EXHIBIT 8(h)
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
and
PROTECTIVE LIFE INSURANCE COMPANY
DATED AS OF
OCTOBER 1, 2000
TABLE OF CONTENTS
ARTICLE I Fund Shares 3
ARTICLE II Representations and Warranties 5
ARTICLE III Prospectuses, Reports to Shareholders and
Proxy Statements; Voting 7
ARTICLE IV Sales Material and Information 9
ARTICLE V Distribution and Service Plans 10
ARTICLE VI Diversification 11
ARTICLE VII Potential Conflicts 11
ARTICLE VIII Indemnification 13
ARTICLE IX Applicable Law 19
ARTICLE X Termination 19
ARTICLE XI Notices 22
ARTICLE XII Foreign Tax Credits 23
ARTICLE XIII Miscellaneous 23
SCHEDULE A Separate Accounts and Contracts 26
SCHEDULE B Participating Xxx Xxxxxx Life Investment Trust Portfolios 27
SCHEDULE C Proxy Voting Procedures 28
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PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
and
PROTECTIVE LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of October, 2000 by
and among PROTECTIVE LIFE INSURANCE COMPANY (hereinafter the "Company"), a
Tennessee corporation, on its own behalf and on behalf of each separate account
of the Company set forth on Schedule A hereto as may be amended from time to
time (each such account hereinafter referred to as the "Account"), and XXX
XXXXXX LIFE INVESTMENT TRUST (hereinafter the "Fund"), a Delaware business
trust, XXX XXXXXX FUNDS INC. (hereinafter the "Underwriter"), a Delaware
corporation, and XXX XXXXXX ASSET MANAGEMENT INC. (hereinafter the "Adviser"), a
Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established by insurance companies for individual and group life insurance
policies and annuity contracts with variable accumulation and/or payout
provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into
participation agreements with the Fund and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may be
amended from time to time by mutual agreement of the parties hereto, under this
Agreement to the Accounts of the Company; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 19, 1990 (File No. 812-7552), granting Participating
Insurance Companies and Variable Insurance Product separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the "1940 Act") and
Rules 6e2(b)(15) and 6e3j)(b)(15) thereunder to the extent necessary to permit
shares of the Fund to be sold to and held by Variable Annuity Product separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Adviser is the investment adviser of the Portfolios of the
Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority 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 the aforesaid Variable
Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Underwriter is authorized to sell such shares to each such Account at net
asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Underwriter and the Adviser agree as follows:
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ARTICLE 1
FUND SHARES
1.1 The Fund and the Underwriter agree to make available for
purchase by the Company shares of the Portfolios and shall execute orders placed
for each Account on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of such order. For purposes of this
Section 1.1, the Company shall be the designee of the Fund and the Underwriter
for receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Houston time on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to provide
the Fund with notice of such orders by 9:15 a.m. Houston time on the next
following Business Day. "Business Day" shall mean any day on which New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission, as
set forth in the Fund's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter
the "Board") may refuse to permit the Fund 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 is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.2 The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies for their Variable
Insurance Products. No shares of any Portfolio will be sold to the general
public.
1.3 The Fund will not make its shares available for purchase by
any insurance company or separate account unless an agreement containing
provisions which afford the Company substantially the same protections currently
provided by Sections 2.1, 2.4, 2.9, 3.4 and Article VII of this Agreement is in
effect to govern such sales.
1.4 The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Fund held by the
Company, executing such requests on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the designee
of the Fund for receipt of requests for redemption from each Account and receipt
by such designee shall constitute receipt by the Fund; provided that the
Underwriter receives notice of such request for redemption on the next following
Business Day in accordance with the timing rules described in Section 1.1.
1.5 The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the
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provisions of such prospectus. The Accounts of the Company, under which amounts
may be invested in the Fund are listed on Schedule A attached hereto and
incorporated herein by reference, as such Schedule A may be amended from time to
time by mutual written agreement of all of the parties hereto. The Company will
give the Fund and the Underwriter sixty (60) days written notice of its
intention to make available in the future, as a funding vehicle under the
Contracts, any other investment company.
1.6 The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares and
dollar amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall pay the redemption
proceeds in federal funds transmitted by wire on the next Business Day after an
order to redeem Portfolio shares is made in accordance with the provisions of
Section 1.4 hereof.
Notwithstanding the foregoing, if the payment of redemption proceeds on the next
Business Day would require the Portfolio to dispose of Portfolio securities or
otherwise incur substantial additional costs, and if the Portfolio has
determined to settle redemption transactions for all shareholders on a delayed
basis, proceeds shall be wired to the Company within seven (7) days and the
Portfolio shall notify in writing the person designated by the Company as the
recipient for such notice of such delay by 3:00 p.m. Houston time on the same
Business Day that the Company transmits the redemption order to the Portfolio.
Any such delay in settlement of redemption transactions shall be applied
uniformly to all holders of shares of that Portfolio.
1.7 Issuance and transfer of the Fund's shares will be by book
entry only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8 The Underwriter shall use its best efforts to furnish same day
notice by 5:30 p.m. Houston time (by wire or telephone, followed by written
confirmation) to the Company of any dividends or capital gain distributions
payable on the Fund's shares. The Company hereby elects to receive all such
dividends and capital gain distributions as are payable on the Portfolio shares
in additional shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such dividends and capital gain distributions
in cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9 The Underwriter shall make the net asset value per share of
each Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:30 p.m.
Houston time. In the event that Underwriter is unable to meet the 5:30 p.m. time
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stated immediately above, then Underwriter shall provide the Company with
additional time to notify Underwriter of purchase or redemption orders pursuant
to Sections 1.1 and 1.4, respectively above. Such additional time shall be equal
to the additional time that Underwriter takes to make the net asset values
available to the Company provided, however, that notification must be made by
10:00 a.m. Houston time on the Business Day such order is to be executed,
regardless of when net asset value is made available.
1.10 If Underwriter provides materially incorrect share net asset
value information through no fault of the Company, the Fund shall make an
adjustment with respect to the Fund shares purchased or redeemed to reflect the
correct net asset value per share. The determination of the materiality of any
net asset value pricing error shall be based on the SEC's recommended guidelines
regarding such errors. The correction of any such errors shall be made at the
Company level pursuant to the SEC's recommended guidelines. Any material error
in the calculation or reporting of net asset value per share, dividend or
capital gain information shall be reported promptly upon discovery to the
Company.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the interests of
Accounts (the "Contracts") are or will be registered and will maintain the
registration under the 1933 Act and the regulations thereunder to the extent
required by the 1933 Act; that the Contracts will be issued and sold in
compliance with all applicable federal and state laws and regulations. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each Account prior to any issuance or sale thereof as a
segregated asset account under the Tennessee Insurance Code and the regulations
thereunder and has registered or, prior to any issuance or sale of the
Contracts, will register and will maintain the registration of each Account as a
unit investment trust in accordance with and to the extent required by the
provisions of the 1940 Act and the regulations thereunder to serve as a
segregated investment account for the Contracts. The Company shall amend its
registration statement for its contracts under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts.
2.2 The Fund and the Underwriter represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and the regulations thereunder to the extent required by the 1933 Act, duly
authorized for issuance in accordance with the laws of the State of Delaware and
sold in compliance with all applicable federal and state securities laws and
regulations and that the Fund is and shall remain registered under the 1940 Act
and the regulations thereunder to the extent required by the 0000 Xxx. The Fund
shall amend the registration statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
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deemed advisable by the Fund.
2.3 The Fund and the Adviser represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and that each will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision, and that each will notify the Company immediately upon having
a reasonable basis for believing that the Fund has ceased to so qualify or that
the Fund might not so qualify in the future.
2.4 The Company represents that each Account is and will continue
to be a "segregated account" under applicable provisions of the Code and that
each Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5 The Fund represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the
Fund undertakes to have a board of directors, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
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 the various states.
2.7 The Fund and the Adviser represent that the Fund is duly
organized and validly existing under the laws of the State of Delaware and that
the Fund does and will comply in all material respects with the 1940 Act.
2.8 The Underwriter represents and warrants that it is and shall
remain duly registered under all applicable federal and state laws and
regulations and that it will perform its obligations for the Fund and the
Company in compliance with the laws and regulations of its state of domicile and
any applicable state and federal laws and regulations.
2.9 The Company represents and warrants that all of its trustees,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement and is 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 Underwriter in the event that such coverage no
longer applies.
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ARTICLE 3
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1 The Fund shall provide the Company with as many printed copies
of the Fund's current prospectus and statement of additional information as the
Company may reasonably request. If requested by the Company in lieu of providing
printed copies the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and statement of additional information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or statement of additional
information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document or
separately. The Company may elect to print the Fund's prospectus and/or its
statement of additional information in combination with other fund companies'
prospectuses and statements of additional information.
3.2(a) Except as otherwise provided in this Section 3.2., all
expenses of preparing, setting in type and printing and distributing Fund
prospectuses and statements of additional information shall be the expense of
the Company. For prospectuses and statements of additional information provided
by the Company to its existing owners of Contracts in order to update
disclosure as required by the 1933 Act and/or the 1940 Act, the cost of setting
in type, printing and distributing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus and/or statement of additional
information, the Fund shall bear the cost of typesetting to provide the Fund's
prospectus and/or statement of additional information to the Company in the
format in which the Fund is accustomed to formatting prospectuses and statements
of additional information, respectively, and the Company shall bear the expense
of adjusting or changing the format to conform with any of its prospectuses
and/or statements of additional information. In such event, the Fund will
reimburse the Company in an amount equal to the product of x and y where x is
the number of such prospectuses distributed to owners of the Contracts, and y is
the Fund's per unit cost of printing the Fund's prospectuses. The same
procedures shall be followed with respect to the Fund's statement of additional
information. The Fund shall not pay any costs of typesetting, printing and
distributing the Fund's prospectus and/or statement of additional information
to prospective Contract owners.
3.2(b) The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and statements of additional
information, which are covered in Section 3.2(a) above) to shareholders in such
quantity as the Company shall reasonably require for distributing to Contract
owners. The Fund shall not pay any costs of distributing such proxy related
material, reports to shareholders, and other communications to prospective
Contract owners.
3.2(c) The Company agrees to provide the Fund or its designee with
such
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information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any
of the foregoing documents other than those actually distributed to existing
Contract owners.
3.2(d) The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.
3.2(e) All expenses, including expenses to be borne by the Fund
pursuant to Section 3.2 hereof, incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares.
3.3 The Fund's statement of additional information shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.4 If and to the extent required by law the Company shall
distribute all proxy material furnished by the Fund to Contract Owners to whom
voting privileges are required to be extended and shall:
(1) solicit voting instructions from Contract owners;
(2) vote the Fund shares in accordance with instructions
received from Contract owners; and
(3) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Portfolio for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require passthrough voting privileges for
variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. The Fund and the Company shall follow the procedures, and shall have the
corresponding responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule C attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C, which standards will also be provided to the other Participating
Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting
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by shareholders, and in particular the Fund will either provide for annual
meetings (except insofar as the Securities and Exchange Commission may interpret
Section 16 not to require such meetings) or comply with Section 16(c) of the
1940 Act (although the Fund is not one of the trusts described in Section 16(c)
of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE 4
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to
the Fund, the Underwriter or their designee, each piece of sales literature or
other promotional material prepared by the Company or any person contracting
with the Company in which the Fund, the Adviser or the Underwriter is named, at
least ten Business Days prior to its use. No such material shall be used if the
Fund, the Adviser, the Underwriter or their designee reasonably objects to such
use within ten Business Days after receipt of such material.
4.2 Neither the Company nor any person contracting with the
Company shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Fund prospectus, as such registration statement or
Fund prospectus may be amended or supplemented from time to time, or in reports
to shareholders or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3 The Fund shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material prepared by the Fund in which the Company or its Accounts, are named at
least ten Business Days prior to its use. No such material shall be used if the
Company or its designee reasonably objects to such use within ten Business Days
after receipt of such material.
4.4 Neither the Fund nor the Underwriter shall give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts, other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement or prospectus may be amended or
supplemented from time to time, or in published reports or solicitations for
voting instruction for each Account 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 or its designee, except with
the permission of the Company.
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4.5 The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
investment in an Account or Contract, contemporaneously with the filing of such
document with the Securities and Exchange Commission or other regulatory
authorities.
4.7 For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following: 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 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 of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
ARTICLE 5
DISTRIBUTION AND SERVICE PLANS
5.1 The Fund is subject to a plan adopted under Rule l8f-3 under
the 1940 Act pursuant to which, as described in the current prospectus of each
Portfolio, the Fund may sell multiple classes of its shares of each Portfolio
with a varying combination of distribution fees, service fees, exchange
features, conversion rights, voting rights, expense allocations and investment
requirements.
5.2 Should the Company wish to participate in the Fund's
distribution plan with respect to a class of shares of a Portfolio of the Fund
pursuant to Rule 12b-l (the "Rule 12b-l Plan") under the 1940 Act, or the Fund's
service plan (the "Service Plan"), each as described in the current prospectus
of each Portfolio, with respect to a class of shares of a Portfolio of the Fund,
it is understood that the Company must be approved by the Board of Trustees of
the Fund. Pursuant to the Rule 12b-l Plan and the Service Plan, the Underwriter
is authorized to remit payments at rates specified in the respective plans with
respect to the net asset value of shares
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maintained by the Company for distribution-related services and/or personal
services to Contract owners accounts provided. If the Company wishes to
participate in these plans and receive the aforementioned remittance, the
Company must enter into a separate agreement specifically regarding these plans.
5.3 The Company's acceptance of this Agreement constitutes a
representation that it will adopt policies and procedures to comply with
Rule 18f-3 under the 1940 Act, with respect to when the Company may
appropriately make available the various classes of shares of the Portfolios of
the Fund and that it will make available such shares only in accordance
therewith.
ARTICLE 6
DIVERSIFICATION
6.1 The Fund will use its best efforts to at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event the Fund ceases to so qualify, it will take all
reasonable steps (a) to notify Company of such event and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 817-5.
ARTICLE 7
POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or 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 owners and variable life
insurance contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2 The Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the Shared Funding
Exemptive Order, by providing the Board with all
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information reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Company to inform the
Board whenever contract owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating 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 segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a
Board determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
7.4 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 Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); 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 members of the Board. No charge or penalty will be imposed as a
result of such withdrawal. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
7.5 For purposes of Sections 7.3 through 7.4 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 through 7.4 to
establish a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict.
7.6 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule
12
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 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.
7.7 Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
by the provisions hereof and in the Shared Funding Exemptive Order, and said
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board. All reports received by the Board of potential or
existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made available
to the Securities and Exchange Commission upon request.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a) The Company agrees to indemnify and hold harmless the Fund,
the Underwriter and each member of their respective Board and officers and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus for the
Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or
13
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for
use in the registration statement or prospectus for the
Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied
by the Company, or persons under its control and other
than statements or representations authorized by the
Fund or the Underwriter) or unlawful conduct of the
Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund
shares; or
(3) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in
a registration statement, prospectus, or sales
literature 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 statement or statements
therein not misleading, if such a statement or omission
was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company; or
(4) arise as a result of any failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement; or
(5) 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.
8.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party 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 or duties under this Agreement.
8.1(c) The Company 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 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
14
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 thereof. 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.
8.1(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with this Agreement, the issuance or sale of the Fund shares or the Contracts,
or the operation of the Fund.
8.2 INDEMNIFICATION BY UNDERWRITER
8.2(a) The Underwriter agrees, with respect to each Portfolio that it
distributes, 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 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including legal and other expenses),
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares that it distributes or
the Contracts and:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Fund or the Underwriter by or on behalf
of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Portfolio
shares; or
15
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature for the Contracts not
supplied by the Fund, the Underwriter or persons under
their respective control and other than statements or
representations authorized by the Company) or unlawful
conduct of the Fund or Underwriter or persons under
their control, with respect to the sale or distribution
of the Contracts or Portfolio shares; or
(3) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in
a registration statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon and in
conformity with information furnished to the Company by
or on behalf of the Fund or the Underwriter; or
(4) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the
materials under the terms of this Agreement; or
(5) 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 Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party 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 or duties under this Agreement.
8.2(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
16
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 fees and 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.
8.2(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 this Agreement, the issuance or sale of the
Contracts or the operation of each Account.
8.3 INDEMNIFICATION BY THE ADVISER
8.3(a) The Adviser agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
operations of the Adviser or the Fund and:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Adviser, the Fund or the Underwriter by
or on behalf of the Company for use in the registration
statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Portfolio shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
17
prospectus or sales literature for the Contracts not
supplied by the Fund, the Adviser or persons under its
control and other than statements or representations
authorized by the Company) or unlawful conduct of the
Fund, the Adviser or persons under their control, with
respect to the sale or distribution of the Contracts or
Portfolio shares; or
(3) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in
a registration statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission, to state therein a material fact
requited 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 or the Adviser; or
(4) arise as a result of any failure by the Adviser to
provide the services and furnish the materials under the
terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Fund
or the Adviser, including without limitation any failure
by the Fund to comply with the conditions of Article VI
hereof.
8.3(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as 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 or duties under this Agreement.
8.3(c) The Adviser 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 Adviser 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 Adviser of any
such claim shall not relieve the Adviser 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 Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory
18
to the party named in the action. After notice from the Adviser to such party
of the Adviser'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 Adviser 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.
8.3(d) The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Adviser.
ARTICLE 9
APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Illinois.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE 10
TERMINATION
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason upon six months
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the
Fund, the Adviser and the Underwriter with respect to any
Portfolio based upon the Company's determination that shares
of such Portfolio are not reasonably available to meet the
requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt of
notice unless the fund makes available a sufficient number of
shares to reasonably meet the requirements of the Account
within said ten (10) day period; or
19
(c) termination by the Company by written notice to the
Fund, the Adviser and the Underwriter with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts
issued or to be issued by the Company. The terminating party
shall give prompt notice to the other parties of its decision
to terminate; or
(d) termination by the Company by written notice to the
Fund, the Adviser and the Underwriter with respect to any
Portfolio in the event that such Portfolio ceases to qualify
as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision; or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof, or
(f) termination by either the Fund, the Adviser or the
Underwriter by written notice to the Company, if either one or
more of the Fund, the Adviser or the Underwriter, shall
determine, in its or their sole judgment exercised in good
faith, that the Company and/or their affiliated companies 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, which is likely to have a material impact upon the
business or operation of the Company, provided that the Fund,
the Adviser or the Underwriter will give the Company sixty
(60) days' advance written notice of such determination of
its intent to terminate this Agreement, and provided further
that after consideration of the actions taken by the Company
and any other changes in circumstances since the giving of
such notice, the determination of the Fund, the Adviser or the
Underwriter shall continue to apply on the 60th day since
giving of such notice, then such 60th day shall be the
effective date of termination, or
(g) termination by the Company by written notice to the
Fund, the Adviser and the Underwriter, if the Company shall
determine, in its sole judgment exercised in good faith, that
either the Fund, the Adviser or the Underwriter 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, which is likely to
have a material impact upon the business or operation of the
Fund, the Adviser or the Underwriter, provided that the
Company will give the Fund, the Adviser and the Underwriter
sixty (60) days' advance written notice of such
20
determination of its intent to terminate this Agreement, and
provided further that after consideration of the actions taken
by the Fund, the Adviser or the Underwriter and any other
changes in circumstances since the giving of such notice, the
determination of the Company shall continue to apply on the
60th day since giving of such notice, then such 60th day shall
be the effective date of termination; or
(h) termination by any party upon the other party's breach
of any representation in Section 2 or any material provision
of this Agreement which breach has not been cured to the
satisfaction of the terminating party within ten (10) days
after written notice of such breach is delivered to the Fund
or the Company, as the case may be; or
(i) termination by the Fund, Adviser or Underwriter by
written notice to the Company in the event an Account or
Contract is not registered or sold in accordance with
applicable federal or state law or regulation, or the Company
fails to provide passthrough voting privileges as specified in
Section 3.4.
10.2 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 Fund 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") unless such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.2 shall not apply to any terminations under
Article VII and the effect of such Article VII terminations shall be governed by
Article VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (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 SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund 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
21
giving the Fund or the Adviser 90 days notice of its intention to do so.
ARTICLE 11
NOTICES
11.1 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:
Xxx Xxxxxx Life Investment Trust
1 Parkview Plaza
XX Xxx 0000
Xxx xxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to Underwriter:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to Adviser:
Xxx Xxxxxx Asset Management Inc.
0 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to the Company:
Protective Life Insurance Company
0000 Xxxxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx (Legal)
22
ARTICLE 12
FOREIGN TAX CREDITS
12.1 The Fund and Adviser agree to consult in advance with the
Company concerning whether any series of the Fund qualifies to provide a foreign
tax credit pursuant to Section 853 of the Code.
ARTICLE 13
MISCELLANEOUS
13.1 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 Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund. Each of the
Company, Adviser and Underwriter acknowledges and agrees that, as provided by
Article 8, Section 8.1, of the Fund's Agreement and Declaration of Trust, the
shareholders, trustees, officers, employees and other agents of the Fund and its
Portfolios shall not personally be bound by or liable for matters set forth
hereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder. A Certificate of Trust
referring to the Fund's Agreement and Declaration of Trust is on file with the
Secretary of State of Delaware.
13.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
13.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or
23
inquiry relating to this Agreement or the transactions contemplated hereby
13.7 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.
13.8 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Adviser may assign this Agreement
or any rights or obligations hereunder to any affiliate of or company under
common control with the Adviser if such assignee is duly licensed and registered
to perform the obligations of the Adviser under this Agreement.
13.9 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any),
as soon practical and in any event within 90 days after the
end of each fiscal year;
(b) the Company's June 30th quarterly statements
(statutory), as soon as practical and in any event within 45
days following such period;
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery thereof
to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the Securities and
Exchange Commission or any state insurance regulator, as soon
as practical after the filing thereof,
(e) any other public report submitted to the Company by
independent accountants in connection with any annual,
interim or special audit made by them of the books of the
Company, as soon as practical after the receipt thereof.
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
as of the date specified above.
PROTECTIVE LIFE INSURANCE COMPANY
on behalf of itself and each of its Accounts named in
Schedule A hereto, as amended from time to time
By: /s/ Xxxxxxx Xxxx
---------------------------
XXX XXXXXX LIFE INVESTMENT TRUST
By: /s/ Xxxxxxx Xxxx
---------------------------
XXX XXXXXX FUNDS INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
XXX XXXXXX ASSET MANAGEMENT INC.
By: /s/ Xxxxxxx Xxxx
---------------------------
25
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
NAME OF SEPARATE ACCOUNT AND FORM NUMBERS AND NAMES OF CONTRACTS
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- -----------------------------------
Protective Variable Annuity Separate Account Protective Variable Annuity
(12/23/1993) FORM IPV-2002 (and state-specific variations thereof)
Elements(R) Plus Variable Annuity (formerly marketed as
"Elements(SM) Variable Annuity")
FORM IPV-2021P (and state-specific variations thereof)
FORM IPV-2021V (and state-specific variations thereof)
Elements(R) Access Variable Annuity
FORM IPV-2025P (and state-specific variations thereof)
FORM IPV-2025V (and state-specific variations thereof)
Protective Advantage(SM) Variable Annuity
FORM IPV-2037P (and state-specific variations thereof)
FORM IPV-2037V (and state-specific variations thereof)
Protective Variable Annuity II
FORM IPV-2048P (and state-specific variations thereof)
FORM IPV2048V (and state-specific variations thereof)
26
SCHEDULE B
PARTICIPATING XXX XXXXXX LIFE INVESTMENT TRUST PORTFOLIOS
Aggressive Growth Portfolio - Class II Shares
27
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities
for the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the
Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run," or
other activity, which will generate the names, address and number of units
which are attributed to each contract owner/policyholder (the "Customer")
as of the Record Date. Allowance should be made for account adjustments
made after this date that could affect the status of the Customers'
accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to the Fund, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting instruction
solicitation material. The Fund will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a) name (legal name as found on account registration)
b) address
c) fund or account number
d) coding to state number of units (or equivalent shares)
28
e) individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce, and the Fund will pay for
the Notice of Proxy and the Proxy Statement (one document). Printed and
folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Company). Contents of envelope sent to Customers by the Company will
include:
a) Voting Instruction Card(s)
b) One proxy notice and statement (one document)
c) return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d) "urge buckslip" optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
e) cover letter optional, supplied by Company and reviewed and approved
in advance by the Fund.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15 day solicitation time to the Company
as the shareowner. (A 5 week period is recommended.) Solicitation time
is calculated as calendar days from (but NOT including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
29
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g., mutilated,
illegible) of the procedure are "hand verified," (i.e., examined as to why
they did not complete the system). Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive, into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units (or equivalent shares)
which is then converted to shares. (It is very important that the fund
receives the tabulations stated in terms of a percentage and the number of
shares.) The Fund must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 A.M. Houston time. The Fund
may request an earlier deadline if reasonable and if required to calculate
the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote. Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
16. All approvals and "signing off" may be done orally, but must always be
followed up in writing.
30
AMENDMENT NO. 1
To The
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
And
PROTECTIVE LIFE INSURANCE COMPANY
WHEREAS, Protective Life Insurance Company ("Company"), Xxx Xxxxxx Life
Investment Trust ("Fund"), Xxx Xxxxxx Funds Inc. ("Underwriter") and Xxx Xxxxxx
Asset Management Inc. ("Adviser") have previously entered into a
Participation
Agreement dated as of October 1, 2000 ("Agreement"); and
WHEREAS, the Company wishes to add an additional contract funded by its variable
annuity separate account, which invests in Class II Shares of the Portfolios
listed in Schedule B of the Agreement;
WHEREAS, the Fund has agreed to provide Class II Shares to the separate accounts
listed in Schedule A of the Agreement;
WHEREAS, each of the parties hereto desires to amend and restate SCHEDULE A to
the Agreement;
NOW, THEREFORE, each of the parties hereby amends the Agreement as follows:
1. SCHEDULE A is hereby amended and restated, and replaced in its
entirety by the SCHEDULE A attached hereto.
2. All capitalized terms used in this Amendment No. 1 shall have the
meaning assigned in the Agreement. Except as set forth in this
Amendment No. 1, no other modifications or changes are made to the
Agreement.
3. This Amendment No. 1 may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together will be
deemed one and the same document.
IN WITNESS WHEREOF, each of the parties have caused this Amendment No. 1 to be
executed in their names and on their behalf and through their duly authorized
offices, as of this 1st day of October, 2001.
PROTECTIVE LIFE INSURANCE COMPANY XXX XXXXXX FUNDS INC.
/s/ Xxxxxxx Xxxx /s/ Xxxxx Xxxxxx
--------------------------------------------------- ----------------------------------------------
By: Xxxxxxx Xxxx Title: Senior Vice President By: Xxxxx Xxxxxx Title: Vice President
XXX XXXXXX LIFE INVESTMENT TRUST XXX XXXXXX ASSET MANAGEMENT INC.
/s/ Xxxxxxx Xxxx /s/ Xxxxxxx Xxxx
--------------------------------------------------- ----------------------------------------------
By: Xxxxxxx Xxxx Title: Executive Vice President By: Xxxxxxx Xxxx Title: President
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
NAME OF SEPARATE ACCOUNT AND DATE FORM NUMBER AND NAMES OF CONTRACTS
ESTABLISHED BY THE BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
------------------------------------- -----------------------------------
Protective Variable Annuity Separate Account Protective Variable Annuity
(12/23/1993) FORM IPV-2002 (and state-specific variations thereof)
Elements(R) Plus Variable Annuity (formerly marketed as
"Elements(SM) Variable Annuity")
FORM IPV-2021P (and state-specific variations thereof)
FORM IPV-2021V (and state-specific variations thereof)
FORM IPV-2019 (and state-specific variations thereof)
FORM IPV-2019C (and state-specific variations thereof)
Elements(R) Access Variable Annuity
FORM IPV-2025P (and state-specific variations thereof)
FORM IPV-2025V (and state-specific variations thereof)
FORM IPV-2045 (and state-specific variations thereof)
FORM IPV-2045C (and state-specific variations thereof)
Protective Advantage(SM) Variable Annuity
FORM IPV-2037P (and state-specific variations thereof)
FORM IPV-2037V (and state-specific variations thereof)
FORM IPV-2039 (and state-specific variations thereof)
FORM IPV-2039C (and state-specific variations thereof)
Protective Variable Annuity II
FORM IPV-2048P (and state-specific variations thereof)
FORM IPV-2048V (and state-specific variations thereof)
FORM IPV-2050 (and state-specific variations thereof)
FORM IPV-2050C (and state-specific variations thereof)
Elements(R) Classic Variable Annuity
FORM IPV-2074P (and state-specific variations thereof)
FORM IPV-2074V (and state-specific variations thereof)
FORM IPV-2075 (and state-specific variations thereof)
FORM IPV-2075C (and state-specific variations thereof)
October 1, 2001
AMENDMENT NO. 2
To The
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
And
PROTECTIVE LIFE INSURANCE COMPANY
WHEREAS, Protective Life Insurance Company ("Company"), Xxx Xxxxxx Life
Investment Trust ("Fund"), Xxx Xxxxxx Funds Inc. ("Underwriter") and Xxx Xxxxxx
Asset Management Inc. ("Adviser") have previously entered into a
Participation
Agreement dated as of October 1, 2000 ("Agreement"); and
WHEREAS, the Company wishes to add additional contracts funded by its variable
life separate account, which invest in Class II Shares of the Portfolios listed
in Schedule B of the Agreement; and
WHEREAS, the Fund has agreed to provide Class II Shares to the accounts listed
in Schedule A of the Agreement; and
WHEREAS, each of the parties hereto desires to amend and restate Schedule A to
the Agreement;
NOW THEREFORE, each of the parties hereby amends the Agreement as follows:
1. Schedule A is hereby amended and restated and replaced in its entirety by
the Schedule A attached hereto.
2. All capitalized terms used in this Amendment No. 2 shall have the meaning
assigned in the Agreement. Except as set forth in this Amendment No. 2, no
other modifications or changes are made to the Agreement.
3. This Amendment No. 2 may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together will be deemed
one and the same document.
IN WITNESS WHEREOF, each of the parties have caused this Amendment No. 2 to be
executed in their names and on their behalf and through their duly authorized
offices, as of the 1st day of May, 2002.
PROTECTIVE LIFE INSURANCE COMPANY XXX XXXXXX FUNDS INC.
/s/ Xxxxxxx Xxxx /s/ [ILLEGIBLE]
--------------------------------------------------- ------------------------------------------------
By: Xxxxxxx Xxxx Title: Senior Vice President By: [ILLEGIBLE] Title: Executive Director
XXX XXXXXX LIFE INVESTMENT TRUST XXX XXXXXX ASSET MANAGEMENT INC.
/s/ Xxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxxxx
--------------------------------------------------- ------------------------------------------------
By: Xxxx X. Xxxxxxxx Title: Treasurer By: Xxxx X. Xxxxxxxx Title: Vice President
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
NAME OF SEPARATE ACCOUNT AND FORM NUMBERS AND NAMES OF CONTRACTS
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- -----------------------------------
Protective Variable Annuity Separate Account Protective Variable Annuity
(12/23/1993) FORM IPV-2002 (and state-specific variations thereof)
Elements(R) Plus Variable Annuity (formerly marketed as
"Elements(SM) Variable Annuity")
FORM IPV-2021P (and state-specific variations thereof)
FORM IPV-2021V (and state-specific variations thereof)
FORM IPV-2019 (and state-specific variations thereof)
FORM IPV-2019C (and state-specific variations thereof)
Elements(R) Access Variable Annuity
FORM IPV-2025P (and state-specific variations thereof)
FORM IPV-2025V (and state-specific variations thereof)
FORM IPV-2045 (and state-specific variations thereof)
FORM IPV-2045C (and state-specific variations thereof)
Protective Advantage(SM) Variable Annuity
FORM IPV-2037P (and state-specific variations thereof)
FORM IPV-2037V (and state-specific variations thereof)
FORM IPV-2039 (and state-specific variations thereof)
FORM IPV-2039C (and state-specific variations thereof)
Protective Variable Annuity II
FORM IPV-2048P (and state-specific variations thereof)
FORM IPV-2048V (and state-specific variations thereof)
FORM IPV-2050 (and state-specific variations thereof)
FORM IPV-2050C (and state-specific variations thereof)
Elements(R) Classic Variable Annuity
FORM IPV-2074P (and state-specific variations thereof)
FORM IPV-2074V (and state-specific variations thereof)
FORM IPV-2075 (and state-specific variations thereof)
FORM IPV-2075C (and state-specific variations thereof)
CONTINUED
Effective May 1, 2002
NAME OF SEPARATE ACCOUNT AND FORM NUMBERS AND NAMES OF CONTRACTS
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- -----------------------------------
Protective Variable Life Separate Account Protective Premiere I variable life insurance policy
(2/15/1995) FORM VUL-04 2-96 (and state-specific variations thereof)
Protective Premiere II variable life insurance policy
FORM VUL-06 3-98 (and state-specific variations thereof)
Protective Single Premium Plus variable life insurance policy
FORM VUL-05 2-98 (and state-specific variations thereof)
Protective Transitions variable life insurance policy
FORM VUL-06 3-98 (and state-specific variations thereof)
Protective Survivor variable life insurance policy
FORM VUL-07 1-00 (and state-specific variations thereof)
Protective Premiere Provider variable life insurance policy
FORM VUL-08 12-00 (and state-specific variations thereof)
Protective Preserver variable life insurance policy
FORM VUL-09 9-01 (and state-specific variations thereof)
Effective May 1, 2002
