ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made on this
22nd day of April, 1998, by and between ARM Financial Group, Inc., a Delaware
corporation ("Parent") and 312 Certificate Company, a Delaware corporation
("Company").
WHEREAS, Parent's management has extensive experience in the investment
advisory company 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 certain
services provided by Company; and
WHEREAS, Parent 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 any applicable laws and regulations applicable to the
Company; 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;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
set forth herein, 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 to perform such
services for Company as may be reasonably necessary in the conduct of Company's
business operations and as set forth in Section 2 of this Agreement.
Subject to the terms, conditions and limitations of this Agreement, Parent
agrees 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.
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(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 standards and guidelines
established by the Board of Directors of Company and communicated to
Parent.
(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 on behalf of Company the services set forth
below.
(a) INVESTMENT ACCOUNTING. Investment accounting support for the
Company's investment portfolios.
(b) ACCOUNTING, TAX AND AUDITING. Parent shall provide all
accounting services, including the following: the processing and
maintenance of the financial records of Company, the preparation of
financial statements and reports including annual statements on both
statutory and GAAP bases, 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 services in
connection with tax and auditing matters.
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(e) MARKETING AND PRODUCT DEVELOPMENT. Parent shall provide
marketing and product development services to Company.
(f) FUNCTIONAL SUPPORT SERVICES. Parent shall provide: (i)
actuarial services, and (ii) telecommunications services and electronic
data processing services, including, without limitation, software
programming and documentation and hardware utilization.
(g) PAYROLL FUNCTIONS. Parent shall perform all payroll functions
including, but not limited to, the preparation of all payroll checks and
withholding tax reports.
(h) PERSONNEL FUNCTIONS. Parent will provide to Company all
personnel functions.
(i) ADMINISTRATIVE SUPPORT SERVICES. Parent will provide other
administrative support services to Company including, without limitation,
legal services and assistance with regulatory compliance matters.
3. CHARGES. Company agrees to pay to Parent for services and facilities
provided by Parent to Company pursuant to this Agreement the fees set forth on
Appendix A attached hereto, as such Appendix may be revised by the parties from
time to time.
4. PAYMENT. Parent shall submit to Company at the beginning 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 for that
calendar month, and Company shall pay to Parent within five (5) 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, Parent will
submit to Company a detailed written statement of the charges due from Company
to Parent in the preceding calendar quarter, including charges not included in
any previous statements, based on the computation of fees set forth on Appendix
A, 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. Parent 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. Parent shall also maintain such
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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, and the originals or
copies thereof shall be delivered to Company not less frequently than quarterly.
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 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 16 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; PROVIDED HOWEVER, that Company may terminate this
Agreement upon giving ten (10) days or more
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advance written notice in the event that it reasonably determines that it may
contract with an unaffiliated party for comparable services at lower fees. 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. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the
effective date of the termination of this Agreement, Parent 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. 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.
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.
13. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not
be assignable by either party hereto, except 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
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upon, extend to and inure to the benefit of the parties hereto, their, and each
of their, successors and assigns respectively.
14. 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 entirely within that State.
15. INTENTIONALLY OMITTED.
16. 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.
515 West Market Street
Louisville, KY 40202-3271
Telecopier: (502) 582-7995
Attention: Robert H. Scott
(b) If to Company to:
312 Certificate Company
515 West Market Street
Louisville, KY 40202-3271
Telecopier: (502) 582-7903
Attention: Robert L Maddox Esq.
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
17. 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 to the
transactions contemplated hereby and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof.
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18. 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, 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.
19. SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
20. 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/ Robert Scott
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Title: General Counsel
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312 CERTIFICATE COMPANY
By: /s/ William D. Morris
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Title: Chief Executive Officer
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APPENDIX A
SCHEDULE OF FEES
1. COMPUTATION OF FEES. The annual charge to Company (the "Annual
Charge") for such services and facilities shall be equal to the product of four
basis points (.0004) multiplied by the Invested Amount outstanding (as such term
is defined in that certain Face Amount Certificate Agreement, dated as of April
22, 1998, by and among the Company, International Securitization Corporation and
The First National Bank of Chicago.
2. ANNUAL ACCOUNTING. At the election of Parent, a cost analysis may be
performed by Parent to determine, as closely as possible, the actual cost of
services rendered to Company hereunder. The amount of the Annual Charge to
Company shall then be adjusted (the "Adjustment to Actual Cost") to equal the
actual cost of the services rendered to Company. The Adjustment to Actual Cost
shall be taken into account at the end of the next calendar quarter on the
detailed written statement of the charges due from Company described in the
second paragraph of Section 4 of the Administrative Services Agreement.