EXHIBIT 9(f)
PARTICIPATION AGREEMENT
AMONG
ST. CLAIR FUNDS, INC.
AND
XXXXXX INVESTORS LIFE INSURANCE COMPANY
AND
HUNTLEIGH FUND DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this_______ day of __________ 1997 by
and among St. Clair Funds, Inc. a Maryland corporation (the "Fund"); Xxxxxx
Investors Life Insurance Company, an Illinois corporation (the "Company"), on
its own behalf and on behalf of each separate account of the Company named in
Schedule 1 to this Agreement as in effect at the time this Agreement is executed
and such other separate accounts that may be added to Schedule 1 from time to
time in accordance with the provisions of Article X of this Agreement (each such
account and sub-account thereof referred to as the "Account"); and Huntleigh
Fund Distributors, Inc., a corporation organized under the laws of Missouri (the
"Distributor").
WHEREAS, the Fund is engaged in business as an open-end management
investment company, and certain series of the Fund were established for the
purpose of serving as the investment vehicle for separate accounts established
for variable life insurance policies and variable annuity contracts
(collectively referred to herein as "Variable Insurance Products," the owners of
such products being referred to herein as "Product Owners") to be offered by
insurance companies which have entered into participation agreements with the
Fund ("Participating Insurance Companies"); and
WHEREAS, the common stock of the Fund (the "Fund shares") consists of
separate series, each such series representing an interest in a particular
managed portfolio of securities and other assets, and this Agreement relates to
those series of the Fund set forth on Schedule 3 to this Agreement as such
Schedule 3 to this Agreement may be amended by mutual written agreement of the
parties (referred to herein as the "Series"); and
WHEREAS, the Fund has filed with the Securities and Exchange Commission
(the "SEC") and the SEC has declared effective a registration statement
(referred to herein as the "Fund Registration Statement" and the prospectus
contained therein, or filed pursuant to Rule 497 under the Securities Act of
1933, as amended (the "1933 Act"), referred to herein as the "Fund Prospectus")
on Form N-1A to register the Series as open-end management investment companies
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Fund shares under the 1933 Act; and
WHEREAS, the Company has filed or will file a registration statement with
the SEC to register under the 1933 Act interests in certain variable life
insurance policies and/or variable annuity contracts described in Schedule 2 to
this Agreement as in effect at the time this
Agreement is executed and such other variable life insurance policies and/or
variable annuity contracts which may be added to Schedule 2 from time to time in
accordance with the terms and provisions of the Agreement, unless such interests
are exempt from registration under the 1933 Act (such policies and contracts
shall be referred to herein collectively as the "Contracts," each such
registration statement for a class or classes of contracts listed on Schedule 2
being referred to as the "Contracts Registration Statement," and the prospectus
with respect to the offering of the Contracts being referred to as the
"Prospectus" and the owners of such contracts, as distinguished from all Product
Owners, being referred to as "Contract Owners"); and
WHEREAS, the Accounts are validly existing separate accounts, duly
authorized by resolution of the Board of Directors of the Company to set aside
and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered or will register each Account with the
SEC as a unit investment trust under the 1940 Act before certain Contracts are
issued by the Account, unless such Account is exempt from registration under the
1940 Act; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
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.
(the "NASD"); and
WHEREAS, the Distributor and the Fund have entered into an agreement (the
"Fund Distribution Agreement") pursuant to which the Distributor will distribute
Fund shares; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Series on behalf of
the Accounts to fund the Contracts, and the Distributor is authorized to sell
such shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Distributor agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
Series which the Company orders on behalf of the Account, executing such orders
on a daily basis in accordance with Section 1.4 of this Agreement.
1.2 The Fund agrees to make the shares of the Series available for
purchase by the Company on behalf of the Account at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, and the Fund shall use best efforts to calculate such net asset value
on each such Business Day. Notwithstanding any other provision in this
Agreement to the contrary, the Board of Directors of the Fund (the "Fund Board")
may suspend or terminate the offering of Fund shares, if such action is required
by law or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Fund Board acting in good faith and in light of its fiduciary
duties under Federal and any applicable state laws, suspension or termination is
necessary and in the best interests of the shareholders of any Series (it being
understood that "shareholders" for this purpose shall mean Product Owners).
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1.3 The Fund agrees to redeem, at the Company's request, any full or
fractional shares of the Series held by an Account or the Company, executing
such requests at the net asset value on a daily basis in accordance with Section
1.4 of this Agreement, the applicable provisions of the 1940 Act and the then
currently effective Fund Prospectus. Notwithstanding the foregoing, the Fund
may delay redemption of Fund shares to the extent permitted by the 1940 Act, any
rules, regulations or orders thereunder, or the then currently effective
Prospectus.
1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be
the designee of the Fund for the limited purpose of receiving redemption and
purchase requests from each Account (but not from the general account of the
Company) based on transactions in the Account's securities or units, and receipt
on any Business Day by the Company as such designee of the Fund prior to the
time prescribed in the current Fund Prospectus (which as of the date of
execution of this Agreement is 4:00 p.m., Eastern time) shall constitute receipt
by the Fund on that same Business Day, provided that the Fund receives notice of
such redemption or purchase request by 9:00 a.m., Eastern time, on the next
following Business Day. For purposes of this Agreement, "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Series calculate their respective net asset values pursuant to rules
of the SEC.
(b) The Company shall pay for shares of each Series on the same day
that it places an order with the Fund to purchase those shares. Payment for
Fund shares will be made by the Account or the Company in Federal Funds
transmitted to the Fund by wire to be received no later than 4:00 p.m., Eastern
time, on the day the Fund is properly notified of the purchase order for shares
(unless sufficient proceeds are available from redemption of shares of other
Series). The Fund will, upon receipt of notice of the purchase order, inform
the Fund's investment adviser of such order. In the event that the payment is
not received by the Fund by 4:00 p.m., Eastern time, on the same day the Company
places an order with the Fund, the Company will reimburse the Fund for all
interest, charges, costs, fees or other expenses, if any, imposed on the Fund,
and for all losses, if any, incurred by the Fund as a result of such delayed
payment.
(c) Payment for shares of each Series redeemed by an Account or the
Company will be made in Federal Funds transmitted to the Company by wire on the
next Business Day after the Fund is notified of the redemption order for shares,
provided such notification is received by the Fund by 4:00 p.m., Eastern time
(unless redemption proceeds are applied to the purchase of shares of other
Series). If payment in Federal Funds for any redemption order is received by
the Company after [ ] p.m., Eastern time on the next Business Day after the
Fund is notified of the redemption order, the Fund 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. The Fund reserves the
right to delay payment of redemption proceeds (i) under circumstances which
would entitle the Company to delay payment of redemption proceeds to the
separate accounts or (ii) when disposition of portfolio securities to pay
redemption proceeds would be a material detriment to the Fund's performance and
the Fund provides notice to the Company of the postponement of payment and of
the date on which payment will be made. In no event may such payment be delayed
longer than the period
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permitted under Section 22(e) of the 1940 Act and any such payments will be
delayed on a pro rata basis among the Company and other Participating Insurance
Companies. Neither the Fund nor the Distributor shall bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds to
Contract Owners; the Company alone shall be responsible for such action.
1.5 Issuance and transfer of Fund shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. Purchase
and redemption orders for Fund shares will be recorded in an appropriate ledger
for the Accounts.
1.6 The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income dividends or capital gain distributions payable on any
shares of the Series. The Company, on its behalf and on behalf of the Accounts,
hereby elects to receive all such dividends and distributions as are payable on
any shares of the Series in the form of additional shares of that Series. The
Company reserves the right, on its behalf and on behalf of the Accounts, to
revoke this election and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares of the Series
so issued as payment of such dividends and distributions. The Fund shall to the
extent practicable provide advance notice to the Company of any date on which
the Fund reasonably expects to make a dividend distribution.
1.7 The Fund shall use its best efforts to make the net asset value per
share for each Series available to the Company by 6:00 p.m., Eastern Time, each
Business Day, and in any event, as soon as reasonably practicable after the net
asset value per share for such Series is calculated, and shall calculate such
net asset value in accordance with the then currently effective Fund Prospectus.
Any material error in the calculation or reporting of net asset value per share
shall be reported immediately upon discovery to the Company. In such event the
Company shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share and the Fund or the
Fund's investment adviser shall bear the cost of correcting such errors.
Neither the Fund, any Series, the Distributor, nor any of their affiliates shall
be liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company to
the Fund or the Distributor.
1.8 The Fund and the Distributor agree that Fund shares will be sold only
to Participating Insurance Companies and their separate accounts or such other
persons, including qualified pension plans, as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder, the sale to which will not impair the tax
treatment currently afforded the Contracts. The Fund and the Distributor will
not sell Fund shares to any insurance company, separate account or other persons
unless an agreement complying with Article VI of this Agreement is in effect to
govern such sales. No shares of any Series will be sold directly to the general
public.
1.9 (a) Until this Agreement is terminated pursuant to Article IX, the
Company shall promote the Fund on the same basis as other funding
vehicles available under the Contracts. Funding vehicles other
than those listed on Schedule 3 to this Agreement may be
available for the investment of the cash value of the Contracts,
provided, however, (i) any such vehicle or series thereof has
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investment objectives and policies that are substantially
different from the investment objectives and policies of the
Series available hereunder; (ii) the Company gives the Fund and
the Distributor 45 days written notice of its intention to make
such other investment vehicle available as a funding vehicle for
the Contracts; or (iii) unless such other vehicle was available
as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company has so informed the Fund and the
Distributor prior to their signing this Agreement, the Fund or
Distributor consents in writing to the use of such other vehicle,
such consent not to be unreasonably withheld.
(b) The Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law) take any action to
operate the Accounts as management investment companies under the
1940 Act.
(c) The Company shall not, without prior notice to the Distributor
and the Fund (unless otherwise required by applicable law),
induce Contract Owners to change or modify the Fund or change the
Fund's distributor or investment adviser.
ARTICLE II. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
2.1 The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the issuance
thereof, (b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal securities and state insurance and
securities laws, and (c) that the Company will require of every person
distributing the Contracts that the Contracts be offered and sold in compliance
in all material respects with all applicable Federal and state laws and
regulations promulgated thereunder. The Company further represents and warrants
that it is an insurance company duly organized, validly existing and in good
standing under applicable law and that it has legally and validly authorized the
Accounts as separate accounts under applicable state insurance laws and
regulations. The Company further represents that for Accounts which are
governed by the 1940 Act, the Company has registered or, prior to the issuance
of any Contracts, will register such Accounts as such unit investment trusts in
accordance with the provisions of the 1940 Act (unless exempt therefrom) to
serve as separate accounts for the Contracts so requiring a registered account,
and that it will maintain such registration for so long as such Contracts are
outstanding.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement are and shall remain registered under the 1933 Act and are duly
authorized for issuance in accordance with applicable law and that the Fund is
and shall remain registered under and in compliance with the 1940 Act for so
long as the Fund shares are sold. The Fund further represents and warrants that
it is a Maryland corporation duly organized, validly existing and in good
standing under the laws of Maryland.
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2.3 The Fund represents that it and each Series currently qualifies and
will make every effort to continue to qualify as a Regulated Investment Company
under Subchapter M of the Code, and to maintain such qualification (under
Subchapter M or any successor or similar provision), and that it will notify the
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.
2.4 The Fund represents that it will comply with Section 817(h) of the
Code, and all regulations issued thereunder so that the Contracts will be
treated as variable contracts under the Code. The Fund will notify the Company
immediately upon having a reasonable basis for believing that the Fund has
ceased to so comply or that the Fund might not so comply in the future. In the
event of a breach of this Section 2.4 by the Fund, the Fund will take all
reasonable steps to adequately diversify its portfolio within the grace period
provided by Code regulations. To the extent feasible, the Fund will also adjust
its investments to comply with such other provisions of the Code and regulations
issued thereunder as necessary to ensure that the Contracts will be treated as
variable contracts under the Code.
2.5 The Company represents that the Contracts currently are, and at the
time of issuance will be, treated as variable contracts under applicable
provisions of the Code. The Company shall make every effort to maintain such
treatment and shall notify the Fund and the Distributor 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.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of any state. The
Company alone shall be responsible for informing the Fund of any investment
restrictions imposed by state insurance law and applicable to the Fund;
provided, however, that upon being so informed by the Company, the Fund shall
abide by such investment restrictions.
2.7 The Distributor represents and warrants that the Distributor is duly
registered as a broker-dealer under the 1934 Act, a member in good standing with
the NASD, and duly registered as a broker-dealer under applicable state
securities laws; its operations are in compliance with applicable law, and it
will distribute the Fund shares according to applicable law. The Distributor
represents and warrants that it shall remain duly registered under all
applicable federal and state securities laws as required to perform its
obligations under this Agreement.
2.8 Each party to this Agreement represents and warrants that it is not
aware of any pending or threatened litigation matter or claim or regulatory
proceeding, investigation or inquiry, involving such party or any of its
affiliates, the outcome of which would have a material adverse effect on this
Agreement or the transactions completed thereunder.
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2.9 The Company represents and warrants that all of its directors,
officers, employees, and other individuals or entities dealing with the money
and/or securities of the Accounts are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Accounts 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 Fund and the Distributor in the event that such coverage no
longer applies.
2.10 To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the Fund Board and a
majority of Fund Board members who are not interested persons of the Fund
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIALS AND OTHER
INFORMATION
3.1 The Distributor shall provide the Company with as many copies of the
current Fund Prospectus (describing only the Series listed on Schedule 3
attached to this Agreement) as the Company may reasonably request.
3.2 The Fund Prospectus shall state that the Statement of Additional
Information for the Fund ("Statement") is available from the Distributor (or, in
the Fund's discretion, the Fund Prospectus shall state that such Statement is
available from the Fund), and the Distributor (or the Fund) shall provide such
Statement free of charge to the Company and to any outstanding or prospective
Contract Owner who requests such Statement.
3.3 The Fund shall provide the Company at the Fund's expense with copies
of its proxy material, shareholder reports and other communications to
shareholders in such quantities as the Company shall reasonably request for
distributing to Contract Owners.
3.4 The Company shall furnish to the Fund each piece of sales literature
or other promotional material, if any, in which a Series, the Fund or the
Distributor is named, at least eight Business Days prior to its use. No such
material shall be used if the Fund or the Distributor reasonably objects to its
use within five Business Days after receipt of such material. The Fund or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund (or a
Series thereof) or the Distributor is named, and no such material shall be used
if the Fund or its designee so object.
3.5 The Fund shall furnish to the Company each piece of sales literature
or promotional material, if any, in which the Company is named, at least eight
Business Days prior to its use. No such material shall be used if the Company
objects to its use within five Business Days after receipt of such materials.
The Company reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Company is
named, and no such material shall be used if the Company objects.
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3.6 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund other than the
information or representations contained in the Fund Registration Statement or
Fund Prospectus, as such Fund Registration Statement, Fund Prospectus, as
applicable, may be amended or supplemented from time to time, or in reports or
proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee, except with the prior permission
of the Fund or its designee.
3.7 The Fund and the Distributor shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account or the Contracts other than the information or representations contained
in the Prospectus, as such Prospectus may be amended or supplemented from time
to time, or in published reports of the Accounts which are in the public domain
or approved by the Company for distribution to Contract Owners, or in sales
literature or other promotional material approved by the Company, except with
the prior permission of the Company.
3.8 The Fund will provide to the Company at least one complete copy of all
Fund Registration Statements, Fund Prospectuses, Statements of Additional
Information, annual and semi-annual reports and other reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Fund or Fund shares, promptly after the filing of such
document with the SEC or other regulatory authorities.
3.9 The Company will provide to the Fund at least one complete copy of all
Registration Statements, reports, sales literature and other promotional
materials, if any, applications for exemptions, requests for no-action letters,
and all amendments or supplements to any of the above, that relate to the
Contracts to which Contract purchase payments and value are allocable, promptly
after the filing of such document with the SEC or other regulatory authorities.
3.10 For purposes of this Article III, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine or
other periodical, radio, television, electronic media, telephone 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, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, Statements of Additional Information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV. VOTING
To the extent required by law, the Company shall:
(a) solicit voting instructions from Contract Owners;
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(b) vote shares of each Series attributable to Contract Owners in
accordance with instructions or proxies timely received from such
Contract Owners;
(c) vote shares of each Series attributable to Contract Owners for which
no instructions have been received in the same proportion as shares of
such Series for which instructions have been timely received; and
(d) vote shares of each Series held by the Company on its own behalf or on
behalf of the Account that are not attributable to Contract Owners in
the same proportion as shares of such Series for which instructions
have been timely received.
The Company reserves the right to disregard the voting instructions of
Contract Owners to the extent such action is permitted by Rules 6e-2 or 6e-3(T)
under the 1940 Act and is permitted under applicable state insurance laws.
The Fund shall notify the Company of the Fund's intent to file proxy
solicitation materials with the SEC as soon as practicable prior to such filing
and shall notify the Company of any shareholder proposal upon its inclusion in
the proxy solicitation materials filed with the SEC.
ARTICLE V. FEES AND EXPENSES
5.1 The Fund and Distributor shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Series adopts and
implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses, then the Distributor may make payments to the Company in
amounts agreed to by the Company and the Distributor in writing. Currently, no
such payments are contemplated. The Fund currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in the contravention of such rule, although it may make payments pursuant
to Rule 12b-1 in the future. [OPEN ISSUE]
5.2 The Fund and the Company shall bear the expenses set forth opposite
their respective names on Schedule 4 to this Agreement. All expenses incident
to performance by the Fund under this Agreement (including expenses expressly
assumed by the Fund pursuant to this Agreement) shall be paid by the Fund to the
extent permitted by law.
ARTICLE VI. POTENTIAL CONFLICTS
The parties to this Agreement acknowledge that the Fund has filed an
application with the SEC to request an order granting relief from various
provisions of the 1940 Act and the rules thereunder to the extent necessary to
permit Fund shares to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies. The parties to this Agreement agree that the conditions or
undertakings specified in such application and that may be imposed on the
Company, the Fund and/or the Distributor by virtue of such order shall be
incorporated herein by this reference, as of the date such order is granted, as
though set forth herein in full, and such parties agree to comply
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with such conditions and undertakings to the extent applicable to each such
party. The Fund and the Distributor will not enter into a participation
agreement with any other Participating Insurance Company unless it imposes the
same material conditions and undertakings incorporated by reference herein on
the parties to such agreement.
If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act 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 contemplated in the order applied for by the Fund) on terms
and conditions materially different from those contained in said order, then:
(a) the 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 such rules are applicable; (b)
Article IV of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to said Article is contained in
such Rule(s) as so amended or adopted; and (c) this Agreement shall be otherwise
amended as required by such change in law.
ARTICLE VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Fund and the
Distributor, and each person who controls or is affiliated with the Fund or the
Distributor, within the meaning of such terms under the federal securities laws,
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or settlements):
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, sales literature or other promotional material for the
Contracts or the Contracts themselves (or any amendment or supplement
to any of the foregoing), or arise out of or 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 in light of the circumstances in which they
were made; provided that this obligation to indemnify shall not apply
if such statement or omission or such alleged statement or alleged
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by the Fund or the Distributor, or
any person controlling or affiliated with such entities (or a person
authorized in writing to do so on behalf of such entities) for use in
the Registration Statement, 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 Fund shares; or
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(b) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact by or on behalf of the Company (other
than statements or representations made by the Fund or the
Distributor, or any person controlling or affiliated with such
entities, or contained in the Fund Registration Statement, or sales
literature or other promotional material of the Fund not supplied by
the Company or persons under its control) or wrongful conduct of the
Company or persons under its control with respect to the sale or
distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Fund Registration Statement, or sales
literature or other promotional material of the Fund 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 statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Fund by or on behalf of the Company; or
(d) arise as a result of any material failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(e) arise out of any material breach by the Company of this Agreement,
including but not limited to a breach of any of the representations
and/or warranties made by Company hereunder, or any failure to
transmit a request for redemption or purchase of Fund shares on a
timely basis in accordance with the procedures set forth in Article I.
This indemnification will be in addition to any liability which the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
7.2 INDEMNIFICATION BY THE FUND AND THE DISTRIBUTOR
The Fund and the Distributor, jointly and severally, agree to indemnify and
hold harmless the Company and each person who controls or is affiliated with the
Company, within the meaning of such terms under the federal securities laws, and
any officer, director, employee or agent of the Company, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities (or settlements):
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(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Fund Registration
Statement (or any amendment or supplement thereto) or sales literature
or other promotional material of the Fund, 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 in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission or alleged statement or
alleged omission was made in reliance upon and in conformity with
information furnished in writing to the Fund or the Distributor, by
the Company or any person controlling or affiliated with the Company
(or a person authorized in writing to do so on behalf of the Company)
for use in the Fund Registration Statement (or any amendment or
supplement thereto), or sales literature for the Fund or otherwise for
use in connection with the sale of the Contracts or Fund shares: or
(b) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact by or on behalf of the Distributor or the
Fund (other than statements or representations made by the Company or
any person controlling or affiliated with the Company or contained in
the Registration Statement or sales literature or other promotional
material for the Contracts not supplied by the Distributor or the Fund
or persons under their control) or wrongful conduct of the Distributor
or persons under its control with respect to the sale or distribution
of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or sales
literature or other promotional material for the Contracts (or any
amendment 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 statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
or on behalf of the Distributor or the Fund to the Company; or
(d) arise out of any material breach by the Distributor or the Fund of
this Agreement, including but not limited to a breach of any of the
representations and/or warranties made by the Distributor or the Fund
hereunder; or
(e) arise out of the Fund's failure to continue to qualify as a Regulated
Investment Company under Subchapter M of the Code or the Fund's
failure to comply with Section 817(h) of the Code and the regulations
issued thereunder.
This indemnification will be in addition to any liability which the Fund and the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due to
the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
12
7.3 INDEMNIFICATION PROCEDURES
After receipt by a party entitled to indemnification ("indemnified party")
under this Article VII of notice of the commencement of any action, if a claim
in respect thereof is to be made by the indemnified party against any person
obligated to provide indemnification under this Article VII ("indemnifying
party"), such indemnified party will notify the indemnifying party in writing of
the commencement thereof as soon as practicable thereafter, provided that the
omission to so notify the indemnifying party will not relieve it from any
liability under this Article VII, except to the extent that the omission results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged solely as a result of the failure to give such notice. The
indemnifying party, upon the request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others entitled pursuant to this Agreement to such
representations as the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to the Agreement shall be entitled to
the benefits of the indemnification contained in this Article VII. The
indemnification provisions contained in this Article VII shall survive any
termination of this Agreement
ARTICLE VIII. APPLICABLE LAW
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the state of Michigan,
without giving effect to the principles of conflicts of laws.
8.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, where applicable, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and regulations
as the SEC may grant, and the terms hereof shall be limited, interpreted and
construed in accordance therewith.
ARTICLE IX. TERMINATION
9.1 This Agreement shall terminate:
13
(a) at the option of any party upon six months' advance written
notice to the other parties, such termination to be effective no earlier than
one year following the date on which the first Contract is issued; or
(b) at the option of the Company, if the Company reasonably
determines in good faith that shares of the Fund are not registered, issued or
sold in accordance with applicable federal or state law in such a way as to meet
the requirements of the Contracts or are otherwise inconsistent with the
Company's legal obligations to Contract Owners; or
(c) at the option of the Fund upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission of any state
or any other regulatory body regarding the Company's duties under this Agreement
or related to the sale of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Fund shares, or an expected
or anticipated ruling, judgment or outcome which would, in the Fund's reasonable
judgment, materially impair the Company's ability to meet and perform the
Company's obligations and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the NASD, the SEC, or any state securities or
insurance commission or any other regulatory body; or
(e) at the option of the Company upon the breach by the Fund or the
Distributor of any material provision of this Agreement, and at the option of
the Fund upon the breach by the Company of any material provision of this
Agreement; or
(f) at the option of the Company in the event that due to future
changes in the wording or interpretation of Federal or state statues relating to
permissible activities of banks and their subsidiaries or affiliates, Munder
Capital Management is prohibited or restricted from providing services to the
Fund and the Fund is unable to retain a replacement investment adviser within
180 days of such change that is reasonably acceptable to the Company; or
(g) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable Federal and/or state law; or
(h) by either the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of disinterested Fund Board members,
that an irreconcilable material conflict exists among the interests of (i) all
Product Owners or (ii) the interests of the Participating Insurance Companies
investing in the Fund.
(i) at the option of the Company upon termination of the Fund's
Servicing Agreement with the Company; or
(j) at the option of the Fund or the Distributor following
consultation with the Fund Board by written notice to the Company, if either one
or both of the Fund or the Distributor, respectively, shall determine, in their
sole judgment exercised in good faith, that the Company and/or its affiliated
companies have suffered a material adverse change in their business, operations,
financial condition, or prospects since the date of this Agreement or are the
14
subject of material adverse publicity; but no termination shall be effective
under this subsection (j) until the Company has been afforded a reasonable
opportunity to respond to a statement by the Fund or the Distributor concerning
the reason for notice of termination hereunder; or
(k) at the option of the Company by written notice to the Fund and
the Distributor, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Distributor has suffered a material
adverse change in its business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of material adverse
publicity; but no termination shall be effective under this subsection (k) until
the Fund and the Distributor have been afforded a reasonable opportunity to
respond to a statement by the Company concerning the reason for notice of
termination hereunder; or
(l) in the event this Agreement is assigned without the prior written
consent of the Company, the Fund, or the Distributor, termination shall be
effective immediately upon such occurrence without notice, or such other time as
stipulated by the party not effecting the assignment.
In the event of termination of this Agreement pursuant to Section 9.1(f),
(i), or (l), the Fund agrees to bear the cost of filing with the SEC a
substitution application or such other documentation as may be required as a
result of such termination.
9.2 NOTICE REQUIREMENT Except as otherwise provided in Section 9.1, 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 such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Article VI or the provisions of Section 9.1(a) of this Agreement, such prior
written notice shall be given in advance of the effective date of termination as
required by such provisions; and
(b) in the event that any termination is based upon the provisions of
Section 9.1(c) or 9.1(d) of this Agreement, such prior written notice shall be
given at least ninety (90) days before the effective date of termination, unless
a shorter period is required by the Company's obligations under state law to
Contract Owners.
9.3 Except as necessary to implement Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Fund shares attributable to the Contracts (as opposed to Fund
shares attributable to the Company's assets held in the Account).
9.4 EFFECT OF TERMINATION Notwithstanding any termination of this
Agreement, the Fund shall, at the option of the Company, continue to make
available additional shares of the Series pursuant to the terms and conditions
of this Agreement for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts")
for so long after the termination of this Agreement as the Company desires;
PROVIDED, HOWEVER, that the obligation to make such additional shares of the
Series available shall continue only for two years after the termination of this
Agreement. Specifically, without limitation, if the Company
15
elects to continue purchasing additional shares of the Series, the owners of the
Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in the Fund, redeem investments
in the Fund and/or invest in the Fund upon the making of additional purchase
payments under the Existing Contracts pursuant to the terms and conditions of
this Agreement.
ARTICLE X. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement from
time to time to reflect changes in or relating to the Contracts and to add new
separate accounts and classes of variable life insurance policies and/or
variable annuity contracts to be issued by the Company through a separate
account investing in the Fund. The provisions of this Agreement shall be
equally applicable to each such separate account and class of contracts or
policies, unless the context otherwise requires.
ARTICLE XI. 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 Fund:
c/o Munder Capital Management
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
If to the Company:
Xxxxxx Investors Life Insurance Company
0 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attn:
If to the Distributor:
Huntleigh Fund Distributors, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000
Attn:
16
ARTICLE XII. MISCELLANEOUS
12.1 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.
12.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
12.3 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.
12.4 The Company, the Fund and the Distributor shall cooperate with each
other party and all appropriate governmental authorities (including without
limitation the SEC, the NASD 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.
12.5 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
This Agreement may not be assigned by any party without the written consent
of all parties.
ST. CLAIR FUNDS, INC.
By:
------------------------------
Name:
Title:
XXXXXX INVESTORS LIFE INSURANCE COMPANY
By:
------------------------------
Name:
Title:
17
HUNTLEIGH FUND DISTRIBUTORS, INC.
By:
------------------------------
Name:
Title:
18
SCHEDULE 1
SEPARATE ACCOUNTS
19
SCHEDULE 2
VARIABLE LIFE INSURANCE POLICIES
VARIABLE ANNUITY CONTRACTS
20
SCHEDULE 3
SERIES
MUNDER S&P 500 INDEX EQUITY FUND
MUNDER S&P MIDCAP INDEX EQUITY FUND
MUNDER S&P SMALLCAP INDEX EQUITY FUND
MUNDER AGGREGATE BOND INDEX FUND
MUNDER FOREIGN EQUITY FUND
21
SCHEDULE 4
EXPENSES
1. In the event the prospectus, SAI, annual report or other communication of
the Fund is combined with a document of another party, the Fund will pay
the costs based upon the relative number of pages attributable to the Fund.
ITEM FUNCTION RESPONSIBLE
PARTY
PROSPECTUS
Update Typesetting Fund (1)
New Sales: Printing Company
Distribution Company
Existing Printing Fund (1)
Owners:
Distribution Fund (1)
STATEMENT OF
ADDITIONAL Same as Prospectus Same
INFORMATION
ANNUAL REPORTS &
OTHER COMMUNICATIONS
WITH SHAREHOLDERS
OF THE FUND
All Typesetting Fund (1)
Marketing: Printing Company
Distribution Company
Existing Owners: Printing Fund (1)
Distribution Fund (1)
22
OPERATIONS OF FUND All operations and related expenses,
including the cost of registration Fund
and qualification of the Fund's
shares, preparation and filing of the
Fund's prospectus and registration
statement, proxy -- materials and
r e ports, the preparation of all
statements and notices required by
any federal or state law and all
taxes on the issuance of the Fund's
shares, and all costs of management
of the business affairs of the Fund.
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