Exhibit (h)(6)
PARTICIPATION AGREEMENT
AMONG
XXXXXXX NATIONAL LIFE INSURANCE COMPANY
AND
BISYS FUND SERVICES LP
AND
FIFTH THIRD ASSET MANAGEMENT
AND
VARIABLE INSURANCE FUNDS
THIS AGREEMENT, made and entered into this 20th day of April, 2004 by and
among Variable Insurance Funds, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), on behalf of the Series named in
Schedule 1 (attached hereto) that may be amended from time to time in accordance
with the provisions of Article XI of this Agreement, BISYS Fund Services LP (the
"Distributor"), a limited partnership organized under the laws of the State of
Ohio, Fifth Third Asset Management, Inc. (the "Investment Manager"), a
corporation organized under the laws of the State of Ohio, and Xxxxxxx National
Life Insurance Company, a Michigan insurance corporation (the "Company"), on its
own behalf and on behalf of each separate account of the Company named in
Schedule 1 to this Agreement as in effect at the time this Agreement is executed
and such other separate accounts that may be added to Schedule 1 from time to
time in accordance with the provisions of Article XI of this Agreement (each
such account referred to as the "Account").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts (collectively referred to as "Variable
Insurance Products," the owners of such products being referred to as "Product
Owners") to be offered by insurance companies which have entered into
participation agreements with the Trust ("Participating Insurance Companies");
and
WHEREAS, the Trust filed with the Securities and Exchange Commission (the
"SEC") and the SEC has declared effective a registration statement (referred to
herein as the "Trust Registration Statement" and the prospectus contained
therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein as
the "Trust Prospectus") on Form N-lA and Form N-8A to register itself as an
open-end management investment company (File No. 811-8644) under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the shares (File No.
33-81800) under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has filed a registration statement with the SEC to
register under the 1933 Act (unless exempt therefrom) certain variable annuity
contracts and variable life
insurance policies (such policies and contracts shall be referred to herein
collectively as the "Contracts," each such registration statement for a class or
classes of contracts being referred to as the "Contracts Registration Statement"
and the prospectus for each such class or classes being referred to herein as
the "Contracts Prospectus," and the owners of such contracts, as distinguished
from all other Product Owners, being referred to as "Contract Owners"); and
WHEREAS, each Account, a validly existing separate account, duly authorized
by resolution of the Board of Directors of the Company on the date set forth on
Schedule 1, sets aside and invests assets attributable to the Contracts; and
WHEREAS, the Company has registered or will have registered each Account
with the SEC as a unit investment trust unless exempt under the 1940 Act, before
any Contracts are issued by that Account; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, the Distributor and the Trust have entered into a Distribution
Agreement (the "Trust Distribution Agreement") pursuant to which the Distributor
will distribute Trust shares (the "Shares"); and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940 and any applicable state securities
laws and serves as an investment manager to the Series pursuant to an agreement,
and may delegate its responsibilities to selected Sub-Investment Managers; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Shares on behalf of each Account to
fund its Contracts and the Distributor is authorized to sell such Shares to unit
investment trusts such as the Accounts at Net Asset Value (the "NAV");
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust, the Distributor, and the Investment Manager agree as follows:
ARTICLE I.
Sale of Shares
1.1. The Distributor agrees to sell to the Company the Shares which the
Company orders on behalf of each Account, executing such orders on a daily basis
in accordance with Section 1.4 of this Agreement.
1.2. The Trust agrees to make Shares available for purchase by the Company
on behalf of the Account, such purchases to be effected at net asset value per
Share ("NAV") in accordance with Section 1.4 of this Agreement. Notwithstanding
any other provision in this Agreement to the contrary, the Trustees of the Trust
(the "Trustees") may suspend or terminate the offering of Shares, if such action
is required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Trustees acting in good faith and in light of its
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fiduciary duties under federal and any applicable state laws, suspension or
termination is necessary and in the best interests of the shareholders (it being
understood that "shareholders" for this purpose shall mean Product Owners). The
Trust reserves the right subject to the conditions of Section 1.12, upon prior
written notice to the Company (given at the earliest practicable time), to take
all actions, including but not limited to, the dissolution, reorganization,
liquidation, merger or sale of all assets of the Trust or any Series upon sole
authorization of the Board, acting in good faith.
1.3. The Trust agrees to redeem, at the Company's request, any full or
fractional Shares held by each Account or the Company, executing such requests
at the NAV on a daily basis in accordance with Section 1.4 of this Agreement and
the applicable provisions of the 1940 Act.
1.4. (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be an
agent of the Trust for the limited purposes of receipt of Contract Owner
purchase and redemption orders for interests in the corresponding sub-accounts
or investment divisions of the Accounts and shall treat receipt of such orders
by the Company on any Business Day prior to the Series' calculation of its NAV
as disclosed in the Fund Prospectuses (generally, the close of the New York
Stock Exchange) as receipt by the Trust on that same Business Day, provided that
the Trust receives notice of such redemption or purchase request in a mutually
agreeable format by 9:00 a.m., Eastern Time on the next following Business Day.
For purposes of this Agreement, "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which a Series calculates its
NAV.
(b) The Trust will post confirmation of each trade (accessible on an
secure internet web page, by a toll-free telephone line, Email or in a similar,
mutually agreeable format) by 1:00 p.m. New York time on the same day the
Company places the order. The Company shall pay for the Shares on the same day
that it places an order with the Trust to purchase those Shares for an Account.
Payment for Shares will be made by each Account or the Company in federal funds
transmitted to the Trust by wire to be received by 6:00 p.m., New York time on
the day the Trust is properly notified of the purchase order for Shares. If
federal funds are not received on time, such funds will be invested, and Shares
purchased thereby will be issued, as soon as practicable and the Company shall
promptly, upon the Trust's request, reimburse the Trust or the Distributor, as
appropriate, for any charges, costs, fees, interest or other expenses incurred
by the Trust or the Distributor in connection with any advances to, or borrowing
or overdrafts by, the Trust, or any similar expenses incurred by the Trust, as a
result of portfolio transactions effected by the Trust based upon such purchase
request.
(c) The Trust shall pay for the Shares on the same day that the
Company places an order with the Trust to redeem Shares for an Account. Payment
for Shares will be made by the Trust in federal funds transmitted to the Company
by wire to be received by 6:00 p.m., New York time on the day the Trust is
properly notified of the redemption order for Shares. If federal funds are not
received on time, such funds will be invested, and Shares redeemed thereby will
be issued, as soon as practicable and the Trust shall promptly, upon the
Company's request, reimburse the Company, as appropriate, for any charges,
costs, fees, interest or other expenses incurred by the Company in connection
with any advances to, or borrowing or overdrafts by, the Company, or any similar
expenses incurred by the Company, as a result of
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non-payment, except that the Trust reserves the right to delay payment of
redemption proceeds as permitted under Section 22(e) of the 1940 Act. Neither
the Trust nor the Distributor shall bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds if securities are
redeemed in-kind by the Series; the Company alone shall be responsible for such
action.
(d) Payments for the purchase of Shares under Section 1.3 and payments
for the redemption of Shares under Section 1.4 may be netted against one another
on any day for the purpose of determining the amount of any wire transfer
payable for all Series on that day.
1.5. Issuance and transfer of Shares will be by book entry only. Share
certificates will not be issued to the Company or each Account. Purchase and
redemption orders for Shares will be recorded in an appropriate ledger for each
Account or the appropriate sub-account of each Account.
1.6. The Trust shall furnish notice to the Company at least one week in
advance of a distribution of any income dividends or capital gain distributions
payable on any Shares. The Company, on its behalf and on behalf of each Account,
hereby elects to receive all such dividends and distributions as are payable on
any Shares in the form of additional Shares. The Company reserves the right, on
its behalf and on behalf of each Account, to revoke this election and to receive
all such dividends in cash. On the date of the distribution, the Trust shall
notify the Company of the number of Shares so issued as payment of such
dividends and distributions.
1.7. The Trust shall use its best efforts to make the NAV available to the
Company by 6:30 p.m., Eastern Time each Business Day, and in any event, as soon
as reasonably practicable after the NAV is calculated, and shall calculate such
NAV in accordance with the then currently effective Trust Prospectus. If the
Trust provides the Company with materially incorrect NAV information through no
fault of the Company, the Company on behalf of the Separate Accounts, shall be
entitled to an adjustment to the number of Shares purchased or redeemed to
reflect the correct NAV. Any material error in the calculation of NAV, dividend
or capital gain information shall be reported promptly upon discovery to the
Company. Neither the Trust, the Distributor, nor the Investment Manager nor any
of their affiliates shall be liable for any information provided to the Company
pursuant to this Agreement or any loss resulting from such information, if such
information is based on incorrect information supplied by the Company to the
Trust, the Distributor or the Investment Manager.
1.8. (a) The Company may withdraw each Account's investment in a Series
only: (i) as necessary to facilitate Contract Owner requests; (ii) upon
requisite vote of the Contract Owners having an interest in the affected Series
to substitute the shares of another investment company for Shares in accordance
with the terms of the Contracts; (iii) as required by state and/or federal laws
or regulations or judicial or other legal precedent of general application; (iv)
to deduct charges under the Contracts; or (v) at the Company's sole discretion
or pursuant to an order of the SEC under Section 26(c) of the 1940 Act, if
required.
(b) The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive and that the Shares may be sold to other
insurance companies
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(subject to the provisions herein) and the assets of the Accounts may be
invested in other investment companies.
(c) The Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action to operate each
Account as a management investment company under the 0000 Xxx.
1.9. The Trust and the Distributor agree that Shares will be sold only to
Participating Insurance Companies, their separate accounts or other permissible
investors that are consistent with the Order referenced in Section 7.1. The
Trust and the Distributor will not sell Shares to any insurance company or
separate account unless an agreement substantially complying with Article VII of
this Agreement is in effect to govern such sales. No Shares will be sold to the
general public.
1.10. Notwithstanding any of the foregoing, the parties have determined
that there is a significant risk that the Trust and its shareholders and
Contract Owners may be adversely affected by short term trading activity and/or
by investors whose purchase and redemption activity follows a market timing
pattern Each party agrees to cooperate to assist in implementing applicable
restrictions on excessive and/or short term trading activity and/or purchase and
redemption activity.
1.11. The Company acknowledges that, pursuant to Form 24F-2, the Trust is
not required to pay fees to the SEC for registration of its Shares under the
1933 Act with respect to its Shares issued to an Account that is a unit
investment trust that offers interests that are registered under the 1933 Act
and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The Company agrees to provide the Trust each year within
60 days of the end of the Trust's fiscal year, or when reasonably requested by
the Trust, information as to the number of Shares purchased by a Registered
Account and any other Account the interests of which are not registered under
the 0000 Xxx. The Company acknowledges that the Trust intends to rely on the
information so provided and represents and warrants that such information shall
be accurate.
1.12. The Trust agrees that if the Trust is dissolved, reorganized,
liquidated, merged or all assets of the Trust or any series are sold upon sole
authorization of the Board, acting in good faith, as provided for in Section
1.2., the Trust shall pay the reasonable costs and expenses of the Company
obtaining any required authorization or exemptive relief of the Securities and
Exchange Commission and the costs of printing, mailing and delivering relating
to the substitution of another fund, the solicitation of proxies or any other
extraordinary procedures required to effect the change.
ARTICLE II
Representations and Warranties
2.1. The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act (unless exempt therefrom) or will be so registered
before the issuance thereof, (b) that the Contracts will be issued in compliance
in all material respects with all applicable federal and state laws and (c) that
the Company will require of every person distributing the Contracts
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that the Contracts be offered and sold in compliance in all material respects
with all applicable federal and state laws. The Company further represents and
warrants that it is an insurance company duly organized and validly existing
under applicable law and that it has legally and validly authorized each Account
as a separate account under Section 500.925 of the Michigan Insurance Code, and
has registered or, prior to the issuance of any Contracts, will register each
Account (unless exempt therefrom) as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a separate account for its Contracts,
and that it will maintain such registrations for so long as any Contracts issued
under them are outstanding. The Company also represents and warrants that it and
each Account are Qualified Persons.
2.2. The Trust represents and warrants that Shares of any Series sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Trust is
and shall remain registered under the 1940 Act for so long as the Shares are
sold. The Trust further represents and warrants that it is a business trust duly
organized and in good standing under the laws of the Commonwealth of
Massachusetts.
2.3. The Trust represents that the Trustees have elected for each Series to
be taxed as a regulated investment company under Subchapter M of the Code. The
Investment Manager and Trust represents and warrants that each Series currently
qualifies as a regulated investment company under Subchapter M of the Code. The
Investment Manager and Trust further represents and warrants that it will make
every reasonable effort to continue to have each Series so qualify and to
maintain such qualification (under Subchapter M of the Code or any successor or
similar provision), and that it will notify the Company immediately upon having
a reasonable basis for believing that it has ceased to so qualify or that a
Series might not so qualify in the future.
2.4. Investment Manager and the Trust represents and warrants that each
Series has complied and will continue to comply with Section 817(h) of the Code
and Treasury Regulation Section 1.817-5 and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and any amendments or other
modifications or successor provisions to such Section or Regulation. The
Investment Manager and Trust will make every effort to (a) notify the Company
immediately upon having a reasonable basis for believing a breach has occurred,
and (b) in the event of a breach of this Section 2.4, the Investment Manager and
Trust will: immediately notify the Company of such breach; and take the steps
necessary to adequately diversify each Series so as to achieve such compliance
within the period allowed by regulation.
2.5. The Company represents and warrants that the Contracts are currently
and at the time of issuance will be treated as annuity contracts or life
insurance policies, whichever is appropriate, under applicable provisions of the
Code. The Company shall make every effort to maintain such treatment and shall
notify the Trust, the Distributor and the Investment Manager 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. In addition, Company
represents and warrants that each of its Accounts is a "segregated asset
account" and that interests in the Accounts are offered exclusively through the
purchase of or transfer into a "variable contract" within the meaning of such
terms under Section 817 of the Code and the regulations thereunder. Company will
use every reasonable effort to continue to meet such definitional requirements,
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and it will notify the Trust and the Investment Manager immediately upon having
a reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
2.6. The Trust makes no representations or warranties as to whether any
aspect of the Series' operations, including, but not limited to, investment
policies, fees and expenses, complies with the insurance laws and other
applicable laws of the various states. If any state will not approve use of a
Series, then Company reserves the right to not offer it in that state.
2.7. The Distributor represents and warrants that it is duly registered as
a broker-dealer under the 1934 Act, a member in good standing of the NASD, and
duly registered as a broker-dealer under applicable state securities laws; its
operations are in compliance with applicable law, and it will distribute the
Shares according to applicable law.
2.8. The Investment Manager represents and warrants that it is registered
as an investment adviser under the Investment Advisers Act of 1940 and its
operations are in compliance with applicable federal and state securities laws.
2.9. The Trust represents and warrants that it has and maintains a fidelity
bond in accordance with Rule 17g-1 under the 1940 Act. The Trust will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
2.10 The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account
with the same coverage limits that pertain to the Trust's fidelity bond
maintained in accordance with Section 2.9 hereof. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company. The Company agrees to hold for the benefit of the Trust and to pay to
the Trust any amounts lost from larceny, embezzlement or other events covered by
the aforesaid bond to the extent such amounts properly belong to the Trust
pursuant to the terms of this Agreement. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Trust and the
Investment Manager in the event that such coverage no longer applies.
2.11. The Investment Manager, the Company, the Distributor, and the Trust
each represent and warrants that each shall comply with applicable privacy and
notice provisions of 15 U.S.C. Sections 6801-6827 and any applicable regulations
promulgated thereunder (including but not limited to 12 C.F.R. Part 248) as they
may be amended.
2.12. The Trust, the Company and the Distributor each undertake and agree
to comply, and to take full responsibility in complying with any and all laws,
regulations, protocols and other requirements relating to money laundering both
United States and foreign, including, without limitation, the International
Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (Title III
of the USA Patriot Act), hereinafter, collectively with the rules, regulations
and orders promulgated thereunder, the "Act," and any requirements and/or
requests in connection therewith, made by regulatory authorities, the other
parties or their duly appointed
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agents, either generally or in respect of a specific transaction, and/or in the
context of a "primary money laundering concern" as defined in the Act.
The Investment Manager, the Trust, the Company and the Distributor each
agrees as a condition precedent to any transaction taking or continuing to be in
effect, to comply with any and all anti-money laundering laws, regulations,
orders or requirements, and without prejudice to the generality of the above, to
provide regulatory authorities, the other party or their duly appointed agents,
with all necessary reports and information for them to fulfill their
obligations, if any, under the Act for the purposes of each party, or other
third parties complying with any and all anti-money laundering requirements,
including, without limitation, the enhanced due diligence obligations imposed by
the Act, the filing of Currency Transaction Reports and/or of Suspicious
Activity Reports obligations required by the Act, and/or the sharing of
information requirements imposed by the Act.
In the event satisfactory reports and information are not received within a
reasonable time period from the date of the request, each party reserves the
right to reject any transaction and/or cease to deal with the other party.
Further, the Investment Manager, the Trust, the Company and the Distributor
each represents that it has not received notice of, and to its knowledge, there
is no basis for, any claim, action, suit, investigation or proceeding that might
result in a finding that it is not or has not been in compliance with the Act,
and the rules and regulations promulgated thereunder. The Investment Manager,
the Trust, the Company and the Distributor agree to notify the other parties
immediately if the representation in the previous sentence is no longer true or
if it has reasonable basis for believing that such representation may no longer
be true.
2.13. The Trust and the Distributor each represents that the Trust has
procedures reasonably designed to ensure that any order to purchase or sell its
Shares (a) is priced in compliance with Rule 22c-1 under the 1940 Act, including
without limitation procedures to price some or all of its portfolio securities
at their "fair value" when appropriate or required by law, and procedures to
prevent the cancellation of trades after the close of the NYSE; and (b) is
handled in compliance with any procedure described in the Trust's Prospectus or
Statement of Additional Information (the "SAI") concerning prevention or control
of market timing or other frequent trading transactions.
2.14. The Company represents and warrants that (a) all transactions
submitted to Company by Contract Owners with respect to a Business Day in
accordance with Article I will be received in good order by the Company prior to
the effective time that NAV is calculated on that Business Day and will be
processed by the Company in compliance with Rule 22c-1 under the 1940 Act; and
(b) the Company will provide the Trust or its agent with assurances regarding
the compliance of its order handling with the requirements of Rule 22c-1 upon
reasonable request. If NAV is calculated on any Business Day as of a time other
than 4 p.m. Eastern Time, Trust will provide Company with at least four hours
advance notice or such shorter period as is practicable under the circumstances,
of the early NAV calculation.
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ARTICLE III
Prospectuses and Proxy Statements; Sales Material and Other Information
3.1. The Distributor shall provide the Company with as many copies of the
current Prospectus of any Series named in Schedule 1 as the Company may
reasonably request. If requested by the Company in lieu thereof, the Trust at
its expense shall provide to the Company a camera-ready copy, and electronic
version, of the current Trust Prospectus suitable for printing and other
assistance as is reasonably necessary in order for the Company to have a new
Contract Prospectus printed together with the Trust Prospectus in one document.
See Article V for a detailed explanation of the responsibility for the cost of
printing and distributing Trust prospectuses.
3.2. The Trust Prospectus shall state that the SAI for the Trust is
available, and the Distributor shall provide such SAI free of charge to the
Company and to any outstanding or prospective Contract Owner who requests such
SAI.
3.3. (a) The Trust at its expense shall provide to the Company a
camera-ready copy of the Trust's shareholder reports with respect to the Series
named in Schedule 1 and other communications to shareholders (except proxy
material), in each case in a form suitable for printing, as determined by the
Company. The Trust shall be responsible for the costs of printing and
distributing these materials to Contract Owners, subject to the limitation in
Article V.
(b) The Trust at its expense shall be responsible for preparing,
printing and distributing its proxy material to Contract Owners to obtain voting
instructions. The Company at its expense will provide the appropriate Contract
Owner names and addresses to a third party proxy vendor for this purpose.
3.4. The Company shall furnish, or shall cause to be furnished, to the
Distributor and the Investment Manager prior to use, each piece of sales
literature or advertising prepared by the Company in which the Trust, the
Series, the Investment Manager or the Distributor is referenced. No sales
literature or advertising will be used if the Trust or the Investment Manager
reasonably objects to its use within seven (7) Business Days following receipt
by the Distributor and without the prior written approval of the Distributor.
3.5. The Company will not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the advertising or sale of the Contracts, other than information or
representations contained in: (a) the Trust Registration Statement, Contract
Registration Statement or Funds' prospectus(es), as may be amended from time to
time, (b) reports to shareholders, (c) proxy statements for the Series or, (d)
sales literature or other promotional material approved by the Investment
Manager, or the Distributor.
3.6. The Trust shall furnish, or shall cause to be furnished, to Company
prior to use, each piece of sales literature or advertising prepared by or for
the Trust in which Company, the Contracts or Separate Accounts, are described.
No sales literature or advertising will be used if Company reasonably objects to
its use within seven (7) Business Days following receipt by Company and without
prior written approval of the Company.
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3.7. The Trust and the Distributor shall not 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 the Contracts Registration Statement or Contracts Prospectus, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or in published reports of each Account which are in the public domain
or approved in writing by the Company for distribution to Contract Owners, or in
sales literature or other promotional material approved in writing by the
Company, except with the prior written approval of the Company. The Company will
use its commercially reasonable best efforts to respond to any request for
approval within seven (7) calendar days of a request by the Trust or the
Distributor.
3.8. The Trust will provide to the Company at least one complete copy of
all Trust Registration Statements, Trust Prospectuses, SAIs, annual and
semi-annual reports and other reports, proxy statements, applications for
exemptions, requests for no-action letters, and all amendments or supplements to
any of the above, that relate to any Series of the Trust named in Schedule 1,
within 20 days after the filing of such document with the SEC or other
regulatory authorities.
3.9. The Company will provide to the Trust at least one complete copy of
all Contracts Registration Statements, Contract Prospectuses, SAIs, annual and
semi-annual reports, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters and all amendments
or supplements to any of the above, that relate to the Contracts and their
investment in the Trust, within 20 days after the filing of such document with
the SEC or other regulatory authorities.
3.10. For purposes of this Article III, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine or
other periodical, radio, television, telephone or tape recording, videotape
display, computer net site, 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, in print or electronically,
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, SAIs, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV
Voting
4.1. Subject to applicable law and the order referred to in Article VII,
the Trust shall solicit voting instructions from Contract Owners.
4.2. Subject to applicable law and the order referred to in Article VII,
the Company shall:
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(i) Vote Shares attributable to Contract Owners in accordance
with instructions or proxies received in timely fashion from such Contract
owners;
(ii) Vote Shares attributable to Contract Owners for which no
instructions have been received in the same proportion as Shares for which
instructions have been received in timely fashion; and
(iii) Vote Shares held by the Company on its own behalf or on
behalf of each Account that are not attributable to Contract Owners in the
same proportion as Shares for which instructions have been received in
timely fashion.
ARTICLE V
Fees and Expenses
5.1. Except as otherwise provided herein, all expenses incident to
performance by a party under this Agreement shall be paid by such party.
5.2. The Trust shall pay, or cause to be paid, all expenses incident to
performance by the Trust under this Agreement (including expenses expressly
assumed by the Trust pursuant to this Agreement) to the extent permitted by law.
Except as may otherwise be provided herein, the Company shall not bear any of
the expenses for the cost of registration and qualification of the Trust shares
under federal and any state securities law, preparation and filing of the Trust
Prospectus and Trust Registration Statement, the preparation of all statements
and notices required of the Trust by any federal or state securities law, all
taxes on the issuance or transfer of Shares, and any expenses permitted to be
paid or assumed by the Trust pursuant to a plan, if any, under Rule 12b-1 under
the 1940 Act.
5.3. The Trust shall pay, or cause to be paid, the expenses associated with
printing and distributing Trust Prospectuses, SAIs, annual reports, and
semi-annual reports to existing Contract Owners with Contract value allocated to
a Series. (If for this purpose the Company may print the Trust Prospectuses,
SAIs, annual reports, and semi-annual reports in a booklet or separate booklets
containing disclosure for the Contracts and for underlying funds other than
those of the Trust, then the Trust shall pay only its proportionate share of the
total cost to print and distribute the booklet to existing Contract Owners with
Contract value allocated to a Series.)
The Trust or its designee shall reimburse the Company for any additional
expenses incurred by the Company as a result of the Trust or its designee
failing to provide the Trust Prospectus, SAI, annual report, and semi-annual
report at least 15 days before they must be distributed or are not customized to
include only the Trust or Series in which each Contract invests.
5.4. The Company is responsible for the cost of printing and distributing
Trust prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for
existing or prospective Contract Owners. The Company shall have the final
decision on choice of printer for all Prospectuses and SAIs.
5.5. The Investment Manager has entered into an Administrative Services
Agreement with the Company that specifically address certain additional services
that the Company will
11
provide to the Investment Manager and the Series in addition to the activities
contemplated in this Agreement.
5.6. The Trust or its designee shall reimburse the Company for reasonable
reprocessing costs associated with late or inaccurate NAV deliveries to the
Company by the Trust or its designee.
ARTICLE VI
Compliance Undertakings
6.1. The Company shall amend the Contracts Registration Statements under
the 1933 Act and each Account's Registration Statement under the 1940 Act from
time to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company shall
register and qualify the Contracts for sale to the extent required by applicable
securities laws of the various states.
6.2. The Trust shall amend the Trust Registration Statement under the 1933
Act and the 1940 Act, from time to time as required in order to effect for so
long as Shares are sold the continuous offering of Shares as described in the
then currently effective Trust Prospectus. The Trust shall register and qualify
Shares for sale to the extent required by applicable securities laws of the
various states.
6.3. The Company shall be responsible for assuring that any prospectus
offering a Contract that is a life insurance contract where it is reasonably
possible that such Contract would be deemed a "modified endowment contract," as
that term is defined in Section 7702A of the Code, will describe the
circumstances under which a Contract could be treated as a modified endowment
contract (or policy).
6.4. The Investment Manager, the Trust, the Company and the Distributor
each shall establish and maintain, and cause its affiliates to establish and
maintain, all required compliance policies and procedures required by Rule 38a-1
under the 1940 Act, or other applicable law and cooperate fully with each other
party to this Agreement in its fulfillment of its obligations under the rule.
ARTICLE VII
Potential Conflicts
7.1. The Trust and its Distributor (collectively, the "Applicants")
received an order from the SEC dated December 10, 1998, Investment Company Act
Rel. No. 23594 (the "Order"). Provisions set forth in 7.2 and 7.3 below shall
apply only if and to the extent consistent with the terms and conditions of the
Order and applicable law. The Order grants exemptions from certain provisions of
the 1940 Act and the regulations thereunder, to the extent necessary to permit
Shares to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
and qualified pension and retirement plans outside the separate account context,
among other things. Each
12
party warrants and agrees that it will comply with the "Applicants' Conditions"
prescribed in the Order as though such conditions were set forth verbatim in
this Agreement, including, without limitation, the provisions regarding
potential conflicts of interest between the separate accounts which invest in
the Trust and regarding Product Owner voting privileges. In order for each party
to perform its duties, each agrees to inform the other parties of the occurrence
of any of the events specified in the Order to the extent that such event may or
does result in a material irreconcilable conflict for purposes of the Order. The
Trustees of the Trust may reach a determination that a material irreconcilable
conflict exists as a result of some condition or event attributable to the
Company.
7.2. (a) If the Company disagrees with the Trustees' determination, the
Company shall file a written protest with the Trustees, reserving its right to
dispute the determination as between just the Company and the Trust. After
reserving that right the Company, although disagreeing with the Trustees that it
(the Company) was responsible for the conflict, shall take the necessary steps,
under protest, to remedy the conflict for the protection of Contract Owners.
(b) As between the Company and the Trust, if within 45 days after
the Trustees' determination the Company elects to press the dispute,
it shall so notify the Trustees in writing. The parties shall then
attempt to resolve the matter amicably through negotiation by
individuals from each party who are authorized to settle the matter.
(c) If the matter has not been amicably resolved within 60 days
from the date of the Company's notice of its intent to press the
dispute, then before either party shall undertake to litigate the
dispute it shall be submitted to non-binding arbitration conducted
expeditiously in accordance with the American Arbitration
Association's (AAA) Rules for Non-Administered Arbitration of Business
Disputes, by a sole arbitrator; provided, however, that if one party
has requested the other party to seek an amicable resolution and the
other party has failed to participate, the requesting party may
initiate arbitration before expiration of the 60-day period set out
just above.
(d) If within 45 days of the commencement of the process to
select an arbitrator the parties cannot agree upon the arbitrator,
then he or she will be selected from the AAA Panels of Neutrals. The
arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. Sec. 1-16. The place of arbitration shall be Lansing, Michigan.
The Arbitrator is not empowered to award damages in excess of
compensatory damages.
(e) If the Trustees shall determine that the Trust or another
insurer was responsible for the conflict, then the Trustees shall
notify the Company immediately of that determination.
7.3. If a material irreconcilable conflict arises because of the Company's
decision to disregard Contract Owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
shall withdraw (without charge or penalty) each Account's investment in the
Trust, if the Trust so elects.
13
7.4. Subject to the terms of Sections 7.1, 7.2 and 7.3 above, the Company
shall carry out the responsibility to take remedial action in the event of a
Trustees determination of a material irreconcilable conflict with a view only to
the interests of Contract Owners.
7.5. The parties to this Agreement agree that the conditions or
undertakings required by the Order that may be imposed on the Company, the
Trust, the Distributor and/or the Investment Manager by virtue of such Order by
the SEC: (i) shall apply only upon the sale of shares of the Series to variable
life insurance separate accounts (and then only to the extent required under the
1940 Act); (ii) will be incorporated herein by reference; and (iii) such parties
agree to comply with such conditions and undertakings to the extent applicable
to each such party notwithstanding any provision of this Agreement to the
contrary.
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 Order) on terms and conditions materially different from those
contained in the Order, then (a) the parties to this Agreement 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
3.1 and 3.2 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.
ARTICLE VIII
Indemnification
8.1. Indemnification by the Company.
The Company agrees to indemnify and hold harmless the Trust, the Investment
Manager, the Distributor and each person who controls, is controlled by or is
affiliated with any of them (other than another Participating Insurance Company)
within the meaning of such terms under the federal securities laws and any
officer, trustee, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(i) Arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or
other promotional material for the Contracts or the Contracts
themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if
such statement
14
or omission or such alleged statement or alleged omission was
made in reliance upon and in conformity with information
furnished to the Company by the Trust, the Distributor or the
Investment Manager (or a person authorized in writing to do so on
behalf of the Trust, the Distributor or the Investment Manager)
for use in the Contracts Registration Statement, Contracts
Prospectus or in the Contracts sales literature or other
promotional material for the Contracts (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Shares; or
(ii) Arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by or on behalf of the
Company (other than statements or representations contained in
the Trust Registration Statement, Trust Prospectus or sales
literature or other promotional material of the Trust not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or its agents or persons under the
Company's authorization or control with respect to the sale or
distribution of the Contracts or Shares; or
(iii) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Trust Registration Statement,
Trust Prospectus or sales literature or other promotional
material 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 in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Trust, the Distributor, or the
Investment Manager 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 or to make any payments under
the terms of this Agreement; or
(v) Arise out of any material breach by the Company of this
Agreement, including, but not limited to, a material breach of
any representation or warranty herein or a failure to transmit a
request for redemption or purchase of Shares on a timely basis in
accordance with the procedures set forth in Article 1; or
(vi) Arise as a result of the Company's providing the Trust with
inaccurate information, which causes the Trust to calculate its
NAVs incorrectly.
This indemnification will be in addition to any liability which the Company
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
15
8.2. Indemnification by the Investment Manager.
The Investment Manager agrees to indemnify and hold harmless the Company
and each person who controls, is controlled by or is affiliated with the Company
within the meaning of such terms under the federal securities laws and any
officer, director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(i) Arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Trust
Registration Statement, Trust Prospectus (or any amendment or
supplement thereto) or sales literature or other promotional
material of the Trust, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made; provided that this obligation to indemnify shall
not apply if such statement or omission or alleged statement or
alleged omission was made in reliance upon and in conformity with
information furnished by or on behalf of the Company or the
Distributor for use in the Trust Registration Statement, Trust
Prospectus (or any amendment or supplement thereto), sales
literature or other promotional material for the Trust or
otherwise for use in connection with the sale of the Contracts or
Shares; or
(ii) Arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the Investment
Manager (other than statements or representations contained in
the Trust Registration Statement, Trust Prospectus or sales
literature or other promotional material of the Trust not
supplied by the Investment Manager or persons under its control);
or
(iii) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances in which they were made, if such statement
or omission was made in reliance upon information furnished in
writing by the Investment Manager to the Company (or a person
authorized in writing to do so on behalf of the Investment
Manager); or
16
(iv) Arise as a result of any failure by the Investment Manager to
provide the services and furnish the materials under the terms of
this Agreement including but not limited to the provisions of
Section 2.4; or
(v) Arise out of any material breach by the Investment Manager of
this Agreement.
This indemnification will be in addition to any liability which the
Investment Manager may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due to
the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
8.3. Indemnification by the Distributor.
The Distributor agrees to indemnify and hold harmless the Company and each
person who controls, is controlled by or is affiliated with the Company within
the meaning of such terms under the federal securities laws and any officer,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(i) Arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the Distributor
(other than statements or representations contained in the
Contract Registration Statement, Contract Prospectus, Trust
Registration Statement, Trust Prospectus or sales literature or
other promotional material for the Contracts or the Trust not
supplied or approved by the Distributor or persons under its
control) or wrongful conduct of the Distributor or persons under
its control with respect to the sale or distribution of the
Contracts or Shares; or
(ii) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances in which they were made, if such statement
or omission was made in reliance upon information furnished in
writing by the Distributor to the Company (or a person authorized
in writing to do so on behalf of the Distributor); or
(iii) Arise as a result of any failure by the Distributor to provide
the services and furnish the materials under the terms of this
Agreement; or
(iv) Arise out of any material breach by the Distributor of this
Agreement.
17
This indemnification will be in addition to any liability which the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due to
the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
8.4. Indemnification by the Trust.
The Trust agrees to indemnify and hold harmless the Company and each person who
controls, is controlled by or is affiliated with the Company within the meaning
of such terms under the federal securities laws and any officer, director,
employee or agent of the foregoing, against any and all losses, claims, damages
or liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(i) arise as a result of any failure by the Trust to provide the
services and furnish the materials required under the terms of
this Agreement; or
(ii) Arise out of or result from any material breach of any
representations and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust including but not limited
to the provisions of Section 2.4.
The parties acknowledge that the Trust's indemnification obligation under
this Section 8.4 are subject to applicable law. The Company agrees that, in the
event an obligation to indemnify exists pursuant to Section 8.4 as well as
Section 8.2 or Section 8.3 hereof, it will seek satisfaction under the
indemnification provisions of Section 8.2 or Section 8.3 before seeking
indemnification under this Section 8.4.
The Trust shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which a
party would otherwise be subject by reason of such parties willful misfeasance,
bad faith, or gross negligence in the performance of such party's duties or by
reason of such party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Account, whichever is applicable.
8.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("Indemnified Party") under this Article VIII of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
Indemnified Party against any person obligated to provide indemnification under
this Article VIII ("Indemnifying Party"), such Indemnified Party will notify the
Indemnifying Party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the Indemnifying Party will
not relieve it from any liability under this Article VIII, except to the extent
that the omission results in a failure of actual notice to the Indemnifying
Party and such Indemnifying Party is damaged solely as a result of the failure
to give such notice. The Indemnifying Party, upon the request of
18
the Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII 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 Ohio, without
giving effect to the principles of conflicts of laws.
9.2. This Agreement shall be subject to the provisions of the 1933 Act,
1934 Act and 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant, and the terms hereof shall be limited, interpreted and construed in
accordance therewith. If, in the future, the Order should no longer be necessary
under applicable law, then Article VII shall no longer apply.
ARTICLE X
Termination
10.1. This Agreement shall terminate:
(a) At the option of any party upon three months advance written
notice to the other parties; or
(b) At the option of the Company if Shares are not available to meet
the requirements of the Contracts as determined by the Company. Prompt notice of
the election to terminate for such cause shall be furnished by the Company.
Termination shall be effective ten days after the giving of notice by the
Company; or
19
(c) At the option of the Trust, the Distributor or the Investment
Manager upon institution of formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to the sale of
the Contracts, the operation of each Account, the administration of the
Contracts or the purchase of Shares, or an expected or anticipated ruling,
judgment or outcome which would, in the Trust's reasonable judgment, materially
impair the Company's ability to perform the Company's obligations and duties
hereunder; or
(d) At the option of the Company upon institution of formal
proceedings against the Trust, the Distributor, or the Investment Manager or any
Sub-Investment Manager, by the NASD, the SEC, or any state securities or
insurance commission or any other regulatory body regarding the duties of the
Trust, the Distributor, the Investment Manager or any Sub-Investment Manager
under this Agreement, or an expected or anticipated ruling, judgment or outcome
which would, in the Company's reasonable judgment, materially impair the
Trust's, the Distributor's, the Investment Manager's or any Sub-Investment
Manager's ability to perform its obligations and duties hereunder; or
(e) Upon requisite vote of the Contract Owners having an interest in
the affected Series (unless otherwise required by applicable law) and written
approval of the Company, to substitute the shares of another investment company
for the corresponding Shares in accordance with the terms of the Contracts; or
(f) At the option of the Trust, the Distributor or the Investment
Manager in the event any of the Contracts are not registered, issued or sold in
accordance with applicable federal and/or state law; or
(g) At the option of the Company or the Trust upon a determination by
a majority of the Trustees, or a majority of disinterested Trustees, that a
material irreconcilable conflict exists among the interests of (i) any Product
Owners or (ii) the interests of the Participating Insurance Companies investing
in the Trust; or
(h) At the option of the Company if the Trust or any Series ceases to
qualify as a regulated investment company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company reasonably believes,
based on an opinion of its counsel, that the Trust may fail to so qualify; or
(i) At the option of the Company if the Trust or any Series fails to
meet the diversification requirements specified in Section 817(h) of the Code
and any regulations thereunder; or
(j) At the option of the Trust, the Distributor or the Investment
Manager, if the Contracts cease to qualify as annuity contracts or life
insurance policies, as applicable, under the Code, if an Account no longer is a
"segregated asset account" whose interests are offered exclusively through
"variable contracts" within the meaning of Section 817 of the Code and the
regulations thereunder, or if the Trust, the Distributor or the Investment
Manager reasonably believes that the Contracts or Account may fail to so
qualify; or
20
(k) At the option of the Trust, the Distributor or the Investment
Manager if the Trust, he Distributor or the Investment Manager, respectively,
shall determine, in their sole judgment exercised in good faith, that either (1)
the Company shall have suffered a material adverse change in its business or
financial condition; or (2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse impact upon the
business and operations of the Trust or the Distributor or the Investment
Manager; or
(l) At the option of the Company, if the Company shall determine, in
its sole judgment exercised in good faith, that either: (1) the Trust and the
Distributor, or either of them, shall have suffered a material adverse change in
their respective businesses or financial condition; or (2) the Trust or the
Distributor, or both of them, shall have been the subject of material adverse
publicity which is likely to have a material adverse impact upon the business
and operations of the Company; or
10.2. Notice Requirement.
(a) Except as otherwise provided in Section 10.1, no termination of
this Agreement shall be effective unless and until the party terminating this
Agreement gives prior written notice to all other parties to this Agreement of
its intent to terminate which notice shall set forth the basis for such
termination. Furthermore:
(b) In the event that any termination is based upon the provisions of
Article VII or the provisions of Section 10.1(a) of this Agreement, such prior
written notice shall be given in advance of the effective date of termination as
required by such provisions; and
(c) In the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be
given at least ninety (90) days before the effective date of termination, or
sooner if required by law or regulation; and
(d) In the event that any termination is based upon the provisions of
Section 10.1(f) of this Agreement, such prior written notice shall be given at
least sixty (60) days before the date of any proposed vote to replace the
Shares.
10.3. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement, the Trust and the Distributor will, at the
option of the Company, continue until the one year anniversary from the date of
termination (or until a substitution order pursuant to Section 26(c) of the 1940
Act can be procured by the Company if such order has been promptly applied for
by the Company pursuant to the following paragraph, if later than such one year
anniversary), and from year to year thereafter if deemed appropriate by the
Trust and to Distributor, to make available additional Shares for so long after
the termination of this Agreement as the Company desires, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, if the
Company so elects to make additional Shares available, the owners of the
Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in the Trust, redeem
investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts.
21
The Company agrees, promptly after any termination of this Agreement, to
take all steps reasonably necessary to redeem the investment of the Accounts in
the Series within one year from the date of termination of the Agreement as
provided in Article X (or as soon thereafter as a substitution order pursuant to
Section 26(c) of the 1940 Act can be procured by the Company if such order has
been promptly applied for by the Company pursuant to this paragraph). Such steps
shall include, but not be limited to, obtaining an order pursuant to Section
26(c) of the 1940 Act to permit the substitution of other securities for the
shares of the Series.
The parties agree that this Section 10.3 shall not apply to any termination
made pursuant to Article VII or any conditions or undertakings incorporated by
reference in Article VII, and the effect of such Article VII termination shall
be governed by the provisions set forth or incorporated by reference therein.
Further, in the event (i) the Agreement is terminated pursuant to Sections
10.1(f) or 10.1(l), at the option of the Trust, the Distributor or the
Investment Manager; or (ii) the one year anniversary of the termination of the
Agreement (or later applicable date that a substitution order is procured by the
Company, as set forth in paragraph (a) of this Section 10.3) is reached or,
after waiver as provided in Section 10.2(a), such subsequent anniversary is
reached (each of (i) and (ii) referred to as a "triggering event" and the date
of termination as provided in (i) or the date of such anniversary as provided in
(ii) referred to as the "Request Date"), the parties agree that such triggering
event shall be considered as a request for immediate redemption of shares of the
Series held by the Accounts, received by the Trust and its agents as of the
request date, and the Trust agrees to process such redemption request in
accordance with the 1940 Act and the regulations thereunder and the Trust's
registration statement.
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts and to add
new classes of variable annuity contracts and variable life insurance policies
to be issued by the Company through a Separate Account investing in the Trust.
The provisions of this Agreement shall be equally applicable to each such class
of contracts or policies, unless the context otherwise requires.
ARTICLE XII
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party(ies) at the address of such party(ies) set forth below
or at such other address as such party(ies) may from time to time specify in
writing to the other party.
If to the Trust: Variable Insurance Funds
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
If to the Company: Xxxxxxx National Life Insurance Co.
0 Xxxxxxxxx Xxx
00
Xxxxxxx, XX 00000
Attn: Xxx Xxxxx
If to the Investment Manager: Fifth Third Asset Management, Inc.
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, MD 1090EF
If to the Distributor: BISYS Fund Services
000 Xxxxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000
Attn: Broker-Dealer Compliance
ARTICLE XIII
Miscellaneous
13.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
13.4. Each party hereto 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.
13.5. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
13.6. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Investment Manager may assign this Agreement
or any rights or obligations hereunder to any affiliate or company under common
control with the Investment Manager, if such assignee is duly licensed and
registered to perform services under this Agreement. Each party agrees to
promptly notify the other parties of any change in control of their legal
entity.
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13.7. All persons dealing with the Trust must look solely to the property
of the respective Series listed on Schedule 1 hereto as though each such Series
had separately contracted with such party for the enforcement of any claims
against the Trust. The parties agree that neither the Trustees, officers, agents
or shareholders of the Trust assume any personal liability or responsibility for
obligations entered into by or on behalf of the Trust. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust. The execution
and delivery of this Agreement have been authorized by the Trustees, and this
Agreement has been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
bind only the trust property of the Trust as provided in the Trust's Declaration
of Trust. The provisions of this Section 13.7 shall survive termination of the
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
Variable Insurance Funds (Trust)
Date: Signature:
------------------------------- -----------------------------
Name:
----------------------------------
Title:
---------------------------------
Xxxxxxx National Life Insurance Company
(Company)
Date: Signature:
------------------------------- -----------------------------
Name:
----------------------------------
Title:
---------------------------------
BISYS Fund Services LP (Distributor)
Date: Signature:
------------------------------- -----------------------------
Name:
----------------------------------
Title:
---------------------------------
Fifth Third Asset Management, Inc.
(Investment Manager)
Date: Signature:
------------------------------- -----------------------------
Name:
----------------------------------
Title:
---------------------------------
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Schedule 1
Separate Accounts of Xxxxxxx National Life Insurance Company
Investing in the Series of the Trust
As of ________________
Company Separate Account
(s) and Date of
Establishment Product Name Eligible Variable Series of the Trust
------------------------ ------------ -------------------------------------
Xxxxxxx National Separate Fifth Third Perspective Fifth Third Balanced VIP Fund
Account 1 Fixed and Variable
Established June 14, 1993 Annuity Fifth Third Disciplined Value VIP Fund
Fifth Third Mid Cap VIP Fund
Fifth Third Quality Growth VIP Fund
26