EXHIBIT 27(h)(8)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 30th day of April, 2004, by and between
Lord Xxxxxx Series Fund, Inc. (the "Fund"), a Maryland Corporation, on its
behalf and on behalf of each separate investment series thereof, whether
existing as of the date above or established subsequent thereto, (each a
"Portfolio" and collectively, the "Portfolios"), Lord Xxxxxx Distributor LLC, a
New York limited liability company (the "Distributor"), and Minnesota Life
Insurance Company (the ("Company"), a life insurance company organized under the
laws of the State of Minnesota.
WHEREAS, Fund is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the " `40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, Fund is organized as a series fund comprised of separate
investment series, namely the Portfolios; and
WHEREAS, Fund was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies and also offers its shares to certain qualified pension and
retirement plans; and
WHEREAS, Fund has filed an application with the SEC requesting an order
granting relief from various provisions of the `40 Act and the rules thereunder
to the extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated participating insurance companies accounts ("Participating
Companies") and qualified pension and retirement plans outside the separate
account context (including, without limitation, those trusts, plans, accounts
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(a),
408(b), 414(d), 457(b), 408(k), 501(c)(18) of the Internal Revenue Code of 1986,
as amended (the "Code") and any other trust, plan, account, contract or annuity
trust that is determined to be within the scope of Treasury Regulation
Section 1.817.5(f)(3)(iii)("Plans"); and
WHEREAS, the Company has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having Fund as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, Distributor is registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934, as amended and acts as Fund's
principal underwriter; and
1
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of Fund to fund the
aforementioned Variable Contracts and Fund is authorized to sell such shares to
the Company at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
Fund, and Distributor agree as follows:
Article I. SALE OF FUND SHARES
1.1 Fund agrees to make Variable Contract Class shares ("Shares")
of the Fund available to the Separate Accounts of the Company for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in Fund's then current prospectus and statement of
additional information. Company agrees to purchase and redeem the Shares of the
Portfolios offered by the then current prospectus and statement of additional
information of the Fund in accordance with the provisions of such prospectus and
statement of additional information. Company shall not permit any person other
than a Variable Contract owner, or a Variable Contract owner's lawfully
designated power of attorney, to give instructions to Company which would
require Company to redeem or exchange Shares of the Fund.
1.2 Fund agrees to sell to the Company those Shares of the
selected Portfolios of Fund which the Company orders, executing such orders on a
daily basis at the net asset value next computed after receipt by Fund or its
designee of the order for the Shares of Fund. For purposes of this Section 1.2,
the Company shall be the designee of Fund for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by Fund; provided that, to the extent not inconsistent with applicable
regulatory requirements, the Company receives the order by 4:00 p.m. Eastern
time in the manner provided for in the Variable Contracts and Fund receives
notice from the Company by telephone, facsimile (orally confirmed) or by such
other means as Fund and the Company may mutually agree of such order by 9:00
a.m. Eastern time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading and on which
Fund calculates its net asset value pursuant to the rules of the SEC.
1.3 Fund agrees to redeem on the Company's request, any full or
fractional Shares of Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by Fund or its
designee of the request for redemption, in accordance with the provisions of
this agreement and Fund's then current registration statement. For purposes of
this Section 1.3, the Company shall be the designee of Fund for receipt of
requests for redemption from the designated Separate Account and receipt by such
designee shall constitute receipt by Fund; provided that, to the extent not
inconsistent with applicable regulatory requirements, the Company receives the
request for redemption by 4:00 p.m. Eastern time in the manner provided for in
the Variable Contracts and Fund receives notice from the Company by telephone,
facsimile (orally confirmed) or by such other means as Fund and the Company may
mutually agree of such request for redemption by 9:00 a.m. Eastern time on the
next following Business Day.
2
1.4 Fund shall furnish, on or before the ex-dividend date, written
notice to the Company of any income dividends or capital gain distributions
payable on the Shares of any Portfolios of Fund. The Company hereby elects to
receive all such income dividends and capital gain distributions as are payable
on a Portfolio's Shares in additional Shares of the Portfolio. Fund shall notify
the Company or its designee of the number of Shares so issued as payment of such
dividends and distributions.
1.5 Fund shall make the net asset value per share for the selected
Portfolios available to the Company on a daily basis, via a mutually agreeable
form, as soon as reasonably practicable after the net asset value per share is
calculated but shall use its best efforts to make such net asset value available
by 6:30 p.m. Eastern time.
1.6 At the end of each Business Day, the Company shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the Company shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar amount
of Fund Shares which shall be purchased or redeemed at that day's closing net
asset value per share. To the extent not inconsistent with applicable regulatory
requirements, the net purchase or redemption orders so determined shall be
transmitted to Fund by the Company by 9:00 a.m. Eastern time on the Business Day
next following the Company's receipt of such requests and premiums in accordance
with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the Company's order requests the purchase of Fund Shares,
the Company shall pay for such purchase by wiring federal funds to Fund or its
designated custodial account on the day the order is transmitted by the Company.
If the Company's order requests a net redemption resulting in a payment of
redemption proceeds to the Company, Fund shall use its best efforts to wire the
redemption proceeds to the Company by the next Business Day, unless doing so
would require Fund to dispose of Portfolio securities or otherwise incur
additional costs. In any event, proceeds shall be wired to the Company within
three Business Days or such longer period permitted by the '40 Act or the rules,
orders or regulations thereunder and Fund shall notify the person designated in
writing by the Company as the recipient for such notice of such delay by 3:00
p.m. Eastern time the same Business Day that the Company transmits the
redemption order to Fund.
1.8 Fund agrees that all Shares of the Portfolios of Fund will be
sold only to Participating Insurance Companies which have agreed to participate
in Fund to fund their Separate Accounts and/or to Plans, all in accordance with
the requirements of Section 817(h) of the Code and Treasury Regulation 1.817-5.
Shares of the Portfolios of Fund will not be sold directly to the general
public.
1.9 Fund may refuse to sell Shares of any Portfolios to any
person, or suspend or terminate the offering of the Shares of any Portfolios if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board of
3
Directors/Trustees of the Fund (the "Board"), deemed necessary, desirable or
appropriate. Without limiting the foregoing, it has been determined that there
is a significant risk that the Fund and its shareholders may be adversely
affected by short-term or excessive trading activity, particularly activity used
to try and take advantage of short-term swings in the market. Accordingly, the
Fund reserves right to reject any purchase order, including those purchase
orders with respect to shareholders or accounts whose trading has been or may be
disruptive to the Fund or that may otherwise adversely affect the Fund. The
Company agrees to use its reasonably best efforts to render assistance to, and
to cooperate with, the Fund to achieve compliance with the Fund's policies and
restrictions on short-term or excessive trading activity as they may be amended
from time to time, or to the extent required by applicable regulatory
requirements.
1.10 Issuance and transfer of Portfolio Shares will be by book
entry only. Stock certificates will not be issued to the Company or the Separate
Accounts. Shares ordered from Portfolios will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. Fees and Expenses
2.1 Except as otherwise provided under this Agreement, the Fund
and Distributor shall pay no fee or other compensation to Company under this
Agreement, and Company shall pay no fee or other compensation to the Fund or
Distributor, except as made a part of this Agreement as it may be amended from
time to time with the mutual consent of the parties hereto. All expenses
incident to performance by each party of its respective duties under this
Agreement shall be paid by that party, unless otherwise specified in this
Agreement
Article III. REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of Minnesota and that
it has legally and validly established each Separate Account as a segregated
asset account under such laws.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the `40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
3.3 The Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to each Separate Account
are, in accordance with the applicable Variable Contracts, to be credited to or
charged against such Separate Account without regard to other income, gains or
losses from assets allocated to any other accounts of the Company. The Company
represents and warrants that the assets of the Separate Account are and will be
kept separate from the General
4
Account of the Company and any other separate accounts the Company may have,
and, to the full extent possible under Minnesota law, will not be charged with
liabilities from any business that the Company may conduct or the liabilities of
any companies affiliated with the Company.
3.4 The Company represents and warrants that the Variable
Contracts will be registered under the Securities Act of 1933 (the "'33 Act")
unless an exemption from registration is available prior to any issuance or sale
of the Variable Contracts and that the Variable Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and further that the sale of the Variable Contracts shall comply in
all material respects with state insurance law suitability requirements.
3.5 The Company represents and warrants that the Variable
Contracts are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of the
Code, that it will maintain such treatment and that it will notify Fund
immediately upon having a reasonable basis for believing that the Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
3.6 Fund represents and warrants that the Portfolio Shares offered
and sold pursuant to this Agreement will be registered under the `33 Act and
sold in accordance with all applicable federal and state laws, and Fund shall be
registered under the `40 Act prior to and at the time of any issuance or sale of
such Shares. Fund, subject to Section 1.9 above, shall amend its registration
statement under the `33 Act and the x00 Xxx from time to time as required in
order to effect the continuous offering of its Shares. Fund shall register and
qualify its Shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by Fund.
3.7 Fund represents and warrants that each Portfolio will comply
with the diversification requirements set forth in Section 817(h) of the Code,
and the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the Company immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance.
3.8 Fund represents and warrants that each Portfolio invested in
by the Separate Account intends to elect to be treated as a "regulated
investment company" under Subchapter M of the Code, and to qualify for such
treatment for each taxable year and will notify the Company immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
3.9 Distributor represents and warrants that it is and will be a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD") and is and will be registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute Portfolio Shares
in accordance with all applicable state and federal laws and regulations,
including without limitation the '33 Act, the '34 Act and the '40 Act.
5
3.10 Distributor represents and warrants that it will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
3.11 Fund represents and warrants that all its directors, trustees,
officers, employees, and other individuals/entities who deal with the money
and/or securities of the Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than that required by Rule 17g-1 under the '40 Act. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. The Fund shall make all reasonable
efforts to see that this bond or another bond containing these same provisions
is always in effect, and each agrees to notify the Company in the event such
coverage no longer applies.
3.12 Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage in an amount not less than that required to be maintained by entities
subject to the requirements of Rule 17g-1 under the '40 Act. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. Company shall make all reasonable efforts to see that
this bond or another bond containing these same provisions is always in effect,
and each agrees to notify the Fund in the event such coverage no longer applies.
Article IV. PROSPECTUS AND PROXY STATEMENTS
4.1 Fund shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of Fund.
4.2 At least annually, Fund or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus for the
Shares of the Portfolios as the Company may reasonably request for distribution
to existing Variable Contract owners whose Variable Contracts are funded by such
Shares. Fund or its designee shall provide the Company, at the Company's
expense, with as many more copies of the current prospectus for the Shares as
the Company may reasonably request for distribution to prospective purchasers of
Variable Contracts. If requested by the Company in lieu thereof, Fund or its
designee shall provide such documentation in a mutually agreeable form and such
other assistance as is reasonably necessary in order for the parties hereto once
a year (or more frequently if the prospectus for the Shares is supplemented or
amended) to have the prospectus for the Variable Contracts and the prospectus
for the Fund Shares and any other fund shares offered as investments for the
Variable Contracts printed at the Company's expense together
6
in one document, provided however that Company shall ensure that, except as
expressly authorized in writing by Fund, no alterations, edits or changes
whatsoever are made to prospectuses or other Fund documentation after such
documentation has been furnished to Company or its designee, and Company shall
assume liability for any and all alterations, errors or other changes that occur
to such prospectuses or other Fund documentation after it has been furnished to
Company or its designee.
4.3 The Fund shall provide the Company with copies of the Fund's
proxy statements, Fund reports to shareholders, and other Fund communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Variable Contract owners. Alternatively and in lieu thereof, the
Company may elect to print at its expense the Fund's proxy statements, Fund
reports to shareholders, and other Fund communications to shareholders.
4.4 Fund will provide the Company with at least one complete copy
of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or supplements to any
of the above that relate to the Portfolios promptly after the filing of each
such document with the SEC or other regulatory authority. The Company will
provide Fund with at least one complete copy of all prospectuses, statements of
additional information, annual and semi-annual reports, proxy statements, and
all amendments or supplements to any of the above that relate to a Separate
Account promptly after the filing of each such document with the SEC or other
regulatory authority.
4.5 The forgoing notwithstanding, the Fund agrees to provide
Company with an electronic copy, in a form mutually agreeable to both parties,
of each document provided for in this Article IV.
Article V. SALES MATERIALS
5.1 The Company will furnish, or will cause to be furnished, to
Fund or Distributor, each piece of sales literature or other promotional
material in which Fund, Distributor or any affiliate thereof is named, at least
fifteen (15) Business Days prior to its intended use. No such material shall be
used unless the Fund or Distributor approves such material. Such approval shall
be presumed given if notice to the contrary is not received by Company within
fifteen Business Days after receipt by the Fund or Distributor of such material.
5.2 Fund or Distributor will furnish, or will cause to be
furnished, to the Company, each piece of sales literature or other promotional
material in which the Company or its Separate Accounts are named, at least
fifteen (15) Business Days prior to its intended use. No such material shall be
used unless the Company approves such material. Such approval shall be presumed
given if notice to the contrary is not received by Fund or within fifteen
Business Days after receipt by the Company of such material.
7
5.3 Except with the permission of the Company, neither the Fund
nor Distributor shall give any information or make any representations on behalf
of the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts other than the information or representations contained in the
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts for distribution to owners of
such Variable Contracts, or in sales literature or other promotional material
approved by the Company or its designee. Neither the Fund nor Distributor shall
give such information or make such representations or statements in a context
that causes the information, representations or statements to be false or
misleading.
5.4 Except with the permission of the Fund or Distributor, neither
the Company nor its affiliates or agents shall give any information or make any
representations or statements on behalf of the Fund, Distributor or any
affiliate thereof or concerning the Fund, Distributor or any affiliate thereof,
other than the information or representations contained in the registration
statements or prospectuses for the Fund, as such registration statements and
prospectuses 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 Distributor or designee thereof.
Neither Company nor its affiliates or agents shall give such information or make
such representations or statements in a context that causes the information,
representations or statements to be false or misleading.
5.5 For purposes of this Agreement, the phrase "sales literature
or other promotional material" or words of similar import include, without
limitation, 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 (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the `40 Act or the x00 Xxx.
Article VI. POTENTIAL CONFLICTS
6.1 The parties acknowledge that Fund has received an exemptive
order from the SEC granting relief from various provisions of the '40 Act and
the rules thereunder to the extent necessary to permit Fund Shares to be sold to
and held by variable annuity and variable life insurance separate accounts of
Participating Companies and Plans. The terms of such exemptive order (the "Mixed
and Shared Funding Exemptive Order"), require Fund and each Participating
Company and Plan to comply with conditions and undertakings substantially as
provided in this Article. In the event of any
8
inconsistencies between the terms of the Mixed and Shared Funding Exemptive
Order and those provided for in this Article, the conditions and undertakings
imposed by the Mixed and Shared Funding Exemptive Order shall govern this
Agreement.
6.2 The Fund's Board will monitor the Fund for the existence of
any material irreconcilable conflict between and among the interests of the
Variable Contract owners of all Participating Companies and of Plan Participants
and Plans investing in the Fund, and determine what action, if any, should be
taken in response to such conflicts. An irreconcilable material conflict may
arise for a variety of reasons, which may include: (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 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity and variable
life insurance contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and (g)
if applicable, a decision by a Plan to disregard the voting instructions of plan
participants.
6.3 The Company will report any potential or existing conflicts to
the Board. The Company will be obligated to assist the Board in carrying out its
duties and responsibilities under the Mixed and Shared Funding Exemptive Order
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. The responsibility includes, but is not limited
to, an obligation by the Company to inform the Board whenever it has determined
to disregard Variable Contract owner voting instructions.
6.4 If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in the Fund, the Board shall give prompt
notice of the conflict and the implications thereof to all Participating
Companies and Plans. If the Board determines that Company is a relevant
Participating Company or Plan with respect to said conflict, Company shall at
its sole cost and expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Board members), take such action
as is necessary to remedy or eliminate the irreconcilable material conflict.
Such necessary action may include but shall not be limited to: (a) withdrawing
the assets allocable to some or all of the Separate Accounts from Fund or any
Portfolio thereof and reinvesting those assets in a different investment medium,
which may include another Portfolio of Fund, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and as appropriate, segregating
the assets of any appropriate group (i.e variable annuity or variable life
insurance contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Variable
Contract owners the option of making such a change; and (c) establishing a new
registered management investment company (or series thereof) or managed separate
account. If a material irreconcilable conflict arises because of the Company's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the election of Fund to withdraw the Separate
9
Account's investment in Fund, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility to take such remedial action shall
be carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
Fund or its investment adviser (or any other investment adviser of Fund) be
required to establish a new funding medium for any Variable Contract. Further,
the Company shall not be required by this Article to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely affected
by the irreconcilable material conflict.
6.5 The Board's determination of the existence of an
irreconcilable material conflict and its implications shall be made known
promptly and in writing to the Company.
6.6 No less than annually, the Company shall submit to the Board
such reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
6.7 If and to the extent that the SEC promulgates new rules or
regulations with respect to mixed or shared funding on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies
as appropriate, shall take such steps as may be necessary to comply with such
rules and regulations, as adopted, to the extent such rules are applicable; and
(b) this Article VI shall be deemed to incorporate such new terms and
conditions, and any term or condition of this Article VI that is inconsistent
therewith, shall be deemed to be succeeded thereby.
6.8 The Company acknowledges it has been advised by Fund that it
may be appropriate for Company to disclose the potential risks of mixed and
shared funding in prospectuses or other applicable disclosure documents.
6.9 The Fund shall provide the Company with a current copy of the
Fund's Mixed and Shared Funding Exemptive Order and promptly notify the Company
of any amendments thereto.
Article VII. VOTING
7.1 The Company will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the `40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the Company, where applicable, will vote Shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. The Company will be
responsible for assuring
10
that each of its Separate Accounts that participates in Fund calculates voting
privileges in a manner consistent with other Participating Insurance Companies.
The Company will vote Shares for which it has not received timely voting
instructions, as well as Shares it owns, in the same proportion as its votes
those Shares for which it has received voting instructions. Company and its
agents shall not oppose or interfere with the solicitation of proxies for Fund
Shares held for such Variable Contract owners.
Article VIII. INDEMNIFICATION
8.1 Indemnification by the Company.
(a) Subject to Section 8.3 below, the Company agrees to indemnify
and hold harmless Fund and Distributor, and each of their trustees, directors,
members, principals, officers, partners, employees and agents and each person,
if any, who controls Fund or Distributor within the meaning of Section 15 of the
`33 Act (collectively, the "Indemnified Parties" for purposes of this Article)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company, which consent shall not
be unreasonably withheld) or litigation (including reasonable 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 Fund's Shares or the Variable
Contracts and:
11
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement or prospectus
for the Variable Contracts or contained in the
Variable 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 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 an Indemnified Party for use in the
registration statement or prospectus for the Variable
Contracts or in the Variable Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Variable Contracts or Fund Shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of Fund not
supplied by the Company, or persons under its
control) or wrongful conduct of the Company or
persons under its control, with respect to the sale
or distribution of the Variable Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales
literature of Fund or any amendment thereof or
supplement thereto or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading if such statement or omission
or such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to Fund by or on behalf of the Company; or
(iv) 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
(v) arises out of information or instructions from the
Company or its agents concerning the purchase,
redemption, transfer or other transaction in Fund
Shares; or
(vi) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party
12
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.
(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 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 an Indemnified Party, the Company shall be entitled to participate at
its own expense in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.2 Indemnification by Fund and Distributor.
(a) Subject to Section 8.3 below, the Fund and Distributor agree
to indemnify and hold harmless the Company and each of its directors, officers,
employees, and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the `33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Fund and Distributor which consent shall not be unreasonably
withheld) or litigation (including reasonable legal and other expenses) to which
the Indemnified Parties may become subject under any statute, or 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 Fund's Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement or prospectus
of 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 Fund or Distributor by
or on behalf of the Company for use in the
registration statement or prospectus for
13
Fund (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable
Contracts or Fund Shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature for the
Variable Contracts not supplied by Fund or
Distributor or persons under its control) or wrongful
conduct of Fund or Distributor or persons under its
control, with respect to the sale or distribution of
the Variable Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement or prospectus covering the
Variable 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 statements
therein not misleading if such statement or omission
or such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Company for inclusion therein by or
on behalf of Fund or Distributor; or
(iv) arise as a result of a failure by Fund or Distributor
to provide the services and furnish the materials
under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by Fund or
Distributor in this Agreement or arise out of or
result from any other material breach of this
Agreement by Fund or Distributor.
(b) Fund or Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.
(c) Fund or Distributor, as the case may be, 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 Fund or
Distributor, as the case may be, 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 Fund or Distributor of any such claim shall not
relieve Fund or Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this
14
indemnification provision. In case any such action is brought against the
Indemnified Parties, Fund or Distributor shall be entitled to participate at its
own expense in the defense thereof. Fund or Distributor also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from Fund or Distributor to such party of Fund's or
Distributor's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
Fund or Distributor 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 Indemnification for Errors. In the event of any error or delay
with respect to information regarding the purchase, redemption, transfer or
registration of Shares of the Fund, the parties agree that each is obligated to
make the Separate Accounts and/or the Fund, respectively, whole for any error or
delay that it causes, subject in the case of pricing errors to the related
Portfolio's policies on materiality of pricing errors. In addition, each party
agrees that neither will receive compensation from the other for the costs of
any reprocessing necessary as a result of an error or delay. Each party agrees
to provide the other with prompt notice of any errors or delays of the type
referred to in this Section.
Article IX. TERM; TERMINATION
9.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
9.2 This Agreement shall terminate in accordance with the
following provisions:
(a) At the option of the Company or Fund at any time from the date
hereof upon ninety (90) days notice, unless a shorter time is
agreed to by the parties;
(b) At the option of the Company, if Fund Shares are not
reasonably available to meet the requirements of the Variable
Contracts as determined by the Company. Prompt notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten days after receipt of notice
unless Fund makes available a sufficient number of Shares to
reasonably meet the requirements of the Variable Contracts
within said ten-day period;
(c) At the option of the Company, upon the institution of formal
proceedings against Fund by the SEC, the National Association
of Securities Dealers, Inc., or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in the Company's reasonable judgment, materially impair
Fund's ability to meet and perform Fund's obligations and
duties hereunder. Prompt notice of election to terminate shall
be furnished by the Company with said termination to be
effective upon receipt of notice;
15
(d) At the option of Fund, upon the institution of formal
proceedings against the Company by the SEC, the NASD, or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in Fund's reasonable
judgment, materially impair the Company's ability to meet and
perform its obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by Fund with said
termination to be effective upon receipt of notice;
(e) In the event Fund's Shares are not registered, issued or sold
in accordance with applicable state or federal law, or such
law precludes the use of such Shares as the underlying
investment medium of Variable Contracts issued or to be issued
by the Company. Termination shall be effective upon such
occurrence without notice;
(f) At the option of Fund if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if Fund reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by the
Company;
(g) At the option of the Company, upon Fund's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of the Company within ten days
after written notice of such breach is delivered to Fund;
(h) At the option of Fund, upon the Company's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of Fund within ten days after
written notice of such breach is delivered to the Company;
(i) At the option of Fund, if the Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior
written consent of the Company, Fund, and Distributor,
termination shall be effective immediately upon such
occurrence without notice.
9.3 Notwithstanding any termination of this Agreement pursuant to
Section 9.2 hereof, Fund at the option of the Company will continue to make
available additional Fund Shares, as provided below, pursuant to the terms and
conditions of this Agreement, for all Variable Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in Fund,
16
redeem investments in Fund and/or invest in Fund upon the payment of additional
premiums under the Existing Contracts.
Article X. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested 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 Funds:
Lord Xxxxxx Family of Funds
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
with a copy to:
Lord, Xxxxxx & Co. LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
If to the Distributor:
Lord Xxxxxx Distributor LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
If to the Company:
Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxx XX 00000
Attention: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article XI. MISCELLANEOUS
11.1 Privacy. Each party hereto acknowledges that, by reason of its
performance under this Agreement, it shall have access to, and shall receive
from the other party (and its affiliates,
17
partners and employees), the confidential information of the other party (and
its affiliates, partners and employees), including but not limited to the
"nonpublic personal information" of their consumers within the meaning of SEC
Regulation S-P (collectively, "Confidential Information"). Each party shall hold
all such Confidential Information in the strictest confidence and shall use such
Confidential Information solely in connection with its performance under this
Agreement and for the business purposes set forth in this Agreement. Under no
circumstances may a party cause any Confidential Information of the other party
to be disclosed to any third party or reused or redistributed without the other
party's prior written consent.
11.2 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which taken together shall constitute one and
the same instrument.
11.3 Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
11.4 Governing Law. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the State
of New York. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders of
the SEC granting exemptive relief therefrom and the conditions of such orders.
11.5 Liability. This Agreement has been executed on behalf of the
Fund by the undersigned officer of the Fund in his or her capacity as an officer
of the Fund. The obligations of this Agreement shall be binding upon the assets
and property of the Fund and each respective Portfolio thereof only and shall
not be binding on any Director/Trustee, officer or shareholder of the Fund
individually. In addition, notwithstanding any other provision of this
Agreement, no Portfolio shall be liable for any loss, expense, fee, charge or
liability of any kind relating to or arising from the actions or omissions of
any other Portfolio or from the application of this Agreement to any other
Portfolio. It is also understood that each of the Portfolios shall be deemed to
be entering into a separate Agreement with the Company so that it is as if each
of the Portfolios had signed a separate Agreement with the Company and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
11.6 Inquiries and Investigations. Each party shall cooperate with
each other party and all appropriate governmental authorities (including without
limitation the SEC, the NASD and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
11.7 Subcontractors, Agents or Affiliates. The Company may hire or
make arrangements for subcontractors, agents or affiliates to perform the
services set forth in this Agreement. Company shall provide the Fund with
written notice of the names of any subcontractors, agents or affiliates Company
hires or arranges to perform such services, and any specific operational
requirements that arise as a result of such arrangement. Company agrees that it
is and will be responsible for the acts
18
and omissions of its subcontractors, affiliates, and agents and that the
indemnification provided by Company in Section 8 of this Agreement shall be
deemed to cover the acts and omissions of such subcontractors, affiliates, and
agents to the same extent as if they were the acts or omissions of Company.
11.8 Client Lists. Company hereby consents to Distributor's,
Fund's, or its investment adviser's use or reference to the Company's name in
connection with any full, partial or representative list of clients.
11.9 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and supersedes all prior
agreement and understandings relating to the subject matter hereof.
11.10 Amendment, Waiver and Other Matters. Neither this Agreement,
nor any provision hereof, may be amended, waived, modified or terminated in any
manner except by a written instrument properly authorized and executed by all
parties hereto. 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.
19
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
Lord Xxxxxx Series Fund, Inc.
By:__________________________________
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President and Assistant Secretary
Lord Xxxxxx Distributor LLC
By: Lord, Xxxxxx & Co. LLC, its Managing Member
By:__________________________________
Name: Xxxxxxxx X. Xxxxxx
Title: Member and Deputy General Counsel
Minnesota Life Insurance Company
By:__________________________________
Name: Xxxxx Xxxxxxxx
Title: 2nd VP, Group Case Underwriting
20
