1934) with CLAFS and engaged directly
or indirectly in the Policy activity (the "associated persons").
This shall include (i) compliance with the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. ("NASD")
and with federal and state laws and regulations, (ii) the
appropriate training of associated persons, and (iii) the filing
with the SEC, NASD and other appropriate regulatory authorities
of any sales literature or materials required to be filed with
respect to sales of Policies.
(b) All books and records maintained in connection with the offer and
sale of the Policies will (i) be maintained and preserved in
conformity with the requirements of Rules 17a-3 and 17a-4 under
the Securities Exchange Act of 1934, (ii) be
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maintained and held on behalf of and as agent for CLAFS, whose
property they are and shall remain, and (iii) be at all times subject
to inspection by the SEC (within the United states, within 1 business
day of request therefor) in accordance with Section 17(a) of such Act.
(c) Upon or prior to the completion of each transaction for which a
confirmation is legally required, CLICA shall, on behalf of CLAFS
acting as agent for CLICA, send a written confirmation of such
transaction reflecting the facts of the transaction.
(d) CLICA shall provide prospectuses and statements of additional
information to sales representatives at no cost to such persons.
21. Termination. This Agreement shall be effective as of the date first
above written and shall remain in full force and effect thereafter,
provided, however, that any party may terminate this Agreement without
penalty, with or without cause, on not less than ninety (90) days'
notice to the other parties.
22. Amendment. This Agreement may be amended at any time by a writing
executed by the parties
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23. Non-Assiqnment. This Agreement shall not be assigned by any party
without a prior written consent of the other parties.
24. Conflicts. Any provision of this Amendment which conflicts, in whole
or in part, with the initial Service Agreement shall supersede and
replace, to the extent the provisions are in conflict, the provision
in the initial Service Agreement which presents such a conflict.
25. Governing Law. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of Georgia; although the initial
Service Agreement provides that the laws of the Province of Ontario
shall govern, this Section supersedes Section 13 of the initial
Service Agreement in its entirety.
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26. By executing this Amendment, CLAFS hereby agrees to be bound by the
terms and conditions set forth in the initial Service Agreement dated
December 30, 1988.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first written above.
THE CANADA LIFE ASSURANCE COMPANY
BY:__________________________________
President
BY:__________________________________
Vice President
CANADA LIFE INSURANCE COMPANY OF
AMERICA
BY:__________________________________
President
BY:__________________________________
Vice President
CANADA LIFE OF AMERICA FINANCIAL
SERVICES, INC.
BY:__________________________________
President
BY:__________________________________
Vice President
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