AMENDMENT
TO
FUND PARTICIPATION AGREEMENT
This amendment (the "Amendment") is made and entered into as of September 3,
2002 by and among Principal Life Insurance Company, an Iowa corporation
("Insurance Company"), X.X. XXXXXX SERIES TRUST II, a Delaware business trust
(the "Fund); (Fund and Insurance Company collectively, the "Parties") in order
to modify that certain Fund Participation Agreement entered into by the Parties
as of March 26, 2002 (the "Agreement").
The Parties agree to amend the Agreement as follows:
1. Exhibit A of the Agreement is hereby amended to include the new Benefit
Variable Universal Life (BVUL) product.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect.
Acknowledged and agreed by:
X.X. XXXXXX SERIES
TRUST II
By: /s/Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Vice PResident and Assistant Secretary
PRINCIPAL LIFE
INSURANCE COMPANY
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Assistant Director
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 26th day of March, 2002, between
Principal Life Insurance Company, on behalf of one or more separate accounts,
("Insurance Company"), a life insurance company organized under the laws of the
State of Iowa, and X.X. Xxxxxx Series Trust II ("Fund"), a business trust
organized under the laws of Delaware, with respect to the Fund's portfolio or
portfolios set forth on Schedule I hereto, as such Schedule may be revised from
time to time (the "Series"; if there are more than one Series to which this
Agreement applies, the provisions herein shall apply severally to each such
Series).
ARTICLE I 1.
DEFINITIONS
1.1. "Act" shall mean the Investment Company Act of 1940, as amended.
1.2. "Board" shall mean the Board of Trustees of the Fund having the
responsibility for management and control of the Fund.
1.3. "Business Day" shall mean any day for which the Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4. "Commission" shall mean the Securities and Exchange Commission.
1.5. "Contract" shall mean a variable annuity or variable life insurance
contract that uses the Fund as an underlying investment medium. Individuals
who participate under a group Contract are "Participants". 1.6.
"Contractholder" shall mean any entity that is a party to a Contract with a
Participating Company.
1.7. "Disinterested Board Members" shall mean those members of the Board that
are not deemed to be "interested persons" of the Fund, as defined by the
Act.
1.8. "Participating Companies" shall mean any insurance company (including
Insurance Company), which offers variable annuity and/or variable life
insurance contracts to the public and which has entered into an agreement
with the Fund for the purpose of making Fund shares available to serve as
the underlying investment medium for the aforesaid Contracts.
1.9. "Plans" shall mean qualified pension and retirement benefit plans.
1.10."Prospectus" shall mean the Fund's current prospectus and statement of
additional information, as most recently filed with the Commission, with
respect to the Series. 1.11. "Separate Account" shall mean those separate
accounts established by Insurance Company in accordance with the laws of
the State of Iowa. 1.12. "Software Program" shall mean the software program
used by the Fund for providing Fund and account balance information
including net asset value per share. 1.13. "Insurance Company's General
Account(s)" shall mean the general account(s) of Insurance Company and its
affiliates which invest in the Fund.
1.11."Separate Account" shall mean those separate accounts established by
Insurance Company in accordance with the laws of the State of Iowa.
1.12."Software Program" shall mean the software program used by the Fund for
providing Fund and account balance information including net asset value
per share.
1.13."Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates which invest in the Fund.
ARTICLE II 2.
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established the Separate Account pursuant to the
Iowa Insurance Code for the purpose of offering to the public certain
individual variable annuity contracts; (c) it has registered the Separate
Account as a unit investment trust under the Act to serve as the segregated
investment account for the Contracts; (d) each Separate Account is eligible
to invest in shares of the Fund without such investment disqualifying the
Fund as an investment medium for insurance company separate accounts
supporting variable annuity contracts or variable life insurance contracts;
and (e) each Separate Account shall comply with all applicable legal
requirements.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the Securities Act of
1933, as amended (" 1933 Act"); (b) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and
state laws; and (c) the sale of the Contracts shall comply in all material
respects with state insurance law requirements. Insurance Company agrees to
inform the Fund promptly of any investment restrictions imposed by state
insurance law and applicable to the Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be credited to
or charged against such Separate Account without regard to other income,
gains or losses from assets allocated to any other accounts of Insurance
Company. Insurance Company represents and warrants that the assets of the
Separate Account are and will be kept separate from Insurance Company's
General Account and any other separate accounts Insurance Company may have,
and will not be charged with liabilities from any business that Insurance
Company may conduct or the liabilities of any companies affiliated with
Insurance Company.
2.4 Fund represents that the Fund is registered with the Commission under the
Act as an open-end management investment company and possesses, and shall
maintain, all legal and regulatory licenses, approvals, consents and/or
exemptions required for the Fund to operate and offer its shares as an
underlying investment medium for Participating Companies. The Fund has
established five portfolios and may in the future establish other
portfolios.
2.5 Fund represents that it is currently qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision)
and that it will notify Insurance Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance policies or
annuity contracts, whichever is appropriate, under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and
that it will notify the Fund and its investment adviser immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future. Insurance
Company agrees that any prospectus offering a Contract that is a "modified
endowment contract," as that term is defined in Section 7702A of the Code,
will identify such Contract as a modified endowment contract (or policy).
2.7 Fund agrees that the Fund's assets shall be managed and invested in a
manner that complies with the requirements of Section 817(h) of the Code.
2.8 Insurance Company agrees that the Fund shall be permitted (subject to the
other terms of this Agreement) to make Series' shares available to other
Participating Companies and contractholders and to Plans.
2.9 Fund represents and warrants that any of its trustees, officers, employees,
investment advisers, and other individuals/entities who deal with the money
and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund in an amount not less than that required by Rule 1 7g-1 under the
Act. The aforesaid Bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable bonding company.
2.10 Insurance Company agrees that the Fund's investment adviser shall be deemed
a third party beneficiary under this Agreement and may enforce any and all
rights conferred by virtue of this Agreement.
ARTICLE III 3.
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in the Series' shares
3.2 Fund agrees to make the shares of its Series available for purchase at the
then applicable net asset value per share by Insurance Company and the
Separate Account on each Business Day pursuant to rules of the Commission.
Notwithstanding the foregoing, the Fund may refuse to sell the shares of
any Series to any person, or suspend or terminate the offering of the
shares of any Series if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board,
acting in good faith and in light of its fiduciary duties under federal and
any applicable state laws, necessary and in the best interests of the
shareholders of such Series.
3.3 Fund agrees that shares of the Fund will be sold only to Participating
Companies and their separate accounts and to the general accounts of those
Participating Companies and their affiliates and to Plans. No shares of any
Series will be sold to the general public.
3.4 Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Series available on a
per-share and Series basis to Insurance Company by 7:00 p.m. Eastern Time
on each Business Day. Any material errors in the calculation of net asset
value, dividend and capital gain information shall be reported immediately
upon discovery to Insurance Company. Non-material errors will be corrected
in the next Business Day's net asset value per share for the Series in
question.
3.5 At the end of each Business Day, Insurance Company will use the information
described in Sections 32 and 3.4 to calculate the Separate Account unit
values for the day. Using this unit value, Insurance Company will process
the day's Separate Account transactions received by it by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) to determine the net dollar amount of Series shares which
will be purchased or redeemed at that day's closing net asset value per
share for such Series. The net purchase or redemption orders will be
transmitted to the Fund by Insurance Company by 8:30 a.m. Eastern Time on
the Business Day next following Insurance Company's receipt of that
information.
3.6 Fund appoints Insurance Company as its agent for the limited purpose of
accepting orders for the purchase and redemption of shares of each Series
for the Separate Account. Fund will execute orders for any Series at the
applicable net asset value per share determined as of the close of trading
on the day of receipt of such orders by Insurance Company acting as agent
("effective trade date"), provided that the Fund receives notice of such
orders by 8:30 a.m. Eastern Time on the next following Business Day and, if
such orders request the purchase of Series shares, the conditions specified
in Section 3.8, as applicable, are satisfied. A redemption or purchase
request for any Series that does not satisfy the conditions specified above
and in Section 3.8, as applicable, will be effected at the net asset value
computed for such Series on the Business Day immediately preceding the next
following Business Day upon which such conditions have been satisfied.
3.7 Insurance Company will make its best efforts to notify Fund in advance of
any unusually large purchase or redemption orders.
3.8 If Insurance Company's order requests the purchase of Series shares,
Insurance Company will pay for such purchases by wiring Federal Funds to
Fund or its designated custodial account on the day the order is
transmitted. Insurance Company shall transmit to the Fund payment in
Federal Funds by the close of the Federal Reserve wire system on the
Business Day the Fund receives the notice of the order pursuant to Section
3.5. Fund will execute such orders at the applicable net asset value per
share determined as of the close of trading on the effective trade date if
Fund receives payment in Federal Funds by the close of the Federal Reserve
wire system on the Business Day the Fund receives the notice of the order
pursuant to Section 3.5. If payment in Federal Funds for any purchase is
not received on such Business Day, Insurance Company shall promptly upon
the Fund's request, reimburse the Fund for any charges, costs, fees,
interest or other expenses incurred by the Fund in connection with any
advances to, or borrowings or overdrafts by, the Fund, or any similar
expenses incurred by the Fund, as a result of portfolio transactions
effected by the Fund based upon such purchase request.
3.9 Fund has the obligation to ensure that Series shares are registered with
applicable federal agencies at all times.
3.10 Fund will confirm each purchase or redemption order made by Insurance
Company. Transfer of Series shares will be by book entry only. No share
certificates will be issued to Insurance Company. Insurance Company will
record shares ordered from Fund in an appropriate title for the
corresponding account.
3.11 Fund shall credit Insurance Company with the appropriate number of shares.
3.12 On each ex-dividend date of the Fund or, if not a Business Day, on the
first Business Day thereafter, Fund shall communicate to Insurance Company
the amount of dividend and capital gain, if any, per share of each Series.
All dividends and capital gains of any Series shall be automatically
reinvested in additional shares of the relevant Series at the applicable
net asset value per share of such Series on the payable date. Fund shall,
on the day after the payable date or, if not a Business Day, on the first
Business Day thereafter, notify Insurance Company of the number of shares
so issued.
ARTICLE IV 4.
STATEMENTS AN]) REPORTS
4.1 Fund shall provide monthly statements of account as of the end of each
month for all of Insurance Company's accounts by the fifteenth (15th)
Business Day of the following month.
4.2 Fund shall distribute to Insurance Company copies of the Fund's
Prospectuses, proxy materials, notices, periodic reports and other printed
materials (which the Fund customarily provides to its shareholders) in
quantities as Insurance Company may reasonably request for distribution to
each Contractholder and Participant. At Insurance Company's request, Fund
shall provide, in lieu of printed documents, camera- ready copy or diskette
of prospectuses, annual and semi-annual reports for printing by Insurance
Company. Fund shall provide all prior materials to Insurance Company in a
timely manner so as to enable Insurance Company to print and distribute
such materials within the time required by law.
4.3 Fund will provide to Insurance Company at least one complete copy of all
registration statements, Prospectuses, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above,
that relate to the Fund or its shares, contemporaneously with the filing of
such document with the Commission or other regulatory authorities.
4.4 Insurance Company will provide to the Fund at least one copy of all
registration statements, Prospectuses, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above,
that relate to the Contracts or the Separate Account, contemporaneously
with the filing of such document with the Commission.
ARTICLE V 5.
EXPENSES
5.1 The charge to the Fund for all expenses and costs of the Series, including
but not limited to management fees, administrative expenses and legal and
regulatory costs, will be made in the determination of the relevant Series'
daily net asset value per share so as to accumulate to an annual charge at
the rate set forth in the Fund's Prospectus. Excluded from the expense
limitation described herein shall be brokerage commissions and transaction
fees and extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of the Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Fund materials,
including the cost of printing the Fund's Prospectus, or marketing
materials for prospective Insurance Company Contractholders and
Participants as the Fund's investment adviser and Insurance Company
shall agree from time to time.
b. Distribution expenses of any Fund materials or marketing materials for
prospective Insurance Company Contractholders and Participants.
c. Distribution expenses of Fund materials or marketing materials for
Insurance Company Contractholders and Participants.
Except as provided herein, all other Fund expenses shall not be borne by
Insurance Company.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 1996 of
the Securities and Exchange Commission under Section 6(c) of the Act and,
in particular, has reviewed the conditions to the relief set forth in the
related Notice. As set forth therein, Insurance Company agrees to report
any potential or existing conflicts promptly to the Board, and in
particular whenever contract voting instructions are disregarded, and
recognizes that it will be responsible for assisting the Board in carrying
out its responsibilities under such application. Insurance Company agrees
to carry out such responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Contractholder investments in the Fund, the Board shall give prompt notice
to all Participating Companies. If the Board determines that Insurance
Company is responsible for causing or creating said conflict, Insurance
Company shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the Disinterested Board
Members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include, but
shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Series and reinvesting such assets in a different investment medium,
or submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote
by all Contractholders having an interest in the Fund, Insurance Company
may be required, at the Board's election, to withdraw the Separate
Account's investment in the Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the
Fund be required to bear the expense of establishing a new funding medium
for any Contract. Insurance Company shall not be required by this Article
to establish a new funding medium for any Contract if an offer to do so has
been declined by vote of a majority of the Contractholders materially
adversely affected by the irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or the Fund taken or omitted as a result of any act or
failure to act by Insurance Company pursuant to this Article VI shall
relieve Insurance Company of its obligations under, or otherwise affect the
operation of, Article V.
ARTICLE VII 7.
VOTING OF FUND SHARES
7.1 Fund shall provide Insurance Company with copies at no cost to Insurance
Company, of the Fund's proxy material, reports to shareholders and other
communications to shareholders in such quantity as Insurance Company shall
reasonably require for distributing to Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants on a
timely basis and in accordance with applicable law;
(b) vote the Series shares in accordance with instructions received from
Contractholders or Participants; and
(c) vote Series shares for which no instructions have been received in the
same proportion as Series shares for which instructions have been
received.
Insurance Company agrees to be responsible for assuring that voting Series
shares for the Separate Account is conducted in a manner consistent with
other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of the Fund and its investment adviser, solicit, induce or
encourage Contractholders to (a) change or supplement the Fund's current
investment adviser or (b) change, modify, substitute, add to or delete the
Fund from the current investment media for the Contracts.
ARTICLE VIII 8.
MARKETING A1~JT) REPRESENTATIONS
8.1 The Fund or its underwriter shall periodically furnish Insurance Company
with the following documents, in quantities as Insurance Company may
reasonably request:
a. Current Prospectus and any supplements thereto;
b. other marketing materials.
Expenses for the production of such documents shall be borne by Insurance
Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities which shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by insurance Company. Insurance Company shall
make reasonable efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to the
Fund, each piece of sales literature or other promotional material in which
the Fund, its investment adviser or the administrator is named, at least
five (5) Business Days prior to its use. No such material shall be used
unless the Fund approves such material. Such approval (if given) must be in
writing and shall be presumed not given if not received within five (5)
Business Days after receipt of such material. The Fund shall use all
reasonable efforts to respond within five (5) days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
or any Series in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
Prospectus, as may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund.
8.5 Fund shall furnish, or shall cause to be furnished, to Insurance Company,
each piece of the Fund's sales literature or other promotional material in
which Insurance Company or the Separate Account is named, at least five (5)
Business Days prior to its use. No such material shall be used unless
Insurance Company approves such material. Such approval (if given) must be
in writing and shall be presumed not given if not received within five (5)
Business Days after receipt of such material. Insurance Company shall use
all reasonable efforts to respond within five (5) days of receipt.
8.6 Fund shall not, in connection with the sale of Series shares, give any
information or make any representations on behalf of Insurance Company or
concerning Insurance Company, the Separate Account, or the Contracts other
than the information or representations contained in a registration
statement or prospectus for the Contracts, as may be amended or
supplemented from time to time, or in published reports for the Separate
Account which are in the public domain or approved by Insurance Company for
distribution to Contractholders or Participants, or in sales literature or
other promotional material approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures or other public media), sales literature (such as any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, or reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. rules,
the Act or the 1933 Act.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless the Fund, its
investment adviser, any sub- investment adviser of a Series, and their
affiliates, and each of their directors, trustees, officers, employees,
agents and each person, if any, who controls or is associated with any of
the foregoing entities or persons within the meaning of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of Section 9.1),
against any and all losses, claims, damages or liabilities joint or several
(including any investigative, legal and other expenses reasonably incurred
in connection with, and any amounts paid in settlement of, any action, suit
or proceeding or any claim asserted) for which the Indemnified Parties may
become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect to thereof) (i) arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in information furnished by Insurance
Company for use in the registration statement or Prospectus or sales
literature or advertisements of the Fund or with respect to the Separate
Account or Contracts, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii)
arise out of or as a result of conduct, statements or representations
(other than statements or representations contained in the Prospectus and
sales literature or advertisements of the Fund) of Insurance Company or its
agents, with respect to the sale and distribution of Contracts for which
Series shares are an underlying investment; (iii) arise out of the wrongful
conduct of Insurance Company or persons under its control with respect to
the sale or distribution of the Contracts or Series shares; (iv) arise out
of Insurance Company's incorrect calculation and/or untimely reporting of
net purchase or redemption orders; or (v) arise out of any breach by
Insurance Company of a material term of this Agreement or as a result of
any failure by Insurance Company to provide the services and furnish the
materials or to make any payments provided for in this Agreement. Insurance
Company will reimburse any Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that with respect to clauses (i) and (ii) above
Insurance Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or omission or alleged omission made in such
registration statement, prospectus, sales literature, or advertisement in
conformity with written information furnished to Insurance Company by the
Fund specifically for use therein; and provided, further, that Insurance
Company shall not be liable for special, consequential or incidental
damages. This indemnity agreement will be in addition to any liability
which Insurance Company may otherwise have.
9.2 The Fund agrees to indemnify and hold harmless Insurance Company and each
of its directors, officers, employees, agents and each person, if any, who
controls Insurance Company within the meaning of the 1933 Act against any
losses, claims, damages or liabilities to which Insurance Company or any
such director, officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (1) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the Fund; (2) arise out of or are
based upon the omission to state in the registration statement or
Prospectus or sales literature or advertisements of the Fund any material
fact required to be stated therein or necessary to make the statements
therein not misleading; or (3) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement or Prospectus or sales literature or advertisements
with respect to the Separate Account or the Contracts and such statements
were based on information provided to Insurance Company by the Fund; and
the Fund will reimburse any legal or other expenses reasonably incurred by
Insurance Company or any such director, officer, employee, agent or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Fund
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged omission made in such Registration
Statement, Prospectus, sales literature or advertisements in conformity
with written information furnished to the Fund by Insurance Company
specifically for use therein; and provided, further, that the Fund shall
not be liable for special, consequential or incidental damages. This
indemnity agreement will be in addition to any liability which the Fund may
otherwise have.
9.3 The Fund shall indemnify and hold Insurance Company harmless against any
and all liability; loss, damages, costs or expenses which Insurance Company
may incur, suffer or be required to pay due to the Fund's (I) incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate of a Series; (2) incorrect reporting of the daily net
asset value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital gain
distribution rate; provided that the Fund shall have no obligation to
indemnify and hold harmless Insurance Company if the incorrect calculation
or incorrect or untimely reporting was the result of incorrect information
furnished by Insurance Company or information furnished untimely by
Insurance Company or otherwise as a result of or relating to a breach of
this Agreement by Insurance Company; and provided, further, that the Fund
shall not be liable for special, consequential or incidental damages.
9.4 Promptly after receipt by an indemnified party under this Article of notice
of the commencement of any action, such indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Article, notify the indemnifying party of the commencement thereof. The
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability under this Article IX, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice. In case any such action is
brought against any indemnified party, and it notified the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and to the extent that the indemnifying party has given notice to
such effect to the indemnified party and is performing its obligations
under this Article, the indemnifying party shall not be liable for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation. Notwithstanding the foregoing, in any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX.
ARTICLE X 10.
COMMENCEMENT AND TERMiNATION
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty as to one or more Series at
the option of the terminating party:
a. At the option of Insurance Company or the Fund at any time from the
date hereof upon 180 days' notice, unless a shorter time is agreed to
by the parties;
b. At the option of Insurance Company, if shares of any Series are not
reasonably available to meet the requirements of the Contracts as
determined by Insurance Company. Prompt notice of election to
terminate shall be furnished by Insurance Company, said termination to
be effective ten days after receipt of notice unless the Fund makes
available a sufficient number of shares to meet the requirements of
the Contracts within said ten-day period;
c. At the option of Insurance Company, upon the institution of formal
proceedings against the Fund by the Commission, National Association
of Securities Dealers or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in Insurance
Company's reasonable judgment, materially impair the Fund's ability to
meet and perform the Fund's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by Insurance
Company with said termination to be effective upon receipt of notice;
d. At the option of the Fund, upon the institution of formal proceedings
against Insurance Company by the Commission, National Association of
Securities Dealers or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in the Fund's
reasonable judgment, materially impair Insurance Company's ability to
meet and perform Insurance Company's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by the Fund
with said termination to be effective upon receipt of notice;
e. At the option of the Fund, if the Fund shall determine, in its sole
judgment reasonably exercised in good faith, that Insurance Company
has suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and such
material adverse change or material adverse publicity is likely to
have a material adverse impact upon the business and operation of the
Fund or its investment adviser, the Fund shall notify Insurance
Company in writing of such determination and its intent to terminate
this Agreement, and after considering the actions taken by Insurance
Company and any other changes in circumstances since the giving of
such notice, such determination of the Fund shall continue to apply on
the sixtieth (60th) day following the giving of such notice, which
sixtieth day shall be the effective date of termination;
f. Upon termination of the Investment Advisory Agreement between the Fund
and its investment adviser or its successors unless Insurance Company
specifically approves the selection of a new Fund investment adviser.
The Fund shall promptly furnish notice of such termination to
Insurance Company;
g. In the event the Fund's shares are not registered, issued or sold in
accordance with applicable federal law, or such law precludes the use
of such shares as the underlying investment medium of Contracts issued
or to be issued by Insurance Company. Termination shall be effective
immediately upon such occurrence without notice;
h. At the option of the Fund upon a determination by the Board in good
faith that it is no longer advisable and in the best interests of
shareholders for the Fund to continue to operate pursuant to this
Agreement. Termination pursuant to this Subsection (h) shall be
effective upon notice by the Fund to Insurance Company of such
termination;
i. At the option of the Fund if the Contracts cease to qualify as annuity
contracts or life insurance policies, as applicable, under the Code,
or if the Fund reasonably believes that the Contracts may fail to so
qualify;
j. At the option of either party to this Agreement, upon another party's
breach of any material provision of this Agreement;
k. At the option of the Fund, if the Contracts are not registered, issued
or sold in accordance with applicable federal and/or state law; or
l. Upon assignment of this Agreement, unless made with the written
consent of the non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, lO.2f or
10.2k herein shall not affect the operation of Article V of this Agreement.
Any termination of this Agreement shall not affect the operation of Article
IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof, the Fund and its investment adviser may, at the option of the Fund,
continue to make available additional Series shares for so long as the Fund
desires pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the Fund so elects to make additional
Series shares available, the owners of the Existing Contracts or Insurance
Company, whichever shall have legal authority to do so, shall be permitted
to reallocate investments in the Series, redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. In the event of a termination of this
Agreement pursuant to Section 10.2 hereof, the Fund, as promptly as is
practicable under the circumstances, shall notify Insurance Company whether
the Fund will continue to make Series shares available after such
termination. If Series shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either the Fund or Insurance Company may terminate the
Agreement, as so continued pursuant to this Section 10.3, upon prior
written notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Fund, need not be
for more than six months.
ARTICLE XI 11.
AMENDMENTS
11.1 Any other changes in the terms of this Agreement shall be made by agreement
in writing between Insurance Company and Fund.
ARTICLE XII 12.
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following
addresses:
Insurance Company:
Principal Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, XX 00000- 0300
Attn: Xxxxx Xxxxx
Fund:
X.X. Xxxxxx Series Trust II
do JPMorgan Chase Bank
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII 13.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
ARTICLE XIV 14.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
PRINCIPAL LIFE INSURANCE COMPANY,
On behalf of one or more separate accounts
By:/s/Xxxxx X. House
Xxxxx X. House
Its: Assistant Director
X.X.XXXXXX SERIES TRUST II
By/s/Xxxx X. Xxxxxxxx
Its: Vice President
SCHEDULE-1
Fund Name Cusip #
1. XX Xxxxxx Bond 616919205
2. XX Xxxxxx SmallCap 616919403
Exhibit A
Principal Life Insurance Company Principal Life Insurance Company
Separate Account B Variable Life Separate Account
(1) The Principal(R) Variable Annuity (1) PrinFlex Life(R) Variable
Life Insurance
(2) Principal Freedom Variable Annuity (2) Survivorship Variable
Universal Life Insurance
(3) Flexible Variable Life
Insurance
(4) Principal Variable Universal Life
Accumulator (VUL)
(5) Executive Variable Universal
Life Accumulator (EVUL)
March 26, 2002
Xx. Xxxxx X. Xxxxx
JPMorgan Chase Bank
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xx. Xxxxx:
This letter sets forth the agreement between Principal Life Insurance Company
(the "Company") and JPMorgan Chase Bank ("Xxxxxx") concerning certain
administrative services.
1. Administrative Services and Expenses. Administrative services for the
Company's Separate Accounts (the "Account") which invests in the X. X.
Xxxxxx Series Trust II (the "Fund") pursuant to the Participation Agreement
among the Company and the Fund, dated March 25, 2002 (the "Participation
Agreement"), and for purchasers of variable life insurance and variable
annuity contracts (the "Contracts") issued through the Account, are the
responsibility of the Company. Certain administrative services for the Fund
in which the Account invests, and shareholder services for purchasers of
shares of the Fund, are the responsibility of Xxxxxx.
Xxxxxx recognizes the Company as the sole shareholder of record of shares
of Portfolios offered by the Fund (the "Portfolios") purchased under the
Participation Agreement on behalf of the Account. Xxxxxx further recognizes
that it will derive a substantial savings in administrative and shareholder
servicing expenses by virtue of having the Company as the shareholder of
record of shares of the Fund purchased under the Participation Agreement,
rather than multiple shareholders having record ownership of such shares.
The administrative and shareholder servicing expenses for which Xxxxxx will
derive such savings are set forth in Schedule A to this letter agreement.
2. Expense Payments. (a) In consideration of the anticipated administrative
and shareholder servicing expense savings resulting from the Company's
services set forth above, Xxxxxx agrees to pay the Company a fee (the
"Fee"), computed daily and paid monthly in arrears, equal to the following
percent of the daily net asset value of the shares of the Portfolios held
in the subaccount of the Account:
X. X. Xxxxxx Bond Portfolio 0.20%
X. X. Xxxxxx Small Company Portfolio 0.25%.
(b) As soon as practicable after the end of each month, Xxxxxx will
calculate Company's fee for the preceding month as stated in this Paragraph
2 and pay such fee to Company. For purposes of this paragraph 2, the
average daily net asset value of the shares of the Fund will be based on
the net asset values reported by such Fund to the Company.
3. Nature of Payments. The parties to this letter agreement recognize and
agree that Xxxxxx'x payments to the Company relate to administrative and
shareholder services only and do not constitute payment in any manner for
investment advisory services or for costs of distribution of Contracts or
of shares of the Fund, and that these payments are not otherwise related to
investment advisory or distribution services or expenses. The amount of
administrative and shareholder servicing expense payments made by Xxxxxx to
the Company pursuant to Paragraph 2 of this letter agreement will not be
deemed to be conclusive with respect to actual administrative and
shareholder servicing expenses or savings of Xxxxxx.
4. Representations. The Company represents and warrants that in performing the
services and receiving the compensation described in this letter agreement
it will comply with all applicable laws, rules and regulations.
5. Term. This letter agreement will remain in full force and effect for so
long as any assets of the Fund are attributable to amounts invested by the
Company under the Participation Agreement, unless terminated in accordance
with Paragraph 6 of this letter agreement. Fees will continue to be due and
payable with respect to the shares attributable to existing Contracts for
only so long as such payments comply with applicable laws, rules and
regulations.
6. Termination. This letter agreement will be terminated upon mutual agreement
of the parties hereto in writing.
7. Amendment. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
8. Counterparts. This letter may be executed in counterparts, each of which
will be deemed an original but all of which will together constitute one
and the same instrument.
9. Successors and Assigns. This letter agreement shall bind and inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative and shareholder servicing expenses payments,
please sign below and return a signed copy to us.
Very truly yours,
Principal Life Insurance Company,
By: /s/Xxxxx X. House
Xxxxx X. House, Assistant Director
Acknowledged and Agreed:
JPMORGAN CHASE BANK
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Vice President
Attachment: Schedule A
SCHEDULE A
Maintenance of Books and Records
* Record issuance of shares
* Record transfers (via net purchase orders)
* Reconciliation and balancing of the separate account at the fund level in the
general ledger, at various banks and within systems interface
Communication with the Fund
* Purchase Orders
- Determination of net amount available for investment by the Fund
- Deposit of receipts at the Fund's custodian (generally by wire
transfer)
- Notification of the custodian of the estimated amount required to pay
dividend or distribution
* Redemption Orders
- Determination of net amount required for redemptions by the Fund
- Notification of the custodian and Fund of cash required to meet
payments
- Cost of share redemption
* Daily pricing
Processing Distributions from the Fund
* Process ordinary dividends and capital gains
* Reinvest the Fund's distributions
Report
* Periodic information reporting to the Fund
Fund-related Contractowner Services
* Financial consultant's advice to contractowners with respect to Fund
inquiries (not including information about performance or related to sales)
* Communications to contractowners regarding Fund and subaccount performance
Other Administrative Support
* Providing other administrative support for the Fund as mutually agreed
between the Company and the Fund or the Adviser
* Relieving the Fund of other usual or incidental administrative services
provided to individual contractowners
