ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made effective
as of January 1, 1995, by and between ARM Financial Group, Inc., a Delaware
corporation ("Parent") and ARM Capital Advisors, Inc., a Delaware corporation
("Company") which is registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act").
WHEREAS, Parent's management has extensive experience in providing
administrative services to support various financial and investment service and
business operations; and
WHEREAS, Company desires Parent to perform certain administrative and
special services (collectively, "services") for Company in its business
operations and desires further to make use in its day-to-day operations of
certain property, equipment and facilities (collectively, "facilities") of
Parent and its subsidiaries; and
WHEREAS, Parent and Company contemplate that the availability of services
and facilities will achieve certain operating efficiencies and improve services
provided by Company to its investment advisory clients; and
WHEREAS, Parent and Company wish to identify the services to be rendered to
Company by Parent and the facilities to be used by Company, and to provide for
the fees to be paid by Company in connection therewith.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
set forth herein the adequacy and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, Parent and Company agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to the terms,
conditions and limitations of this Agreement, Parent agrees (a) to perform such
services for Company as may be reasonably necessary in the conduct of Company's
business operations, including, but not necessarily limited to, the services as
set forth in Section 2 of this Agreement; and (b) to make available to Company
such of its facilities or the facilities of its subsidiaries as may be
reasonably necessary in the conduct of Company's business operations, including,
without limitation, data processing equipment, office facilities (whether owned
or leased) and communications equipment.
(a) CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever Parent
utilizes its personnel to perform services for Company pursuant to this
Agreement, such personnel shall at all times remain employees of Parent,
and Parent shall alone retain full liability for their compensation,
employee benefits, payroll deductions and legally required employer
contributions and withholding tax obligations.
No facility of Parent or its subsidiaries used in performing services
for or subject to use by Company pursuant to this Agreement shall be deemed
to be transferred, assigned, conveyed or leased by performance or use.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any
services hereunder which require the exercise of judgment by Parent, Parent
shall perform such services in accordance with all applicable standards and
guidelines to ensure compliance with the requirements of the Advisers Act
and all other applicable laws and regulations.
(c) CONTROL. The performance of services by Parent for Company
pursuant to this Agreement shall in no way impair the absolute control of
the business and operations of Company by its Board of Directors. Parent
shall act hereunder so as to assure the separate operating and corporate
identity of Company.
2. SERVICES. Subject to the terms, conditions and limitations of this
Agreement, Parent shall provide to Company the services agreed upon from time to
time by the parties hereto, including the services set forth below. All charges
for services and the use of facilities incurred hereunder shall be reasonable
and in accordance with the requirements of the Advisers Act, and all other
applicable laws and regulations.
(a) OPERATIONAL SUPPORT AND INVESTMENT ACCOUNTING. With respect to
Company's third party accounts, Parent shall provide (i) back office
operational support, including, without limitation, trade notification,
trade settlement, maintenance of investment system, generation of
transaction and holding blotters and downloading and balancing cash
transactions from custodian banks; and (ii) investment accounting services,
including, without limitation, reconciliation of investment and cash
transactions, reconciliation of outstanding holdings, serving standard and
ad hoc reporting needs, and billing and cash collection for the third party
accounts.
(b) ACCOUNTING, TAX AND AUDITING. Parent shall provide accounting
services, including, but not necessarily limited to, the following: the
processing and maintenance of the financial records of Company; the
preparation of financial statements and reports; the preparation of tax
returns; and the preparation of additional financial reports used by
Company in the operations of its business. Parent shall also provide
assistance with respect to tax and auditing matters.
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(c) MARKETING. Parent will provide support as requested for Company's
marketing efforts.
(d) FUNCTIONAL SUPPORT SERVICES. Parent shall provide actuarial
services, telecommunications services and electronic data processing
services as needed, including, without limitation, software programming and
documentation and hardware utilization.
(e) PAYROLL FUNCTIONS. Parent shall perform all payroll functions
including, but not necessarily limited to, the preparation of all payroll
checks and withholding tax reports.
(f) PERSONNEL FUNCTIONS. Parent will provide Company with the
following personnel services: the maintenance of employee files; assistance
in the hiring and training of personnel; recommendation of levels of
compensation; assistance in the compliance with federal, state and local
employment laws; and the administration of such employee benefits as group
insurance plans, savings and incentive compensation plans and vacation
plans.
(g) LEGAL SERVICES. Parent will provide legal services to Company
including, without limitation, filing and amendment of all registrations
and reports required by the Advisers Act and any applicable state
securities laws, and assistance with regulatory compliance matters. Parent
may in its sole discretion retain the services of outside legal counsel to
assist with legal services performed for Company. Parent may seek
reimbursement of any costs associated with such legal services, including
the cost of any settlement paid by Parent in connection therewith.
(h) RECORD KEEPING SERVICES. Parent will support Company in the
maintenance of all records required to be kept under the Advisers Act. Such
records shall remain at all times subject to the inspection of the
Securities Exchange Commission.
(i) OTHER SUPPORT SERVICES. Parent will provide such other
administrative support services to Company as needed or as required by
Company from time to time.
3. CHARGES. Company agrees to pay to Parent for services and facilities
provided by Parent to Company pursuant to this Agreement. The charge to Company
for such services and facilities shall include all direct and directly
apportioned expenses attributed to Company by Parent, as calculated by Parent in
the ordinary course of business, plus a charge for direct overhead. The bases
for determining such charges shall be consistent with all applicable laws and
regulations and
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may be modified and adjusted from time to time by mutual agreement of the
parties hereto.
Notwithstanding the foregoing, unless agreed otherwise by the parties
hereto, at no time may such charges invade the minimum net capital needed by the
Company to maintain its status as a "qualified professional asset manager"
pursuant to the Advisers Act, or any other applicable net worth requirements;
and provided further, that any payments hereunder must be made in compliance
with the provisions of the Advisers Act and any other applicable laws and
regulations.
4. PAYMENT. Parent shall periodically determine the amount to be owed by
the Company for services and the use of facilities pursuant to this Agreement
for the appropriate period, and Company shall pay such amount to Parent in a
reasonable prompt manner.
5. ACCOUNTING RECORDS AND DOCUMENTS. Parent shall be responsible for
maintaining accounts and records of the 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. Parent shall also maintain 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.
6. OTHER RECORDS AND DOCUMENTS. All other books, records, and files
established and maintained by Parent by reason of its performance of its
obligations 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.
7. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant Parent 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. Nothing herein
shall be deemed to prohibit Parent from providing any or all of the services to
be provided to Company hereunder to other persons, whether or not affiliated
with Parent. In addition, Company shall have the right to solicit bids and
contract with any third party for the services to be provided hereunder, in
which event this Agreement may be terminated in accordance with Section
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9 hereof. Further, Parent has right to subcontract with any third party,
affiliated or unaffiliated, for services Parent is obligated to provide to
Company pursuant to this Agreement.
8. CONTACT PERSON(S). Company and Parent 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 Section 14 of this Agreement. 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 or additional contact
persons.
9. TERMINATION AND MODIFICATION. This Agreement shall remain in effect
until terminated by either Parent or Company upon giving thirty (30) days' or
more advance written notice or by mutual agreement. Upon termination, Parent
shall promptly deliver to Company all books and records that are, or are deemed
by this Agreement to be, the property of Company.
10. INDEPENDENT CONTRACTOR. In rendering its services hereunder, Parent
shall act as an independent contractor, and any duties of Parent arising
hereunder shall be owed exclusively to Company.
11. NO THIRD PARTY BENEFICIARIES. None of the promises, covenants,
representations or warranties contained herein is intended to benefit any
non-parties to this Agreement which is intended for the sole exclusive benefit
of either Parent or Company (or their successors).
12. FORCE MAJEURE. If any cause or condition shall occur beyond the control
of Parent which wholly or partially prevents the performance by Parent of its
obligations hereunder, including, without limitation, any act of God or the
public enemy, fire, explosion, flood, earthquake, war, riot, adverse weather
conditions, breakdowns in equipment or facilities, strike, slowdown, work
stoppage or other labor trouble or delays in receiving or failures to receive
any permits, licenses or approvals from any governmental authority, then Parent
shall be excused to the extent made necessary by such cause or condition and
during the continuance thereof, and Parent shall incur no liability by reason of
its failure to perform the obligations so excused. Such cause or condition shall
not, however, relieve Company of the obligation to pay to Parent fees and
charges due to Parent for services rendered and expenses incurred hereunder
prior to such stoppage.
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13. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware
applicable to contracts made and to be performed entirely within that State.
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 services, telex
or telecopier, addressed
(a) If to Parent to:
ARM Financial Group, Inc.
239 South Fifth Street, 12th Floor
Louisville, KY 40202-3271
Telecopier: (502) 582-7995
Attention: Robert H. Scott
(b) If to Company to:
ARM Capital Advisors, Inc.
200 Park Avenue, 20th Floor
New York, NY 10166
Telecopier: (212) 973-2201
Attention: Emad A. Zikry
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
15. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of Parent or Company under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid,
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or unenforceable provision or by its severance herefrom; and (d) in lieu of such
illegal, invalid, or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid, and enforceable provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be
possible.
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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective officers duly authorized so to do, as of the
date and year first above written.
ARM FINANCIAL GROUP, INC.
By: /s/ John Franco
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Name: John Franco
Title: Co-Chairman of the Board and
Co-Chief Executive Officer
ARM CAPITAL ADVISORS, INC.
By: /s/ Martin H. Ruby
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Name: Martin H. Ruby
Title: Co-Chairman of the Board