EXHIBIT 8(cc)
FORM OF MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT
EXHIBIT 8(CC)
MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT
-----------------------------------------------
THIS MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT (the "Agreement")
is made and entered into by and between IL Annuity and Insurance Company
("▇▇▇"), a Kansas life insurance company, and Ameritas Life Insurance Corp.
("▇▇▇▇"), a Nebraska life insurance company, effective as of the 1st day of
October, 2002 (the "Effective Date").
W-I-T-N-E-S-S-E-T-H
WHEREAS, ▇▇▇ is a variable-licensed life insurance company that, among
other things, has been in the business of selling, issuing, managing,
administering and servicing variable annuity policies; and
WHEREAS, ▇▇▇ has discontinued selling new variable annuity policies;
and
WHEREAS, ▇▇▇ continues to manage, administer and service the existing
block of approximately 8,000 variable annuity policies having an asset value of
approximately $234 million as of September 1, 2002 (the "▇▇▇ Variable
Annuities"); and
WHEREAS, ▇▇▇▇ is in the business of, among other things, managing,
administering and servicing variable annuity policies issued by certain of its
affiliates; and
WHEREAS, the parties hereto have determined that it is in their mutual
interests to transfer the management, administration and servicing of the ▇▇▇
Variable Annuities to ▇▇▇▇ on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties hereto, the parties hereby agree as follows:
1. Definitions. For the purposes of this Agreement and in addition to
the terms defined in the text of this Agreement, unless the context otherwise
requires, the following terms shall have the meanings set forth below:
(a) "▇▇▇▇ Systems" means any System or part thereof, including
modifications thereof, which is at any time designed,
developed, owned, or modified by ▇▇▇▇ or any of its
affiliates.
(b) "AmerUs Life" means AmerUs Life Insurance Company, an
affiliate of ▇▇▇.
(c) "AVLIC" means Ameritas Variable Life Insurance Company, a
Nebraska life insurance company owned by a joint venture
between AmerUs Life and ▇▇▇▇ and its affiliates.
(d) "AVLIC Service Agreement" means that certain Management
and Administrative Service Agreement dated as of April 1,
2001, as amended, between AVLIC, ▇▇▇▇ and AmerUs Life.
(e) "Board" means the Board of Directors of ▇▇▇.
(f) "Books and Records" means all accounting, financial
reporting, tax, business, marketing, corporate and other
files, documents, instruments, papers, books and records
of a specified person, including without limitation
financial statements, budgets, projections, ledgers,
journals, policies, manuals, contracts, franchises,
permits, agency lists, policyholder lists, supplier lists,
reports, computer files, retrieval programs, operating
data or plans, and environmental studies or plans.
(g) "Cause" means gross negligence, willful or intentional
misconduct, and/or the material breach of any of the
material duties set forth herein, which breach has not
been remedied so as to place ▇▇▇ in the same position as
if the same had never occurred within fifteen (15)
business days after written notice is given by ▇▇▇ to ▇▇▇▇
with respect to any services, advice or accommodations
provided for hereunder of such gross negligence, willful
or intentional misconduct or breach.
(h) "CPI" means the "Consumer Price Index for All Urban
Consumers: U.S. City Average" published monthly by the
United States Department of Labor, or such other index to
which the parties from time to time agree.
(i) "Damages" means any and all monetary damages, liabilities,
fines, fees, penalties, interest obligations,
deficiencies, losses and expenses, including without
limitation punitive, treble or other exemplary or extra
contractual damages, amounts paid in settlement, interest,
court costs, costs of investigation, fees and expenses of
attorneys, accountants, actuaries and other experts, and
other expenses of litigation or of any claim, default or
assessment.
(j) "DP Services" means data processing services.
(k) "Fund Gains/Losses" means gains (losses) in the separate
accounts of ▇▇▇ resulting from incorrect mutual fund
values, calculation of incorrect separate account unit
value, misapplication or misunderstanding of policyholder
instructions, out of balance mutual funds or policyholder
accounts or similar occurrences.
(l) "Laws" means all laws, statutes, ordinances, regulations
and other pronouncements having the effect of law of the
United States of America or any state, commonwealth, city,
county, municipality, territory, protectorate,
2
possession, court, tribunal, agency, government,
department, commission, arbitrator, board, bureau or
instrumentality thereof.
(m) "System" or "Systems" means computer programs and
programming aids with supporting documentation, including,
but not limited to, input and output formats, program
listings, systems flow charts, narrative descriptions and
operation instructions, and shall include tangible media
upon which such programs are recorded and includes ▇▇▇▇
Systems and Third Party Systems.
(n) "Third Party Systems" means Systems other than ▇▇▇▇
Systems.
2. DATA PROCESSING
2.1 ▇▇▇▇ ▇▇ Services. ▇▇▇▇ agrees to provide or to cause to be
provided all DP Services as are reasonably necessary in order to provide the
services contemplated for the proper administration of the ▇▇▇ Variable
Annuities. Such DP Services shall at all times be of at least equivalent scope,
timeliness and quality to those provided by ▇▇▇▇ to its affiliates as of the
date of this Agreement.
2.2 Right To Use Systems of ▇▇▇▇.
(a) ▇▇▇▇ has obtained all third-party consents, if any,
necessary to permit all Systems to be utilized by ▇▇▇▇ in
providing the services contemplated under this Agreement.
(b) Upon expiration or termination of this Agreement, ▇▇▇▇
shall ▇▇▇▇▇ ▇▇▇ for use by ▇▇▇ or as ▇▇▇ may determine,
subject only to any existing restrictions thereon
previously imposed by a third party, a nonexclusive,
royalty free license to use, only for administering the
▇▇▇ Variable Annuities, any improvements or modifications,
including source code, to Third Party Systems made prior
to or during the term of this Agreement which (i) are used
in providing services to ▇▇▇ hereunder and (ii) ▇▇▇▇ has
authority to assign royalty-free and without loss of the
right to use by ▇▇▇▇ or its affiliates or without any
additional royalty fees being required to be paid;
provided, however, that in order to preserve and to
protect the confidentiality of any Third Party Systems, if
▇▇▇ shall elect to use such Third Party Systems after the
date this Agreement is terminated, ▇▇▇ shall enter into an
agreement or agreements with ▇▇▇▇ or ▇▇▇▇'▇ affiliates
containing such covenants and conditions as are necessary
or reasonably required to protect the confidentiality of
such Third Party Systems.
(c) Upon expiration or termination of this Agreement, ▇▇▇▇, at
the request of ▇▇▇, subject to ILA's agreement to
reimburse ▇▇▇▇ for all expenses incurred, shall deliver to
▇▇▇ magnetic tapes, or the then equivalent media,
containing:
3
(1) the data records for the business being
administered for ▇▇▇ along with hard copy
record layouts or printouts, and
(2) subject only to any existing restrictions
thereon previously imposed by a third party,
all specific plan files and operating
company tables.
2.3 Safeguarding Data. ▇▇▇▇ shall establish reasonable safeguards to
protect against the distribution, loss or alteration of ILA's data files and
other records. Such safeguards shall be no less rigorous than those ▇▇▇▇ uses in
protecting its own data and as is necessary to comply with applicable laws and
regulations.
3. MANAGEMENT, ADMINISTRATIVE AND OTHER SERVICES, ACCOMMODATIONS
AND COSTS
3.1 ▇▇▇▇ Basic Services. ▇▇▇▇ shall provide to ▇▇▇ all management,
administrative and other services, advice and other accommodations reasonably
necessary to effectively and efficiently manage, administer and service the ▇▇▇
Variable Annuities in a manner consistent with good business practice. The
foregoing shall include all materials, supplies and other sundry items
reasonably necessary to providing the foregoing. Without limiting the generality
of the foregoing, such services, or portions thereof, shall meet such standards
as are specified in Exhibit A hereto, as such Exhibit A may be updated by
agreement of the parties from time to time.
3.2 ▇▇▇▇ Other Services. These services to be provided by ▇▇▇▇
hereunder shall include the following items:
(a) ▇▇▇▇ shall provide calculation of unit values and perform
trades with the funds for the ▇▇▇ Separate Accounts.
(b) ▇▇▇▇ will timely provide data extracts for ▇▇▇ to make
calculations of statutory, GAAP and tax reserves;
(c) ▇▇▇▇ shall timely provide data necessary for ▇▇▇ to
prepare its Annual Statements ("Blue Book") and Quarterly
Statements;
(d) ▇▇▇▇ shall prepare an Annual Statement ("Green Book") of
the Separate Accounts of ▇▇▇. Such preparation will be on
statement preparation software as provided by ▇▇▇.
Printing and filing of statements will be the
responsibility of ▇▇▇.
(e) ▇▇▇▇ will timely provide the data necessary for ▇▇▇ to
prepare other periodic financial and tax reports as are
reasonably required;
(f) ▇▇▇▇ will provide reasonable cooperation and data for
external and internal audits by ▇▇▇ of the records
maintained by ▇▇▇▇ for the ▇▇▇ Variable Annuities;
4
(g) ▇▇▇▇ will provide reasonable cooperation and data for
claim settlement(s) or litigation handling by ▇▇▇;
(h) ▇▇▇▇ will provide legal services and all related support
necessary to ensure ongoing compliance of ILA's
SEC-registered separate accounts and the variable
contracts with all Laws (including federal securities and
treasury rules and regulations);
(i) ▇▇▇▇ shall have responsibility for the issuance,
management, administration and servicing of any variable
annuitization of an ▇▇▇ Variable Annuity; provided,
however, that ▇▇▇ shall have responsibility for such
services in connection with any fixed annuitization of an
▇▇▇ Variable Annuity;
(j) ▇▇▇▇ will timely prepare and transmit to the Internal
Revenue Service all required 1099's and 5948's; and
(k) ▇▇▇▇ will make all improvements or modifications to any
System reasonably requested by ▇▇▇.
3.3 Performance of Services.
(a) ▇▇▇▇ agrees that the management, administrative and other
services, advice and accommodations performed hereunder by
▇▇▇▇ will at all times be timely and accurate and of at
least equivalent quality to those provided by ▇▇▇▇ to its
affiliates as of the date of this Agreement, subject to
the credibility of the data supplied by or on behalf of
▇▇▇.
(b) ▇▇▇▇ shall retain the right to contract with any third
party, affiliated or unaffiliated, for the performance of
services or use of facilities upon receipt of the consent
of ▇▇▇, which shall not be unreasonably withheld.
(c) No facility or System used by ▇▇▇▇ in performing services
for or subject to use by ▇▇▇ shall be deemed to be
transferred, assigned, conveyed, or leased to ▇▇▇ by
performance or use pursuant to this Agreement, except as
▇▇▇▇ and ▇▇▇ may otherwise agree in writing.
(d) In providing any services hereunder which require the
exercise of judgment, ▇▇▇▇ will endeavor to perform any
such service in accordance with any reasonable and
appropriate standards and guidelines ▇▇▇ develops and
communicates to ▇▇▇▇, provided such guidelines are in
accord with all relevant Laws.
(e) The performance or receipt of services or the making
available or use of facilities pursuant to this Agreement
shall in no way impair the absolute
5
control of the business and operations of each of the
parties by its own board of directors.
(f) ▇▇▇ shall be entitled to all income realized on its
business activity and on its investments and shall be
responsible for all investment expenses incurred in its
behalf, except as specifically provided by this Agreement.
4. Supervision by Board of Directors. ▇▇▇▇ acknowledges that the
Board is vested with the power, authority, and responsibility for managing the
▇▇▇ Variable Annuities, and acknowledges that any and all actions, whether
management, supervisory or ministerial, taken by ▇▇▇▇ pursuant to Sections 2 and
3 shall be subject to the continuous supervision of said Board; provided,
however, that the routine day to day practices and procedures used to comply
with the terms of this Agreement by ▇▇▇▇ shall be within its discretion so long
as they are consistent with the terms and conditions of this Agreement and with
good business practices.
5. AMOUNT AND PAYMENT OF FEES
5.1 Fees Payable to ▇▇▇▇. As consideration for ▇▇▇▇ providing
services pursuant to this Agreement for ▇▇▇, ▇▇▇ will pay ▇▇▇▇ pursuant to the
following provisions as to types of service, determination of fees and
adjustment of fees from time to time.
(a) All time and expenses incurred to date and through March
31, 2003 (or, for items specified below, any later date
specifically stated below) to complete the transfer of all
management, administrative and other services, advice and
other accommodations reasonably necessary to service the
▇▇▇ Variable Annuities, including, but not limited to:
o Programming and system modifications
o Plan file and table coding
o Testing
o Data clean-up
o Temporary manual work-arounds
o Knowledge transfer (analysis, training, etc.)
o Physical file transfers and imaging
o Set-up activities
o Policy conversions
o Transfer of licensing and contracting function,
data and files (provided, however, that such
transition is expected to be implemented April 1,
2003 and completed June 30, 2003).
(b) Basic Services.
(1) The term "Basic Services" shall refer to all
services to be performed by ▇▇▇▇ pursuant to this
Agreement that are not expressly described in
Section 5.1(c)(1) as "Other Services" or in
Section 5.1(d)(1) as "Extraordinary Services."
6
(2) The initial fees for the Basic Services shall be
an annual per policy fee of $74.50 payable
monthly in arrears in an amount equal to one-
twelfth of such amount, multiplied by the number
of ▇▇▇ Variable Annuities in force at the end of
such month. These fees include all DP Services
operations, maintenance and support costs and the
required LIDP license fee to process ▇▇▇ Variable
Annuities on the LIDP System.
(3) Commencing in 2004, the per policy fee for the
Basic Services shall be automatically adjusted up
or down annually at the same percentage rate as
the unit cost payable for "Maintenance" for any
year pursuant to the AVLIC Service Agreement
varies from that charged for the prior year under
such agreement, excluding for this purpose any
variance in such unit cost resulting from an
amendment, in that year or a prior year, of the
Table of Maximum Unit Costs associated with an
increase in the pricing unit cost assumption for
variable annuities as described in Exhibit C to
the AVLIC Service Agreement. If for any year ▇▇▇▇
is no longer providing services under the AVLIC
Service Agreement, the per policy fee charged for
the prior year shall be adjusted on January 1st
by the percentage increase or decrease in the CPI
for December of the year just prior to January
1st from December of the year before that.
(4) While this Agreement remains in force, the fees
for Basic Services shall never be less than the
then current year's per policy fee, adjusted as
described above, multiplied by 1,000, even if the
number of ▇▇▇ Variable Annuities then in force is
less than 1,000.
(5) In addition to the fees for the Basic Services
described in this Section 5.1(A), ▇▇▇ shall pay
▇▇▇▇ a Fund Gains/Losses risk charge in the
amount of 0.01% of separate account assets
annually. This fee shall be determined monthly
based on the average book value (averaging such
value at the beginning and end of such month) of
the assets invested in the separate accounts that
are identified as being related to and supporting
the ▇▇▇ Variable Annuities. This fee shall be
fixed for the term of this Agreement.
(c) Other Services.
(1) The term "Other Services" shall refer to all
those services described in Section 3.2.
(2) Charges for all Other Services, except the legal
services described in Section 3.2(h), the
variable annuitizations described in Section
3.2(i)
7
above, and improvements or modifications to the
Systems under Section 3.2(k), shall be based on
▇▇▇▇'▇ best-efforts determination of the cost of
time and materials actually expended by ▇▇▇▇ in
performing these services plus ten percent (10%)
for overhead, subject to the maximum charges set
forth herein. For each month from inception of
this Agreement through December 31, 2003, ▇▇▇
shall pay one-twelfth of an estimated annual
charge of $100,000 each month; provided, however,
that if the actual cost determined as provided
above is less than $125,000 ($100,000/12*15), the
excess shall be refunded to ▇▇▇ promptly after
December 31, 2003. Beginning in 2004 and each
year thereafter, ILA's monthly payment shall
equal one-twelfth of the lesser of (i) the actual
annual cost for the prior year determined as
specified above, or (ii) the Other Services
Maximum (as defined below); provided, however,
that if the actual annual cost in any year is
less than such payments, the excess shall be
refunded to ▇▇▇ promptly after December 31 of
such year and if actual annual cost in any year
is more than such payments, then the deficit, up
to the "Other Services Maximum", shall be
remitted by ▇▇▇ promptly after December 31st of
such year. For purposes of this Section
5.1(c)(2), the "Other Services Maximum" shall
equal $100,000 during 2004, which amount shall
be, for all years thereafter, adjusted on January
1st by the percentage increase or decrease in the
CPI for December of the year just prior to
January 1st from December of the year before
that.
(3) Charges for the legal services described in
Section 3.2(h) above shall be based on time
expended in performing these services times a per
hour charge which the parties agree shall be $90
for attorneys and $60 for paralegals. These
charges shall be payable monthly and shall be
adjusted annually each January 1st by the
percentage increase or decrease in the CPI for
December of the year just prior to January 1st
from December of the year before that.
(4) The fee for the variable annuitization described
in Section 3.2(i) shall be an annual fee of $600
payable monthly in arrears in an amount equal to
1/12 of such amount, multiplied by the number of
▇▇▇ Variable Annuities that were in variable
annuitization payouts at the end of that month,
plus a set-up fee of $250 for each variable
annuitization of an ▇▇▇ Variable Annuity during
such month. When the variable annuitization is
automated, the parties will review the charges
and adjust as agreed.
(5) Fees payable for improvements or modifications
requested by ▇▇▇ and made by ▇▇▇▇ to a System, as
described in Section 3.2(k), shall
8
be based on ▇▇▇▇'▇ best-efforts determination of
the cost of time and materials actually expended
by ▇▇▇▇ in performing these services plus ten
percent (10%) for overhead. If any such
improvements or modifications made after October
1, 2002 will be used for the benefit of ▇▇▇▇ or
an affiliate of ▇▇▇▇ as well as ▇▇▇, then the
costs of such requested improvement or
modification shall be shared among such entities
on a basis as the parties hereto may agree.
(d) Extraordinary Services.
(1) The term "Extraordinary Services" shall refer to
the following services that may be requested or
required from time to time by ▇▇▇ and performed
by ▇▇▇▇ pursuant to this Agreement:
(A) Services and costs incurred in connection
with SEC, NASD and regulatory examinations
other than regularly scheduled or routine
market conduct or other examinations and
support required from ▇▇▇▇ in the conduct of
such examinations;
(B) Product or fund changes related to the ▇▇▇
Variable Annuities; and
(C) Other extraordinary and non-routine written
requests that may arise other than in the
ordinary course of business in servicing the
▇▇▇ Variable Annuities, as the parties may
agree from time to time.
(2) The fees for the Extraordinary Services shall be
a time and materials charge based on ▇▇▇▇'▇
best-efforts determination of the cost of time
and materials actually expended by ▇▇▇▇ in
performing these services plus ten percent (10%)
for overhead.
(3) Services for which ▇▇▇ requests a change from
ILA's process that is different from ▇▇▇▇'▇
standard for Basic Services shall be deemed to be
an Extraordinary Service, if the Basic Service is
sufficient to satisfy the policy and prospectus
requirements and is consistent with good business
practices.
(e) Costs. ▇▇▇▇ shall pay all of its own personnel and other
costs and expenses of all types necessary or appropriate
to render the management, administrative and other
services, advice and accommodations provided for by this
Agreement, except for the following costs which shall
either be paid directly by ▇▇▇, or if paid by ▇▇▇▇ on
behalf of ▇▇▇, shall be promptly reimbursed by ▇▇▇:
9
(1) All out-of-pocket costs and expenses incurred in
connection with actuarial, tax, accounting,
systems, or other studies, functions or
consultations performed solely for and at the
request of ▇▇▇ by independent professional or
consulting individuals or organizations;
(2) All fines and penalties of ▇▇▇ including interest
assessed;
(3) Premium taxes;
(4) Federal, state or other governmental subdivision
taxes, licenses and fees and interest thereon;
(5) Guaranty fund assessments;
(6) Any registered representative or insurance
licensing or registration fees;
(7) The cost of printing and postage for mailing
prospectuses, annual reports and semi-annual
reports and postage for mailing quarterly reports
(it being understood that if printing is
performed internally the actual cost will be
determined based on ▇▇▇▇'▇ comparable internal
transfer pricing practices);
(8) The cost of Annual Statement software;
(9) Any costs associated with the correction of an
error related to the values of or records
concerning an ▇▇▇ Variable Annuity, which error
occurred prior to the Effective Date and affects
the policy following the Effective Date, which
costs include the administrative costs to correct
or reconvert the policy;
(10) The Fund Gains/Losses described in clauses (A),
(B), (C) or (D) below (it being understood that
such gains shall be payable to ▇▇▇), provided,
however, that payment by ▇▇▇ of amounts under
this Section 5.1(e)(10) shall not relieve ▇▇▇▇ of
any obligation to provide indemnification for
such amounts pursuant to Section 6.6 hereof:
(A) Fund Gains/Losses resulting from neither ▇▇▇
nor ▇▇▇▇ processing trades on September 30,
2002;
(B) Fund Gains/Losses resulting from incorrect
Net Asset Values (NAVs) reported by fund
managers;
10
(C) Fund Gains/Losses resulting from exceptions
requested by ▇▇▇ and the associated
administrative expenses to complete the
re-conversion and correct the ▇▇▇ records;
or
(D) Fund Gains/Losses relating to a correction
described in Section 5.1(e)(9).
(11) Fund Gains/Losses resulting from compliance with
the policy contract requirements (it being
understood that any such gains shall be payable
to ▇▇▇).
5.2 Mechanics of Timing, Calculation and Reporting of Payment of
Fees. ▇▇▇▇ shall deliver to ▇▇▇, within ten (10) days after the end of each
calendar month during the term of this Agreement, statements showing all fees
due and payable pursuant to this Agreement in respect of such period, together
with any amounts to be reimbursed pursuant to Section 5.1(e) hereof. Such
statements shall include detail sufficient to show the basis of ▇▇▇▇'▇
calculation of such fees. ▇▇▇ shall pay all amounts due thereunder within ten
(10) days after such statement is received. Payment of such amounts shall not
constitute any party's agreement to or acceptance of the validity of the charges
set forth on such statements, and each party shall have the right to audit such
charges following payment as permitted under Section 6.3 hereof.
6. CONFIDENTIALITY, PERFORMANCE AND RELATIONSHIP OF PARTIES
6.1 Disclosure of Information. ▇▇▇▇ and ▇▇▇ each will hold in
strict confidence, except as may be necessary by reason of legal, accounting,
regulatory or administrative requirements, all confidential documents and
confidential or proprietary information concerning the other party which is
furnished to it in connection with this Agreement or in the course of carrying
out the services pursuant to this Agreement. Neither party will disclose or
otherwise provide any such confidential or proprietary documents or information
to any other person, including without limitation its auditors, actuaries,
attorneys, financial advisors, other consultants and advisors, unless such other
person agrees to be subject to and bound by the confidentiality provisions
hereof. Nothing herein shall prohibit either party from providing such
information to any rating agency personnel as may be necessary or appropriate.
6.2 Records and Reports. All forms, records, statements, reports,
files and other data and information prepared, maintained or collected by ▇▇▇▇
on behalf of ▇▇▇ in the performance of this Agreement shall be the sole property
of ▇▇▇ and shall be delivered to ▇▇▇ upon request in the form and format in
which they are maintained; provided, however, that if such request impedes
▇▇▇▇'▇ ability to perform its duties or obligations under this Agreement, then
to the extent of such impediment such party shall be relieved of such duty and
obligation without reduction in fees to be paid by ▇▇▇. ▇▇▇▇ agrees to preserve,
for the period prescribed by applicable regulatory authorities, the Books and
Records of ▇▇▇ maintained by ▇▇▇▇ pursuant to this Agreement.
6.3 Inspection of Books and Records. ▇▇▇▇ shall keep proper Books
and Records relating to the services performed hereunder in which full and
correct entries and financial data will
11
be maintained in accordance with generally accepted accounting practices. ▇▇▇
may at its option and at its expense inspect the Books and Records of ▇▇▇▇ as
they pertain to this Agreement at the offices of ▇▇▇▇ in which said Books and
Records are maintained, during normal business hours, for any purpose related to
▇▇▇▇'▇ performance of this Agreement or the collection and determination of the
fees required to be paid by ▇▇▇ under this Agreement. Such inspection and/or
audits may be on a continuous or periodic basis or both and may be conducted by
employees of ▇▇▇ or an affiliate thereof or an independent auditor retained by
such person.
6.4 Performance. The failure of any party to insist upon strict
performance of any provision of this Agreement shall not constitute a waiver of
right to insist upon strict performance or the obligation to strictly perform
thereafter.
6.5 Relationship of Parties.
(a) ▇▇▇▇ assumes no responsibility under this Agreement other
than to render the services, advice and assistance
provided for hereunder in good faith and with reasonable
care. The relationship between ▇▇▇ as the recipient of
services and ▇▇▇▇ as the provider of services with respect
to and for the purposes of this Agreement shall be that of
independent contractor and nothing contained herein shall
create the relationship of employer-employee or
principal-agent.
(b) Neither ▇▇▇▇ nor ▇▇▇ shall act or hold itself out as the
agent of the other. The facilities used by ▇▇▇▇ in
providing such services shall be deemed to be owned and
operated by ▇▇▇▇ and, unless otherwise provided in
writing, shall not be considered as being leased to ▇▇▇.
6.6 Indemnification.
(a) ▇▇▇▇ agrees to indemnify and to hold ▇▇▇ harmless from any
and all Damages incurred by it or any of its affiliates as
the result of (i) any negligent or intentional act or
omission or violation by ▇▇▇▇ (or its employees or agents)
of its obligations hereunder, except to the extent such
negligent or intentional act, omission or violation is
caused by ▇▇▇ or agents of ▇▇▇ who are not employees or
agents of ▇▇▇▇; or (ii) any claims of infringement of any
license, patent, trademark or other right of another
person asserted against ▇▇▇ with respect to any System
used in providing services hereunder. Notwithstanding the
foregoing, the provisions of this section will not apply
with respect to consequential damages; and, where the
action required to be performed under this Agreement
involves the exercise of discretion, the fact that damages
result to ▇▇▇ by reason of an ▇▇▇▇ employee having
exercised such discretion shall not, if such action was
taken in good faith and with reasonable care, be deemed to
be an act of negligence for which indemnity may be
recovered by ▇▇▇.
12
(b) ▇▇▇ agrees to indemnify and to hold ▇▇▇▇ and its
affiliates harmless from any and all Damages incurred by
▇▇▇▇ and/or any of its affiliates as the result of or in
connection with claims by third parties in connection with
the performance of duties under this Agreement except to
the extent of claims described in Section 6.6(a) (and
excluding the costs incurred by ▇▇▇▇ in rendering the
services and providing related accommodations and other
goods under the terms of this Agreement).
(c) Nothing set forth in this Section 6.6 shall deprive ▇▇▇▇
or ▇▇▇ of any claims or causes of action that either of
them may have against the other which are independent of
this Agreement.
(d) Within a reasonable time after the party seeking
indemnification pursuant to this Section 6.6 (the
"Indemnified Party") has actual knowledge of a claim for
Damages, such Indemnified Party will give notice to the
party from whom indemnification is sought (the
"Indemnifying Party").
(1) If the Indemnifying Party notifies the
Indemnified Party within twenty (20) days after
receiving notice of the claim from the
Indemnified Party that the Indemnifying Party
does not dispute its obligation to the
Indemnified Party with respect to such claim and
that the Indemnifying Party desires to defend the
Indemnified Party with respect to such claim for
Damages, then the Indemnifying Party will have
the right to defend, at its sole cost and
expense, such claim by all appropriate
proceedings, which proceedings will be diligently
prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion
of the Indemnifying Party (with the consent of
the Indemnified Party, which consent will not be
withheld or delayed unreasonably). From the date
of such notice, the Indemnifying Party will have
full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that the Indemnified Party
may, at any time prior to its receipt of such
notice from the Indemnifying Party, file any
motion, answer, or other pleadings that the
Indemnified Party may deem necessary or
appropriate to protect its interests.
(2) If the Indemnifying Party fails to notify the
Indemnified Party that the Indemnifying Party
does not dispute its obligation to the
Indemnified Party and that the Indemnifying Party
desires to defend the Indemnified Party with
respect to such claim for Damages pursuant to
this Section, or if the Indemnifying Party gives
such notice but fails diligently and promptly to
defend, prosecute or settle such claim, then the
Indemnified Party will have the right to defend,
at the sole cost and expense of the Indemnifying
Party, such claim by all appropriate proceedings,
which proceedings will be promptly and vigorously
prosecuted by the Indemnified Party to a final
conclusion or will be
13
settled at the discretion of the Indemnified
Party. The Indemnified Party will have full
control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party agrees,
at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnified Party
and its counsel in contesting such claim.
7 . TERM OF AGREEMENT AND NOTICES
7.1 Term of Agreement. This Agreement shall take effect on October
1, 2002 and shall have an initial term that ends on December 31, 2007. The term
of this Agreement shall automatically renew for a second five-year term ending
December 31, 2012 unless ▇▇▇ gives ▇▇▇▇ written notice of non-renewal at least
180 days prior to the end of the initial term. At the end of the initial term,
if a notice of non-renewal is given, or at the end of the renewal term, this
Agreement shall terminate.
7.2 Termination.
(a) Termination for Cause. This Agreement may be terminated by
either party at any time upon delivery of written notice
to the other party for Cause.
(b) Termination upon ▇▇▇ Business Changes. ▇▇▇ shall have the
right to terminate this Agreement on 180 days prior
written notice at any time after any of the following
occurs: (1) the block of ▇▇▇ Variable Annuities is sold or
transferred in any way so that ▇▇▇ is no longer the
beneficial owner of same; (2) ▇▇▇ is no longer an
affiliate of AmerUs Life; or (3) the number of in force
▇▇▇ Variable Annuities is less than 1,000.
(c) Termination upon Dissolution of Joint Venture. This
Agreement may be terminated by either party upon nine
months' prior written notice in the event that either (1)
that certain Amended and Restated Joint Venture Agreement
dated as of June 30, 1996 between ▇▇▇▇ and AmerUs Life is
terminated or (2) ▇▇▇▇ no longer provides the management
and administrative services described in the AVLIC Service
Agreement with respect to AVLIC's variable business.
7.3 Actions Upon Termination. Upon termination, ▇▇▇ shall
immediately pay ▇▇▇▇ all sums due hereunder through the date of termination for
the rendering of services and ▇▇▇▇ shall immediately deliver to ▇▇▇ or its
designees all forms, records, statements, files, reports and other data and
information prepared or collected by ▇▇▇▇ in connection with the performance of
this Agreement. ▇▇▇▇ shall use all reasonable efforts to cooperate in the
transition of the services and accommodations provided hereunder as directed by
▇▇▇. At the request of ▇▇▇, ▇▇▇▇ shall use its best efforts to cause all
employees of ▇▇▇▇ who are employed in rendering service, advice and assistance
required hereunder to ▇▇▇ on the date of termination to cooperate fully with ▇▇▇
or its
14
designee in all respects, including but not limited to all actions necessary to
facilitate the transfer of the servicing obligations provided for hereunder.
▇▇▇ shall compensate ▇▇▇▇ for all reasonable costs and expenses incurred in
transferring the servicing obligations hereunder.
8. MISCELLANEOUS
8.1 Notices. All notices or communications required or permitted
under this Agreement will be in writing and be deemed given: (i) five (5)
business days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; (ii) one (1) business day after deposit with
a commercial overnight carrier, with written verification of receipt; (iii) when
sent via facsimile with confirmation. Notice sent by any other method shall be
effective only upon actual receipt. All communications will be sent to the
parties at the addresses set forth below:
* If to ▇▇▇▇: Chief Executive Officer, Ameritas Life Insurance Corp.,
▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, with a copy to the General
Counsel at the same address.
* If to ▇▇▇: Chief Executive Officer, IL Annuity and Insurance Company,
One AmVestors Place, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
with a copy to the General Counsel at the same address.
8.2 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto and supersedes all prior agreements of the
parties with respect to the subject matter contained herein. Any condition to a
party's obligation hereunder may be waived in writing by such party.
8.3 Amendments. This Agreement shall not be amended, changed,
modified, terminated or discharged in whole or in part, and no notice
requirements set forth herein shall be waived or modified, except by an
instrument in writing duly executed by ▇▇▇▇ and ▇▇▇, or their respective
successors or assigns.
8.4 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
8.5 Severable Provisions. If any provision of this Agreement shall
be found to be unenforceable by any administrative agency or court of competent
jurisdiction, such finding shall not affect the remaining provisions of this
Agreement and all other provisions herein shall remain in full force and effect.
8.6 Governing Law. This Agreement shall be interpreted and enforced
in accordance with the laws of Nebraska without regard to conflicts of laws.
▇▇▇▇ and ▇▇▇ shall appropriately comply with all applicable federal, state, and
local laws and rules, regulations or rulings issued under such laws.
8.7 Assignment. Except as otherwise provided herein, this Agreement
shall not be assigned by any party hereto without the prior written consent of
the other party.
15
8.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original hereof, but all of
which shall constitute one and the same instrument.
8.9 Interpretation. The headings used in this Agreement are for
convenience and are not to be construed or interpreted in connection with this
Agreement. Unless the context of this Agreement otherwise requires,
(a) words using the singular or plural also include the plural
or singular, respectively;
(b) the terms "hereof", "herein", "hereby", "hereto" and
similar words refer to this Agreement; and
(c) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement.
8.10 Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto and their
respective successors and assignors, and it is not the intention of the parties
to confer third party beneficiary rights upon any other person.
8.11 Construction. The parties acknowledge that they and their
respective counsel have worked together closely drafting, negotiating and
reviewing this Agreement and that any rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
8.12 Arbitration.
(a) Any controversy or claim arising out of or relating to
this Agreement or any breach of this Agreement, including any controversy or
claim as to its arbitrability or rescission, shall be finally settled by
arbitration administered by the American Arbitration Association ("AAA") in
accordance with its Commercial Arbitration Rules and the Federal Arbitration
Act. If the AAA is not then in existence, the arbitration shall be governed by
the Commercial Arbitration Rules last in effect. Any party seeking arbitration
must give the other 30 days written notice of that intent. A single United
States arbitrator or, in the case of a dispute in which the amount in
controversy exceeds $100,000, a panel of 3 United States arbitrators (one chosen
by each party and the third selected by the 2 arbitrators so chosen) shall
interpret this Agreement pursuant to Nebraska law and shall base any decision or
award on applicable law and judicial precedent. Any arbitration shall be
conducted in Lincoln, Nebraska, unless the parties mutually agree to another
location. The arbitrator(s) shall not, under any circumstances, have any
authority to award punitive or exemplary damages.
(b) All expenses associated with obtaining and utilizing the
services of the AAA and the arbitrator(s), and as otherwise provided in the
Commercial Arbitration Rules, shall be shared equally by the parties hereto, and
the arbitrator(s) shall request payment separately from each party
16
for said expenses. Each party shall bear its own expenses of preparing for and
participating in the arbitration, including attorney and witness fees and
discovery costs.
(c) The parties may engage in discovery, pursuant to the
Federal Rules of Civil Procedure, to the extent such discovery is consistent
with the purpose of the arbitration and is permitted by the arbitrator(s).
(d) The decision or award of the arbitrator(s) shall be
final, binding, and enforceable. The decision of the arbitrator(s) shall be in
writing and shall set forth in reasonable detail the basis for the decision.
Application may be made to any court of competent jurisdiction for judicial
acceptance of the arbitration award and enforcement, as the law of the state
having jurisdiction may require or allow.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 7th day of April, 2003.
AMERITAS LIFE INSURANCE CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Senior Vice President &
Corporate Actuary
Attest:
Assistant
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ , Secretary
------------------------------------
IL ANNUITY AND INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Attest:
Assistant
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ , Secretary
------------------------------------
17
EXHIBIT A
to Management and Administrative Service Agreement
dated as of October 1, 2002
The following table sets out the financial and statistical information that ▇▇▇▇
will furnish to ▇▇▇ in connection with the administration of ▇▇▇ VAs by ▇▇▇▇
together with the frequency of the reports and the delivery time following the
end of the period to which the information relates:
---------------------------------------------------------------------------------------------
Frequency* Description Delivery Time After End
of Period (Working Days)**
-------------- --------------------------------------------------- --------------------------
M GAAP Reconciliation (Account Value Roll Forward) 5
-------------- --------------------------------------------------- --------------------------
M Separate Account Asset 5
-------------- --------------------------------------------------- --------------------------
M State Withholding for CA & OR 3
-------------- --------------------------------------------------- --------------------------
M State Withholding Reconciliation 3
-------------- --------------------------------------------------- --------------------------
D Fed Withholding Sent Daily
-------------- --------------------------------------------------- --------------------------
M Fed Withholding Reconciliation 8
-------------- --------------------------------------------------- --------------------------
M Escheat Information 8
-------------- --------------------------------------------------- --------------------------
A Form 1099 and Form 5498 Filings (As Required by Form)
-------------- --------------------------------------------------- --------------------------
A Policy Exhibits (Blue Book schedule) 12
-------------- --------------------------------------------------- --------------------------
M Annuity Death Claim 5
-------------- --------------------------------------------------- --------------------------
M Valuation extract (arcval) 5
-------------- --------------------------------------------------- --------------------------
Q State Distribution 8
-------------- --------------------------------------------------- --------------------------
A State Distribution - State Page 12
-------------- --------------------------------------------------- --------------------------
Q State Distribution - Schedule T (Blue Book) 12
-------------- --------------------------------------------------- --------------------------
M Bank Reconciliation 20
-------------- --------------------------------------------------- --------------------------
Q State Distribution - Variable Option Premiums 5
-------------- --------------------------------------------------- --------------------------
Q Schedule E (Blue Book) (Interest Amounts and 18
Interest Rates)
-------------- --------------------------------------------------- --------------------------
M Policy Loan & Accrued Interest 3
-------------- --------------------------------------------------- --------------------------
A Separate Accounts Notes/Reconciliation of SA 18
Transfer
-------------- --------------------------------------------------- --------------------------
M Suspense Accounts Listing 5
-------------- --------------------------------------------------- --------------------------
M Ledger Extract 3
-------------- --------------------------------------------------- --------------------------
M Reinsurance Report 3
-------------- --------------------------------------------------- --------------------------
A GAAP Audit Information 8
-------------- --------------------------------------------------- --------------------------
A Separate Account Annual Statement January 31st
-------------- --------------------------------------------------- --------------------------
Q Separate Account Quarterly Statement in Ameritas 8
Format
-------------- --------------------------------------------------- --------------------------
18
-------------- --------------------------------------------------- --------------------------
M Breakage Reports 45
---------------------------------------------------------------------------------------------
The following table sets out the financial and statistical information that ▇▇▇
will furnish to ▇▇▇▇ in connection with the administration of ▇▇▇ VAs by ▇▇▇▇
together with the frequency of the reports and delivery time following the end
of the period to which the information relates:
---------------------------------------------------------------------------------------------
Frequency* Description Delivery Time After End
of Period (Working
Days)***
-------------- --------------------------------------------------- --------------------------
A Exhibit 6 Plus CRVM Information 10
---------------------------------------------------------------------------------------------
* The abbreviations used in the "Frequency" sections mean the following"
"A" Annually
"Q" Quarterly
"M" Monthly
"D" Daily
** "Working Days" for purposes of this table means any days that ▇▇▇▇ is open
for business.
*** "Working Days" for purposes of this table means any days that ▇▇▇ is open
for business.
19
