Document:

Administrative Service Agrmt TI

     

    Exhibit
      10.12

    
      ADMINISTRATIVE
        SERVICE AGREEMENT

      THIS
        AGREEMENT is made this 31st_____ day of December, 2006 by and between
        Reserve National Insurance Company (hereinafter referred to as “Administrator”)
        and Texas Imperial Life Insurance Company (hereinafter referred to as
“Insurer”).

      RECITALS

      WHEREAS,
        Insurer is a stipulated premium insurance company licensed pursuant to Texas
        Insurance Code (“Code”); and

      WHEREAS,
        Administrator is a capital stock insurance company domiciled in Oklahoma,
        and
        has registered or will register as a third party administrator to the extent
        required by applicable law; and

      WHEREAS,
        Insurer and Administrator are desirous of entering into an agreement reflecting
        the rights of the parties hereto with respect to the administration of the
        insurance business of Insurer subject to the Coinsurance Agreement (“Coinsurance
        Agreement”) which was entered into by and between Administrator and Insurer
        effective on December 31, 2006.

      WITNESSETH

      NOW,
        THEREFORE, for and in consideration of these premises and of the mutual
        covenants and agreements hereinafter set forth, the parties hereto agree
        as
        follows:

      1.        
        The Insurer agrees to provide Administrator with the information and support
        reasonably required by the Administrator to perform its duties pursuant to
        this
        Agreement.

      2.        
        The Administrator shall perform the following duties:

      A.       
        Prepare and mail premium notices to the insureds reasonably in advance of
        the
        premium due dates in accordance with guidelines established by Insurer and
        agreed to by Administrator. Billings shall be run and mailed at least once
        a
        month.

      B.        
        Prepare and mail past due notices and lapse notices. With the cooperation
        of
        Insurer, prepare and send reinstatement applications consistent with policy
        provisions. Upon receipt of completed reinstatement applications, Administrator
        will perform appropriate underwriting and Administrator will proceed with
        policy
        issuance or denial in accordance with the underwriting guidelines applied
        by
        Administrator to its similar business including preparation and issuance
        of
        policies and policy certificates.

      C.       
        Receive claims, verify coverage, request and collect proof of claim, review
        and
        pay claims in accordance with the Coinsurance Agreement.  Administrator
        agrees to be current in awareness of and compliance with the applicable prompt
        payment laws.

      D.       
        Collect and record premiums as provided in the Coinsurance Agreement. 
Initial correspondence sent by Administrator to any policyholder shall notify
        and summarize to said policyholder the relationship among Insurer,
        Administrator, and the policyholder. The written notice must be approved
        by
        Insurer before distribution to policyholders and must state the amount of
        premium specified. The payment of premiums to the Administrator by or on
        behalf
        of an insured is considered to have been received by the Insurer. However,
        the
        payment of return premium by the insurer to the Administrator is not considered
        payment to the insured.

      E.        
        Maintain administrative and statistical records which will determine the
        insurance status of each insured or certificate holder including, but not
        limited to, the effective dates, termination dates, nature of coverage, lapse
        dates, benefit assignments, beneficiary designations (if applicable), and
        appropriate address of record. This record keeping shall include the posting
        of
        premium payments.

      F.        
        Maintain all licenses required by applicable statutes, rules and regulations.
        Conduct its activities pursuant to this Agreement in compliance with all
        applicable statutes, rules or regulations or pursuant to an exemption
        therefrom.

      G.       
        Handle all routine correspondence and other general clerical administration
        of
        the insurance plans subject to this Agreement, maintain all files relating
        to
        such correspondence and general clerical administration.

      H.       
        Make available to Insurer all information necessary to maintain its general
        ledger and prepare statutory financial statements.

      3.        
        Insurer hereby agrees to remain solely liable for and covenants to indemnify
        and
        hold harmless Administrator against any and all loss, cost, expense, claims,
        damages, liabilities and expenses including legal fees and costs (“Loss” or
“Losses”) assessed against or incurred by Administrator with respect to any
        action, demand, proceeding, suit, settlement or compromise concerning claims
        arising out of or related to: (i) the insurance administered under this
        Agreement pursuant to actions or inactions of the Administrator taken or
        not
        taken in reliance upon instructions provided by the Insurer; or (ii) the
        willful
        misconduct, negligent or bad faith acts or omissions of the Insurer or the
        Insurer’s agents, servants or employees. Administrator shall remain solely
        liable for the willful misconduct, negligent or bad faith acts or omissions
        of
        Administrator and shall indemnify and hold harmless Insurer for any loss
        or
        losses Insurer may sustain by virtue of such acts.

      4.        
        Administrator shall maintain adequate books and records of all transactions
        among it, Insurer and the insureds under this Agreement and the business
        being
        administered in connection therewith to comply with regulatory examination
        requirements and statutory retention requirements.

      5.        
        It is understood and agreed that all records in any form including film or
        electronic media, pertaining to each covered plan hereunder (including but
        not
        limited to, all individual applications, files and correspondence related
        thereto) which are generated by Administrator are the property of Insurer.
        It is
        understood and agreed that Insurer shall have access to all records to the
        extent necessary to fulfill contractual obligations to insureds, comply with
        its
        statutory and regulatory obligations, and conduct audits of Administrator.

      6.        
        The initial term of this Agreement shall be for a period of one (1) year
        and
        shall commence on the effective date of this Agreement. Either party may
        terminate the Agreement at any time on or after the expiration of the initial
        term by giving ninety (90) days prior written notice.  This Agreement will
        automatically terminate in the event that Administrator’s obligations under the
        Coinsurance Agreement are converted to assumption reinsurance with respect
        to
        those policies which are subject to assumption reinsurance. Unless otherwise
        terminated, the Agreement shall be automatically renewed for additional one
        year
        terms. Notwithstanding anything to the contrary, in the event of fraud,
        bankruptcy or insolvency of one party, this Agreement may be terminated
        immediately by the other party upon written notice. Furthermore, in the event
        of
        a breach of any of the conditions or promises contained in this Agreement
        or the
        failure to perform any of the duties by one party, if the breach or failure
        is
        not cured within 30 days after written notice, this Agreement may be terminated
        immediately by the other party upon written notice. 

      7.        
        No rights, interests or obligations arising hereunder shall be subject to
        assignment by either party, except with written consent of the other party.
        Any
        assignment of rights, interests or obligations will be ineffective.

      8.        
        No amendment or modification of, or supplement to, this Agreement shall be
        binding unless in writing and duly executed and delivered by each party hereto
        to the other party.

      9.        
        It is understood and agreed that the Administrator shall be considered an
        independent contractor. Nothing contained herein shall be construed as
        constituting a partnership, employment relationship, or joint venture between
        the Administrator and Insurer. This Agreement shall be binding upon the parties
        hereto and their respective successors and assigns.

      10.      
        Pursuant to the provisions of the Health Insurance Portability and
        Accountability Act of 1996 and federal regulations issued pursuant thereto,
        and/or the Gramm‐Leach‐Bliley Act, the NAIC Insurance Information and Privacy
        Protection Model Act, the NAIC Privacy of Consumer Financial and Health
        Information Model Regulation and/or similar laws and regulations as enacted
        in
        various states, the parties recognize that, in the performance of their
        respective obligations under this Agreement, they each may obtain from the
        other
        nonpublic personal or privileged information about individuals collected
        or
        received in connection with insurance transactions under the policies. Each
        of
        the parties agrees not to disclose such information to third-parties without
        the
        individual’s written authorization unless such disclosure is otherwise permitted
        by law, and each of the parties shall also maintain the confidentiality of
        all
        other information related to the policies and all other information denominated
        as confidential by the other party provided to it in connection with this
        Agreement and shall not disclose such information to any third parties except
        as
        may be required by regulatory authorities, or pursuant to legal process;
        provided however, if any state in which policies have been issued have more
        restrictive confidentiality requirements, the parties will comply with those
        laws to the extent applicable.  

      11.      
        This Agreement shall be construed in accordance with and governed by the
        laws of
        the State of Oklahoma.

      12.      
        This Agreement contains the entire agreement of the parties regarding the
        subject matter hereof and supersedes any prior or contemporaneous oral or
        written agreement.

      13.      
        If any clause(s) of this agreement shall be held invalid by a court of law,
        the
        remaining clauses shall survive and remain enforceable.

      14.      
        Effectiveness of Notice - Notices mailed by registered or certified mail,
        return
        receipt requested are effective three days after mailing. Notices that are
        mailed hereunder shall be given to the parties at the following addresses,
        or at
        such other address for a party as shall be specified by notice:

      If to
        Administrator:

      Reserve National Insurance
        Company

      6100 Northwest Grand
        Blvd.

      Oklahoma City, OK
        73118

      ATTN:  Orin
        Crossley

       

      If to Insurer:

      Texas Imperial Life
        Insurance Company

      c/o UTG

      5250 South Sixth
        Street

      Springfield, Illinois 
62703

      ATTN:  Ted
        Miller

      or to such
        other address as hereafter shall be furnished as provided in this Section
        15 by
        any of the parties hereto to the other parties hereto.

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
        as
        of the date and year first above written.

       

      Reserve National Insurance Company
        

      By:  /s/ Kempner Joe
        Cole__________________ 
      
       Kempner Joe Cole, President

       

       

      Texas Imperial Life Insurance
        Company

      By:  /s/ Theodore C.
        Miller__________________ 
      
    Theodore C. Miller, Senior Vice-President

      2673AC Admin and Cost Sharing

 

    
      Exhibit 10.13

      ADMINISTRATIVE
        SERVICES
        AND COST SHARING AGREEMENT

      This Agreement made and entered into this
        1st
        day of January, 2007 by UTG, INC., a Delaware corporation ("UTG") and AMERICAN
        CAPITOL INSURANCE COMPANY, a Texas life insurance company ("ACIC").

       

      WHEREAS, ACIC is engaged in the general life
        insurance business;

       

      WHEREAS, ACIC has as one of its primary
        objectives to operate in the most efficient and profitable manner;

       

      WHEREAS, UTG, through its officers, agents
        and
        employees, has extensive experience and expertise in acquiring, managing
        and
        operating corporations and other business entities engaged in the general
        life
        insurance business as well as other financial and investment activities;
        and has
        been successful in reducing the general expenses of such businesses;

       

      WHEREAS, ACIC desires that the experience,
        expertise, sources of information, advice, counseling and assistance of UTG
        and
        its officers and employees be available to ACIC in the future, and to have
        UTG
        undertake certain duties and responsibilities and perform certain services
        on
        behalf of ACIC, subject to the supervision of the Board of Directors of ACIC,
        as
        provided herein; and,

       

      WHEREAS, UTG is willing to undertake to render
        such services for ACIC, subject to the supervision of the Board of Directors
        of
        ACIC, on the terms and conditions herein set forth;

       

      WHEREAS, ACIC is an indirect subsidiary and
        member of the same holding company structure of UTG.

       

      NOW, THEREFORE, in consideration of the premises
        and mutual covenants herein contained, it is mutually agreed between the
        parties
        as follows:

       

      	Services of UTG. During the terms of this Agreement, UTG shall
          consult with the Board of Directors and executive officers of ACIC in
          connection with all management and policy decisions to be made by such
          Board
          of Directors and executive officers with respect to the management,
          operations, insurance programs, and acquisition programs of ACIC. UTG shall,
          in conformity with such directives of the Board of Directors of ACIC, perform
          and render at UTG's expense (except as otherwise provided herein) all of
          the
          services necessary for ACIC to carry on all of the business of ACIC that
          is
          currently being conducted including, but not by way of limitation: 

       

      	
          	provide data processing services necessary to process and administer
              all
              of the insurance business in force of ACIC;
              
	provide all services and perform all functions necessary to meet
              regulatory requirements, including, but not by way of limitation,
              requirements of state insurance departments and requirements of the
              Internal
              Revenue Service;
              
	provide all services and perform all functions necessary to process
              the
              existing investment portfolio and any addition to or deletion from
              that
              portfolio mandated by the Board of Directors of ACIC;
              
	investigate, evaluate and assist in the selection of and participate
              in
              consultations and negotiations with accountants, lenders, attorneys,
              brokers, actuaries, underwriters, corporate fiduciaries, escrow agents,
              depositories, custodians, banks and other persons acting in any other
              capacity deemed by the Board of Directors of ACIC necessary or appropriate;
              
	advise, consult and negotiate with respect to purchases, sales,
              mergers,
              reorganizations and other acquisitions or dispositions of assets by
              ACIC;
              
	act as attorney-in-fact or agent in purchase, sales, mergers,
              reorganizations and other acquisitions or disposition of assets by
              ACIC;
              
	advise and consult in the agency operations of ACIC including, but
              not
              limited to, the design of insurance products to be offered to the public,
              the structuring of sales programs, conservation programs and training
              programs and the establishment of commission rate schedules payable
              to
              agents and agencies;
              
	perform, advise, consult or assist in the performance of such
              administrative and management functions necessary or appropriate in
              the
              management of ACIC as may be agreed upon by UTG and the Board of Directors
              of ACIC;
              
	advise and consult with respect to the capital and debt structure
              of
              ACIC;
              
	advise, consult and negotiate with respect to any financings by
              ACIC
              either on a public or private basis;
              
	advise and consult with respect to proceedings and hearings held
              and
              conducted by regulatory agencies, including, but not limited to, insurance
              regulatory hearings or proceedings; and
              
	attend, if required, meetings of the Board of Directors of ACIC.
              

        

       

      	Information to UTG. ACIC shall, at all times, keep UTG fully
          informed with regard to (i) the operations of ACIC, (ii) the investments
          and
          assets owned by ACIC, (iii) the funds of ACIC available or to become available
          for investment, and (iv) generally as to the condition of the affairs of
          ACIC.
          In particular, ACIC shall notify UTG promptly of any material purchase,
          sale
          or other acquisition or disposition of assets by ACIC. ACIC shall furnish
          UTG
          with a copy of all financial statements of ACIC, a copy of each report
          prepared by certified public accountants, and such other information with
          regard to the affairs of ACIC as UTG may, from time to time, reasonably
          request.
          
	Officers and Employees. Officers and employees of UTG shall serve,
          if elected, as directors, officers and members of committees of ACIC.
          
	Fees.
	
          	Fees.  As consideration for providing services under this
              Agreement ACIC agrees to pay UTG, a fee equal to ACIC’s pro rata share of
              the costs incurred by UTG to provide such services including but not
              limited
              to all personnel costs and taxes, costs to maintain UTG as a corporation
              in
              good standing and interest costs on borrowings of UTG.
              
	Accountings.  ACIC shall advance to UTG on a monthly basis,
              the projected estimated share of expenses allocable to ACIC.  Not less
              than quarterly, UTG shall provide on accounting of the actual expenses
              allocable to ACIC.  Said accounting shall be in such detail and be
              accompanied by substantive documentation satisfactory to ACIC.  Any
              balance due to or from the other party as a result of the actual accounting
              shall be settled within 90 (ninety)days.
              
	Allocation.  ACIC shall be responsible for the reimbursement
              of its pro rata share of the above described costs to UTG based on;
              ACIC’s
              percentage of the total amount of all life insurance subsidiaries of
              UTG
              using the following formula, the actual number of direct policies in
              force
              by policy type multiplied by the standard base TPA pricing per policy
              as
              used from time to time by UTG and its affiliates with outside third
              parties.  Said formula and resulting percentage allocations shall be
              updated as UTG deems reasonable but in no event not less than annually.
              
	The monthly fee to be paid to UTG by ACIC shall be reduced by any
              and
              all amounts paid directly by ACIC for services which are to be provided
              by
              UTG.
              
	In addition to the above fees, ACIC shall reimburse UTG or pay directly
              for expenses related to: 

        

                                                                    
        i.      mergers, acquisitions of new companies, or
        internal ownership restructuring;

                                                                  
        ii.      changes in the products being offered for
        sale;

                                                                 
        iii.      changes in the manner of soliciting new
        business, such as using direct mail or other forms of advertising;

                                                                
        iv.      the moving of administrative offices, such as
        travel, severance pay, movers, prepayment of existing leases and the like;
        and

                                                                  
        v.      Legal fees of outside counsel related
        specifically to ACIC.

       

      	Expenses.         ACIC
          hereby agrees that it shall be solely responsible for its expenses of:
          
	
          	interest and other costs for borrowed money;
              
	taxes, licenses and fees;
              
	commissions of every kind;
              
	all policy benefits;
              
	all expenses and costs relating to its investment activities;
              
	all income taxes; and
              
	any other expenses not relating to insurance operations. 

        
	Facilities and Staff. UTG shall provide its officers and employees
          with adequate office space and adequate office equipment and other furniture,
          and clerical and secretarial personnel for the performance of the services
          provided for hereunder, and assume the expenses of same.
          
	Responsibility of UTG. UTG shall be responsible to render the
          services provided for herein in good faith and in a reasonably competent
          manner. UTG shall use its best efforts to keep itself informed as to the
          business and affairs of ACIC. UTG shall keep accurate records of all
          transactions handled for ACIC and make those records available at all times
          to
          ACIC. UTG shall use its best efforts to maintain the confidentiality of
          all
          matters relating to the business of ACIC. UTG shall indemnify and hold
          harmless ACIC from any loss, liability or expense occasioned by UTG's failure
          to perform its obligations hereunder, provided, however, that neither UTG
          nor
          any of its officers, directors or employees shall be liable to ACIC or
          any
          third person hereunder unless UTG is guilty of bad faith, willful misfeasance
          or gross negligence. It is expressly understood and agreed that UTG and
          ACIC
          are not partners or joint venturers and nothing herein shall be construed
          so
          as to make them partners or joint venturers or impose any liability as
          such on
          either of them. The relationship between UTG and ACIC shall be that of
          independent contractors.
          
	Freedom of Activity. Nothing in this Agreement shall otherwise
          limit or restrict the right of UTG or any officer or employee of UTG to
          engage
          in any other business or to render services of any kind to any other
          corporation, firm, individual or association.
          
	Term. This agreement shall remain in full force and effect for a
          period of 24 months from the date hereof and may not be terminated by any
          party during said term except as otherwise provided herein. Upon the
          expiration of the term of this Agreement, it shall remain in full force
          and
          effect from month to month unless terminated by any party, upon ninety
          (90)
          days' prior written notice.
          
	Nonassignability. This agreement shall terminate automatically in
          the event of any assignment hereof by UTG. An assignment by UTG to a
          corporation or other entity that is a successor to UTG shall not be deemed
          an
          assignment for purposes hereof. This Agreement shall not be assignable
          by ACIC
          without the consent of UTG, except in the case of an assignment by ACIC
          to a
          corporation or other entity that is a successor, in which event such other
          corporation or entity shall be bound hereunder and by the terms of such
          assignment in the same manner as ACIC is bound hereunder.
          
	Termination. This Agreement shall be and become terminated
          immediately upon written notice of termination from ACIC to UTG if any
          of the
          following events shall occur.
          
	
          	UTG shall violate any provisions of this Agreement and shall fail
              to
              cure such default within thirty (30) days after receipt of written
              notice of
              such violation; or
              
	Without consent of ACIC, UTG shall be adjudged bankrupt or insolvent
              by
              a court of competent jurisdiction, or an order shall be made by a court
              of
              competent jurisdiction for the appointment of a receiver, liquidator
              or
              trustee of UTG, or of all or substantially all of its property by reason
              of
              the foregoing, or approving any petition filed against UTG for its
              reorganization, and such adjudication or order shall remain in force
              or
              unstayed for a period of ninety (90) days; or
              
	UTG shall institute proceedings of voluntary bankruptcy, or shall
              file a
              petition seeking reorganization under the federal bankruptcy laws,
              or for
              relief under any law for the relief of debtor, or shall consent to
              the
              appointment of a receiver of UTG or of all or substantially all of
              its
              property, or shall make a general assignment for the benefits of its
              creditor, or shall admit in writing its inability to pay its debts
              generally
              as they become due. 

        

      If any of the events specified in subparagraphs (b) and (c) of this Section
        11 shall occur, UTG shall give written notice thereof to ACIC within fifteen
        (15) days after the happening of such event.

      	Disclosure of Information.  UTG agrees all information
          communicated to it by or on behalf of ACIC while this Agreement is in force
          shall be used by UTG only for the purposes of this Agreement and during
          the
          term of this Agreement, and thereafter.  UTG will not disclose such
          information to any person who is not a Director, Officer, employee or agent
          of
          ACIC or of any of its affiliated companies, except to the extent such
          disclosure is directly or indirectly related to the performance of this
          Agreement or is otherwise required by any applicable law, rule or regulation.
          
	Records and Reports.  Except as provided herein, all forms,
          records, statements, reports, files and other data and information prepared,
          maintained or collected by UTG in the performance of this Agreement shall
          become the sole property of ACIC and shall be furnished to ACIC upon request.
          
	Inspection of Books and Records.  UTG shall keep proper books
          of account and records relating to the services performed hereunder in
          which
          full and correct entries will be made.  ACIC or its designated agents
          shall, upon ten (10) days prior written notice to UTG have the right to
          inspect the books and records of UTG at the offices of UTG in which said
          books
          and records are maintained during normal business hours for any purpose
          related to administration performance of this Agreement or the collection
          and
          determination of the fees required to be paid by ACIC to UTG under this
          Agreement.
          
	Performance. The failure of either party to insist upon strict
          performance of any provision of this Agreement shall not constitute a waiver
          of the right to insist upon strict performance or the obligation to strictly
          perform thereafter.
          
	Notices. Any notice, report or other communication required or
          permitted to be given hereunder shall be in writing and shall, unless some
          other method of giving such notice, report or other communication is accepted
          by the party to whom it is given, be given by being mailed by certified
          mail,
          postage prepaid, to the following address of the parties thereto: 

      If to
        UTG:        UTG, Inc

      Attn:  Corporate
        Secretary

      P.O. Box 5147

      Springfield, Illinois
        62705

       

      If to
        ACIC:       American Capitol Insurance
        Company

      Attn:  Corporate
        Secretary

      P.O. Box 5147

      Springfield, Illinois
        62705

       

      Any party may, at any time, give written
        notice to the other parties, changing its address for the purposes of this
        Section 16.

       

      	Entire Agreement. This Agreement contains the entire understanding
          of the parties hereto and supersedes all prior agreements of the parties
          with
          respect to the subject matter contained herein.
          
	Modification.    This Agreement shall not be
          amended, changed, modified, terminated or discharged, in whole or in part,
          except by an instrument, in writing, duly executed by all parties hereto
          or
          their respective successors or assigns.
          
	Binding Effect.  This Agreement shall be binding upon and
          inure to the benefit of the parties hereto and any successors of the parties
          hereto.
          
	Applicable Law. The provisions of this Agreement shall be construed
          and interpreted in accordance with the laws of the State of Delaware as
          at the
          time in effect.
          
	Severability. If any provisions of this Agreement shall be found to
          be invalid by any court or competent jurisdiction, such findings shall
          not
          affect the remaining provisions of this Agreement and all other provisions
          herein shall remain in full force and effect.
          
	Titles Not to Affect Interpretation. The titles of paragraphs and
          subparagraphs contained in this Agreement are inserted for convenience
          of
          reference only and neither form a part of this Agreement nor are they to
          be
          used in the construction or interpretation hereof. 

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
        be
        executed by their officers thereunto duly authorized as of the day and year
        first above written.

       

      UTG,
        INC.                                                                 
American Capitol Insurance Company

       

      By: _/s/ James P.
        Rousey__________             
By: __/s/ James P. Rousey___________

             James P.
        Rousey                                                  
       James P. Rousey

             
Executive Vice
        President                          
       Executive Vice President

       

       

      Attest:                                                                         
Attest:

       

      __/s/ Theodore C.
        Miller__________             
__/s/ Theodore C. Miller___________________

      Theodore C.
        Miller                                                      
Theodore C. Miller

      Secretary         
                                                           
Secretary

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