EXHIBIT (i)(1)
SERVICE AGREEMENT
This Service Agreement is entered this 1st day of May, 2010, by and between
Summit Investment Advisors, Inc., a Nebraska corporation ("Summit") and Ameritas
Life Insurance Corp. and The Union Central Life Insurance Company, Nebraska
corporations, each on behalf of itself and its affiliates or subsidiaries
(collectively the "Clients"). Summit and Clients each may be referred to herein
as a "Party," and collectively as "Parties."
Whereas, Summit desires to provide and Clients desire to utilize certain
fund selection and asset allocation services in accordance with the terms of
this Agreement;
Now, therefore the Parties agree as follows:
1. Products and Services:
(a) For purposes of this Agreement Summit shall provide certain products
and services to Clients on a one time basis and certain other services
on a continuing basis as set forth below:
- Fund specific model portfolios (selected from the universe
of available investment options provided by Clients for
their respective product offerings)
- Annual model portfolio reassessment for each Product
Offering
- Periodic model portfolio evaluations for each Product
Offering
- Asset class level allocation weightings (1 time)
- Asset Allocation Questionnaire (1 time)
(b) For purposes of this Agreement the services shall be provided by
Summit to Clients in connection with the asset allocation program
offered in certain of Clients' products ("Product Offerings") as set
forth on Exhibit A attached hereto. The Parties may by mutual
agreement amend Exhibit A to provide for additional Product Offerings
or to delete certain Product Offerings as appropriate.
2. STANDARDS FOR TRANSACTIONS
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This Agreement and the transactions pursuant to this Agreement shall be
subject to the standards set forth in the Nebraska Insurance Holding Company
Act. Such standards shall include but not be limited to the requirements of the
insurance laws and regulations that provide that:
A. The terms shall be fair and reasonable;
B. Charges or fees for services performed shall be reasonable;
C. Expenses incurred and payment received shall be allocated to the
Parties in conformity with customary insurance accounting practices
consistently applied; and
D. The books, accounts, and records for each Party to all such
transactions shall be so maintained as to clearly and accurately
disclose the nature and details of the transactions, including such
accounting information as is necessary to support the
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reasonableness of the charges or fees to the respective Parties.
3. Fees:
Clients shall pay to Summit the fees set forth on Exhibit B attached
hereto. Said fees shall be applicable to the Initial Term, provided that, in the
event of an acquisition of business or other extraordinary event that results in
an increase in assets, the Parties agree to reasonably renegotiate the fee rate.
4. Term and Effective Date:
This Agreement shall commence as of the date first set forth above and
shall continue for an initial term of three years that ends on
May 1, 2013 (the "Initial Term") unless otherwise terminated pursuant
to Section 4 of this Agreement. The Agreement shall then automatically be
renewed for successive one (1) year terms ("Renewal Terms") after the Initial
Term unless any Party provides written notice of non-renewal to the other
Parties no later than ninety (90) days prior to the expiration of each Renewal
term.
This Agreement, as well as any revisions to this Agreement, is subject to
the review and approval or non-disapproval of the Nebraska Insurance Department
and shall be effective on the first day of the month following the completion
thereof.
5. Termination:
(a) Any Party may terminate this Agreement for convenience at any time
upon not less than ninety (90) days prior written notice to the other
Parties.
(b) This Agreement may be terminated if any Party defaults on its
obligations set forth herein and such default is not cured within
thirty (30) days after written notice to cure is provided by the
non-defaulting Party.
6. Specifications Concerning Summit Services:
(a) Summit shall provide Clients;
- Three fund specific models each currently containing 5 portfolio
models, designed for individual Variable products
- Two fund specific models, each containing 4 portfolio models, for
Variable Annuity Products with a Guaranteed Life Withdrawal
Benefit Rider (GLWB)
- One fund specific model with agreed upon portfolio models for
the Ameritas Investment Corp. and Retirement Plans divisions'
Advantage Advisory Program clients
(b) Summit will use internally developed qualitative and quantitative
methodology to construct and recommend to Clients specific model
portfolios in respect to each of the products, as needed, within each
Product Offering (the "Model Portfolios"). Clients will provide Summit
with (i) the available universe of investment options (which may be
updated, revised or otherwise changed from time to time), and which
may include proprietary products of the Clients and their affiliates
and (ii) other specified business parameters, from which Summit will
construct, and recommend to Clients, fund/investment-specific model
portfolios to meet the category-level asset allocation
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weightings provided by Clients. During the first year of the Initial
Term Summit will provide Clients with the category-level weightings
with respect to each Product Offering. Summit will reassess each
fund/investment-specific model portfolio annually, as well as perform
interim periodic evaluations, and will recommend changes as it deems
necessary.
(c) In connection with both initial construction and annual reassessments
of the category -level asset allocation weightings and
fund/investment-specific Model Portfolios with respect to each Program
Offering, Summit will provide Clients with a report setting forth
Summit's rationale and supporting information in respect to the model
portfolio recommendations (the "Investment Policy Statement").
(d) In addition to any interim updates, revisions and changes, Clients
will provide Summit in connection with the annual reassessment to be
made for the following year's model updates, the current available
universe of investment options for each Product Offering, on or before
December 1 of each year. Summit shall provide Clients with its updated
recommendations with respect to fund/investment-specific model
portfolios and supporting rationale described above, no later than
December 31 of the same year. If Clients require different due dates
for the annual reassessment of the Model Portfolios, alternative dates
will be established based on the mutual consent of the Parties. If
Clients have questions regarding the updated recommendations,
supporting material or Summit's rationale, Summit shall promptly make
appropriate Summit personnel available to respond to these questions,
and will provide responses to the questions as soon as reasonably
possible.
(e) Summit agrees that it will act as an investment advisor to Clients
with respect to the recommendations provided to Clients in connection
with the Products and Services described herein. Summit agrees to
provide the Products and Services with due care, in an independent
fashion, and in accordance with industry standards applicable to firms
providing similar services under like circumstances. Summit agrees to
assist Clients in providing disclosure to the individual investors
regarding Summit's role and responsibilities with respect to the
product.
(f) Summit is not in any capacity acting as an investment advisor to
Clients' investors and shall have no fiduciary duty nor liability to
those investors.
7. Representations of Summit:
Summit represents, warrants and covenants:
(a) It is duly authorized to enter into this Agreement, and it has all
necessary rights, licenses and approvals required to perform and
provide the Products and Services in accordance with this Agreement,
information and other deliverables contemplated herein and, without
limiting the generality of the foregoing, Summit is either the owner
of, or authorized to distribute, the Products and Services and other
materials provided by Summit as of the Effective Date of this
Agreement, acquired by Summit during the term of the Agreement or
developed by Summit hereunder;
(b) Summit (i) is an investment adviser, as defined by the Advisers Act,
(ii) is registered as an investment adviser under the Advisers Act and
will continue to be so registered for so long as this Agreement
remains in effect (iii) is not prohibited
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by the Advisers Act from performing the services contemplated by this
Agreement; and (iv) will promptly notify Clients of the occurrence of
any event that would disqualify Summit from serving as an investment
adviser pursuant to this Agreement;
8. Representations of Clients:
Clients represent, warrant and covenant:
(a) they have all requisite authority to enter into this Agreement and
have all necessary rights, licenses and approvals required to perform
their obligations in accordance with this Agreement;
(b) Clients will be solely responsible for all communications with their
investors concerning the Products and Services to be provided pursuant
to this Agreement and compliance therewith with all applicable
disclosure requirements of all regulatory bodies. Notwithstanding the
foregoing, Summit agrees that Summit shall be responsible for
information furnished to Clients for use in registration statements or
prospectuses, or sales literature or other communications relating to
Clients' Products and Services. Clients agree that they shall not make
any reference to Summit in any written communication without Summit's
prior review and approval.
(c) Clients acknowledge receipt of a copy of Summit's Form ADV, Part II.
9. Disclaimer and Limitations:
(a) Disclaimer.
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NO PARTY MAKES ANY OTHER
WARRANTY OR REPRESENTATION TO THE OTHERS INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, ACCURACY, COMPLETENESS OR FITNESS FOR A
PARTICULAR PURPOSE. ALTHOUGH GATHERED FROM SOURCES DEEMED TO BE RELIABLE, SUMMIT
CANNOT GUARANTEE THE ACCURACY OF THE THIRD PARTY DATA USED IN PROVIDING THE
PRODUCTS AND SERVICES.
10. Legal Compliance:
Summit and Clients (each, a "Party" and collectively "Parties") agree and
acknowledge that the Parties to this Agreement are regulated entities, and each
Party shall comply with all applicable laws in the performance of its
obligations hereunder. Without limiting the generality of the foregoing, each
Party's obligations under this Section 9 shall include, without limitation,
compliance with the applicable international, federal, state and local laws,
regulations, ordinances and codes (including the Foreign Corrupt Practices Act,
the Advisers Act, the laws and regulations relating to data protection, the
Internal Revenue Code and ERISA), including identifying and procuring required
permits, certificates, approvals and inspections, including that the software
and other materials provided or used by it in performing its obligations
hereunder shall comply with the applicable international, federal, state and
local laws, regulations, ordinances and codes. In addition to any other
warranties set forth herein, each Party warrants that it will use professional
efforts to ensure its execution, delivery, and performance of this
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Agreement shall not constitute a violation of any judgment, order, or decree; a
material default under any contract by which it or any of its material assets
are bound; or an event that would, with notice or lapse of time, or both,
constitute such a default. Summit and Clients agree and acknowledge that
Summit's compensation shall not be affected, directly or indirectly, by the
recommendation of assets to a particular fund, including any fund managed by or
affiliated with Clients or their affiliates.
Under no circumstances shall any fees, compensation or other remuneration paid
by Clients to Summit be reduced when a model portfolio in a Program Offering
fails to meet the agreed upon performance benchmark for such portfolio, nor
shall any fees, compensation or other remuneration paid by Clients to Summit be
increased when a model portfolio in a Program Offering meets or exceeds the
agreed upon performance benchmark for such portfolio.
Summit and Clients agree and acknowledge that they are affiliates but that such
relationship does not affect or impair the ability of Summit to act independent
of Clients.
Each Party shall promptly notify the others of any failure to comply or a charge
of a failure to comply with all applicable laws or with the provisions of the
above paragraph to the extent that such failure or charge of failure presents a
material risk to the other Party or Parties. If a Party provides such notice, or
another Party reasonably determines, after due inquiry, including, without
limitation, consultation with its counsel, that an action of a Party presents a
material risk of non-compliance to the other Party, such Party agrees to use
best efforts to return to compliance with applicable law, take reasonable steps
to mitigate such risk of non-compliance to the other Party, or provide an
opinion of counsel satisfactory to the other Party why such Party's actions do
not present a material risk to the other Party.
11. Miscellaneous:
(a) Survival. Upon any termination or expiration of this Agreement, the
following provisions shall survive: Sections 2 (only to the extent of any
accrued but unpaid amounts owed to Summit), 8, and 10.
(b) Assignment; Successors and Assigns. No Party may assign any of its
rights or duties under this Agreement without the prior written consent of the
other Parties, such consent not to be unreasonably withheld. The Agreement shall
inure to the benefit of and be binding upon the Parties to this Agreement and
their respective successors and permitted assigns.
(c) Exhibits. The Exhibits attached hereto are hereby incorporated herein
by reference.
(d) This Agreement shall be governed by Nebraska law, and any controversy
between the Parties arising out of this Agreement shall be submitted to an
arbitration panel convened in the city of Lincoln, Nebraska. Each Party shall
select an arbitrator, and the two arbitrators jointly shall select a third
arbitrator to serve as chairman of the panel. The costs of the arbitration,
including the arbitrators' fees, shall be borne equally by the Parties to the
arbitration. Attorneys' fees may be awarded to the prevailing or most prevailing
Party at the discretion of the arbitration panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16 (as may be
amended) and shall take place in conformance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") (without being submitted
to the AAA), excluding the Procedures for Large, Complex Commercial Disputes and
the Optional Rules for Emergency Measures of Protection (the "Rules"). Except to
determine the eligibility or continuing eligibility of the
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chairman of the arbitration panel to serve as such (which shall be determined by
the other arbitrators or upon application to a federal court), the chairman
alone shall make such decisions as, under the Rules, otherwise would be made by
AAA. The arbitration panel shall not have any power to alter, amend, modify or
change any of the terms of this Agreement nor to grant any damages in excess of
compensatory damages. Any negotiation which takes place pursuant to this
Agreement shall be confidential and shall be treated as a compromise and
settlement negotiation for purposes of the Federal Rules of Evidence and state
rules of evidence. Clients understand that this agreement to arbitrate does not
constitute a waiver of the right to seek a judicial forum where such waiver
would be void under the federal securities laws.
(e) This Agreement may be executed in two or more separate counterparts,
each of which shall be deemed to be an original hereof, but all of which shall
constitute one and the same instrument
(remainder of page intentionally blank-signature page to follow)
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THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.
The Parties have executed this Agreement as of the date first set forth herein.
SUMMIT INVESTMENT ADVISORS, INC.
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
Its: Senior Vice President & Senior
Managing Director
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AMERITAS LIFE INSURANCE CORP.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President, & Chief
Financial Officer
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THE UNION CENTRAL LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President & Chief
Marketing Officer, Individual &
Retirement Plans
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EXHIBIT A
Clients' Product Offerings
Fund Specific Models for individual Variable Products offered by Clients,
including but not limited to:
- Ameritas Life Insurance Corp. (Ameritas) and The Union Central Life
Insurance Company (Union Central) commissioned variable life and
variable annuity products currently offered and as may be offered in
the future -- Currently, 5 fund specific portfolio models;
- Ameritas and Union Central variable annuity products currently
offered and as may be offered in the future with GLWB riders --
Currently, 4 fund specific portfolio models which may be used with
GLWB riders;
- Ameritas Advisor variable life and variable annuity products
currently offered and as may be offered in the future --Currently, 5
fund specific portfolio models;
- Ameritas Advisor 6150 variable annuity product currently offered or
such other Ameritas Advisor product as may be offered in the future
with GLWB rider -- Currently, 4 fund specific portfolio models which
may be used with GLWB rider;
- Ameritas Viva variable life product -- Currently 5 portfolio models.
Fund Specific Models for the Ameritas Investment Corp. and Retirement Plans
divisions Advantage Advisory Program
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EXHIBIT B
Compensation
As Compensation for the following listed services, and for the services listed
in Section 1 of the Agreement, each Client agrees to pay Summit the following:
Fund Selection for Model Portfolios with no less than an annual reassessment for
each Product Offering - 1.5 basis points of assets contained in the portfolios
included in the models utilized in the Product Offerings of that Client; paid
quarterly in advance, commencing with the effective date of this Agreement and
not necessarily coinciding with calendar quarters, and based on the previous
quarter end assets of the portfolios included in the models utilized in each
Product Offering. The minimum quarterly fee shall be $18,750.
Development of an asset allocation questionnaire - One time fee of $5,000, paid
at the beginning of this contract term.
Development of the Asset class weightings for certain Product Offerings - one
time fee of $10,000, paid at the beginning of this contract term.
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