AMENDMENT
TO
PARTICIPATION AGREEMENT
This amendment (the "Amendment") is made and entered into as of May 1,2002, by
and among Xxxxxx Variable Trust, Xxxxxx Retail Management, LP (f/k/a Xxxxxx
Mutual Funds Corp.,) and Principal Life Insurance Company (collectively, the
"parties") in order to modify that certain Participation Agreement (the
"Agreement") entered into by the parties as of May 1, 1998.
The parties agree to amend the Agreement as follows: -
1. Schedule A to the Agreement is hereby deleted and the Schedule A
attached to this Amendment is substituted therefor.
2. Schedule B to the Agreement is hereby deleted and the Schedule B
attached to this Amendment is substituted therefor.
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
Xxxxxx Variable Trust
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
Xxxxxx Retail Management LP.
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Managing Director
Principal Life Insurance Company
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Assistant Director
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Principal Life Insurance Company Principal Life Insurance Company
Separate Account B Variable Life Separate Account
SCHEDULE B
FUND Service Fee
1. Xxxxxx VT Global Asset Allocation IB Shares 0.25%
2. Xxxxxx VT Growth & Income IB Shares 0.25%
3. Xxxxxx VT International Growth IB Shares 0.25%
4. Xxxxxx VT Vista IB Shares 0.25%
5. Xxxxxx VT Voyager IB Shares 0.25%
PARTICIPATION AGREEMENT
Among
XXXXXX VARIABLE TRUST
XXXXXX MUTUAL FUNDS CORP.
and
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 1st day of May, 1998
among Principal Mutual Life Insurance Company (the "Company"), an Iowa
corporation, on its own behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto, as such Schedule may be
amended from time to time (each such account hereinafter referred to as
the 'Account"), PUTNAM VARIABLE TRUST (the 'Trust"), a Massachusetts
business trust, and XXXXXX MUTUAL FUNDS CORP. (the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Trust is an open-end diversified management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into Participation
Agreements with the Trust and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest
in a particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission, dated December 29, 1993 (File No. 812-8612), granting
the variable annuity and variable life insurance separate accounts
participating in the Trust exemptions from the provisions of sections
9(a), 13(a), 15(a) and -15(b) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and Rules 6e- 2(b)( 15) and 6e-3(T)(b)( 15)
thereunder, to the extent necessary to permit shares of the Trust to be
sold to and held by variable annuity and variable life insurance separate
accounts of the Participating Insurance Companies (the "Shared Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and the sale of its shares is
registered under the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Company has registered or will register certain
variable life and/or variable annuity contracts under the 1933 Act and
any applicable state securities and insurance law; and
WHEREAS, each Account is a duly organized. validly existing separate
account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to one or more variable insurance
contracts (the "Contracts"); and
WHEREAS, the Company has registered or will register the 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 under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the
Contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the
Company, the Trust and the Underwriter agree as follows:
ARTICLE 1. Sale of Trust Shares
1.1 The Underwriter agrees, subject to the Trust's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company
those Trust shares representing interests in Authorized Funds which each
Account orders, executing such orders on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
order for the shares of the Trust. For purposes of this Section 1. 1,
the Company shall be the designee of the Trust for receipt of such
orders from each Account and receipt by such designee shall constitute
receipt by the Trust; provided that the Trust receives notice of such
order by 9:30 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
Trust calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission. The initial Authorized Funds are set
forth in Schedule B, as such schedule is amended from time to time.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and
its Accounts on those days on whicH the Trust calculates its net asset
value pursuant to rules of the Securities and Exchange Commission and the
Trust shall use reasonable efforts to calculate such net asset value on
each day on which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Trustees of the Trust (the "Trustees")
may refuse to sell shares of any Fund to the Company or any other person,
or suspend or terminate the offering of shares of any Fund if such action
is required by law or by regulatory authorities having jurisdiction over
the Trust or if the Trustees determine, in the exercise of their
fiduciary responsibilities, that to do so would be in the best interests
of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms
of its then current prospectus. For purposes of this Section 1.4, the
Company shall be the designee of the Trust for receipt of requests for
redemption from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice
of such request for redemption by 9:30 a.m., Eastern time, on the next
following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized
Funds offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book
entry only. Share certificates will not be issued to the Company or any
Account. Shares ordered from the Trust will be recorded as instructed by
the Company to the Underwriter in an appropriate title for each Account
or the appropriate sub-account of each Account.
1.8 The Underwriter shall furnish prompt notice (by wire or
telephone. followed by written confirmation) to the Company of the
declaration of any income, dividends or capital gain distributions
payable on the Trust's shares. The Company hereby elects to receive all
such income dividends and capital gain distributions as are payable on
the Fund shares in additional shares of that Fund. The Company reserves
the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Underwriter shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9 The Underwriter shall make the net asset value per share for
each Fund available to the Company on a daily basis as soon as reasonably
practical after the Trust calculates its net asset value per share and
each of the Trust and the Underwriter shall use its best efforts to make
such net asset value per share available by 7:00 p.m. Eastern time.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts
are or will be registered under the 1933 Act; the Contracts will be
issued and sold in compliance in all material respects with all
applicable laws and the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The
Company further represents and warrants that it is an insurance company
duly organized and in good standing under applicable law and that it has
legally and validly established each Account prior to any issuance or
sale thereof as a separate account under applicable law and has
registered or, prior to any issuance or sale of the Contracts, will
register each Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account
for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or
life insurance contracts, under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will make
every effort to maintain such treatment and that it will notify the Trust
and the 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.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance
with all applicable laws, subject to the terms of Section 2.4 below, and
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the Registration Statement for its shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify the
shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by the Trust or the Underwriter in
connection with their sale by the Trust to the Company and only as required
by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company
under Subchapter M of the Code, and that it will use its best efforts to
maintain such qualification (under Subchapter M or any successor 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; and
(c) it is lawfully organized and validly existing under the laws of
the Commonwealth of Massachusetts and that it does and will comply in all
material respects with the 1940 Act.
2.3 The 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 Trust shares in accordance with all applicable securities laws
applicable to it~ including without limitation the 1933 Act, the 1934 Act,
and the 0000 Xxx.
2.4 Notwithstanding any other provision of this Agreement, the Trust
shall be responsible for the registration and qualification of its shares
and of the Trust itself under the laws of any jurisdiction only in
connection with the sales of shares directly to the Company through the
Underwriter. The Trust shall not be responsible, and the Company shall take
full responsibility, for determining any jurisdiction in which any
qualification or registration of Trust shares or the Trust by the Trust may
be required in connection with the sale of the Contracts or the indirect
interest of any Contract in any shares of the Trust and advising the Trust
thereof at such time and in such manner as is necessary to permit the Trust
to comply.
2.5 The Trust makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states.
ARTICLE II. Prospectuses and Proxy Statements; Voting
3.1 The Trust shall provide such documentation (including a
camera-ready copy of its prospectus) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if
the prospectus for the Trust is amended) to have the prospectus for the
Contracts and the Trust's prospectus printed together in one or more
documents (such printing to be at the Company's expense).
3.2 The Trust's Prospectus shall state that the Statement of
Additional Information for the Trust is available from the Underwriter or
its designee (or in the Trust's discretion, the Prospectus shall state
that such Statement is available from the Trust), and the Underwriter (or
the Trust), at its expense, shall print and provide such Statement free of
charge to the Company and to any owner of a Contract or prospective owner
who requests such Statement.
3.3 The Trust, at its expense. shall provide the Company with
copies of its reports to shareholders, proxy material and other
communications to shareholders in such quantity as the Company shall
reasonably require for distribution to the Contract owners, such
distribution to be at the expense of the Company.
3.4 The Company shall vote all Trust shares as required by law and
the Shared Funding Exemptive Order. The Company reserves the right to vote
Trust shares held in any separate account in its own right, to the extent
permitted by law and the Shared Funding Exemptive Order. The Company shall
be responsible for assuring that each of its separate accounts
participating in the Trust calculates voting privileges in a manner
consistent with all legal requirements and the Shared Funding Exemptive
Order.
3.5 The Trust will comply with all applicable provisions of the
1940 Act requiring voting by shareholders, and in particular the Trust
will either provide for annual meetings or comply with Section 16(c) of
the 1940 Act (although the Trust Is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Trust 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 trustees and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 Without limiting the scope or effect of Section 4.2 hereof, the
Company shall furnish, or shall cause to be furnished, to the Underwriter
each piece of sales
literature or other promotional material (as defined hereafter) in which
the Trust, its investment adviser or the Underwriter is named at least 15
days prior to its use. No such material shall be used if the Underwriter
objects to such use within five Business Days after receipt of such
material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus for the Trust shares, as such registration statement and
prospectus may be amended or supplemented from time to time, or in
annual or semi-annual reports or proxy statements for the Trust, or in
sales literature or other promotional material approved by the Trust or
its designee or by the Underwriter, except with the written permission of
the Trust or the Underwriter or the designee of either or as is required
by law.
4.3 The 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 prepared by the Underwriter in
which the Company and/or its separate account(s) is named at least 15 days
prior to its use. No such material shall be used if the Company or its
designee objects to such use within five Business Days after receipt of
such material.
4.4 Neither the Trust nor the Underwriter shall give any
information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in
published reports for each Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the written permission of the Company or as is
required by law.
4.5 For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures,
or other public media), sales literature (i.e. any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all registered
representatives.
ARTICLE V. Fees and Expenses
5.11 Except as provided in Article VI, the Trust and Underwriter
shall pay no fee or other compensation to the Company under this
agreement.
5.2 All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall bear the expenses
for the cost of registration and qualification of the Trust's shares,
preparation and filing of the Trusts prospectus and registration
statement, proxy materials and reports, setting the prospectus and
shareholder reports in type, setting in type and printing the proxy
materials, and the preparation of all statements and notices required by
any federal or state law, in each case as may reasonably be necessary for
the performance by it of its obligations under this Agreement.
5.3 The Company shall bear the expenses of (a) printing and
distributing the Trust's prospectus in connection with sales of the
Contracts and (b) distributing the reports to Trust's Shareholders and
(C) of distributing the Trust's proxy materials to owners of the
Contracts.
Article VI. Service Fees
6.1 So long as the Company complies with its obligations in this
Article VI, the underwriter shall pay such Company a service fee (the
"Service Fee") on shares of the Funds held in the Accounts at the annual
rates specified in Schedule B (excluding any accounts for the Company's
own corporate retirement plans), subject to Section 6.2 hereof.
6.2 The Company understands and agrees that all Service Fee payments
are subject to the limitations contained in each Fund's Distribution
Plan, which may be varied or discontinued at any time and hereby waives
the right to receive such service fee payments with respect to the Fund
if the Fund ceases to pay 12b-l fees to the Underwriter.
6.3 (a) The Company's failure to provide the services described in
Section 6.4 or otherwise comply with the terms of this Agreement will
render it ineligible to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company,
amend this Article VI to change the terms of the Service Fee payments
with prior written notice to the Company.
6.4 The Company will provide the following services to the
Contract Owners purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and
assisting in answering inquiries concerning the Funds;
(ii) Assisting in printing and distributing shareholder reports,
prospectuses and other sale and service literature provided by the
Underwriter;
(iii) Assisting the Underwriter and its affiliates in the
establishment and maintenance of shareholder accounts and records;
(iv) Assisting Contract owners in effecting administrative
changes, such as exchanging shares in or out of the Funds;
(v) Assisting in processing purchasing purchase and redemption
transactions; and
(vi) Providing any other information or services as the Contract
owners or the Underwriter may reasonably request.
The Company will support the Underwriter's marketing efforts by
granting reasonable requests for visits to the Company's offices by
representatives of the Underwriter.
65 The Company's compliance with the service requirement set forth
in this Agreement will be evaluated from time to time by monitoring
redemption levels of Fund shares held in any Account and by such other
methods as the Underwriter deems appropriate.
6.6 The provisions of this Article VI shall remain in effect for
not more than one year from the date hereof and thereafter for successive
annual periods only so long as such continuance is specifically approved
at least annually by the Trustees in conformity with Rule 1 2b- 1. This
Agreement shall automatically terminate in the event of its assignment
(as defined by the 1940 Act). In addition, this Article VI may be
terminated at any time, without the payment of any penalty, with respect
to any Fund or the Trust as a whole by any party upon written notice
delivered or mailed by
registered mail, postage prepaid. to the other party, or, as provided in
Rule 12b-l under the 1940 Act by the Trustees or by the vote of the
holders of the outstanding voting securities of any Fund.
6.7 The Underwriter shall provide the Trustees of each of the
Funds, and such Trustees shall review at least quarterly, a written
report of the amounts paid to the Company under this Article VI and the
purposes for which such expenditures were made.
ARTICLE VII. Diversification
7.1 The Trust shall use its best efforts to cause each Authorized
Fund to maintain a diversified pool of investments that would, if such
Fund were a segregated asset account, satisfy the diversification
provisions of Treas. Reg.ss.1.81 7-5(b)( 1) or (2).
ARTICLE VIII. Potential Conflicts
8.1 The Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Trust. A material
irreconcilable conflict may arise for a variety of reasons, including:(a)
an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities law 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 Fund 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 Trust shall promptly
inform the Company if the Trustees determine that a material
irreconcilable conflict exists and the implications thereof.
8.2 The Company will report any potential or existing conflicts of
which It is aware to the Trustees. The Company will assist the Trustees
in carrying out their responsibilities under the Shared Funding Exemptive
Order, by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised. This includes,
but is not limited to, an obligation by the Company to inform the
Trustees whenever Contract owner voting instructions are disregarded.
8.3 If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material irreconcilable
conflict exists, the Company shall to the extent reasonably practicable
(as determined by a majority of the disinterested Trustees), take, at the
Company's expense, whatever steps are necessary to remedy or eliminate
the material irreconcilable conflict, up to and including: (I)
withdrawing the assets allocable to some or all of the separate accounts
from the Trust or any Fund and reinvesting such assets in a different
investment medium. including (but not limited to) another Fund of the
Trust, or submitting the question whether 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.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
8.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions
and that decision represents a minority position or would preclude a
majority vote, the Company may be required, at the Trust's election, to
withdraw the affected Account's investment in one or more portfolios of
the Trust and terminate this Agreement with respect to such Account;
provided, however, that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. No charge or
penalty shall be imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being implemented,
and until the end of that six month period the Underwriter and Trust
shall, to the extent permitted by law and any exemptive relief previously
granted to the Trust, continue to accept and implement orders by the
Company for the purchase (or redemption) of shares of the Trust.
8.5 If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company
to disregard Contract owner voting instructions and that decision
represents a minority position that would preclude a majority vote, then
the Company may be required, at the Trust's direction, to withdraw the
affected Account's investment in one or more Authorized Funds of the
Trust; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any
such withdrawal and termination must take place within six (6) months
after the Trust gives written notice that this
provision is being implemented, unless a shorter period is required by
law, and until the end of the foregoing six month period (or such shorter
period if required by law), the Underwriter and Trust shall, to the
extent permitted by law and any exemptive relief previously granted to
the Trust, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust. No charge or penalty
will be imposed as a result of such withdrawal.
8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any material irreconcilable
conflict. Neither the Trust nor the Underwriter shall be required to
establish a new finding medium for the Contracts, nor shall the Company
be required to do so, if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the material
irreconcilable conflict. In the event that the Trustees determine that
any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's
investment in one or more Authorized Funds of the Trust and terminate
this Agreement within six (6) months (or such shorter period as may be
required by law or any exemptive relief previously granted to the Trust)
after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. No charge or penalty will be imposed as a result of such
withdrawal.
8.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear
the cost of such remedial action shall be the obligation of the Company,
and the obligation of the Company set forth in this Article VII shall be
carried out with a view only to the interests of Contract owners.
8.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Shared Funding
Exemptive Order) on terms and conditions materially different from those
contained in the Shared Funding Exemptive Order, then (a) the Trust
and/or the Participating Insurance Companies, as appropriate, shall take
such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 8.1, 8.2, 8.3, 8.4 and 8.5 of this
Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
8.9 The Company has reviewed the Shared Funding Exemptive Order
and hereby assumes all obligations referred to therein which are required,
to be assumed or undertaken by the Company, including, without limitation,
the obligation to provide reports, material or data as the Trustees may
request as conditions to such Order.
ARTICLE IX. Indemnification
9.1. Indemnification by the Company
9.1 (a). The Company shall indemnify and hold harmless the Trust
and the Underwriter and each of the Trustees, directors of the
Underwriter, officers, employees or agents of the Trust or the Underwriter
and each person, if any, who controls the Trust or the Underwriter within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company which consent may not be unreasonably
withheld) or litigation (including reasonable legal and other expenses),
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares
or the Contracts or the performance by the parties of their obligations
hereunder and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise Out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Trust for use in the Registration
Statement, Prospectus or Statement of Additional Information for
the Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
(ii) arise Out of or as a result of written statements or
representations (other than statements or representations
contained in the Trusts Registration Statement or Prospectus, or
in sales literature for Trust shares not supplied by the Company,
or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, Prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact. required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Trust or the Underwriter by or
on behalf of the Company; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Company in this Agreement or arise
out of or result from any other breach of this Agreement by the
Company, as limited by and in accordance with the provisions of
Sections 9.1(b) and 9.1(c) hereof.
9.1 (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party to the extent
such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Trust, whichever is
applicable.
9.1 (c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), on the basis of
which the Indemnified Party should reasonably know of the availability of
indemnity hereunder in respect of such claim but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate. at its
own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
Indemnified Party named in the action. After notice from the Company to
such Indemnified Party of the Company's election to assume the defense
thereof the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to
such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.1 (d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Underwriter in connection with the issuance or sale of the Trust Shares
or the Contracts or the operation of the Trust.
9. 1 (e) The provisions of this Section 9.1 shall survive any
termination of this Agreement.
9.2 Indemnification by the Underwriter
9.2 (a) The Underwriter shall indemnify and hold harmless the
Company and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act and any director, officer, employee
or agent of the foregoing (collectively, the "Indemnified ~ for purposes
of this Section 9.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Underwriter which consent may not be unreasonably
withheld) or litigation (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the
Contracts or the performance by the parties of their obligations
hereunder and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained In the
sales literature of the Trust prepared by or approved by the
Trust or Underwriter (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 Trust by or on behalf of the
Company for use in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations
contained in the Registration Statement, Prospectus, Statement of
Additional Information or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) of the
Underwriter or persons under its control, with respect to the sale
or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, Prospectus, Statement of Additional Information 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 breach of any representation
and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other breach of this Agreement by
the Underwriter; as limited by and in accordance with the
provisions of Sections 9.2(b) and 9.2(c) hereof.
(v) arise out of the failure by the Trust, whether intentional or
in good faith or otherwise, to comply with the diversification
requirements specified in Article VII of this Agreement.
9.2 (b) The Underwriter shall flat be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified
Party as such may arise from such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to
each Company or the Account. whichever is applicable.
9.2 (c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or
other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent) on the basis of which the Indemnified Party should
reasonably know of the availability of indemnity hereunder in respect of
such claim, but failure to notify the Underwriter of any such claim shall
not relieve the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled
to participate, at its own expense. in the defense thereof The
Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After
notice from the Underwriter to such Indemnified Party of the
Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained
by it, and the Underwriter will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently
incurred by such Indemnified Party independently in connection with the
defense thereof other than reasonable costs of investigation.
9.2 (d) The Company shall promptly notify the Underwriter of the
Trust of the commencement of any litigation or proceedings against it or
any of its officers or directors, in connection with the issuance or sale
of the Contracts or the operation of each Account,
9.2 (e) The provisions of this Section 9.2 shall survive any
termination of this Agreement.
9.3 Indemnification by the Trust
9.3 (a) The Trust shall indemnify and hold harmless the Company,
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 9.3) against any and all losses , claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust which consent may not be unreasonably withheld) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to
the operations of the Trust and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in a
Registration Statement,
Prospectus and Statement of Additional Information of the 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 Parry 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 Trust by or on
behalf of the Company for use in the Registration Statement,
Prospectus, or Statement of Additional Information for the Trust
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Trust, as limited by and in accordance with the
provisions of Sections 9.3(b) and 9.3(c) hereof.
9.3 (b) The Trust shall not be liable under the 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 or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the
Company, the Trust, the Underwriter or each Account, whichever is
applicable.
9.3 (c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against any Indemnified Party
unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent) on the basis of
which the Indemnified Party should reasonably know of the availability of
indemnity hereunder in respect of such claim, but failure to notify the
Trust of any such claim shall not relieve the Trust from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Trust will be entitled to participate, at its own expense, in the defense
thereof. The Trust also shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the Indemnified Party named in
the action. After notice from the Trust to such Indemnified Party of the
Trust's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of
any additional counsel retained by it, and the Trust will not be liable to
such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.3 (d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
officers or, directors, in connection with this Agreement, the issuance or
sale of the Contracts or the sale or acquisition of shares of the Trust.
9.3 (e) The provisions of this Section 9.3 shall survive any
termination of this Agreement.
ARTICLE X. Applicable Law
10.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
10.2 This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant
(including, but not limited to, the Shared Funding Exemptive Order) and
the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE XI. Termination
11.1 .This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written
notice to the other parties; or
(b) at the option of the Trust or the Underwriter in the event
that formal administrative proceedings are instituted against the Company
by the NASD, the Securities and Exchange Commission, the Insurance
Commissioner of the State of Missouri or any other regulatory body re-
xxxxxxx the Company's duties under this Agreement or related to the sales
of the Contracts, with respect to the operation of any Account, or the
purchase of the Trust shares, provided, however, that the Trust or the
Underwriter determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material adverse effect
upon the ability of the Company to perform its obligations under this
Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or
Underwriter by the NASD, the Securities and Exchange Commission, or
any state securities or insurance department or any other regulatory
body in respect of the sale of shares of the Trust to the Company,
provided, however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Trust or
Underwriter to perform its obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any subaccount)
to substitute the shares of another investment company for the
corresponding Fund shares of the Trust in accordance with the terms of
the Contracts for which those Fund shares had been selected to serve as
the underlying investment media. The Company will give 30 days prior
written notice to the Trust of the date of any proposed vote to replace
the Trusts shares; or
(e) with respect to any Authorized Fund, upon 30 days advance
written notice from the Underwriter to the Company, upon a decision by
the Underwriter to cease offering shares of the Fund for sale.
11.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 11.1 (a) may be
exercised for any reason or for no reason.
11.3 No termination of this Agreement shall be effective unless
and until the party terminating this Agreement gives prior written notice
to all other parties to this Agreement of its intent to terminate, which
notice shall set forth the basis for such termination. Such prior written
notice shall be given in advance of the effective date of termination as
required by this Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement, the Trust and the Underwriter shall, at
the option of the Company, continue to make available additional shares
of the Trust pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").Specifically,
without limitation, subject to Section 1.2 of this Agreement, the owners
of the Existing Contracts shall be permitted to reallocate investments in
the Trust, redeem investments in the Trust and/or invest In the Trust
upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 11.4 shall not apply to
any termination under Article
VIII and the effect of such Article VIII termination shall be governed by
Article VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract
owner initiated transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a ~Legally Required Redemption").
Upon request, the Company will promptly furnish to the Trust and the
Underwriter an opinion of counsel for the Company, reasonably satisfactory
to the Trust, to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, subject to Section 1.2 of this
Agreement. the Company shall not prevent Contract owners from allocating
payments to an Authorized Fund that was otherwise available under the
Contracts without first giving the Trust or the Underwriter 90 days notice
of its intention to do.
ARTICLE XII. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Trust:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
If to the Underwriter;
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
If to the Company:
Principal Mutual life Insurance Company
The Principal Financial Group
Xxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
ARTICLE XIII. Miscellaneous
13.1 A copy of the Agreement and Declaration of Trust of the Trust
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the Trustees of the Trust as Trustees and not individually
and that the obligations of or arising out of this instrument, including
without limitation Article VII, are not binding upon any of the Trustees
or shareholders individually but binding only upon the assets and property
of the Trust.
13.2 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
13.5 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
13.6 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.
13.7 Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Underwriter are several and, without
limiting in any way the generality of the foregoing, neither such party
shall have any liability for any action or failure to act by the other
party, or any person acting on such other party's behalf.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto as
of the date specified below.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By its authorized officer,
/s/ A. Xxxxxxx XxXxxxx
Name: A. Xxxxxxx XxXxxxx
Title: Second Vice President
XXXXXX VARIABLE TRUST
By its authorized officer,
/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXXX MUTUAL FUNDS CORP.
By its authorized officer,
/s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Senior Vice President
SCHEDULE A
Separate Account
Principal Mutual Life Insurance Company Variable Life Separate Account
SCHEDULE B
Fund Service Fee
Xxxxxx VT Global Asset Allocation 0.15%
Xxxxxx VT Vista 0.15%
Xxxxxx VT Voyager 0.15%
