UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2003
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Commission file number: 333-57212, 333-104539, 333-104546,
333-104547, and 333-104548
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ING USA Annuity and Life Insurance Company
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(Exact name of registrant as specified in its charter)
Iowa 41-0991508
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(State or other jurisdiction (IRS employer
of incorporation or organization identification no.)
1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (610) 425-3400
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Golden American Life Insurance Company
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Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of Act: None
Securities registered pursuant to Section 12(g) of Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K. Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 250,000 shares of Common Stock
as of March 25, 2004, all of which were directly owned by Lion Connecticut
Holdings Inc.
NOTE: WHEREAS ING USA ANNUITY AND LIFE INSURANCE COMPANY MEETS THE CONDITIONS
SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K, THIS FORM IS
BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION
I(2).
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Annual Report on Form 10-K
For the Year Ended December 31, 2003
TABLE OF CONTENTS
Form 10-K
Item No. Page
PART I
Item 1. Business** 3
Item 2. Properties** 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders* 6
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 6
Item 6. Selected Financial Data* 6
Item 7. Management's Narrative Analysis of the Results of Operations and
Financial Condition** 6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 16
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 56
Item 9A. Controls and Procedures 56
PART III
Item 10. Directors and Executive Officers of the Registrant* 56
Item 11. Executive Compensation* 57
Item 12. Security Ownership of Certain Beneficial Owners and Management* 57
Item 13. Certain Relationships and Related Transactions* 57
Item 14. Principal Accountant Fees and Services* 57
PART IV
Item 15. Exhibits, Consolidated Financial Statement Schedules and
Reports on Form 8-K 58
Index on Financial Statement Schedules 62
Signatures 66
* Item omitted pursuant to General Instruction I(2) of Form 10-K, except as
to Part III, Item 10 with respect to compliance with Sections 406 and 407
of the Sarbanes Oxley Act of 2002
** Item prepared in accordance with General Instruction I(2) of Form 10-K
PART I
Item 1. Business
Organization of Business
ING USA Annuity and Life Insurance Company (formerly known as Golden
American Life Insurance Company) ("ING USA" or the "Company" as
appropriate), a wholly-owned subsidiary of Lion Connecticut Holdings
Inc. ("Lion" or "Parent"), is a stock life insurance company organized
under the laws of the State of Iowa. ING USA was originally
incorporated under the laws of the State of Minnesota on January 2,
1973, in the name of St. Paul Life Insurance Company. On December 21,
1993, the Company redomesticated from Minnesota to Delaware. On
January 1, 2004 several events occurred. First, the Company
redomesticated from Delaware to Iowa. Secondly, on January 1, 2004
(the "merger date"), Equitable Life Insurance Company of Iowa
("Equitable Life"), USG Annuity & Life Company ("USG") and United Life
& Annuity Insurance Company ("ULA") (the "Merger Companies"), merged
with and into Golden American Life Insurance Company ("Golden
American"). Also on January 1, 2004, immediately after the merger,
Golden American changed its name to ING USA Annuity and Life Insurance
Company. As of the merger date, the Merger Companies ceased to exist
and were merged into ING USA. Lion is an indirect, wholly-owned
subsidiary of ING Groep N.V. ("ING"), a global financial services
holding company based in The Netherlands. ING USA is authorized to do
business in the District of Columbia and all states except New York.
ING USA is licensed as a life insurance company under the laws of the
State of Delaware until December 31, 2003 and Iowa since January 1,
2004.
Prior to the merger date, ING USA was a wholly-owned subsidiary of
Equitable Life from December 30, 2001 through December 31, 2003.
Formerly, from October 24, 1997, until December 30, 2001, Equitable of
Iowa Companies, Inc. ("EIC" or "Former Holding Company") directly
owned 100% of Golden American's stock.
On December 3, 2001, the Board of Directors of EIC approved a plan to
contribute its holding of stock of Golden American to another
wholly-owned subsidiary, Equitable Life. The contribution of stock
occurred on December 31, 2001, following approval by the Insurance
Department of Delaware.
As of April 1, 2002, ING USA sold First Golden American Life Insurance
Company of New York ("First Golden") to its sister company, ReliaStar
Life Insurance Company ("ReliaStar"). ReliaStar, the parent of
Security-Connecticut Life Insurance Company ("Security-Connecticut")
which in turn is the parent of ReliaStar Life Insurance Company of New
York ("RLNY"), merged the First Golden business into RLNY operations
and dissolved First Golden at book value for $27.7 million in cash and
a receivable totaling $0.2 million from RLNY. The receivable from RLNY
was assumed by Equitable Life, and ultimately by ING. The
consideration was based on First Golden's statutory-basis book value.
RLNY's payable to the Company was assumed by ING and subsequently
forgiven. ING USA realized a loss of $3.0 million related to the sale
of First Golden, which was recorded as a capital transaction. Approval
for the merger was obtained from the Insurance Departments of the
States of New York and Delaware.
3
As of October 1, 2003, RLNY's parent, Security-Connecticut merged with
and into its parent, ReliaStar.
Statement of Financial Accounting Standards ("FAS") No. 141, "Business
Combinations" excludes transfers of net assets or exchanges of shares
between entities under common control and is therefore covered by
Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations". RLNY presented combined results of operations including
First Golden activity as of the beginning of the period ending
December 31, 2002. The first three months of First Golden activity is
not reflected in the Golden statement of financial position or other
financial information for the period ended December 31, 2002, as the
amounts were not material.
Products and Services
Management has determined that under FAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information", the Company has
one operating segment, ING U.S. Financial Services ("USFS").
The Company offers a portfolio of variable and fixed insurance
products designed to meet customer needs for tax-advantaged savings
for retirement and protection from death. The Company believes longer
life expectancies, an aging population, and growing concern over the
stability and availability of the Social Security system have made
retirement planning a priority for many Americans. The target market
for all products is consumers and corporations throughout the United
States.
Variable annuities are long-term savings vehicles in which contract
owner premiums (purchase payments) are recorded and maintained in
subaccounts within a separate account established and registered with
the Securities Exchange Commission ("SEC") as a unit investment trust.
Many of the variable annuities issued by ING USA are combination
variable and fixed deferred annuity contracts under which some or all
of the premiums may be allocated by the contract owner to a fixed
account available under the contract.
Principal Markets and Method of Distribution
The Company continued to expand distribution systems during 2003.
Broad-based distribution networks are key to realizing a growing share
of the wealth accumulation marketplace. The principal distribution
channels of the Company's variable and fixed insurance products
include national wirehouses, regional securities firms, independent
National Association of Securities Dealers, Inc. ("NASD") firms with
licensed registered representatives, banks, life insurance companies
with captive agency sales forces, independent insurance agents and
independent marketing organizations. The Company plans to establish
new relationships and increase penetration with key distributors in
existing channels. In addition, growth opportunities exist through
increased utilization of the ING broker/dealer network and the
cross-selling of ING products.
4
Competition
The current business and regulatory environment presents many
challenges to the insurance industry. The variable and fixed annuity
competitive environment remains intense and is dominated by a number
of large highly-rated insurance companies. Increasing competition from
traditional insurance carriers as well as banks and mutual fund
companies offers consumers many choices. The economic environment
during 2003 was characterized by record low interest rates, a modest
recovery in the economy and a strong recovery in the equity market as
evidenced by a 26.4% growth rate in the S&P 500 indices. There is an
aging U.S. population which is increasingly concerned about
retirement, estate planning, maintaining its standard of living in
retirement; and potential reductions in government and
employer-provided benefits at retirement, as well as lower public
confidence in the adequacy of those benefits.
Regulation
The Company's operations are subject to comprehensive regulation
throughout the United States. The laws of the various jurisdictions
establish supervisory agencies, including the state insurance
departments, with board authority to grant licenses to transact
business and regulate many aspects of the products and services
offered by the Company, as well as solvency and reserve adequacy. Many
agencies also regulate investment activities on the basis of quality,
diversification, and other quantitative criteria. The Company's
operations and accounts are subject to examination at regular
intervals by certain of these regulators.
ING USA is subject to the insurance laws of the state in which
organized and of the other jurisdictions in which it transacts
business. Through December 31, 2003, the primary regulator of the ING
USA insurance operations is the Commissioner of Insurance for the
State of Delaware; beginning January 1, 2004, its primary regulator
will be the Division of Insurance for the State of Iowa.
The Securities and Exchange Commission ("SEC"), the National
Association of Securities Dealers ("NASD") and, to a lesser extent,
the states regulate sales and investment management activities and
operations of the Company. Regulations of the SEC, Department of Labor
("DOL") and Internal Revenue Service also impact certain of the
Company's annuity and other investment products. These products
involve Separate Accounts and mutual funds registered under the
Investment Company Act of 1940.
Item 2. Properties
The Company's principal executive office is located at 1475 Dunwoody
Drive, West Chester, Pennsylvania, 19380-1478. All Company office
space is leased or subleased by the Company or its other affiliates.
The Company pays substantially all expenses associated with its leased
and subleased office properties. Expenses not paid directly by the
Company are paid for by an affiliate and allocated back to the
Company.
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Item 3. Legal Proceedings
The Company is a party to threatened or pending lawsuits arising from
the normal conduct of business. Due to the climate in insurance and
business litigation, suits against the Company sometimes include
claims for substantial compensatory, consequential or punitive damages
and other types of relief. Moreover, certain claims are asserted as
class actions, purporting to represent a group of similarly situated
individuals. While it is not possible to forecast the outcome of such
lawsuits, in light of existing insurance, reinsurance and established
reserves, it is the opinion of management that the disposition of such
lawsuits will not have a materially adverse effect on the Company's
operations or financial position.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of December 31, 2003, all of the Company's outstanding shares were
owned by Equitable Life, which is a wholly-owned subsidiary of Lion,
whose ultimate parent is ING. As of January 1, 2004, all of the
Company's outstanding shares are owned by Lion as a result of the
affiliate mergers described in Part I, Item 1.
Item 6. Selected Financial Data
Omitted pursuant to General Instruction I(2)(a) of Form 10-K.
Item 7. Management's Narrative Analysis of the Results of Operations and
Financial Condition
Overview
The following narrative analysis of the results of operations and
financial condition presents a review of the Company for the twelve
month periods ended December 31, 2003 versus 2002. This review should
be read in conjunction with the consolidated financial statements and
other data presented herein.
6
Change in Accounting Principle
During 2002, the Company adopted Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("FAS") No. 142,
"Goodwill and Other Intangible Asset" ("FAS No. 142"). The adoption of
this standard resulted in an impairment loss of $135.3 million. The
Company, in accordance with FAS No. 142, recorded the impairment loss
retroactive to the first quarter of 2002; prior quarters of 2002 were
restated accordingly. This impairment loss represented the entire
carrying amount of goodwill, net of accumulated amortization. This
impairment charge was shown as a change in accounting principle on the
December 31, 2002 Consolidated Income Statement.
Results of Operations
Fee income and other income for the year ended December 31, 2003
increased by $80.6 million compared to the same period in 2002,
primarily due to an increase in the average variable assets under
management by the Company. The increase in average variable assets
under administration reflects continued business growth in the
Company's variable product lines, as well as the impact of the 2003
equity market recovery on contract holder account values.
Net investment income for the year ended December 31, 2003 increased
by $122.6 million compared to the same period in 2002. This increase
in net investment income is primarily due to higher average fixed
assets under management during the year, resulting from having strong
fixed product sales in mid-year 2002, which increased the average
inforce for the full year in 2003. This increase was partially offset
by reduced new money yields, which were negatively impacted by the low
interest rate environment.
Net realized capital gains (losses) for the year ended December 31,
2003 decreased by $40.4 million compared to the same period in 2002.
The decrease was primarily due to futures trading losses related to
the Company's dynamic hedging program to mitigate the Company's
product living and death benefit guarantee exposures resulting from
the volatility in the equity markets. Excluding the futures losses
there is an increase in net realized capital gains of $94.5 million.
Net realized gains result from sale of fixed maturity investments
having a fair value greater than book value primarily due to declining
interest rates.
Interest credited and other benefits to the policyholders for the year
ended December 31, 2003 increased by $1.7 million compared to the same
period in 2002. The increase is primarily due to the Company's growth
in interest credited related to its higher average fixed account
values in force being largely offset by reduced guaranteed living and
death benefit reserves related to the strong equity market recovery.
General expenses for the year ended December 31, 2003 decreased by
$15.9 million compared to the same period in 2002. The decrease is
primarily due to a lower allocation of corporate and service charges
from the Company's parent and other affiliates who provide service to
the Company, as a result of increased efficiencies gained from ING's
7
company-wide cost reduction efforts. Also contributing to the decrease
is a decline in fixed business sales resulting in lower general
expenses.
Commissions for the year ended December 31, 2003 decreased by $38.4
million compared to the same period in 2002. This decrease is
primarily due to lower sales in the Company's fixed product portfolio.
Also contributing to the decrease is a negative ceding commission
related to the recapture of an affiliate reinsurance agreement in the
first quarter of the year.
Policy acquisition costs deferred for the year ended December 31, 2003
decreased by $81.4 million compared to the same period in 2002. The
decrease was primarily due to lower selling expenses on lower fixed
product sales, as well as the deferral of a net gain attributed to the
recapture of an affiliated reinsurance agreement.
Amortization of deferred policy acquisition costs and value of
business acquired for the year ended December 31, 2003, increased by
$56.9 million compared to the same period in 2002. Amortization of
long-duration products is reflected in proportion to actual and
estimated future gross profits. Estimated future gross profits are
computed based on underlying assumptions related to the underlying
contracts, including but not limited to interest margins, surrenders,
withdrawals, expenses, and asset growth. The increase in the
amortization of deferred policy acquisition costs and value of
insurance acquired reflects the impact of these variables on the
overall book of business.
Expense and charges reimbursed under modified coinsurance ("MODCO")
agreements for the year ended December 31, 2003, increased by $26.7
million compared to the same period in 2002. This balance reflects the
net cash flows associated with affiliate MODCO agreements covering
certain variable annuity business. The increase is primarily due to an
increase in expense allowance related to new business written and
covered by MODCO.
Interest expense for the year ended December 31, 2003, decreased by
$2.3 million compared to the same period in 2002. Interest expense
reduced for the year of 2003, due to the repayment of two surplus
notes on June 28, 2002 to Equitable Life. Principal amounts of the
notes were for $50 million and $25 million. The Insurance Department
of the State of Delaware approved the repayments of these notes.
The cumulative effect of the change in accounting principle for the
year ended December 31, 2002, was a loss of $135.3 million net of
taxes, related to the adoption of FAS No. 142, which addresses the
value of Goodwill and Other Intangible Assets.
8
Net income, excluding change in accounting principle and net realized
capital gains and losses (net of taxes), increased by $131.5 million
for the year ended December 31, 2003, as compared to the year ended
December 31, 2002. The increase in net earnings is primarily the
result of increased fee income, reduced variable product benefit
guarantees related to the equity market recovery, partially offset by
lower fixed margins resulting from the depressed interest rate
environment, and increased amortization of deferred policy acquisition
costs and value of business acquired.
Financial Condition
Investments
Fixed Maturities
Total fixed maturities reflected net unrealized capital gains of
$176.3 million and $216.3 million at December 31, 2003 and 2002,
respectively.
It is management's objective that the portfolio of fixed maturities be
of high quality and be well diversified by market sector. The fixed
maturities in the Company's portfolio are generally rated by external
rating agencies and, if not externally rated, are rated by the Company
on a basis believed to be similar to that used by the rating agencies.
The average quality rating of the Company's fixed maturities portfolio
was A+ and AA+ at December 31, 2003 and 2002.
Fixed maturities rated BBB and below may have speculative
characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of the
issuer to make principal and interest payments than is the case with
higher rated fixed maturities.
In addition, the Company invests in structured securities that meet
the criteria of Emerging Issues Task Force ("EITF") Issue No. 99-20,
"Recognition of Interest Income and Impairment on Purchased and
Retained Beneficial Interests in Securitized Financial Assets". Under
EITF Issue No. 99-20, a determination of the required impairment is
based on credit risk and the possibility of significant prepayment
risk that restricts the Company's ability to recover the investment.
An impairment is recognized if the fair value of the security is less
than book value and there has been an adverse change in cash flow
since the last remeasurement date.
When a decline in fair value is determined to be other than temporary,
the individual security is written down to fair value and the loss is
accounted for as a realized loss.
Liquidity and Capital Resources
Liquidity is the ability of the Company to generate sufficient cash
flows to meet the cash requirements of operating, investing, and
financing activities. The Company's principal sources of liquidity are
annuity premiums and product charges, investment income, maturing
investments, proceeds from debt issuance, and capital contributions.
Primary uses of these funds are payments of commissions and operating
expenses, interest and premium credits, investment purchases,
repayment of debt, as well as withdrawals and surrenders.
9
The Company's liquidity position is managed by maintaining adequate
levels of liquid assets, such as cash or cash equivalents and
short-term investments. Additional sources of liquidity include
borrowing facilities to meet short-term cash requirements. The Company
maintains a $40.0 million revolving note facility with ING America
Insurance Holdings, Inc. ("ING AIH"), a perpetual $75.0 million
revolving note facility with Bank of New York and a $125.0 million
revolving note facility with SunTrust Bank which expires on July 30,
2004. Management believes that these sources of liquidity are adequate
to meet the Company's short-term cash obligations.
The National Association of Insurance Commissioners ("NAIC")
risk-based capital requirements require insurance companies to
calculate and report information under a risk-based capital formula.
These requirements are intended to allow insurance regulators to
monitor the capitalization of insurance companies based upon the type
and mixture of risks inherent in a Company's operations. The formula
includes components for asset risk, liability risk, interest rate
exposure, and other factors. The Company has complied with the NAIC's
risk-based capital reporting requirements. Amounts reported indicate
that the Company has total adjusted capital above all required capital
levels.
During 2003, 2002 and 2001, ING USA received capital contributions of
$230.0 million, $356.3 million and $196.8 million, respectively.
Critical Accounting Policies
General
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the use of
estimates and assumptions in certain circumstances that affect amounts
reported in the accompanying consolidated financial statements and
related footnotes. These estimates and assumptions are evaluated on an
on-going basis based on historical developments, market conditions,
industry trends and other information that is reasonable under the
circumstances. There can be no assurance that actual results will
conform to estimates and assumptions, and that reported results of
operations will not be affected in a materially adverse manner by the
need to make future accounting adjustments to reflect changes in these
estimates and assumptions from time to time.
The Company has identified the following estimates as critical in that
they involve a higher degree of judgment and are subject to a
significant degree of variability: investment impairment testing,
amortization of deferred acquisition costs and value of business
acquired and goodwill impairment testing. In developing these
estimates, management makes subjective and complex judgments that are
inherently uncertain and subject to material changes as facts and
circumstances develop. Although variability is inherent in these
estimates, management believes the amounts provided are appropriate
based upon the facts available upon compilation of the consolidated
financial statements.
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Investment Impairment Testing
The Company reviews the general account investments for impairments by
analyzing the amount and length of time amortized cost has exceeded
fair value, and by making certain estimates and assumptions regarding
the issuing companies' business prospects, future economic conditions
and market forecasts. Based on the facts and circumstances of each
case, management uses judgment in deciding whether any calculated
impairments are temporary or other than temporary. For those
impairments judged to be other than temporary, the Company reduces the
carrying value of those investments to the current fair value and
records impairment losses for the difference (refer to Note 2).
Amortization of Deferred Acquisition Costs and Value of Business
Acquired
Deferred policy acquisition costs ("DAC") and value of business
acquired ("VOBA") are amortized with interest over the life of the
contracts (usually 25 years) in relation to the present value of
estimated gross profits from projected interest margins, asset-based
fees, policy administration and surrender charges less policy
maintenance fees and non-capitalized commissions.
Changes in assumptions can have a significant impact on the
calculation of DAC/VOBA and its related amortization patterns. Due to
the relative size of DAC/VOBA balance and the sensitivity of the
calculation to minor changes in the underlying assumptions and the
related volatility that could result in the reported DAC/VOBA balance,
the Company performs a quarterly analysis of DAC/VOBA. At each balance
sheet date, actual historical gross profits are reflected and expected
future gross profits and related assumptions are evaluated for
continued reasonableness. Any adjustment in estimated profit requires
that the amortization rate be revised retroactively to the date of
policy or contract issuance ("unlocking"), which could be significant.
The cumulative difference related to prior periods is recognized as a
component of current period's amortization, along with amortization
associated with the actual gross profits of the period. In general,
increases in estimated returns result in increased expected future
profitability and may lower the rate of amortization, while increases
in lapse/surrender and mortality assumptions or decreases in returns
reduce the expected future profitability of the underlying business
and may increase the rate of amortization.
One of the most significant assumptions involved in the estimation of
future gross profits for variable universal life and variable deferred
annuity products is the assumed return associated with future variable
account performance. To reflect the near-term and long-term volatility
in the equity markets, this assumption involves a combination of
near-term expectations and a long-term assumption about market
performance. The overall return generated by the variable account is
dependent on several factors, including the relative mix of the
underlying sub-accounts among bond funds and equity funds as well as
equity sector weightings.
As part of the regular analysis of DAC/VOBA, at the end of third
quarter of 2002, the Company unlocked its long-term rate of return
assumptions. The Company reset long-term assumptions for the separate
account returns to 9.0% (gross before fund management fees and
mortality and expense and other policy charges), as of December 31,
2002, reflecting a blended return of equity and other sub-accounts.
11
The initial unlocking adjustment in 2002 was primarily driven by the
sustained downturn in the equity markets and revised expectations for
future returns. During 2002, the Company recorded an acceleration of
DAC/VOBA amortization totaling $91.5 million before tax, or $59.5
million, net of $32.0 million of federal income tax benefit.
The Company has remained unlocked during 2003, and reset long-term
assumptions for the separate account returns from 9.0% to 8.5% (gross
before fund management fees and mortality and expense and other policy
charges), as of December 31, 2003, maintaining a blended return of
equity and other sub-accounts. The 2003 unlocking adjustment from the
previous year was primarily driven by improved market performance. For
the year ended December 31, 2003, the Company recorded a deceleration
of DAC/VOBA amortization totaling $41.3 million before tax, or $26.9
million, net of $14.4 million of federal income tax expense.
Goodwill Impairment Testing
The Company tested goodwill as of January 1, 2002 for impairment using
fair value calculations based on the present value of estimated future
cash flows from business currently in force and business that we
estimate we will add in the future. These calculations require
management to make estimates on the amount of future revenues and the
appropriate discount rate. The calculated fair value of goodwill and
the resulting impairment loss recorded is based on these estimates,
which require a significant amount of management judgment. The
adoption of FAS No. 142 resulted in the impairment of the Company's
entire goodwill balance during 2002. Refer to Note 1 of the
consolidated financial statements for a discussion of the results of
the Company's goodwill testing procedures and to Management's
Narrative Analysis of the Results of Operations for the impact these
procedures had on the Company's income.
Off-Balance Sheet Arrangements
In January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation 46, "Consolidation of Variable Interest
Entities", an Interpretation of ARB No.51 (FIN 46). In December 2003,
the FASB modified FIN 46 to make certain technical corrections and
address certain implementation issues that had arisen. FIN 46 provides
a new framework for identifying variable interest entities (VIEs) and
determining when a company should include the assets, liabilities,
noncontrolling interests and results of activities of a VIE in its
consolidated financial statements.
In general, a VIE is a corporation, partnership, limited-liability
corporation, trust, or any other legal structure used to conduct
activities or hold assets that either (1) has an insufficient amount
of equity to carry out its principal activities without additional
subordinated financial support, (2) has a group of equity owners that
are unable to make significant decisions about its activities, or (3)
has a group of equity owners that do not have the obligation to absorb
losses or the right to receive returns generated by its operations.
FIN 46 requires a VIE to be consolidated if a party with an ownership,
contractual or other financial interest in the VIE (a variable
12
interest holder) is obligated to absorb a majority of the risk of loss
from the VIE's activities, is entitled to receive a majority of the
VIE's residual returns (if no party absorbs a majority of the VIE's
losses), or both. A variable interest holder that consolidates the VIE
is called the primary beneficiary. Upon consolidation, the primary
beneficiary generally must initially record all of the VIE's assets,
liabilities and noncontrolling interests at fair value and
subsequently account for the VIE as if it were consolidated based on
majority voting interest. FIN 46 also requires disclosures about VIEs
that the variable interest holder is not required to consolidate but
in which it has a significant variable interest.
At December 31, 2003, the Company held the following investments that,
for purposes of FIN 46, were evaluated and determined that the
investments do not require consolidation in the Company's financial
statements:
Asset Type Purpose Book Value (1) Market Value
---------------------- ------------------- ------------------- ------------------
Private Corporate Securities - synthetic
leases; project financings; credit tenant
leases Investment Holdings $ 1,057.2 $ 1,114.6
Foreign Securities - US VIE subsidiaries
of foreign companies Investment Holdings 190.3 203.0
Commercial Mortgage Obligations (CMO) Investment Holdings 888.5 893.9
Collateralized Debt Obligations (CDO) Investment Holdings
and/or
Collateral Manager 4.9 4.3
Asset-Backed Securities (ABS) Investment Holdings 479.9 482.3
Commercial Mortgage Backed Securities (CMBS) Investment Holdings 325.4 342.0
(1) Represents maximum exposure to loss except for those structures for which the Company also receives asset
management fees.
Contractual Obligations
As of December 31, 2003, the Company had certain contractual
obligations due over a period of time as summarized in the following
table:
Payments due by Period (in millions)
--------------------------------------------------------------------
Less than More than
Contractual Obligations Total 1 Year 1-3 Years 3-5 Years 5 Years
----------------------- ------- --------- --------- --------- ----------
Long-Term Debt $ 502.5 $ 13.0 $ 25.9 $ 25.9 $ 437.7
Operating Lease Obligations 15.1 2.2 4.7 4.8 3.4
Purchase Obligations 25.2 25.2 - - -
------- --------- --------- --------- ----------
Total $ 542.8 $ 40.4 $ 30.6 $ 30.7 $ 441.1
======= ========= ========= ========= ==========
The Company's long-term debt consists of three surplus notes and the
related interest payable. Two of the notes are with Equitable Life and
have outstanding principal balances of $60.0 million and $75.0
million, respectively. The related interest rates and maturity dates
for the Equitable Life notes are 7.25% and 7.75%, and December 29,
2028 and September 29, 2029, respectively. The remaining surplus note
of the Company is with Security Life of Denver Insurance Company, and
has an outstanding principal, interest rate and maturity date of $35.0
million, 7.98% and December 7, 2029, respectively. As a result of the
13
Company's merger with Equitable Life, USG, and ULA effective January
1, 2004, the surplus notes with Equitable Life will no longer exist
effective as of the date of the merger.
Operating lease obligations relate to the rental of office space under
various non-cancelable operating lease agreements that expire through
May 2010.
Purchase obligations consist of commitments to enter into mortgage
loan arrangements during 2004.
Legislative Initiatives
The Jobs and Growth Tax Relief Reconciliation Act of 2003, which was
enacted in the second quarter, may impact the Company. The Act's
provisions, which reduce the tax rates on long-term capital gains and
corporate dividends, impact the relative competitiveness of the
Company's products especially variable annuities.
Other legislative proposals under consideration include repealing the
estate tax, changing the taxation of products, changing life insurance
company taxation and making changes to nonqualified deferred
compensation arrangements. Some of these proposals, if enacted, could
have a material effect on life insurance, annuity and other retirement
savings product sales.
The impact on the Company's tax position and products cannot be
predicted.
Other Regulatory Matters
Like many financial services companies, certain U.S. affiliates of ING
Groep N.V. have received informal and formal requests for information
since September 2003 from various governmental and self-regulatory
agencies in connection with investigations related to mutual funds and
variable insurance products. ING has cooperated fully with each
request.
In addition to responding to regulatory requests, ING management
initiated an internal review of trading in ING insurance, retirement,
and mutual fund products. The goal of this review has been to identify
whether there have been any instances of inappropriate trading in
those products by third parties or by ING investment professionals and
other ING personnel. This internal review is being conducted by
independent special counsel and auditors. Additionally, ING reviewed
its controls and procedures in a continuing effort to deter improper
frequent trading in ING products. ING's internal reviews related to
mutual fund trading are continuing.
The internal review has identified several arrangements allowing third
parties to engage in frequent trading of mutual funds within our
variable insurance and mutual fund products, and identified other
circumstances where frequent trading occurred despite measures taken
by ING intended to combat market timing. Most of the identified
arrangements were initiated prior to ING's acquisition of the
businesses in question. In each arrangement identified, ING has
terminated the inappropriate trading, taken steps to discipline or
terminate employees who were involved, and modified policies and
procedures to deter inappropriate activity. While the review is not
14
completed, management believes the activity identified does not
represent a systemic problem in the businesses involved.
These instances included agreements (initiated in 1998) that permitted
one variable life insurance customer of Reliastar Life Insurance
Company ("Reliastar") to engage in frequent trading, and to submit
orders until 4pm Central Time, instead of 4pm Eastern Time. Reliastar
was acquired by ING in 2000. The late trading arrangement was
immediately terminated when current senior management became aware of
it in 2002. ING believes that no profits were realized by the customer
from the late trading aspect of the arrangement.
In addition, the review has identified five arrangements that allowed
frequent trading of funds within variable insurance products issued by
Reliastar and by ING USA; and in certain ING Funds. ING entities did
not receive special benefits in return for any of these arrangements,
which have all been terminated. The internal review also identified
two investment professionals who engaged in improper frequent trading
in ING Funds.
ING will reimburse any ING Fund or its shareholders affected by
inappropriate trading for any profits that accrued to any person who
engaged in improper frequent trading for which ING is responsible.
Management believes that the total amount of such reimbursements will
not be material to ING or its U.S. business.
Subsequent Event
On January 1, 2004, Equitable Life, USG, and ULA, merged with and into
the Company. Also on January 1, 2004, immediately after the merger,
the Company changed its name to ING USA Annuity and Life Insurance
Company. As of the merger date, the Merger Companies ceased to exist
and were succeeded by ING USA.
The merger was accounted for based on the pooling-of-interests method.
FAS 141 excludes transfers of net assets or exchanges of shares
between entities under common control, and notes that certain
provisions under APB 16, provide a source of guidance for such
transactions.
Prior to the merger date, the Merger Companies were affiliated
companies of ING USA and indirect, wholly-owned subsidiaries of ING.
Equitable Life was domiciled in Iowa and offered various insurance
products, including deferred and immediate annuities, variable
annuities, and interest sensitive and traditional life insurance. ULA
was also domiciled in Iowa and primarily offered annuity related
insurance products, as well as life and health insurance that was
ceded to other insurers. USG was domiciled in Oklahoma and offered
various insurance products, including deferred fixed annuities,
immediate annuities, and interest-sensitive life insurance.
A Form 8-K for ING USA describing the merger, was filed on January 4,
2004 and includes unaudited pro forma condensed consolidated financial
information as of, and for the periods ended, September 30, 2003 and
2002, and December 31, 2002, 2001, and 2000. Revenues and net income
for the period ended December 31, 2003, had the pooling been
consummated at the date of the financial statements, is $1,509.0
million and $57.2 million, respectively (unaudited).
15
Forward-Looking Information/Risk Factors
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions readers
regarding certain forward-looking statements contained in this report
and in any other statements made by, or on behalf of, the Company,
whether or not in future filings with the SEC. Forward-looking
statements are statements not based on historical information and
which relate to future operations, strategies, financial results, or
other developments. Statements using verbs such as "expect,"
"anticipate," "believe" or words of similar import generally involve
forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent the
Company's beliefs concerning future levels of sales and redemptions of
the Company's products, investment spreads and yields, or the earnings
and profitability of the Company's activities.
Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond the Company's control and many of which are subject
to change. These uncertainties and contingencies could cause actual
results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Whether or not actual results differ materially from forward-looking
statements may depend on numerous foreseeable and unforeseeable
developments. Some may be national in scope, such as general economic
conditions, changes in tax law and changes in interest rates. Some may
be related to the insurance industry generally, such as pricing
competition, regulatory developments and industry consolidation.
Others may relate to the Company specifically, such as credit,
volatility and other risks associated with the Company's investment
portfolio. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the Company with the
SEC. The Company disclaims any obligation to update forward-looking
information.
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Asset/liability management is integrated into many aspects of the
Company's operations, including investment decisions, product
development, and determination of crediting rates. As part of the risk
management process, different economic scenarios are modeled,
including cash flow testing required for insurance regulatory
purposes, to determine that existing assets are adequate to meet
projected liability cash flows. Key variables in the modeling process
include interest rates, anticipated contractholder behavior and
variable separate account performance. Contractholders bear the
investment risk related to variable separate account products.
The fixed account liabilities are supported by a portfolio principally
composed of fixed rate investments that can generate predictable,
steady rates of return. The portfolio management strategy for the
fixed account considers the assets available for sale. This enables
the Company to respond to changes in market interest rates, changes in
prepayment risk, changes in relative values of asset sectors and
individual securities and loans, changes in credit quality outlook,
and other relevant factors. The objective of portfolio management is
to maximize returns, taking into account interest rate and credit
risk, as well as other risks. The Company's asset/liability management
16
discipline includes strategies to minimize exposure to loss as
interest rates and economic and market conditions change.
On the basis of these analyses, management believes there is currently
no material solvency risk to the Company.
17
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Report of Independent Auditors 19
Consolidated Financial Statements:
Consolidated Income Statements for the years ended
December 31, 2003, 2002 and 2001 20
Consolidated Balance Sheets as of December 31, 2003 and 2002 21
Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 2003, 2002 and 2001 22
Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001 23
Notes to Consolidated Financial Statements 24
Report of Independent Auditors
The Board of Directors
ING USA Annuity and Life Insurance Company
We have audited the accompanying consolidated balance sheets of ING USA Annuity
and Life Insurance Company (formerly Golden American Life Insurance Company) and
Subsidiary as of December 31, 2003 and 2002, and the related consolidated income
statements, statements of changes in shareholder's equity, and statements of
cash flows for each of the three years in the period ended December 31, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ING USA Annuity
and Life Insurance Company as of December 31, 2003 and 2002, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States.
As discussed in Note 1 to the financial statements, the Company changed the
accounting principle for goodwill and other intangible assets effective January
1, 2002.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 22, 2004
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Consolidated Income Statements
(Millions)
Year ended Year ended Year ended
December 31, December 31, December 31,
2003 2002* 2001*
------------------ ------------------- ------------------
Revenues:
Fee income $ 330.2 $ 245.9 $ 219.1
Net investment income 320.3 197.7 94.4
Net realized capital gains (losses) (36.2) 4.2 (6.5)
Other income (loss) (0.2) 3.5 -
------------------ ------------------- ------------------
Total revenue $ 614.1 $ 451.3 $ 307.0
------------------ ------------------- ------------------
Benefits, losses and expenses:
Benefits:
Interest credited and other benefits
to policyholders 320.1 318.4 239.2
Underwriting, acquisition, and insurance expenses:
General expenses 123.8 139.7 119.9
Commissions 250.3 288.7 232.4
Policy acquisition costs deferred (210.8) (292.2) (128.2)
Amortization:
Deferred policy acquisition costs and value
of business acquired 184.7 127.8 49.6
Goodwill - - 4.2
Other:
Expense and charges reimbursed under
modified coinsurance agreements (131.6) (104.9) (225.6)
Interest expense 13.7 16.0 19.4
------------------ ------------------- ------------------
Total benefits, losses and expenses 550.2 493.5 310.9
------------------ ------------------- ------------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle 63.9 (42.2) (3.9)
Income tax expense (benefit) 2.5 (12.5) 0.1
------------------ ------------------- ------------------
Income (loss) before cumulative effect of change
in accounting principle 61.4 (29.7) (4.0)
Cumulative effect of change in accounting principle - (135.3) -
------------------ ------------------- ------------------
Net income (loss) $ 61.4 $ (165.0) $ (4.0)
================== =================== ==================
*See Note 1.
The accompanying notes are an integral part of these consolidated financial statements.
20
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Consolidated Balance Sheets
(Millions)
As of December 31,
2003 2002
----------------- -----------------
Assets
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost of $5,047.0 at 2003 and $4,720.1 at 2002) $ 5,223.3 $ 4,936.4
Equity securities at fair value:
Investment in mutual funds (cost of $5.3 at 2003 and $22.9 at 2002) 5.6 19.0
Mortgage loans on real estate 847.6 482.4
Policy loans 17.5 16.0
Short-term investments 17.7 2.2
----------------- -----------------
Total investments 6,111.7 5,456.0
Cash and cash equivalents 17.9 148.5
Accrued investment income 65.4 61.9
Reinsurance recoverable 13.0 196.9
Deferred policy acquisition costs 835.3 678.0
Value of business acquired 8.5 8.5
Receivable for securities sold 10.2 -
Due from affiliates 4.2 -
Other assets 14.7 5.3
Assets held in separate accounts 17,112.6 11,029.3
----------------- -----------------
Total assets $ 24,193.5 $ 17,584.4
================= =================
Liabilities and Shareholder's Equity
Policy liabilities and accruals:
Future policy benefits and claims' reserves $ 5,277.3 $ 5,159.1
----------------- -----------------
Total policy liabilities and accruals 5,277.3 5,159.1
Surplus notes 170.0 170.0
Current income taxes 3.9 42.4
Deferred income taxes 126.0 79.8
Dollar roll obligations 120.1 40.0
Other liabilities 31.0 64.7
Liabilities related to separate accounts 17,112.6 11,029.3
----------------- -----------------
Total liabilities 22,840.9 16,585.3
----------------- -----------------
Shareholder's equity:
Common stock (250,000 shares authorized, issued and outstanding;
$10.00 per share par value) 2.5 2.5
Additional paid-in capital 1,358.4 1,128.4
Accumulated other comprehensive income 64.2 2.1
Retained deficit (72.5) (133.9)
----------------- -----------------
Total shareholder's equity 1,352.6 999.1
----------------- -----------------
Total liabilities and shareholder's equity $ 24,193.5 $ 17,584.4
================= =================
The accompanying notes are an integral part of these consolidated financial statements.
21
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(Millions)
Accumulated
Additional Other Retained Total
Common Paid-In Comprehensive Earnings Shareholder's
Stock Capital Income (Loss) (Deficit) Equity
--------------- --------------- ---------------- ---------------- ----------------
Balance at December 31, 2000 $ 2.5 $ 583.6 $ (4.1) $ 35.1 $ 617.1
Contribution of capital 196.8 196.8
Comprehensive income:
Net (loss) - - - (4.0) (4.0)
Other comprehensive income
net of tax:
Unrealized gain on securities
($12.2 pretax) - - 7.9 - 7.9
----------------
Comprehensive income 3.9
--------------- --------------- ---------------- ---------------- ----------------
Balance at December 31, 2001 2.5 780.4 3.8 31.1 817.8
Contribution of capital 356.3 356.3
Other (8.3) (8.3)
Comprehensive income:
Net (loss) - - - (165.0) (165.0)
Other comprehensive income
net of tax:
Unrealized (loss) on securities
($(2.6) pretax) - - (1.7) - (1.7)
----------------
Comprehensive loss (166.7)
--------------- --------------- ---------------- ---------------- ----------------
Balance at December 31, 2002 2.5 1,128.4 2.1 (133.9) 999.1
Contribution of capital - 230.0 - - 230.0
Comprehensive income:
Net income - - - 61.4 61.4
Other comprehensive income
net of tax:
Unrealized gain on securities
($95.6 pretax) - - 62.1 - 62.1
----------------
Comprehensive income 123.5
--------------- --------------- ---------------- ---------------- ----------------
Balance at December 31, 2003 $ 2.5 $ 1,358.4 $ $ 64.2 $ (72.5) $ 1,352.6
=============== =============== ================ ================ ================
The accompanying notes are an integral part of these consolidated financial statements.
22
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Consolidated Statements of Cash Flows
(Millions)
Year ended Year ended Year ended
December 31, December 31, December 31,
2003 2002 2001
----------------- ------------------ -----------------
Cash Flows from Operating Activities:
Net income (loss) $ 61.4 $ (165.0) $ (4.0)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Interest credited and charges on interest sensitive products 306.3 282.2 191.0
Net realized capital (gains) losses 36.2 (4.2) 6.5
Increase in accrued investment income (3.5) (39.5) (13.2)
Increase in guaranteed benefits reserve (91.6) 107.1 28.2
Other changes in insurance reserve liabilities 13.3 - -
Policy acquisition cost deferred (210.8) (292.2) (128.2)
Amortization of deferred policy acquisition costs 180.4 121.2 45.2
Amortization of value of business acquired 4.3 6.6 4.4
Impairment of goodwill - 151.3 -
Other non-cash reconciling items and other changes in
assets and liabilities (87.0) 21.3 110.6
Provision for deferred income taxes 12.8 (85.7) (0.6)
----------------- ------------------ -----------------
Net cash provided by operating activities 221.8 103.1 239.9
----------------- ------------------ -----------------
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, or repayment of:
Fixed maturities available for sale 7,025.8 7,297.1 880.7
Equity securities 16.2 7.8 6.9
Mortgage loans 51.9 285.0 136.0
Acquisition of investments:
Fixed maturities available for sale (7,267.3) (10,068.3) (2,070.8)
Equity securities - (22.8) -
Short-term and other investments (15.4) - (4.7)
Mortgage loans (417.1) (553.7) (250.3)
Increase in policy loans (1.5) (1.2) (1.5)
(Increase) decrease in property and equipment (0.7) 1.1 1.2
Proceeds from sale of interest in subsidiary - 27.7 -
Loss on valuation of interest in subsidiary - 3.0 -
Other - 0.6 -
----------------- ------------------ -----------------
Net cash used for investing activities (608.1) (3,023.7) (1,302.5)
----------------- ------------------ -----------------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 1,383.5 3,818.5 1,933.1
Maturities and withdrawals from insurance contracts (332.3) (171.2) (134.8)
Transfers to separate accounts (1,160.0) (1,053.8) (902.9)
Proceeds received on reinsurance recapture 134.5 - -
Proceeds of notes payable - - 3.1
Repayment of notes payable - (1.4) (1.7)
Proceeds from reciprocal loan agreement borrowings - - 69.3
Repayment of reciprocal loan agreement borrowings - (75.0) (69.3)
Contributions of capital by parent 230.0 356.3 196.8
----------------- ------------------ -----------------
Net cash provided by financing activities 255.7 2,873.4 1,093.6
----------------- ------------------ -----------------
Net increase (decrease) in cash and cash equivalents (130.6) (47.2) 31.0
Cash and cash equivalents, beginning of period 148.5 195.7 164.7
----------------- ------------------ -----------------
Cash and cash equivalents, end of period $ 17.9 $ 148.5 $ 195.7
================= ================== =================
Supplemental cash flow information:
Income taxes (received) paid, net $ 28.2 $ (141.5) $ 0.4
================= ================== =================
Interest paid $ 13.0 $ 20.8 $ 15.0
================= ================== =================
The accompanying notes are an integral part of these consolidated financial statements.
23
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Principles of Consolidation
ING USA Annuity and Life Insurance Company (formerly known as Golden
American Life Insurance Company) ("ING USA" or the "Company" as
appropriate), a wholly-owned subsidiary of Lion Connecticut Holdings Inc.
("Lion" or "Parent"), is a stock life insurance company organized under the
laws of the State of Iowa. ING USA was originally incorporated under the
laws of the State of Minnesota on January 2, 1973, in the name of St. Paul
Life Insurance Company. On December 21, 1993, the Company redomesticated
from Minnesota to Delaware. On January 1, 2004 several events occurred.
First, the Company redomesticated from Delaware to Iowa. Secondly, on
January 1, 2004 (the "merger date"), Equitable Life Insurance Company of
Iowa ("Equitable Life"), USG Annuity & Life Company ("USG") and United Life
& Annuity Insurance Company ("ULA") (the "Merger Companies"), merged with
and into Golden American Life Insurance Company ("Golden American"). Also
on January 1, 2004, immediately after the merger, Golden American changed
its name to ING USA Annuity and Life Insurance Company. As of the merger
date, the Merger Companies ceased to exist and were merged into ING USA.
Lion is an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING"), a
global financial services holding company based in The Netherlands. ING USA
is authorized to do business in the District of Columbia and all states
except New York. ING USA is licensed as a life insurance company under the
laws of the State of Delaware until December 31, 2003 and Iowa since
January 1, 2004.
Prior to the merger date, ING USA was a wholly-owned subsidiary of
Equitable Life from December 30, 2001 through December 31, 2003. Formerly,
from October 24, 1997, until December 30, 2001, Equitable of Iowa
Companies, Inc. ("EIC" or "Former Holding Company") directly owned 100% of
Golden American's stock.
On December 3, 2001, the Board of Directors of EIC approved a plan to
contribute its holding of stock of Golden American to another wholly-owned
subsidiary, Equitable Life. The contribution of stock occurred on December
31, 2001, following approval by the Insurance Department of Delaware.
As of April 1, 2002, ING USA sold First Golden American Life Insurance
Company of New York ("First Golden") to its sister company, ReliaStar Life
Insurance Company ("ReliaStar"). ReliaStar, the parent of
Security-Connecticut Life Insurance Company ("Security-Connecticut"), which
in turn is the parent of ReliaStar Life Insurance Company of New York
("RLNY"), merged the First Golden business into RLNY operations and
dissolved First Golden at book value for $27.7 million in cash and a
receivable totaling $0.2 million from RLNY. The receivable from RLNY was
assumed by Equitable Life, and ultimately by ING. The consideration was
based on First Golden's statutory-basis book value. RLNY's payable to the
Company was assumed by ING and subsequently forgiven. ING USA realized a
loss of $3.0 million related to the sale of First Golden, which was
recorded as a capital transaction. Approval for the merger was obtained
from the Insurance Departments of the States of New York and Delaware.
24
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
As of October 1, 2003, RLNY's parent, Security-Connecticut merged with and
into its parent, ReliaStar.
Statement of Financial Accounting Standards ("FAS") No. 141, "Business
Combinations" excludes transfers of net assets or exchanges of shares
between entities under common control and is therefore covered by
Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations". RLNY presented combined results of operations including
First Golden activity as of the beginning of the period ending December 31,
2002. The first three months of First Golden activity is not reflected in
the ING USA statement of financial position or other financial information
for the period ended December 31, 2002, as the amounts were not material.
Description of Business
The Company offers a portfolio of variable and fixed insurance products
designed to meet customer needs for a tax-advantaged savings for retirement
and protection from death. The Company's variable and fixed insurance
products are marketed by broker/dealers, financial institutions, and
insurance agents. The Company's primary customers are consumers and
corporations.
Recently Adopted Accounting Standards
Accounting for Goodwill and Intangible Assets
During 2002, the Company adopted Financial Accounting Standards Board
("FASB") FAS No. 142, "Goodwill and Other Intangible Assets". The adoption
of this standard resulted in an impairment loss of $135.3 million. The
Company, in accordance with FAS No. 142, recorded the impairment loss
retroactive to the first quarter of 2002; prior quarters of 2002 were
restated accordingly. This impairment loss represented the entire carrying
amount of goodwill, net of accumulated amortization. This impairment charge
was shown as a change in accounting principle on the December 31, 2002
Consolidated Income Statement.
25
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Application of the nonamortization provision (net of tax) of the standard
resulted in an increase in net income of $3.8 million for the twelve months
ended December 31, 2002. Had the Company been accounting for goodwill under
FAS No. 142 for all periods presented, the Company's net income (loss)
would have been as follow:
Year ended
December 31,
(Millions) 2001
Reported net income (loss) $ (4.0)
Add back goodwill amortization, net of tax 3.8
-----------------
Adjusted net income (loss) $ (0.2)
=================
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued FAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended and interpreted by FAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement 133, and FAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an Amendment of FASB 133, and certain FAS 133 implementation
issues". This standard, as amended, requires companies to record all
derivatives on the balance sheet as either assets or liabilities and
measure those instruments at fair value. The manner in which companies are
to record gains or losses resulting from changes in the fair values of
those derivatives depends on the use of the derivative and whether it
qualifies for hedge accounting. FAS No. 133 was effective for the Company's
financial statements beginning January 1, 2001. Adoption of FAS No. 133 did
not have a material effect on the Company's financial position or results
of operations given the Company's limited derivative holdings and embedded
derivatives.
The Company occasionally purchases a financial instrument that contains a
derivative that is "embedded" in the instrument. In addition, the Company's
insurance products are reviewed to determine whether they contain an
embedded derivative. The Company assesses whether the economic
characteristics of the embedded derivative are clearly and closely related
to the economic characteristics of the remaining component of the financial
instrument or insurance product (i.e., the host contract) and whether a
separate instrument with the same terms as the embedded instrument would
meet the definition of a derivative instrument. When it is determined that
the embedded derivative possesses economic characteristics that are not
clearly and closely related to the economic characteristics of the host
contract and that a separate instrument with the same terms would qualify
as a derivative instrument, the embedded derivative is separated from the
host contract and carried at fair value. However, in cases where the host
contract is measured at fair value, with changes in fair value reported in
current period earnings or the Company is unable to reliably identify and
measure the embedded derivative for separation from its host contracts, the
entire contract is carried on the balance sheet at fair value and is not
26
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
designated as a hedging instrument. The Company did not have embedded
derivatives at December 31, 2003 or 2002.
The Derivative Implementation Group ("DIG") responsible for issuing
guidance on behalf of the FASB for implementation of FAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" recently
issued Statement Implementation Issue No. B36, "Embedded Derivatives:
Modified Coinsurance Arrangements and Debt Instruments" That Incorporate
Credit Risk Exposures That Are Unrelated or Only Partially Related to the
Credit Worthiness of the Obligor under Those Instruments ("DIG B36"). Under
this interpretation, modified coinsurance and coinsurance with funds
withheld reinsurance agreements as well as other types of receivables and
payables where interest is determined by reference to a pool of fixed
maturity assets or total return debt index may be determined to contain
embedded derivatives that are required to be bifurcated. The required date
of adoption of DIG B36 for the Company was October 1, 2003. The Company
completed its evaluation of DIG B36 and determined that the Company had
modified coinsurance treaties that required implementation of the guidance.
The applicable contracts, however, were determined to generate embedded
derivatives with a fair value of zero. Therefore, the guidance, while
implemented, did not impact the Company's financial position, results of
operations or cash flows.
Guarantees
In November 2002, the FASB issued Interpretation No.45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others", to clarify
accounting and disclosure requirements relating to a guarantor's issuance
of certain types of guarantees, or groups of similar guarantees, even if
the likelihood of the guarantor's having to make any payments under the
guarantee is remote. The disclosure provisions are effective for financial
statements for fiscal years ended after December 15, 2002. For certain
guarantees, the interpretation also requires that guarantors recognize a
liability equal to the fair value of the guarantee upon its issuance. This
initial recognition and measurement provision is to be applied only on a
prospective basis to guarantees issued or modified after December 31, 2002.
The Company has performed an assessment of its guarantees and believes that
all of its guarantees are excluded from the scope of this interpretation.
Variable Interest Entities
In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No.51" (FIN 46). In December 2003, the FASB modified
FIN 46 to make certain technical corrections and address certain
implementation issues that had arisen. FIN 46 provides a new framework for
identifying variable interest entities (VIEs) and determining when a
company should include the assets, liabilities, noncontrolling interests
and results of activities of a VIE in its consolidated financial
statements.
27
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
In general, a VIE is a corporation, partnership, limited- liability
corporation, trust, or any other legal structure used to conduct activities
or hold assets that either (1) has an insufficient amount of equity to
carry out its principal activities without additional subordinated
financial support, (2) has a group of equity owners that are unable to make
significant decisions about its activities, or (3) has a group of equity
owners that do not have the obligation to absorb losses or the right to
receive returns generated by its operations.
FIN 46 requires a VIE to be consolidated if a party with an ownership,
contractual or other financial interest in the VIE (a variable interest
holder) is obligated to absorb a majority of the risk of loss from the
VIE's activities, is entitled to receive a majority of the VIE's residual
returns (if no party absorbs a majority of the VIE's losses), or both. A
variable interest holder that consolidates the VIE is called the primary
beneficiary. Upon consolidation, the primary beneficiary generally must
initially record all of the VIE's assets, liabilities and noncontrolling
interests at fair value and subsequently account for the VIE as if it were
consolidated based on majority voting interest. FIN 46 also requires
disclosures about VIEs that the variable interest holder is not required to
consolidate but in which it has a significant variable interest.
At December 31, 2003, the Company held the following investments that, for
purposes of FIN 46, were evaluated and determined that the investments do
not require consolidation in the Company's financial statements:
Asset Type Purpose Book Value (1) Market Value
---------------------- ------------------- ------------------- ------------------
Private Corporate Securities - synthetic
leases; project financings; credit tenant
leases Investment Holdings $ 1,057.2 $ 1,114.6
Foreign Securities - US VIE subsidiaries
of foreign companies Investment Holdings 190.3 203.0
Commercial Mortgage Obligations (CMO) Investment Holdings 888.5 893.9
Collateralized Debt Obligations (CDO) Investment Holdings
and/or
Collateral Manager 4.9 4.3
Asset-Backed Securities (ABS) Investment Holdings 479.9 482.3
Commercial Mortgage Backed Securities (CMBS) Investment Holdings 325.4 342.0
(1) Represents maximum exposure to loss except for those structures for which the Company also receives asset management fees.
New Accounting Pronouncements
In July 2003, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 03-1, "Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts," which the Company intends to adopt
during first quarter 2004. The impact on the financial statements is not
known at this time.
28
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Reclassifications and Changes to Prior Year Presentation
Certain reclassifications have been made to prior year financial
information to conform to the current year classifications.
During 2003, certain changes were made to the 2002 and 2001 Income
Statements to reflect the correct balances. These changes had no impact on
net income or net shareholder's equity of the Company. The following
summarizes the corrections to each financial statement line item (in
millions):
Previously
Reported Restated
2002 Adjustments 2002
------------------- ------------------ ------------------
Fee income $ 204.0 $ 41.9 $ 245.9
------------------- ------------------ ------------------
Total revenue $ 409.4 $ 41.9 $ 451.3
=================== ================== ==================
Interest credited and other benefits to
policyholders 276.5 41.9 318.4
------------------- ------------------ ------------------
Total expense $ 451.6 $ 41.9 $ 493.5
=================== ================== ==================
Previously
Reported Restated
2002 Adjustments 2002
------------------- ------------------ ------------------
Fee income $ 188.9 $ 30.2 $ 219.1
------------------- ------------------ ------------------
Total revenue $ 276.8 $ 30.2 $ 307.0
=================== ================== ==================
Interest credited and other benefits to
policyholders 209.0 30.2 239.2
------------------- ------------------ ------------------
Total expense $ 280.7 $ 30.2 $ 310.9
=================== ================== ==================
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from reported results using those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments
and other debt issues with a maturity of 90 days or less when purchased.
29
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Investments
All of the Company's fixed maturity and equity securities are currently
designated as available-for-sale. Available-for-sale securities are
reported at fair value and unrealized gains and losses on these securities
are included directly in shareholder's equity, after adjustment for related
charges in deferred policy acquisition costs, value of business acquired,
and deferred income taxes.
The Company analyzes the general account investments to determine whether
there has been an other than temporary decline in fair value below the
amortized cost basis in accordance with FAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Management considers
the length of the time and the extent to which the market value has been
less than cost; the financial condition and near-term prospects of the
issuer; future economic conditions and market forecasts; and the Company's
intent and ability to retain the investment in the issuer for a period of
time sufficient to allow for recovery in market value. If it is probable
that all amounts due according to the contractual terms of a debt security
will not be collected, an other than temporary impairment is considered to
have occurred.
In addition, the Company invests in structured securities that meet the
criteria of Emerging Issues Task Force ("EITF") Issue No. 99-20,
"Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets". Under Issue No. EITF
99-20, a determination of the required impairment is based on credit risk
and the possibility of significant prepayment risk that restricts the
Company's ability to recover the investment. An impairment is recognized if
the fair value of the security is less than amortized cost and there has
been an adverse change in cash flow since the remeasurement date.
When a decline in fair value is determined to be other than temporary, the
individual security is written down to fair value and the loss is accounted
for as a realized loss.
Realized capital gains and losses on all other investments are included in
the consolidated income statements.
Unrealized capital gains and losses on all other investments are reflected
in shareholder's equity, net of related income taxes.
Purchases and sales of fixed maturities and equity securities (excluding
private placements) are recorded on the trade date. Purchases and sales of
private placements and mortgage loans are recorded on the closing date.
Fair values for fixed maturities are obtained from independent pricing
services or broker/dealer quotations. Fair values for privately placed
bonds are determined using a matrix-based model. The matrix-based model
considers the level of risk-free interest rates, current corporate spreads,
the credit quality of the issuer and cash flow characteristics of the
30
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
security. The fair values for equity securities are based on quoted market
prices. For equity securities not actively traded, estimated fair values
are based upon values of issues of comparable yield and quality or
conversion value where applicable.
The Company engages in securities lending whereby certain securities from
its portfolio are loaned to other institutions for short periods of time.
Initial collateral, primarily cash, is required at a rate of 102% of the
market value of the loaned domestic securities. The collateral is deposited
by the borrower with a lending agent, and retained and invested by the
lending agent according to the Company's guidelines to generate additional
income. The market value of the loaned securities is monitored on a daily
basis with additional collateral obtained or refunded as the market value
of the loaned securities fluctuates.
Reverse dollar repurchase agreement and reverse repurchase agreement
transactions are accounted for as collateralized borrowings, where the
amount borrowed is equal to the sales price of the underlying securities.
The investment in mutual funds represents an investment in mutual funds
managed by the Company, and is carried at fair value.
Mortgage loans on real estate are reported at amortized cost less
impairment writedowns. If the value of any mortgage loan is determined to
be impaired (i.e., when it is probable the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement), the carrying value of the mortgage loan is reduced to the
present value of expected cash flows from the loan, discounted at the
loan's effective interest rate, or to the loan's observable market price,
or the fair value of the underlying collateral. The carrying value of the
impaired loans is reduced by establishing a permanent writedown charged to
realized loss.
Policy loans are carried at unpaid principal balances, net of impairment
reserves.
Short-term investments, consisting primarily of money market instruments
and other fixed maturities issues purchased with an original maturity of 91
days to one year, are considered available for sale and are carried at fair
value, which approximates amortized cost.
The Company's use of derivatives is limited to hedging purposes. The
Company enters into interest rate and currency contracts, including swaps,
caps, and floors to reduce and manage risks associated with changes in
value, yield, price, cash flow or exchange rates of assets or liabilities
held or intended to be held. Changes in the fair value of open derivative
contracts are recorded in net realized capital gains and losses.
On occasion, the Company sells call options written on underlying
securities that are carried at fair value. Changes in fair value of these
options are recorded in net realized capital gains or losses.
31
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Deferred Policy Acquisition Costs and Value of Business Acquired
Deferred Policy Acquisition Costs ("DAC") is an asset, which represents
certain costs of acquiring certain insurance business, which are deferred
and amortized. These costs, all of which vary with and are primarily
related to the production of new and renewal business, consist principally
of commissions, certain underwriting and contract issuance expenses, and
certain agency expenses. Value of Business Acquired ("VOBA") is an asset,
which represents the present value of estimated net cash flows embedded in
the Company's contracts, which existed at the time the Company was acquired
by ING. DAC and VOBA are evaluated for recoverability at each balance sheet
date and these assets would be reduced to the extent that gross profits are
inadequate to recover the asset.
The amortization methodology varies by product type based upon two
accounting standards: FAS No. 60, "Accounting and Reporting by Insurance
Enterprises" ("FAS No. 60") and FAS No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and Realized
Gains and Losses from the Sale of Investments" ("FAS No. 97").
Under FAS No. 60, acquisition costs for traditional life insurance
products, which primarily include whole life and term life insurance
contracts, are amortized over the premium payment period in proportion to
the premium revenue recognition.
Under FAS No. 97, acquisition costs for universal life and investment-type
products, which include universal life policies and fixed and variable
deferred annuities, are amortized over the life of the blocks of policies
(usually 25 years) in relation to the emergence of estimated gross profits
from surrender charges, investment margins, mortality and expense margins,
asset-based fee income, and actual realized gains (losses) on investments.
Amortization is adjusted retrospectively when estimates of current or
future gross profits to be realized from a group of products are revised.
DAC and VOBA are written off to the extent that it is determined that
future policy premiums and investment income or gross profits are not
adequate to cover related expenses.
32
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Activity for the years ended December 31, 2003, 2002 and 2001 within VOBA
was as follows:
(Millions)
Balance at December 31, 2000 $ 25.9
Adjustment for FAS No. 115 (1.3)
Interest accrued at 7% 1.6
Amortization (6.0)
-----------------
Balance at December 31, 2001 20.2
Adjustment for FAS No. 115 (5.1)
Additions (3.3)
Interest accrued at 7% 1.3
Amortization (4.6)
-----------------
Balance at December 31, 2002 8.5
Adjustment for FAS No. 115 4.3
Additions -
Interest accrued at (4% - 5%) 0.4
Amortization (4.7)
-----------------
Balance at December 31, 2003 $ 8.5
=================
The estimated amount of VOBA to be amortized, net of interest, over the
next five years is $7.7 million, $5.7 million, $4.1 million, $3.3 million
and $2.6 million for the years 2004, 2005, 2006, 2007 and 2008,
respectively. Actual amortization incurred during these years may vary as
assumptions are modified to incorporate actual results.
As part of the regular analysis of DAC/VOBA, at the end of third quarter of
2002, the Company unlocked its long-term rate of return assumptions. The
Company reset long-term assumptions for the separate account returns to
9.0% (gross before fund management fees and mortality and expense and other
policy charges), as of December 31, 2002, reflecting a blended return of
equity and other sub-accounts. The initial unlocking adjustment in 2002 was
primarily driven by the sustained downturn in the equity markets and
revised expectations for future returns. During 2002, the Company recorded
an acceleration of DAC/VOBA amortization totaling $91.5 million before tax,
or $59.5 million, net of $32.0 million of federal income tax benefit.
The Company has remained unlocked during 2003, and reset long-term
assumptions for the separate account returns from 9.0% to 8.5% (gross
before fund management fees and mortality and expense and other policy
charges), as of December 31, 2003, maintaining a blended return of equity
and other sub-accounts. The 2003 unlocking adjustment from the previous
year was primarily driven by improved market performance. For the year
ended December 31, 2003, the Company recorded a deceleration of DAC/VOBA
amortization totaling $41.3 million before tax, or $26.9 million, net of
$14.4 million of federal income tax expense.
33
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Policy Liabilities and Accruals
Reserves for immediate annuities with life contingent payout contracts are
computed on the basis of assumed investment yield, mortality, and expenses,
including a margin for adverse deviations. Such assumptions generally vary
by plan, year of issue and policy duration. Reserve interest rates range
from 3.0% to 3.5% for all years presented. Investment yield is based on the
Company's experience.
Mortality and withdrawal rate assumptions are based on relevant Company
experience and are periodically reviewed against both industry standards
and experience.
Other policyholders' funds include reserves for deferred annuity investment
contracts and immediate annuities without life contingent payouts. Reserves
on such contracts are equal to cumulative deposits less charges and
withdrawals plus credited interest thereon (rates range from 2.4% to 7.5%
for all years presented) net of adjustments for investment experience that
the Company is entitled to reflect in future credited interest.
Revenue Recognition
For certain annuity contracts, charges assessed against policyholders'
funds for the cost of insurance, surrender, expenses, actuarial margin and
other fees are recorded as revenue as charges are assessed against
policyholders. Other amounts received for these contracts are reflected as
deposits and are not recorded as revenue. Related policy benefits are
recorded in relation to the associated premiums or gross profit so that
profits are recognized over the expected lives of the contracts. When
annuity payments with life contingencies begin under contracts that were
initially investment contracts, the accumulated balance in the account is
treated as a single premium for the purchase of an annuity and reflected as
an offsetting amount in both premiums and current and future benefits in
the Consolidated Income Statement.
Separate Accounts
Separate Account assets and liabilities generally represent funds
maintained to meet specific investment objectives of contractholders who
bear the investment risk, subject, in some cases, to minimum guaranteed
rates. Investment income and investment gains and losses generally accrue
directly to such contractholders. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company.
Separate Account assets supporting variable options under universal life
and annuity contracts are invested, as designated by the contractholder or
participant under a contract (who bears the investment risk subject, in
limited cases, to minimum guaranteed rates) in shares of mutual funds which
are managed by the Company, or other selected mutual funds not managed by
the Company.
34
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Separate Account assets are carried at fair value. At December 31, 2003 and
2002, unrealized gains of $112.8 million and of $133.4 million,
respectively, after taxes, on assets supporting a guaranteed interest
option are reflected in shareholder's equity.
Separate Account liabilities are carried at fair value, except for those
relating to the guaranteed interest option. Reserves relating to the
guaranteed interest option are maintained at fund value and reflect
interest credited at rates ranging from 2.4% to 7.5% in 2003 and 2.4% to
11.0% in 2002.
Separate Account assets and liabilities are shown as separate captions in
the Consolidated Balance Sheets. Deposits, investment income and net
realized and unrealized capital gains and losses of the Separate Accounts
are not reflected in the Consolidated Financial Statements (with the
exception of realized and unrealized capital gains and losses on the assets
supporting the guaranteed interest option). The Consolidated Statements of
Cash Flows do not reflect investment activity of the Separate Accounts.
Reinsurance
The Company utilizes indemnity reinsurance agreements to reduce its
exposure to large losses in all aspects of its insurance business. Such
reinsurance permits recovery of a portion of losses from reinsurers,
although it does not discharge the primary liability of the Company as
direct insurer of the risks reinsured. The Company evaluates the financial
strength of potential reinsurers and continually monitors the financial
condition of reinsurers. Only those reinsurance recoverable balances deemed
probable of recovery are reflected as assets on the Company's Balance
Sheets.
Income Taxes
The Company is taxed at regular corporate rates after adjusting income
reported for financial statement purposes for certain items. Deferred
income tax expenses/benefits result from changes during the year in
cumulative temporary differences between the tax basis and book basis of
assets and liabilities.
35
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Deferred corporate tax is stated at the face value and is calculated for
temporary valuation differences between carrying amounts of assets and
liabilities in the balance sheet and tax bases based on tax rates that are
expected to apply in the period when the assets are realized or the
liabilities are settled.
Deferred tax assets are recognized to the extent that it is probable that
taxable profits will be available against which the deductible temporary
differences can be utilized. A deferred tax asset is recognized for the
carryforward of unused tax losses to the extent that it is probable that
future taxable profits will be available for compensation.
2. Investments
Fixed maturities available for sale as of December 31 were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- -------------- -------------
2003
(Millions)
U.S. government and government
agencies and authorities $ 23.8 $ 0.1 $ - $ 23.9
State, municipalities and political subdivisions 5.0 - 0.4 4.6
U.S. corporate securities:
Public utilities 482.1 35.7 3.7 514.1
Other corporate securities 2,630.8 128.7 12.1 2,747.4
------------- ------------- -------------- -------------
Total U.S. corporate securities 3,112.9 164.4 15.8 3,261.5
------------- ------------- -------------- -------------
Foreign securities:
Government 68.5 1.0 1.0 68.5
Other 559.7 30.3 5.5 584.5
------------- ------------- -------------- -------------
Total foreign securities 628.2 31.3 6.5 653.0
------------- ------------- -------------- -------------
Mortgage-backed securities 790.0 6.0 4.6 791.4
Other assets-backed securities 487.1 5.5 3.7 488.9
------------- ------------- -------------- -------------
Total fixed maturities $ 5,047.0 $ 207.3 $ 31.0 $ 5,223.3
============= ============= ============== =============
36
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Fixed maturities available for sale as of December 31 were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- -------------- -------------
2002
(Millions)
U.S. government and government
agencies and authorities $ 207.3 $ 2.3 $ 0.1 $ 209.5
U.S. corporate securities:
Public utilities 335.7 15.5 1.9 349.3
Other corporate securities 2,739.5 163.2 6.4 2,896.4
------------- ------------- -------------- -------------
Total U.S. corporate securities 3,075.2 178.7 8.3 3,245.7
------------- ------------- -------------- -------------
Foreign securities:
Government 64.8 2.9 - 67.7
Other 436.3 27.7 2.6 461.3
------------- ------------- -------------- -------------
Total foreign securities 501.1 30.6 2.6 529.0
------------- ------------- -------------- -------------
Mortgage-backed securities 641.7 12.0 0.2 653.5
Other assets-backed securities 294.8 7.0 3.1 298.7
------------- ------------- -------------- -------------
Total fixed maturities $ 4,720.1 $ 230.6 $ 14.3 $ 4,936.4
============= ============= ============== =============
At December 31, 2003 and 2002, net unrealized appreciation is $176.3
million and $216.3 million, respectively, on available-for-sale fixed
maturities.
The aggregate unrealized losses and related fair values of investments with
unrealized losses as of December 31, 2003, are shown below by duration:
Unrealized Fair
Loss Value
------------ -----------
(Millions)
Duration category:
Less than six months below cost $ 9.3 $ 675.3
More than six months and less than twelve months below cost 20.4 679.7
More than twelve months below cost 1.3 7.9
------------ -----------
Fixed maturities $ 31.0 $ 1,362.9
============ ===========
37
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Of the losses more than 6 months and less than 12 months in duration of
$20.4 million, there were $9.1 million in unrealized losses that are
primarily related to interest rate movement or spread widening for other
than credit-related reasons. Business and operating fundamentals are
performing as expected. The remaining losses of $11.3 million as of
December 31, 2003 included the following significant items:
$3.6 million of unrealized losses related to securities reviewed for
impairment under the guidance prescribed by EITF 99-20. This category
includes U.S. government-backed securities, principal protected
securities and structured securities which did not have an adverse
change in cash flows for which the carrying amount was $195.1 million.
$6.3 million of unrealized losses relating to the energy/utility
industry, for which the carrying amount was $125.7 million. During
2003, the energy sector recovered due to a gradually improving
economic picture and the lack of any material accounting
irregularities similar to those experienced in the prior two years.
The Company's year-end analysis indicates that the Company expects the
debt to be serviced in accordance with the contractual terms.
The remaining unrealized losses totaling $1.4 million relate to a
carrying amount of $61.9 million.
Of the losses more than 12 months in duration of $1.3 million, there were
$0.6 million related to securities reviewed for impairment under the
guidance prescribed by EITF 99-20. This category includes U.S.
government-backed securities, principal protected securities and structured
securities which did not have an adverse change in cash flows for which the
carrying amount was $4.0 million.
The amortized cost and fair value of total fixed maturities for the
year-ended December 31, 2003 are shown below by contractual maturity.
Actual maturities may differ from contractual maturities because securities
may be restructured, called, or prepaid.
Amortized Fair
Cost Value
------------ -----------
(Millions)
Due to mature:
One year or less $ 30.6 $ 31.0
After one year through five years 880.9 921.1
After five years through ten years 1,866.6 1,962.7
After ten years 666.4 686.2
Mortgage-backed securities 1,115.4 1,133.3
Other asset-backed securities 487.1 489.0
------------ -----------
Fixed maturities $ 5,047.0 $ 5,223.3
============ ===========
38
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
At December 31, 2003 and 2002, fixed maturities with fair values of $2.9
million and $7.5 million, respectively, were on deposit as required by
regulatory authorities.
The Company did not have any investments in a single issuer, other than
obligations of the U.S. government, with a carrying value in excess of 10%
of the Company's shareholder's equity at December 31, 2003.
Beginning in April 2001, the Company entered into reverse dollar repurchase
agreement and reverse repurchase agreement transactions to increase its
return on investments and improve liquidity. These transactions involve a
sale of securities and an agreement to repurchase substantially the same
securities as those sold. The dollar rolls and reverse repurchase
agreements are accounted for as short-term collateralized financings and
the repurchase obligation is reported on the Consolidated Balance Sheets.
The repurchase obligation totaled $120.1 and $40.0 million at December 31,
2003 and 2002, respectively.
The primary risk associated with short-term collateralized borrowings is
that the counterparty will be unable to perform under the terms of the
contract. The Company's exposure is limited to the excess of the net
replacement cost of the securities over the value of the short-term
investments, an amount that was not material at December 31, 2003. The
Company believes the counterparties to the dollar roll and reverse
repurchase agreements are financially responsible and that the counterparty
risk is immaterial.
During 2003, the Company determined that five fixed maturities had other
than temporary impairments. As a result, at December 31, 2003, the Company
recognized a pre-tax loss of $5.7 million to reduce the carrying value of
the fixed maturities to their fair value of $4.2 million. During 2002, the
Company determined that thirteen fixed maturities had other than temporary
impairments. As a result, at December 31, 2002, the Company recognized a
pre-tax loss of $8.9 million to reduce the carrying value of the fixed
maturities to their combined fair value of $123.5 million. During 2001, the
Company determined that ten fixed maturities had other than temporary
impairments. As a result, at December 31, 2001, the Company recognized a
pre-tax loss of $0.7 million to reduce the carrying value of the fixed
maturities to their fair value of $0.7 million.
3. Financial Instruments
Estimated Fair Value
The following disclosures are made in accordance with the requirements of FAS
No. 107, "Disclosures about Fair Value of Financial Instruments". FAS No. 107
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
39
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates, in many cases, could not be
realized in immediate settlement of the instrument. FAS No. 107 excludes
certain financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Fixed maturities securities: The fair values for the actively traded
marketable bonds are determined based upon the quoted market prices. The
fair values for marketable bonds without an active market are obtained
through several commercial pricing services which provide the estimated
fair values. Fair values of privately placed bonds are determined using a
matrix-based pricing model. The model considers the current level of
risk-free interest rates, current corporate spreads, the credit quality of
the issuer and cash flow characteristics of the security. Using this data,
the model generates estimated market values which the Company considers
reflective of the fair value of each privately placed bond. Fair values for
privately placed bonds are determined through consideration of factors such
as the net worth of the borrower, the value of collateral, the capital
structure of the borrower, the presence of guarantees and the Company's
evaluation of the borrower's ability to compete in their relevant market.
Equity securities: Fair values of these securities are based upon quoted
market value.
Mortgage loans on real estate: The fair values for mortgage loans on real
estate are estimated using discounted cash flow analyses and rates
currently being offered in the marketplace for similar loans to borrowers
with similar credit ratings. Loans with similar characteristics are
aggregated for purposes of the calculations.
Cash, short-term investments and policy loans: The carrying amounts for
these assets approximate the assets' fair values.
Assets held in separate accounts: Assets held in separate accounts are
reported at the quoted fair values of the individual securities in the
separate accounts.
Surplus notes: Estimated fair value of the Company's surplus notes were
based upon discounted future cash flows using a discount rate approximating
the current market value.
Investment contract liabilities (included in future policy benefits and
claims' reserves):
With a fixed maturity: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.
40
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Without a fixed maturity: Fair value is estimated as the amount payable to
the policyholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in
paying an amount different than that determined to be payable on demand.
Liabilities related to separate accounts: Liabilities related to separate
accounts are reported at full account value in the Company's historical
balance sheet. Estimated fair values of separate account liabilities are
equal to their carrying amount.
The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 2003 and 2002 were as follows:
2003 2002
-------------------------- --------------------------
Carrying Fair Carrying Fair
Value Value Value Value
---------- --------- ---------- ---------
(Millions)
Assets:
Fixed maturity $ 5,223.3 $ 5,223.3 $ 4,936.4 $ 4,936.4
Equity securities 5.6 5.6 19.0 19.0
Mortgage loans on real estate 847.6 878.1 482.4 522.2
Policy loans 17.5 17.5 16.0 16.0
Cash and short-term investments 35.6 35.6 150.7 150.7
Assets held in separate accounts 17,112.6 17,112.6 11,029.3 11,029.3
Liabilities:
Surplus notes 170.0 267.7 170.0 260.0
Investment contract liabilities:
Deferred annuities 5,180.2 4,872.0 5,128.0 4,802.9
Supplementary contracts and
immediate annuities 12.9 12.9 8.0 8.0
Liabilities related to separate account 17,112.6 17,112.6 11,029.3 11,029.3
Fair value estimates are made at a specific point in time, based on
available market information and judgment about various financial
instruments, such as estimates of timing and amounts of future cash flows.
Such estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a
particular financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair value
estimates cannot be substantiated by comparison to independent markets, nor
can the disclosed value be realized in immediate settlement of the
instruments. In evaluating the Company's management of interest rate, price
and liquidity risks, the fair values of all assets and liabilities should
be taken into consideration, not only those presented above.
41
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Derivative Financial Instruments
Interest Rate Swaps
Interest rate swaps are used to manage the interest rate risk in the
Company's bond portfolio as well as the Company's liabilities. Interest
rate swaps represent contracts that require the exchange of cash flows at
regular interim periods, typically monthly or quarterly. The notional
amount, carrying value and estimated fair value of the Company's open
interest rate swaps as of December 31, 2003 were $250.0 million, $22.8
million and $22.8 million, respectively. The Company did not have interest
rate swaps at December 31, 2002.
4. Net Investment Income
Sources of net investment income were as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
2003 2002 2001
------------------- -------------------- -------------------
(Millions)
Fixed maturities $ 287.7 $ 185.6 $ 83.7
Mortgage loans 36.2 19.6 11.2
Policy loans 0.8 0.6 0.8
Short-term investments and cash equivalents 0.7 2.6 2.6
Other 16.1 0.4 0.6
------------------- -------------------- -------------------
Gross investment income 341.5 208.8 98.9
Less: investment expenses 21.2 11.1 4.5
------------------- -------------------- -------------------
Net investment $ 320.3 $ 197.7 $ 94.4
=================== ==================== ===================
5. Dividend Restrictions and Shareholder's Equity
The Company's ability to pay dividends to its Parent is subject to the
prior approval of insurance regulatory authorities for payment of
dividends, which exceed an annual limit. The Company did not pay common
stock dividends during 2003, 2002 and 2001.
The Insurance Departments of the State of Delaware and the State of Iowa
(the "Department") recognize as net income and capital and surplus those
amounts determined in conformity with statutory accounting practices
prescribed or permitted by the Department, which differ in certain respects
from accounting principles generally accepted in the United States.
Statutory net income (loss) was $7.6 million, $(303.0) million, and
$(156.4) million for the years ended December 31, 2003, 2002 and 2001,
respectively. Statutory capital and surplus was $733.9 million and $424.9
million as of December 31, 2003 and 2002, respectively.
42
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
As of December 31, 2003, the Company does not utilize any statutory
accounting practices, which are not prescribed by state regulatory
authorities that, individually or in the aggregate, materially affect
statutory capital and surplus.
The Company maintains a $40.0 million revolving note facility with ING
America Insurance Holdings, Inc. ("ING AIH"), a perpetual $75.0 million
revolving note facility with Bank of New York and a $125.0 million
revolving note facility with SunTrust Bank, which expires on July 30, 2004.
6. Capital Gains and Losses
Realized capital gains or losses are the difference between the carrying
value and sale proceeds of specific investments sold. Net realized capital
(losses) gains on investments were as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- ------------------
Fixed maturities $ 99.7 $ 4.2 $ (4.9)
Equity securities (1.0) - (1.6)
Derivatives (134.9) - -
----------------- ----------------- ------------------
Pretax realized capital gains (losses) $ (36.2) $ 4.2 $ (6.5)
================= ================= ==================
After-tax realized capital gains (losses) $ (23.5) $ 2.7 $ (4.2)
================= ================= ==================
Proceeds from the sale of total fixed maturities and the related gross
gains and losses were as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- ------------------
Proceeds on sales $ 5,806.4 $ 6,281.7 $ 880.7
Gross gains 136.3 76.8 6.9
Gross losses 36.6 72.6 11.8
43
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Changes in shareholder's equity related to changes in accumulated other
comprehensive income were as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- ------------------
Fixed maturities $ (40.0) $ 204.0 $ 18.4
Equity securities 4.2 (3.9) -
DAC/VOBA 131.4 (202.8) (8.4)
----------------- ----------------- ------------------
Subtotal 95.6 (2.7) 10.0
Increase in deferred income taxes 33.5 1.0 2.1
----------------- ----------------- ------------------
Net changes in accumulated other
comprehensive income (loss) $ 62.1 $ (1.7) $ 7.9
================= ================= ==================
Shareholder's equity included the following accumulated other comprehensive
income (loss):
As of As of As of
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- ------------------
Net unrealized capital gains (losses):
Fixed maturities $ 176.3 $ 216.3 $ 12.3
Equity securities 0.3 (3.9) -
DAC/VOBA (77.8) (209.2) (6.4)
----------------- ----------------- ------------------
Subtotal 98.8 3.2 5.9
Less: deferred income taxes 34.6 1.1 2.1
----------------- ----------------- ------------------
Net accumulated other comprehensive
income $ 64.2 $ 2.1 $ 3.8
================= ================= ==================
Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities, were as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- ------------------
Unrealized holding gains (losses) arising the year(1) $ (2.1) $ (8.7) $ 11.1
Less: reclassification adjustment for gains (losses)
and other items included in net income(2) 64.2 7.0 (3.2)
----------------- ----------------- ------------------
Net unrealized gains (losses) on securities $ 62.1 $ (1.7) $ 7.9
================= ================= ==================
44
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(1) Pretax unrealized holding gains (losses) arising during the year were
$(3.3) million, $(13.4) million and $17.1 million for the years ended
December 31, 2003, 2002 and 2001, respectively.
(2) Pretax reclassification adjustments for gains (losses) and other items
included in net income were $98.8 million, $10.8 million and $(4.9)
million for the years ended December 31, 2003, 2002 and 2001,
respectively.
7. Severance
In December 2001, ING announced its intentions to further integrate and
streamline the U.S. based operations of ING Americas, (which includes the
Company), in order to build a more customer-focused organization. During
the first quarter 2003, the Company performed a detail analysis of its
severance accrual. As part of this analysis, the Company corrected the
initial planned number of people to eliminate from 252 to 228 (corrected
from the 2002 Annual Report on Form 10K) and extended the date of expected
completion for severance actions to June 30, 2003. Activity for the year
ended December 31, 2003 within the severance liability and positions
elimination related to such actions were as follows:
Severance
(Millions) Liability Positions
--------------- ---------------
Balance at December 31, 2002 $ 0.8 34
Payments (0.8) -
Positions eliminated due to internal replacement jobs - (34)
--------------- ---------------
Balance at December 31, 2003 $ - -
=============== ===============
8. Income Taxes
In 2003 and 2002, ING USA joined in the filing of a consolidated federal
income tax return with its former parent, Equitable Life and other
affiliates. The Company had a tax allocation agreement with Equitable Life
whereby the Company was charged for taxes it would have incurred were it
not a member of the consolidated group and was credited for losses at the
statutory tax rate. Prior to joining the Equitable Life consolidated group,
the Company was the parent of a different consolidated group.
At December 31, 2003, the Company has net operating loss carryforwards of
approximately $206.5 million for federal income tax purposes which are
available to offset future taxable income. If not used, these carryforwards
will expire between 2014 and 2016.
45
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Income tax expense (benefit) from continuing operations included in the
consolidated financial statements are as follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- -----------------
Current taxes (benefits):
Federal $ (10.3) $ (98.2) $ 0.6
----------------- ----------------- -----------------
Total current taxes (benefits) (10.3) (98.2) 0.6
----------------- ----------------- -----------------
Deferred taxes (benefits):
Operations and capital loss carryforwards 53.3 (3.9) (55.3)
Other federal deferred taxes (40.5) 89.6 54.8
----------------- ----------------- -----------------
Total deferred taxes (benefits) 12.8 85.7 (0.5)
----------------- ----------------- -----------------
Total income tax expense $ 2.5 $ (12.5) $ 0.1
================= ================= =================
Income taxes were different from the amount computed by applying the
federal income tax rate to income from continuing operations before income
taxes for the following reasons:
Year ended Year ended, Year ended,
December 31, December 31, December 31,
(Millions) 2003 2002 2001
----------------- ----------------- -----------------
Income before income taxes $ 63.9 $ (42.2) $ (3.9)
Tax rate 35% 35% 35%
----------------- ----------------- -----------------
Income tax at federal statutory rate 22.4 (14.8) (1.4)
Tax effect of:
Goodwill amortization - - 1.0
Meals and entertainment 0.3 0.6 0.5
Dividend received deduction (10.8) - -
Refinement of deferred tax balances (9.5) - -
Other 0.1 1.7 -
----------------- ----------------- -----------------
Income taxes $ 2.5 $ (12.5) $ 0.1
================= ================= =================
46
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31 are presented below:
(Millions) 2003 2002
----------------- -----------------
Deferred tax assets:
Operations and capital loss carryforwards $ 72.3 $ 125.6
Future policy benefits 86.9 134.5
Goodwill 9.8 11.1
Investments 0.2 0.2
Other 12.2 -
----------------- -----------------
Total gross assets 181.4 271.4
----------------- -----------------
Deferred tax liabilities:
Unrealized gains on investments (61.9) (74.3)
Deferred policy acquisition cost (232.6) (254.8)
Value of purchased insurance in force (3.0) (5.0)
Other (9.9) (17.1)
----------------- -----------------
Deferred tax liability before allowance (307.4) (351.2)
----------------- -----------------
Valuation allowance - -
----------------- -----------------
Net deferred income tax liability $ (126.0) $ (79.8)
================= =================
The Company establishes reserves for possible proposed adjustments by
various taxing authorities. Management believes there are sufficient
reserves provided for, or adequate defenses against any such adjustments.
9. Benefit Plans
Defined Benefit Plan
ING North America Insurance Corporation ("ING North America") sponsors the
ING Americas Retirement Plan (the "Retirement Plan"), effective as of
December 31, 2001. Substantially all employees of ING North America and its
subsidiaries and affiliates (excluding certain employees) are eligible to
participate, including the Company's employees.
The Retirement Plan is a tax-qualified defined benefit plan, the benefits
of which are guaranteed (within certain specified legal limits) by the
Pension Benefit Guaranty Corporation ("PBGC"). As of January 1, 2002, each
participant in the Retirement Plan (except for certain specified employees)
earn a benefit under a final average compensation formula. Subsequent to
December 31, 2001, ING North America is responsible for all Retirement Plan
liabilities. The costs allocated to the Company for its employees'
participation in the Retirement Plan were $7.3 million for 2003, $3.4
million for 2002, and $1.2 million for 2001, respectively.
47
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Defined Contribution Plan
ING North America sponsors the ING Savings Plan and ESOP (the "Savings
Plan"). Substantially all employees of ING North America and its
subsidiaries and affiliates (excluding certain employees) are eligible to
participate, including the Company's employees. The Savings Plan is a
tax-qualified profit sharing and stock bonus plan, which includes an
employee stock ownership plan ("ESOP") component. Savings Plan benefits are
not guaranteed by the PBGC. The Savings Plan allows eligible participants
to defer into the Savings Plan a specified percentage of eligible
compensation on a pre-tax basis. ING North America matches such pre-tax
contributions, up to a maximum of 6% of eligible compensation. All matching
contributions are subject to a 4-year graded vesting schedule (although
certain specified participants are subject to a 5-year graded vesting
schedule). All contributions made to the Savings Plan are subject to
certain limits imposed by applicable law. Pre-tax charges of operations of
the Company for the Savings Plan were $2.3 million in 2003, $2.3 million in
2002, and $0.9 million in 2001, respectively.
Other Benefit Plans
During 2003 and 2002, benefit charges to the Company related to the ING
Americas Supplemental Executive Retirement Plan that covers certain
employees of the Company were not significant.
10. Related Party Transactions
Operating Agreements
The Company has certain agreements whereby it generates revenues and incurs
expenses with affiliated entities. The agreements are as follows:
Resources and services are provided to Security Life of Denver
Insurance Company ("SLDIC) and Southland Life Insurance Company
("SLIC"). For the years ended December 31, 2003, 2002 and 2001
revenues for these services, which reduced general expenses incurred,
were $4.8 million, $4.2 million and $0.3 million, respectively for
SLDIC and $1.6 million, $1.0 million and $0.1 million, respectively
for SLIC.
Underwriting and distribution agreement with Directed Services, Inc.
("DSI"), for the variable insurance products issued by the Company.
DSI is authorized to enter into agreements with broker/dealers to
distribute the Company's' variable products and appoint
representatives of the broker/dealers as agents. For the years ended
December 31, 2003, 2002 and 2001 commission expenses were incurred in
the amounts of $253.8 million, $282.9 million and $229.7 million,
respectively.
Asset management agreement with ING Investment Management LLC ("IIM"),
in which IIM provides asset management and accounting services. The
Company records a fee, which is paid quarterly, based on the value of
48
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
the assets under management. For the years ended December 31, 2003,
2002 and 2001 expenses were incurred in the amounts of $20.8 million,
$11.0 million and $4.4 million, respectively.
Service agreement with Equitable Life in which administrative and
financial related services are provided. For the years ended December
31, 2003, 2002 and 2001 expenses were incurred in the amounts of $2.4
million, $0.6 million and $0.3 million, respectively.
Managerial and supervisory services to DSI. The fee paid by DSI for
these services is calculated as a percentage of average assets in the
variable separate accounts. For the years ended December 31, 2003,
2002 and 2001 revenue for these services was $26.0 million, $23.7
million and $23.1 million, respectively.
Advisory, computer, and other resources and services are provided to
Equitable Life and United Life & Annuity Insurance Company ("ULAIC").
For the years ended December 31, 2003, 2002 and 2001 revenues for
these services, which reduced general expenses incurred, totaled $10.8
million, $9.8 million and $8.2 million, respectively for Equitable
Life and $0.3 million, $0.3 million and $0.4 million, respectively for
ULAIC.
Expense sharing agreements with ING AIH for administrative,
management, financial, and information technology services, which were
approved in 2001. For the years ended December 31, 2003 and 2002, ING
USA incurred expenses of $30.2 million and $41.0 million,
respectively.
Guaranty agreement with Equitable Life. In consideration of an annual
fee, payable June 30, Equitable Life guarantees that it will make
funds available, if needed, to pay the contractual claims made under
the provisions of ING USA's life insurance and annuity contracts. The
agreement is not, and nothing contained therein or done pursuant
thereto by Equitable Life shall be deemed to constitute, a direct or
indirect guaranty by Equitable Life of the payment of any debt or
other obligation, indebtedness, or liability, of any kind or character
whatsoever, of ING USA. The agreement does not guarantee the value of
the underlying assets held in separate accounts in which funds of
variable life insurance and variable annuity policies have been
invested. The calculation of the annual fee is based on risk based
capital. No amounts were payable under this agreement as of December
31, 2003, 2002 and 2001.
Reinsurance Agreements
ING USA participates in a modified coinsurance agreement with Equitable
Life, covering a considerable portion of ING USA's variable annuities
issued on or after January 1, 2000, excluding those with an interest rate
guarantee. The financial statements are presented net of the effects of the
agreement.
Under this agreement, ING USA received a net reimbursement of expenses and
charges of $132.5 million, $100.9 million and $224.5 million for the years
ended December 31, 2003, 2002 and 2001, respectively. This was offset by a
decrease in policy acquisition costs deferred of $182.1 million, $143.5
million and $257.5 million, respectively, for the same periods. At December
31, 2003, 2002 and 2001, ING USA also had a payable to Equitable Life of
$34.5 million, $7.1 million, and $22.6 million, respectively, due to the
49
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
overpayment by Equitable Life of the cash settlement for the modified
coinsurance agreement.
ING USA entered into a reinsurance agreement with Security Life of Denver
International, Ltd. ("SLDI"), an affiliate, covering variable annuity
minimum guaranteed death benefits and minimum guaranteed living benefits of
variable annuities issued after January 1, 2000. In March 2003, the Company
amended its reinsurance agreement with SLDI. Under this amendment, the
Company terminated the reinsurance agreement for all inforce and new
business and recaptured all inforce business reinsured under the
reinsurance agreement between the Company and SLDI retroactive to January
1, 2003 and the Company reduced its reinsurance recoverable related to
these liabilities by $150.1 million. On March 28, 2003, SLDI transferred
assets to the Company in the amount of $185.6 million. The difference in
amounts transferred on March 28, 2003 and the reduction of the reinsurance
recoverables as of January 1, 2003 reflects adjustments on the investment
of the reinsurance recoverable as of January 1, 2003 reflects adjustments
on the investment income on the assets and letter of credit costs between
January 1, 2003 and the date of the asset transfer. It also encompasses the
net effect of a recapture fee paid in the amount of $5.0 million offset by
the receipt of a $24.1 million negative ceding commission. The net impact
of which was deferred in policy acquisition costs and is being amortized
over the period of estimated future profits.
Reciprocal Loan Agreement
ING USA maintains a reciprocal loan agreement with ING AIH, a Delaware
corporation and affiliate, to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under this agreement, which
expires December 31, 2007, ING USA and ING AIH can borrow up to $40.0
million from one another. Prior to lending funds to ING AIH, ING USA must
obtain the approval from the Department of Insurance of the State of
Delaware. Interest on any ING USA borrowings is charged at the rate of ING
AIH's cost of funds for the interest period plus 0.15%. Interest on any ING
AIH borrowings is charged at a rate based on the prevailing interest rate
of U.S. commercial paper available for purchase with a similar duration.
Under this agreement, ING USA incurred interest expense of $66,087,
$33,000, and $26,000 for the years ended December 31, 2003, 2002 and 2001,
respectively. At December 31, 2003, 2002 and 2001, ING USA did not have any
borrowings or receivables from ING AIH under this agreement.
Surplus Notes
ING USA issued multiple 30-year surplus notes (see below table). Payment of
the notes and related accrued interest is subordinate to payments due to
policyholders, claimant and beneficiary claims, as well as debts owed to
all other classes of debtors, other than surplus note holders, of ING USA.
Any payment of principal and/or interest made is subject to the prior
50
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
approval of the Delaware Insurance Commissioner. Interest expense for the
years ended December 31:
(Millions)
Surplus Maturity
Note Amount Affiliate Date 2003 2002 2001
8.2% 50.0 *Equitable Life 12/29/2029 - 2.0 4.1
8.0% 35.0 Security Life of Denver 12/7/2029 2.8 2.8 2.8
7.8% 75.0 Equitable Life 9/29/2029 5.8 5.8 5.8
7.3% 60.0 Equitable Life 12/29/2028 4.4 4.4 4.4
8.3% 25.0 *Equitable Life 12/17/2026 - 1.0 2.1
*Surplus notes redeemed June 28, 2002.
Capital Transactions
During 2003, 2002 and 2001, ING USA received capital contributions of
$230.0 million, $356.3 million and $196.8 million respectively.
11. Reinsurance
At December 31, 2003, ING USA had reinsurance treaties with four
unaffiliated reinsurers and two affiliated reinsurers covering a
significant portion of the mortality risks and guaranteed death and living
benefits under its variable contracts. ING USA remains liable to the extent
its reinsurers do not meet their obligations under the reinsurance
agreements.
Reinsurance ceded in force for life mortality risks were $79.3 million and
$90.7 million at December 31, 2003 and 2002, respectively. At December 31,
2003 and 2002, the Company had net receivables of $13.0 million and $196.9
million, respectively for reinsurance claims, reserve credits, or other
receivables from these reinsurers. At December 31, 2003 and 2002,
respectively, these net receivables were comprised of the following: $15.0
million and $36.7 million for claims recoverable from reinsurers; $5.8
million and $6.3 million payable for reinsurance premiums; $(20.2) million
and $137.2 million for reserve credits; and $21.1 million and $24.0 million
for reinsured surrenders and allowances due from an unaffiliated reinsurer.
Included in the accompanying consolidated financial statements, excluding
the modified coinsurance agreements, are net considerations to reinsurers
of $8.9 million, $50.8 million and $30.3 million and net policy benefits
recoveries of $34.1 million, $49.5 million and $21.8 million for the years
ended December 21, 2003, 2002 and 2001, respectively.
ING USA participates in a modified coinsurance agreement with an
unaffiliated reinsurer. The accompanying consolidated financial statements
are presented net of the effects of the treaty which increased (decreased)
income by $(1.9) million, $(2.9) million and $(0.5) million for the years
ended December 31, 2003, 2002 and 2001, respectively.
51
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
12. Commitments and Contingent Liabilities
Leases
For the year ended December 31, 2003 and 2002 rent expense for leases was
$2.6 million and $2.4 million, respectively. The future net minimum
payments under noncancelable leases for the years ended December 31, 2004
through 2008 are estimated to be $2.2 million, $2.3 million, $2.4 million,
$2.4 million and $2.4 million, respectively, and $3.4 million, thereafter.
The Company pays substantially all expenses associated with its leased and
subleased office properties. Expenses not paid directly by the Company are
paid for by an affiliate and allocated back to the Company.
Commitments
Through the normal course of investment operations, the Company commits to
either purchase or sell securities, commercial mortgage loans or money
market instruments at a specified future date and at a specified price or
yield. The inability of counterparties to honor these commitments may
result in either higher or lower replacement cost. Also, there is likely to
be a change in the value of the securities underlying the commitments. At
December 31, 2003 and 2002, the Company had off-balance sheet commitments
to purchase investments equal to their fair value of $25.2 million and
$77.0 million, respectively.
Litigation
The Company is a party to threatened or pending lawsuits arising from the
normal conduct of business. Due to the climate in insurance and business
litigation, suits against the Company sometimes include claims for
substantial compensatory, consequential or punitive damages and other types
of relief. Moreover, certain claims are asserted as class actions,
purporting to represent a group of similarly situated individuals. While it
is not possible to forecast the outcome of such lawsuits, in light of
existing insurance, reinsurance and established reserves, it is the opinion
of management that the disposition of such lawsuits will not have a
materially adverse effect on the Company's operations or financial
position.
Other Regulatory Matters
Like many financial services companies, certain U.S. affiliates of ING
Groep N.V. have received informal and formal requests for information since
September 2003 from various governmental and self-regulatory agencies in
connection with investigations related to mutual funds and variable
insurance products. ING has cooperated fully with each request.
In addition to responding to regulatory requests, ING management initiated
an internal review of trading in ING insurance, retirement, and mutual fund
products. The goal of this review has been to identify whether there have
52
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
been any instances of inappropriate trading in those products by third
parties or by ING investment professionals and other ING personnel. This
internal review is being conducted by independent special counsel and
auditors. Additionally, ING reviewed its controls and procedures in a
continuing effort to deter improper frequent trading in ING products. ING's
internal reviews related to mutual fund trading are continuing.
The internal review has identified several arrangements allowing third
parties to engage in frequent trading of mutual funds within our variable
insurance and mutual fund products, and identified other circumstances
where frequent trading occurred despite measures taken by ING intended to
combat market timing. Most of the identified arrangements were initiated
prior to ING's acquisition of the businesses in question. In each
arrangement identified, ING has terminated the inappropriate trading, taken
steps to discipline or terminate employees who were involved, and modified
policies and procedures to deter inappropriate activity. While the review
is not completed, management believes the activity identified does not
represent a systemic problem in the businesses involved.
These instances included agreements (initiated in 1998) that permitted one
variable life insurance customer of Reliastar Life Insurance Company
("Reliastar") to engage in frequent trading, and to submit orders until 4pm
Central Time, instead of 4pm Eastern Time. Reliastar was acquired by ING in
2000. The late trading arrangement was immediately terminated when current
senior management became aware of it in 2002. ING believes that no profits
were realized by the customer from the late trading aspect of the
arrangement.
In addition, the review has identified five arrangements that allowed
frequent trading of funds within variable insurance products issued by
Reliastar and by ING USA; and in certain ING Funds. ING entities did not
receive special benefits in return for any of these arrangements, which
have all been terminated. The internal review also identified two
investment professionals who engaged in improper frequent trading in ING
Funds.
ING will reimburse any ING Fund or its shareholders affected by
inappropriate trading for any profits that accrued to any person who
engaged in improper frequent trading for which ING is responsible.
Management believes that the total amount of such reimbursements will not
be material to ING or its U.S. business.
13. Subsequent Event
On January 1, 2004, Equitable Life, USG, and ULA, merged with and into the
Company. Also on January 1, 2004, immediately after the merger, the Company
changed its name to ING USA Annuity and Life Insurance Company. As of the
merger date, the Merger Companies ceased to exist and were succeeded by ING
USA.
The merger was accounted for based on the pooling-of-interests method. FAS
141, excludes transfers of net assets or exchanges of shares between
entities under common control, and notes that certain provisions under APB
16, provide a source of guidance for such transactions.
53
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Prior to the merger date, the Merger Companies were affiliated companies of
ING USA and indirect, wholly-owned subsidiaries of ING. Equitable Life was
domiciled in Iowa and offered various insurance products, including
deferred and immediate annuities, variable annuities, and interest
sensitive and traditional life insurance. ULA was also domiciled in Iowa
and primarily offered annuity related insurance products, as well as life
and health insurance that was ceded to other insurers. USG was domiciled in
Oklahoma and offered various insurance products, including deferred fixed
annuities, immediate annuities, and interest-sensitive life insurance.
A Form 8-K for ING USA describing the merger, was filed on January 4, 2004
and includes unaudited pro forma condensed consolidated financial
information as of, and for the periods ended, September 30, 2003 and 2002,
and December 31, 2002, 2001, and 2000. Revenue and net income for the
period ended December 31, 2003, had the pooling been consummated at the
date of the financial statements, is $1,509.5 million and $57.3 million,
respectively (unaudited).
54
QUARTERLY DATA (UNAUDITED)
(Millions)
2003 First Second Third Fourth
- ---- --------------- --------------- ---------------- ----------------
Total revenue $ 173.1 $ 150.3 $ 159.8 $ 130.9
--------------- --------------- ---------------- ----------------
Income (loss) before income taxes (12.4) 60.3* (1.0) 17.0
Income tax expense (benefit) (4.3) 19.4 (7.8) (4.8)
--------------- --------------- ---------------- ----------------
Net income (loss) $ (8.1) 40.9 $ 6.8 $ 21.8
=============== =============== ================ ================
(Millions)
2002 First Second Third Fourth
- ---- --------------- --------------- ---------------- ----------------
Total revenue previously reported $ 69.4 $ 89.2 $ 141.4 $ 109.4
Adjustment (see Note 1) 12.6 12.6 11.1 5.6
--------------- --------------- ---------------- ----------------
Total revenue restated 82.0 101.8 152.5 115.0
--------------- --------------- ---------------- ----------------
Income (loss) before income taxes (3.2) (16.0) (60.2) 37.2
Income tax expense (benefit) (1.0) (5.5) (19.2) 13.2
--------------- --------------- ---------------- ----------------
Income (loss) before cumulative effect
of change in accounting principle (2.2) (10.5) (41.0) 24.0
--------------- --------------- ---------------- ----------------
Cumulative effect of change in accounting
principle (135.3) - - -
--------------- --------------- ---------------- ----------------
Net income (loss) $ (137.5) $ (10.5) $ (41.0) $ 24.0
=============== =============== ================ ================
* The Amendment No. 1 on Form 10-Q/A was filed with respect to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003,
filed with the Securities and Exchange Commission on August 12, 2003. The
amendment No. 1 reflected an adjustment to the Company's net income for the
six months ended June 30, 2003 and did not impact results for the three
months ended June 30, 2003. The adjustment for the six months ended June
30, 2003 related to a transposition error in the line item "Policy
acquisition costs deferred," with a corresponding tax effect in the line
item "Income tax expense (Benefit)" in Part 1, Item I, Condensed
Consolidated Statements of Income. Consequently, Part I, Item 2,
Management's Narrative Analysis of the Results of Operations and Financial
Condition, was updated to reflect these adjustments. Additionally, in
accordance with Regulation S-X, the Certifications required by Section 302
and Section 906 of the Sarbanes-Oxley Act of 2002 were attached as exhibits
to the 10-Q/A in Part II, Item 6, Exhibits and Reports on Form 8-K. The
Amendment No. 1 did not contain updates to reflect any events occurring
after the original August 12, 2003 filing of the Company's Form 10-Q for
the quarterly period ended June 30, 2003. All information contained in the
Amendment No. 1 was subject to updating and supplementing as provided in
the Company's reports filed with the Securities and Exchange Commission, as
may be amended, for periods subsequent to the date of the original filing
of the Form 10-Q for the quarterly period ended June 30, 2003.
55
GE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 9A. Controls and Procedures
a) Within the 90-day period prior to the filing of this report, the
Company carried out an evaluation, under the supervision and with
the participation of its management, including its Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-14 of
the Securities Exchange Act of 1934). Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer have
concluded that the Company's current disclosure controls and
procedures are effective in ensuring that material information
relating to the Company required to be disclosed in the Company's
periodic SEC filings is made known to them in a timely manner.
b) There have not been any significant changes in the internal
controls of the Company or other factors that could significantly
affect these internal controls subsequent to the date the Company
carried out its evaluation.
PART III
Item 10. Directors and Executive Officers of the Registrant
Omitted pursuant to General Instruction I(2) of Form 10-K, except with
respect to compliance with Sections 406 and 407 of the Sarbanes-Oxley
Act of 2002:
a) Code of Ethics for Financial Professionals
------------------------------------------
The Company has approved and adopted a Code of Ethics for
Financial Professionals (attached as Exhibit 14), pursuant to the
requirements of Section 406 of the Sarbanes-Oxley Act of 2002.
Any waiver of the Code of Ethics will be disclosed by the Company
by way of a Form 8-K filing.
b) Designation of Board Financial
------------------------------
Expert The Company has designated David A. Wheat, Director and
Chief Financial Officer of the Company, as its Board Financial
Expert, pursuant to the requirements of Section 407 of the
Sarbanes-Oxley Act of 2002. Because the Company is a wholly-owned
subsidiary of Lion, it does not have any outside directors.
56
Item 11. Executive Compensation
Omitted pursuant to General Instruction I(2) of Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Omitted pursuant to General Instruction I(2) of Form 10-K.
Item 13. Certain Relationships and Related Transactions
Omitted pursuant to General Instruction I(2) of Form 10-K.
Item 14. Principal Accountant Fees and Services
Omitted pursuant to General Instruction I(2) of Form 10-K.
57
PART IV
Item 15. Exhibits, Consolidated Financial Statement Schedules and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
1. Financial statements. See Item 8 on Page 18.
2. Financial statement schedules. See Index to Consolidated
Financial Statement Schedules on Page 62.
Exhibits
1.(a) Underwriting Agreement between Golden American Life
Insurance Company ("Golden American" or "Registrant")
and Directed Services, Inc., incorporated by
reference from Exhibit 1 to Amendment No. 9 to
Registrant's Registration Statement on Form S-1 filed
with the Securities and Exchange Commission ("SEC")
on or about February 17, 1998 (File No. 333-87272).
2.(a) Agreement and Plan of Merger dated June 25, 2003, by
and between USG Annuity & Life Company, United Life &
Annuity Insurance Company, Equitable Life Insurance
Company of Iowa and Golden American, incorporated by
reference in Exhibit 99-8 in the Company's Form 8K
filed with the SEC on January 2, 2004 (File No.
333-87270).
3.(a)(i) Articles of Incorporation and By-Laws Articles of
Incorporation of Golden American, incorporated by
reference from Exhibit 3(a) to Registrant's
Registration Statement on Form S-1 filed with the SEC
on June 30, 2000 (File No. 333-40596).
(ii) Restated Articles of Incorporation of Golden American
dated June 25, 2003, providing for the
redomestication of the Company to Iowa, effective
January 1, 2004.
(iii) Amendment to Articles of Incorporation of Golden
American to change the Company's name to ING USA
Annuity and Life Insurance Company dated November 11,
2003, effective January 1, 2004.
(b)(i) By-laws of Golden American, as amended, incorporated
by reference from Exhibit 3(b)(ii) to the
Registrant's Registration Statement on Form S-1 filed
with the SEC on June 30, 2000 (File No. 333-40596).
(ii) Certificate of Amendment of the By-laws of MB
Variable Life Insurance Company, as amended,
incorporated by reference from Exhibit 3(b)(iii) to
Registrant's Registration Statement on Form S-1 filed
with the SEC on June 30, 2000 (File No. 333-40596).
58
(iii) Restated By-laws of Golden American dated June 25,
2003, providing for redomestication to Iowa, effective
January 1, 2004.
(iv) Amendment to By-laws of Golden American dated June 25,
2003 to change the Company's name to ING USA Annuity
and Life Insurance Company, effective January 1, 2004.
4.(a) Single Premium Deferred Modified Guaranteed Annuity
Contract, incorporated herein by reference to the
initial Registration Statement for Golden American
filed with the SEC on April 15, 2003 on Form S-2 (File
No. 333-104547).
(b) Single Premium Deferred Modified Guaranteed Annuity
Contract, incorporated herein by reference to the
initial Registration Statement for Golden American
filed with the SEC on April 15, 2003 on Form S-2 (File
No. 333-104548).
(c) Interest in Fixed Account I under Variable Annuity
Contracts, incorporated herein by reference to the
initial Registration Statement for Golden American
filed with the SEC on April 15, 2003 on Form S-2 (File
No. 333-104539).
(d) Interests in Fixed Account II under Variable Annuity
Contracts, incorporated herein by reference to the
initial Registration Statement for Golden American
filed with the SEC on April 15, 2003 on Form S-2 (File
No. 333-104546).
(e) Interest in the Guaranteed Account under Variable
Annuity Contracts, incorporated herein by reference to
the initial Registration Statement for Golden American
filed with the SEC on April 15, 2003 on Form S-2 (File
No. 333-57212).
10.A Material Contracts
(a) Service Agreement, dated as of January 1, 1994, between
Golden American and Directed Services, Inc.,
incorporated by reference from Exhibit 10(b) to a
Registration Statement on Form S-1 filed with the SEC
on April 29, 1998 (File No. 333-51353).
(b) Asset Management Agreement, dated January 20, 1998,
between Golden American and ING Investment Management
LLC, incorporated by reference from Exhibit 10(f) to
Golden American's Form 10-Q filed with the SEC on
August 14, 1998 (File No. 33-87272).
59
(c) Reciprocal Loan Agreement, dated January 1, 1998, as
amended March 20, 1998, between Golden American and ING
America Insurance Holdings, Inc., incorporated by
reference from Exhibit 10(g) to Golden American's Form
10-Q filed with the SEC on August 14, 1998 (File No.
33-87272).
(d) Surplus Note, dated December 8, 1999, between Golden
American and First Columbine Life Insurance Company,
incorporated by reference from Exhibit 10(g) to
Amendment No. 7 to a Registration Statement for Golden
American on Form S-1 filed with the SEC on or about
January 27, 2000 (File No. 333-28765).
(e) Reinsurance Agreement, dated June 30, 2000, between
Golden American and Equitable Life Insurance Company of
Iowa, incorporated by reference from Exhibit 10(s) to
Golden American's Form 10-Q filed with the SEC on
August 11, 2000 (File No. 33-87272).
(f) Services Agreement between Golden American and the
affiliated companies listed on Exhibit B to that
Agreement, effective January 1, 2001.
(g) Services Agreement between Golden American and ING
North American Insurance Corporation, Inc., effective
January 1, 2001.
(h) Form of Shared Services Center Services Agreement by
and among ING North America Insurance Corporation
("Service Provider") and Ameribest Life Insurance
Company, a Georgia corporation; Equitable Life
Insurance Company of Iowa, an Iowa corporation; USG
Annuity & Life Company, an Oklahoma corporation; Golden
American, a Delaware corporation; First Columbine Life
Insurance Company, a Colorado corporation; Life
Insurance Company of Georgia, a Georgia corporation;
Southland Life Insurance Company, a Texas corporation;
Security Life of Denver Insurance Company, a Colorado
corporation; Midwestern United Life Insurance Company,
an Indiana corporation; and United Life & Annuity
Insurance Company, a Texas corporation, incorporated by
reference from Exhibit 10(r) to Pre-Effective Amendment
No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about December 11, 2001
(File No. 333-70602)
(i) Tax Sharing Agreement between Golden American,
Equitable Life Insurance Company of Iowa and USG
Annuity and Life Company, effective January 1, 2001.
(j) Tax Sharing Agreement between Golden American, ING
America Insurance Holdings, Inc. and affiliated
companies, effective January 1, 2001.
(k) Amendment to Services Agreement between Golden American
and affiliated companies listed in Exhibit B to that
Agreement, effective January 1, 2002.
60
(l) Amendment to Asset Management Agreement between Golden
American and ING Investment Management LLC, effective
January 1, 2003.
(m) Administrative Services Agreement between Golden
American, ReliaStar Life Insurance Company of New York
and affiliated companies listed on Exhibit A to the
Agreement, effective March 1, 2003.
(n) Third Amendment to the Asset Management Agreement,
between Golden American and ING Investment Management
LLC, effective August 18, 2003.
(o) Lease Agreement, dated as of April 16, 1998, by and
between Golden American and Dunwoody Associates.
(p) First Amendment to Lease Agreement, dated November 4,
1998, between Golden American and Dunwoody Associates.
(q) Second Amendment to Lease Agreement, dated June 1,
2000, between Golden American and Dunwoody Associates.
10.B. Reports on Form 8K
Form 8K Report filed January 2, 2004, to disclose the
redomestication, merger and name change of Golden
American, effective January 1, 2004, incorporated by
reference (File No. 033-87270).
14. ING Code of Ethics for Financial Professionals.
31.1 Certificate of David A. Wheat pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certificate of Keith Gubbay pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certificate of David A. Wheat pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certificate of Keith Gubbay pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
61
Index to Consolidated Financial Statement Schedules
Page
Report of Independent Auditors 63
I. Summary of Investments - Other than Investments in Affiliates as of
December 31, 2003 64
IV. Reinsurance as of and for the years ended December 31, 2003, 2002 and 2001 65
Schedules other than those listed above are omitted because they are not
required or not applicable.
Report of Independent Auditors
The Board of Directors
ING USA Annuity and Life Insurance Company
We have audited the consolidated financial statements of ING USA Annuity and
Life Insurance Company (formerly Golden American Life Insurance Company) and
Subsidiary as of December 31, 2003 and 2002, and for each of the three years in
the period ended December 31, 2003, and have issued our report thereon dated
March 22, 2004. Our audits also included the financial statement schedules
listed in Item 15. These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 22, 2004
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Schedule I
Summary of Investments - Other than Investments in Affiliates
As of December 31, 2003
(Millions)
Amount
Shown on
Type of Investments Cost Value* Balance Sheet
--------------- --------------- ----------------
Fixed maturities:
U.S. government and government agencies and authorities $ 23.8 $ 23.9 $ 23.9
State, municipalities and political subdivisions 5.0 4.6 4.6
Public utilities securities 482.1 514.1 514.1
Other U.S. corporate securities 2,630.8 2,747.4 2,747.4
Foreign securities (1) 628.2 653.0 653.0
Mortgage-backed securities 790.0 791.4 791.4
Other asset-backed securities 487.1 488.9 488.9
--------------- --------------- ----------------
Total fixed maturities 5,047.0 5,223.3 5,223.3
--------------- --------------- ----------------
Total equity securities 5.3 5.6 5.6
--------------- --------------- ----------------
Short term investments 17.7 17.7 17.7
Mortgage loans 847.6 878.1 847.6
Policy loans 17.5 17.5 17.5
--------------- --------------- ----------------
Total other investments $ 882.8 $ 913.3 $ 882.8
=============== =============== ================
* See Notes 2 and 3 of Notes to Consolidated Financial Statements.
(1) The term "foreign" includes foreign governments, foreign political
subdivisions, foreign public utilities and all other bonds of foreign
issuers. Substantially all of the Company's foreign securities are
denominated in U.S. dollars.
64
ING USA Annuity and Life Insurance Company,
formerly Golden American Life Insurance Company
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
Schedule IV
Reinsurance Inforamtion
As of and for the years ended December 31, 2003, 2002 and 2001
(Millions)
Percentage of
(Millions) Gross Ceded Assumed Net assumed to net
------------- ------------- ------------- ------------- ---------------
Year ended December 31, 2003
Life insurance in force $ 154.0 $ 79.3 $ - $ 74.7 0.0%
Year ended December 31, 2002
Life insurance in force $ 158.7 $ 90.7 $ - $ 68.0 0.0%
Year ended December 31, 2001
Life insurance in force $ 169.3 $ 94.8 $ - $ 74.5 0.0%
65
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ING USA Annuity and Life Insurance Company
(Registrant)
March 25, 2004 By /s/ David A. Wheat
- --------------- -----------------------------------------
(Date) David A. Wheat
Director, Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on or before March 25, 2004.
Signatures
Title
/s/ David A. Wheat Director, Senior Vice President and
-------------------------------------- Chief Financial Officer
David A. Wheat
/s/ Keith Gubbay Director and President
- ---------------------------------------
Keith Gubbay
/s/ Thomas J. McInerney Director and Chairman
- ---------------------------------------
Thomas J. McInerney
/s/ Jacques de Vaucleroy Director
- ---------------------------------------
Jacques de Vaucleroy
/s/ Kathleen A. Murphy Director
- ---------------------------------------
Kathleen A. Murphy
EXHIBIT 3(a)(ii)
RESTATED ARTICLES OF INCORPORATION
PROVIDING FOR THE REDOMESTICATION OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA
AND
COMMISSIONER OF INSURANCE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 490.1003, 490.1007 and 508.2 of the Code
of Iowa and to effect the redomestication of a foreign insurance company from
Delaware to Iowa pursuant to Section 490.902 of the Code of Iowa, the
undersigned Corporation adopts the following Restated Articles of Incorporation:
I. The name of the Corporation is Golden American Life Insurance Company.
II. The following are the Restated Articles of Incorporation of Golden American
Life Insurance Company.
ARTICLE I
Name of Corporation
The name of the Corporation is Golden American Life Insurance Company.
ARTICLE II
Place of Business
The principal place of business of the Corporation is located in the City
of Des Moines, Polk County, Iowa.
ARTICLE III
Purpose and Powers
The kinds of business the Corporation proposes to transact shall be any
kinds, classes, types and forms of life, health and accident insurance
including, but not limited to, annuity contracts and combinations of any two (2)
or more of such kinds of classes, types or forms of such insurance and annuity
contracts, as such insurance business is now or hereafter permitted and
authorized under the laws of the State of Iowa or any other state, the District
of Columbia, nation, country, territory, possession, or principality in which
the Corporation is authorized to do business; and to reinsure any such insurance
risk or any part thereof ceded to it by other insurance companies.
ARTICLE IV
Capital Stock
The authorized Capital Stock of the Corporation shall be Two Million Five
Hundred Thousand Dollars ($2,500,000) consisting of Two Hundred Fifty Thousand
(250,000) shares of Common Stock of the par value of Ten Dollars ($10.00) each,
to be issued in accordance with the laws of Iowa at such times and in such
amounts as the Board of Directors shall determine.
ARTICLE V
Term of Existence
The Corporation shall have perpetual existence.
ARTICLE VI
Directors
Section 1. The number of Directors shall be not fewer than five (5) nor
more than twenty-one (21). The names and addresses of the individuals who are to
serve as the initial Directors are:
Keith Gubbay P. Randall Lowery
Thomas J. McInerney Mark A. Tullis
David Wheat
The address for each Director is 5780 Powers Ferry Road NW, Atlanta,
Georgia 30327.
Section 2. The Directors shall be elected at the annual meeting of the
shareholders by a majority vote. The term of office of each Director shall be
until the next annual meeting of shareholders and until his or her successor has
been elected and qualified.
Section 3. In the event of a vacancy occurring on the Board of Directors,
the Board of Directors may fill such vacancy for the remainder of the unexpired
term by vote of the majority of the remaining directors, though less than a
quorum. Not more than one-third of the members of the Board may be so filled by
the remaining directors in any one year except that any number of vacancies
shall be so filled to provide for a minimum of five directors until the next
subsequent meeting of the shareholders. The shareholders, by vote of the
majority of the outstanding shares entitled to vote, may elect a director or
directors at any time to fill any vacancy not filled by the remaining director
or directors.
ARTICLE VII
Indemnification of Directors, Officers, Employees and Agents
Section 1. In the manner and to the fullest extent permitted by the Iowa
Business Corporation Act as the same now exists or may hereafter be amended, the
Corporation shall indemnify Directors, officers, employees and agents and shall
pay or reimburse them for reasonable expenses in any proceeding to which said
person is or was a party.
Section 2. A Director of this Corporation shall not be personally liable to
the Corporation or its shareholders for money damages for any action taken, or
any failure to take any action, as a director, except liability for (i) the
amount of a financial benefit received by a director to which the director is
not entitled, (ii) an intentional infliction of harm on the Corporation or to
the shareholders, (iii) an intentional violation of criminal law, or (iv) under
Section 490.833 of the Code of Iowa for assenting to or voting for an unlawful
distribution. If Chapter 490 of the Code of Iowa is subsequently amended to
authorize corporate action further eliminating or limiting personal liability of
Directors, then the liability of a Director to the Corporation shall be
eliminated or limited to the fullest extent permitted by Chapter 490 of the Code
of Iowa, as so amended. Any repeal or modification of the provisions of this
Article shall not adversely affect any right or protection of a Director of the
Corporation existing at the time of such repeal or modification.
Section 3. Any repeal or modification of the provisions of this Article
shall not adversely affect any right or protection of a Director, officer,
employee or agent of the Corporation existing at the time of such repeal or
modification.
ARTICLE VIII
Exemption from Debts
The private property of the stockholders shall not in any event be subject
to the debts of the Corporation.
ARTICLE IX
Bylaws
Bylaws may be adopted for the Corporation by the Board of Directors and/or
by the Shareholders in lawful and proper meeting assembled. Any and all Bylaws
adopted by the Shareholders shall be superior to and shall prevail over Bylaws
adopted by the Board of Directors.
ARTICLE X
Seal
The Corporation shall have a seal.
III. The duly adopted Restated Articles of Incorporation supersede the original
Articles of Incorporation and all amendments to them. The Restated Articles
of Incorporation shall be effective on the later to occur of (a) 12:01
a.m., January 1, 2004 or (b) 12:01 a.m. on the date on which the Restated
Articles of Incorporation are filed with the Secretary of State of Iowa.
The Restated Articles of Incorporation were duly approved by the
shareholders.
Dated at _______________, this day of See date below, 2003.
--------------
Golden American Life Insurance Company
/s/ Keith Gubbay
--------------------------------------
Keith Gubbay, President 7/2/03
(SEAL)
/s/ Paula Cludray-Engelke
--------------------------------------
Paula Cludray-Engelke, Secretary 7/3/03
STATE OF GEORGIA )
) ss:
COUNTY OF FULTON )
On this 2 day of July, 2003, before me, the undersigned, a Notary Public in
and for the state of Georgia, personally appeared Keith Gubbay, to me personally
known, who, being by me duly sworn, did say that he is the President, of said
corporation executing the within and foregoing instrument to which this is
attached, that the seal affixed thereto is the seal of said corporation; that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors; and that the said Keith Gubbay as such officer
acknowledged the execution of said instrument to be the voluntary act and deed
of said corporation, by it and by him voluntarily executed.
/s/ Mary E. Cannan
-----------------------------
Notary Public in and for said
County and State
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
On this 3 day of July, 2003, before me, the undersigned, a Notary Public in
and for the state of Minnesota, personally appeared Paula Cludray-Engelke, to me
personally known, who, being by me duly sworn, did say that she is the
Secretary, of said corporation executing the within and foregoing instrument to
which this is attached, that the seal affixed thereto is the seal of said
corporation; that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors; and that the said Paula
Cludray-Engelke as such officer acknowledged the execution of said instrument to
be the voluntary act and deed of said corporation, by it and by her voluntarily
executed.
/s/ Loralee A. Renelt
-----------------------------
Notary Public in and for said
County and State
The foregoing Restated Articles of Incorporation of Golden American Life
Insurance Company have been submitted to the undersigned each thereof for
examination and found by us to be in accordance with the provisions of Chapter
508 and Chapter 490 of the Code of Iowa, as amended, and the Constitution and
laws of the United States and the Constitution and the laws of the State of
Iowa, and the same are hereby approved by the undersigned Commissioner of
Insurance of the State of Iowa, and the undersigned Attorney General of the
State of Iowa, on the dates set opposite our respective names.
Commissioner of Insurance
of the State of Iowa
DATED:__________________, 2003 By:__________________________
Attorney General
of the State of Iowa
DATED:__________________, 2003 By:__________________________
CERTIFICATE OF APPROVAL
ATTORNEY GENERAL
Pursuant to provisions of the Iowa Code, the undersigned approves the
Restated Articles of Incorporation Providing for the Redomestication of Golden
American Life Insurance Company (to be effective January 1, 2004) and finds them
in conformance with the laws of the United States and with the laws and
Constitution of the State of Iowa.
THOMAS J. MILLER
Attorney General of Iowa
07-16-03 By: /s/ Jeanie Kunkle Vaudt
- -------- --------------------------
Date Jeanie Kunkle Vaudt
Assistant Attorney General
CERTIFICATE OF APPROVAL
COMMISSIONER OF INSURANCE
Pursuant to the provisions of the Iowa Code, the undersigned approves the
Restated Articles of Incorporation providing for the Redomestication of Golden
American Life Insurance Company (to be effective January 1, 2004).
THERESE M. VAUGHAN
Commissioner of Insurance
07-16-03 By: /s/ James N. Armstrong
- -------- --------------------------
Date James N. Armstrong
Deputy Commissioner
of Insurance
EXHIBIT 3(a)(iii)
AMENDMENT TO ARTICLES OF INCORPORATION
PROVIDING FOR THE NAME CHANGE OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA
AND
COMMISSIONER OF INSURANCE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 490.1003, 490.1007 and 508.2 of the Code
of Iowa and to effect the name change of the undersigned Corporation, the
undersigned Corporation adopts the following amendment to its Restated Articles
of Incorporation:
I. The name of the Corporation is Golden American Life Insurance Company.
II. The following amendment to Article I of the Restated Articles of
Incorporation of Golden American Life Insurance Company replaces Article I
in its entirety.
ARTICLE I
Name of Corporation
The name of the Corporation is ING USA Annuity and Life Insurance Company.
III. The duly adopted Restated Articles of Incorporation, as hereby amended,
supersede the Restated Articles of Incorporation. The Restated Articles of
Incorporation, as amended, shall be effective on the later to occur of (a)
12:03 a.m., January 1, 2004 or (b) 12:03 a.m. on the date on which the
amendment to the Restated Articles of Incorporation is filed with the
Secretary of State of Iowa.
The amendment to the Restated Articles of Incorporation was duly approved
by the shareholders.
Dated at Atlanta & Minneapolis, this 20th day of November, 2003.
Golden American Life Insurance Company
/s/ Keith Gubbay
--------------------------------------
Keith Gubbay, President
(SEAL)
/s/ Paula Cludray-Engelke
--------------------------------------
Paula Cludray-Engelke, Secretary
STATE OF GEORGIA )
) ss:
COUNTY OF FULTON )
On this 20 day of November, 2003, before me, the undersigned, a Notary
Public in and for the state of Georgia, personally appeared Keith Gubbay, to me
personally known, who, being by me duly sworn, did say that he is the President,
of said corporation executing the within and foregoing instrument to which this
is attached, that the seal affixed thereto is the seal of said corporation; that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors; and that the said Keith Gubbay as such officer
acknowledged the execution of said instrument to be the voluntary act and deed
of said corporation, by it and by him voluntarily executed.
/s/ Dianne Glosson
-----------------------------
Dianne Glosson
Notary Public in and for said
County and State
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
On this 21 day of November, 2003, before me, the undersigned, a Notary
Public in and for the state of Minnesota, personally appeared Paula
Cludray-Engelke, to me personally known, who, being by me duly sworn, did say
that she is the Secretary, of said corporation executing the within and
foregoing instrument to which this is attached, that the seal affixed thereto is
the seal of said corporation; that said instrument was signed and sealed on
behalf of said corporation by authority of its Board of Directors; and that the
said Paula Cludray-Engelke as such officer acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation, by it and by
her voluntarily executed.
/s/ Loralee A. Renelt
-----------------------------
Loralee A. Renelt
Notary Public in and for said
County and State
CERTIFICATE OF APPROVAL
ATTORNEY GENERAL
Pursuant to provisions of the Iowa Code, the undersigned approves the
Articles of Amendment providing for Golden American Life Insurance Company
(effective January 1, 2004) and finds them in conformance with the laws and
Constitution of the State of Iowa.
THOMAS J. MILLER
Attorney General of Iowa
11-26-03 By: /s/ Jeanie Kunkle Vaudt
- -------- -----------------------------
Date Jeanie Kunkle Vaudt
Assistant Attorney General
CERTIFICATE OF APPROVAL
COMMISSIONER OF INSURANCE
Pursuant to the provisions of the Iowa Code, the undersigned approves the
Articles of Amendment for Golden American Life Insurance Company (effective
January 1, 2004).
THERESE M. VAUGHAN
Commissioner of Insurance
07-16-03 By: /s/ James N. Armstrong
- -------- -----------------------------
Date James N. Armstrong
Deputy Commissioner
of Insurance
EXHIBIT 3(b)(iii)
RESTATED BYLAWS OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders of Golden
American Life Insurance Company (the "Corporation") shall be held at such place
or places within or without the State of Iowa, as may from time to time be fixed
by the Board of Directors (the "Board"), or as shall be specified or fixed in
the respective notices or waivers of notice thereof, provided that any or all
stockholders may participate in any such meeting by means of conference
telephone or similar communications.
Section 2. ANNUAL MEETING. The annual meeting of the stockholders shall be
held at the home office of the Company on or before the thirty-first day of May
of each year for the purpose of electing Directors and for the transaction of
such other business as may be brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the President, Secretary, the Board of Directors acting
upon majority vote, or the holders of not less than one-tenth of all the
outstanding shares of the Corporation entitled to vote at such meeting. No
business other than that specified in the notice of meeting shall be transacted
at a special meeting of the Shareholders.
Section 4. NOTICE OF MEETING. Written notice of each meeting of
stockholders, stating the place, date and hour of the meeting, and the purpose
or purposes thereof, shall be mailed to each stockholder entitled to vote at
such meeting not less than ten or more than fifty days before the date of the
meeting. Stockholders by written notice may waive notice of any meeting, and the
presence of a stockholder at any meeting, in person or by proxy, shall
constitute a waiver of notice of such meeting.
Section 5. QUORUM/VOTING. The presence at a meeting in person or by proxy
of stockholders of the Company representing a majority or issued and outstanding
shares of the Company shall be necessary to constitute a quorum for the purpose
of transacting business, except as otherwise provided by law, but a smaller
number may adjourn the meeting from time to time until a quorum shall be
obtained. Each stockholder shall be entitled to cast one vote in person or by
proxy for each share of stock of the Company held as of record in his or her
name on the books of the Company.
Section 6. PROXIES. A stockholder may vote at any meeting of the
stockholders, either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. All proxies shall be
filed with the Secretary of the Company before voting and entered on the record
in the minutes of the meeting. No special form of proxy shall be necessary.
Section 7. CONSENTS TO CORPORATE ACTION. Unless otherwise prohibited by the
applicable laws of the State of Iowa or the Company's Articles of Incorporation,
any action required to be taken or which may be taken at any annual or special
meeting of stockholders of the Company may be taken without a meeting and
without a vote if a consent in writing, setting forth the action so taken, shall
be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. The consents of stockholders shall be evidenced by one
or more written approvals, each which sets forth the action taken, and bears the
signature of one or more stockholders. All of the approvals evidencing the
consents shall be delivered to the Secretary of the Company to be filed in the
Company's records.
The action shall be effective on the date the stockholder has
approved the consent unless the consent specifies a different effective date.
ARTICLE II
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors. The Board of Directors shall have
the power to commit shares of the authorized but unissued capital stock of the
Corporation for acquisitions of other property of any and all kinds. Such stock
shall be issued at valuation placed thereon by the Board of Directors, but in no
event for a consideration less than the par value of such shares.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of
the Corporation shall be not less than five (5) nor more than twenty-one (21)
persons elected by the shareholders at the annual meeting of the Corporation.
The number to be elected may be determined by a resolution of the shareholders,
but in the absence of such a resolution there shall be elected the number of
Directors that were elected at the previous annual meeting. Subject to the
Restated Articles of Incorporation, each Director shall hold office for the term
of which they are elected, and until their successors shall have been elected
and qualified.
Section 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw, immediately after, and at
the same place as the annual meeting of Shareholders. The Board of Directors may
provide by resolution, the time and place, either within or without the State of
Iowa, for the holding of additional regular meetings without other notice than
such resolution.
Section 4. SPECIAL MEETING. Special meetings of the Board of Directors may
be called by or at the request of the President or the Secretary, and shall be
called on written request of three (3) members of the Board of Directors.
Meetings of the Board shall be held at the principal office of the Corporation
unless a different place, either within or without the State of Iowa shall be
designated by the President or Board of Directors.
Section 5. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting of
the Board of Directors shall be given by written notice mailed to or served upon
each Director at least twenty-four hours prior to such meetings, and such
special meeting shall be held at such time and place as shall be specified in
such written notice. Notice of a special meeting may be waived by any Director.
A special meeting of the Board of Directors may also be held without written
notice or call at such time and place as shall be fixed by the consent in
writing of all of the Directors given before, at or after such meeting.
Section 6. QUORUM. A majority of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided that if less than a majority of the Directors are present at such
meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice. The act of a majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
Members of the Board of Directors of the Corporation may participate in a
meeting of the Board of Directors by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.
Section 7. VACANCIES. Subject to the provisions of Section 3 of Article VI
of the Corporation's Restated Articles of Incorporation, any vacancy occurring
in the Board of Directors and any Directorship to be filled by reason of an
increase in the number of Directors may be filled by the affirmative vote of a
majority of the Directors then in office, even if less than a quorum of the
Board of Directors. A Director so elected shall be elected for the unexpired
term of his predecessor in office or the full term of such new Directorship.
Section 8. RESIGNATION. Any Director may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein. If no time is specified, it shall take effect at the time of its
receipt by the Secretary. The acceptance of a resignation shall not be necessary
to make it effective.
Section 9. REMOVAL. The entire Board of Directors or any individual
Director may be removed from office, with or without cause, at a Shareholders'
meeting called expressly for that purpose by the vote of a majority of those who
actually vote. In case the entire Board or any one or more of the Directors are
so removed, new Directors may be elected at the same meeting for the unexpired
term of the Director or Directors so removed. A Director shall not be removed
without a meeting pursuant to written consents unless such consents are obtained
from the holders of all the outstanding shares of the Corporation. Failure to
elect Directors to fill the unexpired term of the Directors so removed shall be
deemed to create a vacancy or vacancies in the Board of Directors.
Section 10. ACTION BY BOARD OF DIRECTORS WITHOUT MEETING. Any action
required to be taken at a meeting of the Board of Directors by the Iowa Business
Corporation Act, may be taken without a meeting of the Board of Directors if
written consent setting forth the action so taken shall be signed by all of the
members of the Board of Directors and included in the minutes or filed with the
corporate records reflecting the action taken. Such written consent shall have
the same force and effect as a unanimous vote of the Board of Directors and may
be stated as such in any article or document filed with the Secretary of State
of the State of Iowa pursuant to the provisions of the Iowa Business Corporation
Act. The provisions of this Bylaw shall be applicable whether or not the Iowa
Business Corporation Act requires that such action be taken by resolution of the
Board of Directors.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. COMMITTEES. The Board shall elect from the Directors, by the
affirmative vote of a majority of the whole Board, such committees with such
duties as the Board may by resolution prescribe. Any such committee shall be
comprised of such persons and shall possess such authority as shall be set forth
in such resolution; except that no such committee shall have the authority of
the Board in reference to amending the Articles of Incorporation, approving a
plan of merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the property and assets of the
Company otherwise than in the usual course of its business, recommending to the
stockholders a voluntary dissolution of the Company or a revocation thereof,
amending, altering or repealing any resolution of the Board that by its terms
provides that it shall not be so amendable or repealable in such manner; and,
unless such resolution or the Articles of Incorporation expressly so provide, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of shares of the Company.
Section 2. PROCEDURE. Except as provided otherwise in these bylaws, each
committee may elect its own chairman and secretary, who shall keep minutes of
its proceedings, shall fix its own rules of procedure and shall meet where and
as provided by such rules. Unless otherwise stated in these bylaws, a majority
of the members of a committee shall constitute a quorum for the transaction of
its business.
Section 3. REPORTS TO THE BOARD. All completed actions by any committee
established by the Board shall be reported to the Board at the next succeeding
Board meeting and shall be subject to revision or alteration by the Board;
provided that no acts or rights of third parties shall be affected by any such
revision or alteration.
ARTICLE IV
OFFICERS
Section 1. GENERAL PROVISIONS. The corporate officers of the Company shall
consist of the following: a President; one or more Vice Presidents; a Treasurer;
a Secretary; and such other officers as the Board may from time to time
determine. The Board may authorize the classification of certain Vice Presidents
as Executive, Senior, Second or Assistant, and may authorize Assistant
Treasurers, Assistant Secretaries and such other titles and designations as in
its discretion seems proper. Insofar as permitted by statute, the same person
may hold two or more offices.
The officers shall be elected by the Board. Each such officer shall hold
office until a successor is elected or appointed and qualified or until his or
her earlier death, resignation, removal or suspension.
Any officer or agent or member of a committee elected or appointed by the
Board may be removed, either with or without cause, by the Board whenever in its
judgment the best interests of the Company will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent or member of a
committee shall not of itself create contract rights.
Any vacancy occurring in any office of the Company may be filled by the
Board.
Section 2. POWERS AND DUTIES OF THE PRESIDENT. The President shall have
general charge and management of the affairs, property and business of the
Company, subject to the Board and the provisions of these bylaws. The President
shall be the chief executive officer, and, in the absence of the Chairman, shall
preside at meetings of the stockholders and the Board. In the absence of the
President, the Board shall appoint another of their number to preside.
The President shall perform all duties assigned that office by these bylaws
and such other duties as may from time to time be assigned by the Board.
Section 3. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice President
shall perform such duties as may from time to time be assigned by the Board of
Directors.
Section 4. POWERS AND DUTIES OF THE TREASURER. The Treasurer and Assistant
Treasurers shall have care and custody of all funds of the Company and disburse
and administer the same under direction of the Board or the President and shall
perform such other duties as the Board or President shall assign.
Section 5. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall act
under the direction of the Board and, with any Assistant Secretary, shall record
the proceedings of all the meetings of the stockholders and the Board in books
kept for that purpose. The Secretary shall be the custodian of the corporate
seal. The Secretary or Assistant Secretary shall fix the same to and countersign
papers requiring such acts; and the Secretary and Assistant Secretaries shall
perform other duties as may be required by the Board.
ARTICLE V
CAPITAL STOCK
All certificates of stock shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary of the Company, but
when a certificate is signed by a transfer agent or registrar appointed by the
Board of Directors, the signature of any such corporate officer and the
corporate seal upon such certificate may be facsimiles, engraved or printed.
ARTICLE VI
MISCELLANEOUS
Section 1. WAIVER OF NOTICE. Notice of any meeting required by law or by
these bylaws may be waived in writing, signed by the person or persons entitled
to such notice, either before or after the time of such meeting.
Section 2. AMENDMENTS. The Board from time to time shall have the power to
make, alter, amend or repeal any and all of these bylaws, but any bylaws so
made, altered, amended, or repealed by the Board may be amended, altered, or
repealed by the stockholders.
Section 3. DIVIDENDS. The Board may, from time to time and in accordance
with the law, declare and cause to be paid dividends of cash, property, or
shares of stock or securities of, or owned by, the Company, as the Board may
deem proper.
Section 4. FISCAL YEAR. The fiscal year of the Company shall begin with
January first and end with December thirty-first.
Section 5. SEAL. The seal of the Company shall bear the corporate name of
the Company and the place of its home office.
Section 6. INVESTMENTS. The President, any Vice President, the Treasurer,
the Secretary, and such other officers or employees as may be designated by
resolution of the Board of Directors shall have authority to execute on behalf
of the Corporation any instruments, including but not limited to: Instruments
necessary in order to purchase, sell, assign, transfer, modify, exchange, or
convert bonds, notes or stocks and to assign or satisfy mortgages, and to
execute contracts, deeds, leases, or any and all other instruments relating in
any manner to bonds, notes, stocks, real estate or personal property or any
evidence of indebtedness owned by the Corporation.
Section 7. POLICY CONTRACTS. All policies of insurance or contracts for
annuities and for the disposition and for the disposition of the proceeds
thereof may be executed on behalf of the Corporation by any of the following
officers: The President, any Vice President, the Treasurer, the Secretary or an
Assistant Secretary, an Actuary, an Associate Actuary or an Assistant Actuary.
The signature of any such officer may be in facsimile.
Section 8. AGENCY AND OTHER CONTRACTS. The President, any Vice President,
the Secretary and any other officers or employees designated in writing by the
Board of Directors shall have authority to execute agency contracts and related
agreements on behalf of the Corporation, tax returns or reports and any reports
filed with governmental agencies.
Section 9. OTHER INSTRUMENTS. All other contracts and written instruments
of any kind not previously described shall be signed by one of the following
officers: The President, a Vice President, the Secretary or the Treasurer, or by
any other officer or employee of the Company as shall be so empowered by the
Board of Directors or by such other person or persons as may be designated from
time to time by the Board of Directors.
Section 10. STATUTORY AGENTS. The President, any Vice President and the
Secretary or an Assistant Secretary are authorized to appoint statutory agents
of the Corporation and to execute powers of attorney in evidence thereof,
authorizing such statutory agents to accept service of process against the
Corporation, to execute any and all papers to comply with all applicable
requirements of law in order to qualify the Corporation to do business in any
state, territory, district, country or jurisdiction and to take any other action
on behalf of the Corporation necessary or proper to be taken in compliance with
law or with rules or regulations of the supervisory authorities in order to
qualify the Corporation to do business.
ARTICLE VII
INDEMNIFICATION
Section 1. INDEMNIFICATION. (a) To the extent not prohibited by applicable
law, the Company shall indemnify and hold harmless any person who was or is a
party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a Director, officer, employee or agent of the
Company, or who is or was serving at the request of the Company as a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or entity, from and against any and all liability and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the person did not act in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) To the extent not prohibited by applicable law, the Company shall
indemnify and hold harmless any person who was or is a party, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Company to procure a judgment in its favor by reason of the
fact that he is or was a Director, officer, employee, or agent of the Company,
or is or was serving at the request of the Company as Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or entity, from and against any expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company, and except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Company unless, and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.
(c) To the extent that a Director, officer, employee, or agent of the
Company or a person who is or was serving at the request of the Company as a
Director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise or entity, has been successful, on the
merits or otherwise, in the defense of any action, suit or proceeding referred
to in paragraphs (a) or (b), or in defense of any claim, issue, or matter
therein, shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 2. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any indemnification
under paragraphs (a) and (b) of Section 1, unless ordered by a court, shall be
made by the Company only as authorized in the specific case, upon a
determination that the indemnification of the Director, officer, employee, or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b).
Such determination shall be made (1) by the Board by majority vote of a
quorum consisting of Directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (3) by the stockholders.
Section 3. ADVANCES. To the extent not prohibited by applicable law,
expenses incurred in defending a civil or criminal action, suit or proceeding
may be paid by the Company in advance of the final disposition of such action,
suit or proceeding, as authorized by the Board in the specific case, upon
receipt of an undertaking by or on behalf of the Director, officer, employee or
agent or person who is or was serving at the request of the Company as Director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise or entity, to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the Company as
authorized in this Article of the bylaws.
Section 4. EXCLUSIVITY. The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any agreement, resolution, vote of
stockholders or disinterested Directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise or entity, and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 5. INSURANCE. The Company may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee, or agent of
the Company, or who is or was serving at the request of the Company as a
Director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise or entity, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power to indemnify him
against such liability under the provisions of this Article of these bylaws or
otherwise.
These bylaws were duly adopted by the Board of Directors of the Company on
this the 25th day of June, 2003.
/s/ Paula Cludray-Engelke
--------------------------------
Paula Cludray-Engelke, Secretary
EXHIBIT 3(b)(iv)
AMENDED AND RESTATED BYLAWS OF
ING USA ANNUITY AND LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders of ING USA
Annuity and Life Insurance Company (the "Corporation" or "Company") shall be
held at such place or places within or without the State of Iowa, as may from
time to time be fixed by the Board of Directors (the "Board"), or as shall be
specified or fixed in the respective notices or waivers of notice thereof,
provided that any or all stockholders may participate in any such meeting by
means of conference telephone or similar communications.
Section 2. ANNUAL MEETING. The annual meeting of the stockholders shall be
held at the home office of the Company on or before the thirty-first day of May
of each year for the purpose of electing Directors and for the transaction of
such other business as may be brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the President, Secretary, the Board of Directors acting
upon majority vote, or the holders of not less than one-tenth of all the
outstanding shares of the Corporation entitled to vote at such meeting. No
business other than that specified in the notice of meeting shall be transacted
at a special meeting of the Shareholders.
Section 4. NOTICE OF MEETING. Written notice of each meeting of
stockholders, stating the place, date and hour of the meeting, and the purpose
or purposes thereof, shall be mailed to each stockholder entitled to vote at
such meeting not less than ten or more than fifty days before the date of the
meeting. Stockholders by written notice may waive notice of any meeting, and the
presence of a stockholder at any meeting, in person or by proxy, shall
constitute a waiver of notice of such meeting.
Section 5. QUORUM/VOTING. The presence at a meeting in person or by proxy
of stockholders of the Company representing a majority or issued and outstanding
shares of the Company shall be necessary to constitute a quorum for the purpose
of transacting business, except as otherwise provided by law, but a smaller
number may adjourn the meeting from time to time until a quorum shall be
obtained. Each stockholder shall be entitled to cast one vote in person or by
proxy for each share of stock of the Company held as of record in his or her
name on the books of the Company.
Section 6. PROXIES. A stockholder may vote at any meeting of the
stockholders, either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. All proxies shall be
filed with the Secretary of the Company before voting and entered on the record
in the minutes of the meeting. No special form of proxy shall be necessary.
Section 7. CONSENTS TO CORPORATE ACTION. Unless otherwise prohibited by the
applicable laws of the State of Iowa or the Company's Articles of Incorporation,
any action required to be taken or which may be taken at any annual or special
meeting of stockholders of the Company may be taken without a meeting and
without a vote if a consent in writing, setting forth the action so taken, shall
be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. The consents of stockholders shall be evidenced by one
or more written approvals, each which sets forth the action taken, and bears the
signature of one or more stockholders. All of the approvals evidencing the
consents shall be delivered to the Secretary of the Company to be filed in the
Company's records.
The action shall be effective on the date the stockholder has approved the
consent unless the consent specifies a different effective date.
ARTICLE II
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors. The Board of Directors shall have
the power to commit shares of the authorized but unissued capital stock of the
Corporation for acquisitions of other property of any and all kinds. Such stock
shall be issued at valuation placed thereon by the Board of Directors, but in no
event for a consideration less than the par value of such shares.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of
the Corporation shall be not less than five (5) nor more than twenty-one (21)
persons elected by the shareholders at the annual meeting of the Corporation.
The number to be elected may be determined by a resolution of the shareholders,
but in the absence of such a resolution there shall be elected the number of
Directors that were elected at the previous annual meeting. Subject to the
Restated Articles of Incorporation, each Director shall hold office for the term
of which they are elected, and until their successors shall have been elected
and qualified.
Section 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw, immediately after, and at
the same place as the annual meeting of Shareholders. The Board of Directors may
provide by resolution, the time and place, either within or without the State of
Iowa, for the holding of additional regular meetings without other notice than
such resolution.
Section 4. SPECIAL MEETING. Special meetings of the Board of Directors may
be called by or at the request of the President or the Secretary, and shall be
called on written request of three (3) members of the Board of Directors.
Meetings of the Board shall be held at the principal office of the Corporation
unless a different place, either within or without the State of Iowa shall be
designated by the President or Board of Directors.
Section 5. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting of
the Board of Directors shall be given by written notice mailed to or served upon
each Director at least twenty-four hours prior to such meetings, and such
special meeting shall be held at such time and place as shall be specified in
such written notice. Notice of a special meeting may be waived by any Director.
A special meeting of the Board of Directors may also be held without written
notice or call at such time and place as shall be fixed by the consent in
writing of all of the Directors given before, at or after such meeting.
Section 6. QUORUM. A majority of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided that if less than a majority of the Directors are present at such
meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice. The act of a majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
Members of the Board of Directors of the Corporation may participate in a
meeting of the Board of Directors by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.
Section 7. VACANCIES. Subject to the provisions of Section 3 of Article VI
of the Corporation's Restated Articles of Incorporation, any vacancy occurring
in the Board of Directors and any Directorship to be filled by reason of an
increase in the number of Directors may be filled by the affirmative vote of a
majority of the Directors then in office, even if less than a quorum of the
Board of Directors. A Director so elected shall be elected for the unexpired
term of his predecessor in office or the full term of such new Directorship.
Section 8. RESIGNATION. Any Director may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein. If no time is specified, it shall take effect at the time of its
receipt by the Secretary. The acceptance of a resignation shall not be necessary
to make it effective.
Section 9. REMOVAL. The entire Board of Directors or any individual
Director may be removed from office, with or without cause, at a Shareholders'
meeting called expressly for that purpose by the vote of a majority of those who
actually vote. In case the entire Board or any one or more of the Directors are
so removed, new Directors may be elected at the same meeting for the unexpired
term of the Director or Directors so removed. A Director shall not be removed
without a meeting pursuant to written consents unless such consents are obtained
from the holders of all the outstanding shares of the Corporation. Failure to
elect Directors to fill the unexpired term of the Directors so removed shall be
deemed to create a vacancy or vacancies in the Board of Directors.
Section 10. ACTION BY BOARD OF DIRECTORS WITHOUT MEETING. Any action
required to be taken at a meeting of the Board of Directors by the Iowa Business
Corporation Act, may be taken without a meeting of the Board of Directors if
written consent setting forth the action so taken shall be signed by all of the
members of the Board of Directors and included in the minutes or filed with the
corporate records reflecting the action taken. Such written consent shall have
the same force and effect as a unanimous vote of the Board of Directors and may
be stated as such in any article or document filed with the Secretary of State
of the State of Iowa pursuant to the provisions of the Iowa Business Corporation
Act. The provisions of this Bylaw shall be applicable whether or not the Iowa
Business Corporation Act requires that such action be taken by resolution of the
Board of Directors.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. COMMITTEES. The Board shall elect from the Directors, by the
affirmative vote of a majority of the whole Board, such committees with such
duties as the Board may by resolution prescribe. Any such committee shall be
comprised of such persons and shall possess such authority as shall be set forth
in such resolution; except that no such committee shall have the authority of
the Board in reference to amending the Articles of Incorporation, approving a
plan of merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the property and assets of the
Company otherwise than in the usual course of its business, recommending to the
stockholders a voluntary dissolution of the Company or a revocation thereof,
amending, altering or repealing any resolution of the Board that by its terms
provides that it shall not be so amendable or repealable in such manner; and,
unless such resolution or the Articles of Incorporation expressly so provide, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of shares of the Company.
Section 2. PROCEDURE. Except as provided otherwise in these bylaws, each
committee may elect its own chairman and secretary, who shall keep minutes of
its proceedings, shall fix its own rules of procedure and shall meet where and
as provided by such rules. Unless otherwise stated in these bylaws, a majority
of the members of a committee shall constitute a quorum for the transaction of
its business.
Section 3. REPORTS TO THE BOARD. All completed actions by any committee
established by the Board shall be reported to the Board at the next succeeding
Board meeting and shall be subject to revision or alteration by the Board;
provided that no acts or rights of third parties shall be affected by any such
revision or alteration.
ARTICLE IV
OFFICERS
Section 1. GENERAL PROVISIONS. The corporate officers of the Company shall
consist of the following: a President; one or more Vice Presidents; a Treasurer;
a Secretary; and such other officers as the Board may from time to time
determine. The Board may authorize the classification of certain Vice Presidents
as Executive, Senior, Second or Assistant, and may authorize Assistant
Treasurers, Assistant Secretaries and such other titles and designations as in
its discretion seems proper. Insofar as permitted by statute, the same person
may hold two or more offices.
The officers shall be elected by the Board. Each such officer shall hold
office until a successor is elected or appointed and qualified or until his or
her earlier death, resignation, removal or suspension.
Any officer or agent or member of a committee elected or appointed by the
Board may be removed, either with or without cause, by the Board whenever in its
judgment the best interests of the Company will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent or member of a
committee shall not of itself create contract rights.
Any vacancy occurring in any office of the Company may be filled by the
Board.
Section 2. POWERS AND DUTIES OF THE PRESIDENT. The President shall have
general charge and management of the affairs, property and business of the
Company, subject to the Board and the provisions of these bylaws. The President
shall be the chief executive officer, and, in the absence of the Chairman, shall
preside at meetings of the stockholders and the Board. In the absence of the
President, the Board shall appoint another of their number to preside.
The President shall perform all duties assigned that office by these bylaws
and such other duties as may from time to time be assigned by the Board.
Section 3. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice President
shall perform such duties as may from time to time be assigned by the Board of
Directors.
Section 4. POWERS AND DUTIES OF THE TREASURER. The Treasurer and Assistant
Treasurers shall have care and custody of all funds of the Company and disburse
and administer the same under direction of the Board or the President and shall
perform such other duties as the Board or President shall assign.
Section 5. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall act
under the direction of the Board and, with any Assistant Secretary, shall record
the proceedings of all the meetings of the stockholders and the Board in books
kept for that purpose. The Secretary shall be the custodian of the corporate
seal. The Secretary or Assistant Secretary shall fix the same to and countersign
papers requiring such acts; and the Secretary and Assistant Secretaries shall
perform other duties as may be required by the Board.
ARTICLE V
CAPITAL STOCK
All certificates of stock shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary of the Company, but
when a certificate is signed by a transfer agent or registrar appointed by the
Board of Directors, the signature of any such corporate officer and the
corporate seal upon such certificate may be facsimiles, engraved or printed.
ARTICLE VI
MISCELLANEOUS
Section 1. WAIVER OF NOTICE. Notice of any meeting required by law or by
these bylaws may be waived in writing, signed by the person or persons entitled
to such notice, either before or after the time of such meeting.
Section 2. AMENDMENTS. The Board from time to time shall have the power to
make, alter, amend or repeal any and all of these bylaws, but any bylaws so
made, altered, amended, or repealed by the Board may be amended, altered, or
repealed by the stockholders.
Section 3. DIVIDENDS. The Board may, from time to time and in accordance
with the law, declare and cause to be paid dividends of cash, property, or
shares of stock or securities of, or owned by, the Company, as the Board may
deem proper.
Section 4. FISCAL YEAR. The fiscal year of the Company shall begin with
January first and end with December thirty-first.
Section 5. SEAL. The seal of the Company shall bear the corporate name of
the Company and the place of its home office.
Section 6. INVESTMENTS. The President, any Vice President, the Treasurer,
the Secretary, and such other officers or employees as may be designated by
resolution of the Board of Directors shall have authority to execute on behalf
of the Corporation any instruments, including but not limited to: Instruments
necessary in order to purchase, sell, assign, transfer, modify, exchange, or
convert bonds, notes or stocks and to assign or satisfy mortgages, and to
execute contracts, deeds, leases, or any and all other instruments relating in
any manner to bonds, notes, stocks, real estate or personal property or any
evidence of indebtedness owned by the Corporation.
Section 7. POLICY CONTRACTS. All policies of insurance or contracts for
annuities and for the disposition and for the disposition of the proceeds
thereof may be executed on behalf of the Corporation by any of the following
officers: The President, any Vice President, the Treasurer, the Secretary or an
Assistant Secretary, an Actuary, an Associate Actuary or an Assistant Actuary.
The signature of any such officer may be in facsimile.
Section 8. AGENCY AND OTHER CONTRACTS. The President, any Vice President,
the Secretary and any other officers or employees designated in writing by the
Board of Directors shall have authority to execute agency contracts and related
agreements on behalf of the Corporation, tax returns or reports and any reports
filed with governmental agencies.
Section 9. OTHER INSTRUMENTS. All other contracts and written instruments
of any kind not previously described shall be signed by one of the following
officers: The President, a Vice President, the Secretary or the Treasurer, or by
any other officer or employee of the Company as shall be so empowered by the
Board of Directors or by such other person or persons as may be designated from
time to time by the Board of Directors.
Section 10. STATUTORY AGENTS. The President, any Vice President and the
Secretary or an Assistant Secretary are authorized to appoint statutory agents
of the Corporation and to execute powers of attorney in evidence thereof,
authorizing such statutory agents to accept service of process against the
Corporation, to execute any and all papers to comply with all applicable
requirements of law in order to qualify the Corporation to do business in any
state, territory, district, country or jurisdiction and to take any other action
on behalf of the Corporation necessary or proper to be taken in compliance with
law or with rules or regulations of the supervisory authorities in order to
qualify the Corporation to do business.
ARTICLE VII
INDEMNIFICATION
Section 1. INDEMNIFICATION. (a) To the extent not prohibited by applicable
law, the Company shall indemnify and hold harmless any person who was or is a
party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a Director, officer, employee or agent of the
Company, or who is or was serving at the request of the Company as a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or entity, from and against any and all liability and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the person did not act in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) To the extent not prohibited by applicable law, the Company shall
indemnify and hold harmless any person who was or is a party, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Company to procure a judgment in its favor by reason of the
fact that he is or was a Director, officer, employee, or agent of the Company,
or is or was serving at the request of the Company as Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or entity, from and against any expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company, and except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Company unless, and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.
(c) To the extent that a Director, officer, employee, or agent of the
Company or a person who is or was serving at the request of the Company as a
Director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise or entity, has been successful, on the
merits or otherwise, in the defense of any action, suit or proceeding referred
to in paragraphs (a) or (b), or in defense of any claim, issue, or matter
therein, shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 2. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any indemnification
under paragraphs (a) and (b) of Section 1, unless ordered by a court, shall be
made by the Company only as authorized in the specific case, upon a
determination that the indemnification of the Director, officer, employee, or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b).
Such determination shall be made (1) by the Board by majority vote of a
quorum consisting of Directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (3) by the stockholders.
Section 3. ADVANCES. To the extent not prohibited by applicable law,
expenses incurred in defending a civil or criminal action, suit or proceeding
may be paid by the Company in advance of the final disposition of such action,
suit or proceeding, as authorized by the Board in the specific case, upon
receipt of an undertaking by or on behalf of the Director, officer, employee or
agent or person who is or was serving at the request of the Company as Director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise or entity, to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the Company as
authorized in this Article of the bylaws.
Section 4. EXCLUSIVITY. The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any agreement, resolution, vote of
stockholders or disinterested Directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise or entity, and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 5. INSURANCE. The Company may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee, or agent of
the Company, or who is or was serving at the request of the Company as a
Director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise or entity, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power to indemnify him
against such liability under the provisions of this Article of these bylaws or
otherwise.
These restated bylaws were duly adopted by the Board of Directors of the
Company on the 25th day of June, 2003 and Article I was amended to reflect the
name change the 11th day of November 2003.
/s/ Paula Cludray-Engelke, Secretary
---------------------------------------
Paula Cludray-Engelke, Secretary
EXHIBIT 10.A(f)
SERVICES AGREEMENT
This Services Agreement ("Agreement") is made this 1 day of January, 2001,
by and between Golden American Life Insurance Company, an insurance company
organized and existing under the laws of the state of Delaware, and the
affiliated insurance companies specified in Exhibit B hereto.
RECITALS
WHEREAS, the parties are affiliates under the common control of ING Groep,
N.V.; and
WHEREAS, each party possesses certain resources, including experienced
personnel, facilities and equipment, which enables it to provide certain
administrative, management, professional, advisory, consulting and other
services to the others ("Services"); and
WHEREAS, each party desires from time to time to perform certain Services
on behalf of, and receive certain Services from, the others, as described with
particularity in Exhibit A attached hereto; and
WHEREAS, each party contemplates that such an arrangement will achieve
operating economies, synergies and expense savings, and improve services to the
benefit of its policyholders or contractholders; and
WHEREAS, the parties wish to identify the Services to be provided, to
provide a method for identifying the charges to be assessed and the compensation
to be paid for the Services, and to assure that all charges for the Services are
reasonable and in accordance with the laws and regulations of the states in
which each of them is domiciled;
NOW, THEREFORE, in consideration of these premises and of the mutual
promises set forth herein, and intending to be legally bound hereby, the parties
agree as follows:
1. Services.
(a) Subject to the terms, conditions, and limitations of this
Agreement, the party providing a service hereunder ("Service Provider")
will perform for the party requesting a service hereunder ("Company") such
of the Services described in Exhibit A, attached hereto and incorporated
herein by this reference, as the Company may from time to time request.
(b) The Service Provider shall employ all operating and management
personnel necessary to provide the Services required by this Agreement. The
Service Provider shall also maintain such facilities and equipment as it
deems reasonably necessary in order to provide the Services required by the
Agreement.
Subject to the terms (including any limitations and restrictions) of
any applicable software or hardware licensing agreement then in effect
between the Service Provider and any licensor, the Service Provider shall,
upon termination of this Agreement, grant to the Company a perpetual
license, without payment of any fee, in any electronic data processing
software developed or used by the Service Provider in connection with the
Services provided to the Company, if such software is not commercially
available and is necessary, in the Company's reasonable judgment, for the
Company to perform the functions provided by the Service Provider hereunder
after termination of this Agreement.
(c) The parties agree that all documents, reports, records, books,
files and other materials relative to the Services performed for the
Company under this Agreement shall be the sole property of the Company. The
Service Provider shall keep and maintain or cause to be kept and maintained
full and complete documentation and records related to the Services
provided including the accounting necessary to support charges for
Services. The Service Provider shall maintain custody of said documentation
and records and shall make them available to the Company and the
appropriate insurance regulator of the Company upon request.
2. Charges for Services.
(a) It is the intention of the parties that the charges for the
Services provided under this Agreement be determined in accordance with
fair and reasonable standards and that no party realize a profit nor incur
a loss as a result of the Services rendered pursuant to this Agreement.
(b) The Company agrees to reimburse the Service Provider for all
direct costs incurred on behalf of the Company and for all indirect costs
which may be charged to the Company as follows:
(i) "Direct Costs" include costs incurred by the Service Provider
for Services provided directly to the Company, including but not
limited to: (a) All costs incident to any employee or employees who
are employed in rendering Services to the Company, such as salary,
payroll taxes, and benefits and (b) the cost of other reasonable and
necessary business expenses incurred by employees who are employed in
rendering Services to the Company such as training, travel and
lodging. Direct Costs shall be charged in accordance with reasonable
functional cost studies and/or other information and methodologies
used by the Service Provider for internal cost distribution including,
where appropriate, an analysis of time spent by each employee
providing Services to the Company and/or the percentage of
administrative systems utilized. Data for this analysis will be
collected through tracking of unit costs of Services, through time
studies conducted periodically, or through other methods consistent
with customary insurance accounting practices consistently applied.
Annually, the bases for determining direct costs shall be modified and
adjusted by mutual agreement of the Service Provider and the Company,
where necessary or appropriate, to fairly and equitably reflect the
actual cost incurred by the Service Provider on behalf of the Company.
(ii)"Indirect Costs" include all other costs incurred by the
Service Provider in rendering Services to the Company, including but
not limited to the cost of rent or depreciation of office space,
utilities, office equipment, and supplies utilized by employees who
are employed in rendering Services to the Company.
Indirect costs shall be charged to the Company based on the
proportion of total direct costs chargeable to the Company under
subparagraph (i), herein. In other words, if the direct costs
chargeable to the Company represents 20% of the Service Provider's
total direct costs, then 20% of the Service Provider's indirect costs
will be charged to the Company.
(c) The charges for Direct Costs and Indirect Costs referred to above
shall be made by the Service Provider on a monthly or quarterly basis as
appropriate for the particular Service. Charges paid by any party to the
Service Provider may be net of charges for Direct and Indirect Costs
charged by such party as Service Provider to the other party.
(d) In the event the Service Provider or the Company should discover
upon review of its accounting by its internal auditors, independent
auditor, any state insurance department, or other regulatory agency, that
an amount charged for Services provided hereunder was erroneous, the party
discovering the error will give prompt notice of such error to the affected
party under this Agreement. Such notice shall contain a description of the
accounting error, corrective action and supporting documentation. Any
amounts owing as a result of the correction shall be paid within sixty (60)
days after notice has been given.
(e) The Company stall have the right to inspect and audit, upon
reasonable notice to the Service Provider, all books and records of the
Service Provider related to the provision of the Services so as to verify
the accuracy of all expenses reimbursed under this Agreement.
3. Term.
This Agreement shall be effective on the first day of January, 2001, and
shall end on the 31st day of December, 2001. This Agreement shall be
automatically renewed on the first day of each calendar year thereafter for a
twelve-month period under the same terms and conditions, subject to the
provisions for termination set forth herein.
4. Termination.
This Agreement may be terminated by the Service Provider or by the Company
by providing thirty (30) days' written notice to that effect addressed to the
other party. Any Services provided following the date of termination which, by
their nature, continue after termination shall be provided under the same terms
and conditions which prevailed at the time of such notice.
5. Standard of Service.
The Service Provider shall perform the Services in a competent and
professional manner according to standards agreed upon by the Service Provider
and the Company. The Service Provider agrees that it will exercise due diligence
to abide by and comply with all laws, statutes, rules, regulations, and orders
of any governmental authority in the performance of its Services under this
Agreement. The Service Provider will conduct its business and perform its
obligations in a manner which will not cause the possible revocation or
suspension of the Company's Certificate(s) of Authority or cause the Company to
sustain any fines, penalties, or other disciplinary action of any nature
whatsoever.
6. Limitation of Authority.
The Company shall retain ultimate control and responsibility for all
Services that it has delegated to the Service Provider under this Agreement. In
no event shall the Services involve control of the management of the business
and affairs of the Company. The Service Provider shall provide Services
hereunder as an independent contractor, and shall act hereunder so as to assure
the separate operating identity of the Company. While rendering Services to the
Company pursuant to this Agreement, the Service Provider, its officers and
employees shall not at any time or for any purpose be considered agents of the
Company unless otherwise expressly agreed to by the parties. Under no
circumstances shall the Services provided pursuant to this Agreement be deemed
to be those of a third party administrator pursuant to any applicable state
statutes.
7. Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold harmless
the Service Provider, its officers, directors and employees, from and
against any and all claims, demands, losses, liabilities, actions, lawsuits
and other proceedings, judgements and awards, and costs and expenses
(including reasonable attorneys' fees), arising directly or indirectly, in
whole or in part out of any action taken by the Service Provider within the
scope of its duties or authority hereunder, excluding only such of the
foregoing as result from the negligence or willful acts or omissions of the
Service Provider, its officers, directors, agents and employees. The
provisions of this section shall survive termination of this Agreement.
(b) The Service Provider hereby agrees to indemnify, defend and hold
harmless the Company and its officers, directors and employees from and
against any and all claims, demands, losses, liabilities, action, lawsuits
and other proceedings, judgments and awards, fines and penalties, and costs
and expenses (including reasonable attorneys' fees), arising directly or
indirectly, in whole or in part, out of the negligence or any willful act
or omission of the Service Provider or of any of its officers, directors,
agents or employees, in connection with this Agreement or the performance
of the Service Provider's Services hereunder, or out of any action taken by
the Service Provider beyond the scope of the Service Provider's duties or
authority hereunder. The provisions of this section shall survive
termination of this Agreement.
8. Notices.
All notices, requests, and communications required or permitted under this
Agreement shall be in writing and deemed given when addressed to the applicable
address set forth in Exhibit B attached hereto and (i) delivered by hand to an
officer of the other party, (ii) deposited with the U.S. Postal Service, as
first-class certified or registered mail, postage prepaid, or (iii) deposited
with an overnight courier. Any notice of a change of address shall be given in
the same manner.
9. Cooperation.
Each party to this Agreement shall cooperate with the other party, and with
appropriate governmental authorities (including, without limitation, the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10. Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association, and judgment upon the award maybe
entered in any Court having jurisdiction thereof.
11. Waiver.
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver. Failure of any party to
exercise or delay in exercising any right or power granted under this Agreement
shall not operate as a waiver of any such right or power.
12. Miscellaneous.
This Agreement may not be assigned by either party without the prior
written consent of the other party. This Agreement constitutes the entire
agreement of the parties hereto. This Agreement may be amended only by a written
instrument executed by both parties. If any portion of this Agreement is invalid
under any applicable statute or rule of law, it shall not affect the remainder
of this Agreement which shall remain valid and binding. This Agreement shall be
binding on the parties, their legal representatives and successors. This
Agreement shall be construed in accordance with and governed by the laws of the
state in which the Services are provided, without regard to principles of
conflict of laws.
13. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
Golden American Life Insurance Company
By: /s/ Chris D. Schreier
-------------------------------
Name: Chris D. Schreier
Title: President
LIST OF EXHIBITS
A-1 Underwriting and New Business Processing Services
A-2 Licensing and Contracting Services
A-3 Policyowner and Claims Processing Services
A-4 Actuarial Services
A-5 Information Services
A-6 Legal, Risk Management and Compliance Services
A-7 Human Resource Services
A-8 Marketing and Sales Promotion Services
A-9 Tax Services
A-10 Reinsurance Management and Administration Services
A-11 Management Services
A-12 Printing, Record, File, Mail and Supply Services
B Addresses for Notices
Exhibit A-1
Underwriting and New Business Processing Services
Services related to underwriting and new business processes including, but not
limited to:
1. Underwriting and risk consulting services.
2. Analysis of underwriting standards.
3. Assistance and advice in the development of appropriate underwriting
standards in accordance with all laws and regulations of the Company's
state.
4. Perform underwriting in accordance with Company guidelines.
5. Provide medical and/or technical support and advice to underwriting.
6. Approve for issue all applications which meet underwriting criteria.
7. Process all approved applications and issue and deliver policies to
policyholders.
8. Financial and other reporting in connection with underwriting and new
business processing.
Exhibit A-2
Licensing and Contracting Services
Services related to producer licensing and contracting including, but not
limited to:
1. Assist with pre-appointment investigations of producers.
2. Administer producer licenses, contracts and producer compensation and
maintain a computer database for license and contract status.
Exhibit A-3
Policyowner and Claims Processing Services
Services related to policyowner and claims processing including, but not limited
to:
1. Bill policyholders.
2. Collect premiums.
3. Respond to customer inquiries by phone or letter.
4. Administer policy changes.
5. Administration and support for claims.
6. Process claims and/or render legal, medical or technical support and
advice relating to the processing, settlement and payment of claims.
7. Surrender, lapse and maturity processing.
8. Distribute benefits.
9. Financial and other reporting in connection with policyowner and
processing services.
Exhibit A-4
Actuarial Services
Actuarial related services including but not limited to:
1. Actuarial consulting services, including clerical, technical and
product actuarial support and product development support.
2. Prepare actuarial reports, opinions and memoranda and assist with
asset/liability management and cash flow testing.
3. Conduct product experience studies.
4. Prepare reserve calculations and valuations.
5. Develop new products.
6. Evaluate product performance versus expectations.
7. Financial and other reporting in connection with actuarial services.
Exhibit A-5
Information Services
Services related to information management including, but not limited to:
1. Professional, technical, supervisory, programming and clerical support
for information services.
2. Informational and computer services may be in the nature of
applications and programming support, enhancing existing systems,
helping to install new systems.
3. Develop data processing systems strategy.
4. Implement systems strategy.
5. Program computers.
6. Provide data center services, including maintenance and support of
mainframe and distribution process hardware and software.
7. Standard systems for product administration, accounts payable,
accounting and financial reporting, human resource management and
inventory control.
8. Manage data and voice communications systems.
9. Manage local area networks and other desktop software and systems.
10. Provide data security and maintain effective disaster recovery
program.
11. Purchase hardware, software and supplies.
Subject to the terms (including any limitations and restrictions) of any
applicable software or hardware licensing agreement then in effect between
Service Provider and any licensor, Service Provider shall, upon termination of
this Agreement, grant to Company a perpetual license, without payment of any
fee, in any electronic data processing software developed or used by the Service
Provider in connection with the Services provided to the Company hereunder if
such software is not commercially available and is necessary, in the Company's
reasonable judgment, for the Company to perform subsequent to termination the
functions provided by the Service Provider hereunder.
Exhibit A-6
Legal, Risk Management and Compliance Services
Services related to legal, risk management and compliance including, but not
limited to:
1. Provide counsel, advice and assistance in any matter of law, corporate
governance and governmental relations, including advisory and
consulting services, in connection with the maintenance of corporate
existence, licenses, dealing with regulatory agencies, development of
products, contracts and legal documents, product approvals,
registration and filing of insurance and securities products, handling
of claims and matters involving legal controversy, assist with dispute
resolution, select, retain and manage outside counsel and provide
other legal services as reasonably required or requested.
2. Provide assistance in any matter relating to risk management,
including procurement of fidelity bond insurance, blanket bonds,
general liability insurance, property damage insurance, directors' and
officers' liability insurance, workers compensation, and any other
insurance purchased by the Company.
3. Assist in the development and maintenance of a corporate compliance
program and a state insurance fraud reporting program. Assist in
maintaining appropriate records and systems in connection with the
Company's compliance obligations under application state law.
4. Provide assistance with internal audit including review of operational
procedures, performance of compliance tests, and assist to independent
auditors.
Exhibit A-7
Human Resource Services
Services related to human resource management including, but not limited to:
1. Personnel recruiting and support services.
2. Design and implementation of human resources training.
3. Compensation studies and benefits consulting.
4. Support employee communications.
5. Payroll services.
6. Benefits compensation and design and administration.
7. Employee relations.
Exhibit A-8
Marketing and Sales Promotion Services
Services related to marketing and sales promotion including, but not limited to:
1. Prepare sales promotional items, advertising materials and artwork,
design, text and articles relevant to such work, including clerical,
technical and supervisory support and related communications.
2. Support general communications with producers.
3. Conduct formal insurance market research.
4. Develop sales illustrations, advertising materials, and software for
products, in compliance with state laws.
5. Design and implement training programs, including product and industry
developments and legal compliance.
6. Distribute to employees and/or agents underwriting guidelines for the
products, where applicable.
7. Analyze and develop compensation and benefit plans for general agents
and agents.
8. Plan and support of producer conferences.
Exhibit A-9
Tax Services
Services related to tax including, but not limited to:
1. Maintenance of tax compliance, including tax return preparation and
review of financial statement tax provisions.
2. Management of tax and audit appeals, including processing information
requests, protest preparation, and participation in any appeals
conference.
3. Direction of tax research and planning, including research of
compliance issues for consistency, development of tax strategies and
working with new legislative proposals.
4. Administration of tax liens, levies and garnishment of wages of
Company employees and agents
Exhibit A-10
Reinsurance Management and Administration Services
Services related to reinsurance management and administration including, but not
limited to:
1. Advise with respect to reinsurance retention limits.
2. Advice and support with respect to negotiation of reinsurance
treaties.
3. Advice and support with respect to the management of reinsurer
relationships.
Exhibit A-11
Management Services
Services related to general management including, but not limited to:
1. Consultative and advisory services to the Company's senior executive
officers and staff with respect to conduct of the Company's business
operations and the execution of directives and resolutions of the
Company's Board of Directors pertaining to business operations and
functions, including provision of personnel to serve as officers and
directors of Company.
2. Consultation and participation in the Company's strategic planning
process; the development of business goals, objectives and policies;
the development of operational, administrative and quality programs;
preparation of financial and other reports; and the coordination of
such processes, goals, objectives, policies and programs with those of
the holding company.
3. Advice and assistance with respect to maintenance of the Company's
capital and surplus, the development and implementation of financing
strategies and plans and the production of financial reports and
records.
4. Representation of the Company's interests at government affairs and
industry meetings; participation in the deliberation and affairs of
trade associations and promotion of the Company's products and
relationships with the public.
5. Consultative, advisory and administrative services to the Company's
senior executive officers and staff in respect to development,
implementation and administration of human resource programs and
policies, the delivery of communications and information to employees
regarding enterprise plans, objectives and results; and the
maintenance of employee relations, morale and developmental
opportunities.
6. Direction and performance of internal audits and arrangement for
independent evaluation of business processes and internal control.
Exhibit A-12
Printing, Record, File, Mail and Supply Services
Services related to printing, records, files, mail and supplies including, but
not limited to:
Printing, record, file, mail and supply services including, maintaining
policy files; document control; production and distribution of standard
forms, stationary, business cards and other material; arrangement of
warehouse storage space; supply fulfillment; mail processing, delivery and
shipping; participation in purchasing agreements; retrieval and production
of documents for regulatory examinations and litigation; and development
and administration of record retention programs.
EXHIBIT B - ING AFFILIATE INSURERS
- ------------------------------------- ---------------------------------------------------------------------------------------------
Name Domestic State Principal Office Principal Mailing Address
- ------------------------------------- ---------------------------------------------------------------------------------------------
Security Life of Denver Colorado 1290 Broadway Same
Insurance Company Denver, CO 80203
- ------------------------------------- ---------------------------------------------------------------------------------------------
First Columbine Life Insurance Colorado 1290 Broadway Same
Company Denver, CO 80203
- ------------------------------------- ---------------------------------------------------------------------------------------------
Aetna Life Insurance and Connecticut 151 Farmington Avenue Same
Annuity Company Hartford, CT 06156
- ------------------------------------- ---------------------------------------------------------------------------------------------
Golden American Life Insurance Delaware 1209 Orange Street 1475 Dunwood Drive
Company Wilmington, DE 19801 West Chester, PA 19380
- ------------------------------------- ---------------------------------------------------------------------------------------------
Aetna Insurance Company of America Florida 5100 West Lemon Street, Suite 213 151 Farmington Avenue
Tampa, FL 33609 Hartford, CT 06156
- ------------------------------------- ---------------------------------------------------------------------------------------------
Life Insurance Company of Georgia 5780 Powers Ferry Road, N.W. Same
Georgia Atlanta, GA 30327
- ------------------------------------- ---------------------------------------------------------------------------------------------
Ameribest Life Insurance Georgia 5780 Powers Ferry Road, N.W. 909 Locust Street
Company Atlanta, GA 30327 Des Moines, IA 50309
- ------------------------------------ ----------------------------------------------------------------------------------------------
Midwestern United Life Indiana 8605 Kings Mill Place 1290 Broadway
Insurance Company Fort Wayne, IN 46804 Denver, CO 80203-5699
- ------------------------------------- ---------------------------------------------------------------------------------------------
Equitable Life Insurance Iowa 909 Locust Street Same
Company of Iowa Des Moines, IA 50309
- ------------------------------------- ---------------------------------------------------------------------------------------------
ReliaStar Life Insurance Minnesota 20 Washington Avenue South Same
Company Minneapolis, MN 55401
- -----------------------------------------------------------------------------------------------------------------------------------
Security Connecticut Life Minnesota 20 Washington Avenue South 20 Security Drive
Insurance Company Minneapolis, MN 55401 Avon, CT 06001
- ------------------------------------ ----------------------------------------------------------------------------------------------
USG Annuity and Life Company Oklahoma c/o Horace Rhodes 909 Locust Street
201 RS Kerr, Suite 600 Des Moines, IA 50309
Oklahoma City, OK 73102
- ------------------------------------- ---------------------------------------------------------------------------------------------
Southland Life Insurance Texas c/o CT Corp. System 5780 Powers Ferry Road
Company 350 North St. Paul Street Atlanta, GA 30327
Dallas, TX 75201
- ------------------------------------- ---------------------------------------------------------------------------------------------
United Life and Annuity Texas c/o CT Corp. System 909 Locust Street
Insurance Company 350 North St. Paul Street Des Moines, IA 50309
Dallas, TX 75201
- ------------------------------------- ---------------------------------------------------------------------------------------------
Northern Life Insurance Company Washington 1501 Fourth Ave., Suite 1000 Same
Seattle, WA 98101-3616
- ------------------------------------- ---------------------------------------------------------------------------------------------
EXHIBIT 10.A(g)
SERVICES AGREEMENT
This Services Agreement ("Agreement") is made this 1 day of January, 2001,
by and between ING North America Insurance Corporation, Inc., a corporation
organized and existing under the laws of the state of Delaware (the "Service
Provider"), and Golden American Life Insurance Company, an insurance company
organized and existing under the laws of the state of Delaware (referred to
herein as the "Company").
RECITALS
WHEREAS, the parties are affiliates under the common control of ING Groep,
N.V.; and
WHEREAS, the Service Provider possesses certain resources, including
experienced personnel, facilities and equipment, which enables it to provide
certain administrative, management, professional, advisory, consulting and other
services to the others ("Services"); and
WHEREAS, the Company desires to engage the Service Provider from time to
time to perform certain Services on its behalf as described with particularity
in Exhibit A attached hereto; and
WHEREAS, the Company contemplates that such an arrangement will achieve
operating economies, synergies and expense savings, and improve services to the
benefit of its policyholders or contractholders; and
WHEREAS, the parties wish to identify the Services to be provided, to
provide a method for identifying the charges to be assessed and the compensation
to be paid for the Services, and to assure that all charges for the Services are
reasonable and in accordance with the laws and regulations of the states in
which each of them is domiciled;
NOW, THEREFORE, in consideration of these premises and of the mutual
promises set forth herein, and intending to be legally bound hereby, the parties
agree as follows:
1. Services.
(a) Subject to the terms, conditions, and limitations of this Agreement,
the Service Provider will perform for the Company such of the Services described
in Exhibit A, attached hereto and incorporated herein by this reference, as the
Company may from time to time request.
(b) The Service Provider shall employ all operating and management
personnel necessary to provide the Services required by this Agreement. The
Service Provider shall also maintain such facilities and equipment as it deems
reasonably necessary in order to provide the Services required by the Agreement.
Subject to the terms (including any limitations and restrictions) of any
applicable software or hardware licensing agreement then in effect between the
Service Provider and any licensor, the Service Provider shall, upon termination
of this Agreement, grant to the Company a perpetual license, without payment of
any fee, in any electronic data processing software developed or used by
the Service Provider in connection with the Services provided to the Company, if
such software is not commercially available and is necessary, in the Company's
reasonable judgment, for the Company to perform the functions provided by the
Service Provider hereunder after termination of this Agreement.
(c) The parties agree that all documents, reports, records, books, files
and other materials relative to the Services performed for the Company under
this Agreement shall be the sole property of the Company. The Service Provider
shall keep and maintain or cause to be kept and maintained full and complete
documentation and records related to the Services provided including the
accounting necessary to support charges for Services. The Service Provider shall
maintain custody of said documentation and records and shall make them available
to the Company and the appropriate insurance regulator of the Company upon
request.
2. Charges for Services.
(a) It is the intention of the parties that the charges for the Services
provided under this Agreement be determined in accordance with fair and
reasonable standards and that no party realize a profit nor incur a loss as a
result of the Services rendered pursuant to this Agreement.
(b) The Company agrees to reimburse the Service Provider for all direct
costs incurred on behalf of the Company and for all indirect costs which may be
charged to the Company as follows:
(i) "Direct Costs" include costs incurred by the Service Provider for
Services provided directly to the Company, including but not limited to:
(a) All costs incident to any employee or employees who are employed in
rendering Services to the Company, such as salary, payroll taxes, and
benefits and (b) the cost of other reasonable and necessary business
expenses incurred by employees who are employed in rendering Services to
the Company such as training, travel and lodging. Direct Costs shall be
charged in accordance with reasonable functional cost studies and/or other
information and methodologies used by the Service Provider for internal
cost distribution including, where appropriate, an analysis of time spent
by each employee providing Services to the Company and/or the percentage of
administrative systems utilized. Data for this analysis will be collected
through tracking of unit costs of Services, through time studies conducted
periodically, or through other methods consistent with customary insurance
accounting practices consistently applied. Annually, the bases for
determining direct costs shall be modified and adjusted by mutual agreement
of the Service Provider and the Company, where necessary or appropriate, to
fairly and equitably reflect the actual cost incurred by the Service
Provider on behalf of the Company.
(ii)"Indirect Costs" include all other costs incurred by the Service
Provider in rendering Services to the Company, including but not limited to
the cost of rent or depreciation of office space, utilities, office
equipment, and supplies utilized by employees who are employed in rendering
Services to the Company. Indirect costs shall be charged to the Company
based on the proportion of total direct costs chargeable to the Company
under subparagraph (i), herein. In other words, if the direct costs
chargeable to the Company represents 20% of the Service Provider's
total direct costs, then 20% of the Service Provider's indirect costs will
be charged to the Company.
(c) The charges for Direct Costs and Indirect Costs referred to above shall
be made by the Service Provider on a monthly or quarterly basis as appropriate
for the particular Service. Charges paid by any party to the Service Provider
may be net of charges for Direct and Indirect Costs charged by such party as
Service Provider to the other party.
(d) In the event the Service Provider or the Company should discover upon
review of its accounting by its internal auditors, independent auditor, any
state insurance department, or other regulatory agency, that an amount charged
for Services provided hereunder was erroneous, the party discovering the error
will give prompt notice of such error to the affected party under this
Agreement. Such notice shall contain a description of the accounting error,
corrective action and supporting documentation. Any amounts owing as a result of
the correction shall be paid within sixty (60) days after notice has been given.
(e) The Company stall have the right to inspect and audit, upon reasonable
notice to the Service Provider, all books and records of the Service Provider
related to the provision of the Services so as to verify the accuracy of all
expenses reimbursed under this Agreement.
3. Term.
This Agreement shall be effective on the first day of January, 2001, and
shall end on the 31st day of December, 2001. This Agreement shall be
automatically renewed on the first day of each calendar year thereafter for a
twelve-month period under the same terms and conditions, subject to the
provisions for termination set forth herein.
4. Termination.
This Agreement may be terminated by the Service Provider or by the Company
by providing thirty (30) days' written notice to that effect addressed to the
other party. Any Services provided following the effective date of termination
which, by their nature, continue after termination shall be provided under the
same terms and conditions which prevailed at the time of such notice.
5. Standard of Service.
The Service Provider shall perform the Services in a competent and
professional manner according to standards agreed upon by the Service Provider
and the Company. The Service Provider agrees that it will exercise due diligence
to abide by and comply with all laws, statutes, rules, regulations, and orders
of any governmental authority in the performance of its Services under this
Agreement. The Service Provider will conduct its business and perform its
obligations in a manner which will not cause the possible revocation or
suspension of the Company's Certificate(s) of Authority or cause the Company to
sustain any fines, penalties, or other disciplinary action of any nature
whatsoever.
6. Limitation of Authority.
The Company shall retain ultimate control and responsibility for all
Services that it has delegated to the Service Provider under this Agreement. In
no event shall the Services involve control of the management of the business
and affairs of the Company. The Service Provider shall provide Services
hereunder as an independent contractor, and shall act hereunder so as to assure
the separate operating identity of the Company. While rendering Services to the
Company pursuant to this Agreement, the Service Provider, its officers and
employees shall not at any time or for any purpose be considered agents of the
Company unless otherwise expressly agreed to by the parties. Under no
circumstances shall the Services provided pursuant to this Agreement be deemed
to be those of a third party administrator pursuant to any applicable state
statutes.
7. Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold harmless the
Service Provider, its officers, directors and employees, from and against any
and all claims, demands, losses, liabilities, actions, lawsuits and other
proceedings, judgements and awards, and costs and expenses (including reasonable
attorneys' fees), arising directly or indirectly, in whole or in part out of any
action taken by the Service Provider within the scope of its duties or authority
hereunder, excluding only such of the foregoing as result from the negligence or
willful acts or omissions of the Service Provider, its officers, directors,
agents and employees. The provisions of this section shall survive termination
of this Agreement.
(b) The Service Provider hereby agrees to indemnify, defend and hold
harmless the Company and its officers, directors and employees from and against
any and all claims, demands, losses, liabilities, action, lawsuits and other
proceedings, judgments and awards, fines and penalties, and costs and expenses
(including reasonable attorneys' fees), arising directly or indirectly, in whole
or in part, out of the negligence or any willful act or omission of the Service
Provider or of any of its officers, directors, agents or employees, in
connection with this Agreement or the performance of the Service Provider's
Services hereunder, or out of any action taken by the Service Provider beyond
the scope of the Service Provider's duties or authority hereunder. The
provisions of this section shall survive termination of this Agreement.
8. Notices.
All notices, requests, and communications required or permitted under this
Agreement shall be in writing and deemed given when addressed to the applicable
address set forth in Exhibit B attached hereto and (i) delivered by hand to an
officer of the other party, (ii) deposited with the U.S. Postal Service, as
first-class certified or registered mail, postage prepaid, or (iii) deposited
with an overnight courier. Any notice of a change of address shall be given in
the same manner.
9. Cooperation.
Each party to this Agreement shall cooperate with the other party, and with
appropriate governmental authorities (including, without limitation, the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10. Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association, and judgment upon the award maybe
entered in any Court having jurisdiction thereof.
11. Waiver.
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver. Failure of any party to
exercise or delay in exercising any right or power granted under this Agreement
shall not operate as a waiver of any such right or power.
12. Miscellaneous.
This Agreement may not be assigned by either party without the prior
written consent of the other party. This Agreement constitutes the entire
agreement of the parties hereto. This Agreement may be amended only by a written
instrument executed by both parties. If any portion of this Agreement is invalid
under any applicable statute or rule of law, it shall not affect the remainder
of this Agreement which shall remain valid and binding. This Agreement shall be
binding on the parties, their legal representatives and successors. This
Agreement shall be construed in accordance with and governed by the laws of the
State of Georgia, state in which the Services are provided, without regard to
principles of conflict of laws.
13. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
ING North America Insurance Corporation, Inc.
By: /s/ Robert C. Salipante
--------------------------------------
Name: Robert C. Salipante
Title: General Manager and
CEO, US Retail Financial Services
Golden American Life Insurance Company
By: /s/ Chris D. Schreier
--------------------------------------
Name: Chris D. Schreier
Title: President
LIST OF EXHIBITS
A-1 Underwriting and New Business Processing Services
A-2 Licensing and Contracting Services
A-3 Policyowner and Claims Processing Services
A-4 Actuarial Services
A-5 Information Services
A-6 Legal, Risk Management and Compliance Services
A-7 Human Resource Services
A-8 Marketing and Sales Promotion Services
A-9 Tax Services
A-10 Reinsurance Management and Administration Services
A-11 Management Services
A-12 Printing, Record, File, Mail and Supply Services
B Addresses for Notices
Exhibit A-1
Underwriting and New Business Processing Services
Services related to underwriting and new business processes including, but not
limited to:
1. Underwriting and risk consulting services.
2. Analysis of underwriting standards.
3. Assistance and advice in the development of appropriate underwriting
standards in accordance with all laws and regulations of the Company's
state.
4. Perform underwriting in accordance with Company guidelines.
5. Provide medical and/or technical support and advice to underwriting.
6. Approve for issue all applications which meet underwriting criteria.
7. Process all approved applications and issue and deliver policies to
policyholders.
8. Financial and other reporting in connection with underwriting and new
business processing.
Exhibit A-2
Licensing and Contracting Services
Services related to producer licensing and contracting including, but not
limited to:
1. Assist with pre-appointment investigations of producers.
2. Administer producer licenses, contracts and producer compensation and
maintain a computer database for license and contract status.
Exhibit A-3
Policyowner and Claims Processing Services
Services related to policyowner and claims processing including, but not limited
to:
1. Bill policyholders.
2. Collect premiums.
3. Respond to customer inquiries by phone or letter.
4. Administer policy changes.
5. Administration and support for claims.
6. Process claims and/or render legal, medical or technical support and
advice relating to the processing, settlement and payment of claims.
7. Surrender, lapse and maturity processing.
8. Distribute benefits.
9. Financial and other reporting in connection with policyowner and
processing services.
Exhibit A-4
Actuarial Services
Actuarial related services including but not limited to:
1. Actuarial consulting services, including clerical, technical and
product actuarial support and product development support.
2. Prepare actuarial reports, opinions and memoranda and assist with
asset/liability management and cash flow testing.
3. Conduct product experience studies.
4. Prepare reserve calculations and valuations.
5. Develop new products.
6. Evaluate product performance versus expectations.
7. Financial and other reporting in connection with actuarial services.
Exhibit A-5
Information Services
Services related to information management including, but not limited to:
1. Professional, technical, supervisory, programming and clerical support
for information services.
2. Informational and computer services may be in the nature of
applications and programming support, enhancing existing systems,
helping to install new systems.
3. Develop data processing systems strategy.
4. Implement systems strategy.
5. Program computers.
6. Provide data center services, including maintenance and support of
mainframe and distribution process hardware and software.
7. Standard systems for product administration, accounts payable,
accounting and financial reporting, human resource management and
inventory control.
8. Manage data and voice communications systems.
9. Manage local area networks and other desktop software and systems.
10. Provide data security and maintain effective disaster recovery
program.
11. Purchase hardware, software and supplies.
Subject to the terms (including any limitations and restrictions) of any
applicable software or hardware licensing agreement then in effect between
Service Provider and any licensor, Service Provider shall, upon termination of
this Agreement, grant to Company a perpetual license, without payment of any
fee, in any electronic data processing software developed or used by the Service
Provider in connection with the Services provided to the Company hereunder if
such software is not commercially available and is necessary, in the Company's
reasonable judgment, for the Company to perform subsequent to termination the
functions provided by the Service Provider hereunder.
Exhibit A-6
Legal, Risk Management and Compliance Services
Services related to legal, risk management and compliance including, but not
limited to:
1. Provide counsel, advice and assistance in any matter of law, corporate
governance and governmental relations, including advisory and
consulting services, in connection with the maintenance of corporate
existence, licenses, dealing with regulatory agencies, development of
products, contracts and legal documents, product approvals,
registration and filing of insurance and securities products, handling
of claims and matters involving legal controversy, assist with dispute
resolution, select, retain and manage outside counsel and provide
other legal services as reasonably required or requested.
2. Provide assistance in any matter relating to risk management,
including procurement of fidelity bond insurance, blanket bonds,
general liability insurance, property damage insurance, directors' and
officers' liability insurance, workers compensation, and any other
insurance purchased by the Company.
3. Assist in the development and maintenance of a corporate compliance
program and a state insurance fraud reporting program. Assist in
maintaining appropriate records and systems in connection with the
Company's compliance obligations under application state law.
4. Provide assistance with internal audit including review of operational
procedures, performance of compliance tests, and assist to independent
auditors.
Exhibit A-7
Human Resource Services
Services related to human resource management including, but not limited to:
1. Personnel recruiting and support services.
2. Design and implementation of human resources training.
3. Compensation studies and benefits consulting.
4. Support employee communications.
5. Payroll services.
6. Benefits compensation and design and administration.
7. Employee relations.
Exhibit A-8
Marketing and Sales Promotion Services
Services related to marketing and sales promotion including, but not limited to:
1. Prepare sales promotional items, advertising materials and artwork,
design, text and articles relevant to such work, including clerical,
technical and supervisory support and related communications.
2. Support general communications with producers.
3. Conduct formal insurance market research.
4. Develop sales illustrations, advertising materials, and software for
products, in compliance with state laws.
5. Design and implement training programs, including product and industry
developments and legal compliance.
6. Distribute to employees and/or agents underwriting guidelines for the
products, where applicable.
7. Analyze and develop compensation and benefit plans for general agents
and agents.
8. Plan and support of producer conferences.
Exhibit A-9
Tax Services
Services related to tax including, but not limited to:
1. Maintenance of tax compliance, including tax return preparation and
review of financial statement tax provisions.
2. Management of tax and audit appeals, including processing information
requests, protest preparation, and participation in any appeals
conference.
3. Direction of tax research and planning, including research of
compliance issues for consistency, development of tax strategies and
working with new legislative proposals.
4. Administration of tax liens, levies and garnishment of wages of
Company employees and agents
Exhibit A-10
Reinsurance Management and Administration Services
Services related to reinsurance management and administration including, but not
limited to:
1. Advise with respect to reinsurance retention limits.
2. Advice and support with respect to negotiation of reinsurance
treaties.
3. Advice and support with respect to the management of reinsurer
relationships.
Exhibit A-11
Management Services
Services related to general management including, but not limited to:
1. Consultative and advisory services to the Company's senior executive
officers and staff with respect to conduct of the Company's business
operations and the execution of directives and resolutions of the
Company's Board of Directors pertaining to business operations and
functions, including provision of personnel to serve as officers and
directors of Company.
2. Consultation and participation in the Company's strategic planning
process; the development of business goals, objectives and policies;
the development of operational, administrative and quality programs;
preparation of financial and other reports; and the coordination of
such processes, goals, objectives, policies and programs with those of
the holding company.
3. Advice and assistance with respect to maintenance of the Company's
capital and surplus, the development and implementation of financing
strategies and plans and the production of financial reports and
records.
4. Representation of the Company's interests at government affairs and
industry meetings; participation in the deliberation and affairs of
trade associations and promotion of the Company's products and
relationships with the public.
5. Consultative, advisory and administrative services to the Company's
senior executive officers and staff in respect to development,
implementation and administration of human resource programs and
policies, the delivery of communications and information to employees
regarding enterprise plans, objectives and results; and the
maintenance of employee relations, morale and developmental
opportunities.
6. Direction and performance of internal audits and arrangement for
independent evaluation of business processes and internal control.
Exhibit A-12
Printing, Record, File, Mail and Supply Services
Services related to printing, records, files, mail and supplies including, but
not limited to:
Printing, record, file, mail and supply services including, maintaining
policy files; document control; production and distribution of standard
forms, stationary, business cards and other material; arrangement of
warehouse storage space; supply fulfillment; mail processing, delivery and
shipping; participation in purchasing agreements; retrieval and production
of documents for regulatory examinations and litigation; and development
and administration of record retention programs.
Exhibit B
ING North America Insurance Corporation, Inc.
5780 Powers Ferry Road Atlanta,
Georgia 30327
Golden American Life Insurance Company
1209 Orange Street
Wilmington, DE 19801
EXHIBIT 10.A(i)
TAX SHARING AGREEMENT
THIS AGREEMENT is entered into by and between Equitable Life Insurance
Company of Iowa ("EQUITABLE"), USG Annuity & Life Company ("USG"), and Golden
American Life Insurance Company ("Golden")(USG and Golden referred to herein as
"the Subsidiary").
WITNESSETH:
WHEREAS, EQUITABLE and the Subsidiary are members of an affiliated group,
as that term is defined in Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), which expects to file a consolidated federal income tax
return for each taxable year during which the Subsidiary are includible
corporations qualified to so file; and
WHEREAS, it is desirable for the Subsidiary and EQUITABLE to enter into
this Tax Sharing Agreement ("Agreement") to provide for the manner of
computation of the amounts and timing of payments with regard thereto by
EQUITABLE to the Subsidiary and by the Subsidiary to EQUITABLE, and various
related matters;
NOW, THEREFORE, in consideration of the agreements contained herein and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. AMOUNT OF PAYMENTS
a. General - For each taxable year during which the Subsidiary is
included in a consolidated federal income tax return with EQUITABLE, the
Subsidiary will pay to EQUITABLE an amount equal to the regular federal
income tax liability (including any interest, penalties and other additions
to tax) that the Subsidiary would pay on its taxable income if it were
filing a separate, unconsolidated return, provided that (i) Tax Assets (as
defined herein) will be treated in accordance with subsection (b) of this
section, (ii) intercompany transactions will be treated in accordance with
income tax regulations governing intercompany transactions in consolidated
returns and subject to any election which may be made by EQUITABLE with
regard thereto; (iii) the Subsidiary's payment will be increased to the
extent that the Subsidiary generates Other Taxes, as determined in
accordance with subsection (d) of this section; (iv) such computation will
be made as though the highest rate of tax specified in subsection (b) of
Section 11 of the Code were the only rate set forth in that subsection, and
(v) such computation shall reflect the positions, elections and accounting
methods used by EQUITABLE in preparing the consolidated federal income tax
return for EQUITABLE and the Subsidiary.
b. Tax Assets - "Tax Asset" shall mean any net operating loss, net
capital loss, investment tax credit, foreign tax credit, charitable
deduction, dividends received deduction or any other deduction, credit or
tax attribute which could reduce taxes. Except as provided in subsection
(c) of this section, for each taxable year during which the Subsidiary is
included in a consolidated federal income tax return with EQUITABLE,
EQUITABLE will pay to the Subsidiary an amount equal to the tax benefit of
the Subsidiary's Tax Assets generated in such year. The valuation of the
tax benefit attributable to the Subsidiary's Tax Assets shall be made by
EQUITABLE, and shall be determined without regard to whether such Tax
Assets are actually utilized in the reduction of the consolidated federal
income tax liability for any consolidated taxable year.
c. Separate Return Years - To the extent any portion of a Tax Asset of
the affiliated group is carried back to a pre-consolidation separate return
year of the Subsidiary (whether by operation of law or at the discretion of
EQUITABLE) the Subsidiary shall not be entitled to payment from EQUITABLE
with respect thereto. This shall be the case whether or not that the
Subsidiary actually receives payment for the benefit of such Tax Asset from
the Internal Revenue Service ("IRS") or from the parent of a former
affiliated group.
d. Other Taxes - For any taxable year in which the affiliated group
incurs taxes (other than the alternative minimum tax) such as ITC
recapture, environmental tax, etc. ("Other Taxes"), such taxes, to the
extent directly allocable to particular members of the affiliated group,
will be paid by such members. To the extent such taxes are not directly
allocable to particular members of the affiliated group, such taxes will be
paid by EQUITABLE and/or the Subsidiary producing the attributes that give
rise to such taxes, in the proportion that such attributes bear to the
total amount of such attributes.
e. Alternative minimum tax ("AMT") and Related minimum tax credit
("MTC")- For any taxable year in which the affiliated group incurs an AMT
or utilizes a MTC, the Subsidiary producing the attributes that give rise
to the AMT or MTC shall pay to, or receive from, EQUITABLE such AMT or MTC
amount respectively. The calculation of the AMT or MTC shall be subject to
a methodology determined by EQUITABLE in its sole discretion, provided,
however, that any method adopted by EQUITABLE shall not be changed without
prior notification to the Subsidiary. Any payments required under this
subsection are in addition to payments required under the previous
subsections.
f. Unless specifically approved in writing, all payments made pursuant
to this Agreement by the Subsidiary shall be made by the Subsidiary, and
not by any other company or business unit on behalf of the Subsidiary.
2. INSTALLMENT PAYMENTS
a. Determination and Timing - During and following a taxable year in
which the Subsidiary is included in a consolidated federal income tax
return with EQUITABLE, it shall pay to EQUITABLE, or receive from
EQUITABLE, as the case may be, installment payments of the amount
determined pursuant to section 1 of this Agreement. Payments shall take
place on the dates, on the bases of calculations, and in amounts that
produce cumulative installments, as follows:
DATE BASIS OF CALCULATION CUMULATIVE INSTALLMENT
April 15 Prior year annual financial statement 25% of tax liability as determined in prior
year financial statements results updated for
known adjustments
June 15 March 31 three month financial statement 50% of tax liability as determined by current
financial statement annualized results
September 15 June 30 six month financial statement 75% of tax liability as determined by current
financial statement annualized results
December 15 September 30 nine month financial 100% of tax liability as determined by
statement current financial statement annualized results
March 15 Year-end annual financial statement 100% of tax liability as determined by actual
financial statements results for prior year
updated for known adjustments
Not earlier than September Final tax return 100% of tax liability for prior year
15 of the following year
The due dates, basis of calculation and cumulative installments set
forth above and made during a taxable year are intended to correspond to
the applicable percentages as set forth in Section 6655(e)(2)(B)(ii) of the
Code. Should the Code be amended to alter such provisions, it is hereby
agreed by the parties to this Agreement that the provisions will
correspondingly change. EQUITABLE may revise the schedule of installment
payments set forth in this paragraph, and may provide for annual rather
than quarterly payments in cases where amounts due fall below a certain
threshold, although any such change shall be prospective and shall not take
effect prior to written notice to the Subsidiary.
b. Estimated Taxes and Other Amounts - EQUITABLE shall pay required
installments of federal estimated taxes pursuant to Code section 6655, and
such other amounts with respect to taxes shown on the consolidated return
for the taxable year pursuant to any other applicable provision of the Code
("tax payment"), to the IRS on behalf of itself and each Subsidiary.
EQUITABLE shall have the sole right to determine the amount of each such
tax payment with respect to the affiliated group's tax liability for the
taxable year.
c. Additional Payments by Subsidiary - Should the amount of any tax
payment made by EQUITABLE under this section exceed the sum of installment
payments made by the Subsidiary for any corresponding installment date
pursuant to section 2 of this Agreement, EQUITABLE may, in its sole
discretion, determine such Subsidiary's fair and reasonable share of that
excess, and notify such Subsidiary thereof and such amount shall be paid
over to EQUITABLE within 15 business days of the date of notification by
EQUITABLE. Should EQUITABLE make any tax payment to the IRS on a date that
does not correspond to the installment dates pursuant to section 2, the
Subsidiary will pay over to EQUITABLE an amount which EQUITABLE may in its
sole discretion, determine to be due from the Subsidiary.
d. Penalty in Addition to Tax - If a penalty or an addition to tax for
underpayment of estimated taxes is imposed on the affiliated group with
respect to any required installment under section 6655 of the Code,
EQUITABLE shall, in its sole discretion, determine the amount of the
Subsidiary's share of such penalty or addition to tax, which amount shall
be paid over to EQUITABLE within 15 business days of the date of
notification by EQUITABLE.
3. ADJUSTED RETURNS - If any adjustments are made to the income, gains,
losses, deductions or credits of the affiliated group for a taxable year during
which the Subsidiary is a member, whether by reason of the filing of an amended
return, or a claim for refund with respect to such taxable year, or an audit
with respect to such taxable year by the IRS, the amounts due under this
Agreement for such taxable year shall be redetermined by taking into account
such adjustments. If, as a result of such redetermination, any amounts due under
this Agreement shall differ from the amounts previously paid, then, except as
provided in section 6 hereof, payment of such difference shall be made by the
Subsidiary to EQUITABLE or by EQUITABLE to the Subsidiary, as the case may be,
(a) in the case of an adjustment resulting in a refund or credit, not later than
thirty (30) days after the date on which such refund is received or credit is
allowed with respect to such adjustment or (b) in the case of an adjustment
resulting in the assertion of a deficiency, not later than thirty (30) days
after the Subsidiary is notified of the deficiency. Any amounts due to or from a
Subsidiary under this section shall be determined with respect to such refund or
deficiency and any penalties, interest or other additions to tax which may be
imposed. EQUITABLE shall indemnify the Subsidiary in the event the Internal
Revenue Service levies upon the Subsidiary's assets for unpaid taxes in excess
of the amount required to be paid by the Subsidiary in relation to a
consolidated federal income tax return filed pursuant to this Agreement.
4. PROCEDURAL MATTERS - EQUITABLE shall prepare and file the consolidated
federal income tax return and any other returns, documents or statements
required to be filed with the IRS with respect to the determination of the
federal income tax liability of the affiliated group. In its sole discretion,
EQUITABLE shall have the right with respect to any consolidated federal income
tax returns which it has filed or will file, (a) to determine (i) the manner in
which such returns, documents or statements shall be prepared and filed,
including, without limitation, the manner in which any item of income, gain,
loss, deduction or credit shall be reported, (ii) whether any extensions may be
requested and (iii) the elections that will be made by the Subsidiary, (b) to
contest, compromise or settle any adjustment or deficiency proposed, asserted or
assessed as a result of any audit of such returns by the IRS, (c) to file,
prosecute, compromise or settle any claim for refund and (d) to determine
whether any refunds to which the affiliated group may be entitled shall be paid
by way of refund or credited against the tax liability of the affiliated group.
Each Subsidiary hereby irrevocably appoints EQUITABLE as its agent and
attorney-in-fact to take such action (including the execution of documents) as
EQUITABLE may deem appropriate to effect the foregoing.
5. ADDITIONAL MEMBERS - If future subsidiaries are acquired or created and
they participate in the consolidated federal income tax filing, such subsidiary
shall join in and be bound by this Agreement. This section will also apply to
subsidiaries that are not eligible immediately to join the affiliated group,
when they become eligible to join the affiliated group.
6. COMPANIES LEAVING EQUITABLE GROUP - Except as specifically treated to
the contrary herein, the Subsidiary shall be treated as having withdrawn from
this Agreement when the Subsidiary ceases to be a member of the affiliated
group, or upon signing a letter of intent or a definitive agreement to sell the
Subsidiary. Notwithstanding any provision to the contrary in section 2 hereof,
amounts payable to or receivable from EQUITABLE shall be recomputed with respect
to the Subsidiary, including an estimate of the remaining taxes actually payable
or receivable upon the filing of the consolidated tax return for the year of
withdrawal, as of the last day the Subsidiary is a member of the affiliated
group. Any amounts so computed as due to or from EQUITABLE to or from an
existing Subsidiary shall be paid prior to its leaving the group, provided,
however, that any deficiency or excess of taxes determined on the basis of the
tax return filed for the year of withdrawal, and paid to or from EQUITABLE
related to the tax liability of the Subsidiary for the portion of the year of
withdrawal during which it had been a member of the affiliated group, shall be
settled not later than November 15 of the year following the year of the date of
withdrawal, in accordance with section 2 of this Agreement.
The extent to which EQUITABLE or such Subsidiary is entitled to any other
payments as a result of adjustments, as provided in section 3 hereof, determined
after the Subsidiary has left the affiliated group but affecting any taxable
year during which this Agreement was in effect with respect to EQUITABLE and the
Subsidiary, shall be provided for pursuant to a separate written agreement
between EQUITABLE and the Subsidiary, or its new owner, or in the absence of
such agreement, pursuant to the provision of section 3 hereof. Tax benefits
arising from the Tax Assets of the Subsidiary carried back to tax years during
which the Subsidiary was a member of the affiliated group shall not be refunded
to the Subsidiary, unless specifically provided for pursuant to a separate
written agreement between EQUITABLE and the Subsidiary, or its new owner.
In the case of any Tax Asset of the Subsidiary (i) that arose in a
consolidated taxable year during which it was a member of the affiliated group,
(ii) for which the Subsidiary was paid by EQUITABLE pursuant to Section 1(b) of
this Agreement, and (iii) which has not been utilized in the reduction of the
consolidated federal income tax liability of the affiliated group for any
consolidated taxable period ending on or before the date that the Subsidiary
leaves the group, the Subsidiary shall repay to EQUITABLE prior to the time it
leaves the group the amount of the tax benefit previously received with respect
to the Tax Asset.
7. BOOKS AND RECORDS - The books, accounts and records of EQUITABLE and the
Subsidiary shall be maintained so as to provide clearly and accurately the
information required for the operation of this Agreement. Notwithstanding
termination of this Agreement, all materials including, but not limited to,
returns, supporting schedules, workpapers, correspondence and other documents
relating to the consolidated federal income tax return shall be made available
to EQUITABLE and/or the Subsidiary during regular business hours. Records will
be retained by EQUITABLE and by the Subsidiary, in a manner satisfactory to
EQUITABLE, adequate to comply with any audit request by the IRS or appropriate
State taxing authority, and, in any event to comply with any record retention
agreement entered into by EQUITABLE or the Subsidiary with such taxing
authority.
8. EARNINGS AND PROFITS - The earnings and profits of EQUITABLE and the
Subsidiary shall be determined during the period in which they are members of
the affiliated group filing a consolidated tax return by allocating the
consolidated tax liability in accordance with Income Tax Regulations
ss.ss.1.1552-1(a)(2) and 1.1502-33(d)(3).
9. ESCROW AGREEMENTS - The parties hereto agree that, to the extent
required by applicable law, they shall enter into and file with appropriate
jurisdictions any escrow agreements or similar contractual arrangements with
respect to the taxes covered by this Agreement. The terms of such agreements
shall, to the extent set forth therein, and with respect to the parties thereto,
prevail over the terms of this Agreement.
10. TERMINATION - This Agreement shall be terminated if EQUITABLE and the
Subsidiary agree in writing to such termination or if the affiliated group fails
to file a consolidated federal income tax return for any taxable year.
11. ADMINISTRATION - This Agreement shall be administered by the Vice
President of Taxes of EQUITABLE or, in his/her absence, by any other officer of
EQUITABLE so designated by the Controller of EQUITABLE. Disputes between
EQUITABLE and the Subsidiary shall be resolved by the Vice President of Taxes of
EQUITABLE or other designated officer and the senior financial officer of each
Subsidiary involved in the dispute.
12. PERIOD COVERED - This Agreement shall be effective with respect to each
party thereto upon signing by such party, and shall supersede all previous
agreements between EQUITABLE and any Subsidiary with respect to the matters
contained herein and such previous agreement shall thereupon terminate. The
Agreement shall apply to the taxable year 2001, to all prior taxable years which
are open to adjustments as provided in section 3 hereof (to the extent not
subject to any separate tax sharing agreement) and to all subsequent periods
unless and until amended or terminated, as provided in section 10 hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Tax Sharing
Agreement.
Equitable Life Insurance By /s/ Paula Cludray-Engelke
Company of Iowa -------------------------
Title: Secretary
USG Annuity & Life Company By /s/ Paula Cludray-Engelke
-------------------------
Title: Secretary
Golden American Life By /s/ Paula Cludray-Engelke
Insurance Company -------------------------
Title: Secretary
EXHIBIT 10.A(j)
TAX SHARING AGREEMENT
THIS AGREEMENT is entered into by and between ING AMERICA INSURANCE
HOLDINGS, INC. ("ING") and each of its undersigned subsidiaries (the
"Subsidiaries", or in the singular "Subsidiary").
WITNESSETH:
WHEREAS, ING and/or some or all of the Subsidiaries may join in the filing
of a state or local tax return on a consolidated, combined or unitary basis; and
WHEREAS, it is desirable for the Subsidiaries and ING to enter into this
Tax Sharing Agreement ("Agreement") to provide for the manner of computation of
the amounts and timing of payments among them, and various related matters;
NOW, THEREFORE, in consideration of the agreements contained herein and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Applicability
The parties intend that the provisions of this Agreement shall apply
to situations in which a state or local franchise, income tax or other
tax return based on, or measured by, net income ("state or local
income tax return") is filed on behalf of more than one party to this
Agreement on a consolidated, combined, or unitary basis (each company
participating in such a return is referred to herein as a "Group
Member"). ING is hereby authorized to determine, in its sole
discretion, whether any of the Subsidiaries will be included in the
filing of a consolidated, combined, or unitary state or local income
tax return, or whether any Subsidiary will file a separate,
stand-alone state or local income tax return, in states where the
choice is available.
2. Allocation of Liability
For each taxable year during which a consolidated, combined or unitary
state or local income tax return is filed, each Group Member will pay
to the Designated Lead Company of such group an amount determined as
follows:
i.) Where the tax liability of the group of companies is
calculated by reference to the consolidated, combined, or unitary
apportionment or allocation factors of the group as a whole, the
amount of tax liability payable by each Group Member will be
determined on the basis of its proportional share of the total group's
apportionment or allocation factor. Each Group Member generating tax
losses or credits, including any carryovers thereof, will be paid for
such losses or credits as they are recognized and actually utilized to
reduce the total tax liability of the group.
ii.) Where the tax liability of the group of companies is
calculated for each Group Member on a separate company basis utilizing
separate company apportionment or allocation factors, the amount of
tax liability payable by each Group Member will be an amount equal to
its separate company tax liability. Separate company losses or
credits, and any carryovers thereof, will only be recognized and paid
for at the time, and to the extent, that they are utilized in the
reduction of the consolidated, combined or unitary taxable income of
the group.
iii) In those situations in which ING or any of the Subsidiaries
files separate, stand-alone state or local income tax returns, each
such party will be solely responsible for all taxes, additions to tax,
penalties, and interest associated with such stand-alone filings.
iv) Unless specifically approved in writing, all payments made
pursuant to this Agreement by a Group Member shall be made by that
Group Member, and not by any other company or business unit on its
behalf.
3. Separate Return Years
To the extent any portion of a tax loss or credit of a consolidated,
combined or unitary group is carried back or carried forward to a
separate return year of a Group Member (whether by operation of law or
at the discretion of the Designated Lead Company) the Group Member
shall not be entitled to payment from the Designated Lead Company with
respect thereto. This shall be the case whether or not the Group
Member actually receives payment for the benefit of such tax loss or
credit from the applicable tax authority or otherwise.
4. Installment Payments
a. During and following a taxable year in which Group Members are
included in a state or local income tax return filed on a
consolidated, combined or unitary basis, each shall pay to the
Designated Lead Company, or receive from the Designated Lead Company,
as the case may be, installment payments of the amount determined
pursuant to section 2 of this Agreement. Payments shall made by or to
each Group Member in amounts that produce, on a group basis,
cumulative installments consistent with the payment rules of the
applicable taxing authority. Payments shall be made to/by each Group
Member to/by the Designated Lead Company within 30 days of the
installment payment date mandated by the applicable taxing authority.
The Designated Lead Company may revise the schedule of installment
payments set forth in this paragraph, and may provide for annual
rather than quarterly payments in cases where amounts due fall below a
certain threshold, although any such change shall be prospective and
shall not take effect prior to written notice to the Group Members.
b. The Designated Lead Company shall pay to the applicable taxing
authority all required installments of state or local estimated taxes
pursuant to applicable provisions of state or local law on behalf of
itself and each Group Member. The Designated Lead Company shall have
the sole right to determine the amount of each such tax payment with
respect to the group's tax liability for the taxable year.
c. Should the amount of any tax payment made by the Designated
Lead Company under this section to the taxing authority exceed the sum
of installment payments made by all Group Members for any
corresponding installment date, the Designated Lead Company may, in
its sole discretion, determine each Group Member's fair and reasonable
share of that excess, and notify each Group Member thereof. The amount
of such excess amount shall be paid over to the Designated Lead
Company within 15 business days of the date of notification.
d. If a penalty or an addition to tax for underpayment of
estimated taxes is imposed on the group with respect to any required
installment under applicable state or local law, the Designated Lead
Company shall, in its sole discretion, determine the amount of each
Group Member's share of such penalty or addition to tax, which amount
shall be paid over to the Designated Lead Company within 15 business
days of the date of notification.
5. ADJUSTED RETURNS
If any adjustments are made to the consolidated, combined or unitary
returns for a taxable year, whether by reason of the filing of an
amended return, or a claim for refund with respect to such taxable
year, or an audit with respect to such taxable year, the amounts due
under this Agreement for such taxable year shall be redetermined by
the Designated Lead Company taking into account such adjustments. If,
as a result of such redetermination, any amounts due under this
Agreement shall differ from the amounts previously paid, then, except
as provided in section 6 hereof, payment of such difference shall be
made by each Group Member to the Designated Lead Company, or by the
Designated Lead Company to the Group Member, as the case may be, (a)
in the case of an adjustment resulting in a refund or credit, not
later than thirty (30) days after the date on which such refund is
received or credit is allowed with respect to such adjustment or (b)
in the case of an adjustment resulting in the assertion of a
deficiency, not later than thirty (30) days after the Group Member is
notified of the deficiency. Any amounts due to or from a Group Member
under this section shall be determined with respect to such refund or
deficiency taking into account any penalties, interest or other
additions to tax which may be imposed. ING shall indemnify each
Subsidiary in the event the taxing authority levies upon such
Subsidiary's assets for unpaid taxes in excess of the amount required
to be paid by such Subsidiary in relation to a consolidated, combined
or unitary return filed pursuant to this Agreement.
6. PROCEDURAL MATTERS
The Designated Lead Company shall prepare and file the consolidated,
combined or unitary state or local return and any other returns,
documents or statements required to be filed with the appropriate
jurisdiction, with respect to the determination of the tax liability
of the filing group. In its sole discretion, the Designated Lead
Company shall have the right with respect to any return which it has
filed or will file, (a) to determine (i) the manner in which such
returns, documents or statements shall be prepared and filed,
including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (ii) whether any
extensions may be requested and (iii) the elections that will be made
by any Group Member, (b) to contest, compromise or settle any
adjustment or deficiency proposed, asserted or assessed as a result of
any audit of such returns by the taxing authority, (c) to file,
prosecute, compromise or settle any claim for refund and (d) to
determine whether any refunds to which the filing group may be
entitled shall be paid by way of refund or credited against the tax
liability of the group. Each Group Member hereby irrevocably appoints
the Designated Lead Company as its agent and attorney-in-fact to take
such action (including the execution of documents) as the Designated
Lead Company may deem appropriate to effect the foregoing.
7. ADDITIONAL MEMBERS
If future subsidiaries are acquired or created and they participate in
the consolidated, combined or unitary filing, such subsidiaries shall
join in and be bound by this Agreement. This section will also apply
to subsidiaries that are not eligible immediately to join the filing
group, when they become eligible to join the filing group.
8. COMPANIES LEAVING GROUP
Except as specifically treated to the contrary herein, a Group Member
shall be treated as having withdrawn from this Agreement upon the
signing of a letter of intent or a definitive agreement to sell the
Group Member. Amounts payable to or receivable from Designated Lead
Company shall be recomputed with respect to the withdrawing Group
Member, including an estimate of the remaining taxes actually payable
or receivable upon the filing of the tax return for the year of
withdrawal, as of the last day such Group Member is a member of the
group. Any amounts so computed as due to or from the Designated Lead
Company to or from Group Member shall be paid prior to its leaving the
group, provided, however,
that any deficiency or excess of taxes determined on the basis of the
tax return filed for the year of withdrawal, and paid to or from
Designated Lead Company related to the tax liability of the
withdrawing Group Member for the portion of the year of withdrawal
during which it had been a member of the affiliated group, shall be
settled not later than November 15 of the year following the year of
the date of withdrawal.
The extent to which Designated Lead Company or such Group Member is
entitled to any other payments as a result of adjustments, as provided
in section 5 hereof, determined after such Group Member has left the
affiliated group but affecting any taxable year during which this
Agreement was in effect with respect to the Designated Lead Company
and such Group Member, shall be provided for pursuant to a separate
written agreement between ING and the former Group Member or its new
owner, or in the absence of such agreement, pursuant to the provision
of section 5 hereof. Tax benefits arising from the carry back of
losses or credits of the former Group Member to tax years during which
it was a member of the group shall not be refunded to the Group
Member, unless specifically provided for pursuant to a separate
written agreement between ING and the former Group Member, or its new
owner.
9. BOOKS AND RECORDS
The books, accounts and records of ING and the Subsidiaries shall be
maintained so as to provide clearly and accurately the information
required for the operation of this Agreement. Notwithstanding
termination of this Agreement, all materials including, but not
limited to, returns, supporting schedules, workpapers, correspondence
and other documents relating to the combined, consolidated or unitary
tax return shall be made available to ING and/or any Subsidiary during
regular business hours. Records will be retained by ING and by each
Subsidiary, in a manner satisfactory to ING, adequate to comply with
any audit request by the appropriate State or local taxing authority,
and, in any event to comply with any record retention agreement
entered into by ING or any Subsidiary with such taxing authority.
10. ESCROW AGREEMENTS
The parties hereto agree that, to the extent required by applicable
law, they shall enter into and file with appropriate jurisdictions any
escrow agreements or similar contractual arrangements with respect to
the taxes covered by this Agreement. The terms of such agreements
shall, to the extent set forth therein, and with respect to the
parties thereto, prevail over the terms of this Agreement.
11. TERMINATION
This Agreement shall be terminated if ING and the Subsidiaries agree
in writing to such termination.
12. ADMINISTRATION
This Agreement shall be administered by the Vice President of Taxes of
ING or, in his/her absence, by any other officer of ING so designated
by the Controller of ING. Disputes between ING and any Subsidiary
shall be resolved by the Vice President of Taxes of ING or other
designated officer and the senior financial officer of each Subsidiary
involved in the dispute. Should ING, in its sole discretion, determine
that any provision of this Agreement cannot be applied practicably to
any item or any part of any state or local income tax return, ING
shall apply a reasonable rule of operation in such situation, as
determined in its sole discretion, but predicated on the principle of
equitable sharing of the tax impact of such item among those parties
included in the tax return responsible for such tax impact. ING and
the Subsidiaries each agree to indemnify any party to this agreement
for any loss or other injury sustained as a result of errors or
omissions committed by ING or one of the Subsidiaries in connection
with this Agreement.
13. PERIOD COVERED
This Agreement shall be effective with respect to each party thereto
upon signing by such party, and shall supersede all previous
agreements between ING and any Subsidiary with respect to the matters
contained herein and such previous agreement shall thereupon
terminate. The Agreement shall apply to the taxable year 2001, to all
prior taxable years which are open to adjustments as provided in
section 5 hereof (to the extent not subject to any separate tax
sharing agreement) and to all subsequent periods unless and until
amended or terminated, as provided in section 11 hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Tax Sharing Agreement.
ING America Insurance Holdings, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Treasurer
Cyberlink Development, LLC By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
GAC Capital, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
ING America Life Corporation By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
ING Fund Services Co., LLC By: /s/ Lydia L. Homer
------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING Mutual Funds Management Co., LLC By: /s/ Lydia L. Homer
(merged into ING Investments, LLC in 2001) ------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING North America Insurance Corporation By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Life of Georgia Agency, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Life Insurance Company of Georgia By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Lion Custom Investments, LLC By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Lion II Custom Investments, LLC By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
MIA Office Americas, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Orange Investment Enterprises, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
QuickQuote, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
QuickQuote Financial, Inc. By: /s/ Eric Banta
--------------
Name: Eric Banta
Title: Assistant Secretary
QuickQuote Systems, Inc. By: /s/ Eric Banta
--------------
Name: Eric Banta
Title: Assistant Secretary
Southland Life Insurance Company By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Springstreet Associates, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
First Columbine Life Insurance Company By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
First Secured Mortgage Deposit Corporation By: /s/ Jeffery William Steel
-------------------------
Name: Jeffrey William Seel
Title: President and Director
First ING Life Insurance Company of New York By: /s/ Eric G.Banta
----------------
Name: Eric G. Banta
Title: Secretary
ING America Equities, Inc. By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Midwestern United Life Insurance Company By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Security Life of Denver Insurance Company By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Security Life Assignment Corporation By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
UC Mortgage Corp By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
ING Brokers Network, LLC By: /s/ John S. Simmers
(fka ING Advisors Network, Inc.) -------------------
Name: John S. Simmers
Title: Chief Executive Officer
ING Insurance Agency, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Chief Executive Officer
IFG Advisory Services, Inc. By: /s/ Glenn Black
(aka Associated Financial ---------------
Planners, Inc.) Name: Glenn Black
Title: Vice President,
Taxation
Carnegie Financial Corporation By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Carnegie Securities Corporation By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Compulife Agency, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Compulife, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
Compulife Investor Services, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
IFG Advisory, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Agency, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Agency of Ohio, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Brokerage Corp. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Insurance Agency of Massachusetts, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Insurance Services, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Insurance Services of Alabama, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Network, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
IFG Network Securities, LLC By: /s/ Glenn Black
---------------
Name: Glenn Black
Title: Vice President and
Tax Officer
IFG Services, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Investors Financial Group, LLC By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Investors Financial Planning, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
National Alliance for Independent By: /s/ E. Paul Stewart
Portfolio Managers, Inc. -------------------
Name: E. Paul Stewart
Title: Treasurer
Pennington, Bass & Associates, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Planned Investments, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
Planned Investment Resources, Inc. By: /s/ E. Paul Stewart
-------------------
Name: E. Paul Stewart
Title: Treasurer
MFSC Insurance Agency of California, Inc. By: /s/ Douglas G. Temple-Trujillo
------------------------------
Name: Douglas G. Temple-Trujillo
Title: Director
MFSC Insurance Agency of Massachusetts, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
MFSC Insurance Agency of Nevada, Inc. By: /s/ Douglas G. Temple-Trujillo
------------------------------
Name: Douglas G. Temple-Trujillo
Title: Director
MFSC Insurance Agency of Ohio, Inc. By: /s/ Douglas G. Temple-Trujillo
------------------------------
Name: Douglas G. Temple-Trujillo
Title: Director
MFSC Insurance Agency of Texas, Inc. By: /s/ Boyd G. Combs
------------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
Multi-Financial Group, Inc. By: /s/ Douglas G. Temple-Trujillo
------------------------------
Name: Douglas G. Temple-Trujillo
Title: Director
Multi-Financial Securities Corporation By: /s/ Douglas G. Temple-Trujillo
------------------------------
Name: Douglas G. Temple-Trujillo
Title: Director
PMG Agency, Inc. By: /s/ Luke F. Baum
----------------
Name: Luke F. Baum
Title: Vice President
VESTAX Capital Corporation By: /s/ Valerie G. Brown
--------------------
Name: Valerie G. Brown
Title: Director
VESTAX Securities Corporation By: /s/ Luke F. Baum
----------------
Name: Luke F. Baum
Title: Vice President,
Chief Operating Officer
and SROP
VTX Agency, Inc. By: /s/ R. Jack Conley
------------------
Name: R. Jack Conley
Title: Vice President,
Secretary and Treasurer
VTX Agency of Massachusetts, Inc. By: /s/ R. Jack Conley
------------------
Name: R. Jack Conley
Title: Vice President,
Secretary and Treasurer
VTX Agency of Michigan, Inc. By: /s/ R. Jack Conley
------------------
Name: R. Jack Conley
Title: Vice President,
Secretary and Treasurer
VTX Agency of Texas, Inc. By: /s/ Luke F. Baum
-----------------------
Name: Luke F. Baum
Title: President, Secretary
and Treasurer
ING Payroll Management, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Treasurer
Directed Services, Inc. By: /s/ David Lee Jacobson
----------------------
Name: David Lee Jacobson
Title: Senior Vice President
and Assistant Secretary
Equitable of Iowa Companies, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
ING Funds Distributor, Inc. By: /s/ Lydia L. Homer
(fka ING Pilgrim Securities, Inc.; ------------------
fka Pilgrim Securities, Inc.) Name: Lydia L. Homer
Title: Senior Vice President
and Controller
Locust Street Securities, Inc. By: /s/ Jacqueline C. Conley
------------------------
Name: Jacqueline C. Conley
Title: Vice President,
Compliance
LSSI, Inc. By: /s/ Jacqueline C. Conley
------------------------
Name: Jacqueline C. Conley
Title: Secretary
LSSI Massachusetts Insurance Agency, Inc. By: /s/ Karl Lindberg
-----------------
Name: Karl Lindberg
Title: President and Secretary
LSSI North Carolina, Inc. By: /s/ Karl Lindberg
-----------------
Name: Karl Lindberg
Title: President and Secretary
LSSI Nevada, Inc. By: /s/ Jacqueline C. Conley
------------------------
Name: Jacqueline C. Conley
Title: Secretary
LSSI Ohio Agency, Inc. By: /s/ Karl Lindberg
-----------------
Name: Karl S. Lindberg
Title: Vice President and
Secretary
LSSI Texas, Inc. By: /s/ Jacqueline C. Conley
------------------------
Name: Jacqueline C. Conley
Title: Secretary
ReliaStar Financial Corp. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Bancwest Insurance Agency, Inc. By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Assistant Secretary
Washington Square Securities, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
Washington Square Insurance Agency, Inc. By: /s/ Joseph J. Elmy
(MA) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
Washington Square Insurance Agency, Inc. By: /s/ Joseph J. Elmy
(TX) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
Washington Square Insurance Agency, Inc. By: /s/ Joseph J. Elmy
(NM) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
Washington Square Insurance Agency, Inc. By: /s/ Joseph J. Elmy
(OH) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
PrimeVest Financial Services, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
PrimeVest Insurance Agency of Alabama, Inc. By: /s/ Kevin P. Maas
-----------------
Name: Kevin P. Maas
Title: Secretary
PrimeVest Insurance Agency of New Mexico, By: /s/ Kevin P. Maas
Inc. -----------------
Name: Kevin P. Maas
Title: Secretary
PrimeVest Insurance Agency of Ohio, Inc. By: /s/ Kevin P. Maas
-----------------
Name: Kevin P. Maas
Title: Secretary
PrimeVest Insurance Agency of Oklahoma, Inc. By: /s/ Kevin P. Maas
-----------------
Name: Kevin P. Maas
Title: Secretary
PrimeVest Insurance Agency of Texas, Inc. By: /s/ LeAnn Rummell McCool
------------------------
Name: LeAnn Rummel McCool
Title: Sole Director and
President, Secretary
and Treasurer
Branson Insurance Agency, Inc. By: /s/ Kevin P. Maas
-----------------
Name: Kevin P. Maas
Title: Secretary
Express America TC, Inc. By: /s/ Lydia L. Homer
------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
EAMC Liquidation Corp. By: /s/ Lydia L. Homer
------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
Granite Investment Services, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
ReliaStar Investment Research, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
ReliaStar Payroll Agent, Inc. By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING Capital Corporation, LLC By: /s/ Lydia L. Homer
(fka ING Pilgrim Capital ------------------
Corporation; fka Pilgrim Capital Corporation; Name: Lydia L. Homer
fka Pilgrim Holdings Corporation) Title: Senior Vice President
and Controller
ING Pilgrim Funding, Inc. By: /s/ Lydia L. Homer
(fka Pilgrim Funding, Inc.) ------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING Funds Services, LLC By: /s/ Lydia L. Homer
(fka ING Pilgrim Group, LLC; ------------------
fka Pilgrim Group, LLC) Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING Investments, LLC By: /s/ Lydia L. Homer
(fka ING Pilgrim Investments, LLC; ------------------
fka Pilgrim Investments, Inc.) Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING Re Underwriters, Inc. By: /s/ Paula Cludray-Engelke
(fka ReliaStar Managing -------------------------
Underwriters, Inc.) Name: Paula Cludray-Engelke
Title: Secretary
ING National Trust By: /s/ Robert J. Scalise
(fka ReliaStar National Trust Company) ---------------------
Name: Robert J. Scalise
Title: Assistant Vice
President, Finance
Northeastern Corporation By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice President,
Tax
Successful Money Management Seminars, Inc. By: /s/ Duane Pfaff
---------------
Name: Duane Pfaff
Title: Vice President
Financial Northeastern Corporation By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
FNC Insurance Services, Inc. By: /s/ Jeffrey P. Zage
-------------------
Name: Jeffrey P. Zage
Title: Secretary
Financial Northeastern Securities, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
Guaranty Brokerage Services, Inc. By: /s/ Joseph J. Elmy
(fka Split Rock Financial, Inc.; ------------------
fka Bisys Brokerage Services, Inc.) Name: Joseph J. Elmy
Title: Tax Officer
Bancwest Investment Services, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
Washington Square Insurance Agency, Inc. By: /s/ Joseph J. Elmy
(AL) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
Lexington Funds Distributor, Inc. By: /s/ Lydia L. Homer
------------------
Name: Lydia L. Homer
Title: Senior Vice President
and Controller
ING Advisors, Inc. By: /s/ Lydia L. Homer
(fka ING Pilgrim Advisors; fka ING ------------------
Lexington Management Corporation) Name: Lydia L. Homer
Title: Senior Vice President
and Controller
Lion Connecticut Holdings Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Vice President and
Tax Officer
Aetna Financial Services, Inc. By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING Insurance Services Holding Company, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Insurance ------------------
Agency Holding Co., Inc.) Name: Joseph J. Elmy
Title: Tax Officer
ING Insurance Services, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Insurance Agency, Inc.) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
ING Insurance Services of Alabama, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Insurance Agency ------------------
of Alabama, Inc.) Name: Joseph J. Elmy
Title: Tax Officer
ING Insurance Services of Massachusetts, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Insurance Agency ------------------
of Massachusetts, Inc.) Name: Joseph J. Elmy
Title: Tax Officer
Aetna Insurance Agency of Ohio, Inc. By: /s/ Boyd G. Combs
-----------------
Name: Boyd G. Combs
Title: Senior Vice Pesident,
Tax
ING Retail Holding Company, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Retail Holding Company, Inc.) ------------------
Name: Joseph J. Elmy
Title: Tax Officer
ING Retirement Services, Inc. By: /s/ David Pendergrass
(fka Aetna Retirement Services, Inc.) ---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
ING Retirement Holdings, Inc. By: /s/ David Pendergrass
(fka Aetna Retirement Holdings, Inc.) ---------------------
Name: David Pendergrass
Title: Senior Vice President
and Treasurer
ING Insurance Services Holding Company, Inc. By: /s/ Joseph J. Elmy
(fka Aetna Service Holding Company, Inc. ------------------
Name: Joseph J. Elmy
Title: Tax Officer
Systematized Benefits Administrators, Inc. By: /s/ Joseph J. Elmy
------------------
Name: Joseph J. Elmy
Title: Tax Officer
FNI International, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Corporate Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Corporate Secretary
FN Insurance Services, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Executive Vice
President and Secretary
FN Insurance Agency of Massachusetts, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Secretary
FN Insurance Agency of New Jersey, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Corporate Secretary
FN Insurance Services of Nevada, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Secretary
FN Insurance Services of Alabama, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Secretary
FN Insurance Agency of Kansas, Inc. By: /s/ John S. Simmers
-------------------
Name: John S. Simmers
Title: Corporate Secretary
ING International Insurance Holdings, Inc. By: /s/ Lena A. Rabbitt
(fka Aetna International, Inc.) -------------------
Name: Lena A. Rabbitt
Title: Assistant Secretary
ING International Nominee Holdings, Inc. By: /s/ Lena A. Rabbitt
(fka AE Five, Incorporated) -------------------
Name: Lena A. Rabbitt
Title: Assistant Secretary
ALICA Holdings, Inc. By: /s/ David Pendergrass
---------------------
Name: David Pendergrass
Title: Vice President and
Treasurer
Aetna Capital Holdings, Inc. By: /s/ Scott Burton
----------------
Name: Scott Burton
Title: Assistant Secretary
Aetna International Fund Management, Inc. By: /s/ Scott Burton
----------------
Name: Scott Burton
Title: Assistant Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
of Hawaii ------------------
Name: John S. Simmers
Title: Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
of Hilo, Inc. ------------------
Name: John S. Simmers
Title: Corporate Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
of Honolulu ------------------
Name: John S. Simmers
Title: Corporate Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
of Kauai, Inc. ------------------
Name: John S. Simmers
Title: Corporate Secretary
Financial Network Investment Corporation By: /s/ John S. Simmers
of Puerto Rico, Inc. ------------------
Name: John S. Simmers
Title: Corporate Secretary
FN Insurance Services of HI, Inc. By: /s/ John S. Simmers
------------------
Name: John S. Simmers
Title: Vice President and
Corporate Secretary
ReliaStar Life Insurance Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Northern Life Insurance Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Security-Connecticut Life Insurance Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING Life Insurance and Annuity Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING Insurance Company of America By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Equitable Life Insurance Company of Iowa By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
USG Annuity & Life Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Golden American Life Insurance Company By: /s/ Paula Cludray-Engelke
-------------------------
Name: Paula Cludray-Engelke
Title: Secretary
EXHIBIT 10.A(k)
SERVICES AGREEMENT
This Services Agreement ("Agreement") is made this 1 day of January, 2001,
by and between Golden American Life Insurance Company, an insurance company
organized and existing under the laws of the state of Delaware, and the
affiliated insurance companies specified in Exhibit B hereto.
RECITALS
WHEREAS, the parties are affiliates under the common control of ING Groep,
N.V.; and
WHEREAS, each party possesses certain resources, including experienced
personnel, facilities and equipment, which enables it to provide certain
administrative, management, professional, advisory, consulting and other
services to the others ("Services"); and
WHEREAS, each party desires from time to time to perform certain Services
on behalf of, and receive certain Services from, the others, as described with
particularity in Exhibit A attached hereto; and
WHEREAS, each party contemplates that such an arrangement will achieve
operating economies, synergies and expense savings, and improve services to the
benefit of its policyholders or contractholders; and
WHEREAS, the parties wish to identify the Services to be provided, to
provide a method for identifying the charges to be assessed and the compensation
to be paid for the Services, and to assure that all charges for the Services are
reasonable and in accordance with the laws and regulations of the states in
which each of them is domiciled;
NOW, THEREFORE, in consideration of these premises and of the mutual
promises set forth herein, and intending to be legally bound hereby, the parties
agree as follows:
1. Services.
(a) Subject to the terms, conditions, and limitations of this Agreement,
the party providing a service hereunder ("Service Provider") will perform for
the party requesting a service hereunder ("Company") such of the Services
described in Exhibit A, attached hereto and incorporated herein by this
reference, as the Company may from time to time request.
(b) The Service Provider shall employ all operating and management
personnel necessary to provide the Services required by this Agreement. The
Service Provider shall also maintain such facilities and equipment as it deems
reasonably necessary in order to provide the Services required by the Agreement.
Subject to the terms (including any limitations and restrictions) of any
applicable software or hardware licensing agreement then in effect between the
Service Provider and any licensor, the Service Provider shall, upon termination
of this
Agreement, grant to the Company a perpetual license, without payment of any
fee, in any electronic data processing software developed or used by the Service
Provider in connection with the Services provided to the Company, if such
software is not commercially available and is necessary, in the Company's
reasonable judgment, for the Company to perform the functions provided by the
Service Provider hereunder after termination of this Agreement.
(c) The parties agree that all documents, reports, records, books, files
and other materials relative to the Services performed for the Company under
this Agreement shall be the sole property of the Company. The Service Provider
shall keep and maintain or cause to be kept and maintained full and complete
documentation and records related to the Services provided including the
accounting necessary to support charges for Services. The Service Provider shall
maintain custody of said documentation and records and shall make them available
to the Company and the appropriate insurance regulator of the Company upon
request.
2. Charges for Services.
(a) It is the intention of the parties that the charges for the Services
provided under this Agreement be determined in accordance with fair and
reasonable standards and that no party realize a profit nor incur a loss as a
result of the Services rendered pursuant to this Agreement.
(b) The Company agrees to reimburse the Service Provider for all direct
costs incurred on behalf of the Company and for all indirect costs which may be
charged to the Company as follows:
(i) "Direct Costs" include costs incurred by the Service Provider for
Services provided directly to the Company, including but not limited to: (a) All
costs incident to any employee or employees who are employed in rendering
Services to the Company, such as salary, payroll taxes, and benefits and (b) the
cost of other reasonable and necessary business expenses incurred by employees
who are employed in rendering Services to the Company such as training, travel
and lodging. Direct Costs shall be charged in accordance with reasonable
functional cost studies and/or other information and methodologies used by the
Service Provider for internal cost distribution including, where appropriate, an
analysis of time spent by each employee providing Services to the Company and/or
the percentage of administrative systems utilized. Data for this analysis will
be collected through tracking of unit costs of Services, through time studies
conducted periodically, or through other methods consistent with customary
insurance accounting practices consistently applied. Annually, the bases for
determining direct costs shall be modified and adjusted by mutual agreement of
the Service Provider and the Company, where necessary or appropriate, to fairly
and equitably reflect the actual cost incurred by the Service Provider on behalf
of the Company.
(ii)"Indirect Costs" include all other costs incurred by the Service
Provider in rendering Services to the Company, including but not limited to the
cost of rent or depreciation of office space, utilities, office equipment, and
supplies utilized by employees who are employed in rendering Services to the
Company. Indirect costs shall be charged to the Company based on the proportion
of total direct costs chargeable to the Company under subparagraph (i), herein.
In other words, if the direct costs chargeable to the Company represents 20% of
the Service Provider's total direct costs, then 20% of the Service Provider's
indirect costs will be charged to the Company.
(c) The charges for Direct Costs and Indirect Costs referred to above shall
be made by the Service Provider on a monthly or quarterly basis as appropriate
for the particular Service. Charges paid by any party to the Service Provider
may be net of charges for Direct and Indirect Costs charged by such party as
Service Provider to the other party.
(d) In the event the Service Provider or the Company should discover upon
review of its accounting by its internal auditors, independent auditor, any
state insurance department, or other regulatory agency, that an amount charged
for Services provided hereunder was erroneous, the party discovering the error
will give prompt notice of such error to the affected party under this
Agreement. Such notice shall contain a description of the accounting error,
corrective action and supporting documentation. Any amounts owing as a result of
the correction shall be paid within sixty (60) days after notice has been given.
(e) The Company stall have the right to inspect and audit, upon reasonable
notice to the Service Provider, all books and records of the Service Provider
related to the provision of the Services so as to verify the accuracy of all
expenses reimbursed under this Agreement.
3. Term.
This Agreement shall be effective on the first day of January, 2001, and
shall end on the 31st day of December, 2001. This Agreement shall be
automatically renewed on the first day of each calendar year thereafter for a
twelve-month period under the same terms and conditions, subject to the
provisions for termination set forth herein.
4. Termination.
This Agreement may be terminated by the Service Provider or by the Company
by providing thirty (30) days' written notice to that effect addressed to the
other party. Any Services provided following the date of termination which, by
their nature, continue after termination shall be provided under the same terms
and conditions which prevailed at the time of such notice.
5. Standard of Service.
The Service Provider shall perform the Services in a competent and
professional manner according to standards agreed upon by the Service Provider
and the Company. The Service Provider agrees that it will exercise due diligence
to abide by and comply with all laws, statutes, rules, regulations, and orders
of any governmental authority in the performance of its Services under this
Agreement. The Service Provider will conduct its business and perform its
obligations in a manner which will not cause the possible revocation or
suspension of the Company's Certificate(s) of Authority or cause the Company to
sustain any fines, penalties, or other disciplinary action of any nature
whatsoever.
6. Limitation of Authority.
The Company shall retain ultimate control and responsibility for all
Services that it has delegated to the Service Provider under this Agreement. In
no event shall the Services involve control of the management of the business
and affairs of the Company. The Service Provider shall provide Services
hereunder as an independent contractor, and shall act hereunder so as to assure
the separate operating identity of the Company. While rendering Services to the
Company pursuant to this Agreement, the Service Provider, its officers and
employees shall not at any time or for any purpose be considered agents of the
Company unless otherwise expressly agreed to by the parties. Under no
circumstances shall the Services provided pursuant to this Agreement be deemed
to be those of a third party administrator pursuant to any applicable state
statutes.
7. Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold harmless the
Service Provider, its officers, directors and employees, from and against any
and all claims, demands, losses, liabilities, actions, lawsuits and other
proceedings, judgements and awards, and costs and expenses (including reasonable
attorneys' fees), arising directly or indirectly, in whole or in part out of any
action taken by the Service Provider within the scope of its duties or authority
hereunder, excluding only such of the foregoing as result from the negligence or
willful acts or omissions of the Service Provider, its officers, directors,
agents and employees. The provisions of this section shall survive termination
of this Agreement.
(b) The Service Provider hereby agrees to indemnify, defend and hold
harmless the Company and its officers, directors and employees from and against
any and all claims, demands, losses, liabilities, action, lawsuits and other
proceedings, judgments and awards, fines and penalties, and costs and expenses
(including reasonable attorneys' fees), arising directly or indirectly, in whole
or in part, out of the negligence or any willful act or omission of the Service
Provider or of any of its officers, directors, agents or employees, in
connection with this Agreement or the performance of the Service Provider's
Services hereunder, or out of any action taken by the Service Provider beyond
the scope of the Service Provider's duties or authority hereunder. The
provisions of this section shall survive termination of this Agreement.
8. Notices.
All notices, requests, and communications required or permitted under this
Agreement shall be in writing and deemed given when addressed to the applicable
address set forth in Exhibit B attached hereto and (i) delivered by hand to an
officer of the other party, (ii) deposited with the U.S. Postal Service, as
first-class certified or registered mail, postage prepaid, or (iii) deposited
with an overnight courier. Any notice of a change of address shall be given in
the same manner.
9. Cooperation.
Each party to this Agreement shall cooperate with the other party, and with
appropriate governmental authorities (including, without limitation, the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10. Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association, and judgment upon the award maybe
entered in any Court having jurisdiction thereof.
11. Waiver.
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver. Failure of any party to
exercise or delay in exercising any right or power granted under this Agreement
shall not operate as a waiver of any such right or power.
12. Miscellaneous.
This Agreement may not be assigned by either party without the prior
written consent of the other party. This Agreement constitutes the entire
agreement of the parties hereto. This Agreement may be amended only by a written
instrument executed by both parties. If any portion of this Agreement is invalid
under any applicable statute or rule of law, it shall not affect the remainder
of this Agreement which shall remain valid and binding. This Agreement shall be
binding on the parties, their legal representatives and successors. This
Agreement shall be construed in accordance with and governed by the laws of the
state in which the Services are provided, without regard to principles of
conflict of laws.
13. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
Golden American Life Insurance Company
By: /s/ Chris D. Schreier
----------------------------------
Name: Chris D. Schreier
Title: President
LIST OF EXHIBITS
A-1 Underwriting and New Business Processing Services
A-2 Licensing and Contracting Services
A-3 Policyowner and Claims Processing Services
A-4 Actuarial Services
A-5 Information Services
A-6 Legal, Risk Management and Compliance Services
A-7 Human Resource Services
A-8 Marketing and Sales Promotion Services
A-9 Tax Services
A-10 Reinsurance Management and Administration Services
A-11 Management Services
A-12 Printing, Record, File, Mail and Supply Services
A-13 Financial Management Services for Retail Products
A-14 Pricing, Trading, Performance Reporting and Accounting Services for
Variable Products
B Addresses for Notices
Exhibit A-1
Underwriting and New Business Processing Services
Services related to underwriting and new business processes including, but not
limited to:
1. Underwriting and risk consulting services.
2. Analysis of underwriting standards.
3. Assistance and advice in the development of appropriate underwriting
standards in accordance with all laws and regulations of the Company's
state.
4. Perform underwriting in accordance with Company guidelines.
5. Provide medical and/or technical support and advice to underwriting.
6. Approve for issue all applications which meet underwriting criteria.
7. Process all approved applications and issue and deliver policies to
policyholders.
8. Financial and other reporting in connection with underwriting and new
business processing.
Exhibit A-2
Licensing and Contracting Services
Services related to producer licensing and contracting including, but not
limited to:
1. Assist with pre-appointment investigations of producers.
2. Administer producer licenses, contracts and producer compensation and
maintain a computer database for license and contract status.
Exhibit A-3
Policyowner and Claims Processing Services
Services related to policyowner and claims processing including, but not limited
to:
1. Bill policyholders.
2. Collect premiums.
3. Respond to customer inquiries by phone or letter.
4. Administer policy changes.
5. Administration and support for claims.
6. Process claims and/or render legal, medical or technical support and
advice relating to the processing, settlement and payment of claims.
7. Surrender, lapse and maturity processing.
8. Distribute benefits.
9. Financial and other reporting in connection with policyowner and
processing services.
Exhibit A-4
Actuarial Services
Actuarial related services including but not limited to:
1. Actuarial consulting services, including clerical, technical and
product actuarial support and product development support.
2. Prepare actuarial reports, opinions and memoranda and assist with
asset/liability management and cash flow testing.
3. Conduct product experience studies.
4. Prepare reserve calculations and valuations.
5. Develop new products.
6. Evaluate product performance versus expectations.
7. Financial and other reporting in connection with actuarial services.
Exhibit A-5
Information Services
Services related to information management including, but not limited to:
1. Professional, technical, supervisory, programming and clerical support
for information services.
2. Informational and computer services may be in the nature of
applications and programming support, enhancing existing systems,
helping to install new systems.
3. Develop data processing systems strategy.
4. Implement systems strategy.
5. Program computers.
6. Provide data center services, including maintenance and support of
mainframe and distribution process hardware and software.
7. Standard systems for product administration, accounts payable,
accounting and financial reporting, human resource management and
inventory control.
8. Manage data and voice communications systems.
9. Manage local area networks and other desktop software and systems.
10. Provide data security and maintain effective disaster recovery
program.
11. Purchase hardware, software and supplies.
Subject to the terms (including any limitations and restrictions) of any
applicable software or hardware licensing agreement then in effect between
Service Provider and any licensor, Service Provider shall, upon termination of
this Agreement, grant to Company a perpetual license, without payment of any
fee, in any electronic data processing software developed or used by the Service
Provider in connection with the Services provided to the Company hereunder if
such software is not commercially available and is necessary, in the Company's
reasonable judgment, for the Company to perform subsequent to termination the
functions provided by the Service Provider hereunder.
Exhibit A-6
Legal, Risk Management and Compliance Services
Services related to legal, risk management and compliance including, but not
limited to:
1. Provide counsel, advice and assistance in any matter of law, corporate
governance and governmental relations, including advisory and
consulting services, in connection with the maintenance of corporate
existence, licenses, dealing with regulatory agencies, development of
products, contracts and legal documents, product approvals,
registration and filing of insurance and securities products, handling
of claims and matters involving legal controversy, assist with dispute
resolution, select, retain and manage outside counsel and provide
other legal services as reasonably required or requested.
2. Provide assistance in any matter relating to risk management,
including procurement of fidelity bond insurance, blanket bonds,
general liability insurance, property damage insurance, directors' and
officers' liability insurance, workers compensation, and any other
insurance purchased by the Company.
3. Assist in the development and maintenance of a corporate compliance
program and a state insurance fraud reporting program. Assist in
maintaining appropriate records and systems in connection with the
Company's compliance obligations under application state law.
4. Provide assistance with internal audit including review of operational
procedures, performance of compliance tests, and assist to independent
auditors.
Exhibit A-7
Human Resource Services
Services related to human resource management including, but not limited to:
1. Personnel recruiting and support services.
2. Design and implementation of human resources training.
3. Compensation studies and benefits consulting.
4. Support employee communications.
5. Payroll services.
6. Benefits compensation and design and administration.
7. Employee relations.
Exhibit A-8
Marketing and Sales Promotion Services
Services related to marketing and sales promotion including, but not limited to:
1. Prepare sales promotional items, advertising materials and artwork,
design, text and articles relevant to such work, including clerical,
technical and supervisory support and related communications.
2. Support general communications with producers.
3. Conduct formal insurance market research.
4. Develop sales illustrations, advertising materials, and software for
products, in compliance with state laws.
5. Design and implement training programs, including product and industry
developments and legal compliance.
6. Distribute to employees and/or agents underwriting guidelines for the
products, where applicable.
7. Analyze and develop compensation and benefit plans for general agents
and agents.
8. Plan and support of producer conferences.
Exhibit A-9
Tax Services
Services related to tax including, but not limited to:
1. Maintenance of tax compliance, including tax return preparation and
review of financial statement tax provisions.
2. Management of tax and audit appeals, including processing information
requests, protest preparation, and participation in any appeals
conference.
3. Direction of tax research and planning, including research of
compliance issues for consistency, development of tax strategies and
working with new legislative proposals.
4. Administration of tax liens, levies and garnishment of wages of
Company employees and agents
Exhibit A-10
Reinsurance Management and Administration Services
Services related to reinsurance management and administration including, but not
limited to:
1. Advise with respect to reinsurance retention limits.
2. Advice and support with respect to negotiation of reinsurance
treaties.
3. Advice and support with respect to the management of reinsurer
relationships.
Exhibit A-11
Management Services
Services related to general management including, but not limited to:
1. Consultative and advisory services to the Company's senior executive
officers and staff with respect to conduct of the Company's business
operations and the execution of directives and resolutions of the
Company's Board of Directors pertaining to business operations and
functions, including provision of personnel to serve as officers and
directors of Company.
2. Consultation and participation in the Company's strategic planning
process; the development of business goals, objectives and policies;
the development of operational, administrative and quality programs;
preparation of financial and other reports; and the coordination of
such processes, goals, objectives, policies and programs with those of
the holding company.
3. Advice and assistance with respect to maintenance of the Company's
capital and surplus, the development and implementation of financing
strategies and plans and the production of financial reports and
records.
4. Representation of the Company's interests at government affairs and
industry meetings; participation in the deliberation and affairs of
trade associations and promotion of the Company's products and
relationships with the public.
5. Consultative, advisory and administrative services to the Company's
senior executive officers and staff in respect to development,
implementation and administration of human resource programs and
policies, the delivery of communications and information to employees
regarding enterprise plans, objectives and results; and the
maintenance of employee relations, morale and developmental
opportunities.
6. Direction and performance of internal audits and arrangement for
independent evaluation of business processes and internal control.
Exhibit A-12
Printing, Record, File, Mail and Supply Services
Services related to printing, records, files, mail and supplies including, but
not limited to:
Printing, record, file, mail and supply services including, maintaining
policy files; document control; production and distribution of standard
forms, stationary, business cards and other material; arrangement of
warehouse storage space; supply fulfillment; mail processing, delivery and
shipping; participation in purchasing agreements; retrieval and production
of documents for regulatory examinations and litigation; and development
and administration of record retention programs.
Exhibit A-13
Financial Management Services for Retail Products
Services related to accounting and finance for retail life and annuity products,
including but not limited to:
1. Consultation, technical assistance and oversight in all matters
relations to financial management and analysis for all retail life and
annuity products.
2. Coordination of product expense pricing reporting and analysis.
3. Maintenance of financial controls with respect to the balancing and
reconciliation of Administrative systems and general ledger suspense
accounts.
4. Treasury operations, including bank reconciliation and disbursement
processing.
5. Accounting and reporting for general and separate account products,
including preparation of general ledgers, transaction ledgers and
trial balances.
6. Management reporting services, including coordination of the annual
planning process and consolidation of monthly and quarterly results.
7. Consultation and assistance in coordinating the external audit
process.
8. Provide support as necessary for the preparation of financial
statements and reports, including monthly, quarterly and annual
financial statements on both a statutory and GAAP basis.
9. Maintenance of cost accounting reports and services in support of
monthly management reporting, quarterly and annual external reporting,
and budgeting.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ Paula Cludray-Engelke
----------------------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Exhibit A-14
Pricing, Trading, Performance Reporting and
Accounting Services for Variable Products
Services related to support of day to day pricing, trading, performance
reporting and accounting operations for variable products, including but not
limited to:
1. Pricing. Collect pricing information (net asset value and ordinary
income/capital gain distributions) from Investment Companies, and
where applicable, calculate the variable account unit value. Provide
pricing information to the applicable ING administrative
systems/business units and external business partners; pricing
calculations for insurance products shall be reported as required by
the prospectus for each product.
2. Trading. Collect net trade data from ING administrative systems,
consolidate to a legal entity level per investment option, and submit
to Investment Companies; on a daily basis reconcile the shares/trade
per ING to Investment Company; provide to ING Treasury wire data for
the settlement of trades placed.
3. Accounting. Post to ledger the entries supporting the trades and wires
processed; entries will include any applicable Variable Annuity
Account contract charges; daily reconcile entries posted to
ledger/market value to Variable Annuity Account liability/reserve;
provide Variable Annuity Account data for the Financials and Insurance
Company Schedule D.
4. Investment Company Revenue. Calculate asset based
revenue/sub-accounting fees monthly and post accruals to the ledger;
collect revenue from investment companies in a timely manner;
reconcile amounts received to the estimated calculated, and book
actual payments to ledger.
5. Performance Reporting. Calculate product and investment option level
returns in accordance with SEC and NASD guidelines; provide returns to
ING applications, web sites, marketing, and field.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ Paula Cludray-Engelke
----------------------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
I hereby attest that the attached executed amendment has not been altered,
modified or in any way amended, except as herein listed, from the original
amendment submitted on January 16, 2003 to the Delaware Department for approval.
No changes
Attest:
By: /s/ Paula Cludray-Engelke
----------------------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Date: February 25, 2003
EXHIBIT B - ING AFFILIATE INSURERS
- -----------------------------------------------------------------------------------------------------------------------------------
Name Domestic State Principal Office Principal Mailing Address
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Security Life of Denver Colorado 1290 Broadway Same
Insurance Company Denver, CO 80203
- -----------------------------------------------------------------------------------------------------------------------------------
First Columbine Life Insurance Colorado 1290 Broadway Same
Company Denver, CO 80203
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance and Connecticut 151 Farmington Avenue Same
Annuity Company Hartford, CT 06156
- -----------------------------------------------------------------------------------------------------------------------------------
Golden American Life Insurance Delaware 1209 Orange Street 1475 Dunwood Drive
Company Wilmington, DE 19801 West Chester, PA 19380
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Company of America Florida 5100 West Lemon Street, Suite 213 151 Farmington Avenue
Tampa, FL 33609 Hartford, CT 06156
- -----------------------------------------------------------------------------------------------------------------------------------
Life Insurance Company of Georgia 5780 Powers Ferry Road, N.W. Same
Georgia Atlanta, GA 30327
- -----------------------------------------------------------------------------------------------------------------------------------
Ameribest Life Insurance Georgia 5780 Powers Ferry Road, N.W. 909 Locust Street
Company Atlanta, GA 30327 Des Moines, IA 50309
- -----------------------------------------------------------------------------------------------------------------------------------
Midwestern United Life Indiana 8605 Kings Mill Place 1290 Broadway
Insurance Company Fort Wayne, IN 46804 Denver, CO 80203-5699
- -----------------------------------------------------------------------------------------------------------------------------------
Equitable Life Insurance Iowa 909 Locust Street Same
Company of Iowa Des Moines, IA 50309
- -----------------------------------------------------------------------------------------------------------------------------------
ReliaStar Life Insurance Minnesota 20 Washington Avenue South Same
Company Minneapolis, MN 55401
- -----------------------------------------------------------------------------------------------------------------------------------
Security Connecticut Life Minnesota 20 Washington Avenue South 20 Security Drive
Insurance Company Minneapolis, MN 55401 Avon, CT 06001
- -----------------------------------------------------------------------------------------------------------------------------------
USG Annuity and Life Company Oklahoma c/o Horace Rhodes 909 Locust Street
201 RS Kerr, Suite 600 Des Moines, IA 50309
Oklahoma City, OK 73102
- -----------------------------------------------------------------------------------------------------------------------------------
Southland Life Insurance Texas c/o CT Corp. System 5780 Powers Ferry Road
Company 350 North St. Paul Street Atlanta, GA 30327
Dallas, TX 75201
- -----------------------------------------------------------------------------------------------------------------------------------
United Life and Annuity Texas c/o CT Corp. System 909 Locust Street
Insurance Company 350 North St. Paul Street Des Moines, IA 50309
Dallas, TX 75201
- -----------------------------------------------------------------------------------------------------------------------------------
Northern Life Insurance Company Washington 1501 Fourth Ave., Suite 1000 Same
Seattle, WA 98101-3616
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT 10.A(l)
First Amendment to asset management agreement
THIS FIRST AMENDMENT TO ASSET MANAGEMENT AGREEMENT (this "Amendment"),
dated as of January 1, 2001, is by and between GOLDEN AMERICAN LIFE INSURANCE
COMPANY, a Delaware corporation (the "Client"), and ING INVESTMENT MANAGEMENT
LLC, a Delaware limited liability corporation ("ING-IM").
WITNESSETH:
WHEREAS, the Client and ING-IM are parties to that certain Asset Management
Agreement dated as of January 20, 1998 (the "Asset Management Agreement"); and
WHEREAS, the Client and ING-IM desire to amend the Asset Management
Agreement with respect to the fees payable to ING-IM;
NOW, THEREFORE, for and in consideration for the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Client and ING-IM agree that the Asset Management Agreement is
hereby amended, effective January 1, 2001, to replace Exhibit "C" of the Asset
Management Agreement with the attached Exhibit "C".
IN WITNESS WHEREOF, the parties have executed this Amendment, as of the day
and year first above noted.
CLIENT GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ David L. Jacobson
----------------------
Name: David L. Jacobson
Title: Senior Vice President
ING-IM ING INVESTMENT MANAGEMENT LLC
By: /s/ Mark S. Jordhal
--------------------
Name: Mark S. Jordhal
Title: President
EXHIBIT "B"
ING INVESTMENT MANAGEMENT
ADVISORY FEE SCHEDULE
AS OF JANUARY 1, 2003
Annual Advisory Fees (based on assets under management):
(minimum is $50,000 for small portfolios)
- -------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Public bonds, MBS, CMO-A, Passtroughs 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Below investment grade 44.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Derivatives / Residuals / CMO-B 65.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Short Term Assets 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Actively managed common stock and preferred stock 52.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Indexed common stocks 10.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Commercial mortgages 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Real estate, foreclosed mortgages, and problem commercial loans 69.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
1.8 b.p. for first $1.0
|X| portfolio management and investment services (applied to all assets billion and 0.8 b.p. for the
under management per portfolio) excess
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
5.0 b.p. in additional to the
|X| separate accounts, segregated funds, and pension trusts asset class charge
- -------------------------------------------------------------------------------- --------------------------------
Production Fee (one-time fee assessed at close of transaction):
- -------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 23.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (international - investment guide) 33.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (BIG) 40.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 16.7
- -------------------------------------------------------------------------------- --------------------------------
EXHIBIT "C"
ING INVESTMENT MANAGEMENT
ADVISORY FEE SCHEDULE
AS OF JANUARY 1, 1998
Annual Asset Management Fees (based on assets under management):
- --------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| public bonds, MBS, CMO-A, preferred stock, 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
mortgages and short term investments
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| below investment grade 25.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| derivatives 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| CMO-B 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| actively managed common stock and other high yield stock programs 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| indexed common stocks 10.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| real estate, foreclosed mortgages, and problem commercial loans 72.7
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
1.8 b.p. for first $1.0
|X| portfolio management and investment services (applied to all assets billion and 0.8 b.p. for the
under management per portfolio) excess
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
5.0 b.p. in additional to the
|X| separate accounts, segregated funds, and pension trusts asset class charge
- --------------------------------------------------------------------------------- --------------------------------
Production Fee (one-time fee assessed at close of transaction):
(Excludes Equitable of Iowa)
- --------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 20.7
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (international - investment guide) 30.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (BIG) 40.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 16.7
- --------------------------------------------------------------------------------- --------------------------------
EXHIBIT 10.A(l)
First Amendment to asset management agreement
THIS FIRST AMENDMENT TO ASSET MANAGEMENT AGREEMENT (this "Amendment"),
dated as of January 1, 2001, is by and between GOLDEN AMERICAN LIFE INSURANCE
COMPANY, a Delaware corporation (the "Client"), and ING INVESTMENT MANAGEMENT
LLC, a Delaware limited liability corporation ("ING-IM").
WITNESSETH:
WHEREAS, the Client and ING-IM are parties to that certain Asset Management
Agreement dated as of January 20, 1998 (the "Asset Management Agreement"); and
WHEREAS, the Client and ING-IM desire to amend the Asset Management
Agreement with respect to the fees payable to ING-IM;
NOW, THEREFORE, for and in consideration for the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Client and ING-IM agree that the Asset Management Agreement is
hereby amended, effective January 1, 2001, to replace Exhibit "C" of the Asset
Management Agreement with the attached Exhibit "C".
IN WITNESS WHEREOF, the parties have executed this Amendment, as of the day
and year first above noted.
CLIENT GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ David L. Jacobson
----------------------
Name: David L. Jacobson
Title: Senior Vice President
ING-IM ING INVESTMENT MANAGEMENT LLC
By: /s/ Mark S. Jordhal
--------------------
Name: Mark S. Jordhal
Title: President
EXHIBIT "B"
ING INVESTMENT MANAGEMENT
ADVISORY FEE SCHEDULE
AS OF JANUARY 1, 2003
Annual Advisory Fees (based on assets under management):
(minimum is $50,000 for small portfolios)
- -------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Public bonds, MBS, CMO-A, Passtroughs 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Below investment grade 44.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Derivatives / Residuals / CMO-B 65.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Short Term Assets 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Actively managed common stock and preferred stock 52.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Indexed common stocks 10.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Commercial mortgages 25.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| Real estate, foreclosed mortgages, and problem commercial loans 69.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
1.8 b.p. for first $1.0
|X| portfolio management and investment services (applied to all assets billion and 0.8 b.p. for the
under management per portfolio) excess
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
5.0 b.p. in additional to the
|X| separate accounts, segregated funds, and pension trusts asset class charge
- -------------------------------------------------------------------------------- --------------------------------
Production Fee (one-time fee assessed at close of transaction):
- -------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 23.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (international - investment guide) 33.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| private placements (BIG) 40.0
- -------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 16.7
- -------------------------------------------------------------------------------- --------------------------------
EXHIBIT "C"
ING INVESTMENT MANAGEMENT
ADVISORY FEE SCHEDULE
AS OF JANUARY 1, 1998
Annual Asset Management Fees (based on assets under management):
- --------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| public bonds, MBS, CMO-A, preferred stock, 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
mortgages and short term investments
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| below investment grade 25.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| derivatives 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| CMO-B 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| actively managed common stock and other high yield stock programs 50.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| indexed common stocks 10.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 20.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| real estate, foreclosed mortgages, and problem commercial loans 72.7
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
1.8 b.p. for first $1.0
|X| portfolio management and investment services (applied to all assets billion and 0.8 b.p. for the
under management per portfolio) excess
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
5.0 b.p. in additional to the
|X| separate accounts, segregated funds, and pension trusts asset class charge
- --------------------------------------------------------------------------------- --------------------------------
Production Fee (one-time fee assessed at close of transaction):
(Excludes Equitable of Iowa)
- --------------------------------------------------------------------------------- --------------------------------
ASSET CLASS BASIS PPOINT FEE
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (investments grade) 20.7
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (international - investment guide) 30.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| private placements (BIG) 40.0
- --------------------------------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------- --------------------------------
|X| commercial mortgages 16.7
- --------------------------------------------------------------------------------- --------------------------------
EXHIBIT 10.A(m)
ADMINISTRATIVE SERVICES AGREEMENT
This Service Agreement (this "Agreement"), dated as of March 1, 2003 is
entered into by and between ReliaStar Life Insurance Company of New York, a New
York insurance company ("Company") and the affiliated companies specified in
Exhibit A hereto (each such affiliated company referred to herein as "Service
Provider").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties are affiliates under the common control of ING Groep,
N.V.; and
WHEREAS, each Service Provider possesses certain resources, including
experienced personnel, facilities and equipment, which enables it to provide
certain administrative, management, professional, advisory, consulting and other
services to support the Company's business; and
WHEREAS, Company desires Service Provider to perform certain administrative
and other services as more fully described below (collectively, "Services") for
the Company in its insurance operations, as Company may request, such Services
to be provided either directly by Service Provider or by third parties with
which Service Provider has negotiated agreements for the benefit of the Company
and other affiliates; and
WHEREAS, for the convenience of the parties, each Service Provider and
Company wish to enter into a single contract which will establish the
contractual rights and obligations as between each Service Provider and Company
but not as between the Service Providers; and
WHEREAS, Service Provider and the Company contemplate that such an
arrangement will achieve certain operating economies and improve Services to the
benefit of the Company; and
WHEREAS, Service Provider and the Company wish to assure that (i) all
charges incurred hereunder for Services are reasonable and in accordance with
the requirements of New York Insurance Department Regulation No. 33; and (ii) to
the extent practicable, such charges reflect actual costs and are arrived at in
a fair and equitable manner; and (iii) charges reflecting estimated costs,
whenever used, are adjusted periodically, to bring them into alignment with
costs actually incurred; and
NOW, THEREFORE, in consideration of the premises and of the mutual promises
set forth herein, and intending to be legally bound thereby, each Service
Provider and the Company agree as follows.
1. PEFORMANCE OF SERVICES.
(a) Provision of Services. Subject to the terms and conditions of this
Agreement, Service Provider agrees, to the extent requested by Company, to
provide such
Services as described in Exhibit B, and as specified to be provided by such
Service Provider in Exhibit C ("Services"), for Company as Company determines to
be reasonably necessary in the conduct of its insurance operations. Service
Provider may also negotiate with third parties for such Services to be provided
pursuant to agreements for the benefit of Company and affiliates.
(b) Performance Standards. Service Provider agrees that in performing or
providing functions or services hereunder, it shall use that degree of ordinary
care and reasonable diligence that an experienced and qualified provider of
similar services would use acting in like circumstances and experience in such
matters and in accordance with the standards, practices and procedures
established by Service Provider for its own business. Service Provider shall
perform services according to servicing standards of the Company or such other
standards as may be mutually agreed upon by the Company and Service Provider.
Service Provider shall comply with all laws, regulations, rules and orders
applicable to (i) the Company with respect to the services provided hereunder or
(ii) Service Provider. Service Provider agrees to maintain sufficient facilities
and trained personnel of the kind necessary to perform the services under this
Agreement.
(c) Underwriting. With respect to any underwriting services that are
provided to Company by Service Provider pursuant to this Agreement, it is
understood that (i) Service Provider shall provide such services in accordance
with Company's underwriting guidelines and procedures; and (ii) Company shall
retain all final underwriting authority.
(d) Collection and Handling of Premiums and Other Funds. With regard to the
collection of premiums, deposit and other remittances from policyholders
(including payment of principal or interest on contract loans) and from any
collection facility, including intermediaries and other persons or institutions
that receive remittances with respect to Company's business Company shall either
(i) perform these services on its own behalf; (ii) shall establish a lock-box
bank arrangement in its name for the deposit of amounts collected and Service
Provider employees shall direct the disbursement of funds from the lock-box bank
arrangement; or (iii) in the event a lock-box bank arrangement is not used,
Service Provider shall act in a fiduciary capacity with respect to such
payments, hold such payments for the benefit of Company, and after the required
processing of such payments, will immediately deposit such payments in one or
more bank accounts established by Company and subject to the control of officers
of Company.
(e) Claims Processing. It is understood that (i) Service Provider shall
provide such services in accordance with the claims guidelines and procedures
established and approved by Company's Board of Directors or committees thereof
from time to time and communicated in writing to Service Provider by Company;
and (ii) Company shall retain final approval authority for all claims. Payment
of claims shall be made using Company's checks. In performing claims services
for Company pursuant to this Agreement, Service Provider shall obtain and
maintain all necessary licenses and permits required in order to comply with
applicable laws and regulations, including an independent adjuster's license as
appropriate.
(f) Personal Contact or Communication with Company Policyholders. In
providing services with respect to this Agreement, Service Provider agrees that
any and all personal contact or communication, both oral and written, with
Company policyholders, insureds, beneficiaries and applicants will be done in
the name of and on behalf of Company. (As used herein, the term "policyholders"
shall include annuity contractholders and the term "policies" shall include
annuity contracts.) No mention of Service Provider will be made in any such
personal contact or communication with Company policyholders, insureds,
beneficiaries or applicants. Service Provider agrees to use Company letterhead
for all such written communications. Service Provider further agrees that if any
of its employees who have direct contact with Company policyholders, insureds,
beneficiaries or applicants perform such services from a location outside the
State of New York, Service Provider will establish and maintain a toll free
telephone number for use by Company policyholders, insureds, beneficiaries and
applicants.
(g) Capacity of Personnel and Status of Facilities. Whenever Service
Provider utilizes its employees to perform Services for Company pursuant to this
Agreement, such personnel shall at all times remain employees of Service
Provider subject solely to its direction and control, and Service 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 Service Provider used in performing Services for or subject to use
by Company shall be deemed to be transferred, assigned, conveyed or leased by
such performance or use pursuant to this Agreement.
(h) Exercise of Judgment in Rendering Services. In providing any Services
hereunder that require the exercise of judgment by Service Provider, Service
Provider shall perform any such Service in accordance with the standards set
forth herein and any additional guidelines Company develops and communicates to
Service Provider. In performing any Services hereunder, Service Provider shall
at all times act in a manner reasonably calculated to be in or not opposed to
the best interests of Company.
(i) Control. The performance of Services by Service Provider for Company
pursuant to this Agreement shall in no way impair the absolute control of the
business and operations of Service Provider or Company by their respective
Boards of Directors. Service Provider shall act hereunder so as to assure the
separate operating identity of Company. The performance of Service 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.
(j) Promotional, sales and advertising materials. Company shall be
responsible for all promotional, sales and advertising materials. Pursuant to
New York Insurance Department Regulation 34-A, Company is responsible for
issuing the final approval of all of its promotional, sales and advertising
materials prior to its use. Service Provider shall use only such documents as
have been approved by Company. Company shall maintain all promotional, sales and
advertising materials at its home office and in accordance with the New York
Insurance Department Regulation 34-A.
2. CHARGES; PAYMENTS.
(a) Charges. Company agrees to reimburse Service Provider at cost for
services and facilities provided by Service Provider pursuant to this Agreement.
The charge to Company for such services and facilities shall include all direct
and indirectly allocable expenses. The methods for allocating expenses to
Company shall be determined in accordance with the requirements prescribed in
Department Regulation No. 33. Such methods shall be modified and adjusted by
mutual agreement where necessary or appropriate to reflect fairly and equitably
the actual incidence of cost incurred by Service Provider on behalf of Company.
(b) Payments. Service Provider shall submit to Company within fifteen (15)
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 Service
Provider within fifteen (15) days following receipt of such written statement
the amount set forth in the statement. Within sixty (60) days after the end of
each calendar year, Service Provider shall submit to Company a statement of
actual apportioned expenses for such prior calendar year showing the basis for
the apportionment of each item. Company may request a written statement from
Service Provider setting forth, in reasonable detail, the nature of the services
rendered or expense incurred and other relevant information to support the
charge. Any difference between the amount of the estimated apportioned expenses
paid by Company and the amount of the actual apportioned expenses shall be paid
to either the Service Provider or Company, as the case may be, within fifteen
(15) days of the statement of actual apportioned expenses.
3. RECORDS.
(a) Maintenance of Books. The Service Provider and Company each shall
maintain its own books, accounts and records in such a way as to disclose
clearly and accurately the nature and detail of the transactions between them,
including such accounting information as is necessary to support the
reasonableness of charges under this Agreement, and such additional information
as Company may reasonably request for purposes of its internal bookkeeping and
accounting operations. Service Provider shall keep such books, records and
accounts insofar as they pertain to the computation of charges hereunder
available 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.
(b) Ownership and Custody of Records. All records, books, and files
established and maintained by Service Provider by reason of its performance of
services under this Agreement, which absent this Agreement would have been held
by the Company, shall be deemed the property of the Company and shall be
maintained in accordance with applicable law and regulation, including, but not
limited to, Regulation No.152. Such records should be available, during normal
business hours, for inspection by Company, anyone authorized by the Company, and
any governmental agency that has regulatory authority over Company's business
activities. Copies of such records, books and files shall be delivered to
Company on demand. All such records, books and files shall be promptly
transferred to Company by Service Provider upon termination of this Agreement,
or to the new Service Provider in the event a service is provided by a different
Service Provider. Service Provider shall maintain appropriate disaster recovery
processes and procedures, including provision of access to back up records and
to a disaster recovery site for records.
(c) Accounting Services. All records shall be maintained in accordance with
New York Insurance Department Regulation No. 152 (11 NYCRR 243). In addition to
the foregoing, a computer terminal, which is linked to the electronic system
that generates the electronic records that constitute Company's books of
account, shall be kept and maintained at Company's principal office in New York.
During all normal business hours, there shall be ready availability and easy
access through such terminal (either directly by New York Insurance Department
personnel or indirectly with the aid of Company's employees) to the electronic
media used to maintain the records comprising Company's books of account. The
electronic records shall be in a readable form.
Service Provider shall maintain format integrity and compatibility of the
electronic records that constitute Company's books of account. If the electronic
system that created such records is to be replaced by a system with which the
records would be incompatible, Service Provider shall convert such pre-existing
records to a format that is compatible with the new system.
Service Provider shall maintain acceptable backup (hard copy or another
durable medium, as defined in Regulation No. 152, as long as the means to access
the durable medium is also maintained at Company's principal office) of the
records constituting Company's books of account. Such backup shall be forwarded
to Company on a monthly basis and shall be maintained by Company at its
principal office in New York. If the electronic system being used to maintain
the records which comprise Company's accounting records is to be replaced by a
system incompatible with the existing system, Service Provider shall ensure that
all pre-existing records are accessible with the new system.
(d) Audit. Company and persons authorized by it or any governmental agency
having jurisdiction over Company shall have the right, at Company's expense, to
conduct an audit of the relevant books, records and accounts of Service Provider
upon giving reasonable notice of its intent to conduct such an audit. In the
event of such audit, Service Provider shall give to the party requesting the
audit reasonable cooperation and access to all books, records and accounts
necessary to audit during normal business hours.
4. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant Service Provider an exclusive right to provide Services to Company to the
extent not requested by Company pursuant to this Agreement, 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. Service Provider with
Company's consent, shall have the right to subcontract with any third party for
the performance of Services requested by Service Provider provided that Service
Provider shall remain responsible for the performance of services by any such
subcontractors; and provided further that the charges for any such services
subcontracted to an affiliate shall be determined on one or more of the bases
described in Paragraph 2.
5. TERMINATION.
(a) Termination. This Agreement shall remain in effect until terminated in
whole or in part by either Company or Service Provider upon giving ninety (90)
days or more advance written notice, provided that electronic data processing
services shall not be terminated by either party until one hundred and eighty
(180) days or more advance written notice of termination. Subject to the terms
(including any limitations and restrictions) of any applicable software
licensing agreement then in effect between Service Provider and any licensor,
Service Provider shall, upon termination of this Agreement, grant to Company a
perpetual license, without payment of any fee, in any electronic data processing
software developed or used by Service 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 Service Provider hereunder.
Upon termination, Service Provider shall promptly deliver to Company all books
and records that are, or are deemed by this Agreement, the property of Company.
(b) Settlement upon termination. No later than sixty (60) days after the
effective date of termination of this Agreement Service Provider shall deliver
to Company detailed written statements for all charges incurred and not included
in any previous statements to the effective date of termination. The amounts
owed or to be refunded hereunder shall be due and payable within fifteen (15)
days of receipt of such statements, unless Company sends written notice that
such amounts are disputed.
6. ARBITRATION.
(a) Any dispute or difference with respect to the operation or
interpretation of this Agreement on which an amicable understanding cannot be
reached shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and the Expedited
Procedures thereof.
(b) The arbitration shall be held in New York, New York, or such other
place as may be mutually agreed between Company and Service Provider, and the
arbitration panel shall consist of three arbitrators who must be active or
retired executive officers of life insurance companies other than the parties to
this Agreement, their affiliates or subsidiaries. Service Provider shall appoint
one arbitrator and Company the second. Such arbitrators shall then select the
third arbitrator before arbitration commences. Should one of the parties decline
to appoint an arbitrator or should the two arbitrators be unable to agree upon
the choice of a third, such appointment shall be left to the American
Arbitration Association.
(c) Decisions of the arbitrators shall be by majority vote. The award
rendered by the arbitrators shall be final and binding upon the parties, and
judgment upon the award rendered by the arbitrators may be entered in any Court
having jurisdiction thereof. Each party shall bear its own costs of the
arbitration, except that the fees of the arbitrators shall be borne equally by
the parties.
7. CONTACT PERSON(S). Service Provider and Company 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 as set forth in Exhibit 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.
8. NOTICE. All notices, statements or requests provided for hereunder shall
be in writing and shall be deemed to have been given when delivered by hand to
the person designated in Exhibit A for such or when sent by certified or
registered mail, postage prepaid or overnight courier service or upon
confirmation of transmission if sent by telecopier or e-mail to such person.
9. WAIVER. The failure of Service Provider or Company to insist on strict
compliance with this Agreement, or to exercise any right or remedy under this
Agreement, shall not constitute a waiver of any rights provided under this
Agreement, nor estop the parties from thereafter demanding full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.
10. CONFLICT WITH LAW. The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or enforceability of
any other term or provision hereof. If any provision of this Agreement should be
invalidated or superseded by specific law or regulation, such law or regulation
shall control to the extent of such conflict without affecting the remaining
provisions of this Agreement.
11. NO THIRD PARTY BENEFICIARIES. Except as otherwise specifically provided
for herein, nothing in this Agreement is intended or shall be construed to give
any person, other than the parties hereto, their successors and permitted
assigns, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
12. RELATIONSHIP OF THE PARTIES. This Agreement creates no contractual
relationship between the Service Providers party hereto, and the provisions of
this Agreement shall apply solely to each Service Provider and Company as if
each Service Provider had entered into a separate agreement with Company
conforming to this Agreement. Nothing contained in this Agreement shall be
construed to create the relationship of joint venture or partnership between
Service Provider and Company. Service Provider is an independent contractor and
shall be free, subject to the terms and conditions of this Agreement, to
exercise judgment and discretion with regard to the conduct of business.
13. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, permitted assigns
and legal representatives. Neither this Agreement, nor any right hereunder, may
be assigned by Service Provider or Company (in whole or in part) without the
prior written consent of the other.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and no other agreement, statement or promise not contained
in this Agreement shall be valid or binding.
15. AMENDMENT. This Agreement may be amended only by mutual consent in
writing signed by both parties.
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 one or more separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. GOVERNING LAW. This Agreement is entered into pursuant to and shall be
governed by, interpreted under, and the rights of the parties determined in
accordance with, the laws of the State of New York.
19. PRIVACY RIGHTS. The parties each hereby acknowledge and agree to comply
with all confidentiality and security obligations imposed on them, in connection
with the collection, use, disclosure, maintenance and transmission of personal,
private, health or financial information about individual policyholders or
benefit recipients, including without limitation, those laws currently in place
and those that may become effective during the term hereof, including without
limitation, the following: Gramm-Leach-Bliley Act, the Health Insurance
Portability and Accountability Act of 1996, IICFA Internet Security Policy and
any other applicable Federal laws and regulations or applicable laws and
regulations as enacted in various states and any existing and future rules and
regulations promulgated thereunder. The parties each agree to comply therewith
and to fully cooperate with each other and their contractors to the extent
reasonably necessary to allow the other (and such contractors) to comply
therewith. Service Provider shall immediately report to Company any use or
disclosure of any information in violation of this Agreement of which Service
Provider becomes aware.
20. CONFIDENTIALITY (a) Service Provider and Company agree that all
non-public information pertaining to the business of either party, and to
policyholders or claimants under any insurance policy, shall be confidential
and, unless specifically designated otherwise, be held in strict confidence and
not disclosed to any (i) non-affiliated third party unless written authorization
to make such disclosure has been given by the appropriate party, or unless
required by law, rule, regulation, a lawful order of a governmental or judicial
entity; or (ii) contractor, unless all of the following are satisfied (A) such
use or disclosure is permitted herein in connection with the Services, (B) such
use or disclosure is necessary in connection therewith, (C) such use or
disclosure complies with the privacy rights provision in Section 21 hereof, and
(D) such use or disclosure is only to those contractors who agreed to comply
with the terms herewith in a written confidentiality agreement. The parties
further agree that any such confidential information acquired during the course
of this Agreement shall continue to be treated as confidential information for a
period of five (5) years from the termination of this Agreement.
(b) The parties agree that the requirement of confidentiality under this
Agreement also applies to their employees and agents. Each party shall use
reasonable efforts to assure that its employees and agents adhere to the
confidentiality requirements set forth herein. It is agreed by the parties,
however, that use and disclosure of confidential information by employees and
agents is authorized to the extent necessary to carry out the terms and purposes
of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective duly authorized officers below.
ReliaStar Life Insurance Company of New York
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Equitable Life Insurance Company of Iowa
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Golden American Life Insurance Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING Financial Advisers, LLC
By: /s/ John F. Todd
----------------------------------------
Name: John F. Todd
Title: Assistant Secretary
ING Life Insurance and Annuity Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING North America Insurance Corporation
By: /s/ John F. Todd
----------------------------------------
Name: John F. Todd
Title: Assistant Secretary
ReliaStar Life Insurance Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Security Connecticut Life Insurance Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Security Life of Denver Insurance Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
Southland Life Insurance Company
By: /s/ Paula Cludray-Engelke
----------------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
LIST OF EXHIBITS
A Service Providers
B-1 Underwriting and New Business Processing Services
B-2 Producer Licensing, Contracting and Compensation Services
B-3 Policyowner and Claims Processing Services
B-4 Business Unit Actuarial and Financial Management Services
B-5 Information Services
B-6 Legal, Risk Management and Compliance Services
B-7 Human Resource Services
B-8 Marketing and Sales Promotion Services
B-9 Tax Services
B-10 Reinsurance Management and Administration Services
B-11 Management Services
B-12 Procurement, Supply, Printing, Record, File, Mail, Supply and Real
Estate Management Services
B-13 Corporate Accounting, Finance and Treasury Services
B-14 Pricing, Trading, Performance Reporting and Accounting Services for
Variable Products
C Services Chart
Exhibit A
SERVICE PROVIDERS
- ----------------------------------------------- ----------------------------------------------------- ---------------------------
COMPANY CONTACT NOTICE
- ----------------------------------------------- ----------------------------------------------------- ---------------------------
- ----------------------------------------------- ----------------------------------------------------- ---------------------------
ReliaStar Life Insurance Company of New York William Bonneville Principal Legal Counsel
1000 Woodbury Road, Suite 102 ReliaStar Life Insurance Company of New York ReliaStar Life Insurance
Woodbury, NY 11797 1000 Woodbury Road, Suite 102 Company of New York
Woodbury, NY 11797 1000 Woodbury Road, Suite 102
Woodbury, NY 11797
- ------------------------------------------------ ---------------------------------------------------- -----------------------------
- ------------------------------------------------ ---------------------------------------------------- -----------------------------
SERVICE PROVIDER CONTACT NOTICE
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
Equitable Life Insurance Company of Iowa Keith Gubbay Principal Legal Counsel
909 Locust Street Equitable Life Insurance Company of Iowa Equitable Life Insurance
Des Moines, IA 50309 909 Locust Street Company of Iowa
Des Moines, IA 50309 909 Locust Street
Des Moines, IA 50309
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
Golden American Life Insurance Company Keith Gubbay Principal Legal Counsel
1475 Dunwood Drive Golden American Life Insurance Company Golden American Life
West Chester, PA 19380 1475 Dunwood Drive Insurance Company
West Chester, PA 19380 1475 Dunwood Drive
West Chester, PA 19380
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
ING Financial Advisers LLC Bess Twyman Principal Legal Counsel
151 Farmington Avenue ING Financial Advisers LLC ING Financial Advisers LLC
Hartford, CT 06156 151 Farmington Avenue 151 Farmington Avenue
Hartford, CT 06156 Hartford, CT 06156
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
ING Life Insurance and Annuity Company Keith Gubbay Principal Legal Counsel
151 Farmington Avenue ING Life Insurance and Annuity Company ING Life Insurance and
Hartford, CT 06156 151 Farmington Avenue Annuity Company
Hartford, CT 06156 151 Farmington Avenue
Hartford, CT 06156
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
ING North America Insurance Corporation Scott Burton Principal Legal Counsel
5780 Powers Ferry Road, NW ING North America Insurance Corporation ING North America Insurance
Atlanta, GA 30327 5780 Powers Ferry Road, NW Corporation
Atlanta, GA 30327 5780 Powers Ferry Road, NW
Atlanta, GA 30327
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
ReliaStar Life Insurance Company Keith Gubbay Principal Legal Counsel
20 Washington Avenue South ReliaStar Life Insurance Company ReliaStar Life Insurance
Minneapolis, MN 55401 20 Washington Avenue South Company
Minneapolis, MN 55401 20 Washington Avenue South
Minneapolis, MN 55401
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
Security Connecticut Life Insurance Company Keith Gubbay Principal Legal Counsel
20 Security Drive Security Connecticut Life Insurance Company Security Connecticut Life
Avon, CT 06001 20 Security Drive Insurance Company
Avon, CT 06001 20 Security Drive
Avon, CT 06001
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
Security Life of Denver Insurance Company Keith Gubbay Principal Legal Counsel
1290 Broadway Security Life of Denver Insurance Company Security Life of Denver
Denver, CO 80203 1290 Broadway Insurance Company
Denver, CO 80203 1290 Broadway
Denver, CO 80203
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
- ----------------------------------------------- ----------------------------------------------------- -----------------------------
Southland Life Insurance Company Keith Gubbay Principal Legal Counsel
5780 Powers Ferry Road, NW Southland Life Insurance Company Southland Life Insurance
Atlanta, GA 30327 5780 Powers Ferry Road, NW Company
Atlanta, GA 30327 5780 Powers Ferry Road, NW
Atlanta, GA 30327
- ---------------------------------------------------------- ----------------------------------------------------- ------------------
Exhibit B-1
Underwriting and New Business Processing Services
Services related to underwriting and new business processes including:
1. Underwriting and risk consulting services.
2. Analysis of underwriting standards.
3. Assistance and advice in the development of appropriate underwriting
standards in accordance with all laws and regulations of the Company's
state.
4. Perform underwriting in accordance with Company guidelines.
5. Provide medical and/or technical support and advice to underwriting.
6. Approve for issue all applications which meet underwriting criteria.
7. Process all approved applications and issue and deliver policies to
policyholders.
8. Financial and other reporting in connection with underwriting and new
business processing.
Exhibit B-2
Producer Licensing, Contracting and Compensation Services
Services related to producer licensing and contracting including:
1. Assist with pre-appointment investigations of producers.
2. Administer producer licenses, and contracts and maintain a computer
database for license and contract status.
3. Assist in development of and administer producer compensation and
commission accounting.
Exhibit B-3
Policyowner and Claims Processing Services
Services related to policyowner and claims processing including:
1. Billing, collection, administration and accounting for premiums,
contract payments and withdrawals, and maintenance of customer and
beneficiary accounts.
2. Customer service including response to customer inquiries by telephone
or letter, administration of changes to customer and beneficiary
accounts.
3. Administration of policy changes.
4. Administration and customer support for claims, annuitizations,
rollovers, contract payouts, distribution of benefits and
conservation.
5. Processing claims and/or rendering, medical or technical support and
advice relating to the processing, settlement and payment of claims.
6. Surrender, lapse and maturity processing.
7. Financial and other reporting in connection with premiums, policyowner
and processing services.
Exhibit B-4
Business Unit Actuarial and Financial Management Services
Actuarial and financial management related services including:
1. Actuarial consulting services, including clerical, technical and
product actuarial support and product development support.
2. Preparing actuarial reports, opinions and memoranda and assistance
with asset/liability management and cash flow testing.
3. Conducting product experience studies.
4. Preparing reserve calculations and valuations.
5. Development of new products.
6. Evaluation of product performance versus expectations.
7. Consultation and technical assistance in all matters relating to
corporate financing, cash management, financial analysis and financial
systems and programming.
8. Internal and external management reporting services, including
coordination of annual planning process, preparation and consolidation
of monthly operation results, management and policyholder information
reports (e.g., annual reports), maintenance of reporting systems and
provision of cost account reports and services.
9. Premium accounting.
10. Assisting in development of budgets, business plans and financial
models.
11. Determine and make entries, and prepare books of account including
general ledgers, transaction ledgers and trial balances which will be
reviewed for accuracy by officers of Company.
12. Prepare financial statements and reports, including annual, quarterly
and monthly GAAP and statutory financial statements.
13. Enter data regarding customer records information related to premium
or annuity considerations sent to lockboxes, provided that Company
will verify that all such information is accurate and properly
reflected.
14. Arrange bank accounts in the name and control of Company, and
processing receipts and disbursements subject to the direction and
control of Company subject to the provisions of Section 1(d) of the
Agreement.
15. Commission accounting, including calculation of commissions and
generation and delivery of checks.
Exhibit B-5
Information Services
Services related to information management including:
1. Professional, technical, supervisory, programming and clerical support
for information services.
2. Informational and computer services may be in the nature of
applications and programming support, enhancing existing systems,
helping to install new systems.
3. Develop data processing systems strategy.
4. Implement systems strategy.
5. Program computers.
6. Provide data center services, including maintenance and support of
mainframe and distribution process hardware and software.
7. Standard systems for product administration, accounts payable,
accounting and financial reporting, human resource management and
inventory control.
8. Manage data and voice communications systems.
9. Manage local area networks and other desktop software and systems.
10. Provide data security and maintain effective disaster recovery
program.
11. Purchase hardware, software and supplies.
Exhibit B-6
Legal, Risk Management and Compliance Services
Services related to legal, risk management and compliance including:
1. Provide counsel, advice and assistance in any matter of law, corporate
governance and governmental relations, including advisory and
consulting services, in connection with the maintenance of corporate
existence, licenses, dealings with regulatory agencies, development of
products, contracts and legal documents, product approvals,
registration and filing of insurance and securities products, handling
of claims and matters involving legal controversy, assist with dispute
resolution, select, retain and manage outside counsel and provide
other legal services as reasonably required or requested.
2. Provide assistance in any matter relating to risk management,
including procurement of fidelity bond insurance, blanket bonds,
general liability insurance, property damage insurance, directors' and
officers' liability insurance, workers compensation, and any other
insurance purchased by the Company.
3. Assist in the development and maintenance of a corporate compliance
program and a state insurance fraud reporting program. Assist in
maintaining appropriate records and systems in connection with the
Company's compliance obligations under applicable state law.
4. Provide assistance with internal audit including review of operational
procedures, performance of compliance tests, and assistance to
independent auditors.
Exhibit B-7
Human Resource Services
Services related to human resource management including:
1. Personnel recruiting and support services.
2. Design and implementation of human resources training.
3. Compensation studies and benefits consulting.
4. Support employee communications.
5. Payroll services.
6. Benefits compensation and design and administration.
7. Employee relations.
Exhibit B-8
Marketing and Sales Promotion Services
Services related to marketing and sales promotion including:
1. Prepare sales promotional items, advertising materials and art work,
design, text and articles relevant to such work, including clerical,
technical and supervisory support and related communications.
2. Support general communications with producers.
3. Conduct formal insurance market research.
4. Develop sales illustrations, advertising materials, and software for
products, in compliance with state laws.
5. Design and implement training programs, including product and industry
developments and legal compliance.
6. Distribute to employees and/or agents underwriting guidelines for the
products, where applicable.
7. Analyze and develop compensation and benefit plans for general agents
and agents.
8. Plan and support of producer conferences.
Exhibit B-9
Tax Services
Services related to tax including:
1. Maintenance of tax compliance, including tax return preparation and
review of financial statement tax provisions.
2. Management of tax and audit appeals, including processing information
requests, protest preparation, and participation in any appeals
conference.
3. Direction of tax research and planning, including research of
compliance issues for consistency, development of tax strategies and
working with new legislative proposals.
4. Administration of tax liens, levies and garnishment of wages of
Company employees and agents
Exhibit B-10
Reinsurance Management and Administration Services
Services related to reinsurance management and administration including:
1. Advise with respect to reinsurance retention limits.
2. Advice and support with respect to negotiation of reinsurance
treaties.
3. Advice and support with respect to the management of reinsurer
relationships.
Exhibit B-11
Management Services
Services related to general management including:
1. Consultative and advisory services to the Company's senior executive
officers and staff with respect to conduct of the Company's business
operations and the execution of directives and resolutions of the
Company's Board of Directors pertaining to business operations and
functions, including provision of personnel to serve as officers and
directors of Company.
2. Consultation and participation in the Company's strategic planning
process; the development of business goals, objectives and policies;
the development of operational, administrative and quality programs;
preparation of financial and other reports; and the coordination of
such processes, goals, objectives, policies and programs with those of
the holding company.
3. Advice and assistance with respect to maintenance of the Company's
capital and surplus, the development and implementation of financing
strategies and plans and the production of financial reports and
records.
4. Representation of the Company's interests at government affairs and
industry meetings; participation in the deliberation and affairs of
trade associations and promotion of the Company's products and
relationships with the public.
5. Consultative, advisory and administrative services to the Company's
senior executive officers and staff in respect to development,
implementation and administration of human resource programs and
policies, the delivery of communications and information to employees
regarding enterprise plans, objectives and results; and the
maintenance of employee relations, morale and developmental
opportunities.
6. Direction and performance of internal audits and arrangement for
independent evaluation of business processes and internal control.
Exhibit B-12
Procurement, Supply, Printing, Record, File, Mail and
Real Estate Management Services
Services related to procurement, supplies, printing, records, files, mail and
real estate management including:
1. Procurement and supply purchasing services, including negotiation of
supply and services purchasing agreements and distribution of
supplies.
2. Printing, record, file, mail and supply services including,
maintaining policy files; document control; production and
distribution of standard forms, stationary, business cards and other
material; arrangement of warehouse storage space; supply fulfillment;
mail processing, delivery and shipping; participation in purchasing
agreements; retrieval and production of documents for regulatory
examinations and litigation; and development and administration of
record retention programs.
3. Real estate management services.
Exhibit B-13
Corporate Accounting, Finance and Treasury Services
Services related to corporate accounting, finance and treasury including, but
not limited to:
1. Accounts Payable: Making vendor payments, monitoring recurring
payments, processing stop payments, preparation and filing sales and
use tax reports and returns, responding to questions from vendors,
processing travel and expense reports, maintaining check stock and
providing copies of check images to the Companies.
2. Fixed Assets: Accounting for real estate transactions, maintaining the
fixed asset records and processing payments for property taxes.
3. General Ledger: Processing journal entries, processing expense
allocations, establishing and maintaining accounts and cost centers,
processing intercompany transactions and processing the monthly
closing.
4. Financial Reporting: Generating applicable monthly, quarterly and
annual financial statements on statutory, US GAAP, tax and ING (Dutch)
GAAP bases; monitoring changes to statutory, US GAAP, tax and ING GAAP
accounting standards; corresponding and coordinating reporting to
regulatory agencies; coordinating the external audit with the external
auditors; coordinating external examinations with state insurance
departments; preparing and filing RBC calculations, preparing and
filing escheat reports, preparing and filing benefit plan reports, and
preparing other required regulatory filings.
5. Treasury/Cash Management: Maintaining banking relationships,
performing cash management procedures and short-term investment of
cash balances, and processing of wire transfers.
6. Other: Preparing budget and planning reports for finance shared
services, monitoring suspense account reports and other matters as
requested by each Company, and management of external auditor
relations.
7. Consultation and technical assistance in matters related to corporate
financing, cash management, financial analysis, capital and surplus,
specialized financial systems and programming, and development of
budgets, business plans and financial models.
8. Investment accounting services, including interface with Company
investment manager for documentation of investment transactions,
recording financial activity and compliance reporting.
9. Internal and external management reporting services, including
coordination of annual planning process, preparation and consolidation
of monthly operation results, management and policyholder information
reports (e.g., annual reports), maintenance of reporting systems and
provision of cost account reports and services.
Exhibit B-14
Pricing, Trading, Performance Reporting and
Accounting Services for Variable Products
Services related to support of day to day pricing, trading, performance
reporting and accounting operations for variable products, including but not
limited to:
1. Pricing. Collect pricing information (net asset value and ordinary
income / capital gain distributions) from Investment Companies, and
where applicable, calculate the variable account unit value. Provide
pricing information to the applicable administrative systems /
business units and external business partners; pricing calculations
for insurance products shall be reported as required by the prospectus
for each product.
2. Trading. Collect net trade data from administrative systems,
consolidate to a legal entity level per investment option, and submit
to Investment Companies; on a daily basis reconcile the shares / trade
per to Investment Company; provide wire data for the settlement of
trades placed.
3. Accounting. Post to ledger the entries supporting the trades and wires
processed; entries will include any applicable Variable Annuity
Account contract charges; daily reconcile entries posted to ledger /
market value to Variable Annuity Account liability / reserve; provide
Variable Annuity Account data for the Financials and Insurance Company
Schedule D.
4. Investment Company Revenue. Calculate asset based revenue /
sub-accounting fees monthly and post accruals to the ledger; collect
revenue from investment companies in a timely manner; reconcile
amounts received to the estimated calculated, and book actual payments
to ledger.
5. Performance Reporting. Calculate product and investment option level
returns in accordance with SEC and NASD guidelines; provide returns to
ING applications, web sites, marketing, and field.
EXHIBIT 10.A(n)
THIRD AMENDMENT TO ASSET MANAGEMENT AGREEMENT
This Third Amendment to Asset Management Agreement (this "Amendment")
amends the Asset Management Agreement between ING Investment Management LLC
("ING-IM") and Golden American Life Insurance Company ("Client"). This Amendment
is dated as of August 18, 2003.
1. Background. ING-IM and Client are parties to an Asset Management
Agreement, dated January 20, 1998, as amended (the "Agreement"), pursuant to
which ING-IM provides Client with certain investment advisory services. ING-IM
and Client wish to clarify the limited circumstances under which ING-IM may have
custody of Client funds or securities under the Agreement. Although the parties
do not intend by this Amendment to address whether or not Original Mortgage
Documents (as defined below) are in fact securities, it is the intention of
ING-IM and Client that, except as may be otherwise agreed from time to time,
ING-IM will not have actual or constructive custody of Client funds or
securities other than Original Mortgage Documents.
2. Amendment to Section 3 of the Agreement. Section 3 of the Agreement is
hereby amended to add the following to the end of such Section:
"Notwithstanding anything to the contrary in this Section 3, except with regard
such Original Mortgage Documents as are selected by ING-IM from time to time,
and as may otherwise be agreed between ING-IM and Client:
(a) ING-IM shall not maintain physical custody of Client funds or
securities; and
(b) ING-IM shall not have the power to direct any custodian or other third
party to transfer Client funds or securities, except in the case of
(i) transactions involving a delivery vs. payment or vice versa, (ii)
free receipts into Client Accounts, (iii) transfers between Client's
own accounts, (iv) transfers to satisfy margin or collateral calls by
brokers or other counterparties, and (v) other transactions that would
not reasonably be considered to result in actual or constructive
custody of Client funds or securities.
"Original Mortgage Documents" means original (a) mortgage notes, (b)
certificates of participation where more than one entity has invested in the
mortgage via a participation agreement, and (c) letters of credit, as
applicable, that are provided from time to time by borrowers as additional
security."
3. Amendment to Section 7 of the Agreement. The second sentence of Section
7 of the Agreement is hereby amended to add the language highlighted in italics
below:
"Except as specially contemplated by Section 3, ING-IM shall not maintain
custody of Client funds or securities or otherwise act as custodian for the
Account."
4. Amendment to Section 10 of the Agreement. Section 10 of the Agreement is
hereby amended to read as follows:
Section 10. LIABILITY OF ING-IM - In rendering services under this
Agreement, ING-IM will not be subject to any liability to Client or to any other
party for any act or omission of ING-IM except as a result of ING-IM's
negligence, misconduct or violation of applicable law. Nothing herein shall in
any way constitute a waiver or limitation of any rights of any party under
applicable Federal or State law.
5. Amended Agreement. Except as specifically amended by this Amendment,
each and every term of this Agreement remains in full force and effect.
CLIENT Golden American Life Insurance Company
By: /s/ Paula Cludray-Engelke
--------------------------------
Name: Paula Cludray-Engelke
Title: Secretary
ING-IM: ING INVESTMENT MANAGEMENT LLC
By: /s/ Fred C. Smith
--------------------------------
Name: Fred C. Smith
Title: Executive Vice President
EXHIBIT 10.A(o)
LEASE AGREEMENT
BETWEEN
DUNWOODY ASSOCIATES
a Pennsylvania limited partnership
as Lessor
and
GOLDEN AMERICAN LIFE INSURANCE COMPANY
as Lessee
Date: April 6th, 1998
TABLE OF CONTENTS
1. Premises 1
1.1 Agreement to Lease 1
1.1.1. Lessee's Proportionate Share 1
1.2 Improvements 1
1.3 Intentionally Omitted 2
1.4 Condition 2
1.5 Lessor's Compliance 2
1.6 Option to Expand 3
2. Term
2.1 Original Term 3
2.2 Delay in Possession 4
2.3 Confirmation of Lease 4
2.4 Changes 4
2.5 Force Majeure 5
2.6 Lessee Delays 5
2.7 Options to Extend 5
2.8 Early Occupancy 6
3. Rent 6
3.1 Base Rent 6
3.2 Payment 6
3.4 Increase in Base Rent 7
3.5 Operating Expense Allowance 7
3.6 Operating Expense Adjustments 7
3.7 Taxes 10
3.7.1 Personal Property Taxes 10
3.7.2 Right to Contest Taxes 10
4. Use 10
4.1 Permitted Use 10
4.2 Fixtures Alterations 10
4.3. Lessee's Compliance 11
4.4 Lessor's Access 11
5. Hazardous Substances 11
5.1 Hazardous Substance Defined 11
5.2 Lessor Indemnification 11
5.3 Lessee Indemnification 12
6. Maintenance 12
6.2 Lessor's Obligations 12
6.3 No Liens 12
6.4 No Other Services by Lessor 12
7. Insurance, Indemnification 13
7.1 Payment for Insurance 13
7.2.1 Carried by Lessee 13
7.2.2 Carried by Lessor 13
7.3 Other Matters 13
7.4. Additional Insureds 14
7.5 Waiver 14
7.6 Indemnification 14
8. Damage or Destruction 15
8.1 General 15
8.2 Rent Abatement 15
9. Condemnation 15
9.1 Total Taking 15
9.2 Partial Taking 15
9.3 Award 16
10. Utilities 16
11. Assignments and Subletting 16
12. Default: Breach; Remedies 16
12.1 Events of Default 16
12.2 Remedies 17
13. Broker's Fee 17
14. Estoppel Certificate 17
15. Severability 18
16. Notices 18
17. Waivers 18
18. Recording 19
19. Surrender 19
20. No Right to Holdover 19
21. Cumulative Remedies 19
22. Binding Effect: Choice of Law 19
23. Subordination: Attornment; Non-Disturbance 19
23.1 General 19
24. Signage 20
25. Quiet Possession 20
26. Time of the Essence 20
27. Entire Agreement 21
28. Amendments 21
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") date for reference purposes only as of
the 6th day of April, 1998, by and between Dunwoody Associates, a Pennsylvania
limited Partnership and/or Their Assignee ("Lessor"), and Golden American Life
Insurance Company, a Delaware Corporation ("Lessee").
NOW, THEREFORE, for and in consideration of the rents, covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Premises.
1.1 Agreement to Lease. Lessor hereby leases to Lessee, and Lessee
hereby leases fro Lessor that certain real property consisting of
approximately 15.87 acres, including all improvements therein or to be
provided by Lessor under the terms of this Lease, and commonly known as Lot
G of the Glenloch Corporate Campus, West Whiteland Township, located in the
County of Chester, Commonwealth of Pennsylvania and generally described as
all of that certain real property and the improvements now or hereafter
existing or constructed thereon, including an approximately 65,000 square
foot, 3-story office building and parking on the Premises (as hereinafter
defined) to be constructed by Lessor pursuant to the terms hereof, and more
particularly described in Exhibit A attached hereto (the "Premises").
1.1.1 Lessee's Proportionate Share 100% (determined by dividing
the area leased by Lessee by the area of the building). Lessee shall
only pay for its prorata share of Operating Expenses for space which
it occupies, and common area it uses. Prorata share for exterior
common areas will be based on the total square footage of buildings
constructed on Lots F, G & H.
1.2 Improvements. Lessor will construct or install the building,
parking, landscaping interior improvements and all other improvements on
the Premises (collectively, the "Improvements"), described in Exhibit "B".
Lessor has included as part of the improvements a $25/SF of Building
Interior Finish Allowance ("Allowance") in order to construct the interior
finishes such as doors, walls, ceilings, flooring, electrical and HVAC
distribution, etc. This Allowance is in an addition to the shell building
as described in the "Three Story Shell Office Building" Project Outline
Specification attached as part of Exhibit "B". If Lessee's final floor plan
and finish selections cost in excess of the Allowance, Lessee shall pay
directly to Lessor the additional cost. If the cost of the final floor plan
and finish selections are less than the improvements as described above
shall remain the property of Lessor upon lease expiration. Lessor has
caused to be prepared "Plans and Specifications" for the Improvements on
the Premises (preliminary copies of which are attached hereto as Exhibit
"B"), which Plans and Specifications will be delivered by Lessor to Lessee
in completed form on or before June 1, 1998. Interior finish plans will be
completed on or before June 30, 1998. Within fifteen (15) business days
after Lessee receives the Plans and Specifications from Lessor, Lessee
shall either approve or disapprove the Plans and Specifications, in
writing, delivered to Lessor and noting with reasonable particularity any
changes or corrections therein.
If Lessee makes any changes or corrections to the Plans and Specifications,
Lessor's architect shall resubmit the revises Plans and Specifications to
Lessee within fifteen (15) business days after receipt by Lessor or
Lessee's changes or corrections and, thereafter Lessee shall either approve
or disapprove the revised Plans and Specifications within fifteen (15)
business days after Lessee's receipt of same, which approval or disapproval
shall be in writing, delivered to Lessor, nothing with reasonable
particularity any further changes or corrections therein. A copy of the
final approved plans and specifications shall be attached hereto as Exhibit
"B" and shall replace the preliminary copies attached hereto on the date of
execution. All costs to Lessee, including Lessee's architect, engineers
and/or consultants, in reviewing and revising the Plans and Specifications
shall be the sole responsibility of Lessee. Thereafter, Lessor will
complete the Improvements on or before the Commencement Date (as
hereinafter defined), at Lessor;'s sole cost and expense, except as
otherwise expressly provided in this Lease, in accordance with the approved
Plans and Specifications. Upon written request from Lessee, Lessor shall be
responsible for and promptly make any and all repairs to the Improvements
necessitated by any defective workmanship or materials which occur during
the Term. Lessor shall maintain and enforce any warranties and/or
guarantees from Lessor's general contractor, subcontractor and/or
materialmen in connection with the construction of the Improvements
throughout the Term of the Lease.
1.3 Intentionally Omitted.
1.4 Condition. Lessor shall deliver the Improvements to Lessee broom
clean and free of debris on the Commencement Date and warrants that the
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and
air conditioning systems ("HVAC"), loading doors, if any, and all other
such elements in the Improvements provided by Lessor, other than those
constructed by Lessee, shall be in new operating condition on said date and
that the structural elements of the roof, bearing walls and foundation of
the Building shall be free of material defects. If Lessee determines that a
non-compliance with said warranty exists, Lessor shall, as Lessor's sole
obligation with respect to such matter, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of non-compliance, rectify the
same at Lessors's expense.
1.5 Lessor's Compliance Lessor represents and warrants to Lessee that
the Improvements in and on the Premises shall comply with all applicable
laws, covenants, restrictions of record, building codes, regulations and
ordinances in effect on the Commencement Date, including the Americans with
Disabilities Act. Said warranty also applies to the use to which Lessee
will put the Premises as described in Paragraph 4.1 herein. If the Premises
do not comply with said representation and warranty, Lessor shall, except
as otherwise provided in this Lease, promptly after receipt of written
notice from Lessee setting forth with specificity the nature and extent of
such non-compliance, rectify the same at Lessor's expense.
1.6 Option to Expand Lessor hereby grants to Lessee the sole option to
expand the Building on the Premises (the "Expansion Option") up to a
maximum of an additional 60,000 square feet (as delineated as "Expansion
Area" on Exhibit B). Lessee may exercise the Expansion Option anytime prior
to June 30, 1999 by providing written notice to Lessor which notice
indicates the approximate number of square feet of the expansion. Lessee
shall have the option of expanding the building by a minimum of 20,000
square feet and a maximum of 60,000 square feet. If Lessee desires to
expand less than 60,000 square feet of Expansion Space, Lessor, at Lessor's
option, shall be permitted to construct the entire 60,000 square foot
expansion area, and lease the balance of the expansion area to other
tenants, thereby making the building a multi-tenant building. If the
building is multi-tenanted, Lessee's operating expenses shall be prorated
based on square footage leased by each Tenant. If the building is
multi-tenanted, Lessor agrees that all other Tenants will use the Premises
primarily as general office use, as described in Paragraph 4.1.
All building expansions will include a $25/SF Lessee Improvement Allowance,
which Allowance shall be used exclusively for the construction of interior
finishes, including, but not limited to, wiring, phone equipment, security
systems, etc., in the Expansion Area. No additional lobby area will be
included in the Building Expansion. One elevator and additional bathroom
fixtures in a quantity not to exceed 50% of the existing bathroom fixtures
will be included in the Base Building Expansion. Base rent on the building
expansion will be calculated based on the following formula:
$15.25/SF x Ten year treasury rate on date of financing of the expansion + 175 basis points
Ten year treasury rate on date of initial financing + 175 basis points
x square foot of Building Expansion occupied by Lessee
Expansion space base rent shall escalate at the same percentage increases
as the base lease.
In the event Lessee exercises its right to expand, the lease term shall be
reset to a new ten (10) year lease term commencing on the Commencement Date
as defined in Section 2.1(ii) herein.
2. Original Term The Original Term of this Lease shall commence on the
Commencement Date and continue for a period of ten (10) years. The
"Commencement Date" of the Original Term shall be later to occur of (i)
December 31, 1998, or (ii) the date upon which Lessor "substantially
completes" the Improvement in the Premises (for which date Lessee) shall
receive thirty (30) days prior written notice). The term "Substantial
Completion Date" shall be the date on which all of the following have first
occurred: (A) the Improvements are available for Lessee's uninterrupted use
and occupancy with a minimum of Lessor interference, except for Lessor's
completion of any minor work (e. g. "punch-list items) and (B) the
Improvements have passed final inspection by the applicable local
government authority in accordance with applicable law and a certificate of
occupancy. Upon Lessee's submission of a written list of punch-list items,
at Lessor's sole cost and expense, as detailed in Paragraph 2.4, within
thirty (30) days after the Commencement Date, subject to Paragraphs 2.4 and
2.5 below.
2.2 Delay in Possession. In the event Lessee is unable to take
possession of the Improvements within 45 days of December 31, 1998 as a
result of Lessor's failure to deliver the substantially completed
improvements (other than as a result of changes required by Lessee which
result in delays). Lessee shall be entitled to two (2) days of free Base
Rent for each day substantial completion is delayed. In the event Lessee is
unable to take possession of the Improvements within ninety (90) days of
December 31, 1998 as a result of Lessor's failure to deliver the
substantially completed improvements (other than as a result of Changes
required by Lessee which result in delays), Lessee shall have the right to
terminate this Lease without further obligation to Lessor.
2.3 Confirmation of Lease Prior to or on the Commencement Date, Lessor
and Lessee shall execute the Confirmation of Lease Agreement (the
"Confirmation Agreement"), whereby Lessor and Lessee confirm, in writing,
the Commencement Date, the Expiration Date, the monthly Base Rent payable
by Lessee for the Original Term, and the final square footage of the
Building, to be certified by an Architect in accordance with the method of
measuring square footage used on the final plans attached as Exhibit "B",
which is, actual floor areas shall be measured from the outside face of
exterior walls, and in the event of multi-tenancy, floor areas will be
measured to the middle of any demising walls between Tenants. The form of
the Confirmation Agreement is attached hereto as Exhibit "E".
2.4 Changes If Lessee requests any change, addition or alternation to
the Plans and Specifications, or the Plans, after Lessee's approval of same
or during Lessor's construction and completion of the Improvements
(collectively, "Changes"), Lessor shall promptly give Lessee an estimate of
the costs of such Changes and the resulting delay, if any, in completion of
the Improvements. Within five (5) business days after Lessee's receipt of
such written estimate from Lessor, Lessee shall give Lessor written notice
indicating whether or not Lessee elects to proceed with any such Changes.
If Lessee elects to proceed with such Changes and if Lessor has reasonably
approved such Changes, Lessor will make such Changes. If Lessee elects not
to proceed with such Changes or fails to timely notify Lessor of Lessee'
election, Lessor shall complete the Improvements in the Premises without
making such Changes. Lessor shall not be responsible, in any manner
whatsoever, for any delay caused by Lessee's request for the construction
of such Changes.
2.5 Fore Majeure If the performance by Lessor of any act required
herein or elsewhere in the Lease is prevented or delayed by reason of
strikes, lock-outs, labor disputes, acts of God, fires, floods,
earthquakes, epidemics, freight embargoes, unforeseeable unavailability of
materials and supplies, or any other cause beyond Lessor's reasonable
control, Lessor shall be excused from performance for the time period of
the prevention or delay, and the Commencement Date (if the Commencement
Date has not already occurred and the delay in Lessor's performance relates
directly to the construction and completion of the Improvements), shall
also be extended for the period of time of the prevention or delay.
Notwithstanding anything to the contrary set forth in the Lease, Lessor
shall use its best efforts to avoid and/or mitigate any such force majeure
delays, other than Lessor's use of overtime or week-end work, special
deliveries of materials, or other extra efforts, unless approved by Lessee.
If such delays extend for a period of ninety (90) days beyond December 31,
1998, Lessee shall have the right to terminate lease.
2.6 Lessee Delays To the extent that the Commencment Date has not
occurred because Lessor was delayed in Lessor' substantial completion of
the Improvements as a result of any of the following (collectively, "Lessee
Delays"): (i) Lessee's failure to complete any material item on or before
the due date, which is responsibility of Lessee to complete; (ii) Lessee's
request for Changes or Lessor's construction of any such Changes; (iii)
Lessee's request for materials, finishes, or installations other than those
described in the Plans and Specifications and/or Plans: (v) any act or
failure to act by Lessee or its employees, agents, architects, independent
contractors, consultants and/or any other person performing or required to
perform services on behalf of Lessee, then as soon as reasonably possible,
but in no event more than fourteen (14) days after the occurrence or start
of any Lessee Delays, Lessor shall notify Lessee, in writing, of any Lessee
Delays. If Lessor properly notifies Lessee hereunder of any Lessee Delays
that have previously been accepted in writing by Lessee, the Commencement
Date shall be adjusted by the net number of days so delayed (determined on
a critical path basis).
2.7 Options to Extend. Provided that there is not material default by
Lessee thereunder at the time of any "Option Notice" (as hereinafter
defined) or the commencement date of any Option Term, Lessor hereby grants
to Lessee two (2) consecutive Options to renew the Lease for a period of
five (5) years (each an "Option Term" or, collectively the "Option Terms").
An Option must be exercised, if at all, by written notice delivered by
Lessee to Lessor (the "Option Notice") but not later than six (6) months,
prior to the end of the Original Term or any subsequent Option term.
Provided Lessee has timely delivered the applicable Option Notice, the
Original Term and any subsequent Option Term, as and if applicable, shall
be extended by an Option Term, and all of the terms, covenants and
conditions, of this Lease shall remain unmodified and in full force and
effect, except that the Base Rent payable for the Premises during an Option
Term shall be determined in accordance with Paragraph 3 below.
2.8. Early Occupancy. Lessor will use good faith efforts to allow
Lessee to take possession of the Leased Premises on December 1, 1998, for
fixturing, writing and installation of computer/phone equipment purposes.
Lessor shall allow Lessee's wiring contractor immediate access to the
building, to be coordinated with General Contractor. Lessee agrees to
coordinate its such work with the work of Lessor such that Lessee's work
does not interfere with or delay Lessor's work; provided, however, that
neither Lessor nor any of Lessor's affiliates shall have any responsibility
or liability whatsoever for any injury (including death) to persons or loss
or damage to any of Lessee's leasehold improvements, fixtures, equipment or
any other materials installed or left in the Leased Premises prior to the
Commencement Date. All of the terms and conditions of this Lease will
become effective upon Lessee taking possession of the Leased Premises
except for the payment of Base Rent and Additional Rent which will commence
on the Commencement Date.
3. Rent.
3.1 Base Rent. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent ("Rent"). Lessee's financial
obligations pursuant to this Lease, not including Base Rent, are deemed to
be "Additional Rent".
3.2 Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction, o
or before the day on which it is due. Rent for any period during the term
of hereof which is for less than one (1) full calendar month shall be
pro-rated based upon the actual number of days of said month. Payment of
Rent shall be made tot Lessor at its address noted herein or to such other
persons or place as Lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount then due shall not be
a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
3.3 Initial Calculation of Base Rent. The monthly Base Rent of the
Original Term shall be as follows: (However, Annual Base Rent shall be
finally determined by multiplying the certified square footage, as
described in Paragraph 2.3 by $15.25/SF for months 1 - 60, $16.50/SF for
months 61 - 120, $18.15/SF for months 121 - 180 and $20.00/SF for months
181 - 240.).
Months 1 - 6- $82,604.17/Month
Months 61 - 120 $89,375.00/Month
3.4 Increases in Base Rent. The monthly Base Rent payable by Lessee
for any Option Term, shall be as follows, subject to certified square
footage as detailed in Paragraph 2.3 and rates per square foot as detailed
in Paragraph 3.3.:
Months 121 - 180 $98,312.50/Month
Months 181 - 240 $108,333.33/Month
3.5 Operating Expense Allowance. $22,208/month ($4.10/SF) or such
other initial amount calculated by multiplying the certified square
footage, as described in Paragraph 2.3, by $4.10/SF subject to adjustment
as set forth in Paragraph 3.6 and detailed in Exhibit "F", shall be paid by
Lessee as defined in Paragraph 3.6.
3.6 Operating Expense Adjustments
(A) Operating Expense. Lessee shall pay to Lessor the Operating
Expense Allowance in equal monthly installments, the first of which shall
be payable upon Commencement Date of this Lease. If the Term commences
other than on the first day of the calendar month, then the Operating
Expense Allowance for the first calendar month of the Term shall be
adjusted proportionately.
If Lessor's Operating Expense for any Operating Year shall be greater
or less than the Operating Expense Allowance, Lessee shall pay to Lessor as
additional rent an amount equal to Lessee's Proportionate Share of the
difference, or if Lessor's Operating Expenses for any operating year shall
be less than the Operating Expenses Allowance, Lessor shall credit to
Lessee's succeeding months Operating Expenses Allowance an amount equal to
Lessee's Proportionate Share of the difference (the amount of Lessee's
Proportionate Share of such difference is hereinafter referred to as the
"Operating Expense Adjustment"). If Lessee occupies the Premises or portion
thereof for less than a full Operating Year, the Operating Expense
Adjustment will be calculated in proportion to the Amount of time in such
Operating Year that Lessee occupied the Premises.
Such Additional Rent shall be paid in the following manner: within 120
days following the end of the first and each succeeding Operating year,
Lessor shall furnish Lessee an Operating Expense Statement certified as
true and correct setting forth (i) the Operating Expense for the preceding
Operating Year, (ii) the Operating Expense Allowance and (iii) Lessee's
Operating Expense Adjustment for such Operating Year. Within thirty (30)
days following the receipt of such Operating Expense Statement (the
"Expense Adjustment Date"), Lessee shall pay to Lessor as Additional Rent
the Operating Expense Adjustment for such Operating Year. Lessee with
reasonable notice to Lessor, shall have the right to audit such Operating
Expense records. If Lessee's audit results in an irreconcilable dispute
concerning such Operating Expense Adjustments, Lessee and Lessor shall
agree on an independent Auditor to resolve each dispute.
Commencing with the first month of the second Operating Year, Lessee
shall pay to Lessor, in addition to the Operating Expense Allowance, on
account of the Operating Expense Adjustment for such Operating Year,
monthly installments in advance equal to one-twelfth (1/12) of the
estimated Operating Expense Adjustment for such Operating Year.
As used in this Section 6(A) and Section 1 where applicable, the
following words and terms shall be defined as hereinafter set forth:
(i) "Operating Year" shall mean each calendar year occurring during
the Term. If Lessee's occupancy of the Premises is for less than a full
calendar year, Lessor will prorate the Operating Expenses.
(ii) "Operating Expense Allowance" shall mean a statement in writing
signed by Lessor, or Lessor's Managing Agent, setting forth in reasonable
detail (a) the Operating Expense for the preceding Operating Year, (b) the
Operating Expense Allowance, and (c) the Lessee's Operating Expense
Adjustment for such Operating Year, or portion hereof. The Operating
Expense for each Operating Year shall be available for inspection by Lessee
at Lessor's office during normal business hours. Operating expenses are as
follows:
(a) Real Estate taxes and other taxes or charges levied in lieu of
such taxes, general and special public assessments, charges imposed by any
governmental authority pursuant to anti-pollution or environmental
legislation, taxes on the rentals of the Building or the use, occupancy or
renting of space herein;
(b) Premiums and fess for fire and extended coverage insurance,
insurance against loss or rentals for space in the Building and public
liability insurance, all in amounts and coverages (with additional policies
against additional risks) as may be reasonably required by Lessor or the
holder of any mortgage on the Building, and as further defined by Paragraph
7 herein;
(c) Water and sewer service charges, and common are electric charges.
(d) Maintenance and repair costs, repairs and replacements of supplies
and equipment snow removal and paving, lawn and general grounds upkeep,
maintenance and repair, and the costs of all labor, material and supplies
incidental thereto, excluding any costs associated with Lessor's warranty
items;
(e) Such industry standard, wages, salaries, fees and other
compensation and payments and payroll taxes and contribution to any social
security, unemployment insurance, welfare, pension or similar fund and
payments for other fringe benefits required by law, union agreement or
otherwise made to or on behalf of all employees of Lessor performing
services rendered in connection with the operation and maintenance of the
Building and/or Land, including, without limitation, payments made directly
to or through independent contractors or performance of such services; If
Lessee is not satisfied with workmanship and/or cost, Lessee shall have the
option to cause Lessor to contract with another contractor.
(f) Management fees payable to the managing agent for the Building,
not to exceed two percent (2%) of Base Rent;
(g) Assessments paid by Lessor, not to exceed $.10'SF of building, for
the repair maintenance and upkeep of common facilities located in the
Business Park, any assessments shall reflect actual costs and such costs
shall be consistent with those costs incurred on the other lots in the
Glenloch Corporate Campus; and
(h) Any all other expenditures of Lessor incurred in connection with
the operation, repair or maintenance of the Premises, and the Building or
the Land which are properly expensed in accordance with generally accepted
accounting principles consistently applied in the operation, maintenance
and repair of a first-class office building facility.
(i) Janitorial services, five (5) days per week including trash
removal.
The term "Operating Expenses" shall not include depreciation of the
Building or equipment therein, interest, net income, franchise or capital
stock taxes payable to landlord executive salaries, real estate brokers,
commissions or the costs of services provided specially for any particular
tenant at such tenant's expense and not uniformly available to all tenants
of the Building and Property.
(B) During the calendar year in which the Term ends, Lessor shall have
the right to submit to Lessee a statement of Lessor's reasonable estimate
of the Operating Expense Adjustment during the period (the "final period")
beginning on the first day of the final Operating Year of the Term. Within
thirty (30) days of the expiration of term, Lessor shall reconcile
Estimated Operating Expenses against Actual Operating Expenses. Final audit
procedures shall apply as in Paragraph 3.6. Lessee shall pay to Lessor any
deficiency, or as the case may be, Lessor shall refund to Lessee any
overpayment occasioned by Lessee's payment of the aforesaid estimate.
3.7 Taxes.
3.7.1 Personal Property Taxes. Lessee shall pay, prior to
delinquency, all taxes assessed against and levied upon all personal
property of Lessee. When possible, Lessee shall cause such property to
be assessed and billed separately from the real property of Lessor. If
any of Lessee's said personal property shall be assessed with Lessor's
real property, Lessee shall pay Lessor the taxes attributable to
Lessee's property within thirty (30) days after receipt of a written
statement.
3.7.2 Right to Contest Taxes. Lessee will have the right to
contest the amount or validity, in whole or in part, of any Tax by
appropriate proceedings diligently conducted in good faith. Upon the
termination of those proceedings, Lessee will pay its share of the Tax
or part of the Tax as finally determined, the payment of which may
have been deferred during the prosecution of the proceedings, together
with any costs, fees, interest, penalties, or other related
liabilities. Lessor will not be required to join in any contest or
proceedings unless the provisions of any law or regulations then in
effect require that the proceedings be brought by or in the name of
Lessor. In that event, Lessor will join in the proceedings or permit
them to be brought in its name; provided that Lessor will not be
subjected to any liability for the payment of any costs or expenses in
connection with any contest or proceedings, and Lessee will indemnify
and hold Lessor harmless from nay of such costs or expenses.
4. Use.
4.1 Permitted Use. Lessee shall use the Premises for the installation,
operation and maintenance of General Office Space and such other lawful
purposes deemed necessary by Lessee.
4.2 Fixtures Alterations. Lessee shall have the right to install trade
fixtures, office machinery and equipment, make such alterations,
improvements or additions to the Premises as deemed necessary by Lessee to
the operation of its business, provided that the same do not impair the
structural integrity of the Building. Lessee shall retain ownership of all
such trade fixtures, office machinery and equipment and shall remove the
same upon expiration or termination of this Lease. Lessee with Lessor's
prior written consent, not to be unreasonably withheld, shall have the
right to construct, at Lessee's sole cost, additional private officers and
conference rooms, or other such improvements ("Additional Improvements")
within the Premises. Such additional improvements shall become the property
of Lessor upon expiration of lease and Lessee shall not be responsible for
removing same, unless otherwise agreed upon by Lessor and Lessee at the
time Lessor/s written consent is requested. Lessee shall repair the
Premises and the Building to as good a condition as existed prior to such
removal, normal wear and tear excepted.
4.3 Lessee's Compliance. Lessee will not use or occupy, or permit any
portion of the Premises to be used or occupied in violation of any law,
ordinance, order, rule, regulation, certificate of occupancy or other
governmental requirement. Lessee will comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to
the use, condition, or occupancy of the Premises, and all rules, orders,
regulations, and requirements of the board of fire underwriters or
insurance service office, or any other similar body, having jurisdiction
over the Premises or any portion thereof. Nothing in the foregoing shall
require Lessee to perform any work or make any improvements or repairs
which the Lessor is required to make pursuant to other provisions of this
Lease. Lessor warrants that Lessee's intended use, as detailed in Paragraph
4.1, complies with the regulations of all Governmental Authority and
Lessor's insurers of the Premises.
4.4 Lessor's Access. Lessor, its designated agents, employees and
contractors may enter the Premises at any time in response to an emergency,
and otherwise during normal business hours with reasonable notice to Lessee
and at all time accompanied by Lessee's designated representative to
inspect the Premises, to supply any services which is the Lease requires
Lessor to provide or to make repairs which this Lease requires Lessor to
make; provided, however, all work will be done as promptly as is reasonably
practicable with Lessor's best effort to minimize disruption to Lessee's
business. No entry into the Premises by Lessor during an emergency by any
means shall be a forcible or unlawful entry into the Premises or a detainer
of the Premises or an eviction, actual or constructive, of Lessee from the
Premises, or any part of the Premises, nor will any entry entitle Lessee to
damages or an abatement of Rent or other charges which this Lease requires
Lessee to pay: provided, however, that other than during an emergency
Lessor shall be liable for damages to property and injury to persons caused
by Lessor's negligence or willful misconduct, or that of its agents,
employees or contractors.
5. Hazardous Substances.
5.1 Hazardous Substance Defined. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance or waste which is
classified as such by any federal or state agency or authority having
jurisdiction over such matters.
5.2 Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its officers,
directors, employees, agents, subcontracts and affiliates, harmless from
and against any and all environmental damages, liabilities, judgments,
claims, expenses, penalties, and attorneys and consultant fees arising as a
result of hazardous substances on the Premises prior to the Commencement
Date, and during the term of the lease, except of acts by Lessee, it's
employees, agents and subcontractors, that cause any environmental damage,
liabilities, claims, expenses and penalties, of which are caused by the
negligence, or intentional acts of Lessor, its agents or employees.
Lessor's indemnification obligation shall include, but not limited to, cost
of investigation, removal, remediation, restoration and/or abatement and
shall survive the expiration or termination of this Lease.
5.3. Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees and lenders, if any, harmless from and
against any and all environmental damages, liabilities, judgments, claims,
expenses, penalties , and attorneys and consultant fees arising out or of
involving any hazardous substance proven to be brought onto the Premises by
Lessee (provided, however, that Lessee shall have no liability under this
Lease with respect to underground migration of any hazardous substance onto
the Premises from adjacent properties, unless caused by Lessee). Lessee's
indemnification obligations shall survive the expiration or termination of
this Lease.
6. Maintenance
6.2 Lessor's Obligations. Lessor shall, in addition to its warranty
obligations, at Lessor's sole cost and expense, be responsible for the
repair and maintenance, in good order and condition, of the exterior
structural bearing walls, foundation, and roof and roof membrane of the
Building located on the Premises, along with repairing any soil subsistence
under the parking lot located on the Premises. Notwithstanding anything to
the contrary set forth in this Lease, if Lessee delivers written notice to
the Lessor of the need for repairs and/or maintenance to the Premises which
are Lessor's obligation, but Lessor fails to undertake such repairs and/or
maintenance within fifteen (15) days after receipt of such written notice,
then Lessee may proceed to undertake such repairs and/or maintenance upon
the delivery of an additional written notice to Lessor (and to Lessor's
lender, if Lessee is notified in writing in advance that such additional
notice is required) specifying that Lessee is undertaking such action and
Lessee shall be entitled to reimbursement of Lessee's actual costs and
expenses in taking action. In the event Lessee undertakes such repairs
and/or maintenance, then Lessee shall use only general contractors and
subcontractors who are licensed and insured in the Commonwealth of
Pennsylvania.
6.3 No Liens. Lessee shall not, in the making of any repair,
alterations, improvements or additions to the Premises or Building, suffer
or permit any lien to be filed against the Premises or Building or any part
thereof and if any such lien shall be filed, Lessee shall cause it to be
discharged within sixty (60) days.
6.4. No Other Services by Lessor. Lessor shall not be required to
render any services to Lessee or to make any repairs or replacements to the
Premises, except as provided in Section 3, 8, 11 and 12 hereto. Without
limiting the generality of the foregoing, it is specifically understood and
agreed that Lessee shall be solely responsible for all charges for the
following services used, rendered or supplied to, upon or in connection
with the Premises throughout the Term: telephone and/or communication
services, security system or services, utilities, Lessor shall, at its
expense, provide separate metering of utilities.
7. Insurance, Indemnification.
7.1 Payment for Insurance. Lessee shall pay for all insurances
required under this Paragraph, except to the extent of the cost
attributable to liability insurance carried by Lessor under Paragraph 7.2.2
in excess of Two Million Dollars ($2,000,000.00) per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Original
Term (or any Option Term), shall be pro-rated to correspond to the Original
Term (or any Option Term). Payment shall be made by Lessee to Lessor as
part of the Operating Expense Allowance.
7.2.1 Carried by Lessee. Lessee shall, at its sole expense,
obtain and keep in force during the Original Term (and any Option
Term) of this Lease: (a) commercial general liability insurance with a
combined single limit of not less than Two Million Dollars
($2,000,000.00) on an occurrence basis protection Lessee and Lessor
(as an additional insured) against claims for bodily injury and
property damage arising out of the use and occupancy of the Premises
by Lessee.
7.2.2 Carried by Lessor. Lessor shall obtain and keep in force
during the Term "all-risk" coverage insurance (including Loss of Rent
insurance for a minimum of twelve months) naming Lessor and such other
parties as Lessor may designate as additional insured's with respect
to the Building and Improvements now or hereafter located on the
Premises. The amount of such insurance shall be equal to 100% of the
full insurable value of the Building and Improvements, with such
deductible clause as shall be reasonably determined by Lessor (at
Lease commencement deductible will be $2,500.00). Lessor shall also
carry Lessor's Liability Coverage in single policy inclusive of all
alterations thereof limits of not less than Two Million Dollars
($2,000,000.00) for personal injury and One Hundred Thousands
($100,000,000.00) for property damage for the office building's common
areas. Lessee covenants and agrees to pay Lessor, as additional rent,
all costs for such insurance incurred by Lessor with respect to the
Premises during the Term (and any Option Term) to be included in the
Operating Expense Allowance pursuant to Paragraph 3.5 herein. If any
portion of the Premises lies in the flood plain, Lessor shall, at its
sole expense, obtain and keep in force during the Term a flood plain
insurance policy (or an endorsement to its all-risk policy) equal to
100% of the full insurable value of the Building and Improvements.
Lessor shall be responsible for payment of any deductible.
7.3 Other Matters. All insurance required under this Paragraph 7 and
all renewals thereof will be issued by companies authorized to transact
business in the Commonwealth of Pennsylvania. All insurance policies will
expressly provide that the policies will not be canceled or altered without
thirty (30) days prior written notice to Lessor. Lessee may satisfy its
insurance obligations by appropriate of its blanket insurance policies.
7.4 Additional Insureds. All policies of liability insurance that
Lessee is obligated to maintain according to this Lease or in accordance
with law (other than any policy of workmen's compensation insurance) will
name Lessor as an additional insured. All public liability, property damage
liability, and casualty policies maintained by Lessee will be primarily
polices, and not contributing with and not in excess of coverage that
Lessor may carry.
7.5 Waiver. Lessor and Lessee hereby waive all rights to recover
against each other, or against the officers, directors, shareholders,
partners, joint ventures, employees, agents, customers, invitees, or
business visitors of each of theirs or of any other Lessee or occupant of
the building, for any loss or damage arising from any cause covered by any
insurance required to be carried by each of them pursuant to this Paragraph
7 or any other insurance actually carried by each of them. Lessor and
Lessee will cause their respective insurers to issue appropriate waivers or
subrogation endorsements to all policies of insurance carried in connection
with the Premises or the contents of either of them.
7.6 Indemnification. Lessee hereby agrees to indemnify, protect,
defend and hold harmless Lessor from and against any and all claims, loss
of rents, damages, judgments, penalties, costs (including reasonable
attorney's fee), and liabilities (collectively, the "Claims") arising out
of the occupancy of the Premises by Lessee the conduct of Lessee's business
therein., or any gross neglect of Lessee or Lessee's agents, contractors,
employees or invitees. Notwithstanding the foregoing indemnification
obligations of Lessee, Lessee shall not be required to indemnify and hold
Lessor harmless for any Claims resulting from the negligence and/or willful
misconduct or Lessor or Lessor's agents, contractors, employees or invitees
and Lessor hereby indemnifies and holds Lessee harmless from any such
Claims, excluding consequential damages. Lessor hereby indemnifies and
holds Lessee harmless from any loss or damage to any person on the Premises
to the extent that such loss or damage is covered by Lessor's
insurance (or would have been covered had such insurance been obtained and
maintained by Lessor) even if resulting from the negligence and/or willful
misconduct of Lessee or Lessee's agents, contractors or employees.
Similarly, Lessee hereby indemnifies and holds Lessor harmless from any
loss or damage to the extent such loss or damage is covered by Lessee's
insurance (or would have been covered had such insurance been obtained and
maintained by Lessee), even if resulting from the negligence and/or willful
misconduct of Lessor or Lessor's agents, contractors or employees. The
agreements of Lessor and Lessee to indemnify and hold each other harmless
are not intended to and shall not relieve any insurance carrier or carriers
of their obligations under insurance policies carried by Lessor or Lessee,
respectively, under the Lease.
8. Damage or Destruction
8.1 General. If the Premises are damaged or destroyed by reason of
fire or any other casualty, Lessee shall immediately notify Lessor and
Lessor shall promptly repair or restore the Premises (including Lessee
improvements) at Lessor's expense, so as to make the Premises at least
equal in value to the Premises existing immediately prior to the occurrence
and as nearly similar to it in character as is practicable and reasonable.
Notwithstanding the foregoing, if Lessor is unable to complete the repairs
or restoration of the Premises within 180 days of the date of damage or
destruction, either Lessor or Lessee may elect to terminate this Lease upon
thirty (30) days notice, such termination to be effective as of the date of
casualty. If the Premises are damaged or destroyed during the final two (2)
years of the Original Term or final year of any Option Term, Lessor or
Lessee may terminate this Lease upon written notice.
8.2 Rent Abatement. Lessee's obligations with respect to Rent will
abate pending the repairs to or the restoration of the Premises, but not
longer than the coverage period for the Loss or Rent insurance coverage.
9. Condemnation.
9.1 Total Taking. If, by exercise of the right of eminent domain or by
conveyance made in response to the threat of the exercise of such right (in
either case a "Taking"), all of the Premises are taken, or if so much of
the Premises are taken that the Premises could not be used by Lessee for
the purposes for which they were used immediately before the Taking, this
Lease shall end upon the earlier of the vesting of title to the Premises in
the condemning authority or the taking of possession of the Premises by the
condemning authority (in either case the "Ending Date").
9.2 Partial Taking. If, after a Taking, so much of the Premises
remains that, in Lessee's reasonable estimation, the Premises ca be used
for substantially the same purposes for which they were used immediately
prior to the Taking: (i) this Lease will end on the Ending Date as to the
part of the Premises which is taken; (ii) prepaid Rent will be
appropriately allocated to the part of the Premises which is taken and
prorated to the Ending Date; (iii) beginning on the day
after the Ending Date, Rent for so much of the Premises as remains will be
reduced in the proportion of the floor area of the building remaining after
the Taking to the floor area of the building before the Taking; and (iv) at
its cost, Lessor will restore so much of the Premises as remains to a sound
architectural unit substantially suitable for the purposes for which it was
used immediately prior to the Taking.
9.3 Award. All awards from any Taking shall be allocated between
Lessor and Lessee in accordance with applicable law. Unless prohibited by
applicable law, Lessee may prosecute its own claim by separate proceedings
against the condemning authority for damages legally due to it (such as the
loss of fixtures which Lessee was entitled to remove and moving expenses).
10. Utilities. Lessee will contract in their own name for and pay the
appropriate suppliers for all gas, electricity, lights, heat, telephone,
power, and other utilities, except water and sewer and communications
services delivered to the Premises by such suppliers during the Term,
whether or not the services are billed directly to Lessee. If building
becomes multi-tenanted, utilities used for common areas, if not separately
metered, will be provided.
11. Assignments and Subletting. Lessee shall not assign or sublet all
or part of Lessee's interest in this Lease without Lessor's written consent
which shall not be unreasonably withheld. In connection with any proposed
assignment of the Lease or sublease of all or any portion of the Premises,
Lessee shall deliver to Lessor, for Lessor's review and written approval,
all such information concerning the proposed assignee or sublease as Lessor
may reasonably request. Notwithstanding the foregoing, Lessee may assign
the Lease at any time, or sublease all or any part of the Premises, upon
prior written notice to Lessor but without Lessor's prior written consent,
to any entity which acquires not less than fifty-one percent (51%) of
Lessee's assets or stock, or is merged or consolidated with Lessee, or
which controls, is controlled by or is under common control with, Lessee
(collectively, an "Affiliate"), so long as such Affiliate conclusively
agrees, in writing delivered to Lessor prior to the effective date of the
assignment, to assume all of Lessee's obligations under the Lease.
12. Default; Breach; Remedies.
12.1 Events of Default. The following occurrences each shall
constitute an "Event of Default" hereunder: (i) if Lessee defaults in
payment of Rent, and such default continues for a period of ten (10) days
after written notice to Lessee; (ii) if Lessee abandons the Premises
without payment of rent; (iii) if this Lease or the Premises or any part of
the Premises is taken upon execution or by other process of law directed
against Lessee, or is taken upon or subjected to any attachments by any
creditor of Lessee or claimant against Lessee, and the attachment is not
discharged within ninety (90) days after its levy; (iv) If Lessee files a
petition in bankruptcy or insolvency or for reorganization or arrangement
under the bankruptcy laws of the United States or under any insolvency act
of any state, or is dissolved, or makes an assignment for the benefit of
creditors: (v) if an involuntary proceeding under any bankruptcy law or
insolvency act or for the dissolution of Lessee are instituted against
Lessee, or a receiver or trustee is appointed for all substantially all of
Lessee's property, and such proceeding is not dismissed or the receivership
or trusteeship is not vacated within ninety (90) days after institution or
appointment: or (vi) if Lessee defaults in the performance or observance of
any other material term, covenant, or condition under this Lease and Lessee
fails to cure such default
within thirty (30) days after written notice to Lessee (of, if such default
is incapable of being cured within such thirty (30) day period, Lessee
fails to commence curing such default within such thirty (30) day period).
12.2 Remedies. If any one or more events of default set forth in
Paragraph 12.1 occurs, then Lessor may give Lessee written notice of its
intention to terminate this Lease, whereupon Lessee's right to possession
of the Premises will cease and this Lease will be terminated as of the date
fixed in the notice. If this Lease is terminated pursuant to the provisions
of this Paragraph 12.2, Lessee will be liable to Lessor for damages in an
amount equal to the Rent and all other sums that would been owing by Lessee
under this Lease for the balance of the then current Term if this Lease had
not been terminated, less the net proceeds, if any, of any reletting of the
Premises by Lessor subsequent to the termination. Lessor will be entitled
to collect damages from Lessee monthly on the days on which the Rent and
other amounts would have been payable under this Lease had not been
terminated. In the event this Lease is terminated as set forth herein,
Lessor shall use commercially reasonable efforts to relet the Premises in
order to mitigate Lessees' damages.
13. Broker's Fee. Lessor and Lessee each hereby represent and warrant
to the other that, other than The Flynn Company, on behalf of Lessor,
neither has dealt with any broker or agent in connection with the Lease or
its negotiation. Lessee hereby agrees do indemnify, defend and hold Lessor
harmless from and against any and all costs, expenses and liabilities
(including actual attorney's fees and costs, and court costs)for any
compensation, commission or fees claimed by any broker or agent (other than
The Flynn Company) in connection with the Lease or its negotiation based
upon any act of Lessee. Lessor hereby agrees to indemnify, defend an hold
Lessee harmless from and against any and all costs, expenses and
liabilities (including actual attorney's fees and costs, and court costs)
for any compensation, commission or fees claimed by any broker or agent
(other than t The Flynn company) in connection with the Lease or its
negotiation based upon any act of Lessor.
14. Estoppel Certificate. Within no more than twenty (20) days after
written request by Lessor, Lessee will, at no cost to Lessor, execute,
acknowledge, and deliver to Lessor, to the extent such statement is true
and correct, a certificate stating: (i) that this Lease is unmodified and
in full force and effect, or if the Lease is modified, the nature of such
modification accompanied by a copy of any modification agreement; (ii) the
date to which rental and other sums payable under this Lease have been
paid; (iii) that Lessee has accepted and occupied the Premises; (iv) that
Lessee has no claim or offset against Lessor, or, if it does, stating the
nature of such claim or offset; and (v) other matters as may be reasonably
requested by Lessor and acceptable to Lessee. Any certificate may be relied
upon by any prospective purchaser of the Premises and any prospective
mortgagee or beneficiary under any deed of trust or mortgage encumbering
the Premises.
15. Severability. The invalidity of any provision of this Lease, as
determined by a court or government agency of competent jurisdiction, shall
in no way affect the validity of any other provision hereof.
16. Notices. Any notice, request, demand, consent, approval, or other
communication required or permitted under this Lease shall be in
writing and shall be deemed to have been given (i) when personally
delivered by courier (or by guaranteed overnight delivery service), (iii)
when served pursuant to the Federal Rules of Civil Procedure, or (iii) on
the day, as determined by the postmark, it is deposited in any depository
regularly maintained by the United States postal services, postage prepaid,
certified or registered mail ,return receipt requested, addressed to or
(iv) via telefax:
Lessor: Dunwoody Associates
55 Country Club Drive
Downingtown, PA 19355-3062
ATTN: Jack R. Loew
Lessee: Mr. Myles Tasman
Golden American Life Insurance Company
1001 Jefferson Street
Suite 400
Wilmington, DE 19801
With a copy to: Mr. Ben Chernow
Golden American Life Insurance Company
1001 Jefferson Street
Suite 400
Wilmington, DE 19801
Either Lessor or Lessee may change its address or addressee by giving prior
written notice according this Paragraph.
17. Waivers. No waiver of any condition or agreement in this Lease by
either Lessor or Lessee will imply or constitute a further waiver by such
party of the same or any other condition or agreement. If this Lease is
assigned, of if the Premises or any part of the Premises are sublet or
occupied by anyone other than Lessee, Lessor may collect Rent from the
assignee, sublessee, or occupant as Lessee.
18. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The party requesting
recordation shall be responsible for payment of any fees applicable
thereto.
19. Surrender. Lessee shall, upon expiration or termination of this
Lease, promptly surrender the Premises in good order and condition, normal
wear and tear excepted.
20. No right to Holdover. If Lessee fails to surrender the Premises
upon the expiration or earlier termination of the Term, without the express
written consent of Lessor, Lessee shall become a month-to-month tenant at a
rental rate equal to one hundred fifty percent (150%) of the Base Rent
payable by Lessee for the month immediately preceding such expiration or
earlier termination, and Lessee shall remain responsible for the payment of
all other monetary obligations due and payable by Lessee under the Lease.
Acceptance by Lessor of any rent after such expiration or earlier
termination of the Term shall not result in any renewal or extension of the
Term.
21. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
22. Binding Effect: Choice of Law. This Lease shall be binding upon
the parties, the personal representatives, successors and assigns and be
governed by the laws of the Commonwealth of Pennsylvania. Any litigation
between the parties hereto concerning this Lease shall be imitated in the
County in which the Premises are located.
23. Subordination; Attornment; Non-Disturbance.
23.1 General. This Lease and Lessee's rights hereunder are subject and
subordinate to any first mortgage, first deed of trust, or other first lien
encumbrance or indenture, together with any renewals, extensions,
modifications, consolidations and replacements thereof, which nor or at any
subsequent time affect the Premises, any interest of Lessor in the
Premises, and Lessor's interest in this Lease and the estate created by
this Lease (except to the extent that any such instrument expressly
provides that this Lease is superior to it). Lessee will execute,
acknowledge and deliver to Lessor at any time and from time to time, upon
demand by Lessor, any reasonable documents s may be requested by Lessor,
any ground Lessor or underlying Lessor, or any mortgage lender, or holder
of any other instrument described in this subsection, to confirm or effect
such subordination.
23.2 Attornment. If any mortgage lender or holder of any similar
instrument described in Paragraph 23.1 above succeeds to Lessor's interest
in the Premises, Lessee shall pay to it all Rents subsequently payable
under this Lease, and Lessee shall, upon request of anyone so succeeding to
the interest of Lessor, automatically become the lessee of, and attorn to,
the successor in interest without change in this Lease. Upon request by the
successor in interest and without cost to Lessor or the successor in
interest, Lessee shall execute, acknowledge and deliver an instrument or
instruments confirming such attornment. Such instrument or attornment shall
also provide that the successor in interest shall not disturb Lessee in its
use of the Premises in accordance with this Lease so long as Lessee is not
in material default hereunder.
23.3. Non-Disturbance. With respect to any security instruments
described in Paragraph 23.1 above entered into by Lessor after the
execution of this Lease, Lessee's subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement
from the beneficiary of such security instrument which provides that
Lessee's possession of the Premises and this Lease will not be disturbed so
long as Lessee is not material default hereunder and attorns to the record
owner of the Premises. Further, within sixty (60) days after the execution
of this Lease, Lessor shall use commercially reasonable efforts to obtain a
non-disturbance agreement from the holder of any pre-existing security
instrument relating to the Premises.
24. Signage. The graphics, materials, color, design lettering,
lighting, size, quality, specifications and exact location of Lessee's
signage, if any, shall comply with all applicable law and Park Covenants
affecting the Premises. At the expiration or earlier termination of the
Lease, Lessee shall, at Lessee's sole cost and expense, cause such signage
to be removed from the Premises (including the removal of any lingering
sign identification on the Building and/or the Premises where such signage
was located), and Lessee will repair any damage to the Premises caused by
such removal. If Lessee fails to remove such signage and repair any such
damage to the Premises within thirty (30) days after any termination or
expiration of the Lease, then Lessor may perform such work, and all
reasonable costs and expenses incurred by Lessor shall be reimbursed by
Lessee within thirty (30) days after Lessee's receipt of Lessor's written
demand therefor.
25. Quiet Possession. So long as Lessee is not in material default of
this Lease, Lessee's quite and peaceful enjoyment of the Premises shall not
be disturbed or interfered with by Lessor or by any person claiming by,
through or under Lessor.
26. Time of the Essence. Time is of the essence with regard to the
performance of all obligations to be performed or observed by the parties.
27. Entire Agreement. This Lease Agreement, including any and all
exhibits and attachments hereto, constitutes the entire understanding
between Lessor and Lessee with respect to the subject matter hereof.
28. Amendments. This Lease may be amended only in writing signed by
the parties in interest at the time of the modification.
IIN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
Agreement as of the date first written above.
ATTEST/WITNESS: LESSOR:
DUNWOODY ASSOCIATES
by JRL PROPERTIES, Inc.,
its general partner
________________________________ By: /s/ Jack R. Loew
----------------------
Jack R. Loew, President
LESSEE:
GOLDEN AMERICAN LIFE. INS. CO.
________________________________ By : /s/ Terry Kendall
-----------------
Terry Kendall, President
EXHIBIT "C"
LESSOR IIMPROVEMENTS
(Intentionally Omitted)
EXHIBIT "D"
LESSOR IIMPROVEMENTS
(Intentionally Omitted)
EXHIBIT "F"
ESTIMATED OPERATING EXPENSES
GOLDEN AMERICAN LIFE INSURANCE COMPANY
REAL ESTATE TAXES $1.60
INSURANCE .10
LANDSCAPE MAINTENANCE .18
SNOW REMOVAL .15
WATER/SEWER .15
BUILDING MAINTENANCE .45
TRASH REMOVAL .15
HVAC MAINTENANCE .10
ELEVATOR MAINTENANCE .09
PARKING LOT MAINTENANCE .08
JANITORIAL .80
MANAGEMENT .25
-------
TOTAL $4.10
EXHIBIT "E"
CONFIRMATION OF LEASE AGREEMEN T
THIS CONFIRMATION OF LEASE AGREEMENT ("Agreement") dated _________, _____,
is hereby executed by the undersigned "Lessor" and "Lessee" (as both terms are
hereinafter defined), and is attached to and made a part of that certain Lease
Agreement dated _________, _____ (the "Lease") between
________________________________, a ________________________________ ("Lessor"),
and ________________________________, a ________________________________
("Lessee").
The undersigned, Lessor and Lessee, hereby confirm and verify the
following:
1. _________, _____ is hereby confirmed to be the Commencement Date of the
Original Term of the Lease;
2. _________, _____ is hereby confirmed to be the Expiration Date of the
Original Term of the Lease,
3. US$____________ is the monthly Base Rent payable for the Original Term
of the Lease; and
4. _______________ s. f. is hereby confirmed as the final square footage of
the Building on the Premises.
Except as set forth herein, the Lease remains unmodified and in full force
and effect. In the event of any conflict between the terms of this Agreement and
the Lease, this Agreement shall supersede and control.
ATTEST/WITNESS: LESSOR:
________________________________ By: ______________________________
Name:
Title:
LESSEE:
________________________________ By :______________________________
Name:
Title:
EXHIBIT "B" - SPEC
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Project Outline Specifications
April 3, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The building design will allow for future expansion on the south wall.
The core facilities (i.e. lobby, elevators, restrooms,) for the entire building
(initial construction and future expansion) are provided for in the shell
building. The electric service, water service, and sewer service laterals are
sized for 125,000 s.f. The HVAC will be a VAV type system.
Alternates: (1) To construct an additional 30,000 s.f. and (2) construct an
additional 60,000 s.f. after the completion and occupancy of the initial
building.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township.
Geotechnical monitoring of the site and building including soils compaction
data, footing bottom inspection, and concrete testing are also included as
required.
Construction Facilities and Services: A superintendent will be provided to
monitor and supervise the day-today construction activities. The site will have
temporary facilities including job trailer and utilities. At the end of the
project, Lessor will perform a construction clean-up in preparation for turnover
to the Owner.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Interior or exterior signage
SITEWORK
General: Lessor will provide all necessary sitework to construct the
building.
Paving and Curbing: All areas designated as driveways or parking areas will
be fully curbed and paved and striped in accordance with the configuration and
specification shown on the site plan (attached as Exhibit "A").
Landscaping: Landscaping has been included for the design and installation
of trees, plantings and lawns around the building to meet the Township
requirements.
Utilities: Lessor shall provide and coordinate the installation of
underground water mains for domestic use and fire protection, electric, gas, and
telephone services including all required conduits to the building.
CONCRETE
General: Lessor will provide all concrete work required for the project in
accordance with A.C.I. (American Concrete Institute) general requirements. All
concrete shall have a minimum compressive strength of 3000 OSI in 28 days.
Foundations: Lessor will provide all reinforced concrete retaining walls
and column footings required to support floors, walls, and structural members.
The footing design assumes a soil bearing capacity of 3000 PSI.
Slabs: Concrete slabs shall be provided as follows:
First floor office: 4" of concrete over 4" of stone
Second floor office 3" of concrete on metal deck
Third floor office: 3" of concrete on metal deck
Exterior sidewalks and stops 4" of concrete over 4" of stone
All slabs shall be reinforced with a minimum of 6/6, 10 x 10 wire mesh.
MASONRY
General: The building shall be 4" brick veneer over 8" concrete masonry
units (CMU) below the first floor windows and 4" brick veneer on prefabricated
structural wall panels above the first floor windows. Elevator, stairtowers, and
elevator machine room will be 8" CMU walls.
METALS
Structural Steel: Lessor will provide all required steel for the building
shell. All structural steel work shall be performed in accordance with the
American Institute of Steel Constructions (A.I.S.C.). All steel joists shall be
in accordance with the Steel Joist Institute. The roof will be designed for a
live snow loaf of 30 pounds per square foot. The second and third floors shall
be designed for standard office floor loading of 80 pounds per square foot. The
building will be supported by means of a freestanding steel framework designed
to provide a minimum drop ceiling height of 9'. Steel bar joists will support
the second and third floor slabs and the roof. Lessor will provide all
miscellaneous steel consisting of one interior fire towers, one ornamental lobby
stair, roof access ladder, and miscellaneous site handrails.
Metal Panels: Prefabricated wall panels will be installed to create
spandrel panels between floors and the wall/roof system above the third floor
windows. All panels will be designed under the supervision of a structural
engineer.
CARPENTRY
Rough Carpentry: Lessor shall furnish and install all miscellaneous
carpentry necessary for the construction of soffits.
THERMAL AND MOISTURE
Roofing: The roof of the building will be constructed using four ply
built-up roofing system over a mechanically fastened R-19 rigid insulation
board. All roof areas shall be internally drained. Roof shall have a five (5)
year warranty.
Miscellaneous: Lessor will provide perimeter insulation below grade. 4"
batt insulation shall be installed along all exterior walls. Control joints and
window systems will be caulked using a two-part polyurethane. A roof hatch and
ladder will be provided in a third floor closet.
Moisture Protection: Lessor shall provide foundation waterproofing at all
walls with finished space below grade. A foundation drain will be installed at
all walls receiving a moisture protection barrier.
DOORS AND WINDOWS
Doors: The standard interior lobby doors shall be full height solid core
oak veneer for ingress/egress and hollow metal doors for rated openings (i.e.
mechanical rooms). Both will be set in hollow metal frames. Doors shall receive
standard duty commercial lever-type hardware Schlage or equal meeting all
applicable codes. Panic hardware and exit devices will be provided as required
by applicable building codes.
Glass and Glazing: The building will have six foot high windows
manufactured by Kawneer or equal as shown on the sketch. All windows shall be
insulated glass with a shading coefficient sufficient to balance the optimal
HVAC requirements with adequate natural light. Window analysis to be performed
and approved by Lessor and Lessee. The main entrance shall be a two-story
curtain wall system with medium style doors with quarter inch glass, tempered as
required by code .
FRAMING AND DRYWALL
General: All interior drywall walls will be constructed to create the lobby
area at the first, second, and third floors, two (2) bathroom facilities will be
provided per floor, elevator and mechanical rooms required for the building.
Walls will be constructed of 3 5/8" steel studs, 16" on center, with 1/2"
drywall on each side. All partitions will e nine feet tall. Insulation for noise
control shall be provided in restroom partitions. The walls creating the lobby
areas shall be one hour rated. No other partitions or drywall work is provided
for the shell portion of the project.
FINISHES
A room-by-room finish schedule will ultimately be created by Lessor to be
approved by Lessee to proved exact details on all interior finishes within the
lobby, bathroom, and core areas. We have included ceramic tile in the restrooms
with a 5' high wainscot on the wet wall with Type II vinyl on balance of walls.
An upgraded 12 x 12 quarry tile floor will be provided in the first floor lobby.
Upgraded carpet will be provided in all other public areas of the lobbies
including the lobby stair. An upgraded regular ceiling tile in 7/16" grid is
provided in all lobby public areas.
SPECIALTIES
General: Bathroom fit-up consisting of mirrors and standard bathroom
accessories will be provided in each of the restrooms. Fire extinguishers will
be installed throughout the building in accordance with local authorities.
CONCEYING SYSTEMS
Elevator: Lessor will furnish and install two (2) 3000# capacity, cab size
of approximately 4'3 x 6'8", 3 stop, 125 feet per minute standard car, elevator
system manufactured by Schindler or equal.
MECHANICAL
Fire Protection: The building will be fully sprinklered in accordance with
NFPA 13 (ordinary hazard). All ceilings shall have semi-recessed, chrome plated
sprinkler heads. Miscellaneous equipment including main riser with flow and
tamper switches, inspector test, fire department connection, and sprinkler
cabinet will be installed as required. A smoke evacuation will be installed by
Lessor in main lobby and secondary fire tower.
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Project Outline Specifications
March 26, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The building design will allow for future expansion on the south wall.
The core facilities (i.e. lobby, elevators, restrooms,) for the entire building
(initial construction and future expansion) are provided for in the shell
building. The electric service, water service, and sewer service laterals are
sized for 125,000 s.f. The HVAC will be a will be a water source heat pump
system. The cooling towers will be sized for 125,000 s.f. The loop piping will
be installed in the 65,000 s.f. initial building. The remaining equipment is not
included in the shell (i.e. heat pumps, duct, controls, etc.) and will be
installed as part of the tenant fit-out.
Alternates: (1) To construct an additional 30,000 s.f. and (2) construct an
additional 60,000 s.f. after the completion and occupancy of the initial
building.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township.
Geotechnical monitoring of the site and building including soils compaction
data, footing bottom inspection, and concrete testing are also included as
required.
Construction Facilities and Services: A superintendent will be provided to
monitor and supervise the day-today construction activities. The site will have
temporary facilities including job trailer and utilities. At the end of the
project, Lessor will perform a construction clean-up in preparation for turnover
to the Owner.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations. Lessor will warrant all work for a period of one year from the
time of substantial completion.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Interior or exterior signage
SITEWORK
General: Lessor will provide all necessary sitework to construct the
building.
Paving and Curbing: All areas designated as driveways or parking areas will
be fully curbed and paved and striped in accordance with the configuration and
specification shown on the site plan.
Landscaping: Landscaping has been included for the design and installation
of trees, plantings and lawns around the building to meet the Township
requirements.
Utilities: Lessor shall provide and/or coordinate the installation of
underground water mains for domestic use and fire protection, electric, gas, and
telephone services to the building.
CONCRETE
General: Lessor will provide all concrete work required for the project in
accordance with A.C.I. (American Concrete Institute) general requirements. All
concrete shall have a minimum compressive strength of 3000 OSI in 28 days.
Foundations: Lessor will provide all reinforced concrete retaining walls
and column footings required to support floors, walls, and structural members.
The footing design assumes a soil bearing capacity of 3000 PSI.
Slabs: Concrete slabs shall be provided as follows:
First floor office: 4" of concrete over 4" of stone
Second floor office 3" of concrete on metal deck
Third floor office: 3" of concrete on metal deck
Exterior sidewalks and stops 4" of concrete over 4" of stone
All slabs shall be reinforced with a minimum of 6/6, 10 x 10 wire mesh.
MASONRY
General: The building shall be 4" brick veneer over 8" concrete masonry
units (CMU) below the first floor windows and 4" brick veneer on prefabricated
structural wall panels above the first floor windows. Elevator, stairtowers, and
elevator machine room will be 8" CMU walls.
METALS
Structural Steel: Lessor will provide all required steel for the building
shell. All structural steel work shall be performed in accordance with the
American Institute of Steel Constructions (A.I.S.C.). All steel joists shall be
in accordance with the Steel Joist Institute. The roof will be designed for a
live snow loaf of 30 pounds per square foot. The second and third floors shall
be designed for standard office floor loading of 80 pounds per square foot. The
building will be supported by means of a freestanding steel framework. Steel bar
joists will support the second and third floor slabs and the roof. Lessor will
provide all miscellaneous steel consisting of one interior fire towers, one
ornamental lobby stair, roof access ladder, and miscellaneous site handrails.
Metal Panels: Prefabricated wall panels and partial roof/wall panels will
be installed to create spandrel panels between floors and the wall/roof system
above the third floor windows. All panels will be designed under the supervision
of a structural engineer.
CARPENTRY
Rough Carpentry: Lessor shall furnish and install all miscellaneous
carpentry necessary for the construction of soffits.
THERMAL AND MOISTURE
Roofing: The roof of the building will be constructed using four ply
built-up roofing system over a mechanically fastened R-19 rigid insulation
board. All roof areas shall be internally drained. Roof shall have a five (5)
year warranty.
Miscellaneous: Lessor will provide perimeter insulation below grade. 4"
batt insulation shall be installed along all exterior walls. Control joints and
window systems will be caulked using a two-part polyurethane. A roof hatch and
ladder will be provided in a third floor closet.
Moisture Protection: Lessor shall provide foundation waterproofing at all
walls with finished space below grade. A foundation drain will be installed at
all walls receiving a moisture protection barrier.
DOORS AND WINDOWS
Doors: All interior lobby doors shall be solid core oak veneer for
ingress/egress and hollow metal doors for rated openings (i.e. mechanical
rooms). Both will be set in hollow metal frames. Doors shall receive standard
duty commercial lever-type hardware Schlage or equal meeting all applicable
codes. Panic hardware and exit devices will be provided as required by
applicable building codes.
Glass and Glazing: The building will have six foot high windows
manufactured by Kawneer or equal as shown on the sketch. All windows shall be
insulated glass set in dark bronze thermal break aluminum frames. The main
entrance shall be a two-story curtain wall system with medium style doors with
quarter inch glass, tempered as required by code.
FRAMING AND DRYWALL
General: All interior drywall walls will be constructed to create the lobby
area at the first, second, and third floors, two (2) bathroom facilities will be
provided per floor, elevator and mechanical rooms required for the building.
Walls will be constructed of 3 5/8" steel studs, 16" on center, with 1/2"
drywall on each side. All partitions will e nine feet tall. Insulation for noise
control shall be provided in restroom partitions. The walls creating the lobby
areas shall be one hour rated. No other partitions or drywall work is provided
for the shell portion of the project.
FINISHES
A room-by-room finish schedule will ultimately be created by Lessor to be
approved by Lessee to proved exact details on all interior finishes within the
lobby, bathroom, and core areas. We have included ceramic tile in the restrooms
with a 5' high wainscot on the wet wall. An upgraded 12 x 12 quarry tile floor
will be provided in the first floor lobby. Upgraded carpet will be provided in
all other public areas of the lobbies including the lobby stair. An upgraded
tegular ceiling tile in 7/16" grid is provided in all lobby public areas.
SPECIALTIES
General: Bathroom fit-up consisting of mirrors and standard bathroom
accessories will be provided in each of the restrooms. Fire extinguishers will
be installed throughout the building in accordance with local authorities.
CONCEYING SYSTEMS
Elevator: Lessor will furnish and install two (2) 2500# capacity, cab size
of approximately 4'3 x 6'8", 3 stop, 125 feet per minute standard car, elevator
system manufactured by Schindler or equal.
MECHANICAL
Fire Protection: The building will be fully sprinklered in accordance with
NFPA 13 (ordinary hazard). All ceilings shall have semi-recessed, chrome plated
sprinkler heads. The tenant area is an open ceiling and will have upright
brass-heads. Miscellaneous equipment including main riser with flow and tamper
switches, inspector test, fire department connection, and sprinkler cabinet will
be installed as required. A fire booster pump or other specialty fire equipment
is not included.
Plumbing: The roof water will be internally drained, collected and
distributed to the storm water management system. Domestic water distribution
and sanitary sewer piping is provided as shown on the drawings. We have included
(30) lavatories, (30) water closets with flush valves, (3) water coolers, (3)
water heaters, (3) floor drains, (3) janitor's sinks, and (4) hose bibs.
HVAC: The HVAC system will be a closed loop water source heat pump with
cooling tower mounted on the roof. The main water loop, chiller, boiler make-up
air units, and miscellaneous equipment will be provided in the shell building.
All other equipment including heat pumps, ductwork diffusers and controls to
complete the system will be included with the fit-out portion of the project.
All work shall be in accordance with ASHREA and SMACNA standards. The system
shall be designed to maintain space conditions for occupied areas as follows:
Summer: 75 degree dry bulb with 50% maximum relative humidity, at an outdoor
temperature of 95 degrees dry bulb.
Winter: 70 degree dry bulb with 50% maximum relative humidity, at an outdoor
temperature of 0 degree dry bulb.
Outdoor air will be introduced at the rate of 5% of the total supply CFM.
The required amount of total supplied air shall be a minimum of five (5) air
changes per hour. Exhaust fans will be provided in each bathroom.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Mechanical work within tenant spaces other than specified above
Humidification control
Computerized Energy Management Systems
ELECTRICAL
Service and Distribution: Lessor will perform all work not provided by the
power company to supply a 277/480V - 3pphase electric service. This includes
primary and secondary work and distribution switchgear. A 1600 amp service will
be provided. This service is of adequate size to accommodate the base building
and the 60,000 s.f. expansion.
Lighting: Upgraded interior lobby lighting is included. Fluorescent strip
lighting will be installed in the mechanical and elevator machine room. (24)
high hats are included in the exterior soffit.
Power: Lobby and corridor convenience receptacles are included. Bathrooms
will have ground fault type receptacles.
Emergency Systems: We have included all battery type emergency and exit
lighting required by applicable building codes plus a building code fire alarm
system. This system is expandable to accommodate the future requirements of the
expansion and the tenant fit-out.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Electrical Work to Future Tenant Spaces
Emergency Generator or Uninterrupted Power Sources
Computer or Telecommunications Wiring or Devices
Security, or Entrance Alarm Systems
Specialty or Decorative Lighting
END OF SPECIFICATION
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Interior Fit-Up Outline Specifications
March 26, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The core facilities (i.e. lobby, elevators, restrooms,) for the entire
building were provided for in the shell building. It assumed that the bulk of
the fit-up will be constructed using the standard office finishes with
approximately 3,000 s.f. of upgraded finish are.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township as
required for the fit-up.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations. Lessor will warrant all work for a period of one year from the
time of substantial completion.
FRAMING AND DRYWALL
General: An allowance for 6,000 linear feet of drywall partitions is
included. Walls will be constructed of 3 5/8" metal studs, 16" on center with
1/2" drywall on each face. Partitions in the office area will be nine feet tall.
Insulation for noise control shall be provided around bathrooms, lunchrooms, and
conference rooms.
FINISHES
Generals: All finishes shall be chosen from Lessor's standard selections.
Lessor will assist the Owner in the design and coordination of the interior
finishes. Below is a list of standard finish materials.
STANDARD FINISH MATERIALS
Offices, Conference Rooms, General Areas
Flooring: 28 ounce level loop carpeting
Manufactures: Patchcraft, Designweave, J & J Industries,
or equal
Wall Base: 4" vinyl cove base, 1/8 thick material.
Manufactures: Roppe, Jonsonite, or equal.
Walls: Painted with a minimum of two coats flat latex paint.
Manufactures: Shervin Williams, Duron, Benjamin Moore,
or equal.
Ceilings: 2 x 4 white lay-in ceiling tiles, fissured mainboard, white,
with 15/16" white aluminum grid.
Manufactures: Armstrong, USG, Celtoex, or equal.
Lunch Rooms/Cafeteria/Coffee Area
Flooring: 12" x 12" vinyl composition floor tile (VCT)
Manufactures: Armstrong, Mannington, or equal.
Wall, Base,
Walls, Ceiling: Same as above.
Casework: Kitchen/bathroom counters and cabinets shall have laminate
surfaces.
Manufactures: Formica, Nevamar, Wilsonart, or equal.
UPGRADED FINISHES
Flooring: 28-32 ounce cut pile carpeting with decorative accent
bordering.
Manufactures: Patchcraft, Designweaeve, J & J Industries,
or equal.
Wall Base: Carpet base.
Standard profile wood base.
Walls: Type I vinyl wallcovering.
Ceilings: 2' x 2' tegular edge decorative ceiling.
Lighting: Combination of parabolic light fixturing and/or hi-hat lighting
with appropriate switching.
SPECIALTIES
General: Lessor will provide 1" mini blinds.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Built-in furniture or reception desk.
MECHANICAL
Fire Protection: Lessor will modify the shell sprinkler system to
accommodate the fit-up.
Plumbing: The bulk plumbing is provided in the shell construction.
We will provide one (1) coffee station per floor
including all plumbing requirements.
HVAC: Lessor will complete the HVAC for the space inclusive of the supply
and installation of water source heat pumps (to be connected to the loop system
installed in the shell), ductwork, diffusers, grilles, and controls as required
for a compete system.
ELECTRICAL
Lighting: Lessor will provide 2' x 4' lay-in fluorescent light fixtures
with acrylic prismatic lens covers to create minimum 65 foot candle level in the
office areas. All light fixtures will be provided with energy efficient ballast.
Each office will have a minimum of one light switch.
Power: Receptacles will be provided in the ratio of one (1) receptacle for
each one hundred and twenty-five square feet of open office team. A minimum of
two (2) receptacles will be installed in each office or room.
Emergency Systems: We have included all emergency and exit lighting
required by applicable building codes.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Distribution to, or hook-up of, Owner supplied landscape partitions.
Emergency generator or uninterrupted power sources.
Computer or telecommunications wiring or devices.
END OF SPECIFICATION
EXHIBIT 10.A(o)
LEASE AGREEMENT
BETWEEN
DUNWOODY ASSOCIATES
a Pennsylvania limited partnership
as Lessor
and
GOLDEN AMERICAN LIFE INSURANCE COMPANY
as Lessee
Date: April 6th, 1998
TABLE OF CONTENTS
1. Premises 1
1.1 Agreement to Lease 1
1.1.1. Lessee's Proportionate Share 1
1.2 Improvements 1
1.3 Intentionally Omitted 2
1.4 Condition 2
1.5 Lessor's Compliance 2
1.6 Option to Expand 3
2. Term
2.1 Original Term 3
2.2 Delay in Possession 4
2.3 Confirmation of Lease 4
2.4 Changes 4
2.5 Force Majeure 5
2.6 Lessee Delays 5
2.7 Options to Extend 5
2.8 Early Occupancy 6
3. Rent 6
3.1 Base Rent 6
3.2 Payment 6
3.4 Increase in Base Rent 7
3.5 Operating Expense Allowance 7
3.6 Operating Expense Adjustments 7
3.7 Taxes 10
3.7.1 Personal Property Taxes 10
3.7.2 Right to Contest Taxes 10
4. Use 10
4.1 Permitted Use 10
4.2 Fixtures Alterations 10
4.3. Lessee's Compliance 11
4.4 Lessor's Access 11
5. Hazardous Substances 11
5.1 Hazardous Substance Defined 11
5.2 Lessor Indemnification 11
5.3 Lessee Indemnification 12
6. Maintenance 12
6.2 Lessor's Obligations 12
6.3 No Liens 12
6.4 No Other Services by Lessor 12
7. Insurance, Indemnification 13
7.1 Payment for Insurance 13
7.2.1 Carried by Lessee 13
7.2.2 Carried by Lessor 13
7.3 Other Matters 13
7.4. Additional Insureds 14
7.5 Waiver 14
7.6 Indemnification 14
8. Damage or Destruction 15
8.1 General 15
8.2 Rent Abatement 15
9. Condemnation 15
9.1 Total Taking 15
9.2 Partial Taking 15
9.3 Award 16
10. Utilities 16
11. Assignments and Subletting 16
12. Default: Breach; Remedies 16
12.1 Events of Default 16
12.2 Remedies 17
13. Broker's Fee 17
14. Estoppel Certificate 17
15. Severability 18
16. Notices 18
17. Waivers 18
18. Recording 19
19. Surrender 19
20. No Right to Holdover 19
21. Cumulative Remedies 19
22. Binding Effect: Choice of Law 19
23. Subordination: Attornment; Non-Disturbance 19
23.1 General 19
24. Signage 20
25. Quiet Possession 20
26. Time of the Essence 20
27. Entire Agreement 21
28. Amendments 21
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") date for reference purposes only as of
the 6th day of April, 1998, by and between Dunwoody Associates, a Pennsylvania
limited Partnership and/or Their Assignee ("Lessor"), and Golden American Life
Insurance Company, a Delaware Corporation ("Lessee").
NOW, THEREFORE, for and in consideration of the rents, covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Premises.
1.1 Agreement to Lease. Lessor hereby leases to Lessee, and Lessee
hereby leases fro Lessor that certain real property consisting of
approximately 15.87 acres, including all improvements therein or to be
provided by Lessor under the terms of this Lease, and commonly known as Lot
G of the Glenloch Corporate Campus, West Whiteland Township, located in the
County of Chester, Commonwealth of Pennsylvania and generally described as
all of that certain real property and the improvements now or hereafter
existing or constructed thereon, including an approximately 65,000 square
foot, 3-story office building and parking on the Premises (as hereinafter
defined) to be constructed by Lessor pursuant to the terms hereof, and more
particularly described in Exhibit A attached hereto (the "Premises").
1.1.1 Lessee's Proportionate Share 100% (determined by dividing
the area leased by Lessee by the area of the building). Lessee shall
only pay for its prorata share of Operating Expenses for space which
it occupies, and common area it uses. Prorata share for exterior
common areas will be based on the total square footage of buildings
constructed on Lots F, G & H.
1.2 Improvements. Lessor will construct or install the building,
parking, landscaping interior improvements and all other improvements on
the Premises (collectively, the "Improvements"), described in Exhibit "B".
Lessor has included as part of the improvements a $25/SF of Building
Interior Finish Allowance ("Allowance") in order to construct the interior
finishes such as doors, walls, ceilings, flooring, electrical and HVAC
distribution, etc. This Allowance is in an addition to the shell building
as described in the "Three Story Shell Office Building" Project Outline
Specification attached as part of Exhibit "B". If Lessee's final floor plan
and finish selections cost in excess of the Allowance, Lessee shall pay
directly to Lessor the additional cost. If the cost of the final floor plan
and finish selections are less than the improvements as described above
shall remain the property of Lessor upon lease expiration. Lessor has
caused to be prepared "Plans and Specifications" for the Improvements on
the Premises (preliminary copies of which are attached hereto as Exhibit
"B"), which Plans and Specifications will be delivered by Lessor to Lessee
in completed form on or before June 1, 1998. Interior finish plans will be
completed on or before June 30, 1998. Within fifteen (15) business days
after Lessee receives the Plans and Specifications from Lessor, Lessee
shall either approve or disapprove the Plans and Specifications, in
writing, delivered to Lessor and noting with reasonable particularity any
changes or corrections therein.
If Lessee makes any changes or corrections to the Plans and Specifications,
Lessor's architect shall resubmit the revises Plans and Specifications to
Lessee within fifteen (15) business days after receipt by Lessor or
Lessee's changes or corrections and, thereafter Lessee shall either approve
or disapprove the revised Plans and Specifications within fifteen (15)
business days after Lessee's receipt of same, which approval or disapproval
shall be in writing, delivered to Lessor, nothing with reasonable
particularity any further changes or corrections therein. A copy of the
final approved plans and specifications shall be attached hereto as Exhibit
"B" and shall replace the preliminary copies attached hereto on the date of
execution. All costs to Lessee, including Lessee's architect, engineers
and/or consultants, in reviewing and revising the Plans and Specifications
shall be the sole responsibility of Lessee. Thereafter, Lessor will
complete the Improvements on or before the Commencement Date (as
hereinafter defined), at Lessor;'s sole cost and expense, except as
otherwise expressly provided in this Lease, in accordance with the approved
Plans and Specifications. Upon written request from Lessee, Lessor shall be
responsible for and promptly make any and all repairs to the Improvements
necessitated by any defective workmanship or materials which occur during
the Term. Lessor shall maintain and enforce any warranties and/or
guarantees from Lessor's general contractor, subcontractor and/or
materialmen in connection with the construction of the Improvements
throughout the Term of the Lease.
1.3 Intentionally Omitted.
1.4 Condition. Lessor shall deliver the Improvements to Lessee broom
clean and free of debris on the Commencement Date and warrants that the
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and
air conditioning systems ("HVAC"), loading doors, if any, and all other
such elements in the Improvements provided by Lessor, other than those
constructed by Lessee, shall be in new operating condition on said date and
that the structural elements of the roof, bearing walls and foundation of
the Building shall be free of material defects. If Lessee determines that a
non-compliance with said warranty exists, Lessor shall, as Lessor's sole
obligation with respect to such matter, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of non-compliance, rectify the
same at Lessors's expense.
1.5 Lessor's Compliance Lessor represents and warrants to Lessee that
the Improvements in and on the Premises shall comply with all applicable
laws, covenants, restrictions of record, building codes, regulations and
ordinances in effect on the Commencement Date, including the Americans with
Disabilities Act. Said warranty also applies to the use to which Lessee
will put the Premises as described in Paragraph 4.1 herein. If the Premises
do not comply with said representation and warranty, Lessor shall, except
as otherwise provided in this Lease, promptly after receipt of written
notice from Lessee setting forth with specificity the nature and extent of
such non-compliance, rectify the same at Lessor's expense.
1.6 Option to Expand Lessor hereby grants to Lessee the sole option to
expand the Building on the Premises (the "Expansion Option") up to a
maximum of an additional 60,000 square feet (as delineated as "Expansion
Area" on Exhibit B). Lessee may exercise the Expansion Option anytime prior
to June 30, 1999 by providing written notice to Lessor which notice
indicates the approximate number of square feet of the expansion. Lessee
shall have the option of expanding the building by a minimum of 20,000
square feet and a maximum of 60,000 square feet. If Lessee desires to
expand less than 60,000 square feet of Expansion Space, Lessor, at Lessor's
option, shall be permitted to construct the entire 60,000 square foot
expansion area, and lease the balance of the expansion area to other
tenants, thereby making the building a multi-tenant building. If the
building is multi-tenanted, Lessee's operating expenses shall be prorated
based on square footage leased by each Tenant. If the building is
multi-tenanted, Lessor agrees that all other Tenants will use the Premises
primarily as general office use, as described in Paragraph 4.1.
All building expansions will include a $25/SF Lessee Improvement Allowance,
which Allowance shall be used exclusively for the construction of interior
finishes, including, but not limited to, wiring, phone equipment, security
systems, etc., in the Expansion Area. No additional lobby area will be
included in the Building Expansion. One elevator and additional bathroom
fixtures in a quantity not to exceed 50% of the existing bathroom fixtures
will be included in the Base Building Expansion. Base rent on the building
expansion will be calculated based on the following formula:
$15.25/SF x Ten year treasury rate on date of financing of the expansion + 175 basis points
Ten year treasury rate on date of initial financing + 175 basis points
x square foot of Building Expansion occupied by Lessee
Expansion space base rent shall escalate at the same percentage increases
as the base lease.
In the event Lessee exercises its right to expand, the lease term shall be
reset to a new ten (10) year lease term commencing on the Commencement Date
as defined in Section 2.1(ii) herein.
2. Original Term The Original Term of this Lease shall commence on the
Commencement Date and continue for a period of ten (10) years. The
"Commencement Date" of the Original Term shall be later to occur of (i)
December 31, 1998, or (ii) the date upon which Lessor "substantially
completes" the Improvement in the Premises (for which date Lessee) shall
receive thirty (30) days prior written notice). The term "Substantial
Completion Date" shall be the date on which all of the following have first
occurred: (A) the Improvements are available for Lessee's uninterrupted use
and occupancy with a minimum of Lessor interference, except for Lessor's
completion of any minor work (e. g. "punch-list items) and (B) the
Improvements have passed final inspection by the applicable local
government authority in accordance with applicable law and a certificate of
occupancy. Upon Lessee's submission of a written list of punch-list items,
at Lessor's sole cost and expense, as detailed in Paragraph 2.4, within
thirty (30) days after the Commencement Date, subject to Paragraphs 2.4 and
2.5 below.
2.2 Delay in Possession. In the event Lessee is unable to take
possession of the Improvements within 45 days of December 31, 1998 as a
result of Lessor's failure to deliver the substantially completed
improvements (other than as a result of changes required by Lessee which
result in delays). Lessee shall be entitled to two (2) days of free Base
Rent for each day substantial completion is delayed. In the event Lessee is
unable to take possession of the Improvements within ninety (90) days of
December 31, 1998 as a result of Lessor's failure to deliver the
substantially completed improvements (other than as a result of Changes
required by Lessee which result in delays), Lessee shall have the right to
terminate this Lease without further obligation to Lessor.
2.3 Confirmation of Lease Prior to or on the Commencement Date, Lessor
and Lessee shall execute the Confirmation of Lease Agreement (the
"Confirmation Agreement"), whereby Lessor and Lessee confirm, in writing,
the Commencement Date, the Expiration Date, the monthly Base Rent payable
by Lessee for the Original Term, and the final square footage of the
Building, to be certified by an Architect in accordance with the method of
measuring square footage used on the final plans attached as Exhibit "B",
which is, actual floor areas shall be measured from the outside face of
exterior walls, and in the event of multi-tenancy, floor areas will be
measured to the middle of any demising walls between Tenants. The form of
the Confirmation Agreement is attached hereto as Exhibit "E".
2.4 Changes If Lessee requests any change, addition or alternation to
the Plans and Specifications, or the Plans, after Lessee's approval of same
or during Lessor's construction and completion of the Improvements
(collectively, "Changes"), Lessor shall promptly give Lessee an estimate of
the costs of such Changes and the resulting delay, if any, in completion of
the Improvements. Within five (5) business days after Lessee's receipt of
such written estimate from Lessor, Lessee shall give Lessor written notice
indicating whether or not Lessee elects to proceed with any such Changes.
If Lessee elects to proceed with such Changes and if Lessor has reasonably
approved such Changes, Lessor will make such Changes. If Lessee elects not
to proceed with such Changes or fails to timely notify Lessor of Lessee'
election, Lessor shall complete the Improvements in the Premises without
making such Changes. Lessor shall not be responsible, in any manner
whatsoever, for any delay caused by Lessee's request for the construction
of such Changes.
2.5 Fore Majeure If the performance by Lessor of any act required
herein or elsewhere in the Lease is prevented or delayed by reason of
strikes, lock-outs, labor disputes, acts of God, fires, floods,
earthquakes, epidemics, freight embargoes, unforeseeable unavailability of
materials and supplies, or any other cause beyond Lessor's reasonable
control, Lessor shall be excused from performance for the time period of
the prevention or delay, and the Commencement Date (if the Commencement
Date has not already occurred and the delay in Lessor's performance relates
directly to the construction and completion of the Improvements), shall
also be extended for the period of time of the prevention or delay.
Notwithstanding anything to the contrary set forth in the Lease, Lessor
shall use its best efforts to avoid and/or mitigate any such force majeure
delays, other than Lessor's use of overtime or week-end work, special
deliveries of materials, or other extra efforts, unless approved by Lessee.
If such delays extend for a period of ninety (90) days beyond December 31,
1998, Lessee shall have the right to terminate lease.
2.6 Lessee Delays To the extent that the Commencment Date has not
occurred because Lessor was delayed in Lessor' substantial completion of
the Improvements as a result of any of the following (collectively, "Lessee
Delays"): (i) Lessee's failure to complete any material item on or before
the due date, which is responsibility of Lessee to complete; (ii) Lessee's
request for Changes or Lessor's construction of any such Changes; (iii)
Lessee's request for materials, finishes, or installations other than those
described in the Plans and Specifications and/or Plans: (v) any act or
failure to act by Lessee or its employees, agents, architects, independent
contractors, consultants and/or any other person performing or required to
perform services on behalf of Lessee, then as soon as reasonably possible,
but in no event more than fourteen (14) days after the occurrence or start
of any Lessee Delays, Lessor shall notify Lessee, in writing, of any Lessee
Delays. If Lessor properly notifies Lessee hereunder of any Lessee Delays
that have previously been accepted in writing by Lessee, the Commencement
Date shall be adjusted by the net number of days so delayed (determined on
a critical path basis).
2.7 Options to Extend. Provided that there is not material default by
Lessee thereunder at the time of any "Option Notice" (as hereinafter
defined) or the commencement date of any Option Term, Lessor hereby grants
to Lessee two (2) consecutive Options to renew the Lease for a period of
five (5) years (each an "Option Term" or, collectively the "Option Terms").
An Option must be exercised, if at all, by written notice delivered by
Lessee to Lessor (the "Option Notice") but not later than six (6) months,
prior to the end of the Original Term or any subsequent Option term.
Provided Lessee has timely delivered the applicable Option Notice, the
Original Term and any subsequent Option Term, as and if applicable, shall
be extended by an Option Term, and all of the terms, covenants and
conditions, of this Lease shall remain unmodified and in full force and
effect, except that the Base Rent payable for the Premises during an Option
Term shall be determined in accordance with Paragraph 3 below.
2.8. Early Occupancy. Lessor will use good faith efforts to allow
Lessee to take possession of the Leased Premises on December 1, 1998, for
fixturing, writing and installation of computer/phone equipment purposes.
Lessor shall allow Lessee's wiring contractor immediate access to the
building, to be coordinated with General Contractor. Lessee agrees to
coordinate its such work with the work of Lessor such that Lessee's work
does not interfere with or delay Lessor's work; provided, however, that
neither Lessor nor any of Lessor's affiliates shall have any responsibility
or liability whatsoever for any injury (including death) to persons or loss
or damage to any of Lessee's leasehold improvements, fixtures, equipment or
any other materials installed or left in the Leased Premises prior to the
Commencement Date. All of the terms and conditions of this Lease will
become effective upon Lessee taking possession of the Leased Premises
except for the payment of Base Rent and Additional Rent which will commence
on the Commencement Date.
3. Rent.
3.1 Base Rent. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent ("Rent"). Lessee's financial
obligations pursuant to this Lease, not including Base Rent, are deemed to
be "Additional Rent".
3.2 Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction, o
or before the day on which it is due. Rent for any period during the term
of hereof which is for less than one (1) full calendar month shall be
pro-rated based upon the actual number of days of said month. Payment of
Rent shall be made tot Lessor at its address noted herein or to such other
persons or place as Lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount then due shall not be
a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
3.3 Initial Calculation of Base Rent. The monthly Base Rent of the
Original Term shall be as follows: (However, Annual Base Rent shall be
finally determined by multiplying the certified square footage, as
described in Paragraph 2.3 by $15.25/SF for months 1 - 60, $16.50/SF for
months 61 - 120, $18.15/SF for months 121 - 180 and $20.00/SF for months
181 - 240.).
Months 1 - 6- $82,604.17/Month
Months 61 - 120 $89,375.00/Month
3.4 Increases in Base Rent. The monthly Base Rent payable by Lessee
for any Option Term, shall be as follows, subject to certified square
footage as detailed in Paragraph 2.3 and rates per square foot as detailed
in Paragraph 3.3.:
Months 121 - 180 $98,312.50/Month
Months 181 - 240 $108,333.33/Month
3.5 Operating Expense Allowance. $22,208/month ($4.10/SF) or such
other initial amount calculated by multiplying the certified square
footage, as described in Paragraph 2.3, by $4.10/SF subject to adjustment
as set forth in Paragraph 3.6 and detailed in Exhibit "F", shall be paid by
Lessee as defined in Paragraph 3.6.
3.6 Operating Expense Adjustments
(A) Operating Expense. Lessee shall pay to Lessor the Operating
Expense Allowance in equal monthly installments, the first of which shall
be payable upon Commencement Date of this Lease. If the Term commences
other than on the first day of the calendar month, then the Operating
Expense Allowance for the first calendar month of the Term shall be
adjusted proportionately.
If Lessor's Operating Expense for any Operating Year shall be greater
or less than the Operating Expense Allowance, Lessee shall pay to Lessor as
additional rent an amount equal to Lessee's Proportionate Share of the
difference, or if Lessor's Operating Expenses for any operating year shall
be less than the Operating Expenses Allowance, Lessor shall credit to
Lessee's succeeding months Operating Expenses Allowance an amount equal to
Lessee's Proportionate Share of the difference (the amount of Lessee's
Proportionate Share of such difference is hereinafter referred to as the
"Operating Expense Adjustment"). If Lessee occupies the Premises or portion
thereof for less than a full Operating Year, the Operating Expense
Adjustment will be calculated in proportion to the Amount of time in such
Operating Year that Lessee occupied the Premises.
Such Additional Rent shall be paid in the following manner: within 120
days following the end of the first and each succeeding Operating year,
Lessor shall furnish Lessee an Operating Expense Statement certified as
true and correct setting forth (i) the Operating Expense for the preceding
Operating Year, (ii) the Operating Expense Allowance and (iii) Lessee's
Operating Expense Adjustment for such Operating Year. Within thirty (30)
days following the receipt of such Operating Expense Statement (the
"Expense Adjustment Date"), Lessee shall pay to Lessor as Additional Rent
the Operating Expense Adjustment for such Operating Year. Lessee with
reasonable notice to Lessor, shall have the right to audit such Operating
Expense records. If Lessee's audit results in an irreconcilable dispute
concerning such Operating Expense Adjustments, Lessee and Lessor shall
agree on an independent Auditor to resolve each dispute.
Commencing with the first month of the second Operating Year, Lessee
shall pay to Lessor, in addition to the Operating Expense Allowance, on
account of the Operating Expense Adjustment for such Operating Year,
monthly installments in advance equal to one-twelfth (1/12) of the
estimated Operating Expense Adjustment for such Operating Year.
As used in this Section 6(A) and Section 1 where applicable, the
following words and terms shall be defined as hereinafter set forth:
(i) "Operating Year" shall mean each calendar year occurring during
the Term. If Lessee's occupancy of the Premises is for less than a full
calendar year, Lessor will prorate the Operating Expenses.
(ii) "Operating Expense Allowance" shall mean a statement in writing
signed by Lessor, or Lessor's Managing Agent, setting forth in reasonable
detail (a) the Operating Expense for the preceding Operating Year, (b) the
Operating Expense Allowance, and (c) the Lessee's Operating Expense
Adjustment for such Operating Year, or portion hereof. The Operating
Expense for each Operating Year shall be available for inspection by Lessee
at Lessor's office during normal business hours. Operating expenses are as
follows:
(a) Real Estate taxes and other taxes or charges levied in lieu of
such taxes, general and special public assessments, charges imposed by any
governmental authority pursuant to anti-pollution or environmental
legislation, taxes on the rentals of the Building or the use, occupancy or
renting of space herein;
(b) Premiums and fess for fire and extended coverage insurance,
insurance against loss or rentals for space in the Building and public
liability insurance, all in amounts and coverages (with additional policies
against additional risks) as may be reasonably required by Lessor or the
holder of any mortgage on the Building, and as further defined by Paragraph
7 herein;
(c) Water and sewer service charges, and common are electric charges.
(d) Maintenance and repair costs, repairs and replacements of supplies
and equipment snow removal and paving, lawn and general grounds upkeep,
maintenance and repair, and the costs of all labor, material and supplies
incidental thereto, excluding any costs associated with Lessor's warranty
items;
(e) Such industry standard, wages, salaries, fees and other
compensation and payments and payroll taxes and contribution to any social
security, unemployment insurance, welfare, pension or similar fund and
payments for other fringe benefits required by law, union agreement or
otherwise made to or on behalf of all employees of Lessor performing
services rendered in connection with the operation and maintenance of the
Building and/or Land, including, without limitation, payments made directly
to or through independent contractors or performance of such services; If
Lessee is not satisfied with workmanship and/or cost, Lessee shall have the
option to cause Lessor to contract with another contractor.
(f) Management fees payable to the managing agent for the Building,
not to exceed two percent (2%) of Base Rent;
(g) Assessments paid by Lessor, not to exceed $.10'SF of building, for
the repair maintenance and upkeep of common facilities located in the
Business Park, any assessments shall reflect actual costs and such costs
shall be consistent with those costs incurred on the other lots in the
Glenloch Corporate Campus; and
(h) Any all other expenditures of Lessor incurred in connection with
the operation, repair or maintenance of the Premises, and the Building or
the Land which are properly expensed in accordance with generally accepted
accounting principles consistently applied in the operation, maintenance
and repair of a first-class office building facility.
(i) Janitorial services, five (5) days per week including trash
removal.
The term "Operating Expenses" shall not include depreciation of the
Building or equipment therein, interest, net income, franchise or capital
stock taxes payable to landlord executive salaries, real estate brokers,
commissions or the costs of services provided specially for any particular
tenant at such tenant's expense and not uniformly available to all tenants
of the Building and Property.
(B) During the calendar year in which the Term ends, Lessor shall have
the right to submit to Lessee a statement of Lessor's reasonable estimate
of the Operating Expense Adjustment during the period (the "final period")
beginning on the first day of the final Operating Year of the Term. Within
thirty (30) days of the expiration of term, Lessor shall reconcile
Estimated Operating Expenses against Actual Operating Expenses. Final audit
procedures shall apply as in Paragraph 3.6. Lessee shall pay to Lessor any
deficiency, or as the case may be, Lessor shall refund to Lessee any
overpayment occasioned by Lessee's payment of the aforesaid estimate.
3.7 Taxes.
3.7.1 Personal Property Taxes. Lessee shall pay, prior to
delinquency, all taxes assessed against and levied upon all personal
property of Lessee. When possible, Lessee shall cause such property to
be assessed and billed separately from the real property of Lessor. If
any of Lessee's said personal property shall be assessed with Lessor's
real property, Lessee shall pay Lessor the taxes attributable to
Lessee's property within thirty (30) days after receipt of a written
statement.
3.7.2 Right to Contest Taxes. Lessee will have the right to
contest the amount or validity, in whole or in part, of any Tax by
appropriate proceedings diligently conducted in good faith. Upon the
termination of those proceedings, Lessee will pay its share of the Tax
or part of the Tax as finally determined, the payment of which may
have been deferred during the prosecution of the proceedings, together
with any costs, fees, interest, penalties, or other related
liabilities. Lessor will not be required to join in any contest or
proceedings unless the provisions of any law or regulations then in
effect require that the proceedings be brought by or in the name of
Lessor. In that event, Lessor will join in the proceedings or permit
them to be brought in its name; provided that Lessor will not be
subjected to any liability for the payment of any costs or expenses in
connection with any contest or proceedings, and Lessee will indemnify
and hold Lessor harmless from nay of such costs or expenses.
4. Use.
4.1 Permitted Use. Lessee shall use the Premises for the installation,
operation and maintenance of General Office Space and such other lawful
purposes deemed necessary by Lessee.
4.2 Fixtures Alterations. Lessee shall have the right to install trade
fixtures, office machinery and equipment, make such alterations,
improvements or additions to the Premises as deemed necessary by Lessee to
the operation of its business, provided that the same do not impair the
structural integrity of the Building. Lessee shall retain ownership of all
such trade fixtures, office machinery and equipment and shall remove the
same upon expiration or termination of this Lease. Lessee with Lessor's
prior written consent, not to be unreasonably withheld, shall have the
right to construct, at Lessee's sole cost, additional private officers and
conference rooms, or other such improvements ("Additional Improvements")
within the Premises. Such additional improvements shall become the property
of Lessor upon expiration of lease and Lessee shall not be responsible for
removing same, unless otherwise agreed upon by Lessor and Lessee at the
time Lessor/s written consent is requested. Lessee shall repair the
Premises and the Building to as good a condition as existed prior to such
removal, normal wear and tear excepted.
4.3 Lessee's Compliance. Lessee will not use or occupy, or permit any
portion of the Premises to be used or occupied in violation of any law,
ordinance, order, rule, regulation, certificate of occupancy or other
governmental requirement. Lessee will comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to
the use, condition, or occupancy of the Premises, and all rules, orders,
regulations, and requirements of the board of fire underwriters or
insurance service office, or any other similar body, having jurisdiction
over the Premises or any portion thereof. Nothing in the foregoing shall
require Lessee to perform any work or make any improvements or repairs
which the Lessor is required to make pursuant to other provisions of this
Lease. Lessor warrants that Lessee's intended use, as detailed in Paragraph
4.1, complies with the regulations of all Governmental Authority and
Lessor's insurers of the Premises.
4.4 Lessor's Access. Lessor, its designated agents, employees and
contractors may enter the Premises at any time in response to an emergency,
and otherwise during normal business hours with reasonable notice to Lessee
and at all time accompanied by Lessee's designated representative to
inspect the Premises, to supply any services which is the Lease requires
Lessor to provide or to make repairs which this Lease requires Lessor to
make; provided, however, all work will be done as promptly as is reasonably
practicable with Lessor's best effort to minimize disruption to Lessee's
business. No entry into the Premises by Lessor during an emergency by any
means shall be a forcible or unlawful entry into the Premises or a detainer
of the Premises or an eviction, actual or constructive, of Lessee from the
Premises, or any part of the Premises, nor will any entry entitle Lessee to
damages or an abatement of Rent or other charges which this Lease requires
Lessee to pay: provided, however, that other than during an emergency
Lessor shall be liable for damages to property and injury to persons caused
by Lessor's negligence or willful misconduct, or that of its agents,
employees or contractors.
5. Hazardous Substances.
5.1 Hazardous Substance Defined. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance or waste which is
classified as such by any federal or state agency or authority having
jurisdiction over such matters.
5.2 Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its officers,
directors, employees, agents, subcontracts and affiliates, harmless from
and against any and all environmental damages, liabilities, judgments,
claims, expenses, penalties, and attorneys and consultant fees arising as a
result of hazardous substances on the Premises prior to the Commencement
Date, and during the term of the lease, except of acts by Lessee, it's
employees, agents and subcontractors, that cause any environmental damage,
liabilities, claims, expenses and penalties, of which are caused by the
negligence, or intentional acts of Lessor, its agents or employees.
Lessor's indemnification obligation shall include, but not limited to, cost
of investigation, removal, remediation, restoration and/or abatement and
shall survive the expiration or termination of this Lease.
5.3. Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees and lenders, if any, harmless from and
against any and all environmental damages, liabilities, judgments, claims,
expenses, penalties , and attorneys and consultant fees arising out or of
involving any hazardous substance proven to be brought onto the Premises by
Lessee (provided, however, that Lessee shall have no liability under this
Lease with respect to underground migration of any hazardous substance onto
the Premises from adjacent properties, unless caused by Lessee). Lessee's
indemnification obligations shall survive the expiration or termination of
this Lease.
6. Maintenance
6.2 Lessor's Obligations. Lessor shall, in addition to its warranty
obligations, at Lessor's sole cost and expense, be responsible for the
repair and maintenance, in good order and condition, of the exterior
structural bearing walls, foundation, and roof and roof membrane of the
Building located on the Premises, along with repairing any soil subsistence
under the parking lot located on the Premises. Notwithstanding anything to
the contrary set forth in this Lease, if Lessee delivers written notice to
the Lessor of the need for repairs and/or maintenance to the Premises which
are Lessor's obligation, but Lessor fails to undertake such repairs and/or
maintenance within fifteen (15) days after receipt of such written notice,
then Lessee may proceed to undertake such repairs and/or maintenance upon
the delivery of an additional written notice to Lessor (and to Lessor's
lender, if Lessee is notified in writing in advance that such additional
notice is required) specifying that Lessee is undertaking such action and
Lessee shall be entitled to reimbursement of Lessee's actual costs and
expenses in taking action. In the event Lessee undertakes such repairs
and/or maintenance, then Lessee shall use only general contractors and
subcontractors who are licensed and insured in the Commonwealth of
Pennsylvania.
6.3 No Liens. Lessee shall not, in the making of any repair,
alterations, improvements or additions to the Premises or Building, suffer
or permit any lien to be filed against the Premises or Building or any part
thereof and if any such lien shall be filed, Lessee shall cause it to be
discharged within sixty (60) days.
6.4. No Other Services by Lessor. Lessor shall not be required to
render any services to Lessee or to make any repairs or replacements to the
Premises, except as provided in Section 3, 8, 11 and 12 hereto. Without
limiting the generality of the foregoing, it is specifically understood and
agreed that Lessee shall be solely responsible for all charges for the
following services used, rendered or supplied to, upon or in connection
with the Premises throughout the Term: telephone and/or communication
services, security system or services, utilities, Lessor shall, at its
expense, provide separate metering of utilities.
7. Insurance, Indemnification.
7.1 Payment for Insurance. Lessee shall pay for all insurances
required under this Paragraph, except to the extent of the cost
attributable to liability insurance carried by Lessor under Paragraph 7.2.2
in excess of Two Million Dollars ($2,000,000.00) per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Original
Term (or any Option Term), shall be pro-rated to correspond to the Original
Term (or any Option Term). Payment shall be made by Lessee to Lessor as
part of the Operating Expense Allowance.
7.2.1 Carried by Lessee. Lessee shall, at its sole expense,
obtain and keep in force during the Original Term (and any Option
Term) of this Lease: (a) commercial general liability insurance with a
combined single limit of not less than Two Million Dollars
($2,000,000.00) on an occurrence basis protection Lessee and Lessor
(as an additional insured) against claims for bodily injury and
property damage arising out of the use and occupancy of the Premises
by Lessee.
7.2.2 Carried by Lessor. Lessor shall obtain and keep in force
during the Term "all-risk" coverage insurance (including Loss of Rent
insurance for a minimum of twelve months) naming Lessor and such other
parties as Lessor may designate as additional insured's with respect
to the Building and Improvements now or hereafter located on the
Premises. The amount of such insurance shall be equal to 100% of the
full insurable value of the Building and Improvements, with such
deductible clause as shall be reasonably determined by Lessor (at
Lease commencement deductible will be $2,500.00). Lessor shall also
carry Lessor's Liability Coverage in single policy inclusive of all
alterations thereof limits of not less than Two Million Dollars
($2,000,000.00) for personal injury and One Hundred Thousands
($100,000,000.00) for property damage for the office building's common
areas. Lessee covenants and agrees to pay Lessor, as additional rent,
all costs for such insurance incurred by Lessor with respect to the
Premises during the Term (and any Option Term) to be included in the
Operating Expense Allowance pursuant to Paragraph 3.5 herein. If any
portion of the Premises lies in the flood plain, Lessor shall, at its
sole expense, obtain and keep in force during the Term a flood plain
insurance policy (or an endorsement to its all-risk policy) equal to
100% of the full insurable value of the Building and Improvements.
Lessor shall be responsible for payment of any deductible.
7.3 Other Matters. All insurance required under this Paragraph 7 and
all renewals thereof will be issued by companies authorized to transact
business in the Commonwealth of Pennsylvania. All insurance policies will
expressly provide that the policies will not be canceled or altered without
thirty (30) days prior written notice to Lessor. Lessee may satisfy its
insurance obligations by appropriate of its blanket insurance policies.
7.4 Additional Insureds. All policies of liability insurance that
Lessee is obligated to maintain according to this Lease or in accordance
with law (other than any policy of workmen's compensation insurance) will
name Lessor as an additional insured. All public liability, property damage
liability, and casualty policies maintained by Lessee will be primarily
polices, and not contributing with and not in excess of coverage that
Lessor may carry.
7.5 Waiver. Lessor and Lessee hereby waive all rights to recover
against each other, or against the officers, directors, shareholders,
partners, joint ventures, employees, agents, customers, invitees, or
business visitors of each of theirs or of any other Lessee or occupant of
the building, for any loss or damage arising from any cause covered by any
insurance required to be carried by each of them pursuant to this Paragraph
7 or any other insurance actually carried by each of them. Lessor and
Lessee will cause their respective insurers to issue appropriate waivers or
subrogation endorsements to all policies of insurance carried in connection
with the Premises or the contents of either of them.
7.6 Indemnification. Lessee hereby agrees to indemnify, protect,
defend and hold harmless Lessor from and against any and all claims, loss
of rents, damages, judgments, penalties, costs (including reasonable
attorney's fee), and liabilities (collectively, the "Claims") arising out
of the occupancy of the Premises by Lessee the conduct of Lessee's business
therein., or any gross neglect of Lessee or Lessee's agents, contractors,
employees or invitees. Notwithstanding the foregoing indemnification
obligations of Lessee, Lessee shall not be required to indemnify and hold
Lessor harmless for any Claims resulting from the negligence and/or willful
misconduct or Lessor or Lessor's agents, contractors, employees or invitees
and Lessor hereby indemnifies and holds Lessee harmless from any such
Claims, excluding consequential damages. Lessor hereby indemnifies and
holds Lessee harmless from any loss or damage to any person on the Premises
to the extent that such loss or damage is covered by Lessor's
insurance (or would have been covered had such insurance been obtained and
maintained by Lessor) even if resulting from the negligence and/or willful
misconduct of Lessee or Lessee's agents, contractors or employees.
Similarly, Lessee hereby indemnifies and holds Lessor harmless from any
loss or damage to the extent such loss or damage is covered by Lessee's
insurance (or would have been covered had such insurance been obtained and
maintained by Lessee), even if resulting from the negligence and/or willful
misconduct of Lessor or Lessor's agents, contractors or employees. The
agreements of Lessor and Lessee to indemnify and hold each other harmless
are not intended to and shall not relieve any insurance carrier or carriers
of their obligations under insurance policies carried by Lessor or Lessee,
respectively, under the Lease.
8. Damage or Destruction
8.1 General. If the Premises are damaged or destroyed by reason of
fire or any other casualty, Lessee shall immediately notify Lessor and
Lessor shall promptly repair or restore the Premises (including Lessee
improvements) at Lessor's expense, so as to make the Premises at least
equal in value to the Premises existing immediately prior to the occurrence
and as nearly similar to it in character as is practicable and reasonable.
Notwithstanding the foregoing, if Lessor is unable to complete the repairs
or restoration of the Premises within 180 days of the date of damage or
destruction, either Lessor or Lessee may elect to terminate this Lease upon
thirty (30) days notice, such termination to be effective as of the date of
casualty. If the Premises are damaged or destroyed during the final two (2)
years of the Original Term or final year of any Option Term, Lessor or
Lessee may terminate this Lease upon written notice.
8.2 Rent Abatement. Lessee's obligations with respect to Rent will
abate pending the repairs to or the restoration of the Premises, but not
longer than the coverage period for the Loss or Rent insurance coverage.
9. Condemnation.
9.1 Total Taking. If, by exercise of the right of eminent domain or by
conveyance made in response to the threat of the exercise of such right (in
either case a "Taking"), all of the Premises are taken, or if so much of
the Premises are taken that the Premises could not be used by Lessee for
the purposes for which they were used immediately before the Taking, this
Lease shall end upon the earlier of the vesting of title to the Premises in
the condemning authority or the taking of possession of the Premises by the
condemning authority (in either case the "Ending Date").
9.2 Partial Taking. If, after a Taking, so much of the Premises
remains that, in Lessee's reasonable estimation, the Premises ca be used
for substantially the same purposes for which they were used immediately
prior to the Taking: (i) this Lease will end on the Ending Date as to the
part of the Premises which is taken; (ii) prepaid Rent will be
appropriately allocated to the part of the Premises which is taken and
prorated to the Ending Date; (iii) beginning on the day
after the Ending Date, Rent for so much of the Premises as remains will be
reduced in the proportion of the floor area of the building remaining after
the Taking to the floor area of the building before the Taking; and (iv) at
its cost, Lessor will restore so much of the Premises as remains to a sound
architectural unit substantially suitable for the purposes for which it was
used immediately prior to the Taking.
9.3 Award. All awards from any Taking shall be allocated between
Lessor and Lessee in accordance with applicable law. Unless prohibited by
applicable law, Lessee may prosecute its own claim by separate proceedings
against the condemning authority for damages legally due to it (such as the
loss of fixtures which Lessee was entitled to remove and moving expenses).
10. Utilities. Lessee will contract in their own name for and pay the
appropriate suppliers for all gas, electricity, lights, heat, telephone,
power, and other utilities, except water and sewer and communications
services delivered to the Premises by such suppliers during the Term,
whether or not the services are billed directly to Lessee. If building
becomes multi-tenanted, utilities used for common areas, if not separately
metered, will be provided.
11. Assignments and Subletting. Lessee shall not assign or sublet all
or part of Lessee's interest in this Lease without Lessor's written consent
which shall not be unreasonably withheld. In connection with any proposed
assignment of the Lease or sublease of all or any portion of the Premises,
Lessee shall deliver to Lessor, for Lessor's review and written approval,
all such information concerning the proposed assignee or sublease as Lessor
may reasonably request. Notwithstanding the foregoing, Lessee may assign
the Lease at any time, or sublease all or any part of the Premises, upon
prior written notice to Lessor but without Lessor's prior written consent,
to any entity which acquires not less than fifty-one percent (51%) of
Lessee's assets or stock, or is merged or consolidated with Lessee, or
which controls, is controlled by or is under common control with, Lessee
(collectively, an "Affiliate"), so long as such Affiliate conclusively
agrees, in writing delivered to Lessor prior to the effective date of the
assignment, to assume all of Lessee's obligations under the Lease.
12. Default; Breach; Remedies.
12.1 Events of Default. The following occurrences each shall
constitute an "Event of Default" hereunder: (i) if Lessee defaults in
payment of Rent, and such default continues for a period of ten (10) days
after written notice to Lessee; (ii) if Lessee abandons the Premises
without payment of rent; (iii) if this Lease or the Premises or any part of
the Premises is taken upon execution or by other process of law directed
against Lessee, or is taken upon or subjected to any attachments by any
creditor of Lessee or claimant against Lessee, and the attachment is not
discharged within ninety (90) days after its levy; (iv) If Lessee files a
petition in bankruptcy or insolvency or for reorganization or arrangement
under the bankruptcy laws of the United States or under any insolvency act
of any state, or is dissolved, or makes an assignment for the benefit of
creditors: (v) if an involuntary proceeding under any bankruptcy law or
insolvency act or for the dissolution of Lessee are instituted against
Lessee, or a receiver or trustee is appointed for all substantially all of
Lessee's property, and such proceeding is not dismissed or the receivership
or trusteeship is not vacated within ninety (90) days after institution or
appointment: or (vi) if Lessee defaults in the performance or observance of
any other material term, covenant, or condition under this Lease and Lessee
fails to cure such default
within thirty (30) days after written notice to Lessee (of, if such default
is incapable of being cured within such thirty (30) day period, Lessee
fails to commence curing such default within such thirty (30) day period).
12.2 Remedies. If any one or more events of default set forth in
Paragraph 12.1 occurs, then Lessor may give Lessee written notice of its
intention to terminate this Lease, whereupon Lessee's right to possession
of the Premises will cease and this Lease will be terminated as of the date
fixed in the notice. If this Lease is terminated pursuant to the provisions
of this Paragraph 12.2, Lessee will be liable to Lessor for damages in an
amount equal to the Rent and all other sums that would been owing by Lessee
under this Lease for the balance of the then current Term if this Lease had
not been terminated, less the net proceeds, if any, of any reletting of the
Premises by Lessor subsequent to the termination. Lessor will be entitled
to collect damages from Lessee monthly on the days on which the Rent and
other amounts would have been payable under this Lease had not been
terminated. In the event this Lease is terminated as set forth herein,
Lessor shall use commercially reasonable efforts to relet the Premises in
order to mitigate Lessees' damages.
13. Broker's Fee. Lessor and Lessee each hereby represent and warrant
to the other that, other than The Flynn Company, on behalf of Lessor,
neither has dealt with any broker or agent in connection with the Lease or
its negotiation. Lessee hereby agrees do indemnify, defend and hold Lessor
harmless from and against any and all costs, expenses and liabilities
(including actual attorney's fees and costs, and court costs)for any
compensation, commission or fees claimed by any broker or agent (other than
The Flynn Company) in connection with the Lease or its negotiation based
upon any act of Lessee. Lessor hereby agrees to indemnify, defend an hold
Lessee harmless from and against any and all costs, expenses and
liabilities (including actual attorney's fees and costs, and court costs)
for any compensation, commission or fees claimed by any broker or agent
(other than t The Flynn company) in connection with the Lease or its
negotiation based upon any act of Lessor.
14. Estoppel Certificate. Within no more than twenty (20) days after
written request by Lessor, Lessee will, at no cost to Lessor, execute,
acknowledge, and deliver to Lessor, to the extent such statement is true
and correct, a certificate stating: (i) that this Lease is unmodified and
in full force and effect, or if the Lease is modified, the nature of such
modification accompanied by a copy of any modification agreement; (ii) the
date to which rental and other sums payable under this Lease have been
paid; (iii) that Lessee has accepted and occupied the Premises; (iv) that
Lessee has no claim or offset against Lessor, or, if it does, stating the
nature of such claim or offset; and (v) other matters as may be reasonably
requested by Lessor and acceptable to Lessee. Any certificate may be relied
upon by any prospective purchaser of the Premises and any prospective
mortgagee or beneficiary under any deed of trust or mortgage encumbering
the Premises.
15. Severability. The invalidity of any provision of this Lease, as
determined by a court or government agency of competent jurisdiction, shall
in no way affect the validity of any other provision hereof.
16. Notices. Any notice, request, demand, consent, approval, or other
communication required or permitted under this Lease shall be in
writing and shall be deemed to have been given (i) when personally
delivered by courier (or by guaranteed overnight delivery service), (iii)
when served pursuant to the Federal Rules of Civil Procedure, or (iii) on
the day, as determined by the postmark, it is deposited in any depository
regularly maintained by the United States postal services, postage prepaid,
certified or registered mail ,return receipt requested, addressed to or
(iv) via telefax:
Lessor: Dunwoody Associates
55 Country Club Drive
Downingtown, PA 19355-3062
ATTN: Jack R. Loew
Lessee: Mr. Myles Tasman
Golden American Life Insurance Company
1001 Jefferson Street
Suite 400
Wilmington, DE 19801
With a copy to: Mr. Ben Chernow
Golden American Life Insurance Company
1001 Jefferson Street
Suite 400
Wilmington, DE 19801
Either Lessor or Lessee may change its address or addressee by giving prior
written notice according this Paragraph.
17. Waivers. No waiver of any condition or agreement in this Lease by
either Lessor or Lessee will imply or constitute a further waiver by such
party of the same or any other condition or agreement. If this Lease is
assigned, of if the Premises or any part of the Premises are sublet or
occupied by anyone other than Lessee, Lessor may collect Rent from the
assignee, sublessee, or occupant as Lessee.
18. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The party requesting
recordation shall be responsible for payment of any fees applicable
thereto.
19. Surrender. Lessee shall, upon expiration or termination of this
Lease, promptly surrender the Premises in good order and condition, normal
wear and tear excepted.
20. No right to Holdover. If Lessee fails to surrender the Premises
upon the expiration or earlier termination of the Term, without the express
written consent of Lessor, Lessee shall become a month-to-month tenant at a
rental rate equal to one hundred fifty percent (150%) of the Base Rent
payable by Lessee for the month immediately preceding such expiration or
earlier termination, and Lessee shall remain responsible for the payment of
all other monetary obligations due and payable by Lessee under the Lease.
Acceptance by Lessor of any rent after such expiration or earlier
termination of the Term shall not result in any renewal or extension of the
Term.
21. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
22. Binding Effect: Choice of Law. This Lease shall be binding upon
the parties, the personal representatives, successors and assigns and be
governed by the laws of the Commonwealth of Pennsylvania. Any litigation
between the parties hereto concerning this Lease shall be imitated in the
County in which the Premises are located.
23. Subordination; Attornment; Non-Disturbance.
23.1 General. This Lease and Lessee's rights hereunder are subject and
subordinate to any first mortgage, first deed of trust, or other first lien
encumbrance or indenture, together with any renewals, extensions,
modifications, consolidations and replacements thereof, which nor or at any
subsequent time affect the Premises, any interest of Lessor in the
Premises, and Lessor's interest in this Lease and the estate created by
this Lease (except to the extent that any such instrument expressly
provides that this Lease is superior to it). Lessee will execute,
acknowledge and deliver to Lessor at any time and from time to time, upon
demand by Lessor, any reasonable documents s may be requested by Lessor,
any ground Lessor or underlying Lessor, or any mortgage lender, or holder
of any other instrument described in this subsection, to confirm or effect
such subordination.
23.2 Attornment. If any mortgage lender or holder of any similar
instrument described in Paragraph 23.1 above succeeds to Lessor's interest
in the Premises, Lessee shall pay to it all Rents subsequently payable
under this Lease, and Lessee shall, upon request of anyone so succeeding to
the interest of Lessor, automatically become the lessee of, and attorn to,
the successor in interest without change in this Lease. Upon request by the
successor in interest and without cost to Lessor or the successor in
interest, Lessee shall execute, acknowledge and deliver an instrument or
instruments confirming such attornment. Such instrument or attornment shall
also provide that the successor in interest shall not disturb Lessee in its
use of the Premises in accordance with this Lease so long as Lessee is not
in material default hereunder.
23.3. Non-Disturbance. With respect to any security instruments
described in Paragraph 23.1 above entered into by Lessor after the
execution of this Lease, Lessee's subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement
from the beneficiary of such security instrument which provides that
Lessee's possession of the Premises and this Lease will not be disturbed so
long as Lessee is not material default hereunder and attorns to the record
owner of the Premises. Further, within sixty (60) days after the execution
of this Lease, Lessor shall use commercially reasonable efforts to obtain a
non-disturbance agreement from the holder of any pre-existing security
instrument relating to the Premises.
24. Signage. The graphics, materials, color, design lettering,
lighting, size, quality, specifications and exact location of Lessee's
signage, if any, shall comply with all applicable law and Park Covenants
affecting the Premises. At the expiration or earlier termination of the
Lease, Lessee shall, at Lessee's sole cost and expense, cause such signage
to be removed from the Premises (including the removal of any lingering
sign identification on the Building and/or the Premises where such signage
was located), and Lessee will repair any damage to the Premises caused by
such removal. If Lessee fails to remove such signage and repair any such
damage to the Premises within thirty (30) days after any termination or
expiration of the Lease, then Lessor may perform such work, and all
reasonable costs and expenses incurred by Lessor shall be reimbursed by
Lessee within thirty (30) days after Lessee's receipt of Lessor's written
demand therefor.
25. Quiet Possession. So long as Lessee is not in material default of
this Lease, Lessee's quite and peaceful enjoyment of the Premises shall not
be disturbed or interfered with by Lessor or by any person claiming by,
through or under Lessor.
26. Time of the Essence. Time is of the essence with regard to the
performance of all obligations to be performed or observed by the parties.
27. Entire Agreement. This Lease Agreement, including any and all
exhibits and attachments hereto, constitutes the entire understanding
between Lessor and Lessee with respect to the subject matter hereof.
28. Amendments. This Lease may be amended only in writing signed by
the parties in interest at the time of the modification.
IIN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
Agreement as of the date first written above.
ATTEST/WITNESS: LESSOR:
DUNWOODY ASSOCIATES
by JRL PROPERTIES, Inc.,
its general partner
________________________________ By: /s/ Jack R. Loew
----------------------
Jack R. Loew, President
LESSEE:
GOLDEN AMERICAN LIFE. INS. CO.
________________________________ By : /s/ Terry Kendall
-----------------
Terry Kendall, President
EXHIBIT "C"
LESSOR IIMPROVEMENTS
(Intentionally Omitted)
EXHIBIT "D"
LESSOR IIMPROVEMENTS
(Intentionally Omitted)
EXHIBIT "F"
ESTIMATED OPERATING EXPENSES
GOLDEN AMERICAN LIFE INSURANCE COMPANY
REAL ESTATE TAXES $1.60
INSURANCE .10
LANDSCAPE MAINTENANCE .18
SNOW REMOVAL .15
WATER/SEWER .15
BUILDING MAINTENANCE .45
TRASH REMOVAL .15
HVAC MAINTENANCE .10
ELEVATOR MAINTENANCE .09
PARKING LOT MAINTENANCE .08
JANITORIAL .80
MANAGEMENT .25
-------
TOTAL $4.10
EXHIBIT "E"
CONFIRMATION OF LEASE AGREEMEN T
THIS CONFIRMATION OF LEASE AGREEMENT ("Agreement") dated _________, _____,
is hereby executed by the undersigned "Lessor" and "Lessee" (as both terms are
hereinafter defined), and is attached to and made a part of that certain Lease
Agreement dated _________, _____ (the "Lease") between
________________________________, a ________________________________ ("Lessor"),
and ________________________________, a ________________________________
("Lessee").
The undersigned, Lessor and Lessee, hereby confirm and verify the
following:
1. _________, _____ is hereby confirmed to be the Commencement Date of the
Original Term of the Lease;
2. _________, _____ is hereby confirmed to be the Expiration Date of the
Original Term of the Lease,
3. US$____________ is the monthly Base Rent payable for the Original Term
of the Lease; and
4. _______________ s. f. is hereby confirmed as the final square footage of
the Building on the Premises.
Except as set forth herein, the Lease remains unmodified and in full force
and effect. In the event of any conflict between the terms of this Agreement and
the Lease, this Agreement shall supersede and control.
ATTEST/WITNESS: LESSOR:
________________________________ By: ______________________________
Name:
Title:
LESSEE:
________________________________ By :______________________________
Name:
Title:
EXHIBIT "B" - SPEC
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Project Outline Specifications
April 3, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The building design will allow for future expansion on the south wall.
The core facilities (i.e. lobby, elevators, restrooms,) for the entire building
(initial construction and future expansion) are provided for in the shell
building. The electric service, water service, and sewer service laterals are
sized for 125,000 s.f. The HVAC will be a VAV type system.
Alternates: (1) To construct an additional 30,000 s.f. and (2) construct an
additional 60,000 s.f. after the completion and occupancy of the initial
building.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township.
Geotechnical monitoring of the site and building including soils compaction
data, footing bottom inspection, and concrete testing are also included as
required.
Construction Facilities and Services: A superintendent will be provided to
monitor and supervise the day-today construction activities. The site will have
temporary facilities including job trailer and utilities. At the end of the
project, Lessor will perform a construction clean-up in preparation for turnover
to the Owner.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Interior or exterior signage
SITEWORK
General: Lessor will provide all necessary sitework to construct the
building.
Paving and Curbing: All areas designated as driveways or parking areas will
be fully curbed and paved and striped in accordance with the configuration and
specification shown on the site plan (attached as Exhibit "A").
Landscaping: Landscaping has been included for the design and installation
of trees, plantings and lawns around the building to meet the Township
requirements.
Utilities: Lessor shall provide and coordinate the installation of
underground water mains for domestic use and fire protection, electric, gas, and
telephone services including all required conduits to the building.
CONCRETE
General: Lessor will provide all concrete work required for the project in
accordance with A.C.I. (American Concrete Institute) general requirements. All
concrete shall have a minimum compressive strength of 3000 OSI in 28 days.
Foundations: Lessor will provide all reinforced concrete retaining walls
and column footings required to support floors, walls, and structural members.
The footing design assumes a soil bearing capacity of 3000 PSI.
Slabs: Concrete slabs shall be provided as follows:
First floor office: 4" of concrete over 4" of stone
Second floor office 3" of concrete on metal deck
Third floor office: 3" of concrete on metal deck
Exterior sidewalks and stops 4" of concrete over 4" of stone
All slabs shall be reinforced with a minimum of 6/6, 10 x 10 wire mesh.
MASONRY
General: The building shall be 4" brick veneer over 8" concrete masonry
units (CMU) below the first floor windows and 4" brick veneer on prefabricated
structural wall panels above the first floor windows. Elevator, stairtowers, and
elevator machine room will be 8" CMU walls.
METALS
Structural Steel: Lessor will provide all required steel for the building
shell. All structural steel work shall be performed in accordance with the
American Institute of Steel Constructions (A.I.S.C.). All steel joists shall be
in accordance with the Steel Joist Institute. The roof will be designed for a
live snow loaf of 30 pounds per square foot. The second and third floors shall
be designed for standard office floor loading of 80 pounds per square foot. The
building will be supported by means of a freestanding steel framework designed
to provide a minimum drop ceiling height of 9'. Steel bar joists will support
the second and third floor slabs and the roof. Lessor will provide all
miscellaneous steel consisting of one interior fire towers, one ornamental lobby
stair, roof access ladder, and miscellaneous site handrails.
Metal Panels: Prefabricated wall panels will be installed to create
spandrel panels between floors and the wall/roof system above the third floor
windows. All panels will be designed under the supervision of a structural
engineer.
CARPENTRY
Rough Carpentry: Lessor shall furnish and install all miscellaneous
carpentry necessary for the construction of soffits.
THERMAL AND MOISTURE
Roofing: The roof of the building will be constructed using four ply
built-up roofing system over a mechanically fastened R-19 rigid insulation
board. All roof areas shall be internally drained. Roof shall have a five (5)
year warranty.
Miscellaneous: Lessor will provide perimeter insulation below grade. 4"
batt insulation shall be installed along all exterior walls. Control joints and
window systems will be caulked using a two-part polyurethane. A roof hatch and
ladder will be provided in a third floor closet.
Moisture Protection: Lessor shall provide foundation waterproofing at all
walls with finished space below grade. A foundation drain will be installed at
all walls receiving a moisture protection barrier.
DOORS AND WINDOWS
Doors: The standard interior lobby doors shall be full height solid core
oak veneer for ingress/egress and hollow metal doors for rated openings (i.e.
mechanical rooms). Both will be set in hollow metal frames. Doors shall receive
standard duty commercial lever-type hardware Schlage or equal meeting all
applicable codes. Panic hardware and exit devices will be provided as required
by applicable building codes.
Glass and Glazing: The building will have six foot high windows
manufactured by Kawneer or equal as shown on the sketch. All windows shall be
insulated glass with a shading coefficient sufficient to balance the optimal
HVAC requirements with adequate natural light. Window analysis to be performed
and approved by Lessor and Lessee. The main entrance shall be a two-story
curtain wall system with medium style doors with quarter inch glass, tempered as
required by code .
FRAMING AND DRYWALL
General: All interior drywall walls will be constructed to create the lobby
area at the first, second, and third floors, two (2) bathroom facilities will be
provided per floor, elevator and mechanical rooms required for the building.
Walls will be constructed of 3 5/8" steel studs, 16" on center, with 1/2"
drywall on each side. All partitions will e nine feet tall. Insulation for noise
control shall be provided in restroom partitions. The walls creating the lobby
areas shall be one hour rated. No other partitions or drywall work is provided
for the shell portion of the project.
FINISHES
A room-by-room finish schedule will ultimately be created by Lessor to be
approved by Lessee to proved exact details on all interior finishes within the
lobby, bathroom, and core areas. We have included ceramic tile in the restrooms
with a 5' high wainscot on the wet wall with Type II vinyl on balance of walls.
An upgraded 12 x 12 quarry tile floor will be provided in the first floor lobby.
Upgraded carpet will be provided in all other public areas of the lobbies
including the lobby stair. An upgraded regular ceiling tile in 7/16" grid is
provided in all lobby public areas.
SPECIALTIES
General: Bathroom fit-up consisting of mirrors and standard bathroom
accessories will be provided in each of the restrooms. Fire extinguishers will
be installed throughout the building in accordance with local authorities.
CONCEYING SYSTEMS
Elevator: Lessor will furnish and install two (2) 3000# capacity, cab size
of approximately 4'3 x 6'8", 3 stop, 125 feet per minute standard car, elevator
system manufactured by Schindler or equal.
MECHANICAL
Fire Protection: The building will be fully sprinklered in accordance with
NFPA 13 (ordinary hazard). All ceilings shall have semi-recessed, chrome plated
sprinkler heads. Miscellaneous equipment including main riser with flow and
tamper switches, inspector test, fire department connection, and sprinkler
cabinet will be installed as required. A smoke evacuation will be installed by
Lessor in main lobby and secondary fire tower.
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Project Outline Specifications
March 26, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The building design will allow for future expansion on the south wall.
The core facilities (i.e. lobby, elevators, restrooms,) for the entire building
(initial construction and future expansion) are provided for in the shell
building. The electric service, water service, and sewer service laterals are
sized for 125,000 s.f. The HVAC will be a will be a water source heat pump
system. The cooling towers will be sized for 125,000 s.f. The loop piping will
be installed in the 65,000 s.f. initial building. The remaining equipment is not
included in the shell (i.e. heat pumps, duct, controls, etc.) and will be
installed as part of the tenant fit-out.
Alternates: (1) To construct an additional 30,000 s.f. and (2) construct an
additional 60,000 s.f. after the completion and occupancy of the initial
building.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township.
Geotechnical monitoring of the site and building including soils compaction
data, footing bottom inspection, and concrete testing are also included as
required.
Construction Facilities and Services: A superintendent will be provided to
monitor and supervise the day-today construction activities. The site will have
temporary facilities including job trailer and utilities. At the end of the
project, Lessor will perform a construction clean-up in preparation for turnover
to the Owner.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations. Lessor will warrant all work for a period of one year from the
time of substantial completion.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Interior or exterior signage
SITEWORK
General: Lessor will provide all necessary sitework to construct the
building.
Paving and Curbing: All areas designated as driveways or parking areas will
be fully curbed and paved and striped in accordance with the configuration and
specification shown on the site plan.
Landscaping: Landscaping has been included for the design and installation
of trees, plantings and lawns around the building to meet the Township
requirements.
Utilities: Lessor shall provide and/or coordinate the installation of
underground water mains for domestic use and fire protection, electric, gas, and
telephone services to the building.
CONCRETE
General: Lessor will provide all concrete work required for the project in
accordance with A.C.I. (American Concrete Institute) general requirements. All
concrete shall have a minimum compressive strength of 3000 OSI in 28 days.
Foundations: Lessor will provide all reinforced concrete retaining walls
and column footings required to support floors, walls, and structural members.
The footing design assumes a soil bearing capacity of 3000 PSI.
Slabs: Concrete slabs shall be provided as follows:
First floor office: 4" of concrete over 4" of stone
Second floor office 3" of concrete on metal deck
Third floor office: 3" of concrete on metal deck
Exterior sidewalks and stops 4" of concrete over 4" of stone
All slabs shall be reinforced with a minimum of 6/6, 10 x 10 wire mesh.
MASONRY
General: The building shall be 4" brick veneer over 8" concrete masonry
units (CMU) below the first floor windows and 4" brick veneer on prefabricated
structural wall panels above the first floor windows. Elevator, stairtowers, and
elevator machine room will be 8" CMU walls.
METALS
Structural Steel: Lessor will provide all required steel for the building
shell. All structural steel work shall be performed in accordance with the
American Institute of Steel Constructions (A.I.S.C.). All steel joists shall be
in accordance with the Steel Joist Institute. The roof will be designed for a
live snow loaf of 30 pounds per square foot. The second and third floors shall
be designed for standard office floor loading of 80 pounds per square foot. The
building will be supported by means of a freestanding steel framework. Steel bar
joists will support the second and third floor slabs and the roof. Lessor will
provide all miscellaneous steel consisting of one interior fire towers, one
ornamental lobby stair, roof access ladder, and miscellaneous site handrails.
Metal Panels: Prefabricated wall panels and partial roof/wall panels will
be installed to create spandrel panels between floors and the wall/roof system
above the third floor windows. All panels will be designed under the supervision
of a structural engineer.
CARPENTRY
Rough Carpentry: Lessor shall furnish and install all miscellaneous
carpentry necessary for the construction of soffits.
THERMAL AND MOISTURE
Roofing: The roof of the building will be constructed using four ply
built-up roofing system over a mechanically fastened R-19 rigid insulation
board. All roof areas shall be internally drained. Roof shall have a five (5)
year warranty.
Miscellaneous: Lessor will provide perimeter insulation below grade. 4"
batt insulation shall be installed along all exterior walls. Control joints and
window systems will be caulked using a two-part polyurethane. A roof hatch and
ladder will be provided in a third floor closet.
Moisture Protection: Lessor shall provide foundation waterproofing at all
walls with finished space below grade. A foundation drain will be installed at
all walls receiving a moisture protection barrier.
DOORS AND WINDOWS
Doors: All interior lobby doors shall be solid core oak veneer for
ingress/egress and hollow metal doors for rated openings (i.e. mechanical
rooms). Both will be set in hollow metal frames. Doors shall receive standard
duty commercial lever-type hardware Schlage or equal meeting all applicable
codes. Panic hardware and exit devices will be provided as required by
applicable building codes.
Glass and Glazing: The building will have six foot high windows
manufactured by Kawneer or equal as shown on the sketch. All windows shall be
insulated glass set in dark bronze thermal break aluminum frames. The main
entrance shall be a two-story curtain wall system with medium style doors with
quarter inch glass, tempered as required by code.
FRAMING AND DRYWALL
General: All interior drywall walls will be constructed to create the lobby
area at the first, second, and third floors, two (2) bathroom facilities will be
provided per floor, elevator and mechanical rooms required for the building.
Walls will be constructed of 3 5/8" steel studs, 16" on center, with 1/2"
drywall on each side. All partitions will e nine feet tall. Insulation for noise
control shall be provided in restroom partitions. The walls creating the lobby
areas shall be one hour rated. No other partitions or drywall work is provided
for the shell portion of the project.
FINISHES
A room-by-room finish schedule will ultimately be created by Lessor to be
approved by Lessee to proved exact details on all interior finishes within the
lobby, bathroom, and core areas. We have included ceramic tile in the restrooms
with a 5' high wainscot on the wet wall. An upgraded 12 x 12 quarry tile floor
will be provided in the first floor lobby. Upgraded carpet will be provided in
all other public areas of the lobbies including the lobby stair. An upgraded
tegular ceiling tile in 7/16" grid is provided in all lobby public areas.
SPECIALTIES
General: Bathroom fit-up consisting of mirrors and standard bathroom
accessories will be provided in each of the restrooms. Fire extinguishers will
be installed throughout the building in accordance with local authorities.
CONCEYING SYSTEMS
Elevator: Lessor will furnish and install two (2) 2500# capacity, cab size
of approximately 4'3 x 6'8", 3 stop, 125 feet per minute standard car, elevator
system manufactured by Schindler or equal.
MECHANICAL
Fire Protection: The building will be fully sprinklered in accordance with
NFPA 13 (ordinary hazard). All ceilings shall have semi-recessed, chrome plated
sprinkler heads. The tenant area is an open ceiling and will have upright
brass-heads. Miscellaneous equipment including main riser with flow and tamper
switches, inspector test, fire department connection, and sprinkler cabinet will
be installed as required. A fire booster pump or other specialty fire equipment
is not included.
Plumbing: The roof water will be internally drained, collected and
distributed to the storm water management system. Domestic water distribution
and sanitary sewer piping is provided as shown on the drawings. We have included
(30) lavatories, (30) water closets with flush valves, (3) water coolers, (3)
water heaters, (3) floor drains, (3) janitor's sinks, and (4) hose bibs.
HVAC: The HVAC system will be a closed loop water source heat pump with
cooling tower mounted on the roof. The main water loop, chiller, boiler make-up
air units, and miscellaneous equipment will be provided in the shell building.
All other equipment including heat pumps, ductwork diffusers and controls to
complete the system will be included with the fit-out portion of the project.
All work shall be in accordance with ASHREA and SMACNA standards. The system
shall be designed to maintain space conditions for occupied areas as follows:
Summer: 75 degree dry bulb with 50% maximum relative humidity, at an outdoor
temperature of 95 degrees dry bulb.
Winter: 70 degree dry bulb with 50% maximum relative humidity, at an outdoor
temperature of 0 degree dry bulb.
Outdoor air will be introduced at the rate of 5% of the total supply CFM.
The required amount of total supplied air shall be a minimum of five (5) air
changes per hour. Exhaust fans will be provided in each bathroom.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Mechanical work within tenant spaces other than specified above
Humidification control
Computerized Energy Management Systems
ELECTRICAL
Service and Distribution: Lessor will perform all work not provided by the
power company to supply a 277/480V - 3pphase electric service. This includes
primary and secondary work and distribution switchgear. A 1600 amp service will
be provided. This service is of adequate size to accommodate the base building
and the 60,000 s.f. expansion.
Lighting: Upgraded interior lobby lighting is included. Fluorescent strip
lighting will be installed in the mechanical and elevator machine room. (24)
high hats are included in the exterior soffit.
Power: Lobby and corridor convenience receptacles are included. Bathrooms
will have ground fault type receptacles.
Emergency Systems: We have included all battery type emergency and exit
lighting required by applicable building codes plus a building code fire alarm
system. This system is expandable to accommodate the future requirements of the
expansion and the tenant fit-out.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Electrical Work to Future Tenant Spaces
Emergency Generator or Uninterrupted Power Sources
Computer or Telecommunications Wiring or Devices
Security, or Entrance Alarm Systems
Specialty or Decorative Lighting
END OF SPECIFICATION
THREE-STORY OFFICE BUILDING
GOLDEN AMERICAN
GLENLOCH CORPORATE CAMPUS
West Whiteland Township, Chester County, PA
Interior Fit-Up Outline Specifications
March 26, 1998
GENERAL REQUIREMENTS
Summary of Work: Lessor will construct a 65,000 s.f. three-story office
building. The core facilities (i.e. lobby, elevators, restrooms,) for the entire
building were provided for in the shell building. It assumed that the bulk of
the fit-up will be constructed using the standard office finishes with
approximately 3,000 s.f. of upgraded finish are.
Permits and Inspections: Lessor will obtain and pay for all permits
required from the Pennsylvania State Labor and Industry and the Township as
required for the fit-up.
Quality Assurance: All work shall be performed in accordance with local and
state building codes and per the recommendations of the applicable building
associations. Lessor will warrant all work for a period of one year from the
time of substantial completion.
FRAMING AND DRYWALL
General: An allowance for 6,000 linear feet of drywall partitions is
included. Walls will be constructed of 3 5/8" metal studs, 16" on center with
1/2" drywall on each face. Partitions in the office area will be nine feet tall.
Insulation for noise control shall be provided around bathrooms, lunchrooms, and
conference rooms.
FINISHES
Generals: All finishes shall be chosen from Lessor's standard selections.
Lessor will assist the Owner in the design and coordination of the interior
finishes. Below is a list of standard finish materials.
STANDARD FINISH MATERIALS
Offices, Conference Rooms, General Areas
Flooring: 28 ounce level loop carpeting
Manufactures: Patchcraft, Designweave, J & J Industries,
or equal
Wall Base: 4" vinyl cove base, 1/8 thick material.
Manufactures: Roppe, Jonsonite, or equal.
Walls: Painted with a minimum of two coats flat latex paint.
Manufactures: Shervin Williams, Duron, Benjamin Moore,
or equal.
Ceilings: 2 x 4 white lay-in ceiling tiles, fissured mainboard, white,
with 15/16" white aluminum grid.
Manufactures: Armstrong, USG, Celtoex, or equal.
Lunch Rooms/Cafeteria/Coffee Area
Flooring: 12" x 12" vinyl composition floor tile (VCT)
Manufactures: Armstrong, Mannington, or equal.
Wall, Base,
Walls, Ceiling: Same as above.
Casework: Kitchen/bathroom counters and cabinets shall have laminate
surfaces.
Manufactures: Formica, Nevamar, Wilsonart, or equal.
UPGRADED FINISHES
Flooring: 28-32 ounce cut pile carpeting with decorative accent
bordering.
Manufactures: Patchcraft, Designweaeve, J & J Industries,
or equal.
Wall Base: Carpet base.
Standard profile wood base.
Walls: Type I vinyl wallcovering.
Ceilings: 2' x 2' tegular edge decorative ceiling.
Lighting: Combination of parabolic light fixturing and/or hi-hat lighting
with appropriate switching.
SPECIALTIES
General: Lessor will provide 1" mini blinds.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Built-in furniture or reception desk.
MECHANICAL
Fire Protection: Lessor will modify the shell sprinkler system to
accommodate the fit-up.
Plumbing: The bulk plumbing is provided in the shell construction.
We will provide one (1) coffee station per floor
including all plumbing requirements.
HVAC: Lessor will complete the HVAC for the space inclusive of the supply
and installation of water source heat pumps (to be connected to the loop system
installed in the shell), ductwork, diffusers, grilles, and controls as required
for a compete system.
ELECTRICAL
Lighting: Lessor will provide 2' x 4' lay-in fluorescent light fixtures
with acrylic prismatic lens covers to create minimum 65 foot candle level in the
office areas. All light fixtures will be provided with energy efficient ballast.
Each office will have a minimum of one light switch.
Power: Receptacles will be provided in the ratio of one (1) receptacle for
each one hundred and twenty-five square feet of open office team. A minimum of
two (2) receptacles will be installed in each office or room.
Emergency Systems: We have included all emergency and exit lighting
required by applicable building codes.
Work Not Included in the Contract: The following items are not provided by
Lessor in the base contract:
Distribution to, or hook-up of, Owner supplied landscape partitions.
Emergency generator or uninterrupted power sources.
Computer or telecommunications wiring or devices.
END OF SPECIFICATION
EXHIBIT 10.A(p)
FIRST AMENDMENT TO LEASE AGREEMENT
This first Amendment to Lease Agreement ("First Amendment") made this 4th
day of November, 1998, by and between DUNWOODY ASSOCIATES, a Pennsylvania
limited partnership ("Lessor") and GOLDEN AMERICAN LIFE INSURANCE COMPANY
("Lessee").
BACKGROUND
Lessor and Lessee executed a document entitled Lease Agreement, dated
______, a true and correct copy of which is attached hereto as Exhibit "A" and
incorporated herein by reference (the "Original Lease Agreement").
Lessor and Lessee wish to amend the terms of the Original Lease Agreement
as set forth herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Premises. Subsection 1.1 of the Original Lease Agreement is hereby
deleted ad replaced with the following:
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
that certain real property consisting of approximately 15.87 acres,
including the building located thereon as such is to be expanded (the
"Building") on the property commonly known as Lot G of the Glenlock
Corporate Campus, West Whiteland Township, Chester County, Pennsylvania as
more particularly described and depicted on Exhibit "A" hereto (the
"Premises"). For the purposes of this Lease, the Building is divided into
four (4) different areas as follows:
a. An area containing approximately 65,000 square feet located on the
three floors of the existing Building as depicted on Exhibit "B" hereto and
labeled thereon as the Original Lease Area (the "Original Lease Area").
b. An area containing approximately 20,000 square feet to be located
on one full floor of the Building as such is to be expanded and as depicted
on Exhibit "B" hereto and labeled thereon as the First Expansion Are (the
"First Expansion Area"); and
c. An area containing approximately 20,000 square feet to be located
on one full floor of the Building as such is to be expanded and as depicted
on Exhibit "B" hereto and labeled thereon as the Second Expansion Are (the
"Second Expansion Area"); and
d. An area containing approximately 20,000 square feet to be located
on one full floor of the Building as such is to be expanded and as depicted
on Exhibit "B" hereto and labeled thereon as the Third Expansion Are (the
"Third Expansion Area") (the "First Expansion Area, Second Expansion are
sometimes referred to herein collectively as the "Expansion Areas" and
singularly as an "Expansion Area").
2. Proportionate Share of Operating Expenses. Section 1.1.1. of the
Original Lease Agreement is deleted and is replaced with the following:
Tenant shall pay 100% of the Operating Expenses subject to the
following adjustment for real estate attributable to the land whereon the
Building (as such is to be expanded) is located:
52% from February 1, 1999 to May 31, 1999 and
68% from June 1, 1999 to September 31, 1999 (the "First Expansion
Adjustment"), and
84% from January 1, 2000 to May 31, 2000 (the "Second Expansion
Adjustment"), and
100% from June 1, 2000 to the Termination Date as such may be extended
(the "Third Expansion Adjustment") (the First Expansion Adjustment,
the Second Expansion Adjustment and the Third Expansion Adjustment are
collectively referred to herein as the "Adjustments").
If the Lessee occupies the First Expansion Area prior to June 1, 1999 or
the Second Expansion Are prior to January 1, 2000 or the Third Expansion Area
prior to June 1, 2000, the above Adjustments in the Lessee's prorate share of
the exterior common are maintenance shall be adjusted as of the date the Lessee
commences occupancy of a specific Expansion Area rather than the dates set forth
above. Notwithstanding the preceding, the Lessee shall pay 100% of all other
Operating Expenses including 100% of all real estate taxes attributable to the
Building as such is to be expanded
Additionally, the Lessee's prorate share of the exterior common area
maintenance shall be based upon the square footage of the Building (as such may
be expanded) to the square footage of all buildings on Lots "G" and "H" now or
thereafter constructed except as to the cost of maintaining, including
landscaping, of the common entrance which shall be based upon the square footage
of the Building as such may be expanded to the square footage of all buildings
now of hereafter constructed on Lots "F", "G" and "H".
3. Option to Expand. Section 1.6. of the Original Lease Agreement is hereby
deleted in its entirety.
4. Term. Section 2.1. of the Original Lease Agreement is deleted in its
entirety and replaced with the following:
The Original Term of this Lease shall commence on substantial completion of
the Original Lease Are (the "Commencement Date") and end on May 31, 2010 (the
"Termination Date"). The Original Lease Area as well as any one or more of the
Expansion Areas shall be considered substantially completed when the are in
question is ready and available for Lessee's use improved in accordance with
Lessee's Fit-Up Plans (as hereafter defined) for such, and a certificate of
occupancy has been issued for such are. Upon Lessee's submission of written
punchlist items to Lessor, Lessor shall use its best efforts to correct and
complete such punchlist items at Lessor's sole cost and expense as detailed in
Sections 2.4 and 2.5 of the Original Lease Agreement.
5. Rent. Subsections 3.3 and 3.4 of the Original Lease Agreement are hereby
deleted and replaced with the following:
The monthly Base Rent for the Original Term and the Option Terms shall be
as follows:
Annual Base Monthly Installment
Base Rent Of Base Rent
Period Area (per Sq. Ft.)
2/1/1999 to 5/31/1999 65,000 $ 15.25 $ 82,604.17
6/1/1999 to 12/31/1999 85,000 $ 15.25 $ 108,020.83
1/1/2000 to 5/31/2000 105,000 $ 15.25 $ 133,437.50
6/1/2000 to 5/31/2005 125,000 $ 15.25 $ 158,854.17
6/1/2005 to 5/31/2010 125,000 $ 16.50 $ 171,875.00
6/1/2010 to 5/31/2015 125,000 $ 18.15 $ 189,062.50
6/1/2015 to 5/31/2020 125,000 $ 20.00 $ 208,333.33
The Adjustments in the Base Rent on June 1, 1999, January 1, 2000 and June
1, 2000 are based upon the Lessee commencing occupancy of the First Expansion
Are by June 1, 1999, the Second Expansion Are by January 1, 2000 and Third
Expansion Are by June 1, 2000.
Accordingly:
(a) The First Expansion Area Start Date and Completion Date should be
no later than June 1, 1999, unless Lessee fails to provide Lessor with
Lessee's Fit-Up Plans for the First Expansion Area on or before May 15,
1999. If the
First Expansion Area is not substantially completed by June 1, 1999,
the First Expansion Are Start Date shall be extended until the date
the First Expansion Are is substantially completed unless Lessee fails
to provide Lessor with Lessee's Fit-Up Plans for the First Expansion
Are by January 15, 1999 in which event, the First Expansion Area Start
shall be June 1, 1999 rather than the date the First Expansion Area is
substantially completed.
(b) The second Expansion Area Start Date is January 1, 2000 provided
the Second Expansion Area is substantially completed by then, unless Lessee
fails to provide Lessor with Lessee's Fit-Up Plans for the Second Expansion
Are on or before the last day of September 1999. If the Second Expansion
Area is not substantially completed by January 1, 2000, the Second
Expansion Area Start Date shall be extended until the date the Second
Expansion Area is substantially completed unless Lessee fails to provide
Lessor with Lessee's Fit-Up Plans for the Second Expansion Area by the last
day of September 1999 in which event, the Second Expansion Area Start Date
shall be January 1, 2000 rather than the date the Second Expansion is
substantially completed.
(c) The Third Expansion Area Start Date is June 1, 2000 provided the
Third Expansion Area is substantially completed by then, unless Lessee
fails to provide Lessor with Lessee's Fit-Up Plans for the Third Expansion
Area on or before the last day of February 2000. If the Third Expansion
Area is not substantially completed by June 1, 000, the Third Expansion
Area Start Date shall be extended until the date the Third Expansion Area
is substantially completed unless Lessee fails to provide Lessor with
Lessee's Fit-Up Plans for the Third Expansion Area by the last day of
February 2000 in which event, the Third Expansion Area Start date shall be
June 1, 2000 rather than the date the First Expansion Area is substantially
completed. (The First Expansion Area Start Date, the Second Expansion Area
Start Date and the Third Expansion Area Start Date are sometimes referred
to therein collectively as the "Expansion Area Start Dates" and singularly
as an "Expansion Area Start Date".)
The term, Lessee's Fit-Up Plans, refers to plans, to be prepared by
Lessee, at Lessee's expense, detailing the improvements to be made by
Lessor to the designated area of the Premises in such form and containing
such detail as necessary to permit Lessor, upon payment of the necessary
fee, to obtain the permit required to allow Lessor to commence and
prosecute completion of construction of the improvements depicted thereon.
The First Expansion Are, the Second Expansion Area and the Third Expansion
Area shall be considered substantially completed as set forth in Section 4
hereof.
6. Fit-Up of Expansion Areas.All expansions of the Building include a
$25.00 per square foot Lessee Improvement Allowance, which Lessee Improvement
Allowance shall be used exclusively for the construction of interior finishes
including, but not limited to wiring, phone equipment, security systems, etc. in
the Expansion Areas. No additional lobby area will be included in the Expansion
Areas. One elevator and additional bathroom fixtures will be included in the
Base Building Expansion.
7. Occupancy of the Expansion Area. Lessee may occupy any one of more of
the Expansion Areas prior to the applicable Expansion Area Start Date. In order
to do so, Lessee must give the Lessor written notice of Lessee's intention to so
occupy a given Expansion Area at least 90 days before the date on which Lessee
proposes to commence occupancy with the Lessee's Fit-Up Plans. If Lessee
occupies any one or more of the Expansions Areas prior to the applicable
Expansion Area Start Date, then Lessee shall pay Lessee's proportionate share of
the Operating Expenses applicable to such Expansion Area as set forth in Section
2 hereof and the Base Rent for such Expansion Area shall commence on the date
set forth in Section 5 hereof.
8. Original Lease Agreement. This First Amendment constitutes a part of the
Original Lease Agreement. The Original Lease Agreement, except to the extent
expressly modified herein, remains in full force and effect. The capitalized
terms used herein, unless expressly defined otherwise herein, shall have the
definitions ascribed to them in the Original Lease Agreement. To the extent of
any conflict between the terms contained herein and those contained in the
Original Lease Agreement, the terms contained shall control and prevail. The
term "Lease" refers to the Original Lease Agreement, the Exhibits thereto, and
this First Amendment.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this document the date and year First Expansion Area above
written.
LESSOR:
WITNESS/ATTEST: Dunwoody Associates
______________________________ By:/s/ Jack R. Lowe
-----------------------
Jack R. Lowe, President
LESSEE:
Golden American Life
Insurance Company
By:/s/
-----------------------
EXHIBIT 10.A(q)
SECOND AMENDMENT TO LEASE AGREEMENT
This Second Amendment to Lease Agreement ("Second Amendment") made this 1st
day of June, 2000, by and between DUNWOODY ASSOCIATES, a Pennsylvania Limited
Partnership ("Lessor") and GOLDEN AMERICAN LIFE INSURANCE COMPANY ("Lessee").
BACKGROUND
Lessor and Lessee executed a document entitled Lease Agreement, date 4/6/98
and incorporated herein by reference (the "Original Lease Agreement"), and the
First Amendment to the Lease Agreement date November 4, 1998.
Lessor and Lessee wish to amend the terms of the Original Lease Agreement
as set forth herein.
NOW; THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Rent - Subsection 3.6. of the Original Lease Agreement is hereby
amended to allow the Tenant to pay the following expenses directly to
vendors/contractors in lieu of reimbursing the Landlord as part of
Operating Expense Adjustment;
a. Water and Sewer Usage
b. Tenant Trash Removal
c. HVAC Maintenance Expense
d. Tenant Janitorial
The monthly estimated Operating Expense Allowance shall be adjusted to
reflect the above changes.
All other terms and conditions remain unchanged and in full force and
effect.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement as
of the date first written above.
ATTEST: Lessor: Dunwoody Associates by
JRL Properties, Inc.
its General Partner
_________________ By: /s/ Jack R. Lowe
----------------------------------
Jack R. Lowe, President
WITNESS: Lessee: Golden American Life Ins. Co.
_________________ By: /s/ Myles Tashman
----------------------------------
Myles Tashman, Executive Vice
President, and General Counsel
Exhibit 14
ING Code of Ethics for Financial Professionals
This ING Code of Ethics for Financial Professionals has been adopted by the
boards of the U.S. domiciled insurance companies which are members of the ING
family of companies ("ING Companies") and applies to the principal executive
officer, chief financial officer and all other finance, accounting, treasury,
tax and investor relations professionals ("ING Financial Professionals") serving
one or more of the ING Companies, their subsidiaries or affiliates. This Code of
Ethics is intended to supplement the ING Americas General Code of Conduct -
together these set the standards of personal and professional integrity that we
expect ING Financial Professionals to demonstrate in all their activities.
Financial professionals hold an important and elevated role in corporate
governance in that they are vested with the responsibility and authority to
protect, balance and preserve the interests of all company stakeholders,
including shareholders, customers and employees. ING Financial Professionals are
expected to adhere to this Code of Ethics with respect to their individual
conduct and advocate its tenets among their peers and colleagues.
As an ING Financial Professional, you agree to:
Engage in, promote and reward honest and ethical conduct, including
avoidance of actual or apparent conflicts of interest in your personal
and professional relationships;
Disclose to the USFS Chief Compliance Officer any material transaction
or relationship that could reasonably be expected to give rise to such
a conflict;
Take all reasonable measures to protect the confidentiality of
non-public information obtained or created in connection with ING
business activities, unless disclosure of such information is required
by law or regulation, or legal or regulatory process;
Use non-public information obtained or created in connection with ING
business activities only for the benefit of the ING companies, not for
personal advantage;
Act as a responsible steward with respect to the use and control of
ING assets and resources;
Produce full, fair, complete, accurate, timely and understandable
disclosure in reports and documents that the ING Companies file with
or submit to the Securities and Exchange Commission, other regulators
and in other public communications made by them;
Take all reasonable measures to ensure that business and investment
transactions are properly authorized and completely and accurately
recorded in accordance with applicable GAAP and statutory accounting
principles and established company financial policy;
Comply with all applicable governmental laws, rules and regulations,
as well as the rules and regulations of appropriate regulatory and
self-regulatory agencies;
Not attempt to unduly or fraudulently influence, coerce, manipulate,
or mislead any authorized audit or interfere with any auditor engaged
in the performance of an internal or independent audit of the ING
Companies' financial statements or accounting books and records.
If you become aware of any suspected or known violation of this Code of
Ethics or the ING Code of Conduct, you have a duty to report such concerns
promptly to the USFS Chief Compliance Officer. You may also submit a concern
confidentially and anonymously by accessing the ING Ethics Hotline/Voice Line at
800-555-1853 (detailed access instructions posted on ING Exchange). Your inquiry
will be handled discretely and every effort will be made to maintain, within the
limits allowed by law, the confidentiality of anyone requesting guidance or
reporting suspect behavior or a compliance concern.
As an ING Financial Professional, you understand that you will be held
accountable for your adherence to this Code of Ethics. Your failure to observe
its terms may result in disciplinary action, including termination of
employment. Violations of this Code of Ethics may also constitute violations of
law and may result in civil and criminal penalties for you, your manager and the
ING companies. As evidence that you have read and agreed to abide by this Code
of Ethics, you must sign and return the Declaration acknowledgment form
(delivered along with this Code of Ethics) as instructed on the form.
A request for a waiver of any provision of this Code of Ethics must be in
writing and addressed to the USFS Chief Compliance Officer. No waiver of this
Code of Ethics shall be granted without the approval of the board of directors
for the relevant ING Company and any waiver shall be disclosed promptly on Form
8-K or any other means approved by the Securities and Exchange Commission.
The ING Companies intend that this Code of Ethics serve as its written code
of ethics under Section 406 of the Sarbanes-Oxley Act of 2002, complying with
the standards set forth in the Securities and Exchange Commission Regulation
S-K.
ING Code of Ethics for Financial Professionals
Employee Declaration
I, (print name) _____________________, have read, reviewed carefully and
understand the ING Code of Ethics for Financial Professionals. I understand that
observing this Code of Ethics and the ING General Code of Conduct is an integral
part of my job responsibilities.
I understand that any deviation from or violation of this Code of Ethics
could cause embarrassment and/or financial harm to ING's interests. I also
understand that violation of this Code of Ethics can lead to disciplinary
action, up to and including termination of my employment, and civil or criminal
charges. I further understand that it is my responsibility to prevent and report
any violations.
I also acknowledge that ING may modify or amend this Code of Ethics from
time to time and that, upon receiving written notice of such changes, adherence
to them will constitute part of my ongoing job responsibilities.
Code of Ethics
I understand that this Code of Ethics does not constitute an employment
contract or any guarantee of continued employment and that the employment
relationship is at will.
Position
Department
Company
Signature
Date
Please sign and return this form to the USFS Chief Compliance Officer at
ING, 151 Farmington Avenue, TS31, Hartford, CT 06156