PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC. and
THE UNION CENTRAL LIFE INSURANCE COMPANY
THIS AGREEMENT made as of May 23, 1997, among Templeton
Variable Products Series Fund (the "Trust"), an open-end
management investment company organized as a business trust under
Massachusetts law, Franklin Xxxxxxxxx Distributors, Inc., a
California corporation, the Trust's principal underwriter
("Underwriter"), and The Union Central Life Insurance Company, a
life insurance company organized as a corporation under Ohio law
(the "Company"), on its own behalf and on behalf of each
segregated asset account of the Company set forth in Schedule A,
as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and
Exchange Commission (the "Commission") as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "l 940 Act"), and has an effective registration
statement relating to the offer and sale of the various series of
its shares under the Securities Act of 1933, as amended (the "l
933 Act" ) ; and
WHEREAS, the Trust and the Underwriter desire that Trust
shares be used as an investment vehicle for separate accounts
established for variable life insurance policies and variable
annuity contracts to be offered by life insurance companies which
have entered into fund participation agreements with the Trust
(the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided
into several series of shares, each series representing an
interest in a particular managed portfolio of securities and
other assets, and certain of those series, named in Schedule B,
(the "Portfolios") are to be made available for purchase by the
Company for benefit of the Accounts with respect to the Contracts
listed in Schedule A; and
WHEREAS, the Trust has received an order from the
Commission, dated November 16, 1993 (File No. 812-8546), 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 1940 Act, and Rules 6e-2 (b) (15) and 6e-3 (T) (b)
(15) thereunder, to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Shared Funding Exemptive
Order"); and
WHEREAS, the Portfolios are to be made available as
investment vehicles under certain group variable annuity
contracts listed on Schedule A (the "Contracts"), which are
offered and sold only to employer-sponsored 401(k) retirement
plans (" Plans" ), and the Trust has been advised that interests
under the Contracts in the Accounts are exempt from registration
under the 1933 Act; and
WHEREAS, the Trust has been advised that each Account is
exempt from registration as an investment company under the 1940
Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board
of Directors of the Company, on the date shown for such account
on Schedule A hereto, to set aside and invest assets attributable
to one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer
with the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each,
an "Adviser") is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act")
and any applicable state securities laws; and
WHEREAS, to the extent permitted by applicable insurance
laws and regulations, the Company intends to purchase shares in
the Portfolios on behalf of each Account to fund certain of the
aforesaid Contracts and the Underwriter is authorized to sell
such shares to separate accounts such as each Account at net
asset value.
NOW THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE 1.
Purchase and Redemption of Trust Portfolio Shares
1.1. For purposes of this Article 1, the Company shall be
the Trust's agent for receipt of purchase orders and requests for
redemption relating to each Portfolio from each Account, provided
that the Company notifies the Trust of such purchase orders and
requests for redemption by 10:00 a.m. Eastern time on the next
following Business Day, as defined in Section 1.3.
1.2. The Trust agrees to make shares of the Portfolios
available to the Accounts for purchase at the net asset value per
share next computed after receipt of a purchase order by the
Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust describing
Portfolio purchase procedures on those days on which the Trust
calculates its net asset value pursuant to rules of the
Commission, and the Trust shall use best efforts to calculate
such net asset value on each day on which the New York Stock
Exchange is open for trading. The Company will transmit orders
from time to time to the Trust for the purchase of shares of the
Portfolios. The Trustees of the Trust (the "Trustees") may refuse
to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees acting
in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in
the best interests of the shareholders of such Portfolio.
1.3 The Company shall submit payment for the purchase of
shares of a Portfolio on behalf of an Account no later than the
close of the Federal Reserve Bank, which is 6:00 p.m. Eastern
time, on the next Business Day after the Trust receives the
purchase order. If payment in federal funds for any purchase is
not received by the Trust or its designated custodian or is
received after such time, the Company shall promptly upon the
Trust's written request, reimburse the Trust for any charges,
costs, fees, interest, or other expenses incurred by the Trust in
connection with any advances to, or borrowings or overdrafts by,
the Trust, or any similar expenses incurred by the Trust as a
result of transactions effected by the Trust based upon such
purchase order. Payment shall be made in federal funds
transmitted by wire to the Trust. Upon receipt by the Trust of
the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility
of the Trust for this purpose. " Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on
which. the Trust calculates its net asset value pursuant to the
rules of the Commission.
1.4 The Trust will redeem for cash any full or fractional
shares of any Portfolio, when requested by the Company on behalf
of an Account, at the net asset value next computed after receipt
by the Trust (or its agent) of the request for redemption, as
established in accordance with the provisions of the then current
prospectus of the Trust describing Portfolio redemption
procedures. The Trust shall make payment for such shares in the
manner established from time to time by the Trust. Redemption
with respect to a Portfolio will normally be paid to the Company
for an Account in federal funds transmitted by wire to the
Company before the close of the Federal Reserve Bank, which is
6:00 p.m. Eastern time on the next Business Day after the receipt
of the request for redemption. If payment in federal funds for
any redemption request is received by the Company after such
time, the Trust shall promptly upon the Company's written
request, reimburse the Company for any charges, costs, fees,
interest, or other expenses incurred by the Company as a result
of such failure to provide redemption proceeds within the
specified time. Notwithstanding the foregoing, such payment may
be delayed if, for example, the Portfolio's cash position so
requires or if extraordinary market conditions exist, but in no
event shall payment be delayed for a greater period than is
permitted by the 0000 Xxx.
1.5 Payments for the purchase of shares of the Trust's
Portfolios by the Company under Section 1.3 and payments for the
redemption of shares of the Trust's Portfolios under Section 1.4
may be netted against one another on any Business Day for the
purpose of determining the amount of any wire transfer on that
Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares
will be by book entry only. Stock certificates will not be issued
to the Company or the Account. Portfolio Shares purchased from
the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.7 The Trust shall furnish, on or before the ex-dividend
date, notice to the Company of any income dividends or capital
gain distributions payable on the shares of any Portfolio of the
Trust. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The
Trust shall notify the Company of the number of shares so issued
as payment of such dividends and distributions. The Company
reserves the right, on its behalf and on behalf of the Accounts,
to revoke this election and to receive all such dividends in
cash.
1.8 The Trust shall calculate the net asset value of each
Portfolio on each Business Day, as defined in Section 1.3. The
Trust shall make the net asset value per share for each Portfolio
available to the Company or its designated agent on a daily basis
as soon as reasonably practical after the net asset value per
share is calculated (normally by 6:30 p.m. Eastern time) and
shall use best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time each Business Day.
1.9 The Trust agrees that its Portfolio shares will be sold
only to Participating Insurance Companies and their separate
accounts and to certain qualified pension and retirement plans to
the extent permitted by the Shared Funding Exemptive Order. No
shares of any Portfolio will be sold directly to the general
public. The Company agrees that it will use Trust shares only for
the purposes of funding the Contracts through the Accounts listed
in Schedule A, as amended from time to time.
1.10 The Company agrees that all net amounts available under
the Contracts listed on Schedule A attached hereto and
incorporated herein by this reference, as such Schedule A may be
amended from time to time hereafter by mutual written agreement
of all the parties hereto shall be invested in the Trust, in such
other Funds advised by the Adviser or its affiliates as may be
mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if: (a)
such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the
investment objectives and policies of the Portfolios; or (b) the
Company gives the Trust and the Underwriter 45 days written
notice of its intention to make such other investment company
available as a funding vehicle for the Contracts; or (c) such
other investment company is available as a funding vehicle for
the Contracts at the date of this Agreement and the Company so
informs the Trust and the Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Trust or Underwriter consents to the use
of such other investment company.
1.11 The Trust agrees that all Participating Insurance Companies
shall have the obligations and responsibilities regarding pass-
through voting and conflicts of interest corresponding to those
contained in Section 2.10 and Article IV of this Agreement.
ARTICLE II.
Obligations of the Parties; Fees and Expenses
2.1 The Trust shall prepare and be responsible for filing
with the Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or
similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information
of the Trust. The Trust shall bear the costs of registration and
qualification of its shares of the Portfolios, preparation and
filing of the documents listed in this Section 2.1 and all taxes
to which an issuer is subject on the issuance and transfer of its
shares.
2.2 At the option of the Company, the Trust or the
Underwriter shall either (a). provide the Company with as many
copies of portions of the Trust's current prospectus, annual
report, semi-annual report and other shareholder communications,
including any amendments or supplements to any of the foregoing,
pertaining specifically to the Portfolios as the Company shall
reasonably request; or (b) provide the Company with a camera
ready copy of such documents in a form suitable for printing and
from which information relating to series of the Trust other than
the Portfolios has been deleted to the extent practicable. The
Trust or the Underwriter shall provide the Company with a copy of
its current statement of additional information, including any
amendments or supplements, in a form suitable for duplication by
the Company. Expenses of furnishing such documents for marketing
purposes shall be borne by the Company and expenses of furnishing
such documents for current contract owners invested in Trust
portfolios, and for current Plan participants invested in
subaccounts that are invested in Trust portfolios (" Trust Plan
Participants" ), shall be borne by the Trust or the Underwriter.
2.3 The Trust (at its expense) shall provide the Company
with copies of any Trust-sponsored proxy materials in such
quantity as the Company shall reasonably require for distribution
to Contract owners. The Company shall bear the costs of
distributing proxy materials (or similar materials such as voting
solicitation instructions), prospectuses and statements of
additional information to Contract owners and Trust Plan
Participants. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners and
Trust Plan Participants in accordance with applicable federal and
state securities laws.
2.4 If and to the extent required by law, the Company shall:
(i) solicit voting instructions from Contract owners and Trust
Plan Participants; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners and Trust Plan
Participants; and (iii) vote Trust shares for which no
instructions have been received in the same proportion as Trust
shares of such Portfolio 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 (or Trust Plan
Participants as applicable). The Company reserves the right to
vote Trust shares held in any segregated asset account in its own
right, to the extent permitted by law.
2.5 Except as provided in Section 2.6, the Company shall not
use any designation comprised in whole or part of the names or
marks "Franklin" or " Xxxxxxxxx" without the prior written
consent and upon termination of this Agreement for any reason,
the Company shall cease all use of any such name or xxxx as soon
as reasonably practicable.
2.6 The Company shall furnish, or cause to be furnished to
the Trust or its designee, at least one complete copy of each
Contract, disclosure document, report, solicitation for voting
instructions, sales literature and other promotional materials,
and all amendments to any of the above that relate to the
Contracts or the Accounts prior to their first use. The Company
shall furnish, or shall cause to be furnished, to the Trust or
its designee each piece of sales literature or other promotional
material in which the Trust or the Adviser is named, at least 15
Business Days prior to its use. No such material shall be used if
the Trust or its designee objects to such use within ten (10)
Business Days after receipt of such material. For purposes of
this paragraph, "sales literature or other promotional material"
includes, but is not limited to, portions of the following that
refer to the Trust or affiliates of the Trust: advertisements
(such as material published or designed for use in a newspaper,
magazine or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion
pictures or electronic communication or other public media),
sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts or any other
advertisement, sales literature or published article or
electronic communication), educational or training materials or
other communications distributed or made generally available to
some or all agents or employees, and disclosure documents,
shareholder reports and proxy materials.
2.7 The Company and its agents shall not give any
information or make any representations or statements on behalf
of the Trust or concerning the Trust, the Underwriter or the
Adviser in connection with the sale of the Contracts other than
information or representations contained in and accurately
derived from the registration statement or prospectus for the
Trust shares (as such registration statement and prospectus may
be amended or supplemented from time to time), annual and semi-
annual reports of the Trust, Trust-sponsored proxy statements, or
in sales literature or other promotional material approved by the
Trust or its designee, except as required by legal process or
regulatory authorities or with the written permission of the
Trust or its designee. In addition, the Company specifically
agrees to the disclosure requirements described in Schedule E of
this Agreement.
2.8 The Trust shall use its best efforts to provide the
Company, on a timely basis, with such information about the
Trust, the Portfolios and each Adviser, in such form as the
Company may reasonably require, as the Company shall reasonably
request in connection with the preparation of disclosure
documents and any reports pertaining to the Contracts.
2.9 The Trust shall not give any information or make any
representations or statements on behalf of the Company or
concerning the Company, the Accounts or the Contracts other than
information or representations contained in and accurately
derived from the disclosure documents for the Contracts (as such
disclosure documents may be amended or supplemented from time to
time), or in materials approved by the Company. for distribution
including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with
the written permission. of the Company.
2.10 If and only to the extent that, the Commission
interprets the 1940 Act to require pass-through voting privileges
for Contract owners and Trust Plan Participants, the Company will
provide pass-through voting privileges to Contract owners and
Trust Plan Participants whose Contract values are invested,
through the Accounts, in shares of one or more Portfolios of the
Trust. If such voting privileges are required, the Trust shall
require all Participating Insurance Companies, including the
Company, to calculate voting privileges in the same manner and
the Company shall be responsible for assuring that the Accounts
calculate voting privileges in the manner established by the
Trust. If, and to the extent required by law or Commission or
Commission staff interpretations, the Company will vote shares of
each Portfolio of the Trust held by an Account and for which no
timely voting instructions from Contract owners or Trust Plan
Participants are received in the same proportion as those shares
held by that Account for which voting instructions are received.
The Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Portfolio shares
held to fund the Contracts without the prior written consent of
the Trust, which consent may be withheld in the Trust's sole
discretion.
2.11 The Trust and Underwriter shall pay no fee or other
compensation to the Company under this Agreement except as
provided on Schedule E. Nevertheless, the Trust or the
Underwriter or an affiliate may make payments (other than
pursuant to a Rule 12b-1 Plan) to the Company or its affiliates
or to the Contracts' underwriter in amounts agreed to by the
Underwriter in writing and such payments may be made out of fees
otherwise payable to the Underwriter or its affiliates, profits
of the Underwriter or its affiliates, or other resources
available to the Underwriter or its affiliates.
ARTICLE Ill.
Representations and Warranties
3.1 The Company represents and warrants that it is an
insurance company duly organized and in good standing under the
laws of the State of Ohio and that it has legally and validly
established each Account as a segregated asset account under such
law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that the Account is
exempt from registration as an investment company under Section
3(c) of the 1940 Act, and that it will notify the Trust and the
Underwriter immediately upon having a reasonable basis for
believing that such exemption no longer applies or might not
apply in the future.
3.3 The Company represents and warrants that interests under
the Contracts funded by the Accounts are exempt from registration
under section 3(a)(2) under the 1933 Act, that it will make every
effort to maintain such exemption, and that it will notify the
Trust and the Underwriter immediately upon having a reasonable
basis for believing that such exemption no longer applies or
might not apply in the future; the Contracts will be issued and
sold in compliance in all material respects with all applicable
federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability
requirements.
3.4 The Trust represents and warrants that it is duly
organized and validly existing under the laws of the State of
Massachusetts and that it does and will comply in all material
respects with the 1940 Act and the rules and regulations
thereunder.
3.5 The Trust represents and warrants that the Portfolio
shares offered and sold pursuant to this Agreement will be
registered under the 1933 Act and the Trust shall be registered
under the 1940 Act prior to and at the time of any issuance or
sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to
the extent deemed advisable by the Trust or the Underwriter.
3.6 The Trust represents and warrants that the investments
of each Portfolio will comply with the diversification
requirements for variable annuity, endowment or variable life
insurance contracts set forth in Section 817(h) of the Internal
Revenue Code of 1986, as amended ("Code"), and the rules and
regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the Company immediately upon
having a reasonable basis for believing any Portfolio has ceased
to comply or might not so comply and will in that event
immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded
by Regulation 1.817-5.
3.7 The Trust represents and warrants that it is currently
qualified as a "regulated investment company" under Subchapter M
of the Code, that it will make every effort to maintain such
qualification and will notify the Company immediately upon having
a reasonable basis for believing it has ceased to so qualify or
might not so qualify in the future.
3.8 The Trust represents and warrants that should it ever
desire to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act, the Trustees,
including a majority who are not "interested persons" of the
Trust under the 1940 Act ("Disinterested Trustees"), will
formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
3.9 The Trust represents and warrants that it, its
directors, officers, employees and others dealing with the money
or securities, or both, of a Portfolio shall at all times be
covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less that the minimum
coverage required by Rule 17g-1 or other regulations under the
1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
3.10 The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities
of the Trust are and shall be at all times covered by a blanket
fidelity bond or similar coverage which covers losses to the
Trust, in an amount not less than $5 million. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. The Company agrees to make
all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to
notify the Trust and the Underwriter in the event that such
coverage no longer applies.
3.11 The Underwriter represents that each Adviser is duly
organized and validly existing under applicable corporate law and
that each Adviser is registered and will during the term of this
Agreement remain registered as an investment adviser under the
Advisers Act.
3.12 The Trust currently intends for one or more Classes to
make payments to finance its distribution expenses, including
service fees, pursuant to a Plan adopted under Rule 12b-1 under
the 1940 Act (" Rule 12b-1" ), although it may determine to
discontinue such practice in the future. To the extent that any
Class of the Trust finances its distribution expenses pursuant to
a Plan adopted under Rule 12b-1, the Trust undertakes to comply
with any then current SEC and SEC staff interpretations
concerning Rule 12b-1 or any successor provisions.
ARTICLE IV.
Potential Conflicts
4.1 The parties acknowledge that a Portfolio's shares may be
made available for investment to other Participating Insurance
Companies. In such event, the Trustees will monitor the Trust for
the existence of any material irreconcilable conflict between the
interests of the contract owners of all Participating Insurance
Companies. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are
being
managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract
owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Trust shall promptly inform
the Company of any determination by - the Trustees that an
irreconcilable material conflict exists and of the implications
thereof.
4.2 The Company agrees to promptly report any potential or
existing conflicts of which it is aware to the Trustees. The
Company will assist the Trustees in carrying out their
responsibilities under the Shared Funding Exemptive Order by
providing the Trustees with all information reasonably necessary
for the Trustees to consider any issues raised including, but not
limited to, information as to a decision by the Company to
disregard Contract owner voting instructions. All communications
from the Company to the Trustees may be made in care of the
Trust.
4.3 If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material
irreconcilable conflict exists that affects the interests of
Contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also
affected, at its own expense and to the extent reasonably
practicable (as determined by the Trustees) take whatever steps
are necessary to remedy or eliminate the irreconcilable material
conflict, which steps could include: (a) withdrawing the assets
allocable to some or all of the Accounts from the Trust or any
Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question of whether or not such
withdrawal should be implemented to a vote of all affected
Contract owners and, as appropriate, withdrawing the assets of
any appropriate group (i.e. , annuity contract owners, life
insurance policy owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of
such withdrawal, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new
registered management investment company or managed separate
account.
4.4 If a material irreconcilable conflict arises because of
a decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or
would preclude a majority vote, the Company may be required, at
the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect
to such Account; provided, however that such withdrawal and
termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust
gives written notice that this provision is being implemented.
Until the end of such six (6) month period, the Trust shall
continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with a majority of other state regulators, then
the Company will withdraw the affected Account's investment in
the Trust and terminate this Agreement with respect to such
Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Until
the end of such six (6) month period, the Trust shall continue to
accept and implement orders by the Company for the purchase and
redemption of shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this
Agreement, a majority of the disinterested Trustees shall
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the Trust
be required to establish a new funding medium for the Contracts.
In the event that the Trustees determine that any proposed action
does not adequately remedy any irreconcilable material conflict,
then the Company will withdraw the Account's investment in the
Trust and terminate this Agreement within six (6) months after
the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of
the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees
such reports, materials or data as the Trustees may reasonably
request so that the Trustees may fully carry out the duties
imposed upon them by the Shared Funding Exemptive Order, and said
reports, materials and data shall be submitted more frequently if
reasonably deemed appropriate by the Trustees.
4.8 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 1940 Act or the rules promulgated
thereunder with respect to mixed or shared funding (as defined in
the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE V.
Indemnification
5.1 Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless the
Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually, the " Indemnified Party"
for purposes of this Article V) against any and all losses,
claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company, which consent
shall not be unreasonably withheld) or expenses (including the
reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"),
to which the Indemnified Parties may become subject under any
statute or regulation, or at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of Trust
Shares 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 a
disclosure document for the Contracts or in the Contracts
themselves or in sales literature generated or approved by the
Company on behalf of the Contracts or Accounts (or any amendment
or supplement to any of the foregoing) (collectively, "Company
Documents" for the purposes of this Article V), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this indemnity shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived
from written information furnished to the Company by or on behalf
of the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Trust Documents as
defined in Section 5.2 (a)(i)) or wrongful conduct of the Company
or persons under its control, with respect, to the sale or
acquisition of the Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a)(i) or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon and accurately derived from written information furnished to
the Trust by or on behalf of the Company; or
(iv) arise out of or result from any failure by the Company
to provide the services or furnish the materials required under
the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
(b) The Company shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Trust or
Underwriter, whichever is applicable. The Company shall also not
be liable under this indemnification provision with respect to
any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the 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 such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company 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 Company shall be entitled to
participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(c) The Indemnified Parties will promptly notify the Company
of the. commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Trust shares
or the Contracts or the operation of the Trust.
5.2 Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless
the Company, the underwriter of the Contracts and each of its
directors, officers, employees and agents and each person, if
any, who controls the Company within the meaning of Section 15 of
the 1933 Act (collectively, the " Indemnified Parties and
individually, an " Indemnified Party" for purposes of this
Section 5.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Underwriter, which consent shall not be
unreasonably withheld) or expenses (including the reasonable
costs of investigating or defending any alleged losses, claims,
damages, liabilities or expenses and reasonable legal counsel
fees incurred in connection therewith (collectively, " Losses" )
to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of the Trust's
Shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
Registration Statement, prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing)
(collectively, the " Trust Documents") 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 such statement or omission of such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Trust by or on behalf
of the Company for use in the Registration Statement or
prospectus for the Trust or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the disclosure document or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Trust, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a disclosure document,
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 to the Company by or on
behalf of the Trust; or
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
representation specified in Section 3.7 of this Agreement and the
diversification requirements specified in Section 3.6 of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in ' this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 5.2(b) and 5.2(c)
hereof.
(b) The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to each Company or
the Account, whichever is applicable.
(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Underwriter 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 such
Indemnified Party (or after Such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Underwriter of any such claim shall not
relieve the Underwriter 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 Underwriter will be entitled to participate, at its own
expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume
the defense thereof, the Indemnified Party shall bear the
expenses of any additional counsel retained by it, and the
Underwriter will not be liable to Such party under this Agreement
for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Underwriter 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 each Account.
5.3 Indemnification By The Trust
(a) The Trust agrees to indemnify and hold harmless the
Company, and each of its directors, officers, employees, and
agents and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 5.3) against
any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust,
which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result
from the gross negligence, bad faith or willful misconduct of the
Board or any member thereof, are related to the operations of the
Trust, and arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Section 5.3(b) and 5.3(c)
hereof. It is understood and expressly stipulated that neither
the holders of shares of the Trust nor any Trustee, officer,
agent or employee of the Trust shall be personally liable
hereunder, nor shall any resort to be had to other private
property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against any
Indemnified Party as such may arise from such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Trust, the
Underwriter or each Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Trust
in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the
claims shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the Trust
of any such claim shall not relieve the Trust 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 Trust will be entitled to
participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from the Trust to such party of the Trust's election to
assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and
the Trust will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company and the Underwriter agree promptly to notify
the Trust 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, with respect to the operation of either the Account,
or the sale or acquisition of share of the Trust.
ARTICLE VI.
Termination
6.1 This Agreement may be terminated by any party in its
entirety or with respect to one, some or all Portfolios, for any
reason by sixty (60) days advance written notice delivered to the
other parties, and shall terminate immediately in the event of
its assignment, as that term is used in the 1940 Act.
6.2 This Agreement may be terminated immediately by either
the Trust or the Underwriter following consultation with the
Trustees upon written notice to the Company if:
(a) the Company notifies the Trust and the Underwriter that
the exemption from registration under Section 3(c) of the 1940
Act no longer applies, or might not apply in the future, to the
Accounts or that the exemption from registration. under section
3(a)(2) under the 1933 Act no longer applies or might not apply
in the future, to interests under the Contracts in the Accounts;
or
(b) either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised
in good faith, that the Company has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(c) if the Company gives the Trust and the Underwriter the
written notice specified in Section 1.10 hereof and at the same
time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however, that any termination under this Section 6.4(b)
shall be effective forty-five (45) days after the notice
specified in Section 1.10 was given.
6.3 This Agreement may be terminated immediately by the
Company upon written notice to the Trust and the Underwriter, if
the Company shall determine, in its sole judgment exercised in
good faith, that either the Trust or the Underwriter has suffered
a material adverse change in its business, operations, financial
conditions or prospects since the date of this Agreement or is
the subject of material adverse publicity.
6.4 If this Agreement is terminated for any reason, except
under Article IV (Potential Conflicts) above, the Trust shall, at
the option of the Company, continue to make available additional
shares of any Portfolio and redeem shares of any Portfolio
pursuant to all of the terms and conditions of this Agreement for
all Contracts in effect on the effective date of termination of
this Agreement. If this Agreement is terminated pursuant to
Article IV, the provisions of Article IV shall govern.
6.5 The provisions of Articles 11 (Representations and
Warranties) and V (indemnification) shall survive the termination
of this Agreement. All other applicable provisions of this
Agreement shall survive the termination of this Agreement, as
long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.4, except that the Trust and the
Underwriter shall have no further obligation to sell Trust shares
with respect to Contracts issued after termination.
6.6 The Company shall not redeem Trust shares attributable
to the Contracts (as opposed to Trust shares attributable to the
Company's assets held in the Account) except (i) as necessary to
implement Contract Owner initiated or approved transactions, (ii)
as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or
(iii) as permitted by an order of the Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will
promptly furnish to the Trust and the Underwriter the opinion of
counsel for the Company (which counsel shall be reasonably
satisfactory to the Trust and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent
Contract Owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the
Trust or the Underwriter 90 days notice of its intention to do
so.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party
set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Trust or the Underwriter:
Templeton Variable Products Series Fund, and
Franklin Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Senior Corporate Counsel and
Trust Assistant Secretary
with copy to:
000 X. Xxxxxxx Xxxxxxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X..Green, Trust Secretary
If to the Company:
The Union Central Life Insurance Company
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Assistant Secretary
ARTICLE VIII.
Miscellaneous
8.1 The captions in this Agreement are included for
convenience of reference only and in no way define or delineate
any of the provisions hereof or otherwise affect their
construction or effect.
8.2 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute
one and the same instrument.
8.3 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the
State of Connecticut. It shall also be subject to the provisions
of the federal securities laws and the rules and regulations
thereunder and to any orders of the Commission granting exemptive
relief therefrom and the conditions of such orders. Copies of any
such orders shall be promptly forwarded by the Trust to the
Company.
8.5 The parties to this Agreement acknowledge and agree that
all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall
be satisfied solely out of the assets of the Trust and that no
Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without
limitation the Commission, the National Association of Securities
Dealers, Inc. and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that
this Agreement shall not be exclusive in any respect, except as
provided in Section 1. 10.
8.9 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior
written approval of the other party.
8.10 No provisions of this Agreement may be amended or
modified in any' manner except by a written agreement properly
authorized and executed by both parties.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Fund Participation Agreement
as of the date and year first above written.
The Company:
The Union Central Life Insurance Company
By its authorized officer
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
The Trust:
Templeton Variable Products Series Fund
By its authorized officer
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President, Assistant Secretary
The Underwriter:
Franklin Xxxxxxxxx Distributors, Inc.
By its authorized officer
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President, Assistant Secretary
SCHEDULE A
Separate Accounts and Contracts of The Union Central Life
Insurance Company
Separate Account Name:
UCL Mutual Fund Separate Account No. 30
(for Templeton Stock Fund)
UCL Mutual Fund Separate Account No. 31
(for Xxxxxxxxx International Fund)
1. Contract Name: ESP ("Employee Savings Plan") -
Allocated Group Annuity Policy
Representative Form Number: UC64347
TVPSF Portfolios
and Classes Available: Templeton Stock Fund - Class 2
Xxxxxxxxx International Fund - Class 2
2. Contract Name: ESP ("Employee Savings Plan") -
Allocated Group Annuity Policy
Representative Form Number: UC64342 (NY Sales & Existing Clients)
TVPSF Portfolios
and Classes Available: Templeton Stock Fund - Class 2
Xxxxxxxxx International Fund - Class 2
SCHEDULE B
Trust Portfolios. Classes and Advisers
Portfolio: Xxxxxxxxx International Fund
Class: Class 2
Investment Adviser: Xxxxxxxxx Investment Counsel, Inc.
Portfolio: Templeton Stock Fund
Class: Class 2
Investment Adviser: Xxxxxxxxx Investment Counsel, Inc.
SCHEDULE C
ESP
FUND NAME/MNEMONICS
FUND NAME # 5 12 12/12
Deposit Account 1 DEPST Deposit Acct Deposit Account
Carillon Equity 2 CFEQY CFI Equity Carillon Equity
Carillon Bond 3 CFBND CFIBond Carillon Bond
Xxxxxxx Money Market 4 SCKMKT Money Market Money Market
Carillon Capital 8 CFCAP CFI Capital Carillon Capital
Carillon Government
Securities 9 CFGOV CFI Gov Sec Carillon Gov't Secur
Xxxxxxxxx
Xxxxxx Guardian 00 XXXXX X&X Guardian Neub Xxxxxx Guardian
Xxxxxxxxx
Xxxxxx Genesis 11 NBGEN N&B Genesis Neub Xxxxxx Genesis
American Century
Select 12 ACSEL Am Cen Selct American Cntry Select
American Century
Ultra 13 ACULT Am Cen Ultra American Century Ultra
Xxxxxxx
International 14 SCINT Scud Intnatl Xxxxxxx International
MFS High Income Bond 17 MFHII MFS High Inc MFS High Income Bond
MFS Growth with
Income 18 MFGRO MFS Gro Inc MFS Growth With Income
Carillon Horizon 19 CFHL1 Horizon I Carillon Horizon I
Carillon Horizon II 20 CFHL2 Horizon 11 Carillon Horizon II
Carillon Horizon III 21 CFHL3 Horizon III Carillon Horizon III
FUND NAME # 5 12 12/12
Xxxxxxxxx
Xxxxxx Focus 22 NBFOC N&B Focus Nueb Xxxxxx Focus
American
Century Vista 23 ACVIS Am Cen Vista American Century Vista
MFS Emerging Growth 24 MFEMR MFS Emerg Gr MFS Emerging Growth
Carillon S&P 500
Index 25 CF500 S&P 500 Index Carillon S&P 500 Index
Summit High Yield 26 SUMIT Summit Summit High Yield
Xxxxxxxxx
International 30 TMINT Temp Intnatl Xxxxxxxxx International
Templeton Stock
(Global) 31 TMGLO Temp Stk Gbl Templeton Stock
(Global)
Xxxxxxxxx Xxxxxx
Socially Responsive 32 NBSRF N&B Soc Resp N&B Socially Responsive
SCHEDULE C (continued)
Portfolios Available in Union Central Contracts
Portfolio or Account Name Adviser or Sponsor
Emerging Growth Account American Century Investments, Inc.
Select Account American Century Investments, Inc.
Ultra Account American Century Investments, Inc.
Vista Account American Century Investments, Inc.
Capital Account Carillon Advisers, Inc.
Equity Account Carillon Advisers, Inc.
Fixed Income Bond Account Carillon Advisers, Inc.
Government Securities Separate Account Carillon Advisers, Inc.
Horizon I Account Carillon Advisers, Inc.
Horizon 11 Account Carillon Advisers, Inc.
Horizon III Account Carillon Advisers, Inc.
S&P 500 Index Account Carillon Advisers, Inc.
Summit High Yield Account First Summit Capital Management
Growth with Income Account MFS Management, Inc.
High Income Account MFS Asset Management, Inc.
Focus Account Xxxxxxxxx & Xxxxxx Management, Inc.
Genesis Account Xxxxxxxxx & Xxxxxx Management, Inc.
Guardian Account Xxxxxxxxx & Xxxxxx Management, Inc.
Money Market Account Xxxxxxx, Xxxxxxx and Xxxxx, Inc.
Xxxxxxx International Account Xxxxxxx, Xxxxxxx and Xxxxx, Inc.
Deposit Account Union Central
SCHEDULE E
RULE 11213-11 PLANS
Compensation Schedule
Each Portfolio named below shall pay the following amounts
pursuant to the terms and conditions referenced below under its
Class 2 Rule 12b-1 Distribution Plan, stated as a percentage per
year of Class 2's average daily net assets represented by shares
of Class 2.
Name Maximum Annual Payment Rate
XXXXXXXXX INTERNATIONAL FUND 0.25%
TEMPLETON STOCK FUND 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust
Portfolio shares ("Eligible Shares") which are subject to a Rule
12b-1 Plan adopted under the 1940 Act (the "Plan"), the Company
may participate in the plan.
To the extent the Company or its affiliates, agents or
designees (collectively 9'you") provide administrative and other
services which assist in the promotion and distribution of
Eligible Shares or Variable Contracts offering Eligible Shares,
the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other
services" may include, but are not limited to, furnishing
personal services to owners of Contracts which may invest in
Eligible Shares ("Contact Owners") , answering routine inquiries
regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or
providing such other enhanced services as a Trust Portfolio or
Contract may require, maintaining customer accounts and records,
or providing other services eligible for service fees as defined
under NASD rules. Your acceptance of such compensation is your
acknowledgment that eligible services have been rendered. All
Rule 12b-1 fees, shall be based on the value of Eligible Shares
owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the
Compensation Schedule stated above. The aggregate annual fees
paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an
increase is approved by shareholders as provided in the Plan.
These maximums shall be a specified percent of the value of a
Portfolio's net assets attributable to Eligible Shares owned by
the Company on behalf of its Accounts (determined in the same
manner as the Portfolio uses to compute its net assets as set
forth in its effective Prospectus).
You shall furnish us with such information as shall
reasonably be requested by the Trust's Boards of Trustees
("Trustees ") with respect to the Rule 12b-1 fees paid to you
pursuant to the Plans. We shall furnish to the Trustees, for
their review on a quarterly basis, a written report of the
amounts expended under the Plans and the purposes for which such
expenditures were made.
The Plans and provisions of any agreement relating to such
Plans must be approved annually by a vote of the Trustees,
including the Trustees who are not interested persons of the
Trust and who have no financial interest in the Plans or any
related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the
Disinterested Trustees, or by a vote of a majority of the
outstanding shares as provided in the Plan, on sixty (60)
dayswritten notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting
Agreement between the Underwriter and the Trust, and/or the
management or administration agreement between Franklin Advisers,
Inc. or Xxxxxxxxx Investment Counsel, Inc. or their affiliates
and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting
and nominating any new Disinterested Trustees. Under Rule 12b-1,
the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to
furnish, such information as may reasonably be necessary to an
informed determination of whether the Plan or any agreement
should be implemented or continued. Under Rule 12b-1, the Trust
is permitted to implement or continue Plans or the provisions of
any agreement relating to such Plans from year-to-year only if,
based on certain legal considerations, the Trustees are able to
conclude that the Plans will benefit each affected Trust
Portfolio and class. Absent such yearly determination, the Plans
must be terminated as set forth above. In the event of the
termination of the Plans for any reason, the provisions of this
Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the assets of the
Trust and no person shall seek satisfaction thereof from
shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such
time as the Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the
provisions of the Participation Agreement, including this
Schedule E, in the event of any inconsistency.
You agree to provide complete disclosure as required by all
applicable statutes, rules and regulations of all rule 12b-1 fees
received from us in the disclosure documents. of the contracts.
SCHEDULE F
DISCLOSURE AND MARKETING REQUIREMENTS
In addition to the general requirements of the Agreement, the
parties specifically agree as follows:
1. Portfolio Profile. The Company shall create a document
("Portfolio Profile") for each Portfolio of the Trust named in
Schedule B, above, which summarizes at least the following
information for each Portfolio: investment objective; principal
investment strategies; principal investment risks; portfolio fees
and expenses (including a cross-reference indicating where to
find information about other fees and expenses which may affect
investment performance); and information about the investment
adviser and individual portfolio managers. Each Portfolio Profile
must be consistent with the Portfolio's prospectus and be
approved in advance of use by the Trust and the Distributor. The
Company shall use its best efforts to make a Portfolio Profile
available to all Trust Plan Participants, not later than the time
of their first transaction involving shares of a Portfolio.
2. ERISA 404 ( c) Safe Harbor Regulations. The Company shall
take reasonable steps to advise sponsors of 401 (k) Plans which
purchase the Contracts funded by Portfolios of the Trust of their
need to consider the advisability of complying with ERISA section
404 (c) and the regulations thereunder.
3. NASD Rules. To the extent the Contracts are sold by
Company employees who are not National Association of Securities
Dealers ("NASD") registered representatives, the Company agrees
to comply, as if applicable, with the NASD Conduct Rules, or
their successors, including NASD Notice to Members 97-27 related
to market conduct such as recommendations to customers
(suitability); use of manipulative, deceptive or other
frandulent devices; and supervision.
