ADMINISTRATIVE SERVICES AGREEMENT between FIC INSURANCE SERVICES, L.P. Austin, Texas and FAMILY LIFE INSURANCE COMPANY Houston, Texas
EXHIBIT
10. 64
between
FIC
INSURANCE SERVICES, L.P.
Austin,
Texas
and
FAMILY
LIFE INSURANCE COMPANY
Houston,
Texas
THIS
ADMINISTRATIVE SERVICES AGREEMENT
(“Services
Agreement”)
is made as of the date set forth below by and between FIC
INSURANCE SERVICES, L.P. (“Company”),
a Texas limited partnership, and FAMILY
LIFE INSURANCE COMPANY
(“Insurer”), a Texas stock life insurance corporation.
Recitals
WHEREAS,
Family
Life Corporation, an affiliate of Company, has agreed to sell Insurer to
The
Manhattan Life Insurance Company (“MLIC”);
WHEREAS,
Company
now provides administrative and management services to Insurer pursuant to
various agreements that will be terminated as of the Closing Date of the
sale of
Insurer to MLIC;
WHEREAS,
Insurer
intends to assume the administration of its business as soon as possible
but
requires continuing administrative services until administration can be assumed
by Insurer; and
WHEREAS,
Company
agrees to provide such administrative services to Insurer from the Closing
Date
until administration is assumed by Insurer;
NOW,
THEREFORE,
in
consideration of the mutual covenants and promises contained herein, and
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
Definitions
The
capitalized terms used herein shall have the meaning given below.
1.1 Administrative
Services.
Services that
Company
is to provide in respect of the Policies during the Service Period, as more
fully described at Article II of this Services
Agreement.
1.2 Closing
Date.
The
date of the closing of the sale of Insurer to MLIC pursuant to the Stock
Purchase Agreement dated December 8, 2006.
1.3 Policies.
All
policies, riders, endorsements, and other evidences of coverage issued by
Insurer and in force as of the Closing Date, including life, health, and
accident policies and annuity contracts.
1.4 Producer.
Any
agent, broker, representative, or subagent of any person having a Producer
Agreement.
1.5 Producer
Agreement.
Any
written agreement, contract, understanding, or arrangement between Company
and
any Producer, including any assignments of compensation thereunder, and relating
to the solicitation, sale, marketing, production or servicing of any of the
Policies.
1.6 Producer
Payments.
Any
expense allowance, commission, override commission, service fee, bonus, profit
share or other compensation payable by Company to a Producer pursuant to
a
Producer Agreement.
1.7 Service
Period.
The
period
commencing on the Closing Date and continuing until terminated pursuant to
Article III.
ARTICLE II
Administrative
Services in the Service Period
2.1 Commitment
to Provide.
During
the Service Period, Company will continue to administer the Policies, including,
without limitation, the provision of the Administrative Services described
in
this Article II.
2.2 Description
of the Administrative Services.
The
Administrative Services shall consist of the following; provided, however,
that,
except to the extent described below, Company shall provide Administrative
Services in a manner consistent with the standards and practices that it
utilized in servicing the Policies immediately prior to the Closing
Date:
2.2.1 Billing
and collection of premiums due under the Policies and the return of unearned
premiums.
2.2.2 Preparation
of such reports for Insurer as may reasonably be required to calculate
premium
taxes due under the Policies. Such reports shall be prepared within 30
days of
the end of a calendar quarter.
2.2.3 Maintenance
of applications, policyholder, premium, and other necessary records,
including
all computer records, to enable Insurer to determine, at any time, the
true and
accurate status of the insurance in force under the Policies.
2.2.4 Making
available of all records relating to the Policies for audit by Insurer
upon the
notice. Such records shall include, but not be limited to, policyholder
records,
in-force listings, premium records, claim forms, itemized xxxxxxxx, and
eligibility documentation.
2.2.5 Giving
of
required notices to Policyholders of any cancellation, non-renewal, or
lapse in
coverage under the Policies.
2.2.6 Giving
of
immediate notice to Insurer of any consumer complaint which threatens
legal
action and the forwarding to Insurer of all written consumer complaints
within
(48)
hours,
if possible, but in no instance longer than four (4) business days after
receipt
thereof, as well as all pertinent files and correspondence relating
thereto.
2.2.7 Timely
delivery of all records and data necessary to transition the administration
of
the Policies to Insurer in a manner, form and format reasonably acceptable
to
Insurer provided, however, that Insurer is responsible for providing
the format
for all records and data transfer which format shall be reasonably acceptable
to
Company.
2.2.8 Processing
of policy loan requests and policy loan repayments received from
Policyholders.
2.2.9 Processing
of policy changes requested by Policyholders including, but not limited
to name
changes, address changes, beneficiary changes, reinstatements, assignments,
and
the like and the preparation and delivery of policy forms, certificates,
and
endorsements relating to the Policies.
2.2.10 Processing
of reports of transactions under the Policies from time to time as reasonably
requested by Insurer.
2.2.11 Calculation
of reserves on the Policies on not less than a calendar quarter basis,
and
otherwise as may reasonably be required by Insurer from time to time
in order to
comply with Insurer’s financial reporting requirements and obligations. Such
calculations shall be prepared within 30 days of the end of the related
calendar
quarter.
2.2.12 Reporting
of such information with respect to the Policies as Insurer may reasonably
require from time to time for statutory filing and reporting purposes.
All
requests for such information shall be in writing and shall provide Company
with
a reasonable time to comply with such requests.
2.2.13 Communication
with the Policyholders of the Policies.
2.2.14 The
administration and processing of claims under the Policies, including
the
following:
2.2.14.1 Allowable
claims arising under the terms of the Policies shall be paid promptly
and
accurately in accordance with the terms of this Section. Company’s obligation to
pay claims under this Section shall be subject to Insurer’s deposit from time to
time as requested by Company, by wire transfer to an account designated
by
Company, of immediately available funds in an amount equal to such claims
of any
claims then due and owing. Company also shall have the right to fund
the payment
of claims allowed under this Section out of the amounts received and
held for
the account of Insurer pursuant to Section 2.4 hereof.
2.2.14.2 In
the
event of non-payment of a claim on account of incomplete or insufficient
data,
receipt of the claim shall be confirmed with, and the reason for nonpayment
shall be communicated to,
the
claimant within thirty (30) business days from date of receipt of the
claim form
or the period prescribed by applicable law, whichever is less. Claims
decisions
and payments will be made in compliance with the contractual terms, provisions,
and conditions of the Policies
2.2.14.3 If
Company determines that a claim under a Policy requires investigation
or should
be denied or if suit is brought with respect to a claim, Insurer shall
be
promptly notified. Insurer and Company shall consult regarding the disposition
of the claim. In the event of disagreement, Insurer shall have final
authority
over the disposition of the claim.
2.2.14.4 Conform
to the reasonable requirements set by Insurer for monthly submission
of claims
reports.
2.2.14.5 Perform
such other claim services as Insurer may reasonably require in connection
with
the maintenance of the Policies.
2.2.15 Payment
of Producer Payments due Producers under Producer Agreements that are
in force
with respect to the Policies, for the account of Insurer out of premium
collected under the Policies, in accordance with Section 2.4 of this
Services
Agreement.
2.2.16 Such
other administrative services as Insurer may reasonably require from
time to
time in connection with the maintenance, support, and administration
of the
Policies.
2.3 Compensation.
In
consideration of Company’s performance of the Administrative Services, Insurer
shall pay Company $1.61 per month for each paid-up policy, $5.21 per
month for
each universal life policy, and $4.61 per month for all traditional
and other
policies (“Service Fee”) for each month in the Service Period during which
Administrative Services under this Article II are provided. If the Service
Period ends on other than a month-end date, the Service Fee payable
by Insurer
shall be prorated for the number of days in the last monthly period
during which
Administrative Services were provided. In addition, Insurer will pay
Company
twenty-five thousand dollars ($25,000) for the preparation of each
statutory
financial statement finally prepared for filing during the Service
Period.
Company shall render a monthly statement, in arrears, to Insurer covering
the
Administrative Services rendered in the period. Payment shall be due
within ten
(10) business days of Insurer’s receipt of Company’s statement;
provided, however, that Company
has
the
right to set
off
and transfer such Payment to Company’s account
from the
Premium Payments set
forth
in Section 2.4
of this
Services Agreement.
2.4 Premium
Payments.
Company
will hold all amounts collected under the Policies for the account
of Insurer in
a fiduciary capacity. During the Service Period, Company shall regularly
remit
to Insurer, on no less than a quarterly basis, the Net Proceeds of
transactions
under the Policies. For purposes of this Section, “Net Proceeds” means
(a) premiums collected, adjusted for reinsurance paid, less
(b) benefits paid, net of reinsurance settlements, less
(c) Producer Payments paid, less
(d) a provision for premium taxes equal to 2.5% of premiums collected,
plus
or
minus
(e) such other adjustments as may be specified in this Services
Agreement
or otherwise be agreed to by the parties; provided, that Company shall
have the
right to deduct from the remittance of Net Proceeds any Service Fee
amount then
due and owing to Company for Administrative Services rendered under
this
Article II.
2.5 Books
and Records.
During
the Service Period, Company will maintain true and accurate Books and
Records
with respect to the Policies and the Administrative Services provided
under the
Article II, including such Books and Records as may be required by
law.
2.6. Transfer
of Servicing.
Company
agrees to provide all reasonable assistance to Insurer in the transfer
to
Insurer of the administration of the Policies, including without limitation
responding to questions from Insurer in the conversion of computer
records and
files to the systems of Insurer.
2.7 Negotiation
of Checks and Drafts.
Company
shall be authorized to endorse for payment of all checks, drafts, and
money
orders payable to Insurer with respect to premiums payable on the Policies.
Insurer hereby assigns to Company all of its rights and privileges
to draft or
debit the accounts of any Policyholders for premiums due under the
Policies
pursuant to existing pre-authorized bank draft or electronic fund transfer
arrangements between Insurer and such Policyholders.
ARTICLE III
Termination
3.1 Effective
Date.
This
Services Agreement is effective as of the Closing Date, subject to
the closing
of the transactions contemplated in the Stock Purchase Agreement.
3.2 Term
& Termination.
The
initial term of this Services Agreement shall commence on the Closing
Date and
shall be for a period of three (3) months from the Effective Date.
Upon the
expiration of the initial term or any renewal term hereof, this Services
Agreement shall automatically be renewed for successive additional
terms of one
(1) month each, except that the total of such automatic renewal terms
shall not
exceed three (3) months in duration. This Services Agreement shall
terminate
upon the expiration of the initial term or any subsequent renewal term
by either
party furnishing prior written notice to the other of its intention
to terminate
not less than thirty (30) days prior to such expiration date. Upon
the
furnishing of such notice and expiration of such initial term or any
subsequent
renewal term, this Services Agreement shall terminate (the “Expiration
Date”).
ARTICLE IV
Indemnification
and Exculpation
4.1 Indemnification.
Insurer
shall indemnify and hold harmless Company, its affiliates and their
respective
directors, officers, agents and employees (each, a “Indemnified Person”) from
and against any claims, damages, losses, obligations, liabilities,
costs and
expenses (including, without limitation, reasonable attorneys’ fees)
(collectively, “Losses”), suffered by Indemnified Person and arising out of or
in connection with Administrative Services rendered or to be rendered
by any
Indemnified Person pursuant to this Services Agreement or the transactions
contemplated hereby except to the extent that such Losses are the result
of the
gross negligence or willful misconduct of such Indemnified Person.
ARTICLE V
Miscellaneous
5.1 Privacy
Rights.
Pursuant to the provisions of the National Association of Insurance
Commissioners Model Insurance Information and Privacy Protection Act,
and
similar laws and regulations as enacted in various states, the parties
recognize
that, in the performance of their respective obligations under this
Services
Agreement,
they each may obtain from the other personal or privileged information
about
individuals collected or received in connection with insurance transactions
under the Policies. Each of the parties agrees not to disclose such
information
to third parties without the individual’s written authorization unless such
disclosure is otherwise permitted by law.
5.2 Notice
Generally.
Any and
all notices or other communications required or permitted under this
Services
Agreement
shall be in writing and shall be deemed sufficient when (i) mailed by
United States registered or certified mail, return receipt requested,
(ii) mailed by overnight express mail, (iii) sent by facsimile or
telecopy machine, followed by confirmation mailed by first-class mail
or
overnight express mail, or (iv) delivered in person or by commercial
courier at the address set forth below:
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Insurer:
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Family
Life Insurance Company
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0000
Xxxxx Xxxx, Xxxxx 000
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Xxxxxxx,
XX 00000
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Attention:
Xxx Xxxxxx, President
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Fax:
(000) 000-0000
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Company:
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FIC
Insurance Services, L.P.
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0000
Xxxxx Xxxxx Xxxx., Xxxx. 0
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Xxxxxx,
XX 00000
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Attention:
Xxxxxxx Xxxxxxx
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Fax:
(000) 000-0000
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5.3 Independent
Contractors.
Each
party hereto shall be deemed an independent contractor of the other
for all
purposes hereunder. This Services
Agreement
shall not be construed to create the relationship of employer or employee
between either party hereto, and shall not create any right or legal
relation
between either party hereto and any other person or entity.
5.4 Waivers
and Amendments.
Any
term or condition of this Services
Agreement
may be waived at any time by the party, which is entitled to the benefit
thereof
by a writing executed by a duly authorized representative of
such
party. A waiver on any one occasion shall not be deemed a waiver of
the same
term or condition or any other term or condition on any future occasion.
This
Services Agreement may be modified or amended only by a writing duly
executed by
an executive officer of Company and Insurer, respectively.
5.5 Governing
Law.
Notwithstanding anything herein to the contrary, all provisions of
this Services
Agreement will be governed by and construed in accordance with the
laws of the
State of Texas, without regard to its conflicts of law doctrine.
5.6 Venue
and Jurisdiction.
Company
and Insurer hereby irrevocably submit to the exclusive jurisdiction
of any
county, state, or federal court of general and competent jurisdiction
located
within the State of Texas with respect to any legal action or proceeding
arising
out of or connected with this Services Agreement.
5.7 Severability.
If any
provision of this Services Agreement is held to be illegal, invalid
or
unenforceable under any present or future law or if determined by a
court of
competent jurisdiction to be unenforceable, and if the rights or obligations
of
Company or Insurer under this Services Agreement will not be materially
and
adversely affected thereby, such provision shall be fully severable,
and this
Services Agreement will be construed and enforced as if such illegal,
invalid or
unenforceable provision had never comprised a part of this Services
Agreement,
and the remaining provisions of this Services Agreement shall remain
in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance here from.
5.8 Assignment.
This
Services Agreement shall not be assigned by either of the parties hereto
without
the prior written approval of the other party.
5.9 Counterparts.
This
Services
Agreement
may be executed simultaneously in any number of counterparts, each
of which
shall be deemed an original, but all of which shall constitute one
and the same
instrument.
5.10 Headings.
The
headings in this Services
Agreement
are for convenience only and shall not constitute a part hereof.
IN
WITNESS WHEREOF,
the
parties hereto have caused this Services
Agreement
to be executed by their duly authorized officers.
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FIC
INSURANCE SERVICES, L.P.
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Date:
December 29, 2006
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By:
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/s/
Xxxxxxx
Xxxxxxx
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Xxxxxxx
Xxxxxxx, Interim President & CEO
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Financial
Industries Corporation,
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General
Partner of FIC Insurance Services, L.P.
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FAMILY
LIFE INSURANCE COMPANY
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Date:
December 29, 2006
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By
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/s/
Xxxxx
X. Xxxxxx
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Xxxxx
X. Xxxxxx, Chief Executive Officer
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