ADMINISTRATION SERVICES AGREEMENT
WHEREAS, South Texas Bankers Life Insurance Company Agency, Inc.
("Agency") is the holder of Permit #937 issued by the Texas Department of
Banking as a seller of preneed contracts; and
WHEREAS, South Texas Bankers Life Insurance Company ("STB") is a
Texas domiciled life insurance company that has acted as a life insurance
depository to fund preneed contracts issued by Agency; and
WHEREAS, together they have administered the preneed contracts of
Agency in respect to the business needs and applicable regulations
affecting the preneed contracts issued by Agency; and
WHEREAS, American Capitol Insurance Company ("American Capitol") has
entered into an agreement with World Service Life Insurance Company of
America ("World Service"), the parent of STB, to administer World
Service's insurance policies which will include STB's insurance polices
when the same are reinsured and assumed by World Service which STB and
World Service expect to accomplish in due course; and
WHEREAS, in the interim, STB has arranged for American Capitol to
administer the insurance policies in force in STB; and
WHEREAS, American Capitol, acting as Agency's agent, is willing to
provide administration services to Agency in respect to the preneed
contracts; and
WHEREAS, as a result of American Capitol's assumption of the role of
administrator as herein provided, STB's obligations to Agency shall
terminate;
NOW, THEREFORE, American Capitol, hereinafter referred to as
"Administrator," and Agency, referred to as "Client," agree as follows:
Administrator and Client acknowledge and confirm that the preneed
contracts that are the subject of this administration agreement were
issued or assumed by Client and funded by insurance policies issued by
STB; that STB's insurance policies are to be assumed by its parent, World
Service, subject to approval of the Texas Department of Insurance; that
American Capitol and World Service have entered into an Administrative and
Data Processing Agreement (the "World Service Administration Agreement")
providing for American Capitol to provide services therein set forth in
respect to World Service's insurance policies; that the STB policies, when
the assumption by World Service is consummated, will become a part of the
World Service insurance policies that are the subject of the World Service
Administration Agreement; that STB and American Capitol intend to enter
into an "interim" administration agreement similar to the World Service
Administration Agreement pending the consummation of the assumption by
World Service of the STB insurance policies; and that this agreement, when
signed by STB, will also signify that Administrator, as administrator for
STB's insurance policies, is acting for STB in its role as the issuer of
the subject insurance policies until such policies are assumed by World
Service, when Administrator will be acting for World Service in its role
as issuer of the subject (formerly STB's) insurance policies.
Page 1 of 7 (including Exhibit A)
During the term of this agreement ("Agreement"), Administrator will
perform for Client in respect to Client's preneed contracts administration
services hereinafter designated in this Agreement and Exhibit A attached
hereto and made a part hereof for all purposes. The preneed contracts
that are the subject of this Agreement consist of the preneed contracts
issued by Agency as a result of marketing same directly to the public as
well as preneed contracts issued or assumed by Agency in respect to
conversions whereby preneed contracts funded by trust funds were converted
to funding by insurance policies issued by STB.
Client shall designate the person or persons to whom Administrator will
report. Client will keep Administrator informed of its corporate policy
or changes in policy to enable Administrator to carry out the subject
services for Client in an efficient manner. Client shall appoint one or
more of Administrator's officers as its attorney-in-fact to act for Client
in performing routine functions in the course of providing to Client the
administration services as called for by this Agreement. At any time
during the term of this Agreement, Administrator may enter into a
consulting agreement with one or more employees of Client to provide
consulting services to Administrator regarding the subject administration
services, and Administrator shall be solely responsible for fees relating
thereto.
Administrator shall safeguard all data and information relating to
Client's business to the same extent that Administrator safeguards
comparable data and information relating to its own business; provided,
however, if such data or information is available to the general public,
is known by or is in the possession of Administrator prior to the date of
this Agreement, or is known by or is in the possession of Administrator
prior to actual receipt by Administrator of such information or data from
Client or is rightfully obtained from third parties, Administrator shall
bear no responsibility for its disclosure, inadvertently or otherwise.
Client agrees that all systems, including data processing programs, discs,
tapes, documentations, manuals, specifications, ideas, applications,
routines, formulas, and techniques relating to the subject services
furnished, owned, licensed or developed by Administrator shall and may be
used by Administrator during the term of this Agreement and at any time
thereafter and shall be and remain the sole property of Administrator.
Administrator acknowledges that the subject preneed contracts, related
documents and data have been transferred to Administrator to be used in
connection with the performance by Administrator of its responsibilities
hereunder. Administrator has not verified, and is not responsible for,
the completeness or the correctness of the data furnished as a part of the
preneed contracts, and will be entitled to rely upon the data as
furnished, and will use commercially reasonable efforts to make such
corrections and additions as may be called for in the course of
administration. Administrator shall not be liable for, and Client shall
hold harmless from and indemnify Administrator for, all costs, claims and
actions (including reasonable costs of investigations accounting and
attorneys fees) based on or arising out of Client's obligations pursuant
to the preneed contracts, except that Administrator shall be responsible
for commercially reasonable performance of its administration duties set
forth in this Agreement.
Page 2 of 7 (including Exhibit A)
Administrator and Client hereby agree that the fees and expense
reimbursements provided for in the administrative agreement between World
Service and American Capitol referred to above, and incorporated herein by
reference for all purposes, include the fees and expense reimbursements to
which Administrator is entitled for its services hereunder, except to the
extent explicitly identified and set forth herein.
In the event of termination of this Agreement, Administrator may, at its
option, retain any property, including the preneed contracts, related
documents and data in its possession that belongs to Client until all sums
due Administrator pursuant to this Agreement are paid, including such
additional charges as may be determined by Administrator and Client to be
reasonable and necessary to effect an orderly termination of the work and
services then being performed by Administrator and to assure and protect
the orderly and timely perpetuation of the Client's business as affected
by such work and services. Upon termination of this Agreement, Client
shall instruct Administrator in writing as to the disposition of all such
property or data within ninety (90) days.
Administrator shall use due care and diligence in performing the work and
services to be performed hereunder and agrees that it will correct any
errors which are caused solely by Administrator, its authorized agents,
employees, programs, or data processing equipment and machines, and its
liability for such errors shall be limited to the correction of same
within a reasonable time as full compensation for any and all damages
which may result from such error or errors and in any event, the liability
of Administrator to Client or any other party for any and all losses or
damages directly or indirectly arising out of this Agreement or the
performance hereof, shall not exceed the performance of the particular
task which gives rise to such loss or damages and such amount shall
constitute an agreed amount of liquidated damages for such losses and
damages. The parties acknowledge and agree that Administrator does not
assume, and shall not ever have, any liability on account of or in respect
to Agency's obligations based on or associated with the preneed contracts
that are the subject of this administration services agreement, and that
Administrator's relationship and responsibility in respect to such preneed
contracts is solely that of an agent for Client performing administration
services as herein provided. Client agrees to indemnify Administrator
for, and hold Administrator harmless from, any and all costs or expenses
incurred by Administrator as a result of any claim or litigation seeking
to hold Administrator liable for any of Client's obligations based on or
associated with the preneed contracts.
Client warrants that it is duly authorized to enter into this Agreement
and that Administrator has in no way caused or induced Client to breach
any contracted obligation.
This Agreement and the exhibit attached hereto or referred to herein and
made a part hereof constitute the entire agreement of the parties on the
subject of policy administration and data processing services. Any
modifications or amendments must be in writing signed by both parties.
The parties hereto expressly agree that each will comply with all
applicable federal, state and local laws, the violation of which may
adversely affect the performance of this Agreement.
Page 3 of 7 (including Exhibit A)
Client agrees that in the event of default in any of the covenants or
agreements contained herein or in payment of the charges provided herein
and in the exhibit attached hereto or made a part hereof, that it will pay
all costs and expenses of enforcement or collection, including reasonable
attorney's fees, which may arise or accrue.
This Agreement may not be terminated by either party during the existence
of that certain Reinsurance Agreement between American Capitol and World
Service, and shall automatically terminate when said Reinsurance Agreement
terminates, unless the parties agree otherwise in writing.
This Agreement is effective as of June 1, 1996.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and legal representatives, and shall not
be assigned by either party without the prior written consent of the other
party.
This Agreement shall be construed under the Laws of the State of Texas and
should any portion be invalid or unenforceable, for any reason, it shall
not affect the remainder of this Agreement which shall be valid and
binding. This Agreement is executed and delivered by the parties in
Xxxxxx County, Texas, to be performed in Xxxxxx County, Texas.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed and delivered by its duly authorized officers.
South Texas Bankers Insurance Agency, Inc.
By: /s/Xxxx X. Xxxxxxxxxx
President
American Capitol Insurance Company
By: /s/Xxxx X. Xxxxxxx
President
South Texas Bankers Life Insurance Company
By: /s/Xxxx X. Xxxxxxxxxx
President
Page 4 of 9 (including Exhibit A)
MANAGEMENT
The Client's responsibility shall be:
1. To provide from its Board of Directors or an Officer instructions
regarding its corporate policy, products, growth and general operations of
the Company and such other instructions as are called for herein. To
select one or more officers of the Client to whom the Administrator is to
report and from whom the Administrator is to receive instructions. To
designate and appoint not less than two officers of Administrator to act
as Client's attorney-in-fact to perform in Client's place and stead the
routine transactions, such as contract issuance and claims payments and
such other functions as the parties may deem appropriate.
2. To provide financial interface and receive the financial reports from
Administrator.
3. In the event Client resumes marketing, to provide marketing interface
and receive the marketing reports from Administrator.
The Administrator's responsibilities shall be:
1. To perform the subject services in keeping with corporate policy of
the Client as communicated by the Client to Administrator.
2. To provide information relating to the subject contracts sufficient to
enable Client to complete requirements of the Texas Department of Banking.
MARKETING
The Client's responsibility shall be:
To select the products, marketing systems, brochures, agents' training and
instruction, commissions and other agent compensation, and personnel to
operate the marketing efforts of the Client. The Client is solely
responsible for recruiting, training, assisting, monitoring, supervising,
terminating (if called for) and the market conduct of the Client's agents.
The Administrator's responsibility shall be: None.
ISSUE
The Client's responsibility shall be:
To set standards and guidelines as conditions for issuance of new
contracts.
The Administrator's responsibility shall be:
To issue new contracts consistent with the standards and guidelines
provided by Client.
CONTRACT MAINTENANCE
The Client's Responsibilities shall be:
Page 5 of 7 (including Exhibit A)
To inform Administrator of its policies and guidelines respecting routine
contract maintenance. To issue instructions to Administrator in respect
to contract maintenance matters that are other than routine or in respect
to which Administrator requests instructions. To inform Administrator of
all communication received from contract purchasers and service providers
when such communication is not received directly by Administrator.
The Administrator's Responsibility shall be:
To answer and process all inquiries received, including cancellations and
contract changes, in keeping with Client's guidelines.
BILLING/COLLECTION
The Client's responsibility shall be: To inform Administrator of its
policies and guidelines respecting billing and collection. To remit to
Administrator promptly any payments in respect to the subject preneed
contracts received by the Client. Client specifically authorizes
Administrator to xxxx the preneed contract owners (i.e., customers)
directly, in the form of premium notices (in its role as administrator of
the subject insurance policies for STB or World Service, as the case may
be), and to apply payments made by customers directly as premium credits
on the relevant policies that have been purchased to fund the subject
preneed contracts, to avoid the duplicative process of first billing and
collecting payments on the preneed contracts by Administrator on behalf of
Client and the payment by Administrator on behalf of Client to STB or
World Service, as the case may be, the insurer, of the collected amounts
as premiums on the subject policies.
The Administrator's responsibilities shall be:
To xxxx in accordance with this Agreement and Client's policies and
guidelines.
CLAIMS
The Client's responsibility shall be: To inform Administrator of its
policies and guidelines respecting claims handling. To remit to
Administrator promptly any claims in respect to the subject preneed
contracts received by the Client. Client specifically authorizes
Administrator to arrange to have payment of claims made directly by STB or
World Service, as the case may be, instead of requiring Administrator, on
behalf of Client, to apply itself as administrator on behalf of STB or
World Service, as the case may be, as insurer, for the insurance policy
proceeds and then, in turn, paying same to the recipient of the preneed
contract benefit.
The Administrator's responsibilities shall be:
To pay claims in accordance with this Agreement and Client's policies and
guidelines.
ACCOUNTING, TAXES, REPORTING AND REGULATORY COMPLIANCE
The Client's responsibility shall be:
To inform Administrator of the Officer to whom Administrator is to report
and to inform Administrator of any specific format required to interface
Page 6 of 7 (including Exhibit A)
with Company in respect to accounting procedures, taxes and tax reporting,
financial reporting and regulatory compliance. Client shall be solely
responsible for its accounting functions, taxes and tax reporting,
financial reporting and regulatory compliance.
The Administrator's responsibility shall be:
To provide sufficient contract data and information to Client to enable
client to record all accounting entries on Client's books to properly
account for all transactions implemented by Administrator in respect to
the subject contracts. To make contract data and information relating to
Client's business available to examiners acting for the Texas Banking
Department in the performance of regulatory examinations of Client.
[Signatures appear on page 4]
Page 7 of 7 (including Exhibit A)
