PARTICIPATION AGREEMENT
Among
INVESTORS XXXX SERIES FUND
and
FIDELITY SECURITY LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 19th day of March, 1999 by
and among FIDELITY SECURITY LIFE INSURANCE COMPANY, (hereinafter the "Insurance
Company"), a Missouri corporation, on its own behalf and on behalf of each
segregated asset account of the Insurance Company set forth on Schedule A hereto
as may be amended from time to time (each such account hereinafter referred to
as the "Account"), INVESTORS XXXX SERIES FUND, a Delaware corporation (the
"Series Fund") and INVESTORS XXXX ADVISERS LLC, a Delaware limited liability
company ("IMA").
WHEREAS, the Series Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
variable annuity and life insurance contracts to be offered by separate accounts
of insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies")
and for qualified retirement and pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Series Fund is divided into
several series of shares, each designated a "Fund" and representing the interest
in a particular managed portfolio of securities and other assets; and
WHEREAS, the Series Fund has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated June 29, 1998, (File No.
812-11100), granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Series Fund to be sold to and held by Qualified Plans and
by variable annuity and variable life insurance separate accounts of life
insurance companies that may or may not be affiliated with one another (the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Series Fund is registered as an open-end management
investment company under the 1940 Act and the offering of its shares is
registered under the Securities Act of 1933, as amended (hereinafter the "1933
Act"); and
WHEREAS, IMA is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Insurance Company has registered under the 1933 Act, or
will register under the 1933 Act, certain variable annuity or variable life
insurance contracts identified by the form number(s) listed on Schedule B to
this Agreement, as amended from time to time hereafter by mutual written
agreement of all the parties hereto (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds at
net asset value on behalf of each Account to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Series Fund and IMA agree as follows:
Article I. Sale of Series Fund Shares
1.01 The Series Fund agrees to sell to the Insurance Company those shares of
the Series Fund which each Account orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the
Series Fund or its designee of the order for the shares of the Series
Fund. For purposes of this Section 1.1, the Insurance Company shall be
the designee of the Series Fund for receipt of such orders from the
Accounts and receipt by such designee shall constitute receipt by the
Series Fund; provided that the Series Fund receives notice of such
order by 8:00 a.m., Central Time, on the next following Business Day.
In this Agreement, "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Series Fund
calculates its net asset value pursuant to the rules of the Commission.
1.02 The Series Fund agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its
Accounts on those days on which the Series Fund calculates its Funds'
net asset values pursuant to rules of the Commission and the Series
Fund shall use reasonable efforts to calculate its Funds' net asset
values on each day on which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the directors of the Series
Fund may refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is required
by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the directors of the Series Fund acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of that Fund.
1.03 The Series Fund agrees that all shares of the Series Fund will be sold
only to Insurance Companies which have agreed to participate in the
Series Fund to fund their separate accounts and/or to Qualified Plans,
all in accordance with the requirements of Section 817(h) of the
Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Funds will not be sold directly to
the general public.
1.04 The Series Fund will not sell its shares to any insurance company or
separate account unless an agreement containing provisions
substantially the same as Sections 2.04, 3.04, 3.05, and Sections 7.01
to 7.07 of this Agreement is in effect to govern such sales.
1.05 The Series Fund agrees to redeem, on the Insurance Company's request,
any full or fractional shares of the Series Fund held by the Account,
executing such requests on a daily basis at the net asset value next
computed after receipt by the Series Fund or its designee of the
request for redemption. However, if one or more other series fund, that
the Insurance Company's separate account is purchasing shares of, has
determined to settle redemption transactions for all of its
shareholders on a delayed basis (more than one business day, but in no
event more than three Business Days, after the date on which the
redemption order is received, unless otherwise permitted by an order of
the Commission under Section 22(e) of the 1940 Act), the Series Fund
shall be permitted to delay sending redemption proceeds to the
Insurance Company by the same number of days that the other series fund
is delaying sending redemption proceeds to the shareholders of the
other Fund. For purposes of this Section 1.05, the Insurance Company
shall be the designee of the Series Fund for receipt of requests for
redemption from each Account and receipt by that designee shall
constitute receipt by the Series Fund; provided that the Series Fund
receives notice of the request for redemption by 8:00 a.m., Central
Time, on the next following Business Day.
1.06 The Insurance Company shall pay for Series Fund shares by 1:00 p.m.,
Central Time, on the next Business Day after an order to purchase
Series Fund shares is made in accordance with the provisions of Section
1.01 hereof. Payment shall be in federal funds transmitted by wire. For
the purpose of Sections 2.09 and 2.10, upon receipt by the Series Fund
of the federal funds so wired, such funds shall cease to be the
responsibility of the Insurance Company and shall become the
responsibility of the Series Fund. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus aggregate
purchases of that Fund's shares by that Account) of less than $1
million for a given Business Day will be made by wiring federal funds
to the Insurance Company on the next Business Day after receipt of the
redemption request. Payment of net redemption proceeds of $1 million or
more will be by wiring federal funds within three Business Days after
receipt of the redemption request. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking
place on the New York Stock Exchange, an emergency as defined by the
Securities and Exchange Commission exists, or as permitted by the
Securities and Exchange Commission.
1.07 Issuance and transfer of the Series Fund's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or
any Account. Shares ordered from the Series Fund will be recorded in an
appropriate title for each Account or the appropriate subaccount of
each Account.
1.08 The Series Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance Company of any
income, dividends or capital gain distributions payable on the Funds'
shares. The Insurance Company hereby elects to receive all income
dividends and capital gain distributions payable on a Fund's shares in
additional shares of that Fund. The Insurance Company reserves the
right to revoke this election and to receive all such income dividends
and capital gain distributions in cash. The Series Fund shall notify
the Insurance Company of the number of shares issued as payment of
dividends and distributions.
1.09 The Series Fund shall make the net asset value per share for each Fund
available to the Insurance Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated
and shall use its best efforts to make those per-share net asset values
available by 5:00 p.m., Central Time. If the Series Fund provides the
Insurance Company with materially incorrect share net asset value
information through no fault of the Insurance Company, the Insurance
Company on behalf of the Account, shall be entitled to an adjustment to
the number of shares purchased or redeemed to reflect the correct share
net asset value. Any material error in the calculation of net asset
value per share, dividend or capital gain information shall be reported
promptly upon discovery to the Insurance Company. Furthermore, IMA
shall be liable for the reasonable actual administrative costs incurred
by Insurance Company in relation to the correction of any material
error. Administrative costs shall include allocation of staff time who
actually worked on the correction, costs of outside service providers,
printing and postage.
Article II. Representations, Warranties and Agreements
2.01 The Insurance Company represents, warrants and agrees that the
offerings of the Contracts are, or will be, registered under the 1933
Act; that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that
the sale of the Contracts shall comply in all material respects with
applicable state insurance suitability requirements. The Insurance
Company further represents that it is an insurance company duly
organized and in good standing under applicable law and that it has
legally and validly established the Account as a segregated asset
account prior to any issuance or sale thereof and has registered, or
warrants and agrees that prior to any issuance or sale of the Contracts
it will register, the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment
account for the Contracts.
2.02 The Series Fund warrants and agrees that Series Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sale in compliance with the laws of the
State of Delaware and all applicable federal securities laws and that
the Series Fund is and shall remain registered under the 1940 Act. The
Series Fund warrants and agrees that it shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
shares. The Series Fund shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the
extent deemed advisable by the Series Fund or IMA.
2.03 The Series 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 warrants and agrees that it
will maintain its qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Insurance Company
immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.04 The Insurance Company represents that the Contracts are currently
treated as annuity or life insurance contracts under applicable
provisions of the Code and warrants and agrees that it will make every
effort to maintain such treatment and that it will notify the Series
Fund and IMA 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.
2.05 The Series Fund may elect to make payments to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the
Series Fund undertakes to have a board of trustees, a majority of whom
are not interested persons of the Series Fund, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
2.06 The Series Fund makes no representation nor warranties as to whether
any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies or will comply with the
insurance laws or regulations of the various states.
2.07 The Series Fund represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and represents,
warrants and agrees that it does and will comply in all material
respects with the 1940 Act.
2.08 IMA represents that it is and warrants that it shall remain duly
registered as an investment adviser under all applicable federal and
state securities laws and agrees that it shall perform its obligations
for the Series Fund in compliance in all material respects with the
laws of the State of Missouri and any applicable state and federal
securities laws.
2.09 The Series Fund and IMA represent and warrant that all of their
officers, employees, investment advisers, investment sub-advisers, and
other individuals or entities described in Rule 17g-1 under the 1940
Act dealing with the money and/or securities of the Series Fund are,
and shall continue to be at all times, covered by a blanket fidelity
bond or similar coverage for the benefit of the Series Fund in an
amount not less than the minimum coverage required currently by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated
from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10 The Insurance Company represents and warrants that all of its officers,
employees, investment advisers, and other individuals or entities
described in Rule 17g-1 under the 1940 Act shall to the extent required
by Rule 17g-1 be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Series Fund.
Article III. Disclosure Documents and Voting
3.01 At least annually, the Series Fund or its designee shall provide the
Insurance Company, free of charge, with as many copies of the current
prospectus for the shares of the Funds as the Insurance Company may
reasonably request for distribution to existing Contract owners whose
Contracts are funded by such shares. The Series Fund or its designee
shall provide the Insurance Company, at the Insurance Company's
expense, with as many more copies of the current prospectus for the
shares as the Insurance Company may reasonably request for distribution
to prospective purchasers of Contracts. If requested by the Insurance
Company in lieu thereof, the Series Fund or its designee shall provide
such documentation (including a "camera ready" copy of the prospectus
as set in type or, at the request of the Insurance Company, as a
diskette in the form sent to the financial printer) and other
assistance as is reasonably necessary in order for the parties hereto
once a year (or more frequently if the prospectus for the shares is
supplemented or amended) to have the prospectus for the Contracts and
the prospectus for the Series Fund shares and any other fund shares
offered as investments for the Contracts printed together in one
document. The expenses of such printing shall be apportioned between
(a) the Insurance Company and (b) the Series Fund in proportion to the
number of pages of the Contract, other fund shares prospectuses and the
Series Fund shares prospectus, taking account of other relevant factors
affecting the expense of printing' such as covers, columns, graphs and
charts; the Series Fund to bear the cost of printing the shares'
prospectus portion of such document for distribution only to owners of
existing Contracts funded by the Series Fund shares and the Insurance
Company to bear the expense of printing the portion of such documents
relating to the Account; provided, however, the Insurance Company shall
bear all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing
Contracts not funded by the shares.
3.02 The Series Fund's prospectus shall state that the Statement of
Additional Information for the Series Fund (the "SAI") is available
from the Series Fund and IMA, at its expense, shall print and provide
the SAI free of charge to the Insurance Company and to any owner of a
Contract or prospective owner who requests the SAI.
3.03 The Series Fund, at its expense, shall provide the Insurance Company
with copies of its proxy material, reports to shareholders and other
communications to shareholders in such quantity as the Insurance
Company shall reasonably require for distributing to Contract owners.
3.04 If and to the extent required by law, the Insurance Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Series Fund shares in accordance with instructions
received from Contract owners; and
(c) vote Series Fund shares for which no instructions have been
received in the same proportion as Series Fund shares of that
Fund for which instructions have been received;
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Insurance Company reserves the
right to vote Series Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in
the Series Fund calculates voting privileges in a manner
consistent in all material respects with the standards set forth
on Schedule C attached hereto and incorporated herein by this
reference, which standards will also be provided to the other
Participating Insurance Companies. The Insurance Company shall
fulfill its obligation under, and abide by the terms and
conditions of, the Mixed and Shared Funding Exemptive Order. 3.05
The Series Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Series
Fund will either provide for annual meetings (except insofar as
the Commission may interpret Section 16 of the 1940 Act not to
require such meetings) or, as the Series Fund currently intends,
comply with Section 16(c) of the 1940 Act (although the Series
Fund 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). Further, the Series Fund will act in accordance with the
Commission's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever
rules the Commission may promulgate with respect thereto.
Article IV. Sales Material and Information
4.01 The Insurance Company shall furnish, or shall cause to be furnished, to
the Series Fund or its designee, each piece of sales literature or
other promotional material in which the Series Fund, a sub-adviser of
one of the Funds, or IMA is named, at least fifteen calendar days prior
to its use. No such material shall be used if the Series Fund or its
designee objects to such use within ten calendar days after receipt of
such material.
4.02 The Insurance Company shall not give any information or make any
representations or statements on behalf of the Series Fund or
concerning the Series Fund in connection with the sale of the Contracts
other than the information or representations contained in the Series
Fund's registration statement, prospectus or SAI, as that registration
statement, prospectus or SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Series Fund, or in
sales literature or other promotional material approved by the Series
Fund or its designee or by IMA or its designee, except with the
permission of the Series Fund or IMA or their designees.
4.03 The Series Fund, IMA or its designee, shall furnish, or shall cause to
be furnished, to the Insurance Company or its designee, each piece of
sales literature or other promotional material in which the Insurance
Company or the Account is named at least fifteen calendar days prior to
its use. No such material shall be used if the Insurance Company or its
designee objects to such use within ten calendar days after receipt of
that material.
4.04 The Series Fund and IMA, or their designees, shall not give any
information or make any representations on behalf of the Insurance
Company or concerning the Insurance Company, any Account, or the
Contracts other than the information or representations contained in a
registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for any Account
which are approved by the Insurance Company for distribution to
Contract owners, or in sales literature or other promotional material
approved by the Insurance Company or its designee, except with the
permission of the Insurance Company.
4.05 The Series Fund will provide to the Insurance Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, proxy statement, piece of sales
literature or other promotional material, application for exemption,
request for no-action letter, and any amendment to any of the above,
that relate to the Series Fund or its shares, contemporaneously with
the filing of the document with the Commission, the National
Association of Securities Dealers, Inc. ("NASD"), or other regulatory
authorities.
4.06 The Insurance Company will provide to the Series Fund at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions,
piece of sales literature and other promotional material, application
for exemption, request for no-action letter, and any amendment to any
of the above, that relates to the Contracts or the Account,
contemporaneously with the filing of the document with the Commission,
the NASD, or other regulatory authorities.
4.07 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone
script or tape recording, videotape display, signs or billboards,
motion pictures, 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, shareholder newsletters, seminar
texts, 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, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy
materials.
4.08 At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records,
data and access to operating procedures that may be reasonably
requested.
Article V. Fees and Expenses
5.01 The Series Fund and IMA shall pay no fee or other compensation to the
Insurance Company under this agreement, except as set forth in Section
5.04 and except that if the Series Fund or any Fund adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, IMA or the Series Fund may make payments to the Insurance
Company in amounts consistent with that 12b-1 plan, subject to review
by the directors of the Series Fund.
5.02 All expenses incident to performance by the Series Fund under this
Agreement shall be paid by the Series Fund. The Series Fund shall see
to it that any offering of its shares is registered and that all of its
shares are authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Series
Fund or IMA, in accordance with applicable state laws prior to their
sale. The Series Fund shall bear the cost of registration and
qualification of the Series Fund's shares, preparation and filing of
the Series Fund's prospectus and registration statement, proxy
materials and reports, setting the prospectus in type, setting in type
and printing the proxy materials and reports to shareholders, the
preparation of all statements and notices required by any federal or
state law, and all taxes on the issuance or transfer of the Series
Fund's shares.
5.03 The Insurance Company shall bear the expenses of printing and
distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Series Fund's prospectus, proxy
materials and reports.
5.04 The Insurance Company bears the responsibility and correlative expense
for administrative and support services for Contract owners. IMA
recognizes the Insurance Company as the sole shareholder of shares of
the Series Fund issued under this Agreement. From time to time, IMA may
pay amounts from its past profits to the Insurance Company for
providing certain administrative services for the Series Fund or for
providing other services that relate to the Series Fund. In
consideration of the savings resulting from such arrangement, and to
compensate the Insurance Company for its costs, IMA agrees to pay to
the Insurance Company quarterly an amount equal to 20 basis points
(0.2%) per annum of the prior quarter's average aggregate amount
invested by the Account in the Series Fund under this Agreement. Such
payments will be made only when the average aggregate amount invested
exceeds for the prior quarter $40,000 and shall be made for as long as
the Account invests in the Series Fund. The parties agree that such
payments are for administrative services and investor support services,
and do not constitute payment for investment advisory, distribution or
other services. Payment of such amounts by IMA shall not increase the
fees paid by the Series Fund or its shareholders.
Article VI. Diversification
6.01 The Series Fund will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification
requirements for variable annuity, endowment, modified endowment or
life insurance contracts and any amendments or other modifications to
that Section or Regulation at all times necessary to satisfy those
requirements. The Series Fund will notify the Insurance Company
immediately if it has a reasonable basis for believing any Fund has
ceased to comply or might cease to comply and will immediately take all
reasonable steps necessary to adequately diversify the Fund to achieve
compliance.
Article VII. Potential Conflicts
7.01 The directors of the Series Fund will monitor the Series Fund for the
existence of any material irreconcilable conflict between the interests
of the variable Contract owners of all separate accounts investing in
the Series Fund and the participants of all Qualified Plans investing
in the Series Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Fund are being managed; (e) a
difference in voting instructions given by variable annuity contract
and variable life insurance contract owners; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of
variable contract owners. The directors of the Series Fund shall
promptly inform the Insurance Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
The directors of the Series Fund shall have sole authority to determine
whether an irreconcilable material conflict exists and their
determination shall be binding upon the Insurance Company.
7.02 The Insurance Company and IMA each will report promptly any potential
or existing conflicts of which it is aware to the directors of the
Series Fund. The Insurance Company and IMA each will assist the
directors of the Series Fund in carrying out their responsibilities
under the Mixed and Shared Funding Exemptive Order, by providing the
directors of the Series Fund with all information reasonably necessary
for them to consider any issues raised. This includes, but is not
limited to, an obligation by the Insurance Company to inform the
directors of the Series Fund whenever Contract owner voting
instructions are to be disregarded. These responsibilities shall be
carried out by the Insurance Company with a view only to the interests
of the Contract owners and by IMA with a view only to the interests of
Contract holders and Qualified Plan participants.
7.03 If it is determined by a majority of the directors of the Series Fund,
or a majority of the directors who are not interested persons of the
Series Fund, any of its Funds, or IMA (the "Independent Directors"),
that a material irreconcilable conflict exists, the Insurance Company
and/or other Participating Insurance Companies or Qualified Plans that
have executed participation agreements shall, at their expense and to
the extent reasonably practicable (as determined by a majority of the
Independent Directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate
accounts from the Series Fund or any Fund and reinvesting those assets
in a different investment medium, including (but not limited to)
another Fund of the Series Fund, or submitting the question whether
such segregation should be implemented to a vote of all affected
variable contract owners and, as appropriate, segregating the assets of
any appropriate group (e.g., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account and obtaining
any necessary approvals or orders of the Commission in connection
therewith.
7.04 If a material irreconcilable conflict arises because of a decision by
the Insurance Company to disregard Contract owner voting instructions
and that decision represents a minority position or would preclude a
majority vote, the Insurance Company may be required, at the Series
Fund's election, to withdraw the affected Account's investment in the
Series Fund and terminate this Agreement with respect to that Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Independent Directors. Any
such withdrawal and termination must take place within six (6) months
after the Series Fund gives written notice that this provision is being
implemented, and, until the end of that six month period, the Series
Fund shall continue to accept and implement orders by the Insurance
Company for the purchase (and redemption) of shares of the Series Fund.
7.05 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the
Insurance Company will withdraw the affected Account's investment in
the Series Fund and terminate this Agreement with respect to that
Account within six months after the directors of the Series Fund inform
the Insurance Company in writing that they have determined that the
state insurance regulator's decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
Independent Directors. Until the end of the foregoing six month period,
the Series Fund shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption) of shares of the
Series Fund.
7.06 For purposes of Sections 7.03 through 7.06 of this Agreement, a
majority of the Independent Directors shall determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Series Fund be required to establish
a new funding medium for the Contracts. The Insurance Company shall not
be required by Section 7.03 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority
of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the directors of the Series Fund
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will
withdraw the Account's investment in the Series Fund and terminate this
Agreement within six (6) months after the directors of the Series Fund
inform the Insurance Company in writing of the foregoing determination,
provided, however, that the withdrawal and termination shall be limited
to the extent required by the material irreconcilable conflict, as
determined by a majority of the Independent Directors.
7.07 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 provision of
the Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the
Series Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.04, 3.05 and 7.01
to 7.05 of this Agreement shall continue in effect only to the extent
that terms and conditions substantially identical to those Sections are
contained in the Rule(s) as so amended or adopted.
Article VIII. Indemnification
8.01 Indemnification By The Insurance Company
(a) The Insurance Company agrees to indemnify and hold harmless the
Series Fund and each trustee, officer, employee or agent of the
Series Fund, and each person, if any, who controls the Series
Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this
Section 8.01) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Insurance Company) or litigation
(including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale, acquisition, or redemption
of the Series Fund's shares to or from the Accounts or the
Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Contracts
or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), 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, in light of the circumstances under
which they are made, not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished in writing to the
Insurance Company by or on behalf of the Series Fund for use
in the registration statement or prospectus for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or shares of the Series Fund;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of
the Series Fund not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of the
Insurance Company or persons under its control, with respect
to the sale or distribution of the Contracts or Series Fund
Shares;
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Series
Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein, in light of
the circumstances under which they are made, a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance and in conformity with upon
information furnished in writing to the Series Fund by or on
behalf of the Insurance Company for use in conformity with
the sale of the Contract or shares of the Series Fund;
(iv) arise as a result of any failure by the Insurance Company to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by the Insurance
Company in this Agreement or arise out of or result from any
other material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections
8.01(b) and 8.01(c) hereof.
(b) The Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party that may arise from that Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of that Indemnified Party's duties or by reason of
that Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Series Fund, whichever is
applicable.
(c) The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless that Indemnified Party shall have
notified the Insurance Company in writing within a reasonable
time after the summons or other first legal process giving
information of the nature of the claim shall have been served
upon that Indemnified Party (or after the Indemnified Party shall
have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Insurance Company of its obligations hereunder except to the
extent that the Insurance Company has been materially prejudiced
by such failure to give notice. In addition, any failure by the
Indemnified Party to notify the Insurance Company of any such
claim shall not relieve the Insurance Company from any liability
which it may have to the Indemnified Party against whom the
action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Parties, the Insurance Company shall be
entitled to participate, at its own expense, in the defense of
the action. The Insurance Company also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory
to the party named in the action; provided, however, that if the
Indemnified Party shall have reasonably concluded that there may
be defenses available to it which are different from or
additional to those available to the Insurance Company, the
Insurance Company shall not have the right to assume said
defense, but shall pay the costs and expenses thereof (except
that in no event shall the Insurance Company be liable for the
fees and expenses of more than one counsel for Indemnified
Parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, which counsel shall be
reasonably satisfactory to the Insurance Company). After notice
from the Insurance Company to the Indemnified Party of the
Insurance Company's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Insurance Company
will not be liable to that party under this Agreement for any
legal or other expenses subsequently incurred by the party
independently in connection with the defense thereof other than
reasonable costs of investigation.
(d) The Indemnified Parties will promptly notify the Insurance
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the
Series Fund's shares or the Contracts or the operation of the
Series Fund.
8.02 Indemnification by IMA
(a) IMA agrees to indemnify and hold harmless the Insurance Company
and each of its directors, officers, employees or agents, and
each person, if any, who controls the Insurance Company within
the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.02) against
any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of IMA) or
litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale, acquisition or
redemption of the Series Fund's shares or the Contracts and:
(i) 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
of the Series Fund (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if the statement or omission or alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to IMA or the Series Fund
by or on behalf of the Insurance Company for use in the
registration statement or prospectus for the Series Fund or
in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Series Fund shares;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by IMA or persons under its
control) or wrongful conduct of the Series Fund, IMA or
persons under their control, with respect to the sale or
distribution of the Contracts or shares of the Series Fund;
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished in writing to the Insurance Company by
or on behalf of the Series Fund;
(iv) arise as a result of any failure by the Series 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 Article VI of
this Agreement); or
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by IMA in Article
II or any other Article of this Agreement or arise out of or
result from any other material breach of this Agreement by
IMA;
as limited by and in accordance with the provisions of Sections
8.02(b) and 8.02(c) hereof.
(b) IMA shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party that may arise from
the Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of the Indemnified Party's duties or by
reason of the Indemnified Party's reckless disregard of obligations
and duties under this Agreement.
(c) IMA shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified IMA in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Indemnified Party (or after the Indemnified Party shall have received
notice of such service on any designated agent). Notwithstanding the
foregoing, the failure of any Indemnified Party to give notice as
provided herein shall not relieve IMA of its obligations hereunder
except to the extent that IMA has been prejudiced by such failure to
give notice. In addition, any failure by the Indemnified Party to
notify IMA of any such claim shall not relieve IMA from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties,
IMA will be entitled to participate, at its own expense, in the
defense thereof. IMA also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action;
provided, however, that if the Indemnified Party shall have reasonably
concluded that there may be defenses available to it which are
different from or additional to those available to IMA, IMA shall not
have the right to assume said defense, but shall pay the costs and
expenses thereof (except that in no event shall IMA be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from IMA to the
Indemnified Party of IMA's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified Party,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and IMA will not be liable to that
party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
(d) The Insurance Company agrees to notify IMA promptly of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.03 Indemnification By the Series Fund
(a) The Series Fund agrees to indemnify and hold harmless the Insurance
Company, and each of its directors, officers, employees and agents,
and each person, if any, who controls the Insurance Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.03) against any and all
losses, claims, damages, liabilities (including legal and other
expenses) to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as those
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the operations of the
Series Fund and: (i) arise as a result of any failure by the Series
Fund to provide the services and furnish the materials under the terms
of this Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or (ii) arise out of or result from any material breach of
any representation, warranty or agreement made by the Series Fund in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Series Fund;
as limited by, and in accordance with the provisions of, Sections
8.03(b) and 8.03(c) hereof.
(b) The Series Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party that may
arise from the Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of the Indemnified Party's duties
or by reason of the Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
(c) The Series Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless the Indemnified Party shall have notified the Series Fund in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have
been served upon the Indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Series Fund of
its obligations hereunder except to the extent that the Series Fund
has been prejudiced by such failure to give notice. In addition, any
failure by the Indemnified Party to notify the Series Fund of any such
claim shall not relieve the Series Fund from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Series
Fund will be entitled to participate, at its own expense, in the
defense thereof. The Series Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action; provided, however, that if the Indemnified Party shall have
reasonably concluded that there may be defenses available to it which
are different from or additional to those available to the Series
Fund, the Series Fund shall not have the right to assume said defense,
but shall pay the costs and expenses thereof (except that in no event
shall the Series Fund be liable for the fees and expenses of more than
one counsel for Indemnified Parties in connection with any one action
or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances). After
notice from the Series Fund to the Indemnified Party of the Series
Fund's election to assume the defense thereof, and in the absence of
such a reasonable conclusion that there may be different or additional
defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by
it, and the Series Fund will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by
that party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Insurance Company and IMA agree promptly to notify the Series Fund
of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, the operation of the
Account, or the sale or acquisition of shares of the Series Fund.
8.04 If the indemnification provided for in this Article VIII is unavailable
to or insufficient to hold harmless an Indemnified Party under Sections
8.01, 8.02 or 8.03 above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Insurance
Company, the Series Fund and IMA from the sale, acquisition or
redemption of the Series Fund's shares to or from the Accounts or the
Contracts to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the Indemnified Party failed to give the notice required under Section
8.01(c), 8.02(c) or 8.03(c), as applicable, then each indemnifying
party shall contribute to such amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the
Insurance Company, IMA and the Series Fund in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Insurance Company, IMA or the Series Fund and the parties'
relative, intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Insurance Company,
IMA and the Series Fund agree that it would not be just and equitable
if contribution pursuant to this Section 8.04 were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
Section 8.04. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 8.04 shall be deemed
to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any
such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act of 1933)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
8.05 No indemnifying party shall, without the written consent of the
Indemnified Party, effect the settlement or compromise of any judgment
with respect to, any pending or threatened action or claim of which
indemnification or contribution may be sought hereunder (whether or not
the Indemnified Party is an actual or potential party to such action or
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified Party from all liability
arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any Indemnified Party.
Article IX. Applicable Law
9.01 This Agreement shall be construed and provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.02 This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder,
including any exemptions from those statutes, rules and regulations the
Commission may grant (including, but not limited to, the Mixed and
Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
Article X. Termination
10.01 This Agreement shall terminate:
(a) at the option of any party upon six (6) months advance written
notice to the other parties; provided, however, such notice shall
not be given earlier than one year following the date of this
Agreement; or
(b) at the option of the Insurance Company to the extent that shares
of Funds are not reasonably available to meet the requirements of
the Contracts as determined by the Insurance Company, provided,
however, that such a termination shall apply only to the Fund(s)
not reasonably available. Prompt written notice of the election
to terminate for such cause shall be furnished by the Insurance
Company to the Series Fund and IMA; or
(c) at the option of the Series Fund or IMA, in the event that formal
administrative proceedings are instituted against the Insurance
Company by the NASD, the Commission, an insurance commissioner or
any other regulatory body regarding the Insurance Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Series Fund's shares, provided, however, that the Series Fund
determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse
effect upon the ability of the Insurance Company to perform its
obligations under this Agreement; or
(d) at the option of the Insurance Company in the event that formal
administrative proceedings are instituted against the Series Fund
or IMA by the NASD, the Commission, or any state securities or
insurance department or any other regulatory body, provided,
however, that the Insurance Company determines in its sole
judgement exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon (i) the
ability of the Series Fund or IMA to perform its obligations
under this Agreement or (ii) the ability of the Insurance
Company to market the Contracts; or
(e) with respect to any Account, upon requisite vote of the Contract
owners having an interest in that Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Fund shares in accordance with the terms of the
Contracts for which those Fund shares had been selected to serve
as the underlying investment media. The Insurance Company will
give at least 30 days' prior written notice to the Series Fund of
the date of any proposed vote to replace the Series Fund's
shares; or
(f) at the option of the Insurance Company, in the event any of the
Series Fund's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or exemptions
therefrom, or such law precludes the use of those shares as the
underlying investment media of the Contracts issued or to be
issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Series 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 Insurance Company reasonably believes that the Series Fund
may fail to so qualify; or
(h) at the option of the Insurance Company, if the Series Fund fails
to meet the diversification requirements specified in Article VI
hereof; or
(i) at the option of either the Series Fund or IMA, if (1) the Series
Fund or IMA, respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that the Insurance
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and that material adverse change or material adverse
publicity will have a material adverse impact upon the business
and operations of either the Series Fund or IMA, (2) the Series
Fund or IMA shall notify the Insurance Company in writing of that
determination and its intent to terminate this Agreement, and (3)
after considering the actions taken by the Insurance Company and
any other changes in circumstances since the giving of such a
notice, the determination of the Series Fund or IMA shall
continue to apply on the sixtieth (60th) day following the giving
of that notice, which sixtieth day shall be the effective date of
termination;
(j) at the option of the Insurance Company, if (1) the Insurance
Company shall determine, in its sole judgment reasonably
exercised in good faith, that either the Series Fund or IMA has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and
that material adverse change or material adverse publicity will
have a material adverse impact upon the business and operations
of the Insurance Company or the ability of the Insurance Company
to market the Contracts, (2) the Insurance Company shall notify
the Series Fund and IMA in writing of the determination and its
intent to terminate the Agreement, and (3) after considering the
actions taken by the Series Fund and/or IMA and any other changes
in circumstances since the giving of such a notice, the
determination shall continue to apply on the sixtieth (60th) day
following the giving of the notice, which sixtieth day shall be
the effective date of termination;
(k) at the option of the Insurance Company, upon the Series Fund's or
IMA's breach of any material provision of this Agreement, which
breach has not been cured to the satisfaction of the Insurance
Company within ten days after written notice of such breach is
delivered to the Series Fund; or,
(l) at the option of the Series Fund, upon the Insurance Company's
breach of any material provision of this Agreement, which breach
has not been cured to the satisfaction of the Series Fund within
ten days after written notice of such breach is delivered to the
Insurance Company.
10.02 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.01(a) may be exercised
for any reason or for no reason.
10.03 No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written
notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.01(a), 10.01(i), or
10.01(j) of this Agreement, the prior written notice shall be
given in advance of the effective date of termination as required
by those provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.01(c) or 10.01(d) above of this Agreement, the prior
written notice shall be given at least sixty (60) days before the
effective date of termination.
10.04 Notwithstanding any termination of this Agreement, subject to Section
1.02 of this Agreement and for so long as the Series Fund continues to
exist, the Series Fund and IMA shall at the option of the Insurance
Company, continue to make available additional shares of the Series
Fund pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this
Agreement ("Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Series Fund, redeem investments in the Series Fund
and/or invest in the Series Fund upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.04 shall not apply to any terminations under Article VII and
the effect of Article VII terminations shall be governed by Article VII
of this Agreement.
Article XI. Notices
11.01 Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party
set forth below or at such other address as the other party may from
time to time specify in writing.
If to the Series Fund:
Investors Xxxx Series Fund
000 Xxxxxx Xxxx.
Xxxxxx Xxxx, XX, 00000
Attention: President
If to the Insurance Company:
FIDELITY SECURITY LIFE INSURANCE COMPANY
0000 Xxxxxxxx
Xxxxxx Xxxx XX 00000
If to IMA:
Investors Xxxx Advisers LLC
000 Xxxxxx Xxxx.
Xxxxxx Xxxx, XX, 00000
Attention: President
Article XII. Miscellaneous
12.01 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts 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
without the express written consent of the affected party unless and
until that information may come into the public domain. This section
shall survive termination of this Agreement.
12.02 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.
12.03 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.04 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.
12.05 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit
those authorities reasonable access to its books and records in
connection with any lawful investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
12.06 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.
12.07 This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided, that no
party may assign this Agreement without the prior written consent of
the others.
12.08 If the Agreement terminates, the parties agree that Article VIII, and
to the extent that all or a portion of assets of the Account continue
to be invested in the Series Fund, Articles I, II, III, V, VI VII, IX
and XI will survive the termination and remain in effect until such
time as the assets of the Account are not so invested.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative as of the date specified below.
---------------------------------------- -------------------------------------- --------------------------------------
FIDELITY SECURITY LIFE INSURANCE INVESTORS XXXX SERIES FUND INVESTORS XXXX ADVISERS LLC
COMPANY
---------------------------------------- -------------------------------------- --------------------------------------
By its authorized officer, By its authorized officer, By its authorized officer,
By: _______________________ By: _______________________ By: _______________________
Title: ______________________ Title: ______________________ Title: _______________________
Date: ____________ Date: ____________ Date: ____________
---------------------------------------- -------------------------------------- --------------------------------------
Schedule A
Accounts
Name of Account: Fidelity Security Life Insurance Company's Separate Account M
Date of Resolution of Insurance Company's Board which Established the Account:
August 25, 1998
Schedule B
Contracts
1. Contract: Contact Form No. M-2011
Schedule C
Proxy Voting Procedure
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Series Fund by IMA, the Series Fund and the
Insurance Company. The defined terms herein shall have the meanings assigned in
the Participation Agreement except that the term "Insurance Company" shall also
include the department or third party assigned by the Insurance Company to
perform the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company by IMA
as early as possible before the date set by the Series Fund for the
shareholder meeting to facilitate the establishment of tabulation
procedures. At this time IMA will inform the Insurance Company of the
Record, Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a
"tape run", or other activity, which will generate the names, addresses
and number of units which are attributed to each contract
owner/policyholder (the "Customer") as of the Record Date. Allowance
should be made for account adjustments made after this date that could
affect the status of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best efforts
to call in the number of Customers to IMA, as soon as possible, but no
later than one week after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Series Fund. The
Insurance Company, at its expense, shall produce and personalize the
Voting Instruction cards. IMA must approve the Card before it is
printed. Allow approximately 2-4 business days for printing information
on the Cards. Information commonly found on the Cards includes:
a) name (legal name as found on account registration)
b) address
c) Fund or account number
d) coding to state number of units
e) individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Series Fund). (This and related
steps may occur later in the chronological process due to possible
uncertainties relating to the proposals.)
4. During this time, IMA will develop, produce, and the Series Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Insurance
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Insurance Company). Contents of
envelope sent to customers by Insurance Company will include:
a) Voting Instruction Card(s)
b) One proxy notice and statement (one document)
c) Return envelope (postage pre-paid by Insurance Company) addressed
to the Insurance Company or its tabulation agent
d) "Urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Series Fund.)
e) Cover letter - optional, supplied by Insurance Company and reviewed and
approved in advance by IMA.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge
at Insurance Company reviews and approves the contents of the mailing
package to ensure correctness and completeness. Copy of this approval
sent to IMA.
6. Package mailed by the Insurance Company.
7. The Series Fund must allow at least a 15 business day solicitation time
to the Insurance Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from
(but not including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure.
9. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to the Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified,"
i.e., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.
10. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
11. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Series Fund receives the
tabulations stated in terms of a percentage and the number of shares.)
IMA must review and approve tabulation format.
12. Final tabulation in shares is verbally given by the Insurance Company
to IMA on the morning of the meeting not later than 10:00 a.m. Denver
time. IMA may request an earlier deadline if required to calculate the
vote in time for the meeting.
13. A Certificate of Mailing and Authorization to Vote Shares will be
required from the Insurance Company as well as an original copy of the
final vote. IMA will provide a standard form for each Certification.
14. The Insurance Company will be required to box and archive the Cards
received from the Customers for seven (7) years or such other time as
may be required by applicable regulatory provisions. In the event that
any vote is challenged or if otherwise necessary for legal, regulatory,
or accounting purposes, IMA will be permitted reasonable access to such
Cards.
15. All approvals and "signing-off" may be done orally, but must always
be followed up in writing.
16. To the extent allowed by regulatory authorities, the Insurance Company
may permit Contract owners to use alternative means of voting (e.g.,
voting by telephone or by using the internet).
