EXHIBIT h (7)
Administrative and Shareholder Services Agreement
This Agreement is made as of the 18th day of October 2002, by and between ING
Funds Services, LLC (the "Administrator") and Connecticut General Life Insurance
Company ("Company"), collectively, the "Parties."
WHEREAS, the Administrator serves as the Administrator for ING Variable
Portfolios, Inc. ("ING VPI") which currently consists of 16 separate series (the
"Portfolios"); and
WHEREAS, the Company has entered into a Participation Agreement, dated August
15, 2002, with ING VPI (a "Participation Agreement") pursuant to which ING VPI
will make shares of certain Portfolios available to the Company at net asset
value and with no sales charges, subject to the terms of the Participation
Agreement, to fund benefits under variable life insurance policies and/or
variable annuity Contracts (each, a "Contract," and collectively, the
"Contracts") to be issued by the Company; and
WHEREAS, the Participation Agreement provides that ING VPI will bear the costs
of preparing and filing with the Securities and Exchange Commission ING VPI's
prospectus, registration statement, proxy materials and reports, setting the
prospectus and shareholder reports in type, setting in type and printing the
proxy materials, and preparing all statements and notices required by any
federal or state law, in each case as may reasonably be necessary for the
performance of its obligations under the Participation Agreement (collectively,
"ING VPI Materials"), and providing the Company with copies of ING VPI
Materials; and
WHEREAS, the Participation Agreement provides that ING VPI shall pay for the
cost of typesetting, printing and distributing periodic fund reports to
shareholders, prospectuses and supplements thereto, statements of additional
information, proxy statements and other materials that are required by law to be
sent to existing owners of Contracts ("Contract Owners"), as well as the cost of
distributing such materials; and
WHEREAS, the Participation Agreement makes no provision for which party shall
incur various administrative expenses in connection with the servicing of
Contract Owners who have allocated Contract value to a Portfolio, including, but
not limited to, responding to various Contract owner inquiries regarding a
Portfolio; and
WHEREAS, the Parties wish to allocate expenses in a manner that is fair and
equitable, consistent with the best Interests of Contract Owners, and that does
not entail the expense and inconvenience of separately identifying and
accounting for each item of ING VPI expenses;
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
I. Services Provided:
The Company agrees to provide services including, but not limited to:
a) delivering and responding to inquiries respecting ING VPI
prospectuses, Statements of Additional Information, reports,
notices, proxies and proxy statements and other information
respecting the Portfolios (but not including services paid for
by ING VPI);
b) facilitating the tabulation of Contract Owners' votes in the
event of a meeting of ING VPI shareholders;
c) providing and administering Contract features for the benefit
of Contract Owners participating in ING VPI, including fund
transfers, dollar cost averaging, asset allocation, portfolio
rebalancing, earnings sweep, and pre-authorized deposits and
withdrawals;
d) responding to inquiries from Contract Owners using one or more
of the Portfolios as an investment vehicle regarding the
services performed by the Company as they relate to ING VPI or
its Portfolios;
e) teleservicing support in connection with the Portfolios;
f) maintenance of Company records reflecting shares purchased and
redeemed and share balances held by separate accounts of the
Company and the conveyance of that information to ING VPI, its
transfer agent, or the Administrator as may be reasonably
requested;
g) facilitating the printing and mailing of reports to Contract
Owners and mailing other communications from ING VPI as may be
required pursuant to the Participation Agreement;
h) responding to inquiries from Contract Owners concerning ING
VPI and its operations; and
i) providing such similar services as the Administrator or ING
VPI may reasonably request to the extent permitted or required
under applicable statutes, rules and regulations.
II. Expense Allocations:
Subject to Section III, the Company or its affiliates shall bear the
costs of:
a) printing and distributing all ING VPI Materials to be
distributed to prospective Contract Owners as discussed in the
Participation Agreement as being distributed at the Company's
expense;
2
b) printing and distributing all sales literature or promotional
material developed by the Company or its affiliates and
relating to the Contracts; and
c) servicing Contract Owners who have allocated Contract value to
a Portfolio, which servicing shall include, but is not limited
to, the items listed above.
III. Payment of Expenses:
a) The Administrator shall pay to the Company a quarterly fee
("Service Fee") equal to a percentage of the average daily
cumulative net assets due to investment in a class of the
Portfolio attributable to Contracts issued by the Company at
the annual rates shown in the attached Schedule A. Such
Service Fee shall be calculated and paid quarterly.
b) For purposes of calculating the amount of the Service Fee as
described in Section III(a) above, the "average daily
cumulative net assets" of a class of a Portfolio for any
calendar quarter shall be equal to the quotient produced by
dividing (i) the sum of the net assets of such class of a
Portfolio, for each calendar month in such calendar quarter as
determined in accordance with the procedures established from
time to time by or under the direction of ING VPI's Board of
Directors for each business day of such months, by (ii) the
number of such business days;
c) The Administrator will calculate the Service Fee contemplated
by this Section and will make such payment, as appropriate, to
the Company within thirty (30) days after the last business
day of each calendar quarter thereafter. Each payment will be
accompanied by a statement showing the calculation of the
Service Fee payable by the Administrator, if any, and such
other supporting data as may be reasonably requested by the
Company.
d) The Company agrees to make appropriate disclosure in its
prospectus and registration statement as to the payments for
services provided pursuant to this Agreement as required by
the federal securities laws or other applicable law.
e) From time to time, the Parties hereto shall review the Service
Fee to determine whether it reasonably approximates the
incurred and anticipated costs, over time, of the Company in
connection with its duties hereunder. The Parties agree to
negotiate in good faith any change to the Service Fee proposed
by one of the Parties in good faith.
f) The Parties agree that the Administrator's payments to the
Company are for administrative services only and do not
constitute payment in any manner for investment advisory
services or costs of distribution.
g) This Agreement shall not modify any of the provisions of the
Participation Agreement, but shall supplement those
provisions.
3
IV. Term of Agreement:
This Agreement shall continue in effect for so long as the Company or
its successor(s) in interest, or any affiliate thereof, continues to
hold shares of ING VPI or its Portfolios, and continues to perform in a
similar capacity for the Company and ING VPI.
V. Indemnification:
a) The Company agrees to indemnify and hold harmless the
Administrator and its officers and directors, from any and all
loss, liability and expense resulting from the gross
negligence or willful wrongful act of the Company under this
Agreement, except to the extent such loss, liability or
expense is the result of the willful misfeasance, bad faith or
gross negligence of the Administrator in the performance of
its duties, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
b) The Administrator agrees to indemnify and hold harmless the
Company and its officers and directors from any and all loss,
liability and expense resulting from the gross negligence or
willful wrongful act of the Administrator under this
Agreement, except to the extent such loss, liability or
expense is the result of the willful misfeasance, bad faith or
gross negligence of the Company in the performance of its
duties, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
VI. Amendment
This Agreement may be amended only upon mutual agreement of the Parties
hereto in writing.
VII. Standard of Care
The Parties shall exercise reasonable care in the performance of their
duties under this Agreement.
VIII. Confidentiality
The terms of this arrangement will be held confidential by each Party
except to the extent that either Party or ING VPI may deem it necessary
to disclose this arrangement.
IX. Notices:
Notices and communications required or permitted hereby will be given
to the following persons at the following addresses, or such other
persons as the Party receiving such notices or communications may
subsequently direct in writing:
4
If to ING VPI:
ING Variable Portfolios, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to the Administrator:
ING Funds Services, LLC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to the Company:
Connecticut General Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
X. Applicable Law:
Except insofar as the Investment Company Act of 1940 or other federal
laws and regulations may be controlling, this Agreement will be
construed and the provisions hereof interpreted under and in accordance
with Delaware law, without regard for that state's principles of
conflict of laws.
XI. Execution in Counterparts:
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
XII. Severability:
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
XIII. Cumulative Rights:
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, that the Parties are entitled to
under federal and state laws.
XIV. Headings
The headings used in this Agreement are for purposes of reference only
and shall not limit or define, the meaning of the provisions of this
Agreement.
5
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
ING FUNDS SERVICES, LLC CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ ------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Assistant Vice President
6
SCHEDULE A
Administrator shall pay the following Service Fee pursuant to Article III for
Class R Shares of the ING VP Index Plus SmallCap Portfolio:
Up to $ 10 million in assets 10bp annually
More than $ 10 million in assets 15bp annually
7