Exhibit 8b xii
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of January, 2008 by and
between XXXXX FARGO VARIABLE TRUST, a statutory trust formed under the laws of
Delaware (the "Trust"), XXXXX FARGO FUNDS DISTRIBUTOR, LLC, a Delaware limited
liability company (the "Distributor"), THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY, an Indiana life insurance company (the "Company"), on its own behalf
and on behalf of each separate account of the Company identified herein, and
LINCOLN FINANCIAL DISTRIBUTORS, INC. (the "Insurance Underwriter"), a
broker-dealer affiliated with the Company. This Agreement replaces the
Participation Agreement dated August 20, 2001, by and among Xxxxx Fargo Variable
Trust, The Lincoln National Life Insurance Company, and Xxxxxxxx, Inc.
WHEREAS, the Trust engages in business as an open-end, diversified
management investment company offering shares of beneficial interest (the "Trust
shares") consisting of one or more separate series ("Series") of shares, each
such Series representing an interest in a particular investment portfolio of
securities and other assets (a "Fund"), and which Series may be subdivided into
various classes ("Classes") with each such Class supporting a distinct charge
and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by insurance
companies and may also be utilized by qualified retirement plans; and
WHEREAS, an order of the Securities and Exchange Commission dated September
28, 1998, (File No. 812-11158) grants certain separate accounts supporting
variable life insurance policies, their life insurance company depositors, and
their principal underwriters, exemptions from Sections 9(a), 13(a), 15(a) and
15(b) of the Investment Company Act of 1940, and from Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary for such separate accounts to
purchase and hold Trust shares at the same time that such shares are sold to or
held by separate accounts of affiliated and unaffiliated insurance companies
supporting either variable annuity contracts or variable life insurance
policies, or both, or by qualified pension and retirement plans (the "SEC
Order"); and
WHEREAS, the Distributor has the exclusive right to distribute Trust shares
to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment vehicle
for a certain separate account(s) of the Company and the Distributor desires to
sell shares of certain Series and/or Class(es) to such separate account(s); and
WHEREAS, the Insurance Underwriter serves as the principal underwriter of
one or more classes of variable annuity contracts and/or variable life insurance
policies issued by the Company
and is party to this Agreement for the sole purpose of receiving payments from
the Distributor pursuant to Rule 12b-1 under the Investment Company Act of 1940;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor and the Company agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
1.1. "Accounts" -- the separate accounts of the Company described more
specifically in Schedules 1, 2 and 3 to this Agreement.
1.2. "Business Day"--each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code"--the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts"--the class or classes of variable annuity contracts and/or
variable life insurance policies issued by the Company and described more
specifically on Schedules 1, 2, or 3 to this Agreement.
1.5. "Contract Owners"--the owners of the Contracts, as distinguished from
all Product Owners.
1.6. "Participating Account"--a separate account investing all or a portion
of its assets in Trust shares, including the Accounts.
1.7. "Participating Insurance Company"--any insurance company with a
Participating Account, including the Company.
1.8. "Participating Plan"--any qualified retirement plan investing directly
in the Trust.
1.9. "Participating Investor"--any Participating Account, Participating
Insurance Company or Participating Plan, including the Accounts and the Company.
1.10. "Products"--variable annuity contracts and variable life insurance
policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners"--owners of Products, including Contract Owners.
1.12. "Trust Board"--the board of trustees of the Trust.
1.13. "Registration Statement"--with respect to the Trust shares or a class
of Schedule 1 Contracts, the registration statement filed with the SEC to
register such securities under the 1933
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Act, or the most recently filed amendment thereto, in either case in the form in
which it was declared or became effective. The Contracts' Registration Statement
for each class of Contracts is described more specifically on Schedule 1 to this
Agreement. The Trust's Registration Statement is filed on Form N-1A (File No.
333-74283).
1.14. "1940 Act Registration Statement"--with respect to the Trust or the
Schedule 1 Accounts, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Schedule 1 Accounts' 1940 Act Registration
Statements are described more specifically on Schedule 1 to this Agreement. The
Trust's 1940 Act Registration Statement is filed on Form N-1A (File No.
811-09255).
1.15. "Prospectus"--with respect to shares of a Series (or Class) of Trust
shares or a class of Schedule 1 Contracts, each version of the definitive
prospectus or supplement thereto filed with the SEC pursuant to Rule 497 under
the 1933 Act. Unless indicated to the contrary, the term "Prospectus" in this
Agreement shall include any private placement memorandum or other similar
disclosure document used in connection with the offer or sale of Schedule 2 or
Schedule 3 Contracts. With respect to any provision of this Agreement requiring
a party to take action in accordance with a Prospectus, such reference thereto
shall be deemed to be to the version for the applicable Series, Class or class
of Schedule 1 Contracts last so filed prior to the taking of such action. For
purposes of Article IX, the term "Prospectus" shall include any statement of
additional information incorporated therein.
1.16. "Schedule 1 Accounts"--Accounts registered under the 1940 Act as a
unit investment trust and listed on Schedule 1.
1.17. "Schedule 2 Accounts"--Accounts excluded from the definition of an
investment company as provided for by Section 3(c)(11) of the 1940 Act and
listed on Schedule 2.
1.18. "Schedule 3 Accounts"--Accounts excluded from the definition of an
investment company as provided for by Section 3(c)(1) or Section 3(c)(7) of the
1940 Act and listed on Schedule 3.
1.19. "Schedule 1 Contracts"--Contracts through which interests in Schedule
1 Accounts are offered and issued, which interests are registered as securities
under the 0000 Xxx.
1.20. "Schedule 2 Contracts"--Contracts through which interests in Schedule
2 Accounts are offered and issued to trustees of qualified pension and
profit-sharing plans and certain government plans identified in Section 3(a)(2)
of the 0000 Xxx.
1.21. "Schedule 3 Contracts"--Contracts through which interests in Schedule
3 Accounts are offered and issued to "accredited investors", as that term is
defined in Regulation D under the 1933 Act, or other investors permitted by
Regulation D.
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1.22. "Statement of Additional Information"--with respect to the shares of
the Trust or a class of Schedule 1 Contracts, each version of the definitive
statement of additional information or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Statement of
Additional Information, such reference thereto shall be deemed to be the last
version so filed prior to the taking of such action.
1.23. "SEC"--the Securities and Exchange Commission.
1.24. "NASD"--The National Association of Securities Dealers, Inc.
1.25. "1933 Act"--the Securities Exchange Act of 1933, as amended.
1.26. "1940 Act"--the Investment Company Act of 1940, as amended.
ARTICLE II
SALE OF TRUST SHARES
2.1. AVAILABILITY OF SHARES
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Company for purchase on behalf of the Account, shares of
the Series and Classes listed on Schedule 4 to this Agreement, such
purchases to be effected at net asset value in accordance with Section 2.3
of this Agreement. Such Series and Classes shall be made available to the
Company in accordance with the terms and provisions of this Agreement until
this Agreement is terminated pursuant to Article X or the Distributor
suspends or terminates the offering of shares of such Series or Classes in
the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now, or that may be established in the future,
will be made available to the Company only as the Distributor may so
provide, subject to the Distributor's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor, and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. REDEMPTIONS. The Trust shall redeem, at the Company's request, any
full or fractional Trust shares held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the
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foregoing: (a) the Company shall not redeem Trust shares attributable to
Contract Owners except in the circumstances permitted in Article X of this
Agreement, and (b) the Trust may delay redemption of Trust shares of any Series
or Class to the extent permitted by the 1940 Act, any rules, regulations or
orders thereunder, or the Prospectus for such Series or Class.
2.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as its agent for the limited
purpose of receiving purchase and redemption requests on behalf of the
Accounts for shares of those Series or Classes made available hereunder,
based on transactions in units issued by an Account (or sub-account of an
Account) under the Contracts, other transactions relating to the Contracts
or the Accounts and customary processing of such transactions. Receipt of
requests for transactions in Account (or sub-account) units, or other
transactions relating to the Contracts or the Accounts, on any Business Day
by the Company as such limited agent of the Trust prior to the Trust's
close of business as defined from time to time in the applicable Prospectus
for such Series or Class (which as of the date of execution of this
Agreement is the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. New York Time)) shall constitute receipt by the Trust
on that same Business Day, provided that the Trust receives actual and
sufficient notice of such request by 9:30 a.m. New York Time on the next
following Business Day (the "Notice Day"). Such notice may be communicated
by facsimile to the office or person designated for such notice by the
Trust.
(b) The Company shall pay for shares of each Series or Class on the
Notice Day. Payment for Series or Class shares shall be made in federal
funds transmitted to the Trust by wire to be transmitted to the Trust by
2:00 pm Eastern Time on the Notice Day (unless the Trust determines and so
advises the Company that sufficient proceeds are available from redemption
of shares of other Series or Classes effected pursuant to redemption
requests tendered by the Company on behalf of the Account). In no event may
proceeds from the redemption of shares requested pursuant to an order
received by the Company after the Trust's close of business on any Business
Day be applied to the payment for shares for which a purchase order was
received prior to the Trust's close of business on such day. If the
issuance of shares is canceled because federal funds are not timely
received, the Company shall indemnify the respective Fund and Distributor
with respect to all costs, expenses and losses relating thereto. Upon the
Trust's receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the
Trust. If federal funds are not received on time, such funds will be
invested, and Series or Class shares purchased thereby will be issued, as
soon as practicable after actual receipt of such funds but in any event not
on the same day that the purchase order was received.
(c) Payment for Series or Class shares redeemed by the Accounts or the
Company shall be made in federal funds transmitted by wire to the Company
(or any person designated in writing by the Company), such funds normally
to be transmitted by 6:00 p.m. Eastern Time on the Notice Day of the
redemption order for Series or Class
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shares (unless redemption proceeds are to be applied to the purchase of
Trust shares of other Series or Classes in accordance with Section 2.3(b)
of this Agreement), except that the Trust reserves the right to delay
payment of redemption proceeds to the extent permitted by the 1940 Act, any
rules or regulations or orders thereunder, or the applicable Prospectus.
The Trust shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds by the Company.
(d) Prior to the first purchase of any Trust shares hereunder, the
Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of federal funds to the other party
and all other designated persons pursuant to such protocols and security
procedures as the parties may agree upon. Should such information change
thereafter, the Trust and the Company, as applicable, shall notify the
other in writing of such changes, observing the same protocols and security
procedures, at least three Business Days in advance of when such change is
to take effect. The Company and the Trust shall observe customary
procedures to protect the confidentiality and security of such information.
(e) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. NET ASSET VALUE. The Trust shall inform the Company of the net asset
value per share for each Series or Class available to the Company as soon as
reasonably practicable after the net asset value per share for such Series or
Class is calculated and shall use its best efforts to provide this information
to the Company by 6:30 p.m. New York Time each Business Day. The Trust shall
calculate such net asset value in accordance with the Prospectus for such Series
or Class.
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such dividends
and distributions as are payable on any Series or Class shares in the form of
additional shares of that Series or Class. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends and capital gain distributions in cash; to be effective, such
revocation must be made in writing and received by the Trust at least ten
Business Days prior to a dividend or distribution date. The Trust shall notify
the Company promptly of the number of Series or Class shares so issued as
payment of such dividends and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Company or the
Accounts. Purchase and redemption orders for Trust shares shall be recorded in
an appropriate ledger for each Account (or sub-account).
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2.7. PRICING ERRORS. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported immediately upon
discovery to the Company. The Trust or its agent will promptly correct any such
errors and promptly recalculate transactions made under this Agreement using the
correct net asset value, dividends or capital gains consistent with the Trust's
then current net asset value error correction policy (including the policy's
definition of the term "material"). To the extent that recalculation of one or
more transactions does not make the Company's account with a Fund "whole," the
Distributor shall make such account "whole." The Distributor shall not be
responsible for payment of any costs of reprocessing transactions in units
issued by an Account (or a sub-account of an Account) under the Contracts
arising out of an error in the calculation of a Fund's net asset value,
dividends or capital gains distributions if such error is discovered and
corrected within five business days. Neither the Trust, any Fund, the
Distributor, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Company or any other
Participating Investor to the Trust or the Distributor.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall sell Trust
shares only to life insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Accounts to consider the portfolio investments of
the Trust as constituting investments of the Accounts for the purpose of
satisfying the diversification requirements of Section 817(h). The Company
hereby represents and warrants that it and each Account are Qualified Persons.
The Distributor and the Trust shall not sell Trust shares to any insurance
company or separate account unless an agreement is in effect between the
Distributor, the Trust and the insurance company containing provisions
substantially the same as those in Article VIII of this Agreement. The
Distributor and the Trust shall not sell more than 10% of any Series of Trust
shares to any Participating Plan unless an agreement is in effect between the
Distributor, the Trust and the trustee (or other fiduciary) of the Plan
containing provisions substantially the same as those in Article VIII of this
Agreement. The Distributor and the Trust shall not sell Trust shares to any
Participating Plan unless a written acknowledgment of the foregoing condition is
received from the trustee (or other fiduciary) of the Plan.
2.9 DISRUPTIVE TRADING. The Trust has adopted policies designed to prevent
frequent purchases and redemptions of any Series of Trust shares in quantities
great enough to disrupt orderly management of the corresponding Fund's
investment portfolio. These policies are disclosed in the Trust's prospectus.
From time to time, the Trust and the Distributor implement procedures reasonably
designed to enforce the Trust's disruptive trading policies and shall provide a
written description of such procedures (and revisions thereto) to the Company.
Such procedures may include the imposition of redemption fees as identified in
Article 7.5 of this Agreement. The Company agrees to develop, adopt and maintain
policies regarding transactions in Account units reasonably designed to monitor
and prevent disruptive trading policies.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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3.1. COMPANY. The 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 each Account as a segregated asset
account under applicable state law to serve as segregated investment accounts
for the Contracts; (c) each Schedule 1 Account is duly registered as a unit
investment trust under the 1940 Act and each such Account's 1940 Act
Registration Statement has been filed with the SEC in accordance with the 1940
Act; (d) the Schedule 2 Accounts and Schedule 3 Accounts each qualify for the
exclusions on which they rely for not registering as investment companies under
the 1940 Act; (e) it has registered, or will register, all Schedule 1 Contracts
offered and sold pursuant to this Agreement under the 1933 Act and has an
effective Registration Statement for that purpose; (f) it will offer and sell
the Contracts in compliance in all material respects with all applicable federal
and state laws and regulations, including, but not limited to, state insurance
law and federal securities law suitability requirements; (g) the Contracts have
been filed, qualified and/or approved for sale, as applicable, under the
insurance laws and regulations of the states in which the Contracts will be
offered; (h) sales of the Schedule 2 Contracts and Schedule 3 Contracts properly
qualify for exemptions on which the Company relies in not registering such
Contracts, or interests in the Account through which each is issued, under the
1933 Act; (i) its activities and those of its employees in promoting the sale
and distribution of the Contracts and effecting Contract Owner transactions in
Account units have not caused, and will not cause, the Company to be deemed a
broker-dealer, (j) orders it places for the purchase and redemption of Trust
shares pursuant to Article 2.3 of this Agreement are the net result of
transactions in units issued by an Account, instructions for which are received
by the Company prior to the Trust's close of business as defined from time to
time in the applicable Prospectus for such Series or Class (which as of the date
of execution of this Agreement is the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. New York Time)), (k) as long as this
Agreement remains in effect, it shall remain in continuous compliance with
Article 6.3, Article 6.4 and Article 6.5 of this Agreement and (l) it will
notify the Distributor and the Trust promptly if for any reason it is unable to
perform its obligations under this Agreement.
3.2. TRUST. The Trust represents and warrants that: (a) it is a statutory
trust duly organized and validly existing under the Delaware law; (b) it is duly
registered under the 1940 Act as an open-end management investment company and
has filed a 1940 Act Registration Statement with the SEC in accordance with the
provisions of the 1940 Act; (c) Trust shares issued pursuant to this Agreement
have been, or will be, duly authorized and validly issued in accordance with
applicable law; (d) it will offer and sell Trust shares pursuant to this
Agreement in compliance in all material respects with all applicable federal and
state laws and regulations; (e) it has registered, or will register, all Trust
shares offered and sold pursuant to this Agreement under the 1933 Act and has an
effective Registration Statement for that purpose; (f) as long as this Agreement
remains in effect, it shall remain in continuous compliance with Article 6.1 and
Article 6.2 of this Agreement; and (g) the Trust's Board, a majority of whom are
not interested persons of the Trust, has formulated and approved a plan under
Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution expenses.
3.3. DISTRIBUTOR. The Distributor represents and warrants that: (a) it is a
limited liability company duly organized and in good standing under Delaware
law; (b) it is registered as a broker-dealer under federal and applicable state
securities laws and is a member in good standing
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of the NASD; and (c) Xxxxx Fargo Funds Management, LLC ("Xxxxx Fargo"), the
Trust's investment adviser, is registered as an investment adviser under all
applicable federal and state securities laws and that Xxxxx Fargo will perform
its obligations to the Trust in accordance with any applicable state and federal
securities laws.
3.4. LEGAL AUTHORITY. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate, or
trust action, as applicable, by such party, and, when so executed and delivered,
this Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all of
its directors, trustees, officers, members and employees dealing with the money
and/or securities of the Trust are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Trust in
an amount not less than the amount required by the applicable rules of the NASD
and the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. All
parties shall make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, shall provide evidence thereof
promptly to any other party upon written request therefor, and shall notify the
other parties promptly in the event that such coverage no longer applies.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration
Statement from time to time and maintain its effectiveness as required in order
to effect the continuous offering of Trust shares in compliance with applicable
law. Notwithstanding the foregoing, the Trust shall register and qualify Trust
shares for sale in accordance with the laws of various states if, and to the
extent, deemed advisable by the Trust or the Distributor. The Trust shall amend
the Trust's 1940 Act Registration Statement as required by the 1940 Act to
maintain the Trust's registration under the 1940 Act for as long as Trust shares
are outstanding. The Trust shall comply in all material respects with the 1940
Act.
4.2. ACCOUNT FILINGS. The Company shall amend the Registration Statement
for each Schedule 1 Contract from time to time and maintain its effectiveness as
required in order to effect the continuous offering of such Contracts in
compliance with applicable law for as long as purchase payments are made under
such Contracts. Notwithstanding the foregoing, the Company: (a) may permit the
effectiveness of a Schedule 1 Contract's Registration Statement to expire if the
Company has supplied the Trust with an SEC no-action letter or opinion of
counsel satisfactory to the Trust's counsel to the effect that maintaining such
Registration Statement on a current basis is no longer required, and (b) shall
register and qualify the Contracts for sale in accordance with the securities
laws of the various states only if, and to the extent, it considers such
registration and qualification necessary. The Company shall amend each Schedule
1 Account's 1940 Act Registration Statement as required by the 1940 Act to
maintain the Account's registration under the 1940 Act for as long as the
Schedule 1 Contracts issued through that Account are in force.
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With regard to each Schedule 1 Account, the Company shall comply in all material
respects with the 1940 Act.
The Company shall be responsible for filing all Contract forms,
applications, marketing materials and other documents relating to the Contracts
and/or the Account with state insurance commissions, as required or customary,
and shall use its best efforts: (a) to obtain any and all approvals thereof,
under applicable state insurance law, of each state or other jurisdiction in
which Contracts are or may be offered for sale; and (b) to keep such approvals
in effect for so long as the Contracts are outstanding.
4.3. DELIVERY OF PROSPECTUSES BY THE COMPANY. The Company shall deliver (or
arrange for delivery of) an appropriate Prospectus to each prospective Contract
Owner describing in all material respects the terms and features of the Contract
being offered. The Company also shall deliver (or arrange for delivery of) a
Prospectus for each Fund that a prospective Contract Owner identifies on his or
her application as an intended investment option under a Contract or to which a
Schedule 1 Contract Owner allocates premium payments to or transfers Contract
value. The Company shall deliver (or arrange for delivery of) such Prospectuses
at the times required by applicable provisions of the 1933 Act and rules or
regulations thereunder.
4.4. VOTING OF TRUST SHARES. The extent required by applicable law,
whenever the Trust shall have a meeting of holders of any Series or Class of
Trust shares, the Company shall:
- solicit voting instructions from Contract Owners;
- vote Trust shares held in each Account at such shareholder
meetings in accordance with instructions received from Contract
Owners, and
- vote Trust shares held in each Account for which it has not
received timely instructions in the same proportion as it votes
the applicable Series or Class of Trust shares for which it has
received timely instructions.
Except with respect to matters as to which the Company has the right under Rule
6e-2 or Rule 6e-3(T) under the 1940 Act, to vote Trust shares without regard to
voting instructions from Contract Owners, neither the Company nor any of its
affiliates will recommend action in connection with, or oppose or interfere
with, the actions of the Trust Board to hold shareholder meetings for the
purpose of obtaining approval or disapproval from shareholders (and, indirectly,
from Contract Owners) of matters put before the shareholders.
As required by the conditions attaching to the SEC Order, the Company shall
remain responsible for ensuring that it calculates voting instructions and votes
Trust shares at shareholder meetings in a manner consistent with other
Participating Investors. The Trust will notify the Company of any changes to the
SEC Order, the conditions attaching thereto, or to any interpretation of the
Order or conditions.
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The Trust will comply with all provisions of the 1940 Act requiring voting by
shareholders, and in particular, the Trust will either provide for annual
meetings (except to the extent that the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b) of the
1940 Act. Further, the Trust will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the SEC may promulgate with
respect thereto.
4.5. STATE INSURANCE RESTRICTIONS. The Company acknowledges and agrees that
it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state insurance law applicable to any Fund or
the Trust or the Distributor, and that neither the Trust nor the Distributor
shall bear any responsibility to the Company, other Participating Insurance
Companies or any Product Owners for any such determination or the correctness of
such determination.
4.6. INTERPRETATION OF LAW. Under no circumstances will the Trust, the
Distributor or any of their affiliates (excluding Participating Investors) be
held responsible or liable in any respect for any statements or representations
made by them or their legal advisers to the Company or any Contract Owner
concerning the applicability of any federal or state laws, regulations or other
authorities to the activities contemplated by this Agreement.
4.7. DISCLOSURE. The Trust's prospectus shall state that the statement of
additional information for the Trust is available from either the Distributor or
the Trust. The Trust hereby notifies the Company that it is appropriate to
include in Contract Prospectuses, disclosure of the potential risks of mixed and
shared funding.
4.8. COPIES OF FILINGS. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities
(it being understood that this provision is not intended to require the Trust to
provide to the Company copies of any such documents prepared, filed or used by
Participating Investors other than the Company and the Account).
4.9. REGULATORY RESPONSES. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and other
rulings received by such party with respect to any filing covered by Section 4.8
of this Agreement.
4.10. COMPLAINTS AND PROCEEDINGS
(a) The Trust and/or the Distributor shall immediately notify the
Company of: (i) the issuance by any court or regulatory body of any stop
order, cease and desist order, or
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other similar order (but not including an order of a regulatory body
exempting or approving a proposed transaction or arrangement) with
respect to the Trust's Registration Statement or the Prospectus of any
Series or Class; (ii) any request by the SEC for any amendment to the
Trust's Registration Statement or the Prospectus of any Series or Class;
(iii) the initiation of any proceedings for that purpose or for any
other purposes relating to the registration or offering of the Trust
shares; or (iv) any other action or circumstances that may prevent the
lawful offer or sale of Trust shares or any Class or Series in any state
or jurisdiction, including, without limitation, any circumstance in
which (A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or
(B) such law precludes the use of such shares as an underlying
investment medium for the Contracts or the Accounts. The Trust will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Contracts' Registration Statement or the
Contracts' Prospectus; (ii) any request by the SEC for any amendment to the
Contracts' Registration Statement or Prospectus; (iii) the initiation of
any proceedings for that purpose or for any other purposes relating to the
registration or offering of the Contracts; or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
sale of Trust shares in the Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or
a Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts
or the Company.
4.11. COOPERATION. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any examination, inquiry, or investigation by any such authority
12
relating to this Agreement or the transactions contemplated hereby. However,
such access shall not extend to attorney-client privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be fully responsible as to
the Trust and the Distributor for the sale and marketing of the Contracts. The
Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. Without limiting
the generality of the foregoing, the Company shall: (1) enter into and enforce
agreements with affiliated and unaffiliated parties to, and (2) adopt and
implement written compliance policies and procedures reasonably designed to,
ensure that:
- all persons offering or selling the Contracts are duly
licensed and registered under applicable insurance and
securities laws,
- all individuals offering or selling the Contracts are duly
appointed agents of the Company and are registered
representatives of a NASD member broker-dealer,
- each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and
regulations, including without limitation the rules of the
NASD,
- persons offering or selling the Contracts disclose to
prospective Contract Owners remuneration each expects to
receive in connection with sales of the Contracts and any
conflicts of interest arising therefrom as required by
applicable law, and
- persons offering or selling the Contracts do not intend to
engage in Account unit transactions that would violate the
Company's or the Trust's disruptive trading policies.
5.2. ANTI-MONEY LAUNDERING. The Company shall comply with all applicable
laws and regulations designed to prevent money "laundering", and if required by
such laws or regulations, to share with the Trust information about individuals,
entities, organizations and countries suspected of possible terrorist or money
"laundering" activities in accordance with Section 314(b) of the USA Patriot
Act. In particular, the Company agrees that:
- as part of processing an application for a Contract, it will
verify the identity of applicants and, if an applicant is
not a natural person, will verify the identity of
prospective principal and beneficial owners submitting an
application for a Contract,
13
- as part of its ongoing compliance with the USA Patriot Act,
if required by law, it will, from time to time, reverify the
identity of Contract Owners, including the identity of
principal and beneficial owners of Contracts held by
non-natural persons,
- as part of processing an application for a Contract, it will
verify that no applicant, including prospective principal or
beneficial Contract Owners, is a "specially designated
national" or a person from an embargoed or "blocked" country
as indicated by the Office of Foreign Asset Control ("OFAC")
list of such persons,
- as part of its ongoing compliance with the USA Patriot Act,
if required by law, it will, from time to time, reverify
that no Contract Owner, including a principal or beneficial
Contract Owners, is a "specially designated national" or a
person from an embargoed or "blocked" country as indicated
by the Office of Foreign Asset Control ("OFAC") list of such
persons,
- it will ensure that money tendered to the Trust as payment
for Trust shares did not originate with a bank lacking a
physical place of business (i.e., a "shell" bank) or from a
country or territory named on the list of high-risk or
non-cooperating countries or jurisdictions published by the
Financial Action Task Force, and
- if any of the foregoing cease to be true, the Trust or its
agents, in compliance with the USA Patriot Act or Bank
Secrecy Act, may seek authority to block transactions in
Account units arising from accounts of one or more such
Contract Owners with the Company or of one or more of the
Company's accounts with the Trust.
The Trust and the Distributor shall comply with all applicable laws and
regulations designed to prevent money "laundering", and if required by such laws
or regulations, to share with the Company information about individuals,
entities, organizations and countries suspected of possible terrorist or money
"laundering" activities in accordance with Section 314(b) of the USA Patriot
Act.
5.3. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall be
fully responsible for the underwriting, issuance, service and administration of
the Contracts and for the administration of the Account, including, without
limitation, the calculation of performance information for the Contracts, the
timely payment of Contract Owner redemption requests and processing of Contract
transactions, and the maintenance of a service center, such functions to be
performed in all respects at a level commensurate with those standards
prevailing in the variable insurance industry. The Company shall provide to
Contract Owners all Trust reports, solicitations for voting instructions
including any related Trust proxy solicitation materials, and updated Trust
Prospectuses as required under the federal securities laws.
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5.4. CUSTOMER COMPLAINTS. The Company shall promptly address all complaints
from Contract Owners and resolve such complaints consistent with its procedures.
5.5. TRUST PROSPECTUSES AND REPORTS. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (a) the Trust's Prospectus
for the Series and Classes listed on Schedule 4 and any supplement thereto; (b)
any Trust proxy soliciting material for such Series or Classes; and (c) any
Trust periodic shareholder reports. The Trust and the Company may agree upon
alternate arrangements, but in all cases, the Trust reserves the right to
approve the printing of any such material. The Trust shall make available to the
Company on the Trust's website each Statement of Additional Information and
supplement thereto. The Trust shall provide the Company at least 10 days advance
written notice when any such material shall become available, provided, however,
that in the case of a supplement, the Trust shall provide the Company reasonable
notice in the circumstances, it being understood that circumstances surrounding
such supplement may not allow for advance notice. The Company may not alter any
material so provided by the Trust or the Distributor without the prior written
consent of the Distributor.
5.6. TRUST ADVERTISING MATERIAL. Neither the Company or any person directly
or indirectly authorized by the Company (including, without limitation,
underwriters, distributors, and sellers of the Contracts) shall use any piece of
advertising, sales literature or other promotional material in which the Trust,
the Distributor, Xxxxx Fargo, or a sub-adviser retained by Xxxxx Fargo to manage
a Fund, is named, except with the prior written consent of the Trust or the
Distributor. The Company shall furnish to the Trust or the Distributor each such
piece of advertising, sales literature or other promotional material at least
ten (10) days prior to its use. The Trust or the Distributor shall respond to
any request for written consent. After receiving the Trust's or Distributor's
consent to the use of any such material, no further changes may be made without
obtaining the Trust's or Distributor's consent to such changes. The Trust or
Distributor may at any time in its sole discretion revoke such written consent,
and upon notification of such revocation, the Company shall no longer use the
material subject to such revocation. The Company shall be responsible for filing
any such materials with the NASD as applicable.
5.7. CONTRACTS ADVERTISING MATERIAL. The Trust and the Distributor shall
not use any piece of advertising or sales literature or other promotional
material in which the Company, an Account or a Contract is named, except with
the prior written consent of the Company. The Trust or the Distributor shall
furnish to the Company each such piece of advertising, sales literature or other
promotional material at least ten (10) days prior to its use. The Company shall
respond to any request for written consent on a prompt and timely basis. After
receiving the Company's consent to the use of any such material, no further
changes may be made by the Trust or Distributor without obtaining the Company's
consent to such changes. The Company may at any time in its sole discretion
revoke any written consent, and upon notification of such revocation, neither
the Trust nor the Distributor shall use the material subject to such revocation.
The Trust and the Distributor shall be responsible for filing any such materials
with the NASD as applicable.
15
5.8. TRADE NAMES. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor has
been revoked. The Company shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance.
5.9. REPRESENTATIONS BY COMPANY. Except with the prior written consent of
the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in
advertisements, sales literature or other promotional material approved in
writing by the Trust or its designee in accordance with this Article V, or in
published reports or statements of the Trust in the public domain.
The Company agrees to ensure that advertisements, sales literature or other
promotional material for the Contracts prepared by the Company or its affiliates
will be consistent with every law, rule, and regulation of any regulatory agency
or self-regulatory agency that applies to the Contracts or to the sale of the
Contracts, including, but not limited to, NASD Conduct Rule 2210 and XX-0000-0,
XX-0000-0 and IM-2210-3 thereunder.
The Company has adopted and implemented, or shall adopt and implement,
written compliance procedures reasonably designed to ensure that information
concerning the Trust, the Distributor, or any of their affiliates which is
intended for use by brokers or agents selling the Contracts (i.e., information
that is not intended for distribution to Contract Owners or prospective Contract
Owners) is so used, and neither the Trust, the Distributor, nor any of their
affiliates shall be liable for any losses, damages, or expenses relating to the
improper use of such broker only materials by agents of the Company or its
affiliates who are unaffiliated with the Trust or the Distributor. The parties
hereto agree that this Section 5.9 is not intended to designate nor otherwise
imply that the Company is an underwriter or distributor of the Trust's shares.
5.10. REPRESENTATIONS BY TRUST. Except with the prior written consent of
the Company, the Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Accounts
or the Contracts other than the information or representations contained in the
appropriate Contract Registration Statement or Contract Prospectus or in
published reports of the Company or the Accounts which are in the public domain
or in advertisements, sales literature or other promotional material approved in
writing by the Company in accordance with this Article V.
The Trust agrees to ensure that advertisements, sales literature or other
promotional material for the Trust prepared by the Distributor or its affiliates
in connection with the sale of the Contracts will be consistent with every law,
rule, and Regulation of any regulatory agency or self regulatory agency that
applies to the Trust or to the sale of Trust shares, including, but not limited
to, NASD Conduct Rule 2210 and XX-0000-0, XX-0000-0 and IM-2210-3 thereunder.
16
The Trust or the Distributor shall xxxx information produced by or on
behalf of the Trust which is intended for use by brokers or agents selling the
Contracts (I.E., information that is not intended for distribution to Contract
Owners or prospective Contract Owners) "FOR BROKER USE ONLY," and neither the
Company nor any of its affiliates shall be liable for any losses, damages, or
expenses arising on account of the use by brokers of such information with third
parties in the event that is not so marked.
5.11. ADVERTISING. For purposes of this Article V, the phrase "advertising,
sales literature or other promotional material" includes, but is not limited to,
any material constituting sales literature or advertising under the NASD Conduct
rules, the 1940 Act or the 1933 Act. Such material includes, without limitation,
the following materials for prospective Contract Owners, existing Contract
Owners, wholesalers and other broker-dealers, rating or ranking agencies, or the
press:
- 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, websites, or other public media),
- sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, electronic mail, or published article),
- educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and
- registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(H). The Trust will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts in accordance with the Code and regulations thereunder.
Without limiting the scope of the foregoing, the Trust shall ensure that each
Fund will comply with Section 817(h) of the Code and Treasury Regulation 1.817-5
thereunder, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and any amendments or other
modifications to such Section and Regulation or successors thereto. The Trust
shall notify the Company immediately upon having a reasonable basis for
believing that a Fund has failed to so comply or that it might not comply in the
future.
17
6.2. SUBCHAPTER M. The Trust shall maintain the qualification of each Fund
as a regulated investment company (under Subchapter M or any successor or
similar provision), and the Trust shall notify the Company immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall ensure that at the time each Contract is
issued it is treated as a life insurance, endowment, or annuity contract under
applicable provisions of the Code, and that as long as the Accounts hold shares
of the Trust the Company shall maintain such treatment for each outstanding
Contract. The Company shall notify the Trust and the Distributor immediately
upon having any basis for believing that the Contracts will not be treated as
life insurance, endowment, or annuity contracts under applicable provisions of
the Code.
6.4 REGULATION 1.817-5(F). The Company shall ensure that no Fund fails to
remain eligible for "look-through" treatment under Treasury Regulation
1.817-5(f) by reason of a current or future failure of the Company, the Accounts
or the Contracts to comply with any applicable requirements of the Code or
Treasury Regulations. The Company shall notify the Trust and the Distributor
immediately upon having any basis for believing that the failure of the Company,
the Accounts or the Contracts to comply with any applicable requirements of the
Code or Treasury Regulations could render a Fund ineligible, or jeopardize a
Fund's eligibility, for "look-through" treatment under Treasury Regulation
1.817-5(f). In the event of such a failure, the Company shall take all necessary
steps to cure any such failure, including, if necessary, obtaining a waiver or
closing agreement with respect to such failure from the U.S. Internal Revenue
Service at the Company's expense.
6.5 MODIFIED ENDOWMENT CONTRACTS. The Company shall ensure that any
Prospectus offering a variable life insurance Contract in circumstances where it
is reasonably probable that such Contract would be a "modified endowment
contract," as that term is defined in Section 7702A of the Internal Revenue
Code, will identify such Contract as a modified endowment contract.
ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
18
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and preparation
of a "camera-ready" copy of the foregoing;
(c) preparation of all statements and notices required by any federal
or state securities law;
(d) printing and mailing of all proxy materials, shareholder reports,
prospectuses and other documents required to be provided by the Trust to
its existing shareholders, and providing sufficient copies of the same to
the Company for distribution to Contract Owners currently invested in the
Trust; provided, however, that if the Company prints copies of the Trust's
prospectuses (or portions thereof) as part of a larger document containing
prospectuses of other investment companies, the Trust shall bear the
expense only of its share of the cost of printing the document (for this
purpose, the Trust's share shall be the percentage of the total cost of the
document represented by the ratio that the number of pages of the Trust's
prospectus bears to the total number of pages);
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with sales
of Trust shares to qualified retirement plans, custodial, auditing,
transfer agent and advisory fees, fees for insurance coverage and Trustees'
fees; and
(g) any expenses permitted to be paid or assumed by the Trust pursuant
to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. COMPANY EXPENSES. Expenses incident to the Company's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus
and Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contract Prospectuses to current and
prospective Contract owners and of the Trust's Prospectuses to prospective
Contract Owners as well as compensation for Contract sales;
(d) administration of the Contracts;
(e) solicitation of voting instructions, including distribution of
Trust proxy materials to Contract Owners;
19
(f) payment of all applicable fees relating to Accounts and the
Contracts, including, without limitation, all fees due under Rule 24f-2;
(g) preparation, printing and dissemination of all statements and
notices to Contract Owners required by any federal or state insurance law
other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing materials
for the Contracts and Trust except where other arrangements are made in
advance.
7.4. OTHER EXPENSES AND PAYMENTS. The Trust and the Distributor shall pay
no fee or other compensation to the Company under this Agreement. Each party,
however, shall, in accordance with the allocation of expenses specified in this
Agreement, reimburse other parties for expenses initially paid by one party, but
allocated to another party. In addition, nothing herein shall prevent the
parties from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust, the Distributor, the
Company or the Accounts. Notwithstanding the foregoing, pursuant to the
distribution plan adopted by the Trust pursuant to Rule 12b-1 under the 1940
Act, and as contemplated by Article 3.2(g) of this Agreement, the Trust or any
Series or Class thereof shall pay the Distributor and the Distributor shall pay
the principal underwriter or distributor of one or more classes of Contracts for
activities primarily intended to result in the sale of Contracts or of Trust
shares the Accounts through which such Contracts are issued. Likewise, if the
Trust or any Series or Class adopts and implements a shareholder service plan
pursuant to Rule 12b-1 under the 1940 Act, or otherwise, then the Trust or the
appropriate Series or Class may pay the Distributor and the Distributor may pay
the principal underwriter or distributor of one or more classes of Contracts, or
the Company, for activities related to personal service and/or maintenance of
Contract Owner accounts, as permitted by such Plan.
7.5. REDEMPTION FEES. As a procedure in furtherance of its policies on
disruptive trading of Trust shares, the Trust may assess fees, to be paid by one
or more Accounts or by the Company, upon redemption of shares of one or more
Series or Classes of the Trust within certain stated time periods after such
shares have been purchased.
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. SEC ORDER. The parties to this Agreement acknowledge that the Trust
has obtained an SEC order (the "SEC Order") granting exemptions from various
provisions of the 1940 Act and the rules thereunder to Participant Accounts
supporting variable life insurance policies to the extent necessary to permit
them to hold Trust shares when Trust share also are sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons (as
defined in Section 2.8 hereof). The SEC Order is conditioned upon the Trust and
each Participating Insurance Company complying with conditions and undertakings
substantially as provided in this Article
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VIII. The Trust will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes the same conditions and
undertakings on that company as are imposed on the Company pursuant to this
Article VIII.
8.2. COMPANY MONITORING REQUIREMENTS. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. COMPANY REPORTING REQUIREMENTS. The Company shall report any conflicts
or potential conflicts to the Trust Board and will upon request, provide the
Trust Board, at least annually, with all information reasonably necessary for
the Trust Board to consider any issues raised by such existing or potential
conflicts or by the conditions and undertakings required by the Exemptive Order.
The Company also shall assist the Trust Board in carrying out its obligations
including, but not limited to: (a) informing the Trust Board whenever it
disregards Contract Owner voting instructions with respect to variable life
insurance policies, and (b) providing such other information and reports as the
Trust Board may reasonably request. The Company will carry out these obligations
with a view only to the interests of Contract Owners.
8.4. TRUST BOARD MONITORING AND DETERMINATION. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination. Minutes
of the meetings of the Trust Board, or other appropriate records of the Trust,
shall record all reports received by the Board regarding such conflicts and all
actions taken by the Board in response.
8.5. UNDERTAKING TO RESOLVE CONFLICT. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund) or submitting the question of whether
such withdrawal should be implemented to a vote of all affected Contract Owners,
and, as appropriate, segregating the assets supporting the Contracts of any
group of such owners that votes in favor of such withdrawal, or offering to such
owners the
21
option of making such a change. The Company will carry out the responsibility to
take the foregoing action with a view only to the interests of Contract Owners.
8.6. WITHDRAWAL. If a material irreconcilable conflict arises because of
the Company's decision to disregard the voting instructions of Contract Owners
of variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, if Trust Board so requests, the Company will redeem the shares of the
Trust to which the disregarded voting instructions relate and terminate this
Agreement with respect to the Account through which such Contracts were issued.
No charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. EXPENSES ASSOCIATED WITH REMEDIAL ACTION. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article VIII 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 Contract Owners materially adversely affected by the
irreconcilable material conflict.
8.8. SUCCESSOR RULES. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the SEC Order, then (a) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.7 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, 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), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts themselves (or any
amendment or supplement to any of the foregoing), or arise out of or
22
are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission was
made in reliance upon and in conformity with information furnished in
writing to the Company by the Trust or the Distributor for use in the
Contracts Registration Statement, Contracts Prospectus or in the Contracts
or sales literature or promotional material for the Contracts (or any
amendment or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, if such statement or omission was
made in reliance upon and in conformity with information furnished to the
Trust or Distributor in writing by or on behalf of the Company; or
(c) arise out of or are based upon statements or representations by or
on behalf of the Company (other than statements or representations
contained in the Trust Registration Statement, Trust Prospectus, or
advertisements, sales literature or other promotional material of the Trust
not prepared or supplied by the Company or persons under its control) or
any wrongful conduct of, or violation of federal or state law by, the
Company or persons under its control or subject to its authorization,
including without limitation, any broker-dealers or agents authorized to
sell the Contracts, with respect to the sale, marketing or distribution of
the Contracts or Trust shares, including, without limitation, any
impermissible use of broker-only material, unsuitable or improper sales of
the Contracts or unauthorized representations about the Contracts or the
Trust; or
(d) arise as a result of any failure by the Company or persons under
its control (or subject to its authorization) to provide services, furnish
materials or make payments as required under this Agreement; or
(e) arise out of or result from any material breach by the Company or
persons under its control (or subject to its authorization) of this
Agreement; or
(f) arise out of or result from any breach of any representation or
warranty made by the Company in this Agreement hereof, any failure to
transmit a request for redemption or purchase of Trust shares or payment
therefor on a timely basis in accordance with the procedures set forth in
Article II, or any failure to deliver a Fund's prospectus as required by
Article 4.3 hereunder.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or
23
liability is caused by the wilful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
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), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, expenses or liabilities are related to the
operations of the Trust and:
(a) arise out of or are based upon any failure by the Trust to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise,
to comply with the diversification requirements and procedures related
thereto as specified in Article VI of this Agreement); or
(b) arise out of or result from any material breach of any
representation or warranty made by the Trust under this Agreement or arise
out of or result from any other material breach of this Agreement by the
Trust.
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor hereby agrees to,
and shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act and any officer, director, employee or agent of the
foregoing, 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), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Trust Registration
Statement, any Prospectus for Series or Classes or sales literature or
other promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
24
stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission or
alleged statement or omission was made in reliance upon and in conformity
with information furnished in writing by the Company to the Trust or
Distributor for use in the Trust Registration Statement, Trust Prospectus
or sales literature or promotional material for the Trust (or any amendment
or supplement to any of the foregoing) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the foregoing), 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 in light of the circumstances in which they were made, if such
statement or omission or alleged statement or omission was made in reliance
upon information furnished in writing by the Distributor to the Company; or
(c) arise out of or are based upon statements or representations by or
on behalf of the Distributor (other than statements or representations
contained in the Contracts or in the Contract or Trust Registration
Statement, Contract or Trust Prospectus, or advertisements, sales
literature or other promotional material of the Contracts or Trust not
prepared or supplied by the Distributor or persons under its control) or
wrongful conduct of the Distributor or persons under its control with
respect to the sale of Trust shares or the Contracts; or
(d) arise as a result of any failure by the Distributor or persons
under its control to provide services, furnish materials or make payments
as required under the terms of this Agreement; or
(e) arise out of or result from any material breach by the Distributor
or persons under its control of this Agreement; or
(f) arise out of or result from any breach of any representation or
warranty made by the Distributor in this Agreement hereof.
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
25
9.4. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that 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. The indemnifying party, upon the request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. 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: (a) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, or (b) 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, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. RELATIONSHIP OF PARTIES. The Company is an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of Trust shares, as those terms variously are
used in the 1940 Act, the 1933 Act, and rules and regulations promulgated
thereunder. Likewise, the Company is not a "transfer agent" of the Trust as that
term is used in the 1934 Act and rules and regulations thereunder.
Notwithstanding the foregoing, the Company and the Trust agree that the Company
is a "service provider" to the Trust as that term is defined in Rule 38a-1 under
the 1940 Act and the Company agrees to cooperate with the Trust in the Trust's
efforts to comply with Rule 38a-1, including, but not limited to:
- adopting and implementing written compliance policies and
procedures reasonably designed to prevent the Company violating
the federal securities
26
laws (as defined in the Rule) in its provision of services to the
Trust pursuant to this Agreement, and
- providing copies of such written compliance policies and
procedures to the Trust's chief compliance officer on an annual
basis.
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is terminated
pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made available
hereunder on the same basis as other unaffiliated mutual funds available as
investment options under the Contracts;
(b) the Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action to operate
the Account as a management investment company under the 1940 Act;
(c) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit, induce
or encourage Contract Owners to change or modify the Trust to change the
Trust's distributor or investment adviser;
(d) the Company shall not substitute shares of another investment
company for shares one or more Funds without providing written notice to
the Distributor at least 90 days in advance of effecting any such
substitution; and
(e) the Company shall not withdraw the Account's investment in the
Trust or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine transactions in Account units.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate until
(a) the Trust is dissolved, liquidated, or merged into another entity, or (b) as
to any Fund that has been made available hereunder, no Accounts continue to
invest in that Fund and the Company has confirmed in writing to the Distributor
that it no longer intends to invest in such Fund. However, certain obligations
of, or restrictions on, the parties to this Agreement may terminate as provided
in Sections 10.4 through 10.6 and the Company may be required to redeem Trust
shares pursuant to Section 10.7 or in the circumstances contemplated by Article
VIII. Article IX and Sections 5.8, and 10.8 shall survive any termination of
this Agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the Trust
and the Distributor to make Trust shares available to the Company for purchase
pursuant to Article II of
27
this Agreement shall terminate at the option of the Distributor upon written
notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that institution of such proceedings
is being considered by the NASD, the SEC, the insurance commission of any
state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of
the Account, the administration of the Contracts or the purchase of Trust
shares, or an expected or anticipated ruling, judgment or outcome which
would, in the Distributor's reasonable judgment exercised in good faith,
materially impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such termination
effective upon 30 days prior written notice;
(b) in the event that any Schedule 1 Contract is not registered or in
the event any of the Contracts are not otherwise issued or sold in
accordance with applicable federal and/or state law, such termination
effective immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised
in good faith, that either (1) the Company shall have suffered a material
adverse change in its business or financial condition or (2) the Company
shall have been the subject of material adverse publicity which is likely
to have a material adverse impact upon the business and operations of
either the Trust or the Distributor, such termination effective upon 30
days prior written notice;
(d) if the Distributor suspends or terminates the offering of Trust
shares of any Series or Class to all Participating Investors or only
designated Participating Investors, if such action is required by law or by
regulatory authorities having jurisdiction, SUCH NOTICE EFFECTIVE
IMMEDIATELY UPON RECEIPT OF WRITTEN NOTICE, or if, in the sole discretion
of the Distributor acting in good faith, suspension or termination is
necessary in the best interests of the shareholders of any Series or Class
(it being understood that "shareholders" for this purpose shall mean
Product Owners), SUCH NOTICE EFFECTIVE UPON 15 DAYS WRITTEN NOTICE, it
being understood that a lack of Participating Investor interest in a Series
or Class may be grounds for a suspension or termination as to such Series
or Class and that a suspension or termination shall apply only to the
specified Series or Class; but if a lack of interest is the reason for the
suspension or termination, then the Distributor will provide at least 30
days written notice.
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement) unless
the Trust consents thereto, such termination effective upon 30 days prior
written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to
the Company, such termination effective upon expiration of such 10-day
period; or
28
(g) upon the determination of the Trust s Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.3(a), upon termination of
the Agreement pursuant to Section 10.3(b), or upon notice from the Company
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts.
10.5. TERMINATION BY THE COMPANY OF INVESTMENT IN A FUND. The Company may
elect to cease investing in a Fund, promoting a Fund as an investment option
under the Contracts, or withdraw its investment or the Account's investment in a
Fund, subject to compliance with applicable law, upon 90 days written notice to
the Trust, or upon written notice to the Trust within 15 days of the occurrence
of any of the following events (unless provided otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that it
will not cause such Fund to comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to agree
upon any reasonable alternative accommodations; or
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(d)), and the Distributor, after receiving written notice from
the Company of such non-availability, fails to make available, within 10
days after receipt of such notice, a sufficient number of shares in such
Fund or an alternate Fund to meet the requirements of the Contracts; or
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder and
the Trust, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure; or
(d) if such Fund ceases to qualify as a regulated investment company
under Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Company reasonably believes that the Fund may
fail to so qualify, and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct such
failure within 30 days.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
29
10.6. TERMINATION BY THE COMPANY OF INVESTMENT IN ALL FUNDS. The Company
may elect to cease investing in all Series or Classes of the Trust made
available hereunder, promoting the Trust as an investment option under the
Contracts, or withdraw its investment or an Account's investment in the Trust,
subject to compliance with applicable law, upon 90 days written notice to the
Trust, or upon written notice to the Trust within 15 days of the occurrence of
any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body; or
(b) if the Trust or Distributor is in material breach of a provision
of this Agreement, which breach has not been cured to the satisfaction of
the Company within 10 days after written notice of such breach has been
delivered to the Trust or the Distributor, as the case may be.
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the SEC Order described in
Article VIII or any conditions or undertakings set forth or referenced therein,
or other SEC rule, regulation or order that may be adopted after the date
hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the event
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.4(d) of this Agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.8. CONFIDENTIALITY. The Company will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
30
ARTICLE XI
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by each party acknowledging in writing its
approval of a copy of the revised schedule. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust or the Distributor:
National Accounts
Xxxxx Fargo Advantage Funds
000 Xxxxxx Xxxxxx, 00xx Xxxxx
MAC A0103-123
Xxx Xxxxxxxxx, XX 00000
If to the Company:
Funds Management
The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the conflicts of laws provisions thereof,
subject to the following rules:
31
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the rules,
regulations and rulings thereunder, including the SEC Order and such other
exemptions from those statutes, rules, and regulations as the SEC may
grant, and the terms hereof shall be limited, interpreted and construed in
accordance therewith.
(b) 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.
(c) 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.
(d) 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.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Certificate of Trust of the Trust
is on file with the Secretary of State of the State of Delaware, and notice is
hereby given that this Agreement is executed on behalf of the Trustees of the
Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
32
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
XXXXX FARGO VARIABLE TRUST
(Trust)
Date: 2/7/08 By: /s/ Xxxxxx Xxxx
--------------------------------------
Name: Xxxxxx Xxxx
Title: Assistant Secretary
XXXXX FARGO FUNDS DISTRIBUTOR, LLC
(Distributor)
Date: 2/13/08 By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Company)
Date: 1/22/08 By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
LINCOLN FINANCIAL DISTRIBUTORS, INC.
(Insurance Underwriter)
Date: 1/18/08 By: /s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
33
SCHEDULE 1
Registered Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
DATE ESTABLISHED BY SEC 1940 ACT TYPE OF PRODUCT
BOARD OF DIRECTORS OF REGISTRATION SUPPORTED BY
NAME OF ACCOUNT THE COMPANY NUMBER ACCOUNT
--------------------------------- --------------------- ------------ ----------------
Lincoln National Variable Annuity June 3, 1981 811-03214 Variable Annuity
Account C
Lincoln Life Variable Annuity January 28, 2000 811-10231 Variable Annuity
Account W
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
SEC 1933 ACT CONTRACT FORM
MARKETING NAME REGISTRATION NUMBER NUMBER ANNUITY OR LIFE
---------------------------------- -------------------- ------------- ---------------
MultiFund 5 333-68842 Annuity
Xxxxx Fargo New Directions Core 333-52572 Annuity
Xxxxx Fargo New Directions Access 333-52568 Annuity
Xxxxx Faro New Directions Access 4 333-64208 Annuity
S-1
SCHEDULE 2
Qualified Plan Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
DATE ESTABLISHED BY BOARD OF TYPE OF PRODUCT SUPPORTED BY
NAME OF ACCOUNT DIRECTORS OF THE COMPANY ACCOUNT
--------------- ---------------------------- ----------------------------
N/A
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 2
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
MARKETING NAME CONTRACT FORM NUMBER ANNUITY OR LIFE
-------------- -------------------- ---------------
N/A
S-2
SCHEDULE 3
Private Placement Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
DATE ESTABLISHED BY BOARD OF TYPE OF PRODUCT SUPPORTED BY
NAME OF ACCOUNT DIRECTORS OF THE COMPANY ACCOUNT
--------------- ---------------------------- ----------------------------
N/A
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 3
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
MARKETING NAME CONTRACT FORM NUMBER ANNUITY OR LIFE
-------------- -------------------- ---------------
N/A
S-3
SCHEDULE 4
Trust Share Series and Classes
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
CONTRACT MARKETING NAME FUND/SERIES -- SHARE CLASSES
----------------------------------- --------------------------------------
MultiFund 5 SERVICE CLASS
Advantage VT Equity Income Fund
Advantage VT Large Company Growth Fund
Advantage VT Small Cap Growth Fund
Xxxxx Fargo New Directions Core SERVICE CLASS
Xxxxx Fargo New Directions Access Advantage VT Asset Allocation Fund
Xxxxx Fargo New Directions Access 4 Advantage VT Equity Income Fund
Advantage VT Equity Value Fund
Advantage VT Growth Fund
Advantage VT International Equity Fund
Advantage VT Large Company Growth Fund
Advantage VT Money Market Fund
Advantage VT Small Cap Growth Fund
Advantage VT Total Return Xxxx Xxxx
X-0
