AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
WHEREAS, Xxxxxxxx Portfolios, Inc. (the "Fund"), Xxxxxxxx
Advisors, Inc. (the "Distributor") and Union Central Life
Insurance Company (the "Company") entered into a Fund
Participation Agreement dated April 30, 2001 (the "Original
Agreement") whereby the Fund made shares of its portfolios
available to certain segregated asset accounts of the Company
registered under the Investment Company Act of 1940, such
accounts being established to fund variable life insurance
policies and/or variable annuity contracts registered under the
Securities Act of 1933; and
WHEREAS, the Fund, the Distributor and the Company now
desire to amend and restate the Original Agreement so that such
shares can also be made available to certain unregistered
segregated asset accounts of the Company established to fund
unregistered variable life insurance policies and/or variable
annuity contracts;
NOW THEREFORE, the parties amend and restate the Original
Agreement as follows:
THIS AGREEMENT is made as of this 30th day of June, 2002,
between Xxxxxxxx Portfolios, Inc., an open-end management
investment company organized as a Maryland Corporation (the
"Fund"), Xxxxxxxx Advisors, Inc., a Delaware corporation (the
"Distributor") and The Union Central Life Insurance Company, a
life insurance company organized under the laws of the State of
Ohio (the "Company"), on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A,
as may be amended from time to time (the "Accounts").
WITNESSETH:
WHEREAS, the Fund is a registered open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has filed a currently effective
registration statement to offer and sell its shares under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle
for separate accounts established for variable life insurance
policies and variable annuity contracts to be offered by
insurance companies that have entered into participation
agreements with the Fund (the "Participating Insurance
Companies"); and
WHEREAS, the shares of the Fund are divided into several
series of shares, each series representing an interest in a
particular managed portfolio of securities and other assets (the
"Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities
and Exchange Commission ("SEC") granting Participating Insurance
Companies (as defined in the Fund's application for such order)
and their separate accounts exemptions from the provisions of
sections 9(a), 13(a),-15(a) and 15(b) of 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 Fund to be sold to and held by
variable annuity and variable life insurance separate accounts
of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Exemptive
Order"); and
WHEREAS, the Distributor is registered as a broker-dealer
with the SEC and is a member in good standing of The National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Distributor currently serves as the
distributor of the Fund's shares; and
WHEREAS, the Company has registered or will register
certain variable life insurance policies and/or variable annuity
contracts under the 1933 Act ("Registered Products") and has not
registered certain other variable life insurance policies and/or
variable annuity contracts under the 1933 Act because they are
exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are exempt from registration
under the 1933 Act ("Unregistered Products") (collectively, for
certain purposes, the "Contracts"); and
WHEREAS, the Company has registered or will register each
Registered Product Account as a unit investment trust under the
1940 Act and has not registered the Unregistered Product Account
in reliance upon an exclusion from registration under the 1940
Act; and
WHEREAS, the Company desires to utilize shares of one or
more Portfolios as an investment vehicle of the Accounts;
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
Sale of Fund Shares
1.1. The Fund shall make Class 1 or Class 2 shares of its
Portfolios, as indicated on Schedule A to this Agreement, as
amended from time to time, available to the Accounts at the net
asset value next computed after receipt of such purchase order
by the Fund (or its designee),
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as established in accordance with the provisions of the then
current prospectus of the Portfolio or Portfolios. Shares of a
particular Portfolio of the Fund shall be ordered in such
quantities and at such times as determined by the Company to be
necessary to meet the requirements of the Contracts. The
Directors of the Fund (the "Directors") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Directors acting in good
faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of
the shareholders of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of
any Portfolio when requested by the Company on behalf of an
Account at the net asset value next computed after receipt by
the Fund (or its designee) of the request for redemption, as
established in accordance with the provisions of the then
current prospectus of the Fund.
1.3. For the purposes of Sections 1.1 and 1.2, the Fund
hereby appoints the Company as its designee for the limited
purpose of receiving and accepting purchase and redemption
orders resulting from investment in and payments under the
Contracts. Receipt by the Company shall constitute receipt by
the Fund provided that (i) such orders are received by the
Company in good order prior to the time the net asset value of
each Portfolio is priced in accordance with its prospectus and
(ii) the Fund receives notice of such orders by 10:00 a.m. New
York time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value
pursuant to the rules of the SEC.
1.4. For purposes of determining payment for purchase
orders and redemption orders, all such orders will be netted.
Net purchase orders that are transmitted to the Fund in
accordance with Section 1.3 shall be paid for by the Company by
2:00 p.m. EST on the next Business Day that the Fund receives
notice of the order. Net redemption orders that are transmitted
to the Fund in accordance with Section 1.3 shall be paid for by
the Fund by 2:00 p.m. EST on the same Business Day that the Fund
receives notice of the order, to the extent practicable, and in
any event the Fund shall make such payment within five calendar
days after the date the order is transmitted to the Fund in
accordance with Section 1.3 or such shorter period of time as
may be required by law. Payments shall be made in federal funds
transmitted by wire.
1.5. Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to the
Company or the Account. Shares ordered from the Fund will be
recorded in the appropriate title for each Account or the
appropriate subaccount of each Account.
1.6. The Fund shall furnish prompt notice to the Company
of any income dividends or capital gain distributions payable on
the Fund's shares. The Company hereby elects to receive all such
income dividends and capital gain distributions as are payable
on a Portfolio's shares in additional shares of that Portfolio.
The Fund shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
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1.7. The Fund shall make the net asset value per share for
each Portfolio available to the Company on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated and shall us its best efforts to make such net asset
value per share available by 6 p.m. New York time.
1.8. The Fund agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts
and to certain qualified pension and retirement plans to the
extent permitted by the Exemptive Order. No shares of any
Portfolio will be sold directly to the general public. The
Company agrees that Fund shares will be used only for the
purposes of funding the Contracts and Accounts listed in
Schedule A, as amended from time to time.
ARTICLE II.
Obligations of the Parties
2.1. The Fund shall prepare and be responsible for filing
with the SEC and any state regulators requiring such filing all
shareholder reports, notices, proxy materials (or similar
materials such as voting instruction solicitation materials),
prospectuses and statements of additional information of the
Fund. The Fund shall bear the cost of registration and
qualification of its shares, preparation and filing of the
documents listed in this section 2.1 and all taxes to which an
issuer is subject on the issuance and transfer of its shares.
2.2. At the option of the Company, the Fund or the
Distributor shall either (i) provide the Company with as many
copies of the Fund's or the relevant Portfolio's current
prospectus, statement of additional information, annual reports,
semi-annual reports and other shareholder communications,
including any amendments or supplements to any of the foregoing
("Fund Documents"), as the Company shall reasonably request; or
(ii) provide the Company with a camera ready copy or a .pdf
version of such documents in a form suitable for printing. The
Fund or the Distributor shall provide the Company with a copy of
the Fund's statement of additional information in a form
suitable for duplication by the Company. The Fund shall provide
the Company with copies of any Fund-sponsored proxy materials in
such quantity as the Company shall reasonably require for
distribution to Contract owners.
2.3. The Company shall bear the costs of printing and
distributing the Fund's or the relevant Portfolio's prospectus,
statement of additional information, shareholder reports and
other shareholder communications to applicants for policies for
which the Fund is serving or is to serve as an investment
vehicle; the Fund or Distributor shall bear the cost of printing
and distributing the above materials to existing owners. The
Company shall bear the costs of distributing proxy materials (or
similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners,
to the extent required, in accordance with applicable federal
and state securities laws.
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2.4 (a) The Company agrees and acknowledges that the
Fund's manager, J. & X. Xxxxxxxx & Co. Incorporated
("Xxxxxxxx"), is the sole owner of the name and xxxx "Xxxxxxxx"
and that all use of any designation comprised in whole or part
of Xxxxxxxx (a "Xxxxxxxx Xxxx") under this Agreement shall inure
to the benefit of Xxxxxxxx. Except as provided in section 2.5,
the Company shall not use any Xxxxxxxx Xxxx on its own behalf or
on behalf of the Accounts or Contracts in any registration
statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written
consent of Xxxxxxxx. Upon termination of this Agreement for any
reason, the Company shall cease all use of any Xxxxxxxx Xxxx(s)
as soon as reasonably practicable.
(b) The Fund and the Distributor agree and acknowledge
that the Company and its affiliates are the sole owner or owners
of the name and the marks "Union Central Insurance and
Investments," "Customized Financial Solutions - Person by
Person," "Excel Choice," and "Excel Choice Executive Edge," and
"ESP" or "Employee Savings Plan" and that all use of any
designation comprised in whole or part of Union Central or any
of those names and marks (each, a "Union Central Xxxx") under
this Agreement shall inure to the benefit of the Company. Except
as provided in section 2.5, neither the Fund nor the Distributor
shall use any Union Central Xxxx on its own behalf or on behalf
of the Accounts or Contracts in any registration statement,
advertisement, sales literature or other materials relating to
the Accounts or Contracts without the prior written consent of
the Company, subject to the last sentence of this Section
2.4(b). Upon termination of this Agreement for any reason, the
Fund and the Distributor shall cease all use of any Union
Central Xxxx(s) as soon as reasonably practicable, subject to
the last sentence of this Section 2.4(b). Nothing in this
Section 2.4(b) shall prohibit the Distributor from using any
Union Central Xxxx in any documents or materials to the extent
that such use is permitted under any other agreement by and
between the Distributor and any affiliate of the Company or has
been authorized by any such affiliate of the Company.
2.5. (a) The Company shall fully disclose in each Contract
prospectus any fees paid or to be paid by the relevant Portfolio
under a plan adopted pursuant to Rule 12b-1 of the 1944 Act. The
Company shall furnish, or cause to be furnished, to the Fund or
its designee, a copy of each Contract prospectus or statement of
additional information in which the Fund or Xxxxxxxx is named
prior to the filing of such document with the SEC to enable the
Fund or its designee to review information about the Fund or
Xxxxxxxx contained therein. The Company shall furnish, or shall
cause to be furnished, to the Fund or its designee, each piece
of advertising, sales literature or other promotional material
in which the Fund, the Portfolios or Xxxxxxxx is named, at least
five Business Days prior to its use. No such promotional
material shall be used if the Fund or the Distributor reasonably
objects to such use prior to such use.
(b) The Distributor shall furnish, or cause to be
furnished, to the Company a copy of each Fund or Portfolio
prospectus or statement of additional information in which the
Company is named prior to the filing of such document with the
SEC. The Distributor shall furnish, or shall cause to be
furnished, to the Company each piece of advertising, sales
literature or other promotional material in which the Company is
named, at least five Business Days prior to its use. No such
promotional material shall be used if the Company reasonably
objects to such use prior to such use.
5
2.6. The Company shall not give any information or make
any representations or statements on behalf of the Fund or
concerning the Fund or Xxxxxxxx in connection with the sale of
the Contracts other than information or representations
contained in and accurately derived from the registration
statement or prospectus for the Fund shares (as such
registration statement and prospectus may be amended or
supplemented from time to time), reports of the Fund, Fund-
sponsored proxy statements, or in any advertisements, sales
literature or other promotional material approved by the Fund or
the Distributor, except as required by legal process or
regulatory authorities or with the written permission of the
Fund or the Distributor.
2.7. Neither the Fund nor the Distributor shall give any
information or make any representations or statements on behalf
of the Company, or concerning the Company, the Accounts or the
Contracts other than information or representations contained in
and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or
in materials approved by the Company for distribution including
advertisements, sales literature or other promotional materials,
except as required by legal process or regulatory authorities or
with the written permission of the Company.
2.8. The Fund will provide to the Company at least one
complete copy of all registration statements, profiles,
prospectuses, SAIs, reports, proxy statements, applications for
exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares,
promptly after the filing of such document(s) with the SEC or
other regulatory authorities. The Distributor will use
reasonable efforts to provide the Company with a portfolio
prospectus in a timely manner to enable the Company to generate
a Contract prospectus that includes the portfolio prospectus by
May 1 of each year.
2.9. The Company will provide to the Fund, as to the
Registered Products, at least one complete copy of all
registration statements, prospectuses (which shall include an
offering memorandum, if any, if the Contracts issued by the
Company or interests therein are not registered under the 1933
Act), SAIs, reports, solicitations for voting instructions,
sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or
the Account, promptly after the filing of such document(s) with
the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Distributor any complaints received
from the Contract owners pertaining to the Fund or the
Portfolios.
2.10. The Fund will provide the Company with as much notice
as is reasonably practicable of any proxy solicitation for any
Portfolio, and of any material change in the Fund's registration
statement, particularly any change resulting in a change to the
registration statement or prospectus for any Account. The Fund
will work with the Company so as to enable the Company to
solicit proxies from Registered Product owners, or to make
changes to its prospectus or registration statement, in an
orderly manner, and the Fund will pay for the printing of proxy
materials. Unless otherwise required by applicable law, the
Company will vote any proxy directed to an Unregistered Product
Account.
6
2.11. For purposes of this Article II, the phrase "sales
literature and other promotional materials" includes, but is not
limited to, any of the following that refer to the Fund or any
affiliate of the Fund, or to the Company, as the case may be:
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, Internet website, 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, reports, market letters,
form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article),
educational or training materials or other communications
distributed or made generally available to some or all agents or
employees of the Company, and any other non-SEC filed
communications distributed or made generally available to
customers or the public with regard to the Fund.
2.12. The Distributor shall adopt and implement procedures
reasonably designed to ensure that information concerning the
Company, any of its affiliates, or the Contracts, which is
intended (or delete the other only--two is redundant) for use
only by brokers or agents selling the shares (i.e., information
that is not intended for distribution to shareowners or
prospective shareowners) is so used, and neither the Company nor
any of its affiliates shall be liable for any losses, damages,
or expenses relating to the improper use of such broker only
materials.
2.13. The Company shall adopt and implement procedures
reasonably designed to ensure that information concerning the
Fund which is intended only for use by brokers or agents selling
the Contracts (i.e., information that is not intended for
distribution to Contract owners or prospective Contract owners)
is so used, and neither the Fund nor the Distributor shall be
liable for any losses, damages, or expenses relating to the
improper use of such broker only materials. Notwithstanding, the
Fund and Distributor shall be liable for any losses, damages, or
expenses relating to the improper use of materials insofar as
materials provided to the Company by the Fund or Distributor are
not appropriately labeled "broker use only" by the Fund or
Distributor, or are furnished to the Company without instruction
as to their legal use. The parties hereto agree that this
section is not intended to designate or otherwise imply that the
Company is an underwriter or distributor of the Fund's shares.
2.14. The Fund hereby notifies the Company that it may be
appropriate to include in the prospectus pursuant to which
Contracts are offered disclosure regarding the potential risks
of mixed- and shared-funding.
2.15. So long as, and to the extent that the SEC interprets
the 1940 Act to require passthrough voting privileges for
Registered Product policyowners, the Company will provide pass-
through voting privileges to owners of Registered Products whose
cash values are invested, through the registered Accounts, in
shares of the Fund. The Fund shall require all Participating
Insurance Companies to calculate voting privileges in the same
manner and the Company shall be responsible for assuring that
the these Accounts calculate voting privileges in the manner
established by the Fund. With respect to each of these Accounts,
the Company will vote shares of the Fund held by them and for
which no timely voting instructions for policyowners are
7
received as well as shares it owns that are held by that
Account, in the same proportion as those shares for which voting
instructions are received. Subject to applicable law, the
Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Fund shares held
by such Contract owners without the prior written consent of the
Fund, which consent may be withheld in the Fund's sole
discretion.
2.16. The Company shall establish and disclose in the
prospectus a reasonable policy designed to discourage frequent
and disruptive purchases and redemptions of Fund shares by
Contract owners and shall cooperate with the Fund in minimize
the impact on the Fund of such transactions.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an
insurance company duly organized and in good standing under the
laws of the State of Ohio and that it has legally and validly
established each Account as a segregated asset account under
such law on the date set forth in Schedule A.
3.2. The Company represents and warrants that it has
registered or, prior to any issuance or sale of the Contracts,
will register each Registered Product Account 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 has not registered an Unregistered Product Account
in reliance upon an exclusion from registration under the 1940
Act. The Company further represents and warrants that any
Unregistered Product Account that is not registered under the
1940 Act in reliance upon an exclusion from registration and
offers Contracts to certain Qualified Plans (as defined below)
will comply with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended. In addition,
if any Unregistered Product Account shall fail to continue to
qualify for an exclusion from registration under the 1940 Act,
the Company undertakes to immediately notify the Fund of this
situation and discontinue purchasing shares of the Portfolios
indicated on Schedule A to this Agreement in the Unregistered
Product Account until such time as the Company registers the
Unregistered Product Account in accordance with the provisions
of the 1940 Act, if that becomes necessary in the reasonable
discretion of the Company.
3.3. The Company represents that it has full power and
authority under applicable law and has taken all actions
necessary, to enter into this Agreement. The Company represents
and warrants that the Registered Product Contracts will be
registered under the 1933 Act prior to any issuance or sale of
the Registered Products, and that the Unregistered Products are
not registered because they are exempt from registration under
the 1933 Act or will be offered exclusively in transactions that
are exempt from registration under the 1933 Act; the Contracts
will be issued and sold in compliance in all material respects
with all applicable federal and state laws; and the sale of the
Contracts shall comply in all material respects with state
insurance suitability requirements In addition, if any Contract
shall fail to continue to qualify for an exemption from
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registration under the 1933 Act, the Company undertakes to
immediately notify the Fund of this situation and discontinue
purchasing shares of the Portfolios indicated on Schedule A to
this Agreement in the Account funding that Contract until such
time as the Company registers the Contract in accordance with
the provisions of the 1933 Act.
3.4. The Fund represents and warrants that it is duly
organized and validly existing under the laws of the State of
Maryland.
3.5. The Fund represents and warrants that the Fund shares
offered and sold pursuant to this Agreement will be registered
under the 1933 Act and the Fund shall be registered under the
1940 Act prior to any issuance or sale of such shares. The Fund
shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Fund shall make
notice or other filings in accordance with the laws of the
various states only if and to the extent deemed necessary by the
Fund.
3.6. The Fund represents that it has full power and
authority under applicable law and has taken all actions
necessary, to enter into this Agreement.
3.7. The Distributor represents and warrants that it is
duly organized and validly existing under the laws of the State
of Delaware.
3.8. The Distributor represents that it has full power and
authority under applicable law and has taken all actions
necessary, to enter into this Agreement.
3.9. The Fund will invest its assets in such a manner as
to ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Code
and the regulations issued thereunder (or any successor
provisions). Without limiting the scope of the foregoing, each
Portfolio 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
Regulations. In the event of a breach of this Section 3.9 by the
Fund, it will (a) take all reasonable steps to notify the
Company of such breach and (b) immediately take all necessary
steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation
Section 1.817-5.
3.10. The Fund represents that it is or will be qualified
as a Regulated Investment Company under Subchapter M of the
Code, and that it will use its best efforts to maintain such
qualification (under Subchapter M or any successor or similar
provisions) and that it will notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so
qualify or that it might not so qualify in the future.
9
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that the Fund's shares may be
made available for investment to other Participating Insurance
Companies and qualified pension and retirement plans ("Qualified
Plans"). In such event, the Directors will monitor the Fund for
the existence of any material irreconcilable conflict between
the interests of the contract owners of all Participating
Insurance Companies and of Qualified Plans. An irreconcilable
material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable
life insurance contract owners; or (f) a decision by an insurer
to disregard the voting instructions of contract owners. The
Directors shall promptly inform the Company if they determine
that an irreconcilable material conflict exists and the
implications thereof.
4.2. The Company agrees to promptly report any potential
or existing conflicts of which it is aware to the Directors. The
Company will assist the Directors in carrying out their
responsibilities under the Exemptive Order by providing the
Directors with all information reasonably necessary for the
Directors to consider any issues raised including, but not
limited to, information as to a decision by the Company to
disregard Contact owner voting instructions.
4.3 If it is determined by a majority of the Directors, or
a majority of its disinterested Directors, that a material
irreconcilable conflict exists that affects the interests of
Contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably
practicable (as determined by the Directors) take whatever steps
are necessary to remedy or eliminate the irreconcilable material
conflict, which steps could include: (i) withdrawing the assets
allocable to some or all of the Accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question of whether or not such
segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., variable annuity contract owners or
variable life insurance contract owners that votes in favor of
such segregation, or offering to the affected Contract owners
the option of making such a change; and (ii) establishing a new
registered management investment company or managed separate
account.
4.4. If a material irreconcilable conflict arises because
of a decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or
would preclude a majority vote, the Company may be required, at
the Fund's election, to withdraw the affected Account if
requested by the Fund's Directors, terminate this Agreement with
respect to such Account within six months after the Directors
inform the Company in writing that it has determined that such
decision has created a material irreconcilable conflict;
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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 Directors. Until the end of such six-month period,
the Fund shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because
a particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state
regulators, then the Company will withdraw the affected
Account's investment in the Fund and, if requested by the Fund's
Directors, terminate this Agreement with respect to such Account
within six months after the Directors inform the Company in
writing that it has determined that such decision has created an
irreconcilable material conflict; 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 Directors. Until
the end of such six-month period, the Fund shall continue to
accept and implement orders by the Company for the purchase and
redemption of shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this
Agreement, a majority of the disinterested Directors shall
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the
Company be required to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the
Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate
this Agreement within six (6) months after the Directors 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
Directors.
4.7. The Company and Xxxxxxxx shall at least annually
submit to the Directors such reports, materials or data as the
Directors may reasonably request so that the Directors may fully
carry out the duties imposed upon them by the Exemptive Order,
and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Directors.
4.8. 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 Exemptive Order) on terms and conditions
materially different from those contained in the Exemptive
Order, then the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable.
11
ARTICLE V.
Indemnification
5.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Fund, the Distributor, and each
of their Directors, officers, employees and agents and each
person, if any, who controls the Fund or the Distributor within
the meaning of Section 15 of the 1933 Act (collectively, the
"Xxxxxxxx Indemnified Parties" for purposes of this Article . V)
against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent
of the Company) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the
Xxxxxxxx Indemnified Parties may become subject under any
statute or regulation, or at common law or otherwise, insofar as
such Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in a registration statement or prospectus for the
Contracts or in the Contracts themselves or in any advertising,
sales literature or other promotional literature generated or
approved by the Company on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing)
(collectively, "Company Documents" for the purposes of this
Article V), 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 indemnity shall not apply as
to any Xxxxxxxx Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and was accurately derived from written information furnished to
the Company by or on behalf of the Fund or the Distributor for
use in Company Documents or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Fund Documents as
defined in Section 5.2(a)) or wrongful conduct of the Company or
persons under its control, or subject to its authorization or
supervisions with respect to the sale or acquisition of the
Contracts or Fund shares; or
(c) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in Fund
Documents as defined in Section 5.2(a) or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon and accurately derived from written information furnished
to the Fund or the Distributor by or on behalf of the Company;
or
(d) arise out of or result from any failure by the
Company to provide the services or furnish the materials
required under the terms of this Agreement; or
12
(e) arise out of or result from any material breach
of any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
5.2 Indemnification by the Fund. The Fund agrees to
indemnify and hold harmless the Company, its affiliated
broker-dealer, and each of its directors, officers, employees
and agents and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively,
the "Company Indemnified Parties" for purposes of this Article
V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent
of the Fund) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the
Company Indemnified Parties may become subject under any statute
or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the registration statement or prospectus for the
Fund (or any amendment or supplement thereto), (collectively,
"Fund Documents" for the purposes of this Article V), 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 indemnity shall not apply as to any Company
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was
accurately derived from written information furnished to the
Fund or the Distributor by or on behalf of the Company for use
in Fund Documents or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company Documents) or
wrongful conduct of the Fund or persons under its control, or
subject to its authorization or supervision with respect to the
sale or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in
Company Documents or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon and accurately
derived from written information furnished to the Company by or
on behalf of the Fund; or
(d) arise out of or result from any failure by the
Fund to provide the services or furnish the materials required
under the terms of this Agreement; or
13
(e) arise out of or result from any material breach
of any representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund.
5.3 Indemnification by the Distributor. The Distributor
agrees to indemnify and hold harmless each of the Company
Indemnified Parties against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Distributor) or expenses (including the
reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"),
to which the Company Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise,
insofar as such Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in any advertising, sales literature or other
promotional literature generated or approved by the Fund or the
Distributor on behalf of the Fund or any of the Portfolios
(collectively, "Fund Sales Documents" for the purposes of this
Article V), 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 indemnity shall not apply as
to any Company Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and was accurately derived from written information furnished to
the Fund or the Distributor by or on behalf of the Company for
use in Fund Sales Documents or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company Documents) or
wrongful conduct of the Distributor or persons under its
control, or subject to its authorization or supervision with
respect to the sale or acquisition of the Contracts or Fund
shares; or
(c) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in
Company Documents or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon and accurately
derived from written information furnished to the Company by or
on behalf of the Distributor; or
(d) arise out of or result from any failure by the
Distributor to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach
of any representation and/or warranty made by the Distributor in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Distributor.
14
5.4. Neither the Company, the Fund nor the Distributor
shall be liable under the indemnification provisions of sections
5.1, 5.2 or 5.3, as applicable, with respect to any Losses
incurred or assessed against a Xxxxxxxx Indemnified Party or a
Company Indemnified Party (collectively, the "Indemnified
Parties") that 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.
5.5. Neither the Company, the Fund nor the Distributor
shall be liable under the indemnification provisions of sections
5.1, 5.2 or 5.3, as applicable, with respect to any claim
made against any Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a
reasonable time after the summons, or other first written
notification, giving information of the nature of the claim
shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have
received notice of service upon or other notification to any
designated agent), but failure to notify the party against whom
indemnification is sought of any such claim shall not relieve
that party from any liability which it may have to the
Indemnified Party in the absence of sections 5.1, 5.2 or 5.3.
5.6. In case any such action is brought against the
Indemnified Parties, the indemnifying party shall be entitled to
participate, at its own expense, in the defense of such action.
The indemnifying party also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the
party named in the action. After notice from the indemnifying
party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses
of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
ARTICLE VI.
Termination
6.1 This Agreement may be terminated:
(a) by any party for any reason by six months' advance
written notice delivered to the other party; or
(b) by the Company by written notice to the Fund and
the Distributor based upon the Company's determination that
shares of the Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) by the Company by written notice to the Fund and
the Distributor in the event shares of any of the Portfolios are
not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
15
(d) by the Fund or the Distributor in the event that
formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner or like
official 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 any Account, or the purchase of
the Fund's shares; provided, however, that the Fund 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
(e) by the Company in the event that formal
administrative proceedings are instituted against the Fund or
the Distributor by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; 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 Fund or the Distributor to perform its obligations under
this Agreement; or
(f) by the Company by written notice to the Fund and
the Distributor with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M or fails to comply with the Section
817(h) diversification requirements specified in Sections 3.9
and 3.10 hereof, or if the Company reasonably believes that such
Portfolio may fail to so qualify or comply; or
(g) by either the Fund or the Distributor by written
notice to the Company, if either one or both of the Fund or the
Distributor respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has suffered
a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is
the subject of material adverse publicity; or
(h) by the Company by written notice to the Fund and
the Distributor, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund or the
Distributor has suffered a material adverse change in its
business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(i) by the Company upon any substitution of the shares
of another investment company or series thereof for shares of a
Portfolio of the Fund in accordance with the terms of the
Contracts, provided that the Company has given at least 45 days
prior written notice to the Fund and the Distributor of the date
of substitution; or
(j) by any party in the event that the Fund's Board of
Directors determines that a material irreconcilable conflict
exists as provided m Article IV; or
(k) at the option of any party upon another party's
failure to cure a material breach of any provision of this
Agreement within 30 days after written notice thereof.
16
6.2. Notwithstanding any termination of this Agreement
pursuant to Section 6.1 (other than a termination pursuant to
Section 6.10)), the Fund, at the option of the Fund and the
Distributor, may continue to make available additional shares of
the Fund (or any Portfolio) pursuant to the terms and conditions
of this Agreement for all Contracts in effect on the effective
date of termination of this Agreement (the "Initial Termination
Date"), provided that the Company continues to pay the costs set
forth in section 2.3. Specifically, without limitation, if the
Fund or Distributor so elects to make additional shares
available, the owners of such Contracts or the Company,
whichever shall have legal authority to do so, shall be
permitted to reallocate investments in the Fund or the relevant
Portfolio, redeem investments, and/or invest upon the making of
additional purchase payments under the Existing Contracts.
6.3 In the event of a termination of this Agreement
pursuant to this Section 6, the Fund and the Distributor shall
promptly notify the Company whether the Distributor and the Fund
will continue to make shares available after such termination;
if the Distributor and the Fund will continue to make shares so
available, the provisions of this Agreement shall remain in
effect except for Section 6.1 hereof, and thereafter either the
Fund or the Company may terminate the Agreement (the "Final
Termination"), as so continued pursuant to Section 6.2 and this
Section 6.3, upon prior written notice to the other party, such
notice to be for a period that is reasonable under the
circumstances but, if given by the Fund, need not be greater
than six months.
6.4 The, Company, the Fund and the Distributor agree to
cooperate in respect of the measures that are necessary or
appropriate to effect the Final Termination of this Agreement,
and will give reasonable assistance to one another in that
regard, including steps necessary or appropriate to ensure that
an Account owns no shares of the Fund after the Final
Termination of this Agreement.
6.5. The provisions of Article V shall survive the
termination of this Agreement, and the provisions of Article IV
and Section 2.15 shall survive the termination of this Agreement
as long as shares of the Fund are held on behalf of the Contract
owners in accordance with section 6.2.
17
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by
overnight mail, registered or certified mail to the other party
at the address of such party set forth below or at such other
address as such party may from time to time specify in writing
to the other party.
If to the Fund:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel, Law & Regulation
If to the Company:
The Union Central Life Insurance Company
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
ARTICLE VIII.
Miscellaneous
8.1. 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.
8.2. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall
constitute one and the same instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of
State of New York. Each party hereto unconditionally submits to
the jurisdiction of any New York state court or federal court of
the United States sitting in New York City, and any appellate
court thereof, in any action or proceeding arising out of or
relating to this Agreement.
8.5 The parties to this Agreement acknowledge and agree
that all liabilities of the Fund arising, directly or
indirectly, under this Agreement, of any and every nature
whatsoever, shall be satisfied solely out of the assets of the
Fund and that no Director, officer, agent or holder of shares of
beneficial interest of the Fund shall be personally liable for
any such liabilities.
18
8.6. Each party shall cooperate with each other party and
all appropriate governmental authorities (including without
limitation the SEC, the National Association of Securities
Dealers and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws.
8.8. The parties to this Agreement acknowledge and agree
that this Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior
written approval of the other party.
8.10 No provisions of this Agreement maybe amended or
modified in any manner
except by a written agreement properly authorized and executed
by both parties. `
8.11 This Agreement constitutes the entire contract between
the parties relating to the subject matter hereof and supersedes
any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof.
8.12 The parties hereto agree that, under the privacy
provisions of the Gramm-LeachBliley Act, SEC Regulation S-P and
state insurance regulations related thereto, as the case may be,
the Company and the Fund and Distributor acknowledge that they
are "financial institutions" and "nonaffiliated third parties"
of each other. The parties shall maintain the privacy of any
consumer or customer as to their non-public personal
information, and agree to indemnify and hold each other harmless
for any breach of this provision. For purposes of this section,
"nonpublic personal information" means any personally
identifiable financial information about a consumer or customer
(not publicly available information). A "customer" or
"consumer", for purposes of this provision, is an individual
(not a business entity) who is seeking financial products or
services primarily for personal, family or household purposes
and who has purchased a variable insurance product from Company
or provided non-public personal information as part of an
inquiry concerning doing business with Company.
19
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Participation Agreement as
of the date and year first above written.
Xxxxxxxx Portfolios, Inc.
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: President
Xxxxxxxx Advisors, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President
The Union Central Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
20
Schedule A
Separate Accounts and Associated Contracts
Registered Accounts and Contracts
---------------------------------
Carillon Account (2/6/84) (002-92146/8111-04063) (Variable
Annuity Class 1 and 2)
Carillon Life Account (7/10/95) (33-94858/811-09076) (Excel
Choice Variable Universal Life; Excel Choice Executive Edge
Variable Universal Life)
Unregistered Accounts and Contracts
-----------------------------------
UCL Separate Account No. LII (7/1/02) (ESP Group Variable
Annuity)
A-1
