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EXECUTION COPY
TRANSITION SERVICES AGREEMENT
Between
XXXX XXXXX LIFE INSURANCE COMPANY
and
SUNAMERICA LIFE INSURANCE COMPANY
Dated: March 31, 1997
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TABLE OF CONTENTS
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ARTICLE 1 APPOINTMENT OF JALIC; SERVICES AND AUTHORITY.................................................. 2
1.1 Engagement........................................................................... 2
1.2 General Description of the Services.................................................. 2
1.3 Performance by Affiliates............................................................ 3
1.4 Controlled Disbursement and Income Accounts.......................................... 3
1.5 Monthly Accounting................................................................... 4
1.6 Maintenance of Books and Records..................................................... 4
1.7 Claims-Payment Instructions.......................................................... 6
1.8 Complaint-Handling Procedure......................................................... 6
1.9 Filings.............................................................................. 7
ARTICLE 2 COMPENSATION; PAYMENT......................................................................... 7
2.1 Fee.................................................................................. 7
2.2 Invoice; Payment..................................................................... 7
2.3 Disputes............................................................................. 7
ARTICLE 3 TRANSITION PERIOD............................................................................. 9
ARTICLE 4 NO HIRE....................................................................................... 9
ARTICLE 5 TERM AND TERMINATION.......................................................................... 10
5.1 Term................................................................................. 10
5.2 Termination for Breach............................................................... 10
5.3 Termination for Receivership......................................................... 10
ARTICLE 6 REPRESENTATIONS............................................................................... 11
ARTICLE 7 INDEPENDENT CONTRACTOR........................................................................ 11
ARTICLE 8 FORCE MAJEURE................................................................................. 11
ARTICLE 9 HOLD HARMLESS................................................................................. 12
ARTICLE 10 MISCELLANEOUS................................................................................. 13
10.1 Notices.............................................................................. 13
10.2 Entire Agreement..................................................................... 15
10.3 Amendments........................................................................... 15
10.4 Waivers.............................................................................. 16
10.5 Governing Law........................................................................ 16
10.6 Arbitration.......................................................................... 17
10.7 Certain Definitions.................................................................. 18
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TABLE OF CONTENTS
(cont'd)
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10.8 Binding Effect; Assignment; Third Party Beneficiaries................................ 18
10.9 Severability......................................................................... 18
10.10 Headings............................................................................. 19
10.11 Counterparts......................................................................... 19
10.12 Further Assurances................................................................... 19
SCHEDULES:
Schedule 1.1 - Services
Schedule 2.1 - Compensation of JALIC
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TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT (the "Agreement") dated March 31, 1997
(the "Effective Date") between Xxxx Xxxxx Life Insurance Company, a Minnesota
corporation ("JALIC"), and SunAmerica Life Insurance Company, an Arizona
Corporation (the "Company").
WHEREAS, pursuant to an Asset Purchase and Sale Agreement dated
November 29, 1996 (the "Asset Purchase Agreement") between JALIC and the
Company, JALIC is selling to the Company certain assets used in JALIC's business
of issuing, selling and administering annuity policies and related activities in
the United States other than the State of New York;
WHEREAS, pursuant to an Indemnity Reinsurance Agreement between JALIC
and the Company dated concurrently herewith (the "Indemnity Reinsurance
Agreement") JALIC has ceded on a 100% coinsurance basis all of JALIC's Insurance
Liabilities arising under the Annuity Contracts and Additional Policies (as
defined in the Indemnity Reinsurance Agreement); after the Closing Date pending
assumption of the Annuity Contracts and the Additional Policies as contemplated
in the Assumption Reinsurance Agreement between JALIC and the Company dated
concurrently herewith (the "Assumption Reinsurance Agreement");
WHEREAS, certain of the Annuity Contracts and Additional Policies may
become a Novated Contract (as defined in the Assumption Reinsurance Agreement;
the Annuity Contracts, the Additional Policies and the Novated Contracts are
hereinafter referred to as the "Policies") prior to their transition to the
Company and/or their conversion from JALIC's administration system to the
Company's administration system; and
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WHEREAS, the Company desires JALIC to provide to the Company on an
interim basis technical and administrative services, assistance and support with
respect to the Policies.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and other good, valuable and
sufficient consideration including the consideration provided hereunder, the
receipt of which is hereby acknowledged, the Company and JALIC (collectively,
the "Parties" and, sometimes individually a "Party"), intending to be legally
bound, hereby agree as follows:
ARTICLE 1
APPOINTMENT OF JALIC; SERVICES AND AUTHORITY
1.1 Engagement. The Company hereby engages JALIC to perform and provide
the technical and administrative service, assistance and support functions
described in Schedule 1.1 attached hereto (the "Services"). JALIC hereby accepts
such appointment.
1.2 General Description of the Services. The purpose of this Agreement
is to set forth the terms upon which JALIC shall provide to the Company the
Services on an interim basis in order to permit the Company the opportunity to
obtain alternative sources of supply of the Services. In general, the Services
shall be consistent with the comparable services provided by JALIC with respect
to the Policies immediately prior to the date hereof; provided, however that the
Company shall have the discretion to require JALIC to make such changes to such
Services, at the Company's sole cost and expense, as the Company deems necessary
to be provided in a manner that is reasonable and consistent with the current
prevailing standards of the life insurance industry or applicable Law.
1.3 Performance by Affiliates. The Parties recognize that the Services
may include services which, by their nature, are more effectively to be provided
by Affiliates of JALIC.
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Subject to the next sentence of this Section 1.3, JALIC shall, to the extent
required in order for its Affiliates to provide such Services, cause its
Affiliates to provide such Services hereunder as if such Affiliates were
themselves parties hereto. In connection with the provision of such Services,
JALIC's Affiliates shall be entitled, as if such Affiliates were themselves
parties hereto, to the benefits of (i) the limitations on liability set forth
herein and (ii) the limitations on the obligation to provide Services set forth
herein.
1.4 Controlled Disbursement and Income Accounts. (a) JALIC shall
establish a controlled disbursement account or accounts (the "Controlled
Disbursement Account") for purposes of making any and all payments to
Policyholders in the performance of the Services by JALIC hereunder, including,
but not limited to, all items set forth in Section 3.3 of the Indemnity
Reinsurance Agreement. The Controlled Disbursement Account shall be funded by
the Company during the term of this Agreement in a fashion which will enable
JALIC to make all such payments to Policyholders on a timely basis consistent
with applicable Law and, to the extent not inconsistent with applicable Laws,
the standards for timely payment used by JALIC immediately prior to the date
hereof. The Company shall be entitled, to the extent permitted by Section 2.1(b)
of the Trust Agreement, dated concurrently herewith, by and among the Company,
JALIC and Bankers Trust Company, to withdraw funds from the Trust in order to
fund the Controlled Disbursement Account.
(b) JALIC shall establish an income account (the "Income
Account") for purposes of collecting all income received by JALIC with respect
to Policies including, but not limited to, premiums received and investment
income. JALIC shall promptly deposit all such received income into the Income
Account. The balance of the Income Account shall be reflected on the Monthly
Accounting provided under Section 1.5 below.
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1.5 Monthly Accounting. For the Term (as defined in Article 3), JALIC
shall provide the Company with a monthly accounting for the period beginning on
the 22nd day of the previous month and ending on the 21st day of such month (the
"Monthly Accounting") relating to the Policies no later than ten (10) Business
Days following the end of the related calendar month. The Monthly Accounting
will contain such information as is set forth on Schedule 1.5 hereto, including
the amount of any income deposited in the Income Account and the amount of any
Fees. Schedule 1.5 shall also include a statement of monthly reserves for GAAP
and SAP. The first Monthly Accounting shall be provided to the Company no later
than forty-five (45) days after the date hereof and the final Monthly Accounting
shall be provided to the Company no later than ten (10) Business Days after the
expiration of the Term. If any Monthly Accounting reflects a balance due the
Company, JALIC shall pay such balance, in cash, contemporaneously with the
delivery of the Monthly Accounting to the Company. If the Monthly Accounting
reflects a balance due to JALIC, the Company shall pay such balance, in cash, to
JALIC within 10 Business Days after receiving the Monthly Accounting.
1.6 Maintenance of Books and Records. (a) For the Term, JALIC shall
maintain books and records of all transactions pertaining to the Policies,
including, but not limited to, any disbursement requests submitted in respect of
the Policies and any documents relating thereto, any material communications
relating to any Policy, any material communication concerning any Policy with
any regulatory authority, complaint logs and all data used by JALIC in the
performance of services required under this Agreement. These books and records
shall be maintained, in all material respects, in accordance with any and all
applicable Laws. All such books and records pertaining to a Policy shall be the
property of the Company. JALIC shall (i) allow the Company, upon reasonable
prior notice and during regular business hours, through its
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employees and other Representatives, at the Company's expense to examine and
make copies of any books and records retained by JALIC within its possession or
control (which for purposes of this section shall be defined as the ability to
cause delivery to the Company or access by the Company) and furnish the Company
with such financial and reporting data and other information with respect to the
Policies, the Third Party Administration Agreements, Assigned Contracts and the
Related Agreements as the Company may from time to time reasonably request, to
the extent they relate to the Policies, for any reasonable business purpose,
including, without limitation, the preparation or examination of Tax Returns,
regulatory filings and financial statements and the conduct of any Action,
whether pending or threatened, at JALIC's offices of other facilities or
properties and (ii) maintain such books and records for the Company's
examination and copying. Access to such books and records shall be at the
Company's expense, may not unreasonably interfere with JALIC's or any successor
company's business operations and the Company shall reimburse JALIC for all
reasonable out-of-pocket expenses incurred by JALIC in copying such records.
Except for such books and records as may be required or permitted to be
maintained by JALIC pursuant to the Asset Purchase Agreement, upon expiration of
the Term, JALIC shall deliver to the Company all books and records pertaining to
the Policies.
(b) JALIC shall back up and maintain its computer files used
in the performance of the Services hereunder in the same manner that JALIC
backed up and maintained its computer files relating to Policies prior to the
date hereof.
(c) JALIC shall maintain facilities and procedures for
safekeeping all records used in the performance of Services under this Agreement
of the same kind used to safekeep JALIC'S own Records.
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(d) Each Party and its Representatives may audit and review
the other's records relating to the Services provided hereunder during
reasonable business hours and upon reasonable advance notice; provided, however,
that such audit or review may be postponed during any such period if it will be
unreasonably disruptive to the Party being audited or reviewed.
1.7 Claims-Payment Instructions. JALIC at its own cost will perform
during the Term claims administration and processing of the Policies, including,
without limitation, review, investigation, adjustment, settlement, defense and
payment of claims, special investigation and anti-fraud compliance, and
preparation of any report required by regulatory authorities concerning the
foregoing Services and will, in connection with such claims administration,
retain, at its sole discretion and cost, any outside investigation firms,
adjusters, attorneys or other professionals that the Company deems necessary in
the adjustment of such claims. In regards to payment of claims regarding the
Policies, JALIC shall be entitled to rely on the express, written contractual
terms of the Policies. If a claim is presented in respect of a Policy that JALIC
in good faith disputes, JALIC shall consult with the Company before paying such
claims. If, after such consultation, JALIC and the Company disagree as how to
resolve a claim, JALIC shall follow the instruction of the Company and JALIC
shall be held harmless and fully indemnified in following such instructions of
the Company.
1.8 Complaint-Handling Procedure. The Parties will cooperate with each
other in providing information necessary to respond to any inquiries and
complaints concerning the Policies. JALIC shall answer all inquiries and
complaints received by it concerning any Policy. All inquiries and complaints
concerning the Policies received by the Company with respect to a Policy shall
be immediately forwarded by facsimile or overnight mail to a contact person
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designated by JALIC for reply. Initially such contact person shall be Xxxxxxx X.
Xxxxxxxxxxxx. JALIC shall be solely responsible for maintaining any complaint
files, complaint registers or other reports of any kind, which are required to
be maintained under applicable Laws. JALIC shall also be responsible for
preparing and submitting any other complaint filings as required by applicable
laws.
1.9 Filings. JALIC shall handle all compliance and regulatory matters
relating to the administration of Policies, including monitoring changes in
applicable Laws, implementing the appropriate and necessary changes to forms and
rates as required by applicable Laws, filing and refiling forms and rates as
required by applicable Laws, and preparing and filing all reports and other
filings required by applicable Laws. JALIC shall use its reasonable efforts to
provide copies of all reports and filings with respect to a Policy required to
be made with any governmental entity to the Company.
ARTICLE 2
COMPENSATION; PAYMENT
2.1 Fee. In consideration of the performance and provision of the
Services and in consideration of the other obligations of JALIC to the Company
hereunder, the Company shall pay to JALIC a fee determined in accordance with
Schedule 2.1 attached hereto (a "Fee").
2.2 Invoice; Payment. The Fee shall be set forth in the Monthly
Accounting and shall be settled in accordance with Section 1.5 hereof. The
Monthly Accounting shall be delivered to the Controller of the Company and
accompanied by a certification from a senior financial officer of JALIC
certifying the policy count and accuracy of the calculations of the Fee.
2.3 Disputes. (a) If within 90 days following the end of the Term, the
Company notifies JALIC that it questions all or any part of any of the Fees paid
hereunder, JALIC shall,
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at the request of the Company, provide to the Company within 30 days after
receipt of such request a written explanation, which explanation shall be signed
and certified by a senior financial officer of JALIC, explaining the matter or
matters in question in reasonable detail sufficient to permit the Company to
verify the accuracy of such Fee. Pending receipt and review of such explanation,
the Company shall pay the full amount of any balance set forth on such Monthly
Accounting to JALIC when due. Upon receipt of such explanation, the Company
shall have 60 days in which to deliver to JALIC a written notice of disagreement
specifying in reasonable detail the nature and extent of the disagreement.
(b) If the Company and JALIC are unable to resolve any
disagreement with respect to the Fee within 30 days after JALIC receives a
timely notice of disagreement, the items of disagreement alone shall be referred
for final determination to the U.S. national office of Price Waterhouse LLP or,
if such firm is unable or unwilling to make such final determination, to such
other independent accounting firm as the Parties shall mutually designate. The
firm making such determination is referred to herein as the "Independent Party."
The Fee shall be deemed to be binding on the Company and JALIC upon the earlier
to occur of (i) the Company's failure to deliver to JALIC a notice of
disagreement within 30 days after its receipt of such written explanation
prepared by JALIC, (ii) resolution of any disagreement by mutual agreement of
the Parties after a timely notice of disagreement has been delivered to JALIC,
or (iii) notification by the Independent Party of its final determination of the
items of disagreement submitted to it. The fees and disbursements of the
Independent Party shall be borne equally, one-half by JALIC and one-half by the
Company. If pursuant to this Section 2.3, it is ultimately determined that JALIC
owes the Company any amount, JALIC shall pay such amount to the Company in cash
within 10 days of such determination along with interest calculated at a rate
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equal to the three month LIBOR rate plus 25 basis points on the amount due from
the date on which the Company paid or settled the Fee which is the subject of
the dispute.
ARTICLE 3
TRANSITION PERIOD
Subject to Article 5 hereof, the Company agrees to engage JALIC for the
provision of the Services for a period of nine months (the "Term"). The Term may
be extended or reduced by mutual written agreement of the Parties.
ARTICLE 4
NO HIRE
4.1 Without the prior written consent of JALIC, during the Term of this
Agreement and for a period of two years thereafter the Company shall not
directly or indirectly solicit any employee of JALIC to leave the employ of
JALIC, and without the prior written consent of JALIC the Company shall not
knowingly hire any person who was an employee of JALIC during the 180 days
preceding the date of hire of such person by the Company. Notwithstanding the
foregoing, the Company may directly or indirectly solicit for employment any
employee of JALIC whose primary business location is not in Miami, Florida at
any time and may hire any such employee any time after all Policies of said site
outside of Miami, Florida have been transitioned to the Company and/or converted
onto the Company's administration system (an "Off-site Transition"); provided,
however, that the Company shall give JALIC at least 65 days prior written notice
of such Off-site Transition.
4.2 Without the prior written consent of the Company, during the Term
and for a period of two years thereafter JALIC shall not directly or indirectly
solicit any employee of the Company to leave the employ of the Company, and
without the prior written consent of the
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Company, JALIC shall not hire any person who was an employee of the Company
during the 180 days preceding the date of hire of such person by JALIC.
ARTICLE 5
TERM AND TERMINATION
5.1 Term. Unless sooner terminated pursuant to the provisions of this
Article 5, this Agreement shall remain in effect until the end of the Term;
provided, however, that this Agreement shall terminate with respect to each
Policy that has been transitioned to the Company and/or converted over to the
Company's administration system.
5.2 Termination for Breach. In the event of a breach by either Party of
any obligation of any provision of this Agreement, the non-breaching Party shall
give written notice of breach to the breaching Party, detailing the nature of
such breach in sufficient detail to allow the breaching party to cure, if cure
is possible. If such breach is not cured by the breaching Party within 15 days
after such notice of breach, then the non-breaching Party may terminate this
Agreement by giving notice of termination to the breaching Party. Such
termination shall be effective on notice of termination by the non-breaching
Party to the breaching Party.
5.3 Termination for Receivership. In the event of a receivership or
insolvency of either Party, this Agreement may be terminated immediately by the
other Party upon written notice.
5.4 Termination Upon Notice. The Company may terminate this Agreement
for any reason after the first 25 days of the Term upon the giving of 65 days
prior written notice to JALIC in accordance with Section 10.1 hereof.
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ARTICLE 6
REPRESENTATIONS
THERE ARE NO REPRESENTATIONS OR WARRANTIES BY JALIC OR ITS
AFFILIATES WITH RESPECT TO THE SERVICES, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE ASSET PURCHASE AGREEMENT AND THE ANCILLARY AGREEMENTS. NO
REPRESENTATION OR WARRANTY SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW,
INCLUDING, WITHOUT LIMITATION, WARRANTY OF MERCHANTABILITY OR WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE AS TO THE SERVICES.
ARTICLE 7
INDEPENDENT CONTRACTOR
JALIC and its Affiliates shall be independent contractors to the
Company and its Affiliates with respect to the performance of the Services
hereunder. Nothing contained in this Agreement shall make JALIC, its Affiliates
or their employees the employees of the Company.
ARTICLE 8
FORCE MAJEURE
JALIC and its affiliates shall not be liable for its or their failure
to perform hereunder to the extent that such performance is made impracticable,
delayed or prevented, in whole or in part, due to any acts of God; fires; wars;
Laws or Orders, whether valid or invalid (including, without limitation,
requisitions, allocations and price adjustment restrictions) or inability to
obtain or unavoidable delay in obtaining necessary power. JALIC and its
affiliates shall use commercially reasonable efforts (which shall be
substantially similar to those used by JALIC immediately prior to the date
hereof) to minimize the likelihood of any damage, loss of data,
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delay or error resulting from such occurrence beyond its or their control. If
JALIC or its affiliates fails to perform hereunder as a result of any occurrence
described in the preceding sentence, JALIC shall (i) give written notice to that
effect to Company within 10 days after such occurrence together with a statement
setting forth reasonably full particulars concerning such occurrence and (ii)
during the period any Service required to be provided hereunder cannot be
provided as a result of such occurrence, use reasonable efforts to remedy such
occurrence. To the extent required by any such occurrence, the performance by
JALIC or its Affiliates hereunder shall be suspended during the continuance of
any such occurrence and this Agreement shall otherwise remain unaffected (except
for the Company's obligation to pay the Fees, which shall also be suspended). If
such occurrence is remedied during the time that any Service affected by such
occurrence is required to be provided under this Agreement, JALIC or its
Affiliates shall promptly notify Company and any such suspension shall end.
ARTICLE 9
HOLD HARMLESS
The Company shall indemnify and hold JALIC and each of its Affiliates
harmless from any and all damages, claims, suits, actions, causes of action,
proceedings, investigations, losses, liabilities, assessments, judgments,
deficiencies and expenses (including, without limitation, reasonable legal,
accounting and other professional expenses) ("Liabilities") asserted against or
incurred or sustained by JALIC or any of its Affiliates relating to, associated
with or arising out of providing the Services hereunder, except to the extent
such Liabilities resulted from the negligence, bad faith or willful misconduct
of JALIC or its Affiliates. JALIC shall indemnify and hold the Company and its
Affiliates harmless from any and all Liabilities directly arising from JALIC's
or its Affiliates breach of any provision of this Agreement, including acts of
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negligence, bad faith or willful misconduct by JALIC or its Affiliates in
providing the Services. The indemnification provisions under this Article 9
shall survive the Term for all Liabilities arising from omissions or acts
committed during the Term.
ARTICLE 10
MISCELLANEOUS
10.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally (by courier or
otherwise), sent by certified, registered or express mail, postage prepaid and
return receipt requested, or transmitted by facsimile (with a copy of such
notice or other communication and a confirmation of transmission sent by
certified, registered, or express mail, postage prepaid and return receipt
requested no later than the close of business on the next Business Day following
such transmission) and shall be addressed as follows:
when the Company is to be notified:
SunAmerica Life Insurance Company
0 XxxXxxxxxx Xxxxxx, Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
With a copy to:
SunAmerica Life Insurance Company
0 XxxXxxxxxx Xxxxxx, Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Controller
Facsimile No.: (000) 000-0000
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and
O'Melveny & Xxxxx
1999 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
when JALIC is to be notified:
Xxxx Xxxxx Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, XX 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
With copies to:
Xxxx Xxxxx Financial Corporation
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, XX 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Xxxxx Xxxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
A Party may, by notice given in accordance with this Section 10.1 to the other
Party, designate another address or Person to which notices required or
permitted to be given pursuant to this Agreement shall thereafter be
transmitted. Each notice transmitted in the manner described in this Section
10.1 shall be deemed to have been given, received and become effective for all
purposes at the time it shall have been (i) delivered to the addressee as
indicated by the return receipt (if transmitted by mail), transmitted to the
addressee (if transmitted by facsimile and subject to delivery of the mailed
copy thereof) or the affidavit of the messenger (if transmitted
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by personal delivery), or (ii) presented for delivery to the addressee as so
indicated during normal business hours, if such delivery shall have been refused
for any reason.
10.2 Entire Agreement. This Agreement (including the Schedules attached
hereto), the Asset Purchase Agreement (including the Ancillary Agreements and
the Annex, Exhibits and Schedules attached thereto), the Assumption Reinsurance
Agreement and the Indemnity Reinsurance Agreement contain the entire agreement
and understanding between the Parties with respect to the subject matter hereof
and cancels and supersedes all of the previous or contemporaneous agreements,
representations, warranties and understandings, whether written or oral, by or
between the Parties with respect to the subject matter hereof. Nothing contained
in this Agreement or any of the Schedules hereto shall constitute or be
interpreted or construed as an admission by any Party or any of its Affiliates
of liability to third parties, whether under any Laws or otherwise, or as an
admission that any Party or any of its Affiliates are in violation of or have
ever violated any such Laws. Notwithstanding anything contained in this Section
10.2 to the contrary, any inconsistencies between this Agreement and the
Indemnity Reinsurance Agreement shall be governed by the terms of the Indemnity
Reinsurance Agreement. In the event of any conflict between this Agreement, the
Indemnity Reinsurance Agreement and the Asset Purchase Agreement as to the
rights or obligations of JALIC or the Company, the Asset Purchase Agreement
shall control. In the event of any ambiguity in this Agreement as to the rights
or obligations of JALIC or the Company, the Asset Purchase Agreement shall
control.
10.3 Amendments. No addition to, and no cancellation, renewal,
extension, modification or amendment of, or approvals under, this Agreement
shall be binding upon a Party unless such addition, cancellation, renewal,
extension, modification, amendment or approval is set forth in a written
instrument which states that it adds to, amends, cancels, renews or extends
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this Agreement or grants an approval hereunder and which is executed and
delivered on behalf of each Party by an officer of, or attorney-in-fact for,
such Party.
10.4 Waivers. No waiver of any provision of this Agreement shall be
binding upon a Party unless such waiver is expressly set forth in a written
instrument which is executed and delivered on behalf of such Party by an officer
of, or attorney-in-fact for, such Party. Such waiver shall be effective only to
the extent specifically set forth in such written instrument. Neither the
exercise (from time to time or at any time) nor the delay or failure (at any
time or for any period of time) to exercise any right, power or remedy shall
operate as a waiver of, the right to exercise, or impair, limit or restrict the
exercise by, any Party of any such right, power or remedy any other right, power
or remedy at any time and from time to time thereafter. No waiver of any right,
power or remedy of a Party shall be deemed to be a waiver of any other right,
power or remedy of such Party or shall, except to the extent so waived, impair,
limit or restrict the exercise of such right, power or remedy.
10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ITS PRINCIPLES OF CONFLICTS OF LAWS. Each Party consents and submits to the
non-exclusive personal jurisdiction of any federal court in the State of
Delaware in respect of any proceeding for the sole purpose of injunctive relief
or to enforce an arbitration award under Section 10.6 hereof. Each Party
consents to service of process upon it with respect to any such proceeding by
registered mail, return receipt requested, and by any other means permitted by
applicable Laws. Each Party waives any objection that it may now or hereafter
have to the laying of venue of any such proceeding in federal court in the State
of
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Delaware and any claim that it may now or hereafter have that any such
proceeding in any such court has been brought in an inconvenient forum.
10.6 Arbitration. The Parties acknowledge and agree that the
transactions contemplated herein substantially affect and impact interstate
commerce. Therefore, all disputes or differences between JALIC and the Company
arising under or which are related to this Agreement upon which an amicable
understanding cannot be reached within 30 days shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, except as hereinafter provided, and judgment upon the award entered
by the Arbitrators (as defined below) may be entered in any court having
jurisdiction thereof. The Arbitrators provided for herein shall construe this
Agreement in light of the prevailing custom and practices for transactions of a
similar nature in the insurance industry. The "Arbitrators" shall consist of one
neutral arbitrator (or as provided below, three neutral arbitrators). The
Parties agree that the arbitration, if implemented under this Agreement, shall
be held at a site selected by the Arbitrators. The Parties agree to arbitrate
within 90 days following the transmittal of written demand of either Party to
arbitrate any dispute arbitrable under this Agreement. The Parties will in good
faith, within 15 days following notice of written demand to arbitrate attempt to
agree on a single Arbitrator. If the Parties cannot within 15 days thereafter
agree on a single Arbitrator, each of the Parties shall appoint an Arbitrator,
notifying the other Party of the name and address of such Arbitrator. The
Arbitrators appointed by each Party shall agree upon and appoint a third neutral
Arbitrator. If either Party shall fail to appoint an Arbitrator as herein
provided, or should the two Arbitrators so named fail to select the third
Arbitrator within 30 days after their appointment, then, in either event, the
President of the American Arbitration Association or its successor shall appoint
such second and/or third Arbitrator. A decision of a
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majority of the Arbitrators shall be final and binding and there shall be no
appeal therefrom. The Arbitrators shall within 45 days after the last hearing
enter an award and the award shall be supported by a written opinion. The fees
of the Arbitrators and the direct costs of the arbitration shall be shared
equally by the Parties; all other costs of the respective Parties, including
without limitation fees and expenses of the respective Party's attorneys,
witnesses and discovery shall be paid by the respective Party, except to the
extent that the Arbitrators otherwise direct based on the equities of the
situation. The arbitration shall be held in New York, New York, unless otherwise
agreed between the Parties.
10.7 Certain Definitions. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Asset Purchase
Agreement.
10.8 Binding Effect; Assignment; Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns. Except as otherwise provided
herein, neither JALIC nor the Company shall assign any of its rights or delegate
any of its duties hereunder (in whole or in part and by operation of law or
otherwise) without the prior written consent of the other Party hereto. Any
other assignment of rights or delegation of duties under this Agreement by a
Party without the prior written consent of the other Party, if such consent is
required hereby, shall be void. No Person (including, without limitation, any
employee of a Party) shall be, or be deemed to be, a third party beneficiary of
this Agreement.
10.9 Severability. If any provision of this Agreement shall hereafter
be held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason, (i) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as
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expressed in, and the benefits to the Parties provided by, this Agreement or
(ii) if such provision cannot be so reformed, such provision shall be severed
from this Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
10.10 Headings. The headings in this Agreement have been inserted for
convenience of reference only, and shall not be considered a part of this
Agreement and shall not limit, modify or affect in any way the meaning or
interpretation of this Agreement.
10.11 Counterparts. This Agreement may be executed by the Parties in
any number of counterparts, each of which when so executed and delivered shall
constitute an original instrument, but all such counterparts shall together
constitute one and the same instrument. This Agreement shall become effective
and be deemed to have been executed and delivered by all of the Parties at such
time as counterparts shall have been executed and delivered by both of the
Parties, regardless of whether each of the Parties has executed the same
counterpart. It shall not be necessary when making proof of this Agreement to
account for any counterparts other than a sufficient number of counterparts
which, when taken together, contain signatures of both of the Parties.
10.12 Further Assurances. Subject to the provisions of this Agreement,
JALIC and the Company will use their commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws
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to provide the Services required herein. With regard to any matters not
expressly stated herein, the Parties agree to furnish such information, to
execute such additional documents, and to cooperate with each other as may be
reasonably necessary to carry out the purposes of this Agreement, in accordance
with industry practice for transactions of this kind. If either Party becomes
aware that any Action has been or is about to be initiated with respect to the
Policies, or any other matter reasonably related thereto, it shall inform the
other Party as soon as practicable. The Parties agree to cooperate in furnishing
to each other any files or other information needed by the other to respond to
any Action or threatened Action.
IN WITNESS WHEREOF, the Parties have executed this Agreement.
XXXX XXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President and CFO
----------------------------------
SUNAMERICA LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Title: Senior Vice President
----------------------------------
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Schedule 1.1
SERVICES
I. UNDERWRITING SERVICES
Underwriting Services with respect to each new Additional Policy shall
consist of those services and only those services JALIC would customarily render
had JALIC written such Additional Policies for its own account. The manner and
means for providing such services shall be left to JALIC's discretion; provided,
however, if JALIC is not providing Services consistent with the current
prevailing standards of the life insurance industry, that the services shall be
consistent with the comparable services provided by JALIC with respect to the
Policies prior to the date hereof; and further provided, however, that the
Company shall have the discretion to require JALIC to make such changes to such
Services, at the Company's sole cost and expense (in accordance with item III
below), as the Company deems necessary to be provided in a manner that is
reasonable and consistent with the current prevailing standards of the life
insurance industry.
II. ADMINISTRATIVE SERVICES
Administrative Services with respect to the Policies not yet
transitioned to the Company as conducted by JALIC shall consist of those
services, and only those services, JALIC would customarily render had JALIC
retained the Policies (other than an enhancement to any system or otherwise with
regard to the provision of the Services) provided, however that, if JALIC is not
providing Services consistent with the current prevailing standards of the life
insurance industry, the Company shall have the discretion to require JALIC to
make such changes to such Services, at the Company's sole cost and expense (in
accordance with item III below), as the Company deems necessary to be provided
in a manner that is reasonable and consistent with the current prevailing
standards of the life insurance industry. Such services shall include:
(a) all Policyholder services relating to the Policies including but
not limited to the following:
1. Billing and collection of premiums;
2. Payment of claims;
3. Handling of Policyholder service requests, inquiries
and complaints under the Policies;
4. Preparation of quarterly financial statement data
(within ten business days after the end of a calendar
quarter) and annual financial statement data (within
thirty calendar days after the end of the fiscal
year), for inclusion in the Company's applicable
financial statements;
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5. Administration of any agreements providing for the
payment of commissions relating to the Policies;
6. Provision of the Monthly Accounting pursuant to
Section 1.5;
7. Payment of agent commissions due and payable;
8. Underwriting and issuing any Additional Policies;
9. Preparation and mailing of quarterly and annual
statements to policyholders;
10. Relevant information to the Company regarding renewal
interest rates for Policies;
11. Provision of such other policyholder services on the
Policies as are reasonably required or requested by
the Company which have customarily been provided in
the past by JALIC; and
12. Implement any changes in the credited rates.
(b) All services performed by JALIC's or its Affiliate's employees
providing legal, compliance, actuarial, accounting, treasury, human resources
and data processing, including the preparation of financial and other relevant
reports but excluding any Services which would require payments to Persons other
than JALIC's or its Affiliate's employees, unless such payments are made to
other Persons who presently and regularly provide such services in the ordinary
course to JALIC; and
(c) JALIC shall assist the Company in obtaining consents from third
party licensors, if any, of the software set forth on Schedule 3.14 of the Asset
Purchase Agreement which is necessary for the transitioning of the Policies (the
cost of which shall be at the Company's sole cost and expense).
(d) The Parties acknowledge that (i) rate renewals shall be made no
more frequently than once per quarter, and (ii) no credited rate adjustments
with regard to any Policy shall be made during the 60 days prior to the
transitioning to the Company or the converting of such Policy to the Company's
administrative system. Subject to the terms of the Indemnity Reinsurance
Agreement, the Company shall have the sole and absolute discretion in setting
(i) the commissions rates for new and renewal Policies, subject to the terms and
conditions of the relevant commission agreements (including any notice
provisions contained therein) and (ii) the initial credited rates on Policies
after the Effective Date and any changes to the renewal credited rate on
Policies in force after the Effective Date.
III. EXTRAORDINARY SERVICES
Upon request of the Company and subject to the provisions of Section
1.2 of this Agreement, JALIC shall use commercially reasonable efforts to
provide to the extent readily available such additional services as the Company
may reasonably request. Such services to the extent readily available shall
consist of any services not covered by item I or II of this Schedule 1.1
including, without limitation, (i) all services provided in connection with the
changing by the Company of the commission rates for new and renewal Policies,
(ii) the enhancement of
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Services offered pursuant to items I and II above and (iii) to the extent JALIC
incurs any out-of-pocket or incremental cost or expense with respect thereto,
services provided in connection with the assumption of Policies, including,
without limitation, mailing assumption certificates in connection with the
assumption of the Policies.
IV. MORTGAGE SERVICING
JALIC shall provide such servicing with respect to Mortgage Loans in
which JALIC has acted as servicer immediately prior to the date hereof
consistent and comparable with the servicing provided by JALIC with respect to
such Mortgage Loans immediately prior to the date hereof. The Company and JALIC
shall simultaneously herewith enter into an Interim Servicing Agreement
regarding the servicing of mortgage loans.
V. TRANSITIONING SERVICES
JALIC shall cooperate with the Company and use commercially
reasonable efforts to effect an orderly transition to the Company and/or
conversion onto the Company's administrative system of the Policies as rapidly
and as smoothly as possible, and to do, or cause to be done, all things
necessary, proper or advisable in connection therewith. JALIC shall provide the
Company with copies of all databases, files, programs, job streams, accounting
and other records and information regarding the Policies and the service and
administration of the Policies when requested by the Company in machine readable
form reasonably acceptable to the Company. JALIC shall also provide the Company
upon request current information regarding production volume and policyholder
complaints and reasonable access, to all offices and other facilities and
properties of JALIC concerning the Policies and the administration thereof.
Services to be provided in connection with such transition and/or conversion
shall include, but not be limited to the following: providing the Company remote
and on-site access to JALIC's computers, providing mainframe to mainframe
connections between JALIC and the Company, providing technical support regarding
the Policies and the computer hardware and software systems and providing the
Company access to appropriate JALIC personnel.
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Schedule 2.1
COMPENSATION OF JALIC
For Underwriting Services: $80 per Policy issued during such month for
(Schedule 1.1 - Item I) which JALIC provided underwriting services;
provided that with respect to the first
calendar month with respect to which
compensation is being calculated contracts
issued after March 21, 1997 and prior to the
beginning of such month shall be deemed as
having been issued in such first month. In
addition, the payment for underwriting
services contemplated by this clause shall be
payable only with respect to policies issued
during the term of the Transition Services
Agreement.
For Administrative Services: $4 multiplied by the average number of
(Schedule 1.1 - Item II) Policies administered by JALIC in force
during such month, which average shall be
based upon the mean number of contracts in
force at the end and at the beginning of each
fiscal month of JALIC (a fiscal month being
the period beginning on the 22nd day of the
calendar month preceding the calendar month
with respect to which the calculation of
compensation is being made and ending on the
21st day of the calendar month with respect
to which the calculation of compensation is
being made), adjusted for significant
transfers occurring during such month.
For Extraordinary Services: Direct costs, being 150% of the daily or
(Schedule 1.1 - Item III) hourly salary or wages per day for the
persons performing services not covered
above, which services are provided during the
month with respect to which the calculation
of compensation is being made, plus any
actual out-of-pocket expenses incurred by
JALIC in performing such services.
For Mortgage Servicing: Compensation is provided in the Interim
(Schedule 1.1 - Item IV) Servicing Agreement.
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For Transitioning Services: If JALIC incurs any reasonable direct,
(Schedule 1.1 - Item V) out-of- pocket or incremental costs or
expenses, including, but not limited to, the
payment of reasonable overtime for JALIC
employees, the hiring of temporary employees
or the retention of employees whose
employment would otherwise have been
terminated (and the Company has been
consulted with regard thereto prior to such
intended termination), in providing any of
the Transitioning Services, JALIC shall be
reimbursed for such costs and expenses. For
all Transitioning Services in which no such
costs or expenses are incurred by JALIC,
there will be a charge for such Transitioning
Services.
ii
