FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 23rd day of October, 2015 between
FORETHOUGHT LIFE INSURANCE COMPANY, on behalf of one or more separate accounts,
a life insurance company organized under the laws of the State of Indiana,
("INSURANCE COMPANY"), and XXXXXXX VARIABLE PRODUCTS, INC.), a Maryland
corporation ("CVP"), and XXXXXXX INVESTMENT DISTRIBUTORS, INC., a Delaware
corporation, ("CID").
ARTICLE I
DEFINITIONS
1.1. "1933 ACT" shall mean the Securities Act of 1933, as amended.
1.2. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
1.3. "1940 ACT" shall mean the Investment Company Act of 1940, as amended.
1.4. "BOARD" shall mean the Board of Directors of the Fund having the
responsibility for management and control of the Fund.
1.5. "BUSINESS DAY" shall mean, with respect to any Portfolio, any day for
which the Fund calculates net asset value per share of such Portfolio as
described in the Fund's Prospectus.
1.6. "COMMISSION" shall mean the Securities and Exchange Commission.
1.7. "CONTRACT" shall mean a variable annuity or variable life insurance
contract issued by Insurance Company that uses one or more Portfolios of
the Fund as an underlying investment medium. Individuals who participate
under a group Contract are "Participants".
1.8. "CONTRACTHOLDER" shall mean any person or entity that is a party to a
Contract with the Insurance Company.
1.9. "DISINTERESTED BOARD MEMBERS" shall mean those directors of the Board
who are not deemed to be "interested persons" of the Fund, as defined by
the 0000 Xxx.
1.10. "FUND" shall mean CVP.
1.11. "PARTICIPATING COMPANIES" shall mean any insurance company (including
Insurance Company), which offers variable annuity and/or variable life
insurance contracts to the public ("Participating Contracts") and which
has entered into an agreement with the Fund for the purpose of making
Portfolio Shares available to serve as the underlying investment medium
for the aforesaid Participating Contracts. "Participating
Contractholder" shall mean any person or entity that is a party to a
Participating Contract.
1.12. "PARTY" shall mean Insurance Company, CVP and CID.
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1.13. "PLANS" shall mean qualified pension and retirement benefit plans.
1.14. "PORTFOLIO" shall mean any portfolio of a Fund listed on Schedule A, as
amended from time to time.
1.15. "PROSPECTUS" shall mean, with respect to any Portfolio, the current
Statutory Prospectus, current Summary Prospectus and the statement of
additional information applicable to such Portfolio, and any amendment
or supplement thereto, as most recently filed with the Commission.
1.16. "SEPARATE ACCOUNT" shall mean those separate accounts listed on Schedule
B, which have been established by Insurance Company in accordance with
the laws of the State of Indiana.
1.17. "SHARES" shall mean, with respect to any Portfolio, the shares issued by
such Portfolio.
1.18. "SOFTWARE PROGRAM" shall mean the software program used by the Fund or
its agent(s) for providing Fund and account balance information
including net asset value per share.
1.19. "STATUTORY PROSPECTUS" shall have the same meaning as set forth in Rule
498 of the 0000 Xxx.
1.20. "SUMMARY PROSPECTUS" shall have the same meaning as set forth in Rule
498 of the 0000 Xxx.
1.21. "INSURANCE COMPANY'S GENERAL ACCOUNT(S)" shall mean the general
account(s) of Insurance Company and its affiliates that invest in the
Fund (if any).
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established each Separate Account pursuant to
the Indiana Insurance Code for the purpose of offering to the public
certain individual and/or group variable annuity contracts; (c) it has
registered each Separate Account as a unit investment trust under the
1940 Act to serve as the segregated investment account for the
Participating Contracts; (d) each Separate Account is eligible to invest
in shares of the Fund without such investment disqualifying the Fund as
an investment medium for insurance company separate accounts supporting
variable annuity contracts or variable life insurance contracts; (e)
each Separate Account shall comply at all times with all applicable
legal requirements for so long as any Contract under that Separate
Account is outstanding.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the 1933 Act; (b) the
Contracts will be issued, sold and distributed in compliance in all
material respects with all applicable federal and state
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laws, including, without limitation, the 1933 Act, the 1934 Act and
the 1940 Act; and (c) the sale of the Contracts shall comply in all
material respects with state insurance law requirements. In particular,
Insurance Company represents and warrants that it complies with the
requirements of Rule 498 under the 1933 Act in connection with the
delivery of summary prospectuses for Portfolio Shares, but relies upon
the Fund to maintain a website that satisfies all applicable conditions
of Rule 498(e) under the 0000 Xxx.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to each Separate
Account are, in accordance with the applicable Contracts, to be credited
to or charged against such Separate Account without regard to other
income, gains or losses from assets allocated to any other accounts of
Insurance Company. Insurance Company represents and warrants that the
assets of each Separate Account are and will be kept separate from
Insurance Company's General Account (if any) and any other separate
accounts Insurance Company may have, and will not be charged with
liabilities from any other business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance Company.
2.4 Fund represents and warrants that the Fund is registered with the
Commission under the 1940 Act as an open-end management investment
company and possesses, and shall maintain, all legal and regulatory
licenses, approvals, consents and/or exemptions required for the Fund to
operate and offer its shares as an underlying investment medium for
Participating Companies. CVP has established 12 portfolios and CVP may
in the future establish other portfolios.
2.5 The Fund represents and warrants that (a) the Portfolio Shares will be
described in a registration statement filed under the 1933 Act; and (b)
the Portfolio Shares will be issued, sold and distributed in compliance
in all material respects with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act and the 1940
Act. In particular, Fund represents and warrants that it complies with
all applicable requirements of Rule 498 under the 1933 Act in connection
with the offer and sales of Portfolio Shares.
2.6 Fund represents that it is currently qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "CODE"), and that it will utilize best efforts to maintain
such qualification (under Subchapter M or any successor or similar
provision) and that it will notify Insurance Company immediately in
writing upon having a reasonable basis for believing that it has ceased
to so qualify or that it might not so qualify in the future.
2.7 Insurance Company represents and warrants that the Contracts are
currently, and at the time of issuance will be, treated as life
insurance policies or annuity contracts, whichever is appropriate, under
applicable provisions of the Code, and that it will utilize best efforts
to maintain such treatment and that it will notify the Fund and its
investment adviser immediately in writing 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. Insurance Company represents
that no Contract is a "modified endowment contract", as that term is
defined in Section 7702A of the Code.
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2.8 Fund represents and agrees that the Fund's assets shall be managed and
invested in a manner that complies with the requirements of Section
817(h) of the Code. Without limiting the scope of the foregoing, the
Fund shall ensure that each Portfolio will comply with Section 817(h) of
the Code and Treasury Regulation 1.817-5 thereunder, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts, and any amendments or modifications to such Section
and Regulation or successors thereto. The Fund shall notify the
Insurance Company immediately upon having a reasonable basis for
believing that a Portfolio has failed to so comply or that it might not
comply in the future. In the event of such a failure, the Fund or CID
shall take all necessary steps to cure any such failure within the grace
period afforded by Treasury Regulation 1.817-5, including, if necessary,
obtaining a waiver or closing agreement with respect to such failure
from the U.S. Internal Revenue Service at CID's expense. If the Fund
fails to either (i) cure any such failure within the grace period or
(ii) obtain a waiver or closing agreement with respect to such failure
from the U.S. Internal Revenue Service, CID will reimburse the Insurance
Company for all damages to the Insurance Company arising therefrom
provided that CID shall not be liable for special, consequential or
incidental damages even if it is informed of the possibility thereof.
The representations and warranties of this Section 2.8 shall not apply
with respect to any Portfolio whose beneficial interests are held solely
by owners of "pension plan contracts" within the meaning of Section
818(a) of the Code and other persons whose federal income tax treatment
is not dependent on such Portfolio's compliance with the requirements of
Section 817(h) of the Code.
Notwithstanding any other provision herein to the contrary, Insurance
Company agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of Insurance
Company that any Portfolio has failed to comply with the diversification
requirements of Section 817(h) of the Code or Insurance Company
otherwise becomes aware of any facts that could give rise to any claim
against any Fund or its affiliates as a result of such a failure or
alleged failure:
(i) Insurance shall promptly notify the Fund of such assertion or
potential claim (subject to the Confidentiality provisions of
Article IX as to any Contractholder); and
(ii) Insurance Company shall consult with the Fund as to how to
minimize any liability that may arise as a result of such
failure or alleged failure;
(iii) Insurance Company shall use its best efforts to minimize any
liability of the Fund or its affiliates 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;
(iv) Insurance Company shall permit the Fund, its affiliates and
their legal and accounting advisors to participate in any
conferences, settlement discussions or other administrative or
judicial proceeding or contests (including judicial appeals
thereof) with the IRS, any Contractholder or any other claimant
regarding any
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claims that could give rise to liability to the Fund or CID or
its affiliates as a result of such a failure or alleged failure;
PROVIDED, however, that Insurance Company will retain control of
the conduct of such conferences discussions, proceedings,
contests or appeals;
(v) any written materials to be submitted by Insurance Company to
the IRS, any Contractholder 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)), (a)
shall be provided by Insurance Company to the Fund (together
with any supporting information or analysis), subject to the
confidentiality provisions of Article IX, at least ten (10)
business days or such shorter period to which the Parties hereto
agree prior to the day on which such proposed materials are to
be submitted, and (b) shall not be submitted by Insurance
Company to any such person without the express written consent
of the Fund, which shall not be unreasonably withheld;
(vi) Insurance Company shall provide the Fund or CID or its
affiliates and their accounting and legal advisors with such
cooperation as they shall reasonably request (including, without
limitation, by allowing them to review the relevant books and
records of Insurance Company) in order to facilitate their
review of any written submissions provided to them pursuant to
the preceding clause or its assessment of the validity or amount
of any claim against it arising from such a failure or alleged
failure;
(vii) Insurance Company shall not with respect to any claim of the IRS
or any Contractholder that would give rise to a claim against
any Fund or CID or its affiliates (a) compromise or settle any
claim, (b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the
express written consent of the Fund, CID or its affiliates,
which shall not be unreasonably withheld, PROVIDED that
Insurance Company shall not be required, after exhausting all
administrative appeals, to appeal any adverse judicial decision
unless the Fund, CID or its affiliates shall have provided an
opinion of independent counsel to the effect that a reasonable
basis exists for taking such appeal; and PROVIDED FURTHER that
the costs of any such appeal shall be borne by the Fund or CID
or an affiliate of CID; and
(viii) The Fund, CID and its affiliates shall have no liability as a
result of such failure or alleged failure if Insurance Company
fails to comply with any of the foregoing clauses (i) through
(vii), and such failure could be shown to have materially
contributed to the liability.
Should the Fund, CID or its affiliates refuse to give their written
consent to any compromise or settlement of any claim or liability
hereunder, Insurance Company may, in its discretion, authorize them to
act in the name of Insurance Company in, and to control the conduct of,
such conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event the Fund
or CID or its
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affiliates shall bear the fees and expenses associated with the conduct
of the proceedings that it is so authorized to control; PROVIDED, that
in no event shall Insurance Company have any liability resulting from
their refusal to accept the proposed settlement or compromise with
respect to any failure caused by the Fund. As used in this Agreement,
the term "affiliates" shall have the same meaning as "affiliated person"
as defined in Section 2(a)(3) of the 0000 Xxx.
2.9 Fund represents and warrants that, for as long as Section 817(h) of the
Code continues to apply to the Fund, Shares of each Portfolio will not
be sold to the general public and will be held only by one or more (i)
segregated asset accounts of one or more Participating Companies or (ii)
"permitted investors" as defined in Treasury Regulation 1.817-5(f)(3),
as amended, or any successor Treasury regulation.
2.10 Fund represents and warrants that any of its directors, officers,
employees, investment advisers, and other individual/entities who deal
with the money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund in an amount not less than that required by
Rule 17g-1 under the 1940 Act. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.11 Insurance Company agrees that CID (the Fund's principal underwriter) may
enforce any and all of the Fund's rights conferred by virtue of this
Agreement.
2.12 Each party agrees (i) to perform any and all duties, functions,
procedures and responsibilities assigned to it by National Securities
Clearing Corporation's ("NSCC") rules, procedures or other requirements
relating to its Fund/SERV system ("Fund/SERV") and Networking system
("Networking"), as applicable, in a competent manner; (ii) to maintain
facilities, equipment and skilled personnel sufficient to perform the
foregoing activities; (iii) that any information provided to another
party through Fund/SERV or Networking will be accurate, complete, and in
the format prescribed by the NSCC; and (iv) to adopt, implement and
maintain procedures reasonably designed to ensure the accuracy of all
transmissions through Fund/SERV or Networking and to limit the access
to, and the inputting of data into, Fund/SERV or Networking to persons
specifically authorized by the party.
ARTICLE III
PORTFOLIO SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in the Portfolio Shares.
3.2 Fund agrees to make the shares of each Portfolio available for purchase
at such Portfolio's then applicable net asset value per share by
Insurance Company and the Separate Account on each Business Day pursuant
to rules of the Commission. Notwithstanding the foregoing, the Fund may,
in its sole discretion, (i) refuse to sell the shares of any Portfolio
to any person, or (ii) suspend or terminate the offering of the
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shares of any Portfolio if such action is (a) required by law or by
regulatory authorities having jurisdiction over it or (b) determined by
the Board, acting in good faith and in light of its fiduciary duties
under federal and any applicable state laws, to be necessary and in the
best interests of the shareholders of such Portfolio.
3.3 Insurance Company agrees that, for as long as Section 817(h) of the Code
continues to apply to the Fund, Shares of each Portfolio may be held by
one or more (i) segregated asset accounts of one or more Participating
Companies or (ii) "permitted investors" as defined in Treasury
Regulation 1.817-5(f)(3), as amended, or any successor Treasury
regulation.
3.4 Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Portfolio available on a
per-share and Portfolio basis to Insurance Company by 7:00 p.m. Eastern
Time on each Business Day. In the event that the Fund is unable to make
the 7:00 p.m. deadline, it shall provide additional time for the
Insurance Company to place orders for the purchase or redemption of
Portfolio Shares equal to the additional time that the Fund takes to
make the required information for all Portfolios available to the
Insurance Company; provided, however, that all orders placed by the
Insurance Company during such additional time must have been received by
the Insurance Company prior to the close of the New York Stock Exchange
(currently 4:00 p.m. Eastern time). Any material errors in the
calculation of net asset value, dividend and capital gain information
shall be reported promptly upon discovery to Insurance Company.
(i) CID shall indemnify and hold harmless the Insurance Company
against any amount the Insurance Company is legally required to
pay Contractholders, and which amount is due to CVP's or its
agents' incorrect calculation, incorrect reporting of and/or
untimely reporting of the daily net asset value, dividend rate
or capital gains distribution rate; provided that the Fund shall
have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely
reporting was the result of incorrect or untimely information
furnished by Insurance Company, any net purchase or redemption
order reported to CID or the Fund by Insurance Company without
Contractholder authorization, or as a result of or relating to a
breach of this Agreement by Insurance Company; and provided,
further, that CID shall not be liable for special, consequential
or incidental damages or for any incorrect calculation or
reporting, which after rounding, results in (i) a change to the
net asset value of one cent or less, or (ii) a dividend rate or
capital gain distribution rate that is not required to be
corrected under applicable law and related regulations.
(ii) Should an incorrect calculation by CVP or its agents result in a
gain to the Insurance Company, subject to the immediately
following sentence, the Insurance Company shall immediately
reimburse CVP, the Fund or its agents for any losses incurred by
CVP, the Fund or its agents as a result of the incorrect
calculation. Should an incorrect calculation by CVP or its
agents result in a gain for Contractholders, the Insurance
Company will consult with CVP or its designee as to what
reasonable efforts shall be made to recover the money and repay
CVP, the
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Fund or its agents. The Insurance Company shall then make such
reasonable effort, at the expense of CID, to recover the money
and repay CVP, the Fund or its agents; provided, however, the
Insurance Company shall not be obligated to initiate or
otherwise pursue any legal action against Contractholders for
any such reimbursements.
(iii) CID shall reimburse the Insurance Company for any and all costs
and expenses that result from CID providing an incorrect share
net asset value per share, dividend or capital gain, including
any reasonable administrative costs incurred by the Insurance
Company in resolving the error. The Insurance Company shall
submit an invoice to CVP or its agents for such losses incurred
as a result of the above which shall be payable within sixty
(60) days of receipt.
With respect to the errors or omissions described above, this section
shall control over other indemnification provisions in this Agreement.
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the Separate
Account unit values for the day. Using this unit value, Insurance
Company will process the day's Separate Account transactions received by
it by the close of trading on the floor of the New York Stock Exchange
(currently 4:00 p.m. Eastern time) to determine the net dollar amount of
Portfolio Shares which will be purchased or redeemed at that day's
closing net asset value per share for such Portfolio. Trades will
normally settle through the facilities of Fund/SERV. If a transaction
initiated through Fund/SERV fails to be processed through Fund/SERV then
the net purchase or redemption orders will be transmitted to the Fund by
Insurance Company by 8:30 a.m. Eastern Time on the Business Day next
following Insurance Company's receipt of that information.
3.6 Fund appoints Insurance Company as its agent for the limited purpose of
accepting orders for the purchase and redemption of Portfolio Shares
from Contractholders. Trades will normally settle through the facilities
of Fund/SERV. If a transaction initiated through Fund/SERV fails to be
processed through Fund/SERV then the Fund will execute orders for any
Portfolio at the applicable net asset value per share determined as of
the close of trading on the day of receipt of such orders by Insurance
Company acting as agent ("effective trade date"), provided that the Fund
receives written notice of such orders by 8:30 a.m. Eastern Time on the
next following Business Day and, if such orders request the purchase of
Portfolio Shares, the conditions specified in Section 3.8, as
applicable, are satisfied. A redemption or purchase request for any
Portfolio that does not satisfy the conditions specified above and in
Section 3.8, as applicable, will be effected at the net asset value
computed for such Portfolio on the Business Day as of which such
conditions have been satisfied.
3.7 Insurance Company will make its best efforts to notify Fund in writing
in advance of any unusually large purchase or redemption orders.
3.8 Trades will normally settle through the facilities of Fund/SERV. If a
transaction initiated through Fund/SERV fails to be processed through
Fund/SERV and Insurance Company's
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order requests the purchase of Portfolio Shares, Insurance Company will
pay for such purchases by wiring Federal Funds to Fund or its designated
custody account on the day the order is transmitted. Insurance Company
shall transmit any such Fund payment in Federal Funds by the close of
the Federal Reserve wire system on the Business Day the Fund receives
the notice of the order pursuant to Section 3.6. Fund will execute such
orders at the applicable net asset value per share determined as of the
close of trading on the effective trade date if Fund receives payment in
Federal Funds by the close of the Federal Reserve wire system on the
Business Day the Fund receives the notice of the order pursuant to
Section 3.6. If payment in Federal Funds for any purchase is not
received on such Business Day, Insurance Company shall promptly upon the
Fund's request, reimburse the Fund for any charges, costs, fees,
interest or other expenses incurred by the Fund in connection with any
advances to, or borrowings or overdrafts by, the Fund, or any similar
expenses incurred by the Fund, as a result of Portfolio transactions
effected by the Fund based upon such purchase request.
3.9 Fund shall ensure that Portfolio Shares are registered under the 1933
Act at all times.
3.10 Trades will normally settle through the facilities of Fund/SERV. If a
transaction initiated through Fund/SERV fails to be processed through
Fund/SERV then Fund will confirm each purchase or redemption order made
by Insurance Company. Transfer of Portfolio Shares will be by book entry
only. No share certificates will be issued to Insurance Company or
Participating Companies. Insurance Company will record shares ordered
from Fund in an appropriate title for the corresponding account.
3.11 Trades will normally settle through the facilities of Fund/SERV. If a
transaction initiated through Fund/SERV fails to be processed through
Fund/SERV and the conditions of Section 3.8 have been satisfied, the
Fund shall credit Insurance Company with the appropriate number of
shares utilizing the net asset value per share determined in accordance
with Section 3.6.
3.12 On each ex-dividend date of the Fund or, if not a Business Day, on the
first Business Day thereafter, Fund shall communicate to Insurance
Company the amount of dividend and capital gain, if any, per share of
each Portfolio. The Insurance Company hereby elects to reinvest all such
dividends and capital gain distributions in additional shares of that
Portfolio. The Fund shall (i) automatically reinvest such amounts in
additional shares of the relevant Portfolio at the applicable net asset
value per share of such Portfolio on the payable date and (ii) Fund
shall, on the day after the payable date or, if not a Business Day, on
the first Business Day thereafter, display the number of shares so
issued through DST Vision.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Fund or its agent shall provide monthly statements of account as of the
end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
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4.2 Fund or its agent shall distribute to Insurance Company copies of the
Fund's Prospectus, supplements, notices, reports to shareholders,
periodic reports and other printed materials (which the Fund customarily
provides to its shareholders) in such quantities as Insurance Company
may reasonably request for distribution to each Contractholder and
Participant. Insurance Company has requested, and Fund shall provide, in
lieu of printed documents, camera-ready copy or diskette of
prospectuses, annual and semi-annual reports for Insurance Company to
print or post on its secured website. Fund shall provide all such
materials to Insurance Company in a timely manner so as to enable
Insurance Company to print, post and distribute such materials within
the time required by law. The Fund shall maintain a website that is in
compliance with all applicable requirements of Rule 498 under the 1933
Act such that the Fund may deliver a Summary Prospectus in lieu of
Statutory Prospectus for each Portfolio.
4.3 CVP or its designee will provide the Insurance Company with at least 75
days' notice of any change to a Portfolio Prospectus that requires
Contractholders to receive 60 days' prior notice and will otherwise
utilize commercially reasonable efforts to provide the Insurance with
reasonable advance notice of changes to a Portfolio Prospectus, subject
to any applicable confidentiality requirements or information embargo.
If CVP does not provide the Insurance Company with such advance notice
the Insurance Company will use its best efforts to make the change at
the date requested by CVP. CVP will reimburse the Insurance Company for
all reasonable expenses for facilitating changes to any Portfolio's
Prospectus and for notifying Contractholders of such changes, and
Insurance Company may request reimbursement from CVP for its reasonable
administrative costs and expenses incurred in connection with
circulating supplements that do not coincide with scheduled variable
product prospectus updates. Notwithstanding anything to the contrary,
CVP will provide all registration statement supplements to the Insurance
Company in hand no later than the date such document is filed with the
Securities and Exchange Commission. CVP will provide the Insurance
Company with the most current shareholder reports promptly after they
are filed with the Securities Exchange Commission. The Insurance Company
reserves the right, in its sole discretion, to combine the delivery of
CVP supplements to coordinate with other Insurance Company variable
product supplements.
4.4 Fund or its agent will provide to Insurance Company, contemporaneously
with the filing thereof with the Commission or other regulatory
authority, at least one complete copy of (i) the then-current
registration statement and Prospectus, (ii) all then-current sales
literature and other promotional materials prepared by the Fund for
distribution to Insurance Company or any Participating Company, and
(iii) all new or pending proxy statements, applications for exemptions
or requests for no-action letters, that relate to the Fund or the
Portfolio Shares, and all amendments to any of the documents specified
in (i), (ii) or (iii). With respect to CVP's registration statement,
Insurance Company agrees that the Fund shall be deemed to have fully
satisfied its obligations under this Section 4.4 by making it available
on the Securities and Exchange Commission's XXXXX information retrieval
system.
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4.5 Upon request Insurance Company will provide to the Fund at least one
copy of all registration statements, Prospectuses, reports, and proxy
statements and any amendments thereof. Insurance Company will provide to
the Fund at least one copy of, applications for exemptions, requests for
no-action letters, and all amendments thereof, that relate to the
Contracts or any Separate Account, contemporaneously with the filing of
such document with the Commission or other regulatory authority,
provided that the application for exemption or request for no-action
letters relate to the Fund or Portfolio Shares. With respect to the
registration relating to any Separate Account, the Fund agrees that
Insurance Company shall be deemed to have fully satisfied its
obligations under this Section 4.5 by making it available on either the
Securities and Exchange Commission's XXXXX information retrieval system.
4.6 Insurance Company and Fund shall each promptly notify the other in
writing of the results of any examination by the Commission (or any
other regulatory authority) that (i) relates to the Contracts, Separate
Accounts, Fund or Portfolio Shares and (ii) results in the imposition of
fines or any non-monetary sanction (including, without limitation, a
reprimand or deficiency letter), and the party that was the subject of
any such examination shall provide the other parties with a copy of the
relevant correspondence or written report from the Commission (or other
regulatory authority) regarding such examination.
ARTICLE V
EXPENSES
5.1 The charge to the Fund for all expenses and costs of the Portfolio,
including but not limited to management fees, administrative expenses
and legal and regulatory costs, will be made in the determination of the
applicable Portfolio's daily net asset value per share so as to
accumulate to an annual charge at the rate set forth in the Fund's
Prospectus.
5.2 Expenses associated with providing, printing, processing and
distributing such documents shall be allocated in accordance with
Schedule D attached hereto. CID shall reimburse the Insurance Company
within 30 days, upon the Insurance Company's request, for its costs in
accordance with Schedule D. If any such reimbursement payment is not
received by the Insurance Company within 30 days after being presented
with the Insurance Company's invoice therefor, interest will begin to
accrue thereon at the rate of 1.5% a month or the highest rate permitted
by law, whichever shall be greater. CID agrees to use best efforts to
resolve any billing discrepancy detected by the Insurance Company and
remit any corrective payment promptly upon demand.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the Order of the Commission
under Section 6(c) of the 1940 Act dated December 4, 2000 issued to
Summit Mutual Funds, Inc., the predecessor to CVP (the "CVP EXEMPTIVE
ORDER"), and the conditions to the relief set
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forth in the related Notice of Application for Exemption dated November
9, 2000. As set forth therein, Insurance Company agrees to report any
potential or existing material irreconcilable conflicts promptly to the
Board, in particular whenever contract voting instructions are
disregarded, and recognizes that it will be responsible for assisting
the Board in carrying out its responsibilities under such application
by, among other things, providing the Board with all information
reasonably necessary for the Board to consider any issues raised.
Insurance Company agrees to carry out such responsibilities with a view
only to the interests of existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists with
regard to Participating Contractholder investments in the Fund, the
Board shall give prompt notice to all Participating Companies. If the
Board determines that Insurance Company is wholly or partly responsible
for causing or creating said conflict, Insurance Company shall at its
sole cost and expense, and to the extent reasonably practicable (as
determined by a majority of the Disinterested Board Members), take such
action as is necessary to remedy or eliminate the material
irreconcilable conflict.
Such necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the applicable Separate
Account from the Portfolio and reinvesting such assets in a
different investment medium, or submitting the question of
whether such segregation should be implemented to a vote of all
affected Contractholders and, as appropriate, segregating the
assets of any appropriate group (E.G., annuity contract owners,
life insurance contract owners, or variable contract owners of
one or more Participating Companies) that votes in favor of such
segregation, or offering to the affected Contractholders the
option of making such a change; and/or
b. Establishing a new registered management investment company or
managed separate account and segregating the assets underlying
the Contracts, unless a majority of Contractholders materially
adversely affected by the conflict have voted to decline the
offer to establish a new registered management investment
company or managed separate account.
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions and
said decision represents a minority position or would preclude a
majority vote by all Participating Contractholders having an interest in
the Fund, Insurance Company may be required, at the Board's election, to
withdraw the Separate Account's investment in the Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any material irreconcilable conflict, but in no event will the
Fund be required to bear the expense of establishing a new funding
medium for any Contract. Insurance Company shall not be required by this
Article to establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the Contractholders
materially adversely
12
affected by the material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy any
material irreconcilable conflict, Insurance Company will withdraw the
investment in each affected Portfolio of each Separate Account
designated by the Disinterested Board Members and, if required by the
Disinterested Board Members, will terminate this Agreement within six
(6) months after the Board informs the Company in writing of the
foregoing determination; PROVIDED, HOWEVER, that such withdrawal and
termination shall be limited to the extent required to remedy any such
material irreconcilable conflict as determined by a majority of the
Disinterested Board Members.
6.5 No action by Insurance Company taken or omitted, and no action by either
Separate Account or the Fund taken or omitted as a result of any act or
failure to act by Insurance Company pursuant to this Article VI shall
relieve Insurance Company of its obligations under, or otherwise affect
the operation of, Article V or this Article VI.
6.6 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
and or shared funding (as defined in the CVP Exemptive Order) on terms
and conditions materially different from those contained in the CVP
Exemptive Order, then (a) the Fund or Participating Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rule 6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, to the
extent such rules are applicable, and (b) Sections 6.1, 6.2, 6.3, 6.4,
6.5 and 7.1 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.
6.7 Insurance Company acknowledges that Fund and CID have notified it that
it may be appropriate to include in the prospectus pursuant to which a
Contract is offered disclosure regarding the potential risks of mixed
and shared funding.
ARTICLE VII
VOTING OF FUND SHARES
7.1 To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act
or Rule 6e-2 or Rule 6e-3(T) thereunder, other applicable law, or by
regulatory order, whenever the Fund shall have a meeting of shareholders
of any Portfolio or class of Portfolio Shares, Insurance Company shall:
(a) In the event of a proxy solicitation, the Fund shall mail to the
applicable Contractholders, at its expense, the proxy materials
and shall tabulate the results; provided, however, that, the
Fund may mail notice to such Contractholders indicating where
proxy materials can be accessed in lieu of mailing printed proxy
materials to the extent such notice is permitted under the proxy
rules. In order to assist the Fund in the process, the Insurance
Company shall provide to the Fund or its designated
representative adequate electronic files so that the Fund may
make proper solicitation of the applicable Contractholders. The
electronic files
13
will be in a mutual acceptable format and will contain
Contractholder information, mailing information, and the numbers
of shares of the Fund in which each Contractholder has an
interest as of the record date;
(b) vote the Portfolio Shares held in each Separate Account in
accordance with voting instructions received from
Contractholders or Participants; and
(c) vote Portfolio Shares held in each Separate Account for which it
has not received timely instructions in the same proportion as
it votes Portfolio Shares or class thereof for which it has
received timely instructions.
Except with respect to matters as to which Insurance Company has the
right under Rule 6e-2 and Rule 6e-3(T) under the 1940 Act to vote
Portfolio Shares without regard to voting instructions from
Contractholders or Participants, Insurance Company will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Shares held by any Contractholder.
Insurance Company agrees to be responsible for assuring that voting
Portfolio Shares for each Separate Account is conducted in a manner
consistent with the CVP Exemptive Order. Fund shall notify Insurance
Company of any material changes to the CVP Exemptive Order.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of the Fund and its investment adviser, solicit, induce or
encourage Contractholders to change or supplement the Fund's current
investment adviser.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Insurance Company shall designate certain persons or entities which
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall comply with all applicable federal and state laws in marketing the
Contracts.
8.2 Insurance Company shall furnish, or shall cause to be furnished, to the
Fund, each piece of sales literature or other promotional material in
which the Fund, its investment adviser or the administrator is
described, at least ten (10) Business Days prior to its use. No such
material shall be used unless the Fund approves such material. Such
approval (if given) must be in writing and shall be presumed not given
if not received within ten (10) Business Days after receipt of such
material. The Fund shall use all reasonable efforts to respond within
ten (10) days of receipt.
8.3 Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the
Fund or any Portfolio in connection with the sale of the Contracts other
than the information or representations contained in the registration
statement or Prospectus, as may be amended or supplemented from time to
time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund.
14
Fund shall furnish, or shall cause to be furnished, to Insurance
Company, each piece of the Fund's sales literature or other promotional
material in which Insurance Company or the Separate Account is
described, at least ten (10) Business Days prior to its use. No such
material shall be used unless Insurance Company approves such material.
Such approval (if given) must be in writing and shall be presumed not
given if not received within ten (10) Business Days after receipt of
such material. Insurance Company shall use all reasonable efforts to
respond within ten (10) days of receipt.
8.4 Fund shall not, in connection with the sale of Portfolio Shares, give
any information or make any representations on behalf of Insurance
Company or concerning Insurance Company, the Separate Account, or the
Contracts other than the information or representations contained in a
registration statement or prospectus for the Contracts, as may be
amended or supplemented from time to time, or in published reports for
the Separate Account which are in the public domain or approved by
Insurance Company for distribution to Contractholders or Participants,
or in sales literature or other promotional material approved by
Insurance Company.
8.5 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 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, and any other material constituting sales literature or
advertising under Financial Industry Regulatory Authority rules, the
1940 Act or the 0000 Xxx.
8.6 Insurance Company shall comply with all applicable laws and regulations
designed to prevent money "laundering", and if required by such laws or
regulations, to share with the Fund 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.
The Fund and CID shall comply with all applicable laws and regulations
designed to prevent money "laundering", and if required by such laws or
regulations, to share with Insurance Company 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.
15
ARTICLE IX
CONFIDENTIALITY
9.1 CONFIDENTIALITY OBLIGATION. Each Party shall hold the Confidential
Information (as defined below) of the other Party in strict confidence.
Each Party warrants to the other that it shall not (i) disclose to any
person any Confidential Information of the other Party which it may
acquire in the performance of its obligations under this Agreement or
(ii) use Confidential Information of the other Party for any purpose,
except, in each case, for the purpose of fulfilling its contractual
obligations under this Agreement, and then any disclosure or use of any
such Confidential Information shall be limited to its or its affiliate's
employees, attorneys, accountants or other advisors who have a business
need to know such Confidential Information and who have agreed to be
bound by the confidentiality obligations set forth herein. Each Party
shall maintain the other Party's Confidential Information with
reasonable care, which shall not be less than the degree of care it
would use to safeguard its own Confidential Information, for the purpose
of preventing the unauthorized, negligent or inadvertent disclosure or
use thereof.
9.2 CONFIDENTIAL INFORMATION.
(a) "Confidential Information" means, with respect to a Party, (i)
any data or information that is or relates to proprietary information of
that party, including, without limitation, nonpublic portfolio holding
information of any mutual fund for which CID acts in the capacity of
principal underwriter, financial information, business or marketing
strategies or plans, and product development strategies or plans, (ii)
information that the party has labeled Confidential, (iii) the identity
of that Party's customers and any "non-public personally identifiable
information" of those customers, as that term is defined in the
Xxxxx-Xxxxx-Xxxxxx Act and the rules and regulations promulgated
thereunder, and (iv) information relating to that Party that a
reasonable business person would understand to be confidential.
(b) Confidential Information does not include information that (a)
was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of the
receiving Party or by no violation of this Agreement; (b) was lawfully
received by the receiving Party from a third party free of any
obligation of confidence of such third party; (c) was already in the
possession of the receiving Party prior to receipt thereof directly or
indirectly from the disclosing Party; or (d) is subsequently and
independently developed by employees, consultants or agents of the
receiving Party without reference to or use of the Confidential
Information disclosed under this Agreement. Disclosure of any fees
payable to Insurance Company or Underwriter for performing certain
administrative services shall be determined by the Insurance Company.
9.3 COMPELLED DISCLOSURE. If a receiving Party is ordered, compelled or
required to disclose Confidential Information of another Party by order
of a court or arbitration panel or similar tribunal having jurisdiction
over it or in accordance with a lawfully issued and properly served
subpoena (each an "Order"), the receiving Party shall, if legally
permitted, promptly provide the disclosing Party written notice of the
Order so that the
16
disclosing Party may seek a protective order or other appropriate remedy
or consent in writing to such disclosure. If, as of the fifth business
day prior to the date on which the receiving Party is required to
respond to the Order, a protective order has not been issued and the
disclosing Party has not consented in writing to the disclosure of its
Confidential Information, and in the opinion of receiving Party's
counsel it is required by the Order to disclose such Confidential
Information, the receiving Party may, without liability hereunder,
disclose only that portion of the Confidential Information which such
counsel has advised the receiving Party must be disclosed, provided that
the receiving Party attempts to preserve the confidentiality of the
Confidential Information, including, without limitation, by cooperating
with the disclosing Party, at the disclosing Party's expense, to obtain
an appropriate protective order or other reliable assurance that
confidential treatment will be accorded to the Confidential Information.
Notwithstanding anything to the contrary in this Section 9.3, the
receiving Party may disclose any of the disclosing Party's Confidential
Information to any regulatory authority having jurisdiction over the
receiving Party without notice of any kind.
9.4 UNAUTHORIZED DISCLOSURE NOTIFICATION AND LIABILITY. The receiving Party
shall promptly notify the disclosing Party of, and provide the details
regarding, any unauthorized disclosure, possession or use of the
disclosing Party's Confidential Information. Each Party understands and
agrees that the receiving Party shall be liable for damages arising out
of any breach of the confidentiality obligations set forth in this
Agreement.
9.5 DATA DISPOSITION. Upon the disclosing Party's written request, the
receiving Party shall promptly return all documents and other media
containing Confidential Information. Any information that cannot
feasibly be returned shall be purged, deleted or destroyed and the
receiving Party shall deliver to the disclosing Party written
certification thereof; PROVIDED, HOWEVER, that the receiving Party may
retain a single copy of the Confidential Information solely for the
purpose of complying with applicable law or regulation or the order of
any court, arbitration panel, regulator or similar governmental
authority having jurisdiction over the receiving Party. The receiving
Party shall have an ongoing obligation to safeguard all information of
the disclosing Party that is not returned, purged, deleted or destroyed.
9.6 DUTY NOT TO TRADE. The receiving Party agrees not to trade on any
Confidential Information disclosed to it or otherwise obtained by it
from the disclosing Party or any of the disclosing Party's affiliates,
agents or representatives.
9.7 COMPLIANCE WITH APPLICABLE LAWS. Each Party warrants and represents that
its conduct under this Agreement shall comply with the
Xxxxx-Xxxxx-Xxxxxx Act, Regulation S-P (17 C.F.R. Section248), and all
other applicable federal and state laws and regulations concerning
customer confidentiality, and that no party will share customers'
non-public personal information with third parties, except as allowed by
applicable law and regulation.
17
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY INSURANCE COMPANY. Insurance Company agrees to
indemnify and hold harmless the Fund, its investment adviser, any
sub-investment adviser of a Portfolio, and their affiliates, and each of
their directors, trustees, officers, employees, agents and each person,
if any, who controls or is associated with any of the foregoing entities
or persons within the meaning of the 1933 Act (collectively, the
"INDEMNIFIED PARTIES" for purposes of Section 10.1), against any and all
losses, claims, damages or liabilities joint or several (including any
investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit
or proceeding or any claim asserted, with the written consent of the
Insurance Company, which consent shall not be unreasonably withheld) for
which the Indemnified Parties may become subject, under any statute or
regulation, or at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) (i) arise
out of or are based on any untrue statement or alleged untrue statement
of a material fact contained in the registration statement, prospectus,
statement of additional information, or sales literature or other
promotional material of any Separate Account or relating to 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, (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
information furnished by Insurance Company for use in the Fund's
registration statement, Prospectus, or sales literature or other
promotional material 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 not misleading, (iii) arise out of or as a result of conduct,
statements or representations (other than statements or representations
contained in the Prospectus and sales literature or advertisements of
the Fund) of Insurance Company, with respect to the sale and
distribution of Contracts for which Portfolio Shares are an underlying
investment; (iv) arise out of the wrongful conduct of Insurance Company
or persons under its control or direction with respect to the sale or
distribution of the Contracts or Portfolio Shares; (v) arise out of
Insurance Company's incorrect calculation and/or untimely reporting of
net purchase or redemption orders or CID's or the Fund's reliance on any
net purchase or redemption order reported by Insurance Company without
Contractholder authorization; or (vi) arise out of any breach by
Insurance Company of a material term of or representation contained in
this Agreement or as a result of any failure by Insurance Company to
provide the services and furnish the materials or to make any payments
provided for in this Agreement. Insurance Company will reimburse any
Indemnified Party in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that with
respect to clauses (i), (ii) and (iii) above, Insurance Company will not
be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement
or omission or alleged untrue statement or omission made in any document
specified in any such clause in conformity with written information
furnished to Insurance Company by the Fund specifically for use therein;
and PROVIDED, FURTHER, that Insurance Company shall not be liable for
special, consequential or incidental damages. This indemnity provision
will be in addition to any liability that
18
Insurance Company may otherwise have.
No party shall be entitled to indemnification by the Insurance Company
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless disregard
of duty by the party seeking indemnification.
The Insurance 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 Insurance 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 the Insurance Company of any such claim shall not (i)
relieve the Insurance Company from any liability which it may have to
the indemnified party against whom such action is brought under this
indemnification provision unless the Insurance Company's ability to
defend against the claim shall have been materially prejudiced by the
indemnified party's failure to give such notice or (ii) in any way
release the Insurance Company from any liability which it may have to
the indemnified party against whom the action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Insurance Company shall be
entitled to participate, at its own expense, in the defense of such
action. The Insurance Company also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party named
in the action. After notice from the Insurance Company to such party of
the Insurance 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 Insurance 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.
The Indemnified Parties will promptly notify the Insurance Company of
the commencement of any litigation or proceedings against them or any of
their officers or directors in connection with the issuance or sale of
the Portfolio Shares or the Contracts or the operation of the Fund.
10.2 INDEMNIFICATION BY CID. CID agrees to indemnify and hold harmless
Insurance Company, its affiliates, and each of their directors,
officers, employees, agents and each person, if any, who controls or is
associated with any of the foregoing entities or persons within the
meaning of the 1933 Act (collectively, the "INDEMNIFIED PARTIES" for
purposes of Section 10.2) against any losses, claims, damages or
liabilities joint or several (including any investigative, legal and
other expenses reasonably incurred in connection with, any amounts paid
in settlement of, any action, suit or proceeding or any claim asserted)
for which the Indemnified Parties may become subject, under any statute
or regulation, or at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) (i) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement or
Prospectus or sales literature or advertisements of the Fund; (ii) arise
out of or are based upon the omission to state in the registration
statement or Prospectus or sales
19
literature or advertisements of the Fund, any material fact required to
be stated therein or necessary to make the statements therein not
misleading; (iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any written
information furnished by the Fund for use in the registration statement
or prospectus or sales literature or other promotional material with
respect to the Separate Account or the Contracts 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; (iv) arise out of the wrongful conduct of CID or persons
under its control or direction with respect to the sale or distribution
of Portfolio Shares or (v) arise out of or are based upon any breach by
the Fund of a material term of or representation contained in this
Agreement or any failure by the Fund to provide the services and furnish
the materials or make any payments under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements and
procedures related thereto as specified in Article 2 of this Agreement);
PROVIDED, HOWEVER, that, with respect to clauses (i), (ii) or (iii)
above, CID will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or omission or alleged untrue statement or omission
made in any document specified in any such clause in conformity with
written information furnished to CID or the Fund by Insurance Company
specifically for use therein; and PROVIDED, FURTHER, that CID shall not
be liable for special, consequential or incidental damages. This
indemnity agreement will be in addition to any liability that the Fund
may otherwise have.
No party shall be entitled to indemnification by CID if such loss,
claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence, or reckless disregard of duty
by the party seeking indemnification.
CID 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 CID 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 CID of any
such claim shall not (i) relieve CID from any liability which it may
have to the indemnified party against whom such action is brought under
this indemnification provision unless CID's ability to defend against
the claim shall have been materially prejudiced by the indemnified
party's failure to give such notice or (ii) in any way release CID from
any liability which it may have to the indemnified party against whom
the action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, CID shall be entitled to participate, at its own expense, in
the defense of such action. CID also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party named
in the action. After notice from the CID to such party of CID's election
to assume the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and CID 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.
20
The Indemnified Parties will promptly notify CID of the commencement of
any litigation or proceedings against them or any of their officers or
directors in connection with the issuance or sale of the Portfolio
Shares or the Contracts or the operation of the Fund.
10.3 The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent. No indemnifying party,
in the defense of any such claim or litigation, shall, without the prior
written consent of the Indemnified Parties, consent to the entry of any
judgment or enter into any settlement that does not include as an
unconditional term the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect to such
claim or litigation. No indemnifying party shall settle any claim in any
matter that would impose any expense, penalty, obligation or limitation
on the Indemnified Party, or would contain language other than a
recitation of any amounts to be paid in settlement, the fact of the
settlement or the underlying claim relating to the settlement, that
could be viewed, in the sole discretion of the Indemnified Party, as an
acknowledgement of wrongdoing on the part of the Indemnified Party or as
detrimental to the reputation of the Indemnified Party, without the
Indemnified Party's prior written consent.
10.4 A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article X.
10.5 This Article X shall survive the termination of this Agreement.
ARTICLE XI
COMMENCEMENT AND TERMINATION
11.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
11.2 This Agreement shall terminate without penalty as to one or more
Portfolios as set forth below:
a. At the option of Insurance Company or the Fund, in each case
with or without cause, upon 180 days' advance written notice
(unless a shorter time is agreed to by the parties), which
notice shall specify the Portfolio or Portfolios, Contracts and,
if applicable, Separate Accounts as to which the Agreement is to
be terminated;
b. At the option of Insurance Company, if shares of any Portfolio
are not reasonably available to meet the requirements of the
Contracts as determined by Insurance Company, provided, however,
that such termination shall apply only to those Portfolios the
Shares of which are not reasonably available. Prompt notice of
election to terminate shall be furnished by Insurance Company,
said termination to be effective ten (10) days after receipt of
notice unless the Fund makes available a sufficient number of
shares to meet the requirements of the Contracts within said
ten-day period;
21
c. At the option of Insurance Company, upon the institution of
formal proceedings against the Fund by the Commission, Financial
Industry Regulatory Authority or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in Insurance Company's reasonable judgment, materially
impair the Fund's ability to meet and perform the Fund's
obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by Insurance Company with said
termination to be effective upon receipt of notice;
d. At the option of the Fund, upon the institution of formal
proceedings against Insurance Company by the Commission,
Financial Industry Regulatory Authority or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in the Fund's reasonable judgment, materially
impair Insurance Company's ability to meet and perform Insurance
Company's obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by the Fund with said
termination to be effective upon receipt of notice;
e. At the option of the Fund, if the Fund shall determine, in its
sole judgment reasonably exercised in good faith, that Insurance
Company has suffered a material adverse change in its business
or financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity is likely to have a material adverse impact upon the
business and operation of the Fund or its investment adviser,
the Fund shall notify Insurance Company in writing of such
determination and its intent to terminate this Agreement, and
after considering the actions taken by Insurance Company and any
other changes in circumstances since the giving of such notice,
such determination of the Fund shall continue to apply on the
sixtieth (60th) day following the giving of such notice, which
sixtieth day shall be the effective date of termination;
f. Upon termination of the Investment Advisory Agreement between
the Fund and its investment adviser or its successors unless
Insurance Company specifically approves the selection of a new
Fund investment adviser. The Fund shall promptly furnish notice
of the termination of the Investment Advisory Agreement to
Insurance Company;
g. In the event the Fund's shares are not registered, issued or
sold in accordance with applicable federal law, or such law
precludes the use of such shares as the underlying investment
medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately upon such occurrence
without notice;
h. At the option of the Fund upon a determination by the Board in
good faith that it is no longer advisable and in the best
interests of shareholders for the Fund to continue to operate
pursuant to this Agreement. Termination pursuant to this
Subsection (h) shall be effective upon notice by the Fund to
Insurance Company of such termination;
22
i. At the option of the Fund if the Contracts cease to qualify as
annuity contracts or life insurance policies, as applicable,
under the Code, or if the Fund reasonably believes that the
Contracts may fail to so qualify;
j. At the option of either party to this Agreement, fifteen (15)
days after such party delivers to the other party notice of such
other party's material breach of any provision of this Agreement
unless such alleged breach is cured to the reasonable
satisfaction of the notifying Party within such fifteen (15) day
period;
k. At the option of the Fund, if the Contracts are not registered,
issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written
consent of the non-assigning party.
11.3 Notwithstanding any termination of this Agreement pursuant to Section
11.2 hereof, the Fund and its investment adviser may, at the option of
the Fund, continue to make available additional Portfolio Shares for so
long as the Fund desires pursuant to the terms and conditions of this
Agreement as provided below, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to
as "Existing Contracts"). Specifically, without limitation, if the Fund
so elects to make additional Portfolio Shares available, the owners of
the Existing Contracts or Insurance Company, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in the
Portfolio, redeem investments in the Fund and/or invest in any
additional Portfolio upon the making of additional purchase payments
under the Existing Contracts. In the event of a termination of this
Agreement pursuant to Section 11.2 hereof, the Fund, as promptly as is
practicable under the circumstances, shall notify Insurance Company
whether the Fund will continue to make additional Portfolio Shares
available after such termination. If additional Portfolio Shares
continue to be made available after such termination, the provisions of
this Agreement shall remain in effect and thereafter either the Fund or
Insurance Company may terminate the Agreement, as so continued pursuant
to this Section 11.3, upon prior written notice to the other party, such
notice to be for a period that is reasonable under the circumstances
but, if given by the Fund, need not be for more than six months.
ARTICLE XII
AMENDMENTS
12.1 Any change in the terms of this Agreement (other than those permitted
pursuant to Section 11.3) shall be made by agreement in writing between
the parties to this Agreement.
23
ARTICLE XIII
NOTICE
13.1 Except as otherwise specifically provided for in this Agreement, any
notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service or 3 days after sent by
registered or certified mail, postage prepaid, return receipt requested
or on the date sent and confirmed received by facsimile transmission to
the other party's address set forth below or to such other address as
may be provided in writing:
INSURANCE COMPANY:
Forethought Life Insurance Company
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, EVP, Chief Investment Officer
Tel: 000-000-0000
In the case of any notice to Insurance Company, a duplicate copy shall
be sent to:
Forethought Life Insurance Company
00 Xxxxxxxxx Xxxxxx
Xxxx View Building, Suite 200
Simsbury, CT 06089
Attn: Xxx Xxxxxxxx
Tel: 000-000-0000
FUND:
Xxxxxxx Variable Series, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
CID:
Xxxxxxx Investment Distributors, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
In the case of any notice to Fund or CID, a duplicate copy shall be
sent to:
24
Xxxxxxx Investments, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxxxx, XX 00000
Attn: Office of the General Counsel
Tel: 000-000-0000
Fax: 000-000-0000
ARTICLE XIV
TRADEMARKS AND PORTFOLIO NAMES
14.1 The Fund or CID or one or more of its affiliates owns all right, title
and interest in and to the tradenames, trademarks and service marks set
forth on Schedule C, as amended from time to time by written notice from
the Fund or CID to Insurance Company (the "Xxxxxxx Licensed Marks" or
the "licensor's licensed marks") and is authorized to use and to license
other persons to use such marks. Insurance Company and its affiliates
are hereby granted a limited, non-transferable, non-exclusive, revocable
license to use the Xxxxxxx Licensed Marks in connection with Insurance
Company's performance of the services contemplated under this Agreement,
subject to the terms and conditions set forth in this Section 14.1.
14.2 The grant of license to Insurance Company (collectively, the "Licensee")
shall terminate automatically upon (i) the termination of this
Agreement, (ii) Licensee's receipt of written notification that its use
of any Xxxxxxx Licensed Xxxx, in the reasonable opinion of the Fund or
CID, reflects unfavorably upon the professional, business or personal
reputation of the Fund or CID or any of its affiliates or any of their
directors, officers, employees or agents, or (iii) Licensee's receipt of
written notification that the quality, appearance and/or style of any
Xxxxxxx Licensed Xxxx is unacceptable in the reasonable opinion of the
Fund or CID (each of clauses (ii) and (iii) being a "License
Violation"). Upon the termination of the license, Insurance Company and
its affiliates shall immediately cease to issue any new annuity or life
insurance contract bearing any Xxxxxxx Licensed Xxxx and shall likewise
cease any activity which suggests that it has any right under any of the
Xxxxxxx Licensed Marks or that it has any association with the Fund,
except that Insurance Company shall have the right to continue to
service outstanding Contracts by utilizing any of the Xxxxxxx Licensed
Marks until the earlier of (x) the Final Termination Date and (y)
Licensee's receipt of written notification regarding the occurrence of a
second License Violation, following which the license shall terminate
and Licensee will cease all further use of any Xxxxxxx Licensed Xxxx.
14.3 The Licensee shall obtain the prior written approval of the applicable
Fund or CID (which may be in the form of an email) for the public
release by Licensee of any materials bearing any Xxxxxxx Licensed Xxxx,
which shall not be unreasonably withheld. Each such approval shall
remain in effect with respect to the approved materials unless the
applicable Fund or CID has withdrawn such approval in writing in
accordance with Section 14.4 Notwithstanding any other provision of this
Section 14.3, approval of the
25
applicable Fund or CID shall not be required for any materials that only
list the available Funds under a Contract and/or include any approved
Xxxxxxx Licensed Xxxx.
14.4 During the term of this grant of license, the Fund or CID may request
that the Licensee submit samples of any materials bearing any of the
Xxxxxxx Licensed Marks which were previously approved by the Fund or CID
but, due to changed circumstances, in the sole judgment of the Fund or
CID, require reconsideration. If, on reconsideration, or on initial
review, respectively, any such sample fails to meet with the written
approval of the Fund or CID, then the Licensee shall immediately cease
distributing such disapproved materials. The Fund or CID shall not
unreasonably withhold approval upon any reconsideration and shall, when
engaged in any reconsideration, give due weight to the expenses
associated with withdrawing and replacing the materials that are the
subject of such reconsideration. The Licensee shall obtain the prior
written approval of the Fund or CID for the use of any new materials
developed to replace the disapproved materials, in the manner set forth
above.
14.5 The Licensee (i) acknowledges that it does not own the Xxxxxxx Licensed
Marks and claims no rights therein other than as a Licensee under this
Agreement; (ii) agrees never to contend otherwise in legal proceedings
or in other circumstances; and (iii) acknowledges and agrees that the
use of the Xxxxxxx Licensed Marks pursuant to this grant of license
shall inure to the benefit of the Fund and/or CID and/or its affiliates.
ARTICLE XV
MISCELLANEOUS
15.1 This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his/her capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
Director, officer or shareholder of the Fund individually.
15.2 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.
15.3 This Agreement may be executed in one or more counterparts, each of
which, taken together, shall constitute one and the same instrument. A
signature page forwarded as an electronic image for attachment to an
assembled document shall be deemed delivery of an original signature
page.
15.4 If any provision of this Agreement shall be held or made invalid or
unenforceable by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable
portion had not been inserted.
15.5 This Agreement, together with the Services Agreement among the Insurance
Company, CID, Xxxxxxx Investment Administrative Services, Inc., Xxxxxxx
Investment Services, Inc.
26
and Forethought Distributors, LLC dated October 23, 2015 (the "Services
Agreement") and the Rule 22c-2 Shareholder Information Agreement (the
"Rule 22c-2 Agreement") among CID and the Insurance Company dated
October 23, 2015, constitute the entire understanding between the
Parties regarding the specific subject matter covered herein. To the
extent of any conflict between this Agreement, the Services Agreement
and the Rule 22c-2 Agreement, the order of priority shall be the Rule
22c-2 Agreement, this Agreement, and the Services Agreement.
15.6 This Agreement shall be binding upon, enforceable against and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
15.7 Waiver by a party of a breach of any provision of this Agreement does
not constitute waiver of any subsequent breach of that or any other
provision.
15.8 The schedules and exhibits attached hereto, as modified from time to
time, are incorporated herein by reference and is part of this
Agreement.
15.9 Each party hereto shall cooperate with each other party in connection
with inquiries by appropriate governmental authorities (including,
without limitation, the Commission, Financial Industry Regulatory
Authority, and state insurance regulators) relating to this Agreement or
the transactions contemplated hereby.
15.10 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.
15.11 Unless otherwise agreed to in writing by the parties hereto, each party
acknowledges that the others may enter into agreements, similar to this
one, with other parties, for the performance of the same or similar
services to those to be provided under this Agreement.
15.12 Any party may assign its interest in this Agreement to a third party
provided that each non-assigning party has given prior written consent
to the assignment in writing, which consent shall not be unreasonably
withheld. Any attempted assignment in contravention hereof shall be null
and void.
15.13 Except as otherwise expressly provided in this Agreement, neither the
Fund nor CID nor any affiliate of either or them shall use any
trademark, trade name, service xxxx or logo of Insurance Company or any
of its affiliates, or any variation of any such trademark, trade name,
service xxxx or logo, without Insurance Company's prior written consent,
the granting of which shall be at the Insurance Company's sole
discretion. Except as otherwise expressly provided in this Agreement,
neither Insurance Company nor any of its affiliates shall use any
trademark, trade name, service xxxx or logo of Fund or CID or any of
their affiliates, or any variation of any such trademark, trade name,
service xxxx or logo, without the Fund's or CID's prior written consent,
the granting of which shall be at the applicable company's sole
discretion.
27
ARTICLE XVI
LAW
16.1 This Agreement shall be construed in accordance with the internal laws
of the State of Maryland, without giving effect to principles of
conflict of laws.
28
IN WlTNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested as of the date first above written.
FORETHOUGHT LIFE INSURANCE COMPANY
By:
-----------------------------------
Its:
Date:
-----------------------------------
XXXXXXX VARIABLE PRODUCTS, INC.
By:
-----------------------------------
Its:
Date:
-----------------------------------
XXXXXXX INVESTMENT DISTRIBUTORS, INC.
By:
-----------------------------------
Its:
Date:
-----------------------------------
29
SCHEDULE A
PORTFOLIOS
CVP PORTFOLIOS
For purposes of this Agreement, the CVP Portfolios constitute (i) each series
offered by CVP as of the date of this Agreement and (ii) each series offered by
CVP at any time in the future unless, prior to CID's acceptance of Insurance
Company's first purchase order for any such future series, CID notifies
Insurance Company in writing that such series is not subject to this Agreement.
30
SCHEDULE B
INSURANCE COMPANY SEPARATE ACCOUNTS
All current and future separate accounts under which variable annuity products
are offered by Forethought Life Insurance Company.
31
SCHEDULE C
XXXXXXX TRADEMARKS
(a) The following logo:
[XXXXXXX INVESTMENTS LOGO]
(b) The name "Xxxxxxx Variable Products, Inc."
(c) The name of each Portfolio that is made subject to this Agreement
pursuant to Schedule A.
32
SCHEDULE D
ALLOCATION OF EXPENSES
ITEM PAID BY THE INSURANCE COMPANY PAID BY FUND
------------------------------------ ---------------------------------------------- --------------------------------------------
Registration Statements Preparing and filing the Separate Account's Preparing and filing the Fund's
registration statement registration statement
Prospectuses, Supplements, and Text composition and alterations for Separate Text composition and alterations for
Statements of Additional Information Account prospectus, supplements and statements Fund prospectuses, supplements and
of additional information statements of additional information
Printing, processing, mailing and distributing Printing, processing, mailing and
or electronically delivering of Separate distributing and/or electronically
Account prospectuses, supplements and delivering of Fund prospectuses,
statements of additional information to new supplements and statements of
and existing Contractholders as required by additional information for use with
applicable law Contractholders, including
Contractholders making an initial
Printing, processing, mailing and distributing investment in a Fund, as required by
Separate Account and Series prospectuses, applicable law (1)
supplements and statements of additional
information for use with prospective
Contractholders
Documents and Communications related Printing, processing, mailing and distributing Printing, processing, mailing and
to fund changes or electronically delivering Series and distributing or electronically
Separate Account supplements and other delivering Series and Separate Account
communications related to fund substitutions supplements and other communications
and other similar fund transactions initiated related to fund closings, fund mergers
by the Insurance Company and other similar fund transactions (1)
Contractholder Account Statements Preparing, printing, and distributing annual Not Applicable
individual account statements for
Contractholders
Annual and Semi-Annual Reports Text composition of annual and semi-annual Text composition of annual and
reports of the Separate Account semi-annual reports of the Fund
Printing, processing, mailing, and Printing, processing, mailing, and
distributing or electronically delivering distributing or electronically
annual and semi-annual reports of the Separate delivering annual and semi-annual
Account to Contractholders reports of the Fund to
Contractholders(1)
Proxies Text composition, printing, processing, Text composition, printing,
mailing, distributing or electronically processing, mailing, distributing or
delivering and tabulation of proxy statements electronically delivering and
and voting instruction solicitation materials tabulation of proxy statements and
to Contractholders with respect to proxies voting instruction solicitation
sponsored by the Separate Accounts materials to Contractholders with
respect to proxies sponsored by a
Fund(1)
----------
(1) The Insurance Company may request that the Fund provide typeset electronic
document files of such documents for use with Contractholders. The Insurance
Company may choose to print the Fund's
33
prospectus(es), statement of additional information, and semi-annual and annual
reports, or any of such documents, in combination with such documents of other
fund companies; or may utilize electronic delivery for such fund documents. In
this case, the Fund's share of the total expense for printing, processing,
mailing, and distribution of the combined materials or of electronic delivery of
such materials shall be allocated based upon the Fund's share of the total costs
determined according to the number of pages of the Fund's relative portions of
the documents.
34
