SERVICES AGREEMENT
This Services Agreement (the "Agreement") is made as of the 13th day of
March, 2012, by and among se2, Inc. ("se2"), an affiliate of Security Benefit
Life Insurance Company ("SBL"), Security Distributors, Inc. ("SDI"), Epoch
Securities, Inc. ("Epoch"), and Commonwealth Annuity and Life Insurance
Company ("Commonwealth") (each a "Party" and collectively, the "Parties").
WHEREAS, Commonwealth and First Allmerica Financial Life Insurance
Company ("FAFLIC") each entered into an Amended and Consolidated Underwriting
and Administrative Services Agreement dated May 1, 2010 with Epoch
(collectively, the "Underwriting Agreements"), pursuant to which: (a) Epoch
serves as the exclusive principal underwriter for certain insurance company
separate accounts (the "Accounts") through which Commonwealth and FAFLIC
previously offered and sold certain variable annuity contracts and variable
life insurance policies (collectively, the "Contracts"), which are no longer
offered or sold, and (b) Commonwealth provides certain administrative
services to Epoch in connection with the Accounts and the Contracts; and
WHEREAS, Commonwealth and Epoch entered into an Expense Sharing
Agreement dated August 5, 2010 with respect to the allocation of expenses
under the Underwriting Agreements and otherwise; and
WHEREAS, Commonwealth entered into a Work Assignment, dated as of
December 30, 2005 (the "Work Assignment"), with SBL and SDI pursuant to a
certain Third Party Administrator Agreement, dated August 22, 2005 (the "TPA
Agreement"), by and among SBL and Commonwealth's parent company, The Xxxxxxx
Xxxxx Group Inc. ("GS Group"), which TPA Agreement and Work Assignment were
assigned by SBL to se2 on October 1, 2009, whereby se2 and SDI (collectively,
the "Service Providers") provide certain administrative services with respect
to the Accounts; and
WHEREAS, Epoch, in connection with the services it provides to
Commonwealth, has asked the Service Providers to enter into this Agreement to
permit Epoch to oversee, supervise, and monitor certain services described on
Schedule A to this Agreement that are performed by the Service Providers
under the Work Assignment and TPA Agreement (collectively, the "Covered
Services");
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises herein contained, the Parties agree as follows:
1. ADMINISTRATIVE SERVICES
(a) Epoch shall oversee, supervise, and monitor each Service Provider's
performance of the Covered Services to the same extent as would be required
if the Covered Services were being performed directly by Epoch.
(b) Epoch shall at all times serve as the exclusive principal
underwriter for the Accounts with respect to the Contracts under the
respective Underwriting Agreements, unless and until such Underwriting
Agreements are terminated pursuant to their terms, in which case this
Agreement shall automatically terminate. Notwithstanding any provision of
any agreement to the contrary, neither Service Provider shall have any
responsibility under the TPA Agreement, Work Assignment, this Agreement, or
otherwise for performing any services: (i) that might cause either Service
Provider to be deemed to be acting as an "underwriter" within the meaning of
the securities laws, (ii) that would cause se2 to be acting as a "broker" or
"dealer" within the meaning of the securities laws, or (iii) that would cause
either Service Provider to assume any role or responsibility that would
require it obtain a license or qualification that it does not already possess
as of the date of this Agreement.
(c) The Parties acknowledge and agree that this Agreement does not
require, and shall not be construed to require, either Service Provider to
perform any service, including but not limited to maintaining any books and
records, that is not also required by the TPA Agreement or Work Assignment.
2. BOOKS AND RECORDS
(a) The TPA Agreement requires the Service Providers to maintain and
preserve certain books and records as agent for Commonwealth in accordance
with the requirements of Rules 31a-1 and 31a-2 under the Investment Company
act of 1940, as amended ("1940 Act"), and Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and provides
that such books and records shall be the sole property of Commonwealth (the
"Commonwealth books and records"). The Underwriting Agreements require
Commonwealth to maintain certain books and records as agent for Epoch in
accordance with the requirements of Rules 17a-3 and 17a-4 of the 1934 Act and
provides that such books and records shall remain the property of Epoch (the
"Epoch books and records"). To the extent any of the Commonwealth books and
records coincide with any or all of the Epoch books and records, the Service
Providers shall: (i) acknowledge Epoch's ownership of such books and records,
(ii) provide copies of such books and records to Epoch at Commonwealth's
expense, and (iii) allow such books and records to be inspected, to the
extent required by applicable law, by the SEC, by FINRA, and by other
regulatory and self-regulatory authorities.
(b) The Parties agree that the TPA Agreement's provisions relating to
audit and inspection rights as set forth in Section 16 of the TPA Agreement,
as the same may be amended from time to time, are incorporated herein by
reference and shall govern the conduct of audit and inspections.
Notwithstanding the generality of Section 16.4(v) and Section 16(vii) of the
TPA Agreement, the Service Providers agree to provide Epoch access to such of
the Commonwealth books and records that coincide with the Epoch books and
records, and provide access to their respective officers and employees, at
such reasonable times as is necessary to enable Epoch (i) to ensure
compliance with applicable securities laws and regulations and FINRA rules
and regulations, and (ii) to oversee, supervise, and monitor the Service
Provider's performance of the Covered Services, which includes a periodic due
diligence review to determine that the Service Providers are capable of
performing the Covered Services.
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(c) The Service Providers shall permit FINRA and all other applicable
regulators to have the same complete access to the Service Providers' work
product regarding the Covered Services as would be required if the Covered
Services had been performed instead by Epoch.
3. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to each other Party that (a) it has
been duly organized and is validly existing under the laws of the state of
its formation with full power and authority to conduct its business as it is
currently being conducted and (b) the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action, and
when so executed and delivered this Agreement shall be the valid and binding
obligation of such Party enforceable in accordance with its terms.
Epoch represents and warrants to each other Party that, pursuant to its
obligations under FINRA rules, it shall establish and maintain a supervisory
system and written procedures for any functions or activities performed by
the Service Providers (including any sub-vendor) that are reasonably designed
to achieve compliance with applicable securities laws and regulations and
with applicable FINRA rules, including but not limited to Notice to Members
05-48 and any successor FINRA guidance or rules.
4. INDEMNIFICATION AND LIMITATION OF LIABILITY
The Parties agree that the TPA Agreement's provisions relating to
Indemnification as set froth in Section 12 of the TPA Agreement, as the same
may be amended from time to time, are incorporated herein by reference and
shall govern the Parties' obligations under this Agreement. The Parties
further agree that the TPA Agreement's provisions relating to Limitation of
Liability as set forth in Section 13 of the TPA Agreement, as the same may be
amended from time to time, are incorporated herein by reference including,
without limitation, the fact that any claim under this Agreement shall be
aggregated with any claim under the TPA Agreement and shall be subject to the
overall limitation of liability set forth in Section 13 of the TPA Agreement.
5. CONFIDENTIALITY
The Parties agree that the TPA Agreement's provisions relating to
confidentiality, including but not limited to the provisions of Section 14 of
the TPA Agreement pertaining to Confidential Information and Information
Security Management Procedures (as defined therein), as the same may be
amended from time to time, are incorporated herein by reference and shall
govern the Parties' obligations under this Agreement. respect to the Covered
Services.
6. COOPERATION
Each Party shall, as legally permissible, reasonably cooperate with each
other Party in facilitating the purposes of this Agreement and in connection
with any regulatory investigation or proceeding or judicial proceeding
insofar as such investigation or proceeding relates to the Contracts, the
Underwriting Agreements, the Work Assignment, the TPA Agreement, and/or this
Agreement. Without limiting the generality of the foregoing, each Party
shall, as legally
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permissible, notify each other Party promptly, but in no event later than
five business days following receipt of any notice of any regulatory
investigation or proceeding or judicial proceeding arising in connection with
the Contracts, the Underwriting Agreements, the Work Assignment, the TPA
Agreement, or this Agreement.
7. MISCELLANEOUS
(a) No provision of this Agreement may be changed, waived, discharged,
or terminated except by an instrument in writing signed by the Party against
which enforcement of the change, waiver, discharge, or termination is sought.
(b) The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions hereof.
(c) This Agreement may be executed simultaneously in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(d) This is a severable agreement. In the event that any provision of
this Agreement would require a Party to take action prohibited by applicable
federal or state law or prohibit a Party from taking action required by
applicable federal or state law, then it is the intention of the Parties that
such provision shall be enforced to the extent permitted under the law, and,
in any event, that all other provisions of this Agreement shall remain valid
and duly enforceable as if the provision at issue had never been a part
hereof.
(e) This Agreement shall be construed and its provisions interpreted
under and in accordance with the internal laws of the state of New York
without giving effect to principles of conflicts of laws.
(f) The Service Providers are performing the Covered Services in the
capacity of independent contractors and not as employees or partners or joint
venturers with Epoch, Commonwealth, FAFLIC, or GS Group and are authorized to
represent Epoch, Commonwealth, FAFLIC, and GS Group only to the extent
expressly authorized by the Work Assignment, TPA Agreement, and this
Agreement. No further authority is granted or implied.
(g) All references to "Work Assignment" shall include any and all Work
Assignments entered into by se2, SDI, and Commonwealth subsequent to the date
of this Agreement that relate to variable life or variable annuity products.
8. TERM AND TERMINATION
(a) This Agreement shall become effective as of the date and year first
written above and shall continue in effect until the earliest of (i) a
Party's material breach of this Agreement unless such breach has been cured
within 10 days after receipt of notice of breach by a non-
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breaching Party, (ii) upon 60 day's notice by a Party to the other Parties,
(iii) termination of the Work Assignment or TPA Agreement, or (iv)
termination of the Underwriting Agreements.
(b) This Agreement may not be assigned without the written consent of
the non-assigning Parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by
their duly authorized officers on the date and year first above written.
EPOCH SECURITIES, INC.
By: /s/ Xxxxxxxx xxx Xxxxxx
-------------------------
Name: Xxxxxxxx xxx Xxxxxx
Title: President and CEO
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxx xxx Xxxxxx
-------------------------
Name: Xxxxxxxx xxx Xxxxxx
Title: President and CEO
se2, Inc.
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and Chief Financial Officer
SECURITY DISTRIBUTORS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Vice President and Assistant Secretary
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SCHEDULE A
Covered Services
1. Collecting and promptly transmitting customer funds related to the
Contracts.
2. Managing the ledgers related to customer funds. under the Contracts.
3. Managing the Epoch Common Remitter Bank Account.
4. Other administrative functions as agreed to among the Parties, consistent
with the TPA Agreement and Work Assignment.
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