ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made
effective as of November 8, 1996 ("Effective Date"), by and between First
Golden American Life Insurance Company of New York ("Company") and Golden
American Life Insurance Company ("Provider").
WHEREAS, Provider has extensive experience in life insurance business
operations; and
WHEREAS, Company desires Provider to perform certain administrative and
special services (collectively, "services") for Company in its insurance
operations and desires further to make use in its day-to-day operations of
certain property, equipment and facilities (collectively, "facilities") of
Provider as Company may request; and
WHEREAS, Company has executed a Commitment Agreeemnt to the New York
Insurance Department dated September 19, 1996, regarding the operations of the
Company, which contemplates agreements for services; and
WHEREAS, Provider and Company contemplate that such an arrangement will
achieve certain operating economies and improve services to the mutual benefit
of both; and
WHEREAS, Provider and Company wish to assure that all charges for
services and the use of facilities incurred hereunder are reasonable and in
accordance with the requirements of New York Insurance Department Regulation
No. 33 and to the extent practicable reflect actual costs and are arrived at
in a fair and equitable manner, and that estimated costs, whenever used, are
adjusted periodically, to bring them into alignment with actual costs; and
WHEREAS, Provider and Company wish to identify the services to be
rendered to Company by Provider and the facilities to be used by Company and
to provide a method of fixing basis for determining the charges to be made to
Company;
NOW THEREFORE, in consideration of the premises and of the mutual
promises set forth herein, and intending to be legally bound hereby, Provider
and Company agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to the terms,
conditions and limitations of this Agreement, Provider agrees to the
extent requested by Company to perform diligently and in a professional
manner such services for Company as Company determines to be reasonably
necessary in the conduct of its insurance operations and as set forth in
Section 2 of this Agreement.
Subject to the terms, conditions and limitations of this Agreement,
Provider agrees to the extent requested by Company to make available to
Company such of its facilities as Company may determine to be reasonably
necessary in the conduct of it insurance operations, including data
processing equipment, business property (whether owned or leased) and
communications equipment.
Provider agrees at all times to maintain sufficient facilities and
trained personnel of the kind necessary to perform this Agreement.
(a) CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever
Provider utilizes its personnel to perform services for Company
pursuant to this Agreement, such personnel shall at all times remain
employees of Provider subject solely to its direction and control,
and Provider shall alone retain full liability to such employees for
their welfare, salaries, fringe benefits, legally required employer
contributions and tax obligations.
No facility of Provider used in performing services for or
subject to use by Company shall be deemed to be transferred,
assigned, conveyed or leased by performance or use pursuant to this
Agreement.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any
services hereunder which require the exercise of judgment by
Provider, Provider shall perform any such service in accordance with
any standards and guidelines Company develops and communicates to
Provider. In performing any services hereunder, Provider shall at
all times act in a manner reasonably calculated to be in or not
opposed to the best interests of Company.
(c) CONTROL. The performance of services by Provider for Company
pursuant to this Agreement shall in no way impair the absolute
control of the business and operations of Provider or Company by
their respective Boards of Directors. Provider shall act hereunder
so as to assure the separate operating identity of Company.
(d) USE OF DATA PROCESSING FACILITIES. Subject to the terms
(including any limitations and restrictions) of any applicable
software or hardware licensing agreement then in effect between
Provider and any licensor, Provider shall, upon termination of this
Agreement, grant to Company a perpetual license, with payment of a
reasonable fee, in any electronic data processing software developed
or used by Provider in connection with the services provided to
Company hereunder if such software is not commercially available and
is necessary, in Company's reasonable judgment, for Company to
perform subsequent to termination the functions provided by Provider
hereunder.
2. SERVICES. It is understood that Company has certain obligations under a
Commitment Agreement to the New York Insurance Department dated September
19, 1996, and it is agreed that Provider shall not act or refrain from
acting in any manner to cause Company to breach said obligations.
The performance of Provider under this Agreement with respect to the
business and operations of Company shall at all times be subject to the
direction and control of the Board of Directors of Company.
Subject to the foregoing and to the terms, conditions and limitations of
this Agreement, Provider shall provide to Company the services set forth
below.
(a) ACCOUNTING, DATA PROCESSING, TAX AND AUDITING. Under the
general supervision of the Board of Directors of Company, and
provided that the records and transactions are initiated by Company,
the final product is verified by Company and Provider shall cause
Company's Chief Administrative Officer (or his or her designee
within Company) to be familiar with all details of services
provided, including, but not limited to, accounting and adjusting
entries, Provider shall provide the following accounting services:
preparation and maintenance of the financial statements and reports
including annual statements on both statutory and GAAP bases and tax
returns, and processing of the related financial records and
transactions of Company. Provider shall also provide such
assistance as may be required with respect to tax and auditing
services.
(b) UNDERWRITING. Until September 18, 2001, and subject to
underwriting standards established by Company and communicated
to Provider, Provider shall provide underwriting services,
including review of policy applications, assignment of policy
numbers, MIB review, medical review and other investigations
and actual policy issue. All final underwriting decisions
will be made by Company.
(c) CLAIMS. Until September 18, 2001, and subject to claims
settlement procedures established by Company and communicated to
Provider, Provider shall provide claims services, including
verification that the policy was in force, and review and
investigation of claims. Company shall exercise final approval
authorization for all claims settlements.
(d) MARKETING. Until September 18, 2001, provider shall provide
marketing services, including market research, statistical
analyses, agent or agency licensing support, and the administration
of certain agency matters.
(e) ADVERTISING AND SALES PROMOTIONAL SERVICES. Under the general
supervision of the Board of Directors of Company and subject to the
direction, control and prior approval of the responsible officers of
Company, Provider shall provide sales services, including sales
aids, rate guides, sales brochures, solicitation materials and such
other promotional materials, information, assistance and advice as
shall assist the sales efforts of Company.
(f) FUNCTIONAL SUPPORT SERVICES. Provider shall provide (i)
actuarial services, including periodic review of reserves by line of
business, periodic audit of annuity benefit payment calculations,
rate and profit share analysis, product development, counseling on
reserving requirements, work required for or in support of rate
and/or form submissions and actuarial certifications, (ii)
telecommunications services and electronic data processing services,
facilities and integration, including software programming and
documentation and hardware utilization, (iii) legal services,
including representation of Company in the prosecution or defense of
actions and in the negotiation and preparation of contracts,
agreements and agency documents, product development and drafting
and filing of policies and forms, governmental relations and
advising on regulatory compliance and rendering opinions on various
legal matters, and (iv) purchasing and employee relations services.
(g) DISASTER RECOVERY PROGRAM. Provider agrees to maintain back-up
systems and contingency plans to assure that any work stoppages,
interruptions, or other failures resulting from any types of
disaster will not jeopardize the integrity of data or records
maintained by Provider under this Agreement on behalf of the
Company. Provider warrants that it will maintain such systems and
plans in conformity with prudent business practices.
3. CHARGES. Company agrees to reimburse Provider for services and
facilities provided by Provider to Company pursuant to this Agreement.
The charge to Company for such services and facilities shall include all
direct and directly allocable expenses, reasonably and equitably
determined to be attributable to Company by Provider, plus a reasonable
charge for direct overhead, the amount of such charge for overhead to be
agreed upon by the parties from time to time.
Subject to New York Insurance Department Regulation 33, the bases for
determining such charges to Company shall be those used by Provider for
internal cost distribution including, where appropriate, time records
prepared at least annually for this purpose. Such bases shall be
modified and adjusted by mutual agreement where necessary or appropriate
to reflect fairly and equitably the actual incidence of cost incurred by
Provider on behalf of Company.
Cost analyses will be made at least annually by Provider to determine, as
closely as possible, the actual cost of services rendered and facilities
made available to Company hereunder. Provider shall forward to Company
the information developed by these analyses, and such information shall
be used to develop bases for the distribution of expenses which more
currently reflect the actual incidence of cost incurred by Provider on
behalf of Company.
Provider's determination of charges hereunder shall be presented to
Company, and if Company objects to any such determination, it shall so
advise Provider within thirty (30) days of receipt of notice of said
determination. Unless the parties can reconcile any such objection, they
shall agree to the selection of a firm of independent certified public
accountants which shall determine the charges properly allocable to
Company and shall, within a reasonable time, submit such determination,
together with the basis therefor, in writing to Provider and Company
whereupon such determination shall be binding. The expenses of such a
determination by a firm of independent certified public accountants shall
be borne equally by Provider and Company.
4. PAYMENT. Provider shall submit to Company within thirty (30) days of the
end of each calendar month a written statement of the amount estimated to
be owed by Company for services and the use of facilities pursuant to
this Agreement in that calendar month, and Company shall pay to Provider
within thirty (30) days following receipt of such written statement the
amount set forth in the statement.
Within thirty (30) days after the end of each calendar quarter, Provider
will submit to Company a detailed written statement of the charges due
from Company to Provider in the preceding calendar quarter, including
charges not included in any previous statements, and any balance payable
or to be refunded as shown in such statement shall be paid or refunded
within fifteen (15) days following receipt of such written statement by
Company.
5. ACCOUNTING RECORDS AND DOCUMENTS. Provider shall be responsible for
maintaining full and accurate accounts and records of all services
rendered and facilities used pursuant to this Agreement and such
additional information as Company may reasonably request for purposes of
its internal bookkeeping and accounting operations. Provider shall keep
such accounts and records insofar as they pertain to the computation of
charges hereunder available at its principal offices for audit,
inspection and copying by Company and persons authorized by it or any
governmental agency having jurisdiction over Company during all
reasonable business hours.
With respect to accounting and statistical records prepared by Provider
by reason of its performance under this Agreement, such records shall be
delivered to Company within thirty (30) days from the end of the month to
which the records pertain.
6. OTHER RECORDS AND DOCUMENTS. All books, records, and files established
and maintained by Provider by reason of its performance under this
Agreement which, absent this Agreement, would have been held by Company,
shall be deemed the property of Company, and shall be subject to
examination at all times by Company and persons authorized by it or any
governmental agency having jurisdiction over Company, and shall be
delivered to Company at least quarterly.
With respect to original documents other than those provided for in
Section 5 hereof which would otherwise be held by Company and which may
be obtained by Provider in performing under this Agreement. Provider
shall deliver such documents to Company within thirty (30) days of their
receipt by Provider except where continued custody of such original
documents is necessary to perform hereunder.
7. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant Provider an exclusive right to provide services to Company, and
Company retains the right to contract with any third party, affiliated or
unaffiliated, for the performance of services or for the use of
facilities as are available to or have been requested by Company pursuant
to this Agreement.
8. CONTACT PERSON(S). Company and Provider each shall appoint one or more
individuals who shall serve as contact person(s) for the purpose of
carrying out this Agreement. Such contact person(s) shall be authorized
to act on behalf of their respective parties as to the matters pertaining
to this Agreement. Effective upon execution of this Agreement, the
initial contact person(s) shall be those set forth in Appendix A.
Each party shall notify the other, in writing, as to the name, address
and telephone number of any replacement for any such designated contact
person.
9. TERMINATION AND MODIFICATION. This Agreement shall remain in effect
until terminated by either Provider or Company upon giving thirty (30)
days or more advance written notice, provided that Company shall have the
right to elect to continue to receive data processing services and/or to
continue to utilize data processing facilities and related software for
up to one year from the date of such notice. Upon termination, Provider
shall promptly deliver to Company all books and records that are, or are
deemed by this Agreement to be, the property of Company.
10. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the
effective date of Complete Termination of this Agreement, Provider shall
deliver to Company a detailed written statement for all charges incurred
and not included in any previous statement to the effective date of
termination. The amount owed or to be refunded hereunder shall be due
and payable within thirty (30) days of receipt of such statement.
11. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party hereto, except as set forth herein or by
operation of law. Except as and to the extent specifically provided in
this Agreement, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto, or their
respective legal successors, any rights, remedies, obligations or
liabilities, or to relieve any person other than the parties hereto, or
their respective legal successors, from any obligations or liabilities
that would otherwise be applicable.The representations, warranties,
covenants and agreements contained in this Agreement shall be binding
upon, extend to and inure to the benefit of the parties hereto, their,
and each of their, successors and assigns respectively.
12. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in that State, without
regard to principles of conflict of laws.
13. ARBITRATION. In the event of any irreconcilable dispute between the
parties in connection with this Agreement, the dispute shall be submitted
to arbitration. Either party may submit the dispute to arbitration by
notifying the other of its submission and naming its arbitrator. The
other party shall name its arbitrator within 30 days after receiving such
notice. If the arbitrators cannot agree, they shall choose an umpire
through the nomination of three persons by each arbitrator, the
declination by each arbitrator of two of the nominees named by the other
arbitrator and the drawing of lots to choose between the two arbitrators
within thirty days after the arbitrators and umpire, if any, are chosen.
The arbitrators and umpire shall be disinterested insurance company
executives. The arbitrators are relieved from judicial formalities and
may refrain from following strict rules of evidence. The decisions of
the arbitrators and umpire, or the majority of them, shall be final and
binding upon the parties. Each party shall bear the expense of its own
arbitrator and one-half the other expenses of the arbitration
proceedings. Any arbitration shall take place in New York, New York,
unless otherwise mutually agreed.
14. NOTICE. All notices, statements or requests provided for hereunder shall
be deemed to have been duly given when delivered by hand to an officer of
the other party, or when deposited with the U.S. Postal Service, as first
class certified or registered mail, postage prepaid, overnight courier
service, telex or telecopier, addressed:
(a) if to Company:
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First Golden American Life Insurance Company of
New York
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(b) if to Provider:
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Golden American Life Insurance Company
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or to such other persons or places as each party may from time to time
designate by written notice sent as aforesaid.
15. ENTIRE AGREEMENT. This Agreement, together with such amendments as may
from time to time be executed in writing by the parties, constitutes the
entire agreement and understanding between the parties in respect of the
transactions contemplated hereby and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof.
Any amendments to this Agreement are subject to prior approval by the
Superintendent, State of New York, Department of Insurance.
16. SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
18. ADDITIONAL PROVISIONS. Appendix A, attached hereto, is hereby
incorporated into and made a part of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective officers duly authorized so to do, and their
respective corporate seals to be affixed hereto, as of the date and year first
above written.
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Vice President (Seal)
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
GOLDEN AMERICAN LIFE INSURANCE COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Vice President (Seal)
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
APPENDIX A
CONTACT PERSON(S) FOR PROVIDER
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CONTACT PERSON(S) FOR COMPANY
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