EX-99.8.19
PARTICIPATION AGREEMENT
AMONG
PILGRIM VARIABLE PRODUCTS TRUST
AND
NORTHERN LIFE INSURANCE COMPANY
AND
ING PILGRIM SECURITIES, INC.
THIS AGREEMENT, made and entered into as of this 1st day of April,
2001, among Northern Life Insurance Company (the "Company"), a life insurance
company organized under the laws of Washington, on its own behalf and on behalf
of each separate account of the Company as set forth on Schedule A hereto, as
such Schedule may be amended from time to time (each such account hereinafter
referred to as the "Account"), PILGRIM VARIABLE PRODUCTS TRUST (the "Trust"), an
open-ended management investment company and business trust organized under the
laws of Massachusetts, and ING PILGRIM SECURITIES, INC. (the "Distributor"), a
corporation organized under the laws of the State of Delaware.
WHEREAS, the Trust is an open-end diversified management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Contracts") to be offered by insurance companies which have
entered into Participation Agreements with the Trust and the Distributor (the
"Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust may rely on an order ("ING Variable Insurance Trust,
et al., Investment Company Act Rel. No. 24439 (May 3, 2000)) from the Securities
and Exchange Commission ("SEC"), granting the variable annuity and variable life
insurance separate accounts participating in the Trust exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company
Act of 1940, as amended (the "1940 Act"), and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
to be sold to and held by variable annuity and variable life insurance separate
accounts of the Participating Insurance Companies (the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Trust 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 (the "1933 Act"); and
WHEREAS, the Company has registered or will register the certain of the
Contracts under the 1933 Act, the 1940 Act and applicable state securities and
insurance law; and
WHEREAS, the Company represents herein that each Account is a duly
organized, validly existing separate account, which was established by
resolution of the Board of Directors of the Company, on the dates shown for such
Accounts on Schedule A hereto, to set aside and invest assets attributable to
one or more of the Contracts; and
WHEREAS, the Company has registered or will register the Accounts
(except those Accounts for which no such registration is required) as unit
investment trusts under the 1940 Act; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the Contracts
and the Distributor is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company,
the Trust and the Distributor agree as follows:
ARTICLE I
SALE OF TRUST SHARES
1.1. The Distributor agrees, subject to the Trust's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company those
Trust shares representing interests in Authorized Funds which each Account
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by the Trust or its designee of the order for the shares
of the Trust. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from each Account and receipt
by such designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such order by 10:00 a.m., Eastern time, on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange ("NYSE") is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC. The initial Authorized Funds are
set forth in Schedule B, as such schedule is amended from time to time.
1.2. The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to the rules of the SEC and the Trust shall use reasonable efforts to
calculate such net asset value on each day the NYSE is open for trading.
Notwithstanding the foregoing, the Trustees of the Trust (the "Trustees") may
refuse to sell
shares of any Authorized Fund to the Company or any other person, or suspend or
terminate the offering of shares of any Authorized Fund if such action is
required by law or by regulatory authorities having jurisdiction over the Trust
or if the Trustees determine, in the exercise of their fiduciary
responsibilities, that to do so would be in the best interests of shareholders.
1.3. The Trust and the Distributor agree that shares of the Trust will
be sold only to Participating Insurance Companies and their separate accounts
and other persons who are permissible investors consistent with the Accounts
meeting the requirements of Treas. Reg. 1.817-5. No shares of any Authorized
Fund will be sold directly to the general public.
1.4. The Trust shall redeem its shares in accordance with the terms of
its then-current prospectus. For purposes of this Section 1.4, the Company shall
be the designee of the Trust for receipt of requests for redemption from each
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption by 10:00
a.m., Eastern time, on the next following Business Day.
1.5. The Company shall purchase and redeem the shares of Authorized
Funds offered by the then-current prospectus and statement of additional
information ("SAI") of the Trust in accordance with the provisions of such
prospectus and SAI.
1.6. The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Article I hereof. Payment shall be in federal funds transmitted by
wire.
1.7. Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or to any Account.
Shares ordered from the Trust will be recorded as instructed by the Company to
the Distributor in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.8. The Distributor shall furnish prompt notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Authorized Fund shares in additional shares
of that Authorized Fund. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in cash.
The Distributor shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9. The Distributor shall make the net asset value per share for each
Authorized Fund available to the Company on a daily basis as soon as reasonably
practical after the Trust calculates its net asset value per share, and each of
the Trust and the Distributor shall use its reasonable best efforts to make such
net asset value per share available by 6:00 p.m., Eastern time, but in no event
later than 7:00 p.m., Eastern time, each Business Day.
1.10. Any error in the calculation of the net asset value, dividend and
capital gain information greater than or equal to $0.01 per share of the Trust's
shares, shall be reported immediately upon discovery to the Company. Any error
of a lesser amount shall be corrected in the next Business Day's net asset value
per share for the Trust. Any such notice will state for
each day for which an error occurred the incorrect price, the correct price and,
to the extent communicated to the Trust's shareholders, the reason for the price
change. The Company may send this notice or a derivation thereof (so long as
such derivation is approved in advance by the Distributor) to contract owners or
participants whose accounts are affected by the price change. The parties will
negotiate in good faith to develop a reasonable method for effecting such
adjustments. The Trust shall provide the Company, on behalf of the Account or
the appropriate subaccount of each Account, with a prompt adjustment to the
number of shares purchased or redeemed to reflect the correct share net asset
value.
For purposes of this Section 1.10, the Trust or the Distributor shall
be liable to the Company for any amount the Company is required to pay to
Contract owners or participants due to (i) an incorrect calculation of a Fund's
daily net asset value, dividend rate, or capital gain distribution rate, in
accordance with the Trust's procedures or (ii) incorrect or late reporting of
the daily net asset value, capital gain distribution rate of an Authorized Fund,
in accordance with the Trust's procedures, upon written notification by the
Company, with supporting data, to the Trust, provided, however, that neither the
Trust nor the Distributor shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on inaccurate
information supplied by the Company to the Trust or any of its affiliates, or
for any incorrect or late reporting because of acts of God or systems or
mechanical failures over which the Trust, or the Distributor or the investment
adviser to the Trust have no reasonable control; and provided further that the
Distributor and Officers of the Trust shall in good faith discuss with the
Company the bearing of any expenses described in (i) and (ii) above for which
the Trust or Distributor are not liable under this provision. In addition, the
Trust or the Distributor shall be liable to the Company for systems and out of
pocket costs incurred by the Company in making a Contract owner's or a
participant's account whole, if such costs or expenses are a result of the
Trust's failure to provide timely or correct net asset values, dividend and
capital gains or financial information and if such information is not corrected
by 4:00 p.m. Eastern time of the next business day after releasing such
incorrect information. If a mistake is caused in supplying such information or
confirmations, which results in a reconciliation with incorrect information, the
amount required to make a Contract owner's or a participant's account whole
shall be borne by the party providing the incorrect information, regardless of
when the error is corrected.
1.11. The parties may agree to provide pricing information, execute
orders and wire payments for purchases and redemptions through National
Securities Clearing Corporation's Fund/SERV system in which case such activities
will be governed by the provisions set forth in an Exhibit to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that
(a) at all times during the term of this Agreement, the
Contracts are or will be registered (except those Contracts which are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 0000 Xxx) under the 1933 Act and the 1940 Act; the
Contracts will be issued and sold in compliance in all material respects with
all applicable laws and the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. 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 separate
account under applicable law and has registered or, prior to any issuance or
sale of the Contracts, will register each Account (except those Accounts which
have not been registered in proper reliance upon an exclusion from registration
under the 0000 Xxx) as a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a segregated investment account for the Contracts;
and
(b) the Contracts are currently treated as endowment, annuity
or life insurance contracts, under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every effort to
maintain such treatment and that it will notify the Trust and the Distributor
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future; and
(c) all notices to the Trust of the purchase and/or redemption
of Trust shares by each Account shall be accurate.
2.2. The Trust represents and warrants that:
(a) at all times during the term of this Agreement, Trust
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold by the Trust to the Company in compliance
with all applicable laws, subject to the terms of Section 2.4 below, and the
Trust is and shall remain registered under the 1940 Act. The Trust 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 Trust shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Trust or the Distributor in connection with their sale by the Trust to
the Company and only as required by Section 2.4;
(b) each Authorized Fund is currently qualified as a Regulated
Investment Company under Subchapter M of the Code, and that the Trust will use
its best efforts to maintain such qualification (under Subchapter M or any
successor provision) and that it will notify the Company immediately upon having
a reasonable basis for believing that an Authorized Fund has ceased to so
qualify or that it might not so qualify in the future; and
(c) the Trust is lawfully organized and validly existing under
the laws of the Commonwealth of Massachusetts and that it does and will comply
in all material respects with the 1940 Act.
2.3. The Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Distributor further represents that it will sell and distribute the Trust shares
in accordance with all applicable securities laws applicable to it, including
without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. Notwithstanding any other provision of this Agreement, the Trust
shall be responsible for the registration and qualification of its shares and of
the Trust itself under the laws of any jurisdiction only in connection with the
sale of shares directly to the Company through the Distributor. The Trust shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Trust
shares or the Trust by the Trust may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the
Trust and advising the Trust thereof at such time and in such manner as is
necessary to permit the Trust to comply.
2.5. The Trust 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.
2.6. The Trust and the Distributor represent and warrant that all of
their trustees, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Trust
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
ARTICLE III
PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Trust shall provide the Company with a sufficient quantity of
its prospectus, SAI and any supplements to any of these materials once each year
(or more frequently if these materials are amended), to be used in connection
with the offerings and transactions contemplated by this Agreement. In addition,
the Trust shall provide the Company with a sufficient quantity of its proxy
materials that are required to be sent to Contract owners or participants. In
lieu of the Trust providing the Company with printed copies of its prospectus,
SAI, supplements and proxy materials, the Company shall have the right to
request that the Trust transmit a copy of such materials in an electronic format
(camera-ready copy), which the Company may use to have such materials printed
together with similar materials of other Account funding media that the Company
or any distributor will distribute to existing or prospective Contract owners or
participants.
3.1. The Trust's prospectus shall state that the SAI for the Trust is
available from the Trust, and the Trust shall provide the SAI free of charge to
any owner of a Contract or to any prospective Contract owner who requests the
SAI. Distributor and Trust, as appropriate, agree to provide to Company with as
many copies of the SAI as reasonably requested by Company.
3.2. The Trust, at its expense, shall provide the Company with copies
of its reports to shareholders, proxy material and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to the Contract owners or participants. The Company shall respond
to requests for documents regarding the Trust in a manner that is consistent
with SEC rules, including, but not limited to, Item 1(b) of Form N-1A, which
requires requested documents to be sent within three (3) business days from the
date of request.
3.3. The Company shall vote all Trust shares as required by law and the
Mixed and Shared Funding Exemptive Order. The Company reserves the right to vote
Trust shares held in any separate account in each Company's own right, to the
extent permitted by law and the Mixed and Shared Funding Exemptive Order. The
Company shall be responsible for assuring that each of its separate accounts
participating in the Trust calculates voting privileges in a manner consistent
with all legal requirements and the Mixed and Shared Funding Exemptive Order.
3.4. The Trust will comply with all applicable provisions of the 1940
Act requiring voting by shareholders.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1. Without limiting the scope or effect of Section 4.2 hereof, the
Company shall furnish, or shall cause to be furnished, to the Distributor each
piece of sales literature or other promotional material (as defined hereafter)
in which the Trust, its investment adviser or the Distributor is named at least
15 days prior to its use. No such material shall be used if the Distributor
objects to such use within five (5) Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for the Trust, or in sales literature or other promotional material
approved by the Trust or its designee or by the Distributor, except with the
written permission of the Trust or the Distributor or the designee of either or
as is required by law.
4.3. The Distributor or its designee 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 Distributor in which the Company
and/or the Company's Account is named at least 15 days prior to its use. No such
material shall be used if the Company or its designee object to such use within
five (5) Business Days after receipt of such material.
4.4. Neither the Trust nor the Distributor 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 and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners or participants,
or in sales literature or other promotional material approved by the Company or
its designee, except with the written permission of the Company or as is
required by law.
4.5. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, 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 registered representatives.
4.6. The Trust 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, notices and exemptive orders related to applications for exemptive
relief from the requirements of the federal securities laws, and all amendments
to any of the above, that relate to the Trust or its shares, promptly after the
filing of such document with the SEC, the NASD or other regulatory authority.
ARTICLE V
FEES AND EXPENSES
5.1. If the Trust or any Authorized Fund adopts and implements a plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses,
subject to obtaining any required exemptive orders or other regulatory
approvals, the Trust or Distributor may make payments to the Company or to the
underwriter for the Account if and in such amounts agreed to by the parties in
writing.
5.2. All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust to the extent permitted by law. The Trust
shall bear the expenses for the cost of registration and qualification of the
Trust's shares, preparation and filing of the Trust's prospectus and
registration statement, proxy materials and reports, setting the prospectus and
shareholder reports in type, setting in type and printing the proxy materials,
and the preparation of all statements and notices required by any federal or
state law, in each case as may reasonably be necessary for the performance by it
of its obligations under this Agreement. All expenses incident to the
solicitation and tabulation of the Trust's proxy materials will be paid by the
Trust, including postage.
5.2. The Trust shall pay for the cost of typesetting and printing
periodic fund reports to shareholders, prospectuses, prospectus supplements,
statements of additional information and other materials that are required by
law to be sent to Contract owners or participants, as well as the cost of
distributing such materials. The Company shall pay for the cost of printing the
Trust's prospectuses and statements of additional information and the
distribution thereof for prospective Contract owners or participants. Each party
shall be provided with such supporting data as may reasonably be requested for
determining expenses under this Article V.
ARTICLE VI
DIVERSIFICATION
6.1. The Trust will invest its assets to cause each Authorized fund to
maintain a diversified pool of investments that would, if such Fund were a
segregated asset account, satisfy the diversification requirements of Treasury
Reg. 1.817-5(b)(1) or (2). In the event of a breach
of this Article VI by the Trust, it will take all reasonable steps: (a) to
notify the Company of such breach; and (b) to adequately diversify the Trust so
as to achieve compliance within the grace period afforded by Treasury regulation
1.817-5.
ARTICLE VII
POTENTIAL CONFLICTS
7.1. The Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the Contract owners or
participants of all separate accounts investing in the Trust. A material
irreconcilable 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 Authorized Fund are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners or participants; or (f) a decision by an
insurer to disregard the voting instructions of Contract owners or participants.
The Trust shall promptly inform the Company if the Trustees determine that a
material irreconcilable conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Trustees. The Company will assist the Trustees in
carrying out their responsibilities under the Mixed and Shared Funding Exemptive
Order, by providing the Trustees with all information reasonably necessary for
the Trustees to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by the Company to inform the Trustees whenever
Contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Trustees, or a majority
of the disinterested Trustees, that a material irreconcilable conflict exists,
the Company shall to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees), take, at the Company's expense (but
only if the Trustees determine that the Company is responsible for causing or
creating said conflict, said conflict is caused by operation of law or said
conflict is the result of some other cause outside the control of the Trust or
any of the Participating Insurance Companies), whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Trust or any Authorized Fund thereof and reinvesting such assets in a
different investment medium, including (but not limited to) another series of
the Trust, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners or participants and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
contract owners or participants, life insurance contract owners or participants,
or variable contract owners or participants of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected Contract owners or participants the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account.
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, that Company may be required, at the Trust's
election, to withdraw the affected Account's investment in one or more
portfolios of the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. No charge or penalty
shall be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented, and until the end of that six
month period, the Distributor and Trust shall, to the extent permitted by law
and any exemptive relief previously granted to the Trust, continue to accept and
implement orders of the Company for the purchase (and redemption) of shares of
the Trust.
7.5. If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company to
disregard Contract owner voting instructions and that decision represents a
minority position or would preclude a majority vote, then the Company may be
required, at the Trust's direction, to withdraw the affected Account's
investment in one or more Authorized Funds of the Trust; provided, however, that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested Trustees. Any such withdrawal and termination must take place
within six (6) months after the Trust gives written notice that this provision
is being implemented, unless a shorter period is required by law, and until the
end of the foregoing six month period (or such shorter period if required by
law), the Distributor and Trust shall, to the extent permitted by law and any
exemptive relief previously granted to the Trust, continue to accept and
implement orders by that Company for the purchase (and redemption) of shares of
the Trust. No charge or penalty will be imposed as a result of such withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. Neither the
Trust nor the Distributor shall be required to establish a new funding medium
for the Contracts, nor shall the Company be required to do so, if an offer to do
so has been declined by vote of a majority of Contract owners or participants
materially adversely affected by the material irreconcilable conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any material irreconcilable conflict, then the Company will withdraw the
Account's investment in one or more Authorized Funds of the Trust and terminate
this Agreement within six (6) months (or such shorter period as may be required
by law or any exemptive relief previously granted to the Trust) after the
Trustees inform the Company in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees. No charge or penalty will be imposed as
a result of such withdrawal.
7.7. The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and the obligation
of the Company set forth in this Article VII shall be carried out with a view
only to the interests of Contract owners or participants.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4
and 7.5 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
7.9. The Company has reviewed the Mixed and Shared Funding Exemption
Order and hereby assumes all obligations referred to therein which are required,
including, without limitation, the obligation to provide reports, material or
data as the Trustees may request, as conditions to such order, to be assumed or
undertaken by the Company.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by the Company
(a) The Company shall indemnify and hold harmless the Trust,
the Distributor and ING Pilgrim Investments, LLC (the "Adviser"), and each of
the Trustees, directors of the Distributor or the Adviser, officers, employees
or agents of the Trust, the Distributor or the Adviser, and each person, if any,
who controls the Trust, Adviser or the Distributor 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 which consent
may not be unreasonably withheld) or litigation expenses (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 the Trust's shares or
the Contracts or the performance by the parties of their obligations hereunder
and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in a registration statement, prospectus or SAI 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 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 Trust for use in the registration statement,
prospectus or SAI 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 Trust shares; or
(ii) arise out of or as a result of written
statements or representations (other than statements or representations
contained in the Trust's registration statement or prospectus, or in
sales literature for Trust shares not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or its
agents or employees or persons under its control, with respect to the
sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished
to the Trust or the Distributor by or on behalf of the Company; or
(iv) arise out of or result from any breach of any
material 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, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
(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 to the extent 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 or to the Trust, whichever is applicable.
(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), on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim 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 the
Company's expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
Indemnified Party named in the action. After notice from the Company to such
Indemnified 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 Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Distributor shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Distributor in connection with the issuance or sale of the Trust Shares or the
Contracts or the operation of the Trust.
(e) The provisions of this Section 8.1 shall survive any
termination of this Agreement.
8.2. Indemnification by the Distributor
(a) The Distributor shall indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or agent of the
foregoing (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 Distributor which consent may
not be unreasonably withheld) or litigation expenses (including reasonable legal
and other expenses) to which the Indemnified Parties may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the Contracts or
the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in a registration statement, prospectus, or SAI for
the Trust or the sales literature for the Trust prepared by
the Trust or Distributor (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 Distributor or Trust by or on
behalf of the Company for use in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written
statements or representations (other than statements or
representations contained in the registration statement,
prospectus, SAI or sales literature for the Contracts not
supplied by the Distributor or persons under its control) of
the Distributor or persons under its control, with respect to
the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, SAI or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Distributor; or
(iv) arise out of or result from any breach of any
material representation and/or warranty made by the
Distributor or the Trust in this Agreement or arise out of or
result from any other material breach of this Agreement by the
Distributor or the Trust; as limited by and in accordance with
the provisions of Sections 8.2(b) and 8.2(c) hereof.
(b) The Distributor 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 and duties
under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Distributor 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 Distributor 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) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Distributor of any such claim
shall not relieve the Distributor 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 Distributor will be entitled to participate, at its
own expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Distributor to such Indemnified Party
of the 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 the Distributor will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company shall promptly notify the Distributor, the
Adviser, and the Trust of the commencement of any litigation or proceedings
against it or any of its officers or directors, in connection with the issuance
or sale of the Contracts or the operation of each Account.
(e) The provisions of this Section 8.2 shall survive any
termination of this Agreement.
ARTICLE IX
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 Delaware.
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 SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X
TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party, with respect to some or all of
the Authorized Funds, upon sixty (60) days' advance written notice to the other
parties; or
(b) at the option of the Trust or the Distributor in the event
that formal administrative proceedings are instituted against the Company by the
NASD, the SEC, any State Insurance Commissioner or any other regulatory body
regarding the Company's duties under this Agreement or related to the sales of
the Contracts, with respect to the operation of any Account, or the purchase of
the Trust shares, provided, however, that the Trust or the Distributor
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the ability
of the Company to perform its obligations under this Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Distributor by
the NASD, the SEC, or any state securities or insurance department or any other
regulatory body in respect of the sale of shares of the Trust to the Company,
provided, however, that the Company determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Trust or Distributor to perform its
obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of the
Contract owners or participants having an interest in such Account (or any
subaccount) to substitute the shares of another investment company for the
corresponding Authorized Fund shares of the Trust in accordance with the terms
of the Contracts for which those Authorized Fund shares had been selected to
serve as the underlying investment media. The Company will give 30 days' prior
written notice to the Trust of the date of any proposed vote to replace the
Trust's shares;
(e) with respect to any Authorized Fund, upon 30 days' advance
written notice from the Distributor to the Company, upon a decision by the
Distributor to cease offering shares of the Trust for sale; or
(f) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material breach of any
provision of this Agreement which material breach is not cured within thirty
(30) days of said notice.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1 (a) may be exercised for any
reason or for no reason.
10.3. No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for such termination. Such prior written notice shall be
given in advance of the effective date of termination as required by this
Article X.
10.4. Notwithstanding any termination of this Agreement, subject to
Sections 1.2 and 10.5 of this Agreement, the Trust and the Distributor shall, at
the option of the Company, continue to make available additional shares of the
Trust pursuant to the terms and conditions of this Agreement, for all Contracts
in effect as of the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, subject to Sections 1.2 and
10.5 of this Agreement, the owners or participants of the Existing Contracts
shall be permitted to reallocate investments in the Trust, redeem investments in
the Trust and/or invest in the Trust upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section 10.4
shall not apply to any termination under Article VII and the effect of such
Article VII termination shall be governed by Article VII of this Agreement.
10.5. If any party terminates this Agreement with respect to any
Authorized Fund pursuant to the provisions under Article X, the Agreement shall
nevertheless continue in effect as to any shares of the Trust that are
outstanding as of the date of such termination (the "Initial Termination Date").
This continuation shall extend to the earlier of (a) the date as of which an
Account no longer owns shares of the affected Authorized Fund or (b) the date
(the "Final Termination Date") as of 180 days following the Initial Termination
Date, or, at the Distributor's option, such later date as is necessary for the
Company to obtain a substitution order from the SEC, the application for which
the Company will diligently pursue.
10.6. The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in either Account) except (i) as necessary to implement Contract owner or
participant initiated 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"). Upon request, the
Company will promptly furnish to the Trust and the Distributor an opinion of
counsel for the Company, reasonably satisfactory to the Trust, 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, subject to Sections 1.2 and 10.5 of this Agreement, the Company shall
not prevent Contract owners or participants from allocating payments to an
Authorized Fund that was otherwise available under the Contracts without first
giving the Trust or the Distributor 90 days' written notice of its intention to
do so.
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Pilgrim Variable Products Trust
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
If to the Distributor:
ING Pilgrim Securities, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
If to the Company:
Northern Life Insurance Company
c/o Aetna Life Insurance and Annuity Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
ARTICLE XII
MISCELLANEOUS
12.1. A copy of the Agreement and Declaration of Trust is on file with
the Secretary of State of the State of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of or arising out of this
instrument, including without limitation Article VI, are not binding upon any of
the Trustees or shareholders individually but binding only upon the assets and
property of the Trust
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.6. 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.
12.7. Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Distributor are several and, without limiting
in any way the generality of the foregoing, neither such party shall have any
liability for any action or failure to act by the other party, or any person
acting on such other party's behalf.
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 and its seal to be hereunder affixed hereto as of the date
specified below.
NORTHERN LIFE INSURANCE COMPANY
By its authorized officer,
/s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Vice President
PILGRIM VARIABLE PRODUCTS TRUST
By its authorized officer,
/s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President and Secretary
ING PILGRIM SECURITIES, INC.
By its authorized officer,
/s/ Xxxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President, Chief
Financial Officer and Treasurer
Schedule A
Separate Accounts
Separate Account One
Schedule B
PILGRIM VARIABLE PRODUCTS TRUST
Authorized Funds
Pilgrim VP MagnaCap Portfolio
Pilgrim VP Research Enhanced Index Portfolio
Pilgrim VP Growth Opportunities Portfolio
Pilgrim XX XxxXxx Opportunities Portfolio
Pilgrim VP Growth + Value Portfolio
Pilgrim VP SmallCap Opportunities Portfolio
Pilgrim VP International Value Portfolio
Pilgrim VP High Yield Bond Portfolio
Pilgrim VP Worldwide Growth Portfolio
Pilgrim VP International SmallCap Growth Portfolio
Pilgrim VP International Portfolio
Pilgrim VP Emerging Countries Portfolio
Pilgrim VP Growth and Income Portfolio
Pilgrim VP LargeCap Growth Portfolio
Pilgrim VP Financial Services Portfolio
Pilgrim VP Convertible Portfolio
EXHIBIT
TO
ARTICLE I OF PARTICIPATION AGREEMENT
Procedures for Pricing and Order/Settlement Through National Securities Clearing
Corporation's Mutual Fund Profile System and Mutual Fund Settlement, Entry and
Registration Verification System
1. As provided in Section 2(e) of the Fund Participation Agreement, the parties
hereby agree to provide pricing information, execute orders and wire payments
for purchases and redemptions of Fund shares through National Securities
Clearing Corporation ("NSCC") and its subsidiary systems as follows:
(a) Distributor or the Funds will furnish to the Company or its affiliate
through NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net
asset value information for each Fund, (2) a schedule of anticipated dividend
and distribution payment dates for each Fund, which is subject to change without
prior notice, ordinary income and capital gain dividend rates on the Fund's
ex-date, and (3) in the case of fixed income funds that declare daily dividends,
the daily accrual or the interest rate factor. All such information shall be
furnished to the Company or its affiliate by 6:30 p.m. Eastern Time on each
business day that the Fund is open for business (each a "Business Day") or at
such other time as that information becomes available. Changes in pricing
information will be communicated to both NSCC and the Company.
(b) Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is calculated as
specified in such Fund's prospectus ("Close of Trading") on each Business Day
("Instructions"), and upon its determination that there are good funds with
respect to Instructions involving the purchase of Shares, the Company or its
affiliate will calculate the net purchase or redemption order for each Fund.
Orders for net purchases or net redemptions derived from Instructions received
by the Company or its affiliate prior to the Close of Trading on any given
Business Day will be sent to the Defined Contribution Interface of NSCC's Mutual
Fund Settlement, Entry and Registration Verification System ("Fund/SERV") by
5:00 a.m. Eastern Time on the next Business Day. Subject to the Company's or its
affiliate's compliance with the foregoing, the Company or its affiliate will be
considered the agent of the Distributor and the Funds, and the Business Day on
which Instructions are received by the Company or its affiliate in proper form
prior to the Close of Trading will be the date as of which shares of the Funds
are deemed purchased, exchanged or redeemed pursuant to such Instructions.
Instructions received in proper form by the Company or its affiliate after the
Close of Trading on any given Business Day will be treated as if received on the
next following Business Day. Dividends and capital gains distributions will be
automatically reinvested at net asset value in accordance with the Fund's then
current prospectuses.
(c) The Company or its affiliate will wire payment for net purchase orders
by the Fund's NSCC Firm Number, in immediately available funds, to an NSCC
settling bank account designated by the Company or its affiliate no later than
5:00 p.m. Eastern time on the same
Business Day such purchase orders are communicated to NSCC. For purchases of
shares of daily dividend accrual funds, those shares will not begin to accrue
dividends until the day the payment for those shares is received.
(d) NSCC will wire payment for net redemption orders by Fund, in
immediately available funds, to an NSCC settling bank account designated by the
Company or its affiliate, by 5:00 p.m. Eastern Time on the Business Day such
redemption orders are communicated to NSCC, except as provided in a Fund's
prospectus and statement of additional information.
(e) With respect to (c) or (d) above, if Distributor does not send a
confirmation of the Company's or its affiliate's purchase or redemption order to
NSCC by the applicable deadline to be included in that Business Day's payment
cycle, payment for such purchases or redemptions will be made the following
Business Day.
(f) If on any day the Company or its affiliate, or Distributor is unable to
meet the NSCC deadline for the transmission of purchase or redemption orders, it
may at its option transmit such orders and make such payments for purchases and
redemptions directly to Distributor or the Company or its affiliate, as
applicable, as is otherwise provided in the Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and the requirements of applicable law. The Funds reserve the right,
at their discretion and without notice, to suspend the sale of shares or
withdraw the sale of shares of any Fund.
2. The Company or its affiliate, Distributor and clearing agents (if applicable)
are each required to have entered into membership agreements with NSCC and met
all requirements to participate in the MFPS and Fund/SERV systems before these
procedures may be utilized. Each party will be bound by the terms of their
membership agreement with NSCC and will perform any and all duties, functions,
procedures and responsibilities assigned to it and as otherwise established by
NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level
utilized.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect. Unless otherwise indicated herein, the
terms defined in the Agreement shall have the same meaning as in this Exhibit.
