Exhibit 9(b)2
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and between XXXXXXX
VARIABLE LIFE INVESTMENT FUND (the "Fund'), a Massachusetts business trust
created under a Declaration of Trust dated March 15, 1985, with a principal
place of business in Boston, Massachusetts and (INSURANCE COMPANY), a __________
corporation (the "Company"), with a principal place of business in
_____________, _____________.
WHEREAS, the Fund has been organized to act as the investment vehicle for
the separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially identical to this Agreement
("Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a `Portfolio' and representing the interest in
a particular managed portfolio of securities; and
WHEREAS, it is in the best interest of Participating Insurance Companies
to insure that the average annual expenses of the Fund will not exceed a fixed
percentage of the Fund's average annual net assets; and
WHEREAS, the Parties desire to evidence their agreement as to certain
other matters,
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
1. Additional Definitions.
For the purposes of this Agreement, the following definitions shall apply:
(a) The "Fund's expenses" for any fiscal year shall mean the
expenses for such fiscal year as shown in the Statement of Operations (or
similar report) certified by the Fund's independent public accountants;
(b) A "Portfolio's average daily net assets" for each fiscal year
shall mean the sum of the net asset values determined throughout the year for
the purpose of determining net asset value per share, divided by the number of
such determinations during such year;
(c) The "Company's proportionate share of the excess expenses of a
Portfolio" for any fiscal year shall mean a Portfolio's total expenses for such
year minus 1/2 of 1% of the Portfolio's average daily net assets for such year
multiplied by a fraction the denominator of which is the average daily net
assets of the Portfolio and the numerator of which is the average daily net
asset value of the Shares of the Portfolio owned by the Company, the separate
account or accounts of the Company, and any insurance company which is an
affiliate thereof.
(d) The "average daily net asset value of the Shares
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of the Portfolio" owned by the Company, the separate account or accounts of the
Company and by an insurance company which is an affiliate thereof for any fiscal
year of the Fund shall mean the greater of (i) $1,000,000 or (ii) the sum of the
aggregate net asset values of the Shares so owned determined during the fiscal
year, as of each determination of the net asset value per Share, divided by the
number of such determinations during such year.
(e) "Shares" means shares of beneficial interest, without par value,
of any Portfolio, now or hereafter created, of the Fund.
2. Expense Reimbursement.
The Company shall, within sixty days after the end of each fiscal year of
the Fund, reimburse the Fund for the Company's proportionate share of the excess
expenses of a Portfolio for such year.
3. Shareholder Service Representative.
The Company shall reimburse the Fund a sum equal to that portion of the
salaries and overhead of the Funds shareholder representative personnel
allocable to the Company's proportionate interest in the Fund in a manner to be
agreed upon from time to time by the Fund and the Company. The overhead of such
personnel shall be determined in accordance with the asset allocation system of
Xxxxxxx, Xxxxxxx & Xxxxx Ltd., the Fund's investment adviser.
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4. Indemnification.
The Company agrees to indemnify and hold harmless the Fund and each of its
Trustees and officers and each person, if any, 1~who controls the Fund within
the meaning of Section 15 of the securities Act of 1933 (the "Act") against any
and all losses, claims, damages, liabilities or litigation (including legal and
other expenses), arising out of the acquisition of any Shares by any person, to
which the Fund or such Trustees, officers or controlling person may become
subject under the Act, under any other statute, at common law or otherwise,
which (i) may be based upon any wrongful act by the Company, any of its
employees or representatives, any affiliate of or any person acting on behalf of
the Company or a principal underwriter of its insurance products, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares 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 if such a statement or omission was made
in reliance upon information furnished to the Fund by the Company, or (iii) may
be based on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance products
sold by the Company or any insurance company which is an affiliate thereof, or
any amendments or supplement thereto, or the omission or
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alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not misleading, unless
such statement or omission was made in reliance upon information furnished to
the Company or such affiliate by or on behalf of the Fund; provided, however,
that in no case (i) is the Company's indemnity in favor of a Trustee or officer
or any other person deemed to protect such Trustee or officer or other person
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement or (ii) is the Company to be liable under its indemnity
agreement contained in this Paragraph 4 with respect to any claim made against
the Fund or any person indemnified unless the Fund or such person, as the case
may be, shall have notified the Company in writing pursuant to Paragraph 7
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 the Fund or
upon such person (or after the Fund or such person 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 has to the
Fund or any person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this Paragraph 4 The Company shall be
entitled
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to participates at its own expense, in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but, if it
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Fund, to its officers and Trustees, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that the Company elects to assume the defense of any such suit and retain such
counsel, the Fund, such officers and Trustees or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Company does not elect to
assume the defense of any such. suit, the Company will reimburse the Fund, such
officers and Trustees or controlling person or persons. defendant or defendants
in such suit, for the reasonable sees and expenses of any counsel retained by
them. The Company agrees promptly to notify the Fund pursuant to Paragraph 7 of
the commencement of any litigation or proceedings against it in connection with
the issue and sale of any Shares.
The Fund agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Act against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
it or such directors, officers or controlling person may become subject under
the Act, under any other statute, at com-
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mon law or otherwise, arising out of the acquisition of any shares by any person
which (i) may be based upon any wrongful act by the Fund, any of its employees
or representatives or a principal underwriter of the Fund, or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares 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 unless such statement or omission was made
in reliance upon information furnished to the Fund by the Company or (iii) may
be based on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance products
sold by the Company, 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 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 Fund; provided, however, that in no case (i) is
the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his
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reckless disregard of obligations and duties under this agreement or (ii) is the
Fund to be liable under its indemnity agreement contained in this Paragraph 4
with respect to any claims made against the Company or any such director,
officer or controlling person unless it or such director, officer or 0ontrolling
person, as the case may be, shall have notified the Fund in writing pursuant to
Paragraph 7 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 it or upon such director, officer or controlling person (or after the
Company or such director, officer or controlling person shall have received
notice of such service on any designated agent), but failure to notify the Fund
of any claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this Paragraph. The Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Company, its directors, officers or controlling
person or persons, defendant or defendants, in the suit. In the event the Fund
elects to assume the defense of any such suit and retain such counsel, the
Company, its directors, officers or controlling person or persons, defendant or
defendants in the
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suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Fund does not elect to assume the defense of any such
suit, it will reimburse the company or such directors, officers or controlling
person or persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Fund agrees promptly to notify
the Company pursuant to Paragraph 7 of the commencement of any litigation or
proceedings against it or any of its officers or Trustees in connection with the
issuance or sale of any Shares.
5. Massachusetts Law to Apply.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
6. Duration and Termination.
This Agreement shall remain in force for the period ending June 30, 1987
(such date and any anniversary of such date being hereinafter called a
"Renegotiation Date"), and from year to year thereafter provided that neither
the Company nor the Fund shall have given written notice to the other within
thirty (30) days prior to a Renegotiation Date that it desires to renegotiate
the amount of reimbursement due hereunder ("Renegotiation Notice"). If a
Renegotiation Notice is properly given as aforesaid and the Fund and the Company
shall fail, within sixty (60) days after the Renegotiation Date, either to enter
into an amendment to this Agreement or a writ-
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ten acknowledgment that the Agreement shall continue in effect, this Agreement
shall terminate as of the tone hundred twentieth day after such Renegotiation
Date. If this Agreement is so terminated, the Fund may, at any time thereafter,
automatically redeem the Shares of any Portfolio held by the Company, its
separate account(s) or the separate account(s) of any affiliated insurance
companies. This Agreement may be terminated at any time, at the option of either
of the Company or the Fund, when neither the Company, its separate account(s)
nor the separate account(s) of any affiliated insurance company own any Shares
of the Fund. Notwithstanding anything to the contrary in this Agreement or its
termination as provided herein, the Company's obligation to reimburse the Fund
hereunder shall continue at the rate most recently in effect (i) following a
properly given Renegotiation Notice, in the absence of agreement otherwise,
until termination of this Agreement, and (ii) following termination of this
Agreement, until the later of the fifth anniversary of the date of this
Agreement or the date on which the Company, its separate account(s) or the
separate account(s) of any affiliated insurance company owns no Shares.
7. 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.
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If to the Fund:
Xxxxxxx Variable Life Investment Fund
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Attn: ___________________________
If to the Company:
_________________________________
_________________________________
_________________________________
_________________________________
Attn: ___________________________
8. Compliance.
The Fund represents that it will use its best efforts to comply
substantially with applicable state insurance laws and, to the extent necessary
to avoid federal income taxation of holders of contracts and policies on
dividends and distributions by the Fund, with the requirements set forth in Rev.
Rul. 81-225.
9. Duty of Fund to Sell.
The Fund shall make its shares available for purchase at the applicable
net asset value per Share by Participating Insurance Companies and their
affiliates and separate accounts on those days on which the Fund is required to
calculate its net asset value pursuant to rules of the Securities and Exchange
Commission; provided, however, that the Trustees of the Fund may refuse to sell
Shares of any Portfolio to any per-
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son, 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
is, in the sole discretion of the Trustees, necessary in the best interest of
the shareholders of any Portfolio or of the owners of contracts or policies
issued by any Participating Insurance Company.
10. Miscellaneous.
The parties hereto agree to execute one or more amendments to this
Agreement to the extent necessary to incorporate the conditions of any
applicable order of the Securities and Exchange Commission relating to "mixed
funding" and "shared funding" (the use of the Fund as an investment vehicle for
both flexible premium and fixed premium contracts and policies for the separate
accounts of unaffiliated insurance companies).
No Shares of any Portfolio of the Fund may be sold to the general public.
The name "Xxxxxxx Variable Life Investment Fund" is the designation of the
Trustees for the time being under a Declaration of Trust dated March 15, 1985
and all persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the Trustees,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Fund.
The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the
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provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the ____ day of ________ , 1985.
SEAL XXXXXXX VARIABLE LIFE
INVESTMENT FUND
By____________________________
President
SEAL [PARTICIPATING INSURANCE
COMPANY]
By_____________________________
Its____________________________
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