Exhibit (h.2)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of the 22nd day of September, 2008, by and between
ULTRA SERIES FUND ("TRUST") a Massachusetts business trust, CUNA BROKERAGE
SERVICES, INC. ("DISTRIBUTOR"), a Wisconsin corporation, and CUNA MUTUAL
INSURANCE SOCIETY ("LIFE COMPANY"), a life insurance company organized under the
laws of the State of Iowa.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended ("1940 Act") as an
open-end, diversified management investment company; and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies"); and
WHEREAS, TRUST has received an order from the SEC, dated July 24, 1997
(File No. 812-10398), granting Participating Insurance Companies and their
separate accounts exemptions from certain provisions of the 1940 Act and its
related rules, to the extent necessary to permit shares of the Portfolios of
TRUST 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 ("Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, DISTRIBUTOR is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934, as amended ("1934 Act"); and
WHEREAS, MEMBERS Capital Advisors, Inc. is the investment advisor and
administrator of the Trust; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value ("NAV").
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, and DISTRIBUTOR agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE COMPANY
listed on Appendix B shares of the Portfolios for investment of proceeds from
Variable Contracts allocated to the designated Separate Accounts, such shares to
be offered as provided in TRUST's then-current Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders on behalf of the Separate
Accounts, executing such orders on a daily basis at the NAV next computed after
receipt by TRUST or its designee of the order for the shares of TRUST. For
purposes of this Section 1.2, LIFE COMPANY shall be the designee of TRUST for
receipt of such orders and receipt by such designee shall constitute receipt by
TRUST; provided that TRUST receives notice of such order by 9:30 a.m., Central
Time (or such other time upon which both parties agree) 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 TRUST calculates its NAV pursuant to
the rules of the SEC as described in the then-current registration statement of
the Trust on Form N-lA.
1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any full or
fractional shares of TRUST held by LIFE COMPANY on behalf of the Separate
Accounts, executing such requests on each Business Day at the NAV next computed
after receipt by TRUST or its designee of the request for redemption. For
purposes of this Section 1.3, LIFE COMPANY shall be the designee of TRUST for
receipt of requests for redemption and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 9:30 a.m., Central Time (or such other time upon which both
parties agree) on the next following Business Day.
1.4 TRUST shall furnish same-day notice to LIFE COMPANY of any income
dividends or capital gain distributions payable on the shares of any Portfolio
of TRUST. LIFE COMPANY hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Portfolio's shares in additional
shares of the Portfolio. TRUST shall notify LIFE COMPANY of the number of shares
so issued as payment of such dividends and distributions. LIFE COMPANY reserves
the right to revoke this election by written notice to TRUST.
1.5 TRUST shall make the NAV per share for the selected Portfolios
available to LIFE COMPANY on each Business Day as soon as reasonably practicable
after the NAV per share is calculated but shall use its best efforts to make
such NAV available by 5:30 p.m., Central Time. If TRUST provides LIFE COMPANY
with materially incorrect share NAV information through no fault of LIFE
COMPANY, LIFE COMPANY on behalf of the Separate Accounts, shall be entitled to
an adjustment to the number of shares purchased or redeemed to reflect the
correct share NAV. Any material error (determined in accordance with SEC
guidelines) in the calculation of NAV per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE
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COMPANY. In the event that such material error is the result of the TRUST's (or
its designated agents) gross negligence, the TRUST shall also be responsible for
any of LIFE COMPANY's reasonable administrative or other costs or losses
incurred in correcting Variable Contract owner accounts.
1.6 At the end of each Business Day, LIFE COMPANY shall use the information
described in Section 1.5 to calculate Separate Account unit values for the day.
Using these unit values, LIFE COMPANY shall process each such Business Day's
Separate Account transactions based on requests and premiums received by it by
the time as of which the TRUST calculates its share price as disclosed in the
prospectus for the TRUST to determine the net dollar amount of TRUST shares
which shall be purchased or redeemed at that day's closing NAV per share. The
net share purchase or redemption orders so determined shall be transmitted to
TRUST by LIFE COMPANY by 9:30 a.m., Central Time (or such other time upon which
both parties agree) on the Business Day next following LIFE COMPANY's receipt of
such requests and premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If LIFE COMPANY's order requests the net purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is actually transmitted by
LIFE COMPANY by 2:00 p.m., Central Time (or such other time upon which both
parties agree). If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY on the day the order is actually received by TRUST by
2:00 p.m., Central Time (or such other time upon which both parties agree)
unless doing so would require TRUST to dispose of portfolio securities or
otherwise incur additional costs, but in such event, proceeds shall be wired to
LIFE COMPANY within seven business days and TRUST shall notify the person
designated in writing by LIFE COMPANY as the recipient for such notice of such
delay by 2:00 p.m., Central Time (or such other time upon which both parties
agree) the same business day that LIFE COMPANY transmits the redemption order to
TRUST.
1.8 Notwithstanding Section 1.7, TRUST reserves the right to suspend the
right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 1940 Act and any rules
thereunder.
1.9 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts, the TRUST's investment advisor, the
insurance company depositor of a variable life insurance account and/or to
certain qualified pension and other retirement plans, all in accordance with the
requirements of Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code") and Treasury Regulation 1.817-5. Shares of the Portfolios of TRUST will
not be sold directly to the general public.
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1.10 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the 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 Board of Trustees of TRUST ("Board"), acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, deemed necessary and in the best interests of the shareholders of
such Portfolios.
1.11 The issuance and transfer of TRUST shares shall be by book entry only.
Share certificates will not be issued to LIFE COMPANY or the Separate Accounts.
1.12 TRUST represents and warrants that each Portfolio complies with the
diversification requirements set forth in Section 817(h) of the Code and Section
1.817-5(b) of the regulations under the Code. TRUST further represents that it
will make every effort to maintain each Portfolio's compliance with the
diversification requirements. TRUST will notify LIFE COMPANY immediately if
TRUST has reason to believe that a Portfolio has ceased to comply with the
diversification requirements or may cease to comply in the future. In the event
of a breach of this Section, TRUST will take all reasonable steps to adequately
diversify the Portfolio so as to achieve compliance within the grace period
afforded by Section 1.817-5 of the regulations under the Code.
1.13 LIFE COMPANY shall be fully responsible as to TRUST and DISTRIBUTOR
for the underwriting, issuance, service, administration, sale and marketing of
the Variable Contracts. LIFE COMPANY shall provide Variable Contracts, the
Variable Contracts' and TRUST's prospectuses, Variable Contracts' and TRUST's
statements of additional information, and all amendments or supplements to any
of the foregoing to Variable Contract owners and prospective Variable Contract
owners, all in accordance with state and federal laws. LIFE COMPANY shall take
reasonable steps to ensure that (1) all persons offering or selling the Variable
Contracts are duly licensed and registered under applicable insurance and
securities laws; (2) all individuals offering or selling the Variable Contracts
are duly appointed agents of LIFE COMPANY and are registered representatives of
a Financial Industry Regulatory Authority, Inc. ("FINRA") member broker-dealer;
(3) the Variable Contracts' prospectuses describe distribution and compensation
arrangements for the sale of the Variable Contracts adequately; and (4) that all
complaints from Variable Contract owners are promptly addressed and that such
complaints are settled consistent with high ethical standards and principles of
ethical conduct.
1.14 LIFE COMPANY has reasonable policies and procedures to comply with all
applicable state and federal laws and regulations addressing anti-money
laundering, including those adopted by the Federal Financial Crimes Enforcement
Network (FinCEN) and if required by such laws or regulations, to share with
TRUST information about individuals, entities, organizations and countries
suspected of possible terrorist or money "laundering" activities in accordance
with Section 314(b) of the USA Patriot Act. TRUST and DISTRIBUTOR shall comply
with all applicable state and federal laws and regulations addressing anti-money
laundering and if required by such laws or regulations, to share with LIFE
COMPANY information about individuals, entities,
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organizations and countries suspected of possible terrorist or money
"laundering" activities in accordance with Section 314(b) of the USA Patriot
Act.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of Iowa and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws.
2.2 LIFE COMPANY represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the 1940 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts are or
will be registered under the Securities Act of 1933, as amended ("1933 Act"),
unless an exemption from registration is available prior to any issuance or sale
of the Variable Contracts. LIFE COMPANY represents and warrants that the
Variable Contracts will be issued and sold in compliance in all material
respects with all applicable state and federal laws and further that the sale of
the Variable Contracts shall comply in all material respects with state
insurance law suitability requirements. LIFE COMPANY shall be responsible for
filing as required Variable Contract forms, applications, marketing materials,
and other documents related to the Variable Contracts and/or Separate Accounts
with state insurance commissions.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will make every effort to maintain such treatment and that it will notify TRUST
immediately upon having a reasonable basis for believing that the Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of TRUST as required to be delivered under applicable federal
or state law and interpretations of state and federal securities regulators
thereunder in connection with the offer, sale or acquisition of the Variable
Contracts.
2.6 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement are or will be registered under the 1933 Act and
sold in accordance with all applicable state and federal securities laws, and
TRUST shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. TRUST 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. TRUST shall register and qualify
its shares for sale in accordance
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with the laws of the various states if and to the extent necessary to perform
its obligations under this Agreement.
2.7 TRUST represents and warrants that each Portfolio currently complies,
and will continue to comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder, including
without limitation Treasury Regulation 1.817-5 (or any successor or similar
provisions), and will notify LIFE COMPANY immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so comply
and will immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by Regulation
1.817-5.
LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of LIFE COMPANY (or,
to LIFE COMPANY's knowledge, of any Variable Contract owner) that any Portfolio
has failed to comply with the diversification requirements of Section 817(h) of
the Code or LIFE COMPANY otherwise becomes aware of any facts that could give
rise to any claim against TRUST, DISTRIBUTOR or MEMBERS Capital Advisors, Inc.
as a result of such a failure or alleged failure:
(a) LIFE COMPANY shall promptly notify the TRUST, DISTRIBUTOR and
MEMBERS Capital Advisors, Inc. of such assertion or potential claim;
(b) LIFE COMPANY shall consult with the TRUST, DISTRIBUTOR and MEMBERS
Capital Advisors, Inc. as to how to minimize any liability that may arise as a
result of such failure or alleged failure;
(c) LIFE COMPANY shall use its best efforts to minimize any liability
of TRUST, DISTRIBUTOR and MEMBERS Capital Advisors, Inc. resulting from such
failure, including, without limitation, demonstrating, pursuant to Treasury
Regulations, Section 1.817- 5(a)(2), to the commissioner of the IRS that such
failure was inadvertent;
(d) Any written materials to be submitted by LIFE COMPANY to the IRS,
any Variable Contract owner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to Treasury Regulations, Section
1.817-5 (a)(2)) shall be provided by LIFE COMPANY to TRUST, DISTRIBUTOR and
MEMBERS Capital Advisors, Inc. (together with any supporting information or
analysis) within at least two (2) business days prior to submission;
(e) LIFE COMPANY shall provide the TRUST, DISTRIBUTOR and MEMBERS
Capital Advisors, Inc. with such cooperation as the TRUST, DISTRIBUTOR and
MEMBERS Capital Advisors, Inc. shall reasonably request (including, without
limitation, by permitting the TRUST, DISTRIBUTOR and MEMBERS Capital Advisors,
Inc. to review the relevant books and records of LIFE COMPANY) in order to
facilitate review by TRUST, DISTRIBUTOR and MEMBERS Capital Advisors, Inc. of
any written submissions provided to it
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or its assessment of the validity or amount of any claim against it arising from
such failure or alleged failure; and
(f) LIFE COMPANY shall not with respect to any claim of the IRS or any
Variable Contract owner that would give rise to a claim against TRUST,
DISTRIBUTOR and MEMBERS Capital Advisors, Inc. (i) compromise or settle any
claim, (ii) accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express written consent of the
TRUST, DISTRIBUTOR and MEMBERS Capital Advisors, Inc., which shall not be
unreasonably withheld; provided that, LIFE COMPANY shall not be required to
appeal any adverse judicial decision unless TRUST and MEMBERS Capital Advisors,
Inc. shall have provided an opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and further provided that TRUST,
DISTRIBUTOR and MEMBERS Capital Advisors, Inc. shall bear the costs and
expenses, including reasonable attorney's fees, incurred by LIFE COMPANY in
complying with this clause (f).
2.8 TRUST represents and warrants that each Portfolio invested in by the
Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will maintain such qualification under
Subchapter M (or any successor or similar provisions) and will notify LIFE
COMPANY immediately upon having a reasonable basis for believing any Portfolio
has ceased to so qualify or might not so qualify in the future.
2.9 TRUST represents and warrants that, to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-l under the 1940 Act, it will
have a board of trustees, a majority of whom are not interested persons of the
TRUST, formulate and approve any plan under Rule 12b-l and will comply with
applicable provisions and SEC interpretations of the 1940 Act with respect to
any such distribution plan.
2.10 TRUST represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply in
all material respects with applicable state and federal securities laws.
2.11 TRUST represents and warrants that its directors, officers, employees
and other persons dealing with the money and/or securities of TRUST are and
shall continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the TRUST in an amount not less than the minimum
coverage as required by Rule 17g-l under the 1940 Act or related provisions as
may be promulgated from time to time.
2.12 DISTRIBUTOR represents and warrants that it is a member in good
standing of FINRA and is registered as a broker-dealer under the 1934 Act.
DISTRIBUTOR further represents that it will sell and distribute TRUST's shares
in accordance with all applicable state and federal securities laws.
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2.13 Each party represents and warrants that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as applicable,
by such party, and, when so executed and delivered, this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
2.14 LIFE COMPANY represents and warrants that all orders for the purchase
and sale of TRUST shares submitted to the TRUST (or counted by LIFE COMPANY in
submitting a net order under Section 1.6 of the Agreement) for execution at a
price based on the NAV per share of the Portfolios next computed after receipt
by LIFE COMPANY on a particular Business Day, will have been received in good
order by LIFE COMPANY prior to the time as of which the TRUST calculates its NAV
per share on that Business Day, as disclosed in the then-current prospectus for
the pertinent Portfolio (the "trading deadline"), in accordance with Rule 22c-1
under the 1940 Act (subject only to exceptions as permitted under Rule 22c-l(c)
under the 1940 Act, respecting initial purchase payments on variable annuity
contracts, and to the established administrative procedures of LIFE COMPANY as
described under Rule 6e-3(T), paragraph (b)(12)(iii) under the 1940 Act
respecting premium processing for variable life insurance contracts).
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST 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 TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares, and any expenses permitted to be paid or assumed by the TRUST pursuant
to Rule 12b-l under the 0000 Xxx.
3.2 TRUST will bear the printing costs (or duplicating costs with respect
to the statement of additional information) and mailing costs associated with
the delivery of TRUST (or individual Portfolio) documents, and any supplements
thereto, to existing Variable Contract owners of LIFE COMPANY (regardless of
whether such documents are printed together with, or separate from, the
documents for other trusts in the Variable Contracts) or rather may provide the
LIFE COMPANY with a sufficient number of printed documents pertaining to the
following materials:
(a) prospectuses and statements of additional information;
(b) annual and semi-annual reports; and
(c) proxy materials (including, but not limited to, the proxy cards,
notice and statement).
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If such documents are printed together with documents for other investment
options available to the Variable Contract owners, TRUST is only responsible for
the pro rata costs of the pages applicable to TRUST.
TRUST shall be responsible for all costs of tabulating the votes of its
shareholders. LIFE COMPANY shall be responsible for all costs of tabulating
votes of Variable Contract owners.
LIFE COMPANY will submit any bills for printing, duplicating and/or mailing
costs, relating to the TRUST documents described above, to TRUST for
reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use its
best efforts to control these costs. Upon submission of any bills, LIFE COMPANY
will provide TRUST with a current tabulation of the number of existing Variable
Contract owners of LIFE COMPANY whose Variable Contract values are invested in
TRUST.
3.3 TRUST will provide the LIFE COMPANY, at TRUST's expense, with the
following TRUST (or individual Portfolio) documents, and any supplements
thereto:
(a) electronic PDF format of the current prospectus for printing by
the LIFE COMPANY;
(b) a copy of the statement of additional information suitable for
duplication;
(c) electronic PDF format of proxy material suitable for printing;
and
(d) electronic PDF format of the annual and semi-annual reports for
printing by the LIFE COMPANY.
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
3.5 LIFE COMPANY will bear all costs associated with providing copies of
prospectuses, statements of additional information, annual and semi-annual
reports and other TRUST-related materials to prospective Variable Contract
owners.
3.6 Except with respect to information provided by LIFE COMPANY to TRUST in
writing, LIFE COMPANY is not responsible for the content of TRUST's registration
statement.
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3.7 Except with respect to information provided by TRUST to LIFE COMPANY in
writing, TRUST is not responsible for the content of the Variable Contracts'
registration statements.
3.8 For the avoidance of doubt, regulatory materials may be delivered
electronically rather than in paper to the extent all laws applicable to such
electronic delivery have been met.
Article IV. SALES MATERIALS; PRIVACY
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST and
DISTRIBUTOR, each piece of sales literature or other promotional material in
which TRUST or DISTRIBUTOR is named, at least ten (10) Business Days prior to
its intended use. No such material will be used if TRUST or DISTRIBUTOR objects
to its use in writing within five (5) Business Days after receipt of such
material. For the purposes of this Agreement, "in writing" means facsimile
transmissions and electronic mail.
4.2 TRUST and DISTRIBUTOR will furnish, or will cause to be furnished, to
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least ten (10)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY objects to its use in writing within five (5) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of LIFE COMPANY or concerning LIFE COMPANY,
the Separate Accounts, or the Variable Contracts issued by LIFE COMPANY, other
than the information or representations contained in a registration statement or
prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by LIFE COMPANY or its designee, except with the written permission of
LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public
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media), sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under FINRA rules, the 1940 Act or the 0000 Xxx.
4.6 Subject to law and regulatory authority, each party hereto shall treat
as confidential all information pertaining to the owners of the Variable
Contracts and all information reasonably identified as confidential in writing
by any other party hereto and, except as permitted by this Agreement, shall not
disclose, disseminate or utilize such names and addresses and other confidential
information until such time as it may come into the public domain without the
express written consent of the affected party. Each party hereto shall be solely
responsible for the compliance of their officers, directors, employees, agents,
independent contractors, and any affiliated and non-affiliated third parties
with all applicable privacy-related laws and regulations including but not
limited to the Xxxxx-Xxxxx-Xxxxxx Act and Regulation S-P. The provisions of this
Section 4.6 shall survive the termination of this Agreement.
Article V. POTENTIAL CONFLICTS
5.1 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of the Variable Contract owners of
Participating Insurance Company Separate Accounts investing in the TRUST. A
material irreconcilable conflict may arise for a variety of reasons, including:
(a) state insurance regulatory authority action; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of the TRUST
are being managed; (e) a difference in voting instructions given by variable
annuity and variable life insurance contract owners or by contract owners of
different Participating Insurance Companies or by qualified retirement plans (or
their participants, if applicable) investing in the Portfolios; or (f) a
decision by a Participating Insurance Company or a qualified retirement plan to
disregard voting instructions of Variable Contract owners or plan participants,
if applicable. The Board shall promptly inform LIFE COMPANY if it determines
that a material irreconcilable conflict exists and the implications of such
conflict.
5.2 LIFE COMPANY will report any potential or existing conflicts of which
it is aware to the Board. LIFE COMPANY will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set forth in the
Order, by providing the Board with all information reasonably necessary for it
to consider any issues raised.
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5.3 If a majority of the Board or a majority of its independent trustees
determines that a material irreconcilable conflict exists, LIFE COMPANY, at its
expense and to the extent reasonably practicable (as determined by a majority of
independent trustees), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including (1) establishing a new investment
option and (2)(a) withdrawing Separate Account assets subject to the conflict
from the Portfolio and reinvesting such assets in a different investments medium
or (b) submitting the question of whether such withdrawal should be implemented
to a vote of all affected Variable Contract owners and, as appropriate,
segregating the assets of any group of such participants that vote in favor of
such withdrawal or offering those participants the option of making such a
change. LIFE COMPANY will carry out this responsibility with a view only to the
interests of the Variable Contract owners.
For the purposes of this Section 5.3, a majority of the independent
trustees of the Board shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the TRUST or MEMBERS Capital Advisors, Inc. (or any other investment adviser of
the TRUST) be required to establish a new funding medium for any Variable
Contract if an offer to do so has been declined by a majority of the Variable
Contract owners adversely affected by the conflict.
5.4 No less than annually, the TRUST will request from the LIFE COMPANY
such reports, materials or data as the Board may reasonably request so that the
Board may fully carry out the obligations imposed upon it by the Order. Such
reports, materials, and data shall be requested more frequently if deemed
appropriate by the Board.
5.5 If and to the extent 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 thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Order, then
TRUST and/or LIFE COMPANY, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such Rules are applicable.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the 1940 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of TRUST held by
its Separate Accounts in a manner consistent with voting instructions timely
received from its Variable Contract owners. LIFE COMPANY shall vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as it votes those shares for which it has received voting
instructions.
6.2 If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at the election of
12
the TRUST, to withdraw its Separate Account's investment in the TRUST, and no
charge or penalty will be imposed as a result of such withdrawal.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify and
hold harmless TRUST and DISTRIBUTOR and each of their trustees, directors,
officers, employees and agents and each person, if any, who controls or is
affiliated with TRUST or DISTRIBUTOR within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Article
VII) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of LIFE COMPANY, which consent shall
not be unreasonably withheld) or litigation (including reasonable legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus, or sales literature for the
Variable Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY by or on behalf of
TRUST or DISTRIBUTOR for use in the registration statement,
prospectus or sales literature for the Variable Contracts or in
the Variable Contracts (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY or persons under its control) or
wrongful conduct of LIFE COMPANY or any of its directors,
officers, employees or agents, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment thereof
or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein
13
or necessary to make the statements therein not misleading if
such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to TRUST for inclusion therein by or on behalf of LIFE
COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to substantially
provide the services and furnish the materials 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 LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to TRUST,
whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent LIFE COMPANY has
been prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, LIFE COMPANY shall be entitled to
participate at its own expense in the defense of such action. LIFE COMPANY also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from LIFE COMPANY to
such party of LIFE COMPANY's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and LIFE COMPANY will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.4 Indemnification by DISTRIBUTOR. DISTRIBUTOR agrees to indemnify and
hold harmless LIFE COMPANY and each of its directors, officers, employees, and
agents and each person, if any, who controls LIFE COMPANY within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for the
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
14
DISTRIBUTOR which consent shall not be unreasonably withheld) or litigation
(including reasonable legal and other expenses) to which the Indemnified Parties
may become subject under any statute, or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or sales literature of TRUST
(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 DISTRIBUTOR or
TRUST by or on behalf of LIFE COMPANY for use in the registration
statement or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by DISTRIBUTOR or persons under
its control) or wrongful conduct of TRUST or DISTRIBUTOR or
persons under their control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c) 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 Variable Contracts,
or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY for inclusion therein
by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Portfolio(s) invested in
by the Separate Account to comply with the diversification
requirements of Section 817(h) of the Code; or (iii) a failure by
a Portfolio(s) invested in by the Separate Account to qualify as
a "regulated investment company" under Subchapter M of the Code;
or
15
(e) arise out of or result from any material breach of any
representation and/or warranty made by DISTRIBUTOR or TRUST in
this Agreement or arise out of or result from any other material
breach of this Agreement by DISTRIBUTOR or TRUST.
7.5 DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to LIFE
COMPANY.
7.6 DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified DISTRIBUTOR in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify DISTRIBUTOR of any such claim shall not
relieve DISTRIBUTOR from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision, except to the extent DISTRIBUTOR has been prejudiced
by such failure to give notice, In case any such action is brought against the
Indemnified Parties, DISTRIBUTOR shall be entitled to participate at its own
expense in the defense thereof. DISTRIBUTOR also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party named in the
action. After notice from DISTRIBUTOR to such party of DISTRIBUTOR's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and DISTRIBUTOR will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.7 The provisions of this Article VII shall survive the termination of
this Agreement.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the date
hereof upon 60 days' notice, unless a shorter time is agreed to
by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined
16
by LIFE COMPANY. Prompt notice of election to terminate shall be
furnished by LIFE COMPANY, said termination to be effective ten
(10) days after receipt of notice unless TRUST makes available a
sufficient number of shares to reasonably meet the requirements
of the Variable Contracts within said ten (10) day period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST or DISTRIBUTOR by the SEC, FINRA or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in LIFE COMPANY's reasonable
judgment, materially impair TRUST's or DISTRIBUTOR ability to
meet and perform their respective obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by LIFE COMPANY with said termination to be effective
ten (10) days after receipt of notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, FINRA or any other
regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in TRUST's reasonable judgment,
materially impair LIFE COMPANY's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by TRUST with said termination to be
effective ten (10) days after receipt of notice;
(e) At the option of LIFE COMPANY, in the event TRUST's shares are
not registered, issued or sold in accordance with applicable
state or federal law, or such law precludes the use of such
shares as the underlying investment medium of Variable Contracts
issued or to be issued by LIFE COMPANY. Termination shall be
effective ten (10) days after notice to TRUST;
(f) At the option of TRUST, if the Variable Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if TRUST reasonably believes that
the Variable Contracts may fail to so qualify. Termination shall
be effective ten (10) days after receipt of notice by LIFE
COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of LIFE COMPANY within ten (10) days
after written notice of such breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been
cured to the
17
satisfaction of TRUST within ten (10) days after written notice
of such breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective ten (10) days
after notice to LIFE COMPANY;
(j) At the option of LIFE COMPANY, in the event that any Portfolio
ceases to qualify as a regulated investment company under
Subchapter M of the Code or under any successor or similar
provision, or if LIFE COMPANY reasonably believes that any
Portfolio may fail to so qualify. Termination shall be effective
ten (10) days after notice to the TRUST;
(k) At the option of LIFE COMPANY, in the event that any Portfolio
fails to meet the diversification requirements specified in
Article II hereof or if LIFE COMPANY reasonably believes that any
Portfolio may fail to meet such diversification requirements.
Termination shall be effective ten (10) days after notice to the
TRUST;
(l) In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, TRUST and DISTRIBUTOR, termination shall
be effective ten (10) days after such occurrence without notice;
and
(m) At the option of the LIFE COMPANY, it may substitute shares of
another investment company or series thereof for shares of the
TRUST in accordance with the terms of the Variable Contracts,
provided that the LIFE COMPANY has given at least forty-five days
prior written notice to the TRUST of the date of substitution.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Office of the General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
18
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Wisconsin. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.4 The parties agree that the assets and liabilities of each Portfolio
are separate and distinct from the assets and liabilities of each other
Portfolio. No Portfolio shall be liable or shall be charged for any debt,
obligation or liability of any other Portfolio. No Trustee, officer or agent
shall be personally liable for such debt, obligation or liability of any
Portfolio.
10.5 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, FINRA 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. However, such access
shall not extend to attorney-client privileged information.
10.6 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.7 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
DISTRIBUTOR and the LIFE COMPANY.
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IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Fund Participation Agreement as of the date and year first above
written.
CUNA BROKER AGE SERVICES, INC. ULTRA SERIES FUND
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President
CUNA MUTUAL INSURANCE SOCIETY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
20
APPENDIX A
PORTFOLIOS
Conservative Allocation Fund
Moderate Allocation Fund
Aggressive Allocation Fund
Money Market Fund
Bond Fund
High Income Fund
Diversified Income Fund
Large Cap Value Fund
Large Cap Growth Fund
Mid Cap Value Fund
Mid Cap Growth Fund
Small Cap Value Fund
Small Cap Growth Fund
Global Securities Fund
International Stock Fund
Target Retirement 2020
Target Retirement 2030
Target Retirement 2040
21
APPENDIX B
SEPARATE ACCOUNTS
CUNA Mutual Variable Life Insurance Account
CUNA Mutual Variable Annuity Account
CUNA Mutual Group Variable Annuity Account
22
