FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 28th day of November, 2001, between
Modern Woodmen of America ("the Society"), a fraternal benefit society organized
under the laws of the State of Illinois, and X.X. Xxxxxx Series Trust II
("Fund"), a business trust organized under the laws of Delaware, with respect to
the Fund's portfolio or portfolios set forth on Schedule 1 hereto, as such
Schedule may be revised from time to time (the "Series"; if there are more than
one Series to which this Agreement applies, the provisions herein shall apply
severally to each such Series).
ARTICLE I
DEFINITIONS
1.1. "Act" shall mean the Investment Company Act of 1940, as amended.
1.2. "Board" shall mean the Board of Trustees of the Fund having the
responsibility for management and control of the Fund.
1.3. "Business Day" shall mean any day for which the Fund calculates net
asset value per share as described in the Fund's Prospectus and
the Society is open for business.
1.4. "Commission" shall mean the Securities and Exchange Commission.
1.5. "Contract" shall mean a variable annuity or variable life insurance
contract that uses the Fund as an underlying investment medium.
Individuals who participate under a group Contract are "Participants".
1.6. "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company.
1.7. "Disinterested Board Members" shall mean those members of the Board
that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8. "Participating Companies" shall mean any insurance company (including
the Society), which offers variable annuity and/or variable life
insurance contracts to the public and which has entered into an
agreement with the Fund for the purpose of making Fund shares
available to serve as the underlying investment medium for the
aforesaid Contracts.
1.9. "Plans" shall mean qualified pension and retirement benefit plans.
1.10. "Prospectus" shall mean the Fund's current prospectus and statement of
additional information, as most recently filed with the Commission,
with respect to the Series.
1.11. "Separate Account" shall mean the separate accounts listed on Schedule
II hereto as such Schedule may be revised from time to time. Each
separate account is established by the Society in accordance with the
laws of the State of Illinois.
1.12. "Software Program" shall mean the software program used by the Fund
for providing Fund and account balance information including net asset
value per share.
1.13. "The Society's General Account(s)" shall mean the general account(s)
of the Society and its affiliates which invest in the Fund.
ARTICLE II
REPRESENTATIONS
2.1 The Society represents that (a) it is a fraternal benefit society duly
organized and in good standing under applicable law; (b) it has
legally and validly established each Separate Account pursuant to the
Illinois Insurance Code for the purpose of offering to the public
certain variable annuity contracts and variable life insurance
contracts; (c) each Separate Account is registered as a unit
investment trust under the Act (or exempt therefrom) and will serve as
a segregated investment account for the Contracts; (d) each Separate
Account is eligible to invest in shares of the Fund without such
investment disqualifying the Fund as an investment medium for the
Society separate accounts supporting variable annuity contracts or
variable life insurance contracts; and (e) each Separate Account shall
comply with all applicable legal requirements.
2.2 The Society represents that (a) the Contracts will be registered as
securities under the Securities Act of 1933, as amended ("1933 Act")
(or exempt therefrom); (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and
state laws; and (c) the sale of the Contracts shall comply in all
material respects with applicable state insurance law requirements.
The Society agrees to inform the Fund promptly of any investment
restrictions imposed by state insurance law and applicable to the
Fund.
2.3 The Society represents that the income, gains and losses, whether or
not realized, from assets allocated to the Separate Account are, in
accordance with the applicable Contracts and applicable state
insurance law, to be credited to or charged against such Separate
Account without regard to other income, in accordance with applicable
state insurance law, gains or losses from assets allocated to any
other accounts of the Society. The Society represents, in accordance
with applicable state insurance law, that the assets of the Separate
Account are and will be kept separate from the Society's General
Account and any other separate accounts the Society may have, and will
not be charged with liabilities from any business that the Society may
conduct or the liabilities of any companies affiliated with the
Society.
2.4 Fund represents that the Fund is registered with the Commission under
the Act as an open-end management investment company and possesses,
and shall maintain, all legal and regulatory licenses, approvals,
consents and/or exemptions required for the Fund to operate and offer
its shares as an underlying investment medium for Participating
Companies. The Fund has established five portfolios and may in the
future establish other portfolios.
2.5 Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Society immediately
upon having a reasonable basis for believing that it has ceased to so
qualify or that it might not so qualify in the future.
2.6 Subject to the Fund's compliance with Section 817(h) of the Code, the
Society represents and agrees that the Contracts are currently, and at
the time of issuance will be, treated as life insurance or
annuity contracts, whichever is appropriate, under applicable
provisions of the Code, and that it will make every effort to maintain
such treatment and that it will notify the Fund and its investment
adviser immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be
so treated in the future. The Society agrees that any prospectus
offering a Contract that is a "modified endowment contract," as that
term is defined in Section 7702A of the Code, will identify such
Contract as a modified endowment contract.
2.7 "Fund represents and agrees that each Series currently complies with
the diversification requirements of Section 817(h) of the Code and the
regulations issued thereunder relating to the diversification
requirements for variable life insurance contracts and variable
annuity contracts, that it will make every effort to comply with those
requirements and that it will notify the Society immediately upon
having a reasonable basis for believing that any Series has ceased to
so qualify or that a Series might not so qualify in the future."
2.8 The Society agrees that the Fund shall be permitted (subject to the
other terms of this Agreement) to make Series' shares available to
other Participating Companies and contractholders and to Plans.
2.9 Fund represents and warrants that any of its trustees, officers,
employees, investment advisers, and other individuals/entities who
deal with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less
than that required by Rule 17g-1 under the Act. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.10 The Society represents and warrants that it maintains comprehensive
general liability coverage and a fidelity bond covering it and each of
its employees and agents who deal with the money and/or securities of
the Fund with limits of not less than those considered commercially
reasonable and appropriate under current industry practices. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11 The Society agrees that the Fund's investment adviser shall be deemed
a third party beneficiary under this Agreement and may enforce any and
all rights conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through each Separate Account will provide for
the investment in Series shares.
3.2 Fund agrees to make the shares of its Series available for purchase at
the then applicable net asset value per share by the Society and each
Separate Account on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing, the Fund may refuse to sell
the shares of any Series to any person, or suspend or terminate the
offering of the shares of any Series if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws,
necessary and in the best interests of the shareholders of such Series
(it being understood that for this purpose shareholders means
Contractholders). Notice of election to suspend or terminate shall be
furnished by the Fund, if or where practicable and if such suspension
or termination is in the sole discretion of the Board, said
termination to be effective 10 business days after receipt of such
notice by the Society in order to give the Society sufficient time to
take appropriate steps in response to such suspension or termination.
3.3 Fund agrees that shares of the Fund will be sold only to Participating
Companies and their separate accounts and to the general accounts of
those Participating Companies and their affiliates and to Plans. No
shares of any Series will be sold to the general public.
3.4 Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Series available on a
per-share and Series basis to the Society by 7:00 p.m. Eastern Time on
each Business Day. Any material errors in the calculation of net asset
value, dividend and capital gain information shall be reported
immediately upon discovery to the Society. Non-material errors
will be corrected in the next Business Day's net asset value per share
for the Series in question.
3.5 At the end of each Business Day, the Society will use the
information described in Sections 3.2 and 3.4 to calculate the
Separate Account unit values for the day. Using this unit value, the
Society will process the day's Separate Account transactions received
by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net
dollar amount of Series shares which will be purchased or redeemed at
that day's closing net asset value per share for such Series. The net
purchase or redemption orders will be transmitted to the Fund by the
Society by 10:00 a.m. Eastern Time on the Business Day next following
the Society's receipt of that information provided, however, that the
Fund shall provide additional time to the Society in the event that
the Fund is unable to meet the 7:00 p.m. Eastern Time stated in
Section 3.4. Such additional time shall be equal to the additional
time that the Fund takes to make net asset available to the Society.
Subject to Sections 3.6 and 3.8, all purchase and redemption orders
for the Society's General Accounts shall be effected at the net asset
value per share of the relevant Series next calculated after receipt
of the order by the Fund or its Transfer Agent.
3.6 Fund appoints the Society as its agent for the limited purpose of
accepting orders for the purchase and redemption of shares of each
Series for the Separate Accounts. Fund will execute orders for any
Series at the applicable net asset value per share determined as of
the close of trading on the day of receipt of such orders by the
Society acting as agent ("effective trade date"), provided that the
Fund receives notice of such orders by 10:00 a.m. Eastern Time on the
next following Business Day and, if such orders request the purchase
of Series shares, the conditions specified in Section 3.8, as
applicable, are satisfied. A redemption or purchase request for any
Series that does not satisfy the conditions specified above and in
Section 3.8, as applicable, will be effected at the net asset value
computed for such Series on the Business Day immediately preceding the
next following Business Day upon which such conditions have been
satisfied.
3.7 The Society will make its best efforts to notify Fund in advance of
any unusually large purchase or redemption orders.
3.8 If the Society's order requests the purchase of Series shares, the
Society will pay for such purchases by wiring Federal Funds to Fund or
its designated custodial account on the day the order is transmitted.
The Society shall transmit to the Fund payment in Federal Funds by the
close of the Federal Reserve wire system on the Business Day the Fund
receives the notice of the order pursuant to Section 3.5. Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
Fund receives payment in Federal Funds by the close of the Federal
Reserve wire system on the Business Day the Fund receives the notice
of the order pursuant to Section 3.5. If payment in Federal Funds for
any purchase is not received on such Business Day, the Society shall
promptly upon the Fund's request, reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowings or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of
portfolio transactions effected by the Fund based upon such purchase
request. If the Society's order requests the redemption of Series
shares valued at or greater than $1 million dollars, the Fund may wire
such amount to the Society within five days of the order to
enable the Society to pay redemption proceeds within the time
specified in Section 22(e) of the Act or such shorter period of time
as may be required by law.
3.9 Fund has the obligation to ensure that Series shares are registered
with applicable federal agencies at all times.
3.10 Fund will confirm each purchase or redemption order made by the
Society. Transfer of Series shares will be by book entry only. No
share certificates will be issued to the Society. The Society will
record shares ordered from Fund in an appropriate title for the
corresponding account.
3.11 Fund shall credit the Society with the appropriate number of shares.
3.12 On each ex-dividend date of the Fund or, if not a Business Day, on the
first Business Day thereafter, Fund shall communicate to the Society
the amount of dividend and capital gain, if
any, per share of each Series. All dividends and capital gains of any
Series shall be automatically reinvested in additional shares of the
relevant Series at the applicable net asset value per share of such
Series on the payable date. Fund shall, on the day after the payable
date or, if not a Business Day, on the first Business Day thereafter,
notify the Society of the number of shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Fund shall provide monthly statements of account as of the end of each
month for all of the Society's accounts by the fifteenth (15th)
Business Day of the following month. Statements will include
transaction detail for the statement period of each Series in which
shares were purchased, redeemed or exchanged, and a summary of the
number of Series shares owned and net asset value thereof as of the
statement date.
4.2 Fund shall distribute to the Society copies of the Fund's
Prospectuses, proxy materials, notices, periodic reports and other
printed materials (which the Fund customarily provides to its
shareholders) in quantities as the Society may reasonably request for
distribution to each Contractholder and Participant.
4.3 Fund will provide to the Society at least one complete copy of all
registration statements, Prospectuses, reports, proxy statements and
other voting solicitation materials, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments and supplements to any of the
above, that relate to the Fund or its shares, contemporaneously with
the filing of such document with the Commission or other regulatory
authorities.
4.4 The Society will provide to the Fund at least one copy of all
registration statements, Prospectuses, reports, proxy statements and
other voting solicitation materials, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments and supplements to any of the
above, that relate to the Contracts or the Separate Accounts,
contemporaneously with the filing of such document with the
Commission.
4.5 The Fund will provide the Society with as much notice as is reasonably
practicable of any proxy solicitation for any Series, and of any
change in the Fund's registration statement or prospectus,
particularly any change resulting in a change to the registration
statement or prospectus for any Separate Account. The Fund will work
with the Society so as to enable the Society to solicit proxies from
Contractholders, or to make changes to its registration statement or
prospectus, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses
become effective simultaneously with the annual updates for such
prospectuses.
ARTICLE V
EXPENSES
5.1 The charge to the Fund for all expenses and costs of the Series,
including but not limited to management fees, administrative expenses
and legal and regulatory costs, will be made in the determination of
the relevant Series' daily net asset value per share so as to
accumulate to an annual charge at the rate set forth in the Fund's
Prospectus. Excluded from the expense limitation described herein
shall be brokerage commissions and transaction fees and extraordinary
expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, the Society shall not be required to pay directly any
expenses of the Fund or expenses relating to the distribution of its
shares. The Society shall pay the following expenses or costs:
a. The cost of printing the Fund's Prospectus, or marketing
materials for prospective Society Contractholders and
Participants as the Fund's investment adviser and the Society
shall agree from time to time.
b. Distribution expenses of any Fund materials or marketing
materials for prospective Society Contractholders and
Participants.
c. Distribution expenses of Fund materials or marketing materials
for Society Contractholders and Participants.
Except as provided herein, all other Fund expenses shall not be borne
by the Society.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 The Society has reviewed a copy of the order dated December, 1996 of
the Securities and Exchange Commission under Section 6(c) of the Act
granting the Fund the exemptive relief necessary to permit the Fund to
engage in mixed and shared funding as that term is defined in the
corresponding application for exemptive relief and, in particular, has
reviewed the conditions to the relief set forth in the related Notice.
As set forth therein, the Society agrees to report any potential or
existing conflicts promptly to the Board, and in particular whenever
contract voting instructions are disregarded, and recognizes that it
will be responsible for assisting the Board in carrying out its
responsibilities under such application. The Society agrees to carry
out such responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists
with regard to Contractholder investments in the Fund, the Board shall
give prompt notice to all Participating Companies. If the Board
determines that the Society is responsible for causing or creating
said conflict, the Society shall at its sole cost and expense, and to
the extent reasonably practicable (as determined by a majority of the
Disinterested Board Members), take such action as is necessary to
remedy or eliminate the irreconcilable material conflict. Such
necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to a Separate Account from the
Series and reinvesting such assets in a different investment
medium, or submitting the question of whether such segregation
should be implemented to a vote of all affected Contractholders;
and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision
by the Society to disregard Contractholder voting instructions and
said decision represents a minority position or would preclude a
majority vote by all Contractholders having an interest in the Fund,
the Society may be required, at the Board's election, to withdraw the
Separate Account's investment in the Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will
the Fund be required to bear the expense of establishing a new funding
medium for any Contract. The Society shall not be required by this
Article to establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the
Contractholders materially adversely affected by the irreconcilable
material conflict.
6.5 No action by the Society taken or omitted, and no action by a Separate
Account or the Fund taken or omitted as a result of any act or failure
to act by the Society pursuant to this Article VI shall relieve the
Society of its obligations under, or otherwise affect the operation
of, Article V.
ARTICLE VII
VOTING OF FUND SHARES
7.1 Fund shall provide the Society with copies at no cost to the Society,
of the Fund's proxy material, reports to shareholders and other
communications to shareholders in such quantity as the Society shall
reasonably require for distributing to Contractholders or
Participants.
The Society shall:
(a) solicit voting instructions from Contractholders or Participants
on a timely basis and in accordance with applicable law;
(b) vote the Series shares in accordance with instructions received
from Contractholders or Participants; and
(c) vote Series shares for which no instructions have been received
in the same proportion as Series shares for which instructions
have been received.
The Society agrees at all times to vote its General Account shares in
the same proportion as Series shares for which instructions have been
received from Contractholders or Participants. The Society further
agrees to be responsible for assuring that voting Series shares for
the Separate Account is conducted in a manner consistent with other
Participating Companies.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 The Fund or its underwriter shall periodically furnish the Society
with the following documents, in quantities as the Society may
reasonably request:
a. Current Prospectus and any supplements thereto;
b. other marketing materials.
Expenses for the production of such documents shall be borne by the
Society, if applicable, in accordance with Section 5.2 of this
Agreement.
8.2 The Society shall designate certain persons or entities which shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by the Society. The Society shall make
reasonable efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
8.3 The Society shall furnish, or shall cause to be furnished, to the
Fund, each piece of sales literature or other promotional material in
which the Fund, its investment adviser or the administrator is named,
at least fifteen Business Days prior to its use. No such material
shall be used unless the Fund approves such material. Such approval
(if given) must be in writing and shall be presumed not given if not
received within ten Business Days after receipt of such material. The
Fund shall use all reasonable efforts to respond within ten days of
receipt. Fund reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in
which the Fund, its investment adviser or administrator is named, and
no such material shall be used if the Fund so objects.
8.4 The Society shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund or any
Series in connection with the sale of the Contracts other than the
information or representations contained in the registration statement
or Prospectus, as may be amended or supplemented from time to time, or
in reports or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund except with the
permission of the Fund.
8.5 Fund shall furnish, or shall cause to be furnished, to the Society,
each piece of the Fund's sales literature or other promotional
material in which the Society, a Separate Account or the Contract is
named, at least fifteen Business Days prior to its use. No such
material shall be used unless the Society approves such material. Such
approval (if given) must be in writing and shall be presumed not given
if not received within ten Business Days after receipt of such
material. The Society shall use all reasonable efforts to respond
within ten days of receipt. The Society reserves the right to
reasonably object to the continued use of any such sales literature or
other promotional material in which the Society, a Separate Account or
the Contracts is named, and no such material shall be used if the
Society so objects.
8.6 Fund shall not, in connection with the sale of Series shares, give any
information or make any representations on behalf of the Society or
concerning Society, the Separate Account, or the Contracts other than
the information or representations contained in a registration
statement or prospectus for the Contracts, as may be amended or
supplemented from time to time, or in published reports for the
Separate Account which are in the public domain or approved by the
Society for distribution to Contractholders or Participants, or in
sales literature or other promotional material approved by the
Society, except with the permission of the Society.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed
for use, in a newspaper, magazine or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, telephone directories (other than routine
listings), electronic media, computerized media, or other public
media), sales literature (such as any written or electronic
communication distributed or made generally available to customers or
the public, including, but not limited to brochures, circulars,
research reports, market letters, performance reports or summaries,
form letters, telemarketing scripts, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees.
ARTICLE IX 9.
INDEMNIFICATION
9.1 The Society agrees to indemnify and hold harmless the Fund, its
investment adviser, any sub-investment adviser of a Series, and their
affiliates, and each of their directors, trustees, officers,
employees, agents and each person, if any, who controls or is
associated with any of the foregoing entities or persons within the
meaning of the 1933 Act (but not any participating The Society)
(collectively, the "Indemnified Parties" for purposes of Section 9.1),
against any and all losses, claims, damages or liabilities joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted)
for which the Indemnified Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect to thereof) (i) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in information furnished by the Society for
use in the registration statement or Prospectus or sales literature or
advertisements of the Fund or with respect to the Separate Account or
Contracts, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (ii) arise out of or as a result of conduct, statements or
representations (other than statements or representations contained in
the Prospectus and sales literature or advertisements of the Fund) of
the Society or its agents, with respect to the sale and distribution
of Contracts for which Series shares are an underlying investment;
(iii) arise out of the wrongful conduct of the Society or persons
under its control with respect to the sale or distribution of the
Contracts or Series shares; (iv) arise out of the Society's incorrect
calculation and/or untimely reporting of net purchase or redemption
orders; or (v) arise out of any breach by the Society of a material
term of this Agreement or as a result of any failure by the Society to
provide the services and furnish the materials or to make any payments
provided for in this Agreement. The Society will reimburse any
Indemnified Party in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
with respect to clauses (i) and (ii) above the Society will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in such registration
statement, prospectus, sales literature, or advertisement in
conformity with information furnished to the Society by the Fund or
any other Indemified Party for use therein; and provided, further,
that the Society shall not be liable for special, consequential or
incidental damages. This indemnity agreement will be in addition to
any liability which the Society may otherwise have.
9.2 The Fund agrees to indemnify and hold harmless the Society and each of
its directors, officers, employees, agents and each person, if any,
who controls the Society within the meaning of the 1933 Act against
any losses, claims, damages or liabilities to which the Society or any
such director, officer, employee, agent or controlling person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or Prospectus or sales literature or advertisements of the
Fund; (2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the Fund any material
fact required to be stated therein or necessary to make the statements
therein not misleading; (3) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the registration statement or Prospectus or sales literature or
advertisements with respect to the Separate Account or the Contracts
and such statements were based on information provided to the Society
by the Fund or any of its affiliates; or (4) arises out of any breach
by the Fund of a material term of this Agreement or as a result of any
failure by the Fund 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 specified in Section 2.7 of this
Agreement, or to qualify as a Regulated Investment Company under
Subchapter M of the Code), and the Fund will reimburse any legal or
other expenses reasonably incurred by the Society or any such
director, officer, employee, agent or controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Fund will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such Registration Statement,
Prospectus, sales literature or advertisements in conformity with
information furnished to the Fund by the Society or any other
indemnified party for use therein; and provided, further, that the
Fund shall not be liable for special, consequential or incidental
damages. This indemnity agreement will be in addition to any liability
which the Fund may otherwise have.
9.3 The Fund shall indemnify and hold the Society harmless against any and
all liability, loss, damages, costs or expenses which the Society may
incur, suffer or be required to pay due to the Fund's (1) incorrect
calculation of the daily net asset value, dividend rate or capital
gain distribution rate of a Series; (2) incorrect reporting of the
daily net asset value, dividend rate or capital gain distribution
rate; and (3) untimely reporting of the net asset value, dividend rate
or capital gain distribution rate; provided that the Fund shall have
no obligation to indemnify and hold harmless the Society if the
incorrect calculation or incorrect or untimely reporting was the
result of incorrect information furnished by the Society or
information furnished untimely by the Society or otherwise as a result
of or relating to a breach of this Agreement by the Society; and
provided, further, that the Fund shall not be liable for special,
consequential or incidental damages.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to
give such notice. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party, and to the extent that the indemnifying party has
given notice to such effect to the indemnified party and is performing
its obligations under this Article, the indemnifying party shall not
be liable for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation. Notwithstanding the foregoing,
in any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty as to one or more
Series at the option of the terminating party:
a. At the option of the Society or the Fund at any time from the
date hereof upon 180 days' notice, unless a shorter time is
agreed to by the parties;
b. At the option of the Society, if shares of any Series are not
reasonably available to meet the requirements of the Contracts as
determined by the Society. Prompt notice of election to terminate
shall be furnished by the Society, said termination to be
effective ten days after receipt of notice unless the Fund makes
available a sufficient number of shares to meet the requirements
of the Contracts within said ten-day period;
c. At the option of the Society, upon the institution of formal
proceedings against the Fund by the Commission, National
Association of Securities Dealers or any other regulatory body,
the expected or anticipated ruling, judgment or outcome of which
would, in the Society's reasonable judgment, materially impair
the Fund's ability to meet and perform the Fund's obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by the Society with said termination to be effective
upon receipt of notice;
d. At the option of the Fund, upon the institution of formal
proceedings against the Society by the Commission, National
Association of Securities Dealers or any other regulatory body,
the expected or anticipated ruling, judgment or outcome of which
would, in the Fund's reasonable judgment, materially impair the
Society's ability to meet and perform the Society's obligations
and duties hereunder. Prompt notice of election to terminate
shall be furnished by the Fund with said termination to be
effective upon receipt of notice;
e. At the option of the Fund, if the Fund shall determine, in its
sole judgment reasonably exercised in good faith, that the
Society has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity is likely to have a material adverse impact upon the
business and operation of the Fund or its investment adviser, the
Fund shall notify the Society in writing of such determination
and its intent to terminate this Agreement, and after considering
the actions taken by the Society and any other changes in
circumstances since the giving of such notice, such determination
of the Fund shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be
the effective date of termination;
f. At the option of the Society, if the Society shall determine,
in its sole judgement reasonably exercised in good faith, that
the Fund or its investment adviser has suffered a material
adverse change in its business or financial condition or is
the subject of material adverse publicity and such material
adverse change or material adverse publicity is likely to have
a material adverse impact upon the business and operation of
the Society or a Separate Account or the sale of or retention
of assets under the Contracts, the Society shall notify the
Fund in writing of such determination and its intent to
terminate this Agreement, and after considering the actions
taken by the Fund and any other changes in circumstances since
the giving of such notice, such determination of the Society
shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the
effective date of termination;
g. At the option of the Society, if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Society
reasonably believes that the Fund may fail to so qualify;
h. At the option of the Society, if the Fund fails to meet the
diversification requirements of Section 817(h) of the Code or if
the Society reasonably believes that the Fund will fail to meet
such requirements;
i. Upon termination of the Investment Advisory Agreement between the
Fund and its investment adviser or its successors unless the
Society specifically approves the selection of a new Fund
investment adviser. The Fund shall promptly furnish notice of
such termination to Society;
j. In the event the Fund's shares are not registered, issued or sold
in accordance with applicable federal law, or such law precludes
the use of such shares as the underlying investment medium of
Contracts issued or to be issued by the Society. Termination
shall be effective immediately upon such occurrence without
notice;
k. At the option of the Fund upon a determination by the Board in
good faith that it is no longer advisable and in the best
interests of shareholders for the Fund to continue to operate
pursuant to this Agreement. Termination pursuant to this
Subsection (h) shall be effective upon notice by the Fund to
the Society of such termination;
l. At the option of the Fund if the Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable,
under the Code, or if the Fund reasonably believes that the
Contracts may fail to so qualify;
m. At the option of either party to this Agreement, upon another
party's breach of any material provision of this Agreement;
n. At the option of the Fund, if the Contracts are not registered,
issued or sold in accordance with applicable federal and/or state
law; or
o. Upon assignment of this Agreement, unless made with the written
consent of the non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2l or
10.2n herein shall not affect the operation of Article V of this
Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, the Fund and its investment adviser shall, at the option
of the Society, continue to make available additional Series shares
pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, based upon instructions from the
owners of the Existing Contracts or the Society, whichever shall have
legal authority to do so, shall be permitted to reallocate investments
in the Series, redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the
Existing Contracts. If the Series shares continue to be made available
after a termination of this Agreement pursuant to Section 10.2, the
provisions of this Agreement shall remain in effect and thereafter
either the Fund or the Society may terminate the Agreement, as so
continued pursuant to this Section 10.3, upon prior written notice to
the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Fund, need not be longer
than the greater of (i) six months or (ii) the period required by the
Society to obtain any necessary approval from the Commission or any
state insurance regulatory authority provided that the Society makes a
reasonable good faith effort to obtain such approvals in a reasonable
period of time.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement shall be made by
agreement in writing between the Society and Fund.
ARTICLE XII
NOTICE
12.1 Any notice required by this Agreement shall be sufficiently given by
overnight, registered or certified mail, to the appropriate parties at
the following addresses:
The Society:
c/o Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Vice President - Investment Administration
Fund:
X.X. Xxxxxx Series Trust II
c/x Xxxxxx Guaranty Trust Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mutual Funds - Legal
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
13.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
of Contractholders and Participants and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose, disseminate
or utilize such names and addresses and other confidential information
until such time as it may come into the public domain without the
express written consent of the affected party.
13.3 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.
13.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13.5 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.
13.6 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.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of Delaware, without giving effect to principles of
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
Modern Woodmen of America
By: /s/ Xxxxx X. Xxxxxxx
Its: President
X.X.XXXXXX SERIES TRUST II
By: /s/ Xxxxxx Xxxxxxx
Its: Vice President
SCHEDULE I
NAME OF SERIES
X.X. Xxxxxx Small Company Portfolio
X.X. Xxxxxx Mid Cap Value Portfolio
SCHEDULE II
SEPARATE ACCOUNTS
Modern Woodmen of America Variable Account
Modern Woodmen of America Variable Annuity Account
As of November 28, 2001
Xx. Xxxxx X. Xxxxx
Xxxxxx Guaranty Trust Society of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xx. Xxxxx:
This letter sets forth the agreement between Modern Woodmen of America (the
"Society") and Xxxxxx Guaranty Trust Society of New York ("Xxxxxx") concerning
certain administrative services.
1. ADMINISTRATIVE SERVICES AND EXPENSES. Administrative services for the
Society's Separate Accounts (the "Accounts") which invest in the X. X.
Xxxxxx Series Trust II (the "Fund") pursuant to the Participation Agreement
among the Society and the Fund, dated as of November 28, 2001 (the
"Participation Agreement"), and for purchasers of variable annuity and
variable life insurance contracts (the "Contracts") issued through the
Accounts, are the responsibility of the Society. Certain administrative
services for the Fund in which the Accounts invest, and shareholder
services for purchasers of shares of the Fund, are the responsibility of
Xxxxxx.
Xxxxxx recognizes the Society as the sole shareholder of record of shares
of Portfolios offered by the Fund (the "Portfolios") purchased under the
Participation Agreement on behalf of the Accounts. Xxxxxx further
recognizes that it will derive a substantial savings in administrative and
shareholder servicing expenses by virtue of having the Society as the
shareholder of record of shares of the Fund purchased under the
Participation Agreement, rather than multiple shareholders having record
ownership of such shares. The administrative and shareholder servicing
expenses for which Xxxxxx will derive such savings are set forth in
Schedule A to this letter agreement.
2. EXPENSE PAYMENTS. (a) In consideration of the anticipated administrative
and shareholder servicing expense savings resulting from the Society's
services set forth above, Xxxxxx agrees to pay the Society a fee (the
"Fee"), computed daily and paid monthly in arrears, equal to the following
percent of the daily net asset value of the shares of the Portfolios held
in the subaccounts of the Accounts:
X. X. Xxxxxx Small Society Portfolio 0.25 %
X.X. Xxxxxx Mid Cap Value Portfolio 0.25 %
(b) As soon as practicable after the end of each month, Xxxxxx will
calculate Society's fee for the preceding month as stated in this Paragraph
2 and pay such fee to Society. For purposes of this Paragraph 2, the
average daily net asset value of the shares of the Fund will be based on
the net asset values reported by such Fund to the Society.
3. NATURE OF PAYMENTS. The parties to this letter agreement recognize and
agree that Xxxxxx'x payments to the Society relate to administrative and
shareholder services only and do not constitute payment in any manner for
investment advisory services or for costs of distribution of Contracts or
of shares of the Fund, and that these payments are not otherwise related to
investment advisory or distribution services or expenses. The amount of
administrative and shareholder servicing expense payments made by Xxxxxx to
the Society pursuant to Paragraph 2 of this letter agreement will not be
deemed to be conclusive with respect to actual administrative and
shareholder servicing expenses or savings of Xxxxxx.
4. REPRESENTATIONS. The Society represents and warrants that in performing the
services and receiving the compensation described in this letter agreement
it will comply with all applicable laws, rules and regulations.
5. TERM. This letter agreement will remain in full force and effect for so
long as any assets of the Fund are attributable to amounts invested by the
Society under the Participation Agreement, unless terminated in accordance
with Paragraph 6 of this letter agreement. Fees will continue to be due and
payable with respect to the shares attributable to existing Contracts for
only so long as such payments comply with applicable laws, rules and
regulations.
6. TERMINATION. This letter agreement will be terminated upon mutual agreement
of the parties hereto in writing.
7. AMENDMENT. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
8. COUNTERPARTS. This letter may be executed in counterparts, each of which
will be deemed an original but all of which will together constitute one
and the same instrument.
9. SUCCESSORS AND ASSIGNS. This letter agreement shall bind and inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative and shareholder servicing expenses payments,
please sign below and return a signed copy to us.
Very truly yours,
MODERN WOODMEN OF AMERICA
By: /s/ Xxxxx X. Xxxxxxx
Acknowledged and Agreed:
XXXXXX GUARANTY TRUST SOCIETY OF NEW YORK
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Vice President
Attachment: Schedule A
SCHEDULE A
MAINTENANCE OF BOOKS AND RECORDS
- Record issuance of shares
- Record transfers (via net purchase orders)
- Reconciliation and balancing of the separate account at the fund level in
the general ledger, at various banks and within systems interface
COMMUNICATION WITH THE FUND
- Purchase Orders
- Determination of net amount available for investment by the Fund
- Deposit of receipts at the Fund's custodian (generally by wire
transfer)
- Notification of the custodian of the estimated amount required to pay
dividend or distribution
- Redemption Orders
- Determination of net amount required for redemptions by the Fund
- Notification of the custodian and Fund of cash required to meet
payments
- Cost of share redemption
- Daily pricing
PROCESSING DISTRIBUTIONS FROM THE FUND
- Process ordinary dividends and capital gains
- Reinvest the Fund's distributions
REPORT
- Periodic information reporting to the Fund
FUND-RELATED CONTRACTOWNER SERVICES
- Telephone support for contractowners with respect to Fund inquiries (not
including information about performance or related to sales)
- Communications to contractowners regarding Fund and subaccount performance
OTHER ADMINISTRATIVE SUPPORT
- Providing other administrative support for the Fund as mutually agreed
between the Society and the Fund or Xxxxxx
- Relieving the Fund of other usual or incidental administrative services
provided to individual contractowners as mutually agreed between the
Society and the Fund or Xxxxxx
As of November 28, 2001
Modern Woodmen of America
0000 0xx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: C. Xxxxxx Xxxxx
General Counsel
Dear Xx. Xxxxx:
Reference is hereby made to the Participation Agreement, dated as of November
28, 2001 (the "Participation Agreement"), between Modern Woodmen of America
("the Society") and X.X. Xxxxxx Series Trust II (the "Fund"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in the Participation Agreement. In connection therewith, X.X.
Xxxxxx Investment Management Inc., investment adviser to the Fund (the
"Investment Adviser"), and the Society hereby agree as follows:
1. INDEMNIFICATION. The Investment Adviser agrees to indemnify and hold
harmless the Society and each of its directors, officers, employees, agents
and each person, if any, who controls the Society within the meaning of the
1933 Act (collectively, the "Indemnified Parties") 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 the Indemnified Parties may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof):
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or Prospectus or sales literature or advertisements of the Fund;
(b) arise out of or are based upon the omission or alleged omission to
state in the registration statement or Prospectus or sales literature
or advertisements of the Fund any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(c) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement, Prospectus, sales literature or advertisements with respect
to the Separate
Account or the Contracts and such statements were based on information
provided to the Society by the Fund or the Investment Adviser; or
(d) arise out of any breach by the Fund of a material term of this
Agreement or as a result of any failure by the Fund to provide the
services and furnish the materials provided for in the Participation
Agreement (including a failure, whether unintentional or in good faith
or otherwise to comply with the diversification requirements specified
in Section 817(h) of the Code or to qualify as a Regulated Investment
Company under Subchapter M of the Code);
provided, however, that with respect to clauses (1), (2) and (3) above, the
Investment Adviser will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged omission made in such Registration Statement,
Prospectus, sales literature or advertisements in conformity with written
information furnished to the Fund or the Investment Adviser by the Society
specifically for use therein. In addition, the Investment Adviser shall not be
liable for special, consequential or incidental damages to any Indemnified
Party.
2. PARTICIPATION AGREEMENT. The provisions set forth above are subject to the
terms and conditions of the Participation Agreement, including, without
limitation, Section 9.4 thereof.
3. AMENDMENT. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
4. COUNTERPARTS. This letter may be executed in counterparts, each of which
will be deemed an original but all of which will together constitute one
and the same instrument.
If this letter agreement is consistent with your understanding of the matters
discussed therein, please sign below and return a signed copy of us.
Very truly yours,
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Vice President
ACKNOWLEDGED AND AGREED:
MODERN WOODMEN OF AMERICA
By: /s/ C. Xxxxxx Xxxxx
