EXHIBIT 1.A (8) (d)
ADMINISTRATION SERVICES AGREEMENT
between
Security Life of Denver Insurance Company
and
Financial Administrative Services Corporation
AGREEMENT made as of the 21st day of November, 1994 by and between Financial
Administrative Services Corporation ("FASCorp"), of 0000 Xxxx Xxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx, 00000, and Security Life of Denver Insurance Company
("SLD"), of 0000 Xxxxxxxx, Xxxxxx, Xxxxxxxx, 00000-0000.
WHEREAS, FASCorp shall provide data processing and other services to SLD
pursuant to the terms and conditions of this Agreement and such other terms and
conditions as SLD and FASCorp may agree in written amendments to this Agreement,
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
SECTION 1 Terms of Appointment
1.01 Subject to the conditions set forth in this Agreement, SLD hereby
appoints FASCorp as Administrative Services Agent.
1.02 FASCorp agrees to provide at its expense the necessary facilities,
equipment, and personnel to perform its duties and obligations
hereunder in accordance with accepted industry practice, and in full
compliance with the rules and regulations of state insurance
departments, and other regulatory bodies with jurisdiction over SLD,
SLD Equities, Inc. and FASCorp.
1.03 Beacon Software Development Company ("Beacon") will provide the
LifeCAD software package ('LifeCAD') to SLD to support the Contracts
for which recordkeeping services will be provided by FASCorp
hereunder.
1.04 SLD will facilitate the delivery by Beacon to FASCorp of LifeCAD and
arrange for training by Beacon of FASCorp on LifeCAD.
1.05 FASCorp will provide the Unit Value Calculator software package (the
"Unit Value Calculator") and build a connection between LifeCAD and
the Unit Value Calculator to generate all the unit values as well as
the accounting in support of the Contracts for which administrative
and recordkeeping services will be provided by FASCorp hereunder.
1.06 SLD will provide necessary training of FASCorp on SLD's Contracts.
1.07 FASCorp agrees that it will perform, at the direction of SLD, those
Administrative Services as set forth in Exhibit B attached, which may
be amended by mutual agreement from time to time, and which is
incorporated into this Agreement by this reference. FASCorp shall have
only the authority necessary or incident to the performance of those
services expressly set forth in this Agreement or in Exhibit B and
shall have no other express or implied authority or right to act on
behalf of SLD or to bind SLD with regard to any statement,
representation or undertaking. FASCorp shall have no authority to
alter, amend or waive any contractual provision on behalf of SLD
without SLD's express written authorization. FASCorp shall be limited
to act only in the capacity in which it is licensed.
SECTION 2 Term
2.01 Subject to termination as hereinafter provided, this Agreement shall
remain in full force and effect for a period of five (5) years, the
initial term of the Agreement. This Agreement shall be renewed
automatically for additional successive terms of eighteen (18) months
at the end of the initial term and the end of each renewal term,
subject to the provisions of Section 9.02, unless terminated as herein
provided.
SECTION 3 Fees and Expenses
3.01 SLD shall pay to FASCorp such fees and charges as are set forth in
Exhibit A attached hereto and incorporated herein by reference.
3.02 SLD shall also reimburse FASCorp for all reasonable out-of-pocket
expenses listed in the attached Exhibit A, as may be incurred by
FASCorp in the performance of this Agreement.
3.03 FASCorp may impose a 1.5% per month late payment charge on balances of
fees, charges or expenses outstanding for over 45 days.
SECTION 4 Representations and Warranties of FASCorp
FASCorp represents and warrants to SLD as follows:
4.01 It is a corporation duly organized and in good standing under the laws
of the State of Colorado.
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4.02 It is empowered under applicable laws to enter into and perform the
services contemplated in this Agreement.
4.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform the services contemplated in the Agreement.
4.04 It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4.05 It has and will maintain a minimum capital and surplus of at least
$50,000 during the term of this Agreement. FASCorp will provide to SLD
within 30 days after execution of this Agreement, and thereafter at
SLD's request, a copy of its most recent audited financial statement.
SECTION 5 Representations and Warranties of SLD
SLD represents and warrants to FASCorp as follows:
5.01 It is a corporation duly organized and in good standing under the laws
of the State of Colorado.
5.01 It is empowered under the applicable laws to enter into and perform
this Agreement.
5.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
5.04 No policy or other form will be provided by SLD to be administered by
FASCorp unless it has been duly filed as necessary and approved by all
applicable state insurance departments and other regulatory bodies
with jurisdiction over SLD, and is in compliance with all federal and
state laws and regulations.
SECTION 6 Indemnification
6.01 FASCorp shall not be responsible for and SLD shall indemnify and hold
FASCorp harmless from and against, any and all costs, expenses,
losses, damages, charges, reasonable attorney's fees, payments and
liability, which may be asserted against FASCorp or for which it may
be held to be liable, arising out of or attributable to:
a. SLD's refusal or failure to comply with the terms of this Agreement,
or SLD's failure to act in a reasonable or customary manner in
connection
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with this Agreement, or which arise out of SLD's negligence or
misconduct or which arise out of the breach of any representation or
warranty of SLD hereunder;
b. Reliance on or use by FASCorp in accordance with the terms of this
Agreement such information and materials provided by or at the
direction of SLD and instructions or directions given by the
authorized individuals described in Exhibit C; or
c. Reliance by FASCorp on LifeCAD to function properly and to accurately
support SLD's Contracts.
d. Any failure by SLD to comply with Federal, state or local laws or
regulations with respect to the offering and/or sale of any insurance
products or securities.
e. Any matters associated with SLD or its Contracts or the sale of such
Contracts subject to this Agreement which are unrelated to the
services provided by FASCorp hereunder.
6.02 FASCorp shall be responsible for and shall indemnify and hold SLD
harmless from and against any and all losses, damages, costs, charges,
reasonable attorney's fees, payments, expenses and liability arising,
out of or attributable to FASCorp's refusal or failure to comply with
the terms of this Agreement, FASCorp's failure to act in a reasonable
manner in connection with this Agreement, any failure by FASCorp to
comply with federal, state or local regulations with respect to the
books and records maintained by FASCorp, or which arise out of
FASCorp's negligence or misconduct or which arise out of the breach of
any representation or warranty of FASCorp hereunder.
6.03 At any time FASCorp may apply to a person indicated on SLD's "Schedule
of Authorized Personnel" set forth in Exhibit C attached hereto and
incorporated herein by reference as a person authorized to give
instructions under this section with respect to any matter arising in
connection with this Agreement. FASCorp shall not be liable for, and
shall be indemnified by SLD, against any action taken or omitted by
FASCorp in good faith and in the exercise of due care and diligence in
reliance upon such instructions.
6.04 In the event malfunction of any FASCorp system causes an error or
mistake in any record, report, data, information or output under the
terms of this Agreement FASCorp shall at its expense correct and
reprocess such records, provided that SLD shall promptly notify
FASCorp in writing of such error or mistake in any
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record, report, data, information, or output received by SLD. Such
writing may be hand-delivered, sent by mail or courier or transmitted
by telefax.
6.05 If either party believes it is entitled to indemnification hereunder,
it shall, within five business (5) days of the commencement of any
action or threat of any action, give written notice to the other party
of any claim for which it believes it is entitled to indemnification;
provided, however, that the failure to provide timely notice shall not
relieve the indemnifying party of any liability which it may have to
the other party as long as such notice is not unreasonably withheld or
delayed.
The parties shall cooperate with each other concerning any defense and
give each other all information and assistance which either may
reasonably request in defending any matter hereunder.
6.06 The provisions of this Section shall survive termination of this
Agreement.
6.07 The provisions of this Section shall not be deemed to be a limitation
upon a party's right to injunction, specific performance or any other
legal or equitable remedy to which either party may be entitled by
virtue of this Agreement or to prevent any breach or threatened breach
of this Agreement.
6.08 IN NO EVENT AND UNDER NO CIRCUMSTANCES, HOWEVER, SHALL ANY PARTY UNDER
THIS AGREEMENT BE LIABLE TO THE OTHER PARTIES UNDER ANY PROVISION OF
THIS AGREEMENT FOR LOST PROFITS OR FOR EXEMPLARY, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
SECTION 7 Covenants of FASCorp
7.01 FASCorp shall establish and maintain facilities and procedures for the
safekeeping of check forms and facsimile signature imprinting devices,
if any, and all other documents, reports, records, books, files and
other materials relative to this Agreement.
7.02 It is expressly understood and agreed that all documents, reports,
records, books, files and other materials relative to this Agreement
shall be the sole property of SLD and SLD Equities and that such as
agent, during the effective terms property shall be held by FASCorp,
of this Agreement.
7.03 FASCorp shall maintain back-up computer files, as necessary, so long
as LifeCAD currently and continually allows FASCorp to maintain such
records. The purpose of back-up and recovery is to permit file
recovery in the event of destruction of
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normal processing files. SLD may review the procedures in effect and
inspect the storage facility upon demand. A copy of FASCorp's current
procedures is attached hereto as Exhibit F.
7.04 All charges or premiums received by FASCorp on behalf of SLD from
SLD's Lockbox Account shall be promptly remitted by FASCorp to the
person entitled to it or deposited in a fiduciary account. Any
payments received by FASCorp for insurance on behalf of SLD shall be
deemed received by SLD, shall be held in a separate SLD trust account
and shall be administered as set out in Exhibit B. Premium bills shall
direct premium payors to send premiums to a lock box as set forth in
Exhibit B.
7.05 No advertising or sales literature in connection with the Contracts
shall be utilized by FASCorp unless it has been approved in writing by
SLD prior to such use.
7.06 Except as specifically provided to the contrary in this Agreement,
FASCorp shall be responsible for providing all technical and
operational support, obtaining office space, purchasing all equipment
and paying all costs and expenses associated with its provision of
administration services to SLD hereunder, including, but not limited
to, all rents, salaries and other overhead expenditures.
7.07 If FASCorp receives any notice from any source (including, but not
limited to, the policy Owner or regulatory agency) of a lawsuit or
other legal or administrative hearing, or proceeding being brought
against SLD and involving the business administered for SLD by
FASCorp, or the threat of any such lawsuit, hearing or proceeding,
FASCorp shall immediately notify SLD and send a copy of all legal
documents, correspondence and other material relevant thereto which
FASCorp reasonably has access to: FASCorp agrees to cooperate fully
with SLD in connection with any suit, hearing or proceeding and shall
provide SLD with all books, records, documents and data requested by
SLD in connection therewith; provided, however, FASCorp shall be
entitled to review such requests with its counsel prior to furnishing
SLD with such materials so long as such review is done in a timely
manner.
7.08 FASCorp will conduct its business and performance obligations in
accordance with all applicable federal and state laws, rules and
regulations and in a manner which will not put SLD's or its
affiliates' registrations and licenses in any jeopardy of revocation
or suspension or cause SLD or any of its affiliates to sustain any
disciplinary action of any nature, subject only to any limitations to
which FASCorp may be subject due to the use of the LifeCAD system.
7.09 FASCorp acknowledges and agrees that all books and records maintained
by FASCorp in connection with the Contracts shall be maintained and
preserved in
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conformity with the requirements of Rules 17a-3 and 17a-4 of the
Securities Exchange Act of 1934 (the "1934 Act"), to the extent that
such requirements are applicable to the Contracts; that all such books
and records are maintained and held by FASCorp on behalf of SLD and
SLD Equities, whose property they are and shall remain. FASCorp
further acknowledges and agrees that all such books and records are at
all times subject to inspection by the Securities and Exchange
Commission ("SEC") in accordance with Section 17(a) of the 1934 Act,
and undertakes to permit examination of such books and records at any
time and from time to time during business hours by representatives or
designees of the SEC or National Association of Securities Dealers,
Inc., true, correct, complete and current hard copies of any or all or
any part of such books and records.
7.10 FASCorp acknowledges, covenants and agrees that it shall issue
payments, including commission payments to retail broker-dealers, on
behalf of and on the account(s) of SLD, as a purely ministerial
services for and on behalf of SLD Equities, and that the records in
respect of such payments shall be properly reflected by FASCorp on the
books and records maintained by it for SLD and SLD Equities.
7.11 FASCorp acknowledges, covenants and agrees that it will send a
confirmation for each transaction which constitutes the sale of a
security to the contract owner as required by applicable law,
regulation or rule in such form as required by applicable law,
regulation or rule.
7.12 FASCorp shall provide SLD with full and free access as reasonably
requested, during ordinary business hours, to all documents, records,
reports, books, files and other materials relative to this Agreement
and maintained by FASCorp.
7.13 FASCorp shall furnish to SLD any information or reports in connection
with its services to SLD, which the California Commissioner of
Insurance may request in order to ascertain whether the variable life
insurance operations of SLD are being conducted in a manner consistent
with applicable California law, regulations and rules.
SECTION 8 Covenants of SLD.
8.01 SLD shall, on a prompt basis, provide FASCorp with current forms of
policies, prospectuses and applications, names and states of license
of all insurance and/or broker-dealer agents and representatives
authorized to sell the Contracts.
8.02 All policies subject to the services performed under this Agreement
are underwritten by SLD.
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8.03 SLD shall immediately provide FASCorp with written notice of any
change of authority of persons authorized and enumerated in Exhibit C
to provide FASCorp with instructions or directions relating to
services to be performed by FASCorp under this Agreement.
SECTION 9 Termination of Agreement
9.01 a) Either party may terminate this Agreement at the end of the
initial term or any renewal term by providing at least 180 days
prior written notice to the other.
b) This Agreement may be terminated at any time upon the mutual written
consent of the parties hereto.
c) This Agreement may be terminated upon written notice of one party to
the other hereto in the event of bankruptcy or insolvency of such
party to which notice is given.
d) This Agreement shall automatically be terminated in the event of its
assignment, subject to the provisions of Section 10.01.
9.02 At least 180 days prior to the end of the initial or any renewal term
hereof, FASCorp shall give SLD written notice if FASCorp desires to
increase its fees or charges to SLD or to change the manner of
payment. If FASCorp and SLD do not agree to fees and charges before
the end of the term during which such notice is given by FASCorp, this
Agreement shall terminate at the end of such term.
9.03 Additionally, this Agreement shall terminate at SLD's option because
of:
a) fraud, misrepresentation, conversion or unlawful withholding of funds
by FASCorp; or
b) the dissolution or disqualification of FASCorp to do business under
any applicable state or federal law; or
c) the suspension or revocation of any material license or permit held by
FASCorp by the appropriate governmental agency or authority; or
d) the sale (without the prior written consent of SLD, which consent
shall not be unreasonably withheld) of FASCorp's business to an
unaffiliated person
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or entity, whether by merger, consolidation, or sale of substantially
all of FASCorp's assets or stock or otherwise, during the term of, and
any extension to, this Agreement.
9.04 At FASCorp's option because of fraud, misrepresentation, conversion,
or withholding of funds belonging to FASCorp by SLD.
9.05 In order to act as administrative agent for the Contracts, FASCorp
will depend on the correct operation and adequate functionality of
LifeCAD provided by Beacon. The parties therefore agree that if during
testing prior to initial "production" implementation, LifeCAD does not
meet the requirements of FASCorp for Contract administration and if
Beacon is unable to provide the necessary software modifications by
the date actual production must commence, the Agreement will terminate
automatically. Once production has commenced, if LifeCAD is not
capable of supporting the Contract administration and if Beacon is
unable to make reasonable corrections in a timely manner, the
Agreement will terminate automatically.
9.06 The parties acknowledge that regulatory approval will be required for
the policies and contracts to be administered under this Agreement and
for their distribution by SLD 's broker-dealer. The parties agree that
if regulatory approval for SLD 's broker-dealer distribution procedure
is not received the Agreement will automatically terminate so long as
no Contracts are in force. If there are in force Contracts, the
termination procedures set forth in Section 9.01 will apply.
Additionally, the parties agree that if all regulatory approval
necessary for SLD to sell any one or more of the contracts to be
administered hereunder is not received, the Agreement will
automatically terminate, but only as to that contract or contracts.
9.07 If either of the parties hereto shall breach this Agreement or be in
default in the performance of any of its duties and obligations
hereunder ("the defaulting party"), the other party hereto may give
written notice thereof to the defaulting party and if such default or
breach shall not have been remedied within ninety (90) days after such
written notice is given, then the party giving such written notice may
terminate this Agreement by giving ninety (90) days written notice of
such termination to the defaulting party, provided, however, that
FASCorp will not be deemed to be in default if its failure to perform
any of its duties and obligations hereunder is due to a defect or flaw
in LifeCAD.
9.08 Termination of this Agreement by default or breach by SLD shall not
constitute a waiver of any rights of FASCorp in reference to services
performed prior to such termination of rights of FASCorp to be
reimbursed for out-of-pocket expenditures and to collect fees;
termination of this Agreement by default or breach by
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FASCorp shall not constitute a waiver by SLD of any other rights it
might have under this Agreement.
9.09 In the event of a termination, FASCorp will return LifeCAD to SLD and
will make its computer record formats and other relevant systems
information available to SLD for a machine conversion, subject to
reimbursement to FASCorp for such assistance at its standard rates and
fees in effect at that time. Additionally, the Unit Value Calculator
may be purchased at FASCorp's standard rate and applicable fees for
the transition thereof shall be assessed by FASCorp. FASCorp will
provide any required training in any such conversion or transition at
FASCorp's standard rate and applicable fees. As described in Sections
7.02 and 7.09, all data contained in the computer flies is the
exclusive property of SLD.
9.10 During the period between the date of any notice of intention to
terminate given pursuant to this Section 9 and the date of actual
termination of the Agreement, each party shall continue to perform its
obligations under this Agreement.
9.11 During any transition period FASCorp agrees to cooperate with SLD to
effectuate an orderly transfer of all policy records and materials to
SLD or its designee. For services performed during the transition
period, FASCorp shall be compensated for its services pursuant to
Exhibit A of this Agreement.
9.12 The parties agree that following a termination of this Agreement, for
a period reasonable to effect an orderly transition, they will
continue to perform each and every obligation hereunder.
SECTION 10 Assignment
10.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written consent of the
other.
10.01 This Agreement shall inure to the benefit of and be binding upon the
parties hereto, SLD Equities and their respective successors and
assigns, provided that any assignment is performed in accordance
with Section 10.01 above.
SECTION 11 Confidentiality
11.01 The parties hereto agree that all tapes, books, reference manuals,
instructions, records, information and data pertaining to the
business of the other party, FASCorp's systems, and the policyowners
serviced by FASCorp hereunder, which
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are exchanged or received pursuant to the negotiation of and/or the
carrying out of this Agreement, shall remain confidential and shall
not be voluntarily disclosed to any other person, except to the
extent disclosure thereof may be required by law All such tapes,
books, reference manuals, instructions, records, information and
data in the possession of each of the parties hereto shall be
returned to the party from whom it was obtained upon the termination
or expiration of this Agreement.
11.02 FASCorp shall maintain the confidentiality of all trade secrets and
other confidential information obtained from SLD or its affiliates,
SLD Equities, First ING and Southland (collectively "SLD" for
purposes of this Section 11). FASCorp will use all reasonable
precautions and take all necessary steps to prevent any information
obtained by FASCorp provided to it hereunder from being acquired by
any unauthorized persons, including its parent company or any of its
affiliates. FASCorp acknowledges that such information has been
disclosed by SLD only to enable FASCorp to provide the services
hereunder and that disclosure thereof would be damaging to SLD if
such information were obtained by any competitor of SLD.
11.03 SLD shall maintain the confidentiality of all trade secrets and
other confidential information obtained from FASCorp. SLD will use
all reasonable precautions and take all necessary steps to prevent
any information obtained by SLD provided to it hereunder from being
acquired by any unauthorized persons, including its parent company
or any of its affiliates other than First ING or Southland. SLD
acknowledges that such information has been disclosed by FASCorp
only to enable FASCorp to provide the services hereunder and that
disclosure thereof would be damaging to FASCorp if such information
were obtained by any competitor of FASCorp.
11.04 SLD shall use its best efforts to facilitate a confidentiality
agreement between FASCorp and Beacon.
SECTION 12 Insurance
12.01 Errors and Omissions Insurance. FASCorp, as a member of the Great-
West Life family of companies, is currently self insured for errors
and omissions coverage. Such coverage is for amounts up to and in
excess of one million dollars per claim.
12.02 Fidelity and Theft Insurance. For the duration of this Agreement,
FASCorp shall carry fidelity and theft insurance from any insurer
rated "A" or better by A.M. Best Company. Such insurance shall
cover the theft, loss or disappearance of any monies collected by
FASCorp on SLD's behalf and shall
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provide at least $1,000,000 coverage per occurrence. The policy
shall not exclude any employee or principal of FASCorp.
12.03 Approval and Evidence of Insurance. FASCorp shall provide SLD with
a copy of the fidelity and theft insurance prior to the effective
date of this Service Agreement, with evidence that policy is full
force. Additionally, FASCorp shall, on an annual basis, provide SLD
with written certification from the insurers that the required
insurance coverage has been renewed.
12.04 Notice of Cancellation. All required insurance contracts shall
contain a clause which requires the insurers issuing the fidelity
and theft insurance to provide SLD with thirty (30) days prior
written notice in the event any required insurance coverage is
canceled or the tenons of the insurance are materially altered.
FASCorp shall give SLD written notice of any change or cancellation
of such insurance.
12.05 Review of Required Insurance. The parties agree to review the
amounts and terms of all required insurance from time to time to
determine the adequacy of such insurance.
12.06 Survival. If this Service Agreement terminates for any reason,
FASCorp shall use its best efforts to keep the insurance called for
in this section in force for 3 years following termination. FASCorp
shall give SLD at least 30 days prior notice of any change or
cancellation of such insurance.
SECTION 13 Arbitration
13.01 Any dispute which arises between the parties with respect to any of
the terms of this Agreement, whether such dispute arises during the
term of the Agreement or after the termination, shall be resolved
through binding arbitration. Arbitration shall be conducted in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Each party agrees to waive its right, if any,
to a jury trial. Each party shall bear its own cost in the
arbitration proceedings. The judgment of the AAA may be entered in,
and enforced by, any court of competent jurisdiction.
SECTION 14 Miscellaneous
14.01 SLD or its duly authorized independent auditors have the right
under this Agreement to perform on-site audits of records and
accounts directly pertaining to the Contracts serviced by FASCorp
at FASCorp's facilities in accordance with reasonable procedures
and at mutually agreeable dates and times, but at least once
annually. At the request of SLD FASCorp will make available to
SLD's auditors
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and representatives of the appropriate regulatory agencies all
reasonably requested records and data.
14.02 This Agreement constitutes the entire agreement between the parties
hereto and may not be modified except in written instrument executed
by both of the parties hereto and except that if any section herein
contained shall be found to be unenforceable as contrary to the
current law, that section shall be severed and the remaining sections
of this Agreement shall continue to be enforceable.
14.03 Neither party shall be liable for damages due to delay or failure to
perform any obligation under this Agreement if such delay or failure
results directly or indirectly from circumstances beyond the control
and without the fault or negligence of such party.
14.04 It is understood and agreed that all services performed hereunder by
FASCorp shall be as an independent contractor and not as an employee
of SLD.
14.05 Beacon, through agreement with SLD, will provide FASCorp with LifeCAD
at no charge to FASCorp. SLD agrees to execute and keep current a
maintenance agreement for LifeCAD with Beacon, also at no charge to
FASCorp.
14.06 FASCorp agrees not to use LifeCAD for any other party including
FASCorp without entering into a separate agreement with Beacon.
14.07 FASCorp and SLD acknowledge that in using LifeCAD, FASCorp may
encounter routine difficulties caused by software failure. FASCorp is
authorized, without SLD's prior approval, to contact Beacon and
incur, on SLD's behalf and at SLD's expense, any service costs that
may be charged by Beacon to correct such failures, up to $1,000 per
separate occurrence. Except for the foregoing, FASCorp is not
authorized to cause SLD to incur any costs to make any changes or
customizations of LifeCAD without SLD's express written consent.
14.08 This Agreement shall be governed by the laws of the State of
Colorado.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, in their names and on their behalf by and through their duly
authorized officers as of the day and year first above written.
Security Life of Denver Insurance Company
By: /s/ Xxxxx Xxxxxxx
Title: Vice President Variable & Product
Financial Administrative Services Corporation
By: /s/ Xxxx X. XxXxxxxx
Title: Vice President, Operations
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Exhibit A Fee Schedule
CONTRACTS:
Individual variable life and variable annuity products of Security Life of
Denver ("SLD").
FEES:
A. Basic one-time set up charge due upon the signing of this Agreement:
$70,000 which consists of two variable annuity products and one
variable life product of SLD and one variable annuity product and one
variable life product for each of First ING and Southland.
If one additional affiliate of SLD contracts with FASCorp for similar
services, that affiliate shall pay FASCorp $45,000 as a one-time set
up charge, and FASCorp shall pay SLD $25,000 to reimburse SLD for the
affiliate's share of the one-time set up charge.
If two additional affiliates of SLD contract with FASCorp for similar
services, the second affiliate shall pay FASCorp $36,666 as a one-time
set up charge, and FASCorp shall pay SLD and the first affiliate each
$8,333 to reimburse SLD and the first affiliate for their respective
shares of the one-time set up charge.
B. Processing Charges:
1. Policy Contract Processing Charges:
Variable Monthly Service Fee
Contract Volume Per Contract
Variable Annuities
First 30,000 $2.50 per policy, per month
Over 30,000 $2.50 per policy, per month
Storage, all contracts .08 per policy, per month
Variable Life
All $3.00 per policy, per month
Storage, all contracts .08 per policy, per month
The policy contract processing charges will be based on the aggregate
policy count for each company at the end of the month.
2. Investment Option Unit Value Processing Charges:
For each daily unit value calculation, the processing charge will be $70
per month.
C. Minimum Monthly Contract Service Fee:
The minimum monthly contract service fee schedule for SLD and any
subsidiary of SLD contracting with FASCorp for similar services is:
$70 per month for each daily unit value calculation, PER COMPANY, plus
1. For SLD alone - the greater of $10,000 per month or the actual Policy
Contract Processing Charges plus the Unit Value Processing Charges.
2. For SLD and one affiliate - per company, the greater of $6,000 per month
or the companies' aggregate of the actual Policy Contract Processing
Charges plus the Unit Value Processing Charges, with such Processing
Charges prorated between the companies according to Contract Volume.
3. For SLD and two affiliates - per company, the greater of $4,667 per
month or the companies' aggregate of the actual Policy Contract Processing
Charges plus the Unit Value Processing Charges, with such Processing
Charges prorated among the companies according to Contract Volume.
Effective the end of the month in which the first application is received,
that company will be included in the above calculations for the minimum
Monthly Contract Services Fee, and FASCorp will begin billing, the greater
of the Minimum Monthly Contract Service Fee or the actual Policy Contract
Processing Charges plus the Unit Value Processing Charges.
D. Out-Of-Pocket Expenses:
In addition to the fees set forth above, FASCorp will xxxx out-of-pocket
expenses as they are incurred. Out-of-pocket expenses are expenditures for
the items such as those listed below and any other items agreed to by the
parties:
1. The cost of long distance telephone calls including toll-free "800"
lines and facsimile (fax) transmissions to or from SLD, and to or from
policyowners. Costs of any lines installed for network communications
between FASCorp and SLD,
2
including CRT's and related minicomputer equipment. Costs of
telecommunication lines and equipment installed to provide primary and
backup support for on-line access to the administrative system,
including transmission capabilities between FASCorp and SLD.
2. Cost of equipment (including maintenance) which is provided to or
obtained by FASCorp for purposes of the Services Agreement. SLD will
be responsible for such costs including costs under FASCorp leases and
maintenance agreements with third parties for such equipment,
including leases and maintenance agreements which may extend beyond
the termination or expiration of the Services Agreement.
3. Cost of postage for mailing forms, reports, contracts, bills,
statements, prospectuses, and other materials to policyowners or
agents, and cost for postage and overnight delivery for any other
communication to policyowners or FASCorp or SLD.
4. Cost of printing blank stock and the cost of set-up and printing
(including per impression costs) confirmation statements, contract
file folders, checks, tax reporting forms, contract pages,
specification pages, envelopes, proxy or voting, instructions cards,
periodic policyowner statements, separate account statements,
individual and list bills, and any other required forms or reports.
Cost of labor for folding, inserting and mailing functions
5. Cost of microfilm and microfiche equipment and supplies and the cost
of transferring all necessary information to microfilm and/or
microfiche.
6. Costs involved with on- or off-site storage for SLD records,
documents, correspondence and other items.
7. Custom programming, and new product implementation at $75 per hour.
8. Normal and reasonable travel, meal and lodging expenses incurred
during FASCorp's performance of the Services Agreement, if any.
3
Exhibit B Operational Plan
Systems
A. LifeCAD System will:
1. Produce the contract data page, standard policy pages, state variation
pages.
2. Calculate and process periodic charges as specified in product
prospectuses.
3. Calculate and process valuations as specified by product
prospectus(es).
4. Calculate and process withdrawals (partial, full, periodic) as
specified.
5. Calculate and process annuity payout amounts.
6. Calculate and process periodic transactions including free look
transfer, dollar cost averaging transfer, automatic rebalance transfer
as specified in the prospectus.
7. Produce reporting including confirmations, client statements, daily
transactions, notification of upcoming maturities, lapse notification,
billing notices, qualified plan reporting, COLI reporting.
8. Produce required extract files including accounting, tax reporting,
production, electronic funds transfer, check writing, reinsurance,
valuation, inforce illustration, SLD client alpha index, proxy
solicitation.
9. Produce reports required to transact daily business with the mutual
funds and for periodic reconciliations.
10. Accept import of unit values (accumulation, annuity) from FASCorp
system.
11. Calculate and process changes in death benefits.
12. Perform appropriate past due processing on life products. Allow for
reinstatements.
13. Accommodate other product features described in prospectus including
persistency refunds, guaranteed death benefit provisions and riders.
14. Handle subsidiary/affiliate companies with products substantially
similar to those of SLD.
15. Track state approvals by product, by company. As SLD will do the
actual product filings information regarding approvals will be
provided to FASCorp.
16. Store and provide access to agent licensing information. As SLD will
do the actual agent appointments, information will be provided to
FASCorp via interface with SLD systems and LifeCAD.
17. Accommodate SLD and regulatory audit requirements.
18. Maintain client account history as required to process transactions
and administer contract provisions.
19. Systems will automatically interface with SLD and FASCorp systems. A
scheduled time for data transmission will be determined and daily user
involvement will not be required.
20. Interface LifeCAD with SLD to automatically feed to SLD systems any
necessary updates for other SLD policies.
21. Provide information necessary for proxy preparation and mailings.
B. Additional systems support is required to provide the following functions:
1. Automated voice response
a. Inquiry for unit values, account values
b. Transactions which update the account.
2. Interfaces, reporting requirements and other special requests from
outside broker/dealers.
3. Electronic funds transfer capabilities
a. Draw from accounts for premium payments
b. Deposit disbursements to accounts.
The functions described in this section B are considered essential by FASCorp.
Development and implementation of these functions will be mutually agreed upon
by SLD and FASCorp. Item 1 will be addressed during the first half of 1995. Item
2 will be bid by FASCorp on a per occurrence basis. Item 3(b) will be bid on by
FASCorp at a future date. Item 3(a) has been bid by FASCorp and is scheduled for
implementation 4th quarter, 1994.
2
ADMINISTRATIVE SERVICES
A. Contract Issue - Annuity
1. Reviews application, applies issue criteria developed by SLD to
application for annuity contract. Verifies license status of
brokers/agents based on information supplied by SLD. SLD to provide a
written set of issue criteria to FASCorp
2. Prepares contract data page, issues contract for paid business and
mails to contract owners or agents. System will produce contract data
pages. Policy page production to be automated as agreed upon by SLD
and FASCorp.
3. Establishes and maintains annuitant and contract owner records, as
applicable, on computer and manual systems.
4. Notifies dealer/agent of any error or missing data needed to establish
annuitant or contract owner records.
5. Produces and mails required confirmation statements.
6. Deposits monies received with application into depository account.
7. Maintains inventory of all issue-related forms, contracts and
endorsements based on updates provided by SLD. Printing to be
coordinated with SLD.
8. For policies being exchanged from another company or XXX funds being
transferred, FASCorp will request the funds from the other insurance
company (or XXX custodian) using forms supplied by SLD. SLD will
establish signing authority for FASCorp personnel.
B. Policy Issue - Life
1. Upon receipt of a life application, FASCorp will check the binding
requirements. Return of money, if required, will be coordinated with
SLD.
2. Verifies license status of brokers/agents based on information
supplied by SLD.
3. Upon completion of the underwriting and approval of the life
application by SLD, FASCorp will prepare policy data page and issue
policies for SLD approved applications and mail to brokers/agents.
Policy data pages to be produced by LifeCAD. Policy page production to
be automated as agreed upon by SLD and FASCorp. If any outstanding
requirements at issue, SLD will inform FASCorp when to place policy
into inforce status. Any required amendments will be prepared by SLD.
3
4. Establishes and maintains all policyowner records, as applicable, on
computer and manual systems. SLD will be responsible for establishing
and maintaining underwriting records both manual and system. Policy
changes requiring underwriting will be coordinated with SLD.
5. Deposits premiums received into depository account.
6. Prepares and mails "Notice of Withdrawal Right" to life policyowners.
7. For policies being exchanged from another company, SLD will request
the funds from the other insurance company.
8. Reissue and duplicate policy requests will be coordinated between
FASCorp and SLD.
9. Maintains inventory of all issue-related forms, contracts and
endorsements based on updates provided by SLD. Printing to be
coordinated with SLD.
C. Collection procedures (after policy/contract is in force)
1. Receives from lockbox the remittance information in accordance with
processing requirements.
2. Processes payments received to customer accounts.
3. Prepares and mails required confirmation of transactions.
4. Deposits cash received directly by FASCorp under the policies into a
designated bank account.
5. Transmits daily accounting and bank transfer authorization summaries
prepared for each valuation period.
6. Bills for planned premiums at appropriate frequencies for life
policies.
7. Notifies policyowner of approaching lapse. Administers grace period
provisions.
8. Prepares and mails refunds as appropriate (declines, free look).
D. Banking
1. Photocopies checks received directly by FASCorp and assigns them a
control number. Balances, edits, endorses and prepares daily deposit.
Reconciles bank lockbox deposits to applications received.
4
2. Deposits are placed into a depository account.
3. Transfers funds from the depository account to one of the following,
as appropriate:
a. General Account of Security Life
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of Security Life and SLD Equities, Inc.
d. Separate Accounts of Security Life Bank accounts and mutual fund
accounts to be established by SLD with appropriate signing and
trading authorizations established for FASCorp personnel.
4. Generates from the system daily cash journal summary reports and
maintains detail of activity.
5. Processes disbursement transactions for policyowner or beneficiary,
surrenders, withdrawals, loans, and death claims. Death claims
administered by SLD. LifeCAD will produce check production extract
file. Check production will be through a FASCorp checkwriting system.
6. LifeCAD will produce check production extract file for annuitants in
payout phase whose contracts are administered by LifeCAD. Supplemental
contract administered by LifeCAD. Supplemental Contract is the
contract issued when an annuity is in the payout phase. The actual
form of the contract is to be supplied by Security Life. Check
production will be through a FASCorp checkwriting system.
7. SLD will maintain balances in the appropriate SLD bank accounts
necessary to meet administrative needs identified in the contract.
8. SLD will obtain the appropriate authorizations to allow FASCorp to
transfer funds amongst SLD accounts.
9. Reprocess dishonored items. Reverses associated transactions, prepares
reports and communicates with policyowner. LifeCAD will reverse all
ledger entries associated with dishonored items.
10. LifeCAD will produce check production extract file for systematic
payouts (XXX income, systematic income and others which may be
established). Check production will be through a FASCorp checkwriting
system.
E. Accounting/Auditing
1. Generates from the LifeCAD system daily accounting extracts for
policies maintained on the system.
5
2. Generates from the LifeCAD system accounting information necessary to
post entries to ledgers.
3. Retains systems generated reports in accordance with a retention
schedule [tbd] mutually established and as required by regulatory
authorities. Provides access to such reports for internal and external
auditing.
4. Determines the "Net Amount Available for Investment" in mutual fund
and places fund purchase/redemption orders with the appropriate mutual
funds. Receives confirmation of mutual fund investments.
5. Maintains an inventory of all mutual fund shares owned, including the
date purchased and sold, cost, book value, gain, loss, and other
relevant information.
6. Reconciles inventory of mutual fund shares owned to reports of mutual
fund shares owned supplied by mutual funds.
7. Cooperates in annual audit of separate account financials conducted
for purposes of financial statement certification and publication and
accommodates SLD or regulatory audits, as required.
F. Pricing/Valuation
1. Collects information needed in determining variable account unit
values from the mutual fund. This information includes the daily net
asset value of the underlying mutual funds, any capital gains or
dividend distribution made by the mutual funds and the number of
mutual fund shares acquired or sold during the immediate preceding
valuation date.
2. Enters required information into FASCorp system for unit value
calculation to be performed.
3. FASCorp system will generate separate account ledger activity
associated with unit valuation. SLD will specify the required
accounting entries based on information available from the Unit Value
Calculator. LifeCAD will be updated with the calculated unit values.
G. Contract Owner Service/Record Maintenance
1. Receives and implements contract owner service requests including
information requests, beneficiary changes, transfer of funds between
eligible mutual funds, loan request, payout requests, exchange of
policies, and changes of any other information maintained on the
system.
6
2. Researches contract owner inquiries using both data stored in the
system and manual records. Responds directly to any questions or
inquires.
3. LifeCAD will generate a set of daily journals confirming financial
changes made to annuity or life accounts.
4. Address changes will be coordinated between SLD and FASCorp. An
interface to SLD systems to coordinate policy changes (name, address,
beneficiary) will be developed.
5. Processes reinstatements when approved by SLD.
6. Produces tax reporting based on extracts from LifeCAD.
H. Disbursement (Surrenders, Loans)
1. Receives requests for systematic, partial and full surrenders and
loans from contract owners. Retains and accounts for any contract
administrative charges.
2. Processes all surrender and loan requests against the policyowner
files. Generates related separate account ledger accounting.
3. LifeCAD will produce check production extract file for surrenders and
loans and forwards to contract owner in accordance with applicable
law. Check production will be through a FASCorp checkwriting system.
4. Prepares and mails confirmation statements of disbursement
transactions to contract owners.
5. LifeCAD will generate a report on surrenders and loans.
6. Reviews, causes to have printed, and maintains adequate supply of
checks.
7. Contacts policyowner regarding tax withholding procedures, if
required.
8. Backup withholding will be coordinated between FASCorp and SLD.
I. Claims
1. Receives request for death claim from contract owners and
beneficiaries. Immediately notifies SLD. In addition, any notification
received by SLD regarding a policy administered by FASCorp will
immediately be communicated to FASCorp. This is necessary to freeze
the account.
7
2. If multiple policies are involved, SLD and FASCorp will coordinate
sending claim forms.
3. Respond to request from SLD for disbursement of proceeds. Generate
related separate account ledger accounting.
4. LifeCAD will produce check production extract file for disbursements
as directed by SLD. Check production will be through a FASCorp
checkwriting system.
5. Make changes to owner and/or annuitant information on LifeCAD as
directed by SLD where no payout is required.
6. LifeCAD will generate report on death claims, if required.
7. Claims examination will be done by SLD.
J. Commissions
1. Verifies license status of brokers/agents based on information
supplied by SLD.
2. LifeCAD will produce detailed commission transactions for each policy
financial transaction processed including premium application or
reversal, cancellation, etc. for which a commission is required.
3. Prepares commission statements for broker/dealer firms. LifeCAD will
produce check production extract file for any required checks. Check
production will be through a FASCorp checkwriting system.
4. Creates tax reporting forms, if required, based on extracts from
LifeCAD.
4. LifeCAD will generate required production information.
K. Annuity Benefit Processing
1. Notifies owner of approaching annuitization approximately 90 days
before annuitization date based on information generated by LifeCAD.
2. Receives information regarding annuitants going into the annuity
(payout) phase.
3. Calculates the amount of the initial annuity payment for variable
payout based on tables supplied by Security Life. Calculation of fixed
payout based on information supplied by Security Life.
8
4. Deducts applicable premium taxes. LifeCAD will produce accounting
information. Premium tax reporting and payment will be done by
Security Life.
5. Establishes and maintains annuitant records.
6. Withholds appropriate federal and state income tax; LifeCAD generates
journal entries for Security Life general ledger.
7. Provides information for general account ledger maintenance.
8. Maintains inventory of variable annuity units on annuitant master
files using LifeCAD. Inventory of fixed annuity units to be maintained
on LifeCAD (subject to system constraints).
9. LifeCAD will produce check production or electronic fund transfer
extract file for payment of amount due to annuitant in accordance with
applicable law. Check production will be through a FASCorp
checkwriting system.
10. issues supplemental contract as defined in the variable annuity
contract. Actual form of contract to be supplied by Security Life.
Contract filing to be done by Security Life.
11. FASCorp will generate tax reporting based on extracts from LifeCAD.
SLD will make all payments to the appropriate regulatory agencies for
any taxes withheld and will effect all necessary associated reports.
L. Proxy Processing
1. Receives record date information from the underlying mutual funds.
Receives proxy solicitation material from underlying mutual funds.
2. Prepares proxy cards, if applicable.
3. Mails solicitation and resolicitations, if necessary.
4. Maintains all proxy registers and other required proxy material.
5. LifeCAD will provide all necessary information for preparation of
proxy cards, if applicable.
6. Tabulates returned proxy cards and transmits results to underlying
mutual funds.
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M. Periodic Reports to Policyowners
1. Prepares and mails statement of account to each policyowner. Mails on
schedule supplied by SLD.
2. Inserts and mails semi-annual and annual reports to policyowners, as
required, both underlying mutual fund and Separate Account reports.
Filing of reports with NASD and SEC will be done by Security Life.
Printing of reports will be done by Security Life.
N. Regulatory/Statement Reports
1. Prepares IRS reports for contract owners who received annuity payments
or distributions. Mails to contract owners and transmits to IRS.
2. Prepares other IRS reports as required for IRAs (i.e., 5498s).
3. Responds to requests for calculations applicable to annuity payments
as may be necessary to tax calculations.
O. Actuarial and Management Reports
1. Provides, on the time schedule [tbd], extracts listed below:
a. Reserve Extracts
b. Production Extracts
c. Premium Tax Extracts
d. Loan Extracts
e. Surrender Extracts
f. Claims Report
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EXHIBIT C
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized by Security Life of Denver Insurance
Company to give instructions or direction to Financial Administrative Services
Corporation with respect to matters arising in connection with the servicing to
be performed under this Agreement:
Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
Xxxxxxxxx Xxxxx /s/ Xxxxxxxxx Xxxxx
Xxxxx Xxxxxx
Xxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
Exhibit D Backup Procedures
Current backup practices and procedures are described herein and may be changed
upon mutual agreement of Security Life of Denver ("SLD") and Financial
Administrative Services Corporation ("FASCorp").
SLD products are administered on the LifeCAD system that resides on a PC
network. Every night all LifeCAD data is copied from the PC network to the UNIX
system where data is backed up on a corporate basis.
PC Network:
1. For daily on line processes, the hardware configuration provides for all
activity to be written to twin, redundant hard drives.
2. Before the nightly batch processing takes place, an image copy of the data
is taken in case any batch problems require a rerun of the cycle.
3. Every night, after the batch cycle, the LifeCAD data is copied to the UNIX
network where corporate backup procedures are followed.
UNIX Network:
Every night the UNIX network back up process waits for the data to be received
from the LifeCAD PC network. At that time, the backup process is done according
to the following corporate schedule:
Level 0 - Each UNIX machine is totally backed up. This takes place every 3
to 4 months and the backup files are kept for 1 year.
Every year end a special Level 0 is done and the backup files are kept for
7 years.
Level 1 - Everything that changed since the last Level 0 back up is copied.
This takes place every Friday night and the backup files are kept for 120
days.
Level 5 - Everything that changed since the last Level 1 back up is copied.
This takes place every night and the backup files are kept for 60 days.
The back up files are moved to off-site storage daily, on a rotating basis.
Hardware Location.
The hardware that stores and backs up the SLD data is located in a separate
computer operations building which has its own emergency power supply.
EXHIBIT E
Great-West Life & Annuity Insurance Company
Statement of Support
(See Attached)
Great-West
LIFE & ANNUITY INSURANCE COMPANY
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000 Tel. (000) 000-0000
Address mail to: X.X. Xxx 0000. Xxxxxx, XX 00000
November 21, 1994
Security Life of Denver
Insurance Company
0000 Xxxxxxxx
Xxxxxx. XX 00000-0000
Re: Financial Administrative Services Corporation ("FASCorp")
Dear Madam or Sir:
Please be advised that FASCorp is a member of the Great-West Life family of
companies. As such, FASCorp is entitled to coverage through the self insurance
arrangement for errors and omissions coverage maintained by the Great-West
family of companies.
Further, FASCorp is a wholly owned subsidiary of Great-West Life & Annuity
Insurance Company ("GWL&A") and, as such, has the full financial backing of
GWL&A.
Sincerely,
Xxxxxx Low
Executive Vice President
Financial Services
Great-West Life & Annuity
Insurance Company
