EXHIBIT 8(r)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this ___ day of _______, ___, between Xxxxxxxx
Portfolios, Inc., an open-end management investment company organized as a
Maryland Corporation (the "Fund"), ______________ (the "Underwriter"), a
_________ corporation, and Peoples Benefit Life Insurance Company, a stock life
insurance company organized under the laws of the State of Iowa (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 "Account").
WITNESSETH:
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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")
to be issued by Peoples Benefit Life Insurance Company; 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, any one or more of which may be made available
under this Agreement by mutual agreement of the parties hereto, (the
"Portfolios"); and
WHEREAS, _______________ (the "Adviser") is duly registered as an
investment adviser under the federal Investment Advisers Act of 1940 (the
"Advisers Act") and any applicable state securities law; 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 Company has registered or will register certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts") or will not register the Contracts in proper reliance on an
exemption from registration under the 1933 Act; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulation, the Company intends to purchase shares of one or more Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts, such as each Account, at net asset value;
NOW THEREFORE, in consideration of their mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE I.
Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 10:00 a.m. eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund shall make [Class 1/Class 2] shares of its Portfolios
available indefinitely for purchase at the applicable net asset value per share
by the Company and its Accounts on those days on which the Fund calculates its
net asset value pursuant to rules of the Securities and Exchange Commission and
the Fund shall use reasonable efforts to calculate such net asset value on each
day which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, 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.
1.3. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of any Portfolio held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund (or its agent) of the request for redemption, as established in
accordance with the provisions of the then current prospectus of the Fund. The
Fund shall make payment for such shares in the manner established from time to
time
by the Fund, but in no event shall payment be delayed for a greater period
than is permitted by the 1940 Act.
1.4. For the purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its agent 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.
eastern time on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of the SEC.
1.5. Purchase orders that are transmitted to the Fund in accordance with
Section 1.3 shall be paid for on the same Business Day that the Fund receives
notice of the order. Payments shall be made in federal funds transmitted by
wire. Upon receipt by the Fund of the federal funds so wired, such funds shall
cease to be the responsibility of the Company and shall become the
responsibility of the Fund.
1.6. 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.
1.7. The Fund shall furnish same day notice (by wire or telephone, followed
by written instructions) 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 Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.8. 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 use its best efforts to
make such net asset value per share available by 6 p.m. eastern time.
1.9. The Fund and the Underwriter agree that shares of the Fund 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.
1.10. The Fund and the Company agree that they shall amend any provision of
this Agreement to the extent that it is inconsistent with any condition imposed
by the SEC in the Exemptive Order.
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. The Underwriter shall provide the Company with as many printed copies
of the Fund's or the relevant Portfolio's current prospectus and statement of
additional information (describing only the designated Portfolios of the
Account) or, to the extent permitted, the Fund's profiles as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide the Company with a PDF, camera ready copy, or a form suitable for
printing of such documents, and such other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if such documents
are amended during the year) to have such documents printed together in one
document. Alternatively, the Company may print the Fund's prospectus and/or
statement of additional information in combination with other fund companies'
prospectuses and statements of additional information. All such documents shall
be provided to the Company within time reasonably required to allow for printing
and delivery to Contract owners, but no later than five business days prior to
the date the documents are required under then-current regulations to be sent to
Contract owners. Except as provided in the following three sentences, all
expenses of printing and distributing Fund prospectuses and statements of
additional information shall be the expense of the Company. For prospectuses and
statements of additional information provided by the Company to its existing
Contract owners in order to update disclosure annually as required by the 1933
Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive PDF or camera ready film in lieu of receiving printed
copies of the Fund's prospectus, the Fund will reimburse the Company in an
amount equal to the product of A and B where A is the number of such
prospectuses distributed to Contract owners, and B is the Fund's per unit cost
of typesetting and printing the Fund's prospectus. The same procedures shall be
followed with respect to the Fund's statement of additional information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or statements of
additional information other than those actually distributed to existing
Contract owners.
2.3 The Fund's prospectus shall state that the statement of additional
information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the prospectus shall state that such statement is
available from the Fund).
2.3. 2.4 The Fund (at its expense) shall provide the Company with copies of
any Fund-sponsored proxy materials, shareholder reports, and other
communications (except for prospectuses and statements of additional
information, which are covered in Section 2.2) to shareholders in such quantity
as the Company shall reasonably require for distribution to Contract owners.
2.5 The Company shall bear the cost of distributing the Fund's or the
relevant Portfolio's prospectus, statement of additional information,
shareholder reports and other shareholder communications to owners of and
applicants for policies for which the Fund is serving or is to serve as an
investment vehicle. 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 in accordance with applicable federal
and state securities laws.
2.6 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.
2.7 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 1940 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. 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 or Xxxxxxxx is named,
at least fifteen Business Days prior to its use. No such material shall be used
if the Fund or its designee reasonably objects to such use within fifteen
Business Days after receipt of such material.
2.8 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 its designee,
or by the Underwriter, except as required by legal
process or regulatory authorities or with the written permission of the Fund or
the Underwriter or the designee of either.
2.9 The Fund, Underwriter, or its designee shall furnish, or shall cause to
be furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its Account(s), is named
at least fifteen Business Days prior to its use. No such material shall be used
if the Company or its designee reasonably objects to such use within fifteen
Business Days after receipt of such material.
2.10. The Fund and the Underwriter shall not 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.
2.11. If and to the extent required by law the Company shall (i) solicit
voting instructions from Contract owners; (ii) vote the Fund shares in
accordance with instructions received from Contract owners; and (iii) vote
shares of the Fund for which no timely voting instructions for Contract owners
are received in the same proportion as those shares for which voting
instructions are received, so long as, and to the extent that the Securities and
Exchange Commission continues to interpret the 1940 Act to require pass-through
voting privileges for variable contract owners. The Company reserves the right
to vote Fund shares held in any segregated asset account in its own right, to
the extent permitted by law. The Fund shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Fund. The Company and its agents will in no way
recommend or oppose or interfere with the solicitation of proxies for Fund
shares held by Contract owners without the prior written consent of the Fund,
which consent may be withheld in the Fund's sole discretion.
2.12 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the funds described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.
2.13 The Company shall establish and disclose to Contract owners a
reasonable policy designed to discourage frequent and disruptive purchases and
redemptions of Fund shares by Contract owners and shall cooperate with the Fund
to minimize the impact on the Fund of such transactions.
2.14 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
2.15 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
2.16 For purposes of this Article II, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE III.
Representations and Warranties
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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 Iowa and that
it has legally and validly established each Account prior to any issuance or
sale thereof 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 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, or that the Company will
not register the Account in proper reliance upon an exclusion from registration
under the 0000 Xxx.
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 Contracts are or will be
registered under the 1933 Act, or that the Contracts are not registered in
proper reliance on an exemption from registration under the 1933 Act, prior to
any issuance or sale of the Contracts; 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.
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, duly
authorized for issuance and sold in compliance with the laws of the state of
Iowa and all applicable federal and state securities laws and that 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 or the Underwriter.
3.6 The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations. In the event of a breach of the diversification
requirement by the Fund, it will take all reasonable steps (a) to notify the
Company of such breach and (b) to adequately diversify the Trust so as to
achieve compliance within the grace period afforded by Regulation 1.817-5.
3.7 The Fund represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement.
3.8 The Fund represents that it intends to qualify as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M 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 it might not so qualify in
the future.
3.9 The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter 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.
3.10 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's
investment policies, fees and expenses are and shall at all times remain in
compliance with the laws of the State of Iowa and the Fund and the Underwriter
represent that their respective operations are and shall at all times remain in
material compliance with the laws of the state of Iowa to the extent required to
perform this Agreement.
3.11 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker/dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Iowa and all applicable state and
federal laws, including without limitation the 1933 Act, the 1934 Act and that
0000 Xxx.
3.12 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of
________ and any applicable state and federal securities laws.
3.13 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
ARTICLE IV.
Potential Conflicts
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4.1 The Fund, if it determines to offer its shares to any other insurance
company, separate account or to a qualified plan shall furnish the Company with
a copy of its application for an order of the Securities and Exchange Commission
under Section 6(c) of the 1940 Act for mixed and shared funding relief, and the
notice of such application and order when issued by the SEC. The Company agrees
to comply with the conditions on which such order is issued, including reporting
any potential or existing conflicts promptly to the Board of Directors of the
Fund , and in particular whenever contract owner voting instructions are
disregarded, to the extent such conditions are not materially different from the
conditions of the mixed and shared funding relief that the Company has agreed to
be bound by in similar participation agreements with other fund providers, and
recognizes that it shall be responsible for assisting the Board in carrying out
its responsibilities in connection with such order. The Company agrees to carry
out such responsibilities with a view to the interests of existing Contract
owners.
4.2. 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.
4.3. 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.
4.4. 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.
4.5. 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; 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 and Underwriter shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Fund.
4.6. 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 and Underwriter
shall continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Fund.
4.7. For purposes of Sections 4.4 through 4.7 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.
4.8. The Company and Xxxxxxxx shall at least annually submit to the
Directors such reports, materials or data as the Directors may reasonable
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.
4.9. 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.
ARTICLE V.
Indemnification
---------------
5.1.(a) Indemnification By the Company. The Company agrees to indemnify and
------------------------------
hold harmless the Underwriter and the Fund and each of its Directors, officers,
employees and agents and each person, if any, who controls the Fund within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this 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 Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(i) 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 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 for use in Company Documents or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) 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
(iii) 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 by or on behalf of the
Company; or
(iv) 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
(v) 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, as limited by and in accordance with the
provisions of Sections 5.1(b) and 5.1(c) hereof.
5.1.(b) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
5.2.(a) Indemnification By the Fund. The Fund agrees to indemnify and
---------------------------
hold harmless the Company and each of its directors, officers, employees and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the
"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 Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the 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
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 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
(ii) 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
(iii) 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
(iv) 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
(v) 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.
5.2.(b) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
5.3.(a) Indemnification By the Underwriter. The Underwriter agrees to
----------------------------------
indemnify and hold harmless the Company and each of its directors and officers
and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 5.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its control)
or wrongful conduct of the Fund, Adviser or Underwriter or persons
under their control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Underwriter; or
(iv) arise out of or result from any failure by the
Underwriter to provide the services or furnish the materials required
under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance with
the provisions of Sections 5.3(b) and 5.3(c) hereof.
5.3.(b) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or nay of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
5.4. Neither the Company, the Fund nor the Underwriter 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 an Indemnified Party
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 Underwriter 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 and 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 by either party:
(a) 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 Underwriter
with respect to any Portfolio based upon the Company's determination that
shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) by the Company by written notice to the Fund and the Underwriter
with respect to any Portfolio 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
(d) by the Fund or the Underwriter 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 Underwriter determine in their 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 Underwriter 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 Underwriter to perform its obligations under
this Agreement; or
(f) by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M or under any successor or similar provision, or fails to
comply with the Section 817(h) diversification requirements specified
in Section 3.6 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 Underwriter by written notice to
the Company, if (1) either one or both of the Fund or the Underwriter,
respectively, shall determine, in their sole judgment reasonably
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, or financial condition, or
is the subject of material adverse publicity and such material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of either the Fund or the
Underwriter, (2) the Fund or Underwriter shall notify the Company in
writing of such determination and its intent to terminate this
Agreement, and (3) after considering the actions taken by the Company
and any other changes in circumstances since the giving of such notice,
such determination of the Fund or the Underwriter shall continue to
apply on the sixtieth (60th) day following the giving of such notice,
which sixtieth day shall be the effective date of termination; or
(h) by the Company by written notice to the Fund and the
Underwriter, if (1) the Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business,
operations or financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity will have a material adverse impact upon the business and
operations of the Company, (2) the Company shall notify the Fund and
the Underwriter in writing of such determination and its intent to
terminate the Agreement, and (3) after considering the actions taken by
the Fund and/or the Underwriter
and any other changes in circumstances since the giving of such notice,
such determination of the Company shall continue to apply on the
sixtieth (60th) day following the giving of such notice, which sixtieth
day shall be the effective date of termination; 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 of the date of substitution; or
(j) by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 6.1(b) hereof and at the time such notice
was given there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any termination
under this Section 6.1(j) shall be effective forty five (45) days after
the notice specified in Section 6.1(b) was given; or
(k) by any party in the event that the Fund's Board of
Directors determines that a material irreconcilable conflict exists as
provided in Article V; or
(l) 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..
6.2. Notwithstanding any termination of this Agreement pursuant to
Section 6.1 (other than a termination pursuant to Section 6.1(k)), the Fund and
the Underwriter, shall at the option of the Company, 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 Sections 2.2 and 2.5.
Specifically, without limitation, the owners of such Contracts 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. The parties agree that this Section 6.2
shall not apply to any terminations under Article IV and the effect of such
Article IV terminations shall be governed by Article IV of this Agreement.
6.3 In the event of a termination of this Agreement pursuant to this
Section 6, the Fund or the Underwriter shall promptly notify the Company whether
the Fund or the Underwriter will continue to make shares available after such
termination; if the Fund or the Underwriter will continue to make shares so
available, the provisions of this Agreement shall remain in effect except for
Section 6.1 hereof, and thereafter the Fund 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 or
the Underwriter, need be greater than six months.
6.4 The Company, the Fund and the Underwriter 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 or
the Underwriter 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 - we don't believe
this is correct) 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.
ARTICLE VII.
Notices
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Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Xxxxxxxx Portfolios, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel, Law & Regulation
If to the Company:
Peoples Benefit Life Insurance Company
0000 Xxxxxxxx Xxxx X.X.
Xxxxx Xxxxxx, Xxxx 00000
Attention: Financial Markets Division, Legal Department
If to the Underwriter:
--------------------------
--------------------------
--------------------------
Attention:
---------------
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 the State of Iowa.
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.
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 any party without the prior written approval of all parties hereto;
provided, however, that the Underwriter may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement. The Company
shall promptly notify the Fund and the Underwriter of any change in control of
the Company.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by all
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.
IN WITNESS WHEREOF, each of the parties hereto has caused their duly
authorized officers to execute this Participation Agreement as of the date and
year first above written.
Xxxxxxxx Portfolios, Inc. Peoples Benefit Life Insurance Company
By: By:
------------------------ ------------------------
Name: Name:
---------------------- ----------------------
Title: Title:
--------------------- ---------------------
(Underwriter)
By:
------------------------
Name:
----------------------
Title:
---------------------
Schedule A
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Separate Accounts and Associated Contracts
------------------------------------------
Names of Separate Account
and Date Established by Contracts Funded
the Board of Directors By the Separate Account Applicable Portfolios
---------------------- ----------------------- ---------------------
Peoples Benefit Life Insurance Advisor's Edge Xxxxxxxx Capital Portfolio
Company Separate Account V Variable Annuity
(February 14, 1992) (AV515 101 130 600) Xxxxxxxx Global
Technology Portfolio
Advisor's Edge Select
Variable Annuity Xxxxxxxx Communications and
(AV516 101 131 600) Information Portfolio
