EXHIBIT 10.3
EXPENSE AND INDEMNITY AGREEMENT
This Expense and Indemnity Agreement (this "Agreement") is entered into as
of [.], by and between ING USA Annuity and Life Insurance Company, an Iowa
insurance company ("ING USA"), and GSS Holdings II, Inc., as trust beneficial
owner (the "Trust Beneficial Owner").
WHEREAS, in consideration of the Trust Beneficial Owner being the sole
beneficial owner of each Trust created in connection with the Program and
pursuant to the Program Documents under which the Trust Beneficial Owner 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 4.1 to Registration Statement on Form S-3 (File No.
333-156411) filed with the Securities and Exchange Commission by ING USA on
December 23, 2008, 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 the Indenture
Trustee 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 the Trust Beneficial Owner that results
from the bad faith, misconduct or negligence of the Trust Beneficial Owner, (v)
any costs and expenses attributable solely to the Trust Beneficial Owner's
administrative overhead unrelated to the Program, (vi) any tax imposed on fees
paid to the Trust Beneficial Owner, (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.
1
"Fees" means the fees agreed to between ING USA and the Trust Beneficial
Owner 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 and
(ii) 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 the Trust Beneficial Owner
its Fees.
Section 2.02 Payment of Obligations. (a) In the event that the Trust
Beneficial Owner delivers written notice and evidence, reasonably satisfactory
to ING USA, of any Obligation of the Trust Beneficial Owner, 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 herein, or at such other address as such party shall hereafter
furnish in writing.
(b) The Trust Beneficial Owner will (i) from time to time execute all such
instruments and other agreements and take all such other actions as may be
necessary or desirable, or that ING USA may request, 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 ING USA
relating to any Obligation or any portion of any Obligation, immediately after
any such amount relating to such Obligation, or any portion of any such
Obligation, is otherwise received by the Trust Beneficial Owner from a party
other than ING USA.
(c) ING USA and the Trust Beneficial Owner 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.
ARTICLE III
INDEMNIFICATION
Section 3.01 Indemnification. Subject to the remaining sections of this
Article III, ING USA covenants to fully indemnify and defend the Trust
Beneficial Owner and its executive officers and directors (each, an "Indemnified
Person") for, and to hold them harmless against, any and all loss, liability,
claim, damage or reasonable expense (including the reasonable compensation,
expenses and disbursements of its counsel) arising out of the acceptance by the
Trust Beneficial Owner, in its capacity as Trust Beneficial Owner, of the
performance of its duties and/or the exercise of its respective rights under the
applicable Trust Agreement, 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, misconduct or negligence of the
Trust Beneficial Owner.
2
Notwithstanding anything to the contrary, ING USA shall have no obligation to
indemnify or defend the Trust Beneficial Owner for any loss, liability, claim,
damage or expense relating to (i) any costs and expenses attributable solely to
the Trust Beneficial Owner's administrative overhead unrelated to the Program or
(ii) any tax imposed on the Fees paid to the Trust Beneficial Owner.
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 or (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. 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. If the indemnification provided for herein is
invalid or unenforceable 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 liability in such proportion as is appropriate to reflect the relative
benefits received by ING USA, on one hand, and the Trust Beneficial Owner, 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 the Trust Beneficial Owner
shall be the Fees it has been paid up to that point, as the Trust Beneficial
Owner, less costs and unreimbursed expenses incurred by it, as Trust Beneficial
Owner, 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 the one hand, and the Trust
Beneficial Owner, on the other hand, in connection with the actions or omissions
which resulted in such liability, as well as any other relevant equitable
considerations.
Section 3.04 Subrogation. ING USA shall be subrogated to any right of the
Indemnified Person in respect of the matter as to which 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.
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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 pursuant to
Section 4.03 herein.
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 Trust Beneficial Owner is or becomes a party.
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 and there
is no 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 the Trust Beneficial Owner
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
personally delivered or sent by guaranteed overnight delivery or by facsimile
transmission (to be followed by personal 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:
To the Trust Beneficial Owner:
GSS Holdings II, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
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To ING USA:
ING USA Annuity and Life Insurance Company
c/o ING Institutional Markets
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: [.]
Facsimile: (000) 000-0000 and (000) 000-0000
With a copy to:
ING Institutional Markets
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx XxxXxxx
Facsimile: (000) 000-0000 and (000) 000-0000
[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:
GSS HOLDINGS II, INC.
By: ________________________
Name:
Title:
6
EXHIBIT A
FEES
The Trust Beneficial Owner shall be entitled to receive the following fees
at the times set forth below:
$[-] per annum. The Fee shall be due and payable upon receipt of an
invoice by ING USA.
A-1
