September 1, 1998
Mr. Xxxxx Xxxxxxx
President - Financial SBU
Xxxxxx Investor Life Insurance Company
0 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000-0000
Dear Xx. Xxxxxxx:
We are please that Xxxxxx Investors Life Insurance Company (the "Company") has
entered into an agreement dated September 1, 1998, with Evergreen Variable
Annuity Trust (the "Trust") providing for the purchase by the Company of shares
of the Trust for certain of the Company's separate accounts to fund benefits for
Variable Insurance Products (the "Participation Agreement"). This letter sets
forth the agreement between the Company and Evergreen Asset Management Corp.,
First Union National Bank of North Carolina and Keystone Investment Management
Company (collectively the "Advisers" and individally the "Adviser") concerning
certain administrative services the Company will provide the Trust and its
Portfolios.
1. Adminstrative Services and Expenses. Administrative services for the
separate accounts of the Company (the "Accounts") which invest in one or
more portfolios (collectively, the "Portfolios") of the Trust pursuant to
the Participation Agreement, and for purchaserso of certain Variable
Insurance Products issued through the Accounts, are the responsibility of
the Company. Administrative services for the Portfolios, in which the
Account invests, and for purchasers of shares of the Porfolios, are the
responsibility of the Trust. Notwithstanding the foregoing, however, the
Company will provide to the Trust and its Portfolios certain administrative
services, as set forth below and which may be amended from time to time,
including, but not limited to, the following:
a) Aggregate allocation, transfer, and liquidation orders of the Account.
b) Print and mail to owners of Variable Insurance Products copies of the
Portfolios' prospectuses and other materials that the Trust is
required by law or otherwise to provide to its shareholders, but that
the Company is not otherwise required to provide to owners of Variable
Insurance Products.
c) Provide financial consultants with advice with respect to inquiries
related to the Portfolios (not including information related to
sales).
d) Provided such other administrative support for the Trust as mutually
agreed to by the Company and the Advisers to the extent permitted or
requiredunder applicable statutes, and relieve the Trust of other
usual or incidental adminsitrative services provided o individual
owners of Variable Insurance Products.
2. Servie fee. In consideration of the anticiapated administrative expense
savings resulting to the Trust from the Company's services, the Advisers
agree to pay the Company at the end of each calendar month a fee ("Service
Fee") which will accrue daily at an annual rate of 25 basis points (.25%)
of the first $50,000,000 of the aggregate net asset value of all of the
issued and outstanding shares of the Portfolios held in the subaccounts of
the Accounts, reduced to 20 basis points (.20%) per annum of such aggregate
net asset value in excess of $50,000,000 up to $100,000,000 and further
reduced to eighteen basis points (.18%) of such aggreate net asset value in
excess of $100,000,000.
3. Nature of Payments. The parties to this letter agreement recognize and
agree that the Advisers' payments to the Company relate to administrative
services only and do not constitute payment in any mannder for
adminstrative seervices provided by the Company to the Account or to the
Variable Insurance Products, for investment advisory services or for costs
of distribution of Variable Insurance Products or of shares of the Portfo-
lios and that these payments are not otherwise related to investment advi-
sory or distribution services or expenses.
4. Representations and Warranties:
a) Each Adviser represents and ewarrants that in the event the Trustees
of the Trust approve the payment of all or any portion of the Service
Fee by the Trust, the Trust will calculate in the same manner the
Service Fee to all insurance companies that have entered into Service
Fee arrangements with the Adviser and/or the Trust (the "Participating
Insurance Companies").
b) The Company represents and warrants that: (1) it and its employees and
agents meet the requirements of applicable law, including but not
limited to federal and state securities law and state law, for the
performance of services contemplated herein; and (2) it will not
purchase Trust shares of the Portfolios with Account assets derived
from tax-qualified retirement pland except indirectly, through
Variable Insurance Prodicts purchsed in connection with such plans and
that the Service Fee does not include any payment to the Company that
is prohibited under the Employee Retirement Income Securities Act of
1974 ("ERISA") with respect to any assets of an owner of a Variable
Insurance Product invested in a Varibale Insurance Product using the
Portfolios as investment vehicles.
c) The Company represents, warrants and agrees that: (1) the payment of
the Service Fee by the Advisers is designed to reimburse the Company
for providing administrative services to the Trust that the Trust
would customarily pay and does not represent reimbursement to the
Company for providing administrative services to the Varibale
Insurance Products or Accounts; (2) no portion of the Service Fee will
be rebated by the Company to any owners of Variable Insurance
Products; and (3) if the Company or the Adviser, with advice of
counsel, determines that it is required or appropriate under
applicable law, the Company will disclose to each owner of a Variable
Insurance Product the existence of the Service Fee received by the
Company pursuant to this letter agreement and will disclose the amount
of the Service Fee, if any, that is paid by the Trust.
5. Indemnification.
a) The Company agrees to indemnify and hold xxxxxxx the Advisers and
their directors, officers, and employees from any and all loss,
liability and expense resulting from any gross negligence or willful
wrongful act of the Company in performing its services under this
letter agreement, from the inaccuracy or breach of any representation
made in this letter agreement, or from a breach of a material
provision of this letter agreement, except to the extent such loss,
liability or expence is the result of the Advisers' willful
misfeasance, bad faith or gross negligence in the performance of
their duties.
b) The Advisers agree to indemnify and hold harmless the Company and its
directos, officers, agents and employees from any and all loss,
liability and expense resulting from any gross negliegence or willfil
wrongful act of the Advisers in performing their services under this
letter agreement, from the inaccuracy or breach of any provision of
this letter agreement, except to the extent such loss, liability or
expense is the result of the Company's willfull misfeasance, bad faith
or gross negligence in the performance of its duties. The Advisers
also agree to indemnify and hold harmless the Company and its
directors, officers, agents, and employees from any and all loss,
liability and expense resulting from the Trust's failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification requirements set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
6. Termination.
a) Any party may terminate this letter agreement, without penalty, on
sixty (60) days' written notice to the other parties.
b) This letter agreement will terminate at the option of any party in the
event of the termination of the Participation Agreemnet.
c) This letter agreement will terminate immediately upon the
determination of any party, with the advice of counsel, that the
payment of the Service Fee is in conflict with applicable law.
7. Amendment. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
8. Confidentiality. The terms of this letter agreement will be treated as
confidential and will not be disclosed to the public or any outside party
except with each party's prior written consent, as required by law or
judicial process or as process or as provided in paragraph 4c herein.
9. Assignement. This letter agreement may not be assigned (as that term is
defined in the Investment Company Act of 1940) by any party without the
prior written approval of the other parties, which approval will not be
unreasonably withheld, except that the Advisers may assign their
bligations under this letter agreement, including the payment of all or any
portion of the Service Fee, to the Trust or to an entity under common
control with the Advisers or that serves as a successor investment adviser
to the Trust, in each case upon thirty (30)days' written notice to the
Company.
10. Governing Law. This letter agreement will be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Illinois.
11. Counterparts. This letter agreement 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.
If you agreem to the foregoing, please sign the enclosed copy of this letter and
return it to Xxxxxxx X. Xxxxxx, The Evergreen Fund, 000 Xxxxxxxx Xxxxxx, Xxxxxx,
XX 00000.
Sincerely,
Evergreen Asset Management Corp. Keystone Investment Management Company
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ -------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: President Title: President
AGREED
First Union National Bank Xxxxxx Investors Life Insurance
of North Carolina Company
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx, Xx.
------------------------ ---------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxx X. Xxxxxxx, Xx.
Title: Senior Vice President Title: Marketing Officer
EVERGREEN VARIABLE ANNUITY TRUST
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 1st day of September, 1998 between EVERGREEN
VARIABLE ANNUITY TRUST, an open-end management investment company organized as a
Delaware business trust (the "Trust"), and Xxxxxx Investors Life Insurance
Company, a life insurance company organized under the laws of the State of
Illinois (the "Company"), on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A, as may be amended from
time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and the offer and sale of its shares are registered under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission granting Participating Insurance Companies and their separate account
exemptions from the provisions of section 9(a), 13(a), 15(a) and 15(b) of the
1940 Act and rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Trust to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
nonaffiliated life insurance companies and certain qualified pension and
retirement plans (the "Shared Trust Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register certain Accounts as
unit investment trusts under the 1940 Act;
WHEREAS, the Company relies on certain provisions of the 1940 and 1933 Acts
that exempt certain Accounts and Contracts from the registration requirements of
the Acts in connection with the sale of Contracts under certain private
placement offerings; and
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1. The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary and in the best interest of the shareholders of such
Portfolio.
1.2. The Trust will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3. For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that (i) such orders are received by the Company in good order prior to
the close of the regular trading session of the New York Stock Exchange and (ii)
the Trust receives notice of such orders by 10:00 a.m. New York time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.4. Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for on the same Business Day that the Trust receives
notice of the order. Payments shall be made in federal funds transmitted by
wire.
1.5. The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on shares of any Portfolio of
the Trust. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Trust shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.6. The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 7:00 p.m. New York time.
1.7. The Trust agrees that it shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Shared Trust Exemptive
Order. No shares of any Portfolio will be sold directly to the general public.
The Company agrees that the trust shares will be used only for the purposes of
funding the Contracts and Accounts listed in Schedule A, as amended from time to
time.
1.8. The Trust agrees that all participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those contained in Section 2.9 and Article IV of
this Agreement.
ARTICLE II
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1. and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
2.2. The Trust will bear or cause to be borne the printing costs (or
duplicating costs with respect to the statement of additional information) and
mailing costs associated with the delivery of the Trust's current prospectus,
statement of additional information, annual report, semi-annual report, Trust
sponsored proxy material or other shareholder communications, including any
amendments or supplements to any of the foregoing.
2.3. The Company will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the Accounts' current prospectuses and statements of
additional information, private placement memorandums, annual and semi-annual
reports, Contracts, Contract applications, Account sponsored proxy materials and
voting solicitation instructions.
The Company agrees to provide the Trust or its designee with such information as
may be resaonably requested by the Trust to asure that the Trust's expenses do
not include the cost of printing any prospectuses or statements of additional
information other than those actually distributed to existing owners of the
Contracts.
2.4. The Company agrees and acknowledges Evergreen Asset Management Corp.
("Evergreen Asset"), is the sole owner of the name and mark "Evergreen" and that
all use of any designation comprised in whole or in part of Evergreen (an
"Evergreen Mark") under this Agreement shall inure to the benefit of Evergreen
Asset. Except as provided in Section 2.5., the Company shall not use any
Evergreen Mark on its own behalf or on behalf of the Accounts or Contracts in
any registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
Evergreen Asset. Upon termination of this Agreement for any reason, the Company
shall cease all use of any Evergreen Asset Mark(s) as soon as reasonably
practicable.
2.5. The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or an investment adviser to the Trust is named
prior to the filing of such document with the Securities and Exchange
Commission. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material including private placement memorandums, in which the Trust or its
investment adviser is named, at least ten Business Days prior to its use. No
such material shall be used if the Trust or its designee reasonably objects to
such use within ten Business Days after receipt of such material.
2.6. The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
advisers in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement and
prospectus may be amended or supplemented from time to time), annual and
semi-annual reports of the Trust, Trust-sponsored proxy statements, or in sales
literature or other promotional material approved by the Trust or its designee,
except as required by legal process or regulatory authorities or with the
written permission of the Trust or its designee.
2.7. The Trust shall furnish or cause to be furnished, to the Company or
its designee, a copy of each Trust prospectus or statement of additional
information in which the Company or the Accounts are named prior to the filing
of such document with the Securities and Exchange Commission. The Trust shall
furnish, or shall cause to be furnished, to the Company or its designee, each
piece of sales literature or other promotional material in which the Company or
the Accounts are named, at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within ten Business Days after receipt of such material.
2.8. The Trust shall not give any information or make any representations
or statements on behalf of the Company or concerning the Company, the Accounts
or the Contracts other than information or representations contained in and
accurately derived from the registration statement, prospectus or private
placement memorandum for the Contracts (as such registration statement,
prospectus or private placement memorandum may be amended or supplemented from
time to time), or in materials approved by the Company for distribution
including sales literature or other promotional materials, except as required by
legal process or regulatory authorities or with the written permission of the
Company.
2.9. With respect to Contracts sold under private placement offerings, the
Company shall vote shares held by it inaccordance with Section 3.4 of this
Agreement. Other wise , so long as, and to the extent that the Securities and
Exchange Commission interprets the 1940 Act to require pass-through voting
privileges for variable policy owners, the Company will provide pass-through
voting privileges to owners of policies whose cash values are invested, through
the Accounts, in shares of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculated voting
privileges in the manner established by the Trust. With respect to each Account,
the Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policy owners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
ARTICLE III
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Illinois and
that it has legally and validly established each Account as a segregated asset
account under such law on the dates set forth in Schedule A.
3.2. The Company represents and warrants that, unless an exemption from
registration is available, it has registered or, prior to any issuance or sale
of the Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
3.3. The Company represents and warrants that, unless an exemption from
registration is available, the Contracts will be registered under the 1933 Act
to the extent required by the 1933 Act prior to any issuance or sale of the
Contracts; the Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws; and the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements.
3.4. With respect to the Accounts which are exempt from registration under
the 1940 Act in reliance upon Sections 3(c)(1) or 3(c)(7) thereof, the Company
represents and warrants that:
(a) The principal underwritrer for each such unregistered Account and any
subaccount thereof is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended;
(b) Trust Shares are and will continue to be the only investment
securities held by the corresponding Account subaccount(s); and
(c) with regard to each Portfolio, the Company, on behalf of the
corresponding Account subaccount, will;
(1) vote such shares held by it in the same portion as the vote of
all other holders of such shares; and
(2) refrain from substituting shares of another security for such
shares unless the Securities and Exchange Commission has approved
such substitution in the manner provided in Section 26 of the
1940 Act.
3.5. The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.6. The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust is registered under the 1940 Act prior to any issuance or sale of such
shares. The Trust shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.7. The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder. The Trust shall provide the Company, or cause to be
provided, a letter from the appropriate office within ten Business Days
following the end of each calendar quarter of the Trust, certifying the Trust's
compliance during that calendar quarter with the diversification requirements
and qualification as a regulated investment company, including a detailed
listing of individual securities held by each Portfolio of the Trust. In the
event of a breach of this Section 3.6 by the Trust, it will take all reasonable
steps (a) to immediately notify the Company of such breach and (b) to adequately
diversify the Trust so as to achieve compliance within the grace period afforded
by Regulation 817-5.
ARTICLE IV
Potential Conflicts
4.1. The parties acknowledge that the Trust's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material irreconcilable
conflict between the interests of the contract owners of all Participating
Insurance Companies. An irreconcilable material conflict may arise for a variety
of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Trust Exemptive
Order by providing the Trustees with all information reasonably necessary for
the Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3. If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that an irreconcilable material conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a difference investment medium, including (but
not limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4. If an irreconcilable material conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing irreconcilable material conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust.
4.5. If any irreconcilable material conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it had determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested Trustees. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Trust.
4.6. For purposes of Section 4.3. through 4.6. of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if any offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such irreconcilable material conflict as
determined by a majority of the disinterested Trustees.
4.7. The Company shall at least annually submit to the trustees such
reports, materials or data as the Trustees may reasonably request so that the
trustees may fully carry out the duties imposed upon them by the Shared Trust
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(l) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Trust Exemptive Order) on terms and conditions
materially different from those contained in the Shared Trust Exemptive Order,
then the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(l),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1. The Company agrees to indemnify and hold harmless the Trust and each
of its Trustees, officers, employees and agents and each person, if any, who
controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a registration statement,
prospectus or private placement memorandum for the Contracts or in the Contracts
themselves or in sales literature generated or approved by the Company on behalf
of the Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this Article
V), 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, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately derived from
written information furnished to the Company by or on behalf of the Trust for
use in Company Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from Trust
Documents as defined in Section 5.2.(a)) or wrongful conduct of the Company or
persons under its control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in Section
5.2(a) or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance upon and
accurately derived from written information furnished to the Trust by or on
behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide the
services or furnish the materials required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or result
from any other material breach of this Agreement by the Company.
5.2. The Trust agrees to indemnify and hold harmless the Company and each
of its directors, officers, employees and agents and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration statement or
prospectus for the Trust (or any amendment or supplement thereto),
(collectively, "Trust Documents" for the purposes of this Article V), 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, provided, that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived from written
information furnished to the Trust by or on behalf of the Company for use in
Trust Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from Company
Documents) or wrongful conduct of the Trust or persons under its control, with
respect to the sale or acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived form written
information furnished to the Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust to provide the
services or furnish the materials required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement or arise out of or result
from any other material breach of this Agreement by the Trust.
5.3. Neither the Company nor the Trust shall be liable under the
indemnification provisions of Section 5.1. or 5.2., as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
5.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions of Section 5.1. or 5.2., as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim which shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim or shall not relieve that party from any liability which it may have to
the Indemnified Party int he absence of Sections 5.1. and 5.2.
5.5. In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI
Termination
6.1. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason by six (6) months' advance
written notice delivered to the other party; or
(b) termination by the Company by written notice to the Trust with respect
to any Portfolio based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the requirements of the Contracts
or not consistent with the Company's obligations to Contract owners; or
(c) termination by the Company by written notice to the Trust with respect
to any Portfolio in the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Trust with respect
to any Portfolio in the event that such Portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or any independent
or resulting failure under Section 817 of the Code, or under any successor or
similar provision of either, or if the Company reasonably believes that the
Trust may fail to so qualify; or
(e) termination by the Trust by written notice to the Company if the Trust
shall determine, in its sole judgment exercised in good faith, that the Company
and/or its affiliated companies has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity, but no such
termination shall be effective under this subsection (e) until the Company has
been afforded a reasonable opportunity to respond to a statement by the Trust
concerning the reason for notice of termination hereunder; or
(f) termination by the Company by written notice to the Trust if the
Company shall determine, in its sole judgment exercised in good faith, that
either the Trust or an investment adviser to the Trust has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material adverse
publicity; but no such termination shall be effective under this subsection (f)
until the Trust has been afforded a reasonable opportunity to respond to a
statement by the Company concerning the reason for notice of termination
hereunder.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement, provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Legal Department
If to the Company:
Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
ARTICLE VIII
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Illinois.
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising directly or indirectly under this Agreement, of
any and every nature whatsoever, shall be satisfied solely out of the assets of
the Trust and that no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
XXXXXX INVESTORS LIFE INSURANCE COMPANY EVERGREEN VARIABLE ANNUITY TRUST
By: /s/ Xxxx X. Xxxxxxx By: /s/ X'Xxx Xxxxx
Name: Xxxx X. Xxxxxxx Name: X'Xxx Xxxxx
Title: Marketing Officer Title: Secretary
A-1
SCHEDULE A
Separate Accounts, Contracts and Associated Portfolios
Name of Separate Accounts and Date
Established by Board of Directors
1. KILICO Variable Separaate Account - 2
(KV SA-2) (est.06/17/97)
2 KILICO Variable Series III Separate Account (Series III SA) (est 01/30/97)
3. KILICO Variable Series VI Separate Account
(Series VI SA) (est. 01/30/98)
Contracts Funded by Separate Account
1. First Fondation VUL (KV SA-2)
2. Series IV VUL (Individual) (Series III SA)
3. Series VII VUL (Survivorship) (Series VI SA)
Designated Portfolios
1. First Foundation VUL
Evergreen VA Fund
Evergreen VA Growth and Income Fund Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund Evergreen VA Strategic Income Fund
Evergreen VA Aggressive Growth Fund Evergreen VA Small Cap Equity
Income Fund Evergreen VA International Growth Fund
2. Series IV VUL Evergreen VA Fund
Evergreen VA Growth and Income Fund Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund Evergreen VA Strategic Income Fund
Evergreen VA Aggressive Growth Fund Evergreen VA Small Cap Equity
Income Fund
3. Series VII VUL Evergreen VA Fund
Evergreen VA Growth and Income Fund Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund Evergreen VA Strategic Income Fund
Evergreen VA Aggressive Growth Fund Evergreen VA Small Cap Equity
Income Fund
