1
EXHIBIT 1.A.(9)(g)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 30th day of September, 1996, by and among
TOMORROW FUNDS RETIREMENT TRUST ("TRUST"), a Delaware business trust, XXXXX,
XXXX & XXXXX, L.L.C. ("WPG"), a Delaware Limited Liability Company, and
Security Equity Life Insurance Company ("LIFE COMPANY"), a life insurance
company organized under the laws of the State of New York.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the " `40 Act"),
as an open-end, diversified management investment company and its shares of
beneficial interest are registered under the Securities Act of 1933 (the " `33
Act"); and
WHEREAS, TRUST is organized as a series fund comprised of several Funds
("Funds"), those currently available are listed on Appendix A hereto; and
WHEREAS, TRUST was organized to act as the investment vehicle for
certain variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts
("Separate Accounts") of such life insurance companies ("Participating
Insurance Companies") and also offers its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the `40 Act, and Rules 6e-2(b)
(15) and 6e-3(T) (b) (15) ("Exemptive Order") thereunder, to the extent
necessary to permit shares of the Funds of the TRUST to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies which have
entered into fund participation agreements substantially identical to this
Agreement and Qualified Plans; and
WHEREAS, LIFE COMPANY has duly organized and has established or will
establish pursuant to state insurance laws and regulations one or more
Separate Accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, LIFE COMPANY has registered or will register certain Variable
Contracts under the `33 Act; and
WHEREAS, WPG is registered with the SEC as an investment adviser under
the Investment Advisers Act of 1940, and acts as the Trust's investment
adviser; and
2
WHEREAS, WPG is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934 and, pursuant to a dully approved contract
with the TRUST, acts as the principal underwriter of the TRUST's shares; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of Trust to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares
to LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, and WPG agree as follows:
Article I. SALE OF TRUST SHARES
--------------------
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Funds as listed on Appendix B for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in TRUST's Registration Statement.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the
selected Funds of TRUST which LIFE COMPANY orders, executing such orders on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of the designated Fund of TRUST. For
purposes of this Section 1.2, LIFE COMPANY shall be the designee of TRUST for
receipt of such orders from the designated Separate Account and receipt by
such designee shall constitute receipt by TRUST; provided that LIFE COMPANY
receives the order by 4:00 p.m. New York time and TRUST receives notice from
LIFE COMPANY by telephone or facsimile (or by such other means as TRUST and
LIFE COMPANY may agree in writing) of such order by 10:00 a.m. New York time
on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which TRUST
calculates its Fund net asset values pursuant to the rules of the Securities
and Exchange Commission ("SEC").
1.3 TRUST agrees to redeem for cash on LIFE COMPANY's request, any
full or fractional shares of the Funds of the TRUST held by LIFE COMPANY,
executing such requests on a daily basis at the net asset value next computed
after receipt by TRUST or its designee of the request for redemption, in
accordance with the provisions of this Agreement and TRUST's Registration
Statement. For purposes of this Section 1.3, LIFE COMPANY shall be the
designee of TRUST for receipt of requests for redemption from the designated
Separate Account and receipt by such designee shall constitute receipt by
TRUST; provided that LIFE COMPANY receives the request for redemption by 4:00
p.m. New York time and TRUST receives notice from LIFE COMPANY by telephone or
facsimile (or by such other means as TRUST and LIFE COMPANY may agree in
writing) of such request for redemption by 10:00 a.m. New York time on the
next following Business Day.
2
3
1.4 TRUST shall furnish, on or before the payable date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Fund of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Fund's shares in additional shares of the Fund. TRUST shall notify LIFE
COMPANY or its designee of the number of shares so issued as payment of such
dividends and distributions.
1.5 TRUST shall make the net asset value per share for the selected
Fund(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use
its best efforts to make such net asset value available by 6:30 p.m. New York
time. If TRUST provided LIFE COMPANY with materially incorrect share net
asset value information through no fault of LIFE COMPANY, LIFE COMPANY on
behalf of the Separate Accounts, shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct share net asset
value. Any material error in the calculation of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar
amount of TRUST shares which shall be purchased or redeemed at that day's
closing net asset value per share. The net purchase or redemption orders so
determined shall be transmitted to TRUST by LIFE COMPANY by 10:00 a.m. New
York time on the Business Day next following LIFE COMPANY's receipt of such
requests and premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares,
LIFE COMPANY shall pay for such purchase by wiring federal funds to TRUST or
its designated custodial account by 11:00 a.m., New York time on the day the
order is transmitted by LIFE COMPANY. If LIFE COMPANY's order requests a net
redemption resulting in a payment of redemption proceeds to LIFE COMPANY TRUST
shall use its best efforts to wire the redemption proceeds to LIFE COMPANY by
the next Business Day, unless doing so would require TRUST to dispose of Fund
securities or otherwise incur additional costs. In any event, proceeds shall
be wired to LIFE COMPANY within three Business Days or such longer period
permitted by the `40 Act or the rules, orders or regulations thereunder and
TRUST shall notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York time the same
Business Day that LIFE COMPANY transmits the redemption order to TRUST. If
LIFE COMPANY's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another Fund advised by WPG,
TRUST shall so apply such proceeds the same Business DAY that LIFE COMPANY
transmits such order to TRUST.
3
4
1.8 TRUST agrees that all shares of the Funds of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of
the Funds of Trust will not be sold directly to the general public.
1.9 TRUST may refuse to sell shares of any Fund to any person, or
suspend or terminate the offering of the shares of or liquidate any Fund or
Trust if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the
Trust (the "Board"), acting in good faith and in light of its duties under
federal and any applicable state laws, deemed necessary or desirable and in
the best interests of the shareholders of such Funds.
1.10 Issuance and transfer of Fund shares will be by book entry
only. Stock certificates will not be issued to LIFE COMPANY or the Separate
Accounts. Shares ordered from Fund will be recorded in appropriate book entry
titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of New York and
that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that Walnut Street Securities,
Inc., the principal underwriter for the Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the " `34 Act") and
is a member of the National Association of Securities Dealers, Inc.
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the `40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable
Contracts will be registered under the `33 Act unless an exemption from
registration is available prior to any issuance or sale of the Variable
Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all
material respects with state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable
Contracts are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of the
Code, that it will maintain such treatment and that it will notify TRUST
immediately upon having a reasonable basis for believing that the
4
5
Variable Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and
sold pursuant to this Agreement will be registered under the `33 Act and sold
in accordance with all applicable federal and state laws, and TRUST shall be
registered under the `40 Act prior to and at the time of any issuance or sale
of such shares. TRUST, subject to Section 1.9 above, shall amend its
Registration Statement under the `33 Act and the x00 Xxx from time to time as
required in order to effect the continuous offering of its shares. TRUST
shall register and qualify its shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Fund will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Fund has ceased to comply or might not so
comply and will immediately take all reasonable steps to adequately diversify
the Fund to achieve compliance.
2.7 TRUST represents and warrants that each fund invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and that it will make every effort to
continue to qualify for such treatment for each taxable year and will notify
LIFE COMPANY immediately upon having a reasonable basis for believing it has
ceased to so qualify or might not so qualify in the future.
2.8 WPG represents and warrants that it is and will be a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD")
and is and will be registered as a broker-dealer with the SEC. WPG further
represents that it will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations, including without
limitation the `33 Act, the `34 Act and the x00 Xxx. WPG represents that its
operations are and shall at all times remain in material compliance with the
laws of the State of Delaware to the extent required to perform this
Agreement.
2.9 WPG represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable Federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and Federal
laws.
2.10 TRUST represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Delaware and that it does and
will comply in all material respects with the x00 Xxx.
2.11 WPG represents and warrants that its directors, officers and
employees, investment managers and other individuals or entities dealing with
the money and/or securities of the TRUST are and shall continue to be at all
times covered by a blanket fidelity bond or
5
6
similar coverage for the benefit of the TRUST in an amount not less than the
minimal coverage as currently required by Section 17(g) of the `40 Act or may be
promulgated from time to time.
Article III. PROSPECTUS AND PROXY STATEMENTS
-------------------------------
3.1 TRUST shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials), prospectuses and statements
of additional information of TRUST. TRUST shall bear the costs of
registration and qualification of shares of the Funds, preparation and filing
of the documents listed in this Section 3.1 and all taxes and filing fees to
which an issuer is subject on the issuance and transfer of its shares.
3.2 At least annually, TRUST or its designee shall provide LIFE
COMPANY, free of charge, with as many copies of the current prospectus and
statement of additional information ("SAI") for the shares of the Funds as
LIFE COMPANY may reasonably request for distribution to existing Variable
Contract owners whose designee shall provide LIFE COMPANY, at LIFE COMPANY's
expense, with as many copies of the current prospectus and SAI for the shares
of the TRUST as LIFE COMPANY may reasonably request for distribution to
prospective purchasers of Variable Contracts. If requested by LIFE COMPANY in
lieu thereof, TRUST or its designee shall provide such documentation
(including a "camera ready" copy of the new prospectus and SAI as set in type
or, at the request of LIFE COMPANY, as a diskette in the form sent to the
financial printer) and other assistance as is reasonably necessary in order
for the parties hereto once a year (or more frequently if the prospectus or
SAI for the shares is supplemented or amended) to have the prospectus for the
Variable Contracts and the prospectus for the TRUST shares printed together in
one document and the SAI for the Trust shares printed. The expenses of such
printing will be apportioned between (a) LIFE COMPANY and (b) TRUST in
proportion to the number of pages of the Variable Contract and shares'
prospectus, taking account of other relevant factors affecting the expense of
printing, such as covers, columns, graphs and charts; TRUST to bear the cost
of printing the shares' prospectus portion of such document for distribution
only to owners of existing Variable Contracts funded by the TRUST shares and
LIFE COMPANY to bear the expense of printing the portion of such documents
relating to the Separate Account; provided, however, LIFE COMPANY shall bear
all printing expenses of such combined documents where used for distribution
to prospective purchasers or to owners of existing Variable Contracts not
funded by the shares. In the event that LIFE COMPANY requests that TRUST or
its designee provide TRUST's prospectus or SAI in a "camera ready" or diskette
format, TRUST shall be responsible for providing the prospectus and SAI in the
format in which it is accustomed to formatting prospectuses and shall bear the
expense of providing the prospectus and SAIs in such format (e.g. typesetting
expenses), and LIFE COMPANY shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses.
3.3 TRUST will provide LIFE COMPANY with at least one complete copy
of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy
6
7
statements, exemptive applications and all amendments or supplements to any of
the above that relate to the Funds promptly after the filing of each such
document with the SEC or other regulatory authority. LIFE COMPANY will provide
TRUST with at least one complete copy of all registration statements,
prospectuses, statements of additional information, annual reports, exemptive
applications and all amendments or supplements to any of the above that relate
to the Separate Account promptly after the filing of each such documents with
the SEC or other regulatory authority.
3.4 The TRUST's prospectus shall state from whom a Statement of
Additional Information for the TRUST is available and the TRUST, at its
expense, shall reproduce such Statement free of charge to LIFE COMPANY and/or
any Variable Contract owner or prospective purchaser who requests such a
Statement.
3.5 The TRUST, at its expense, shall provide LIFE COMPANY with
copies of its proxy material, reports to stockholders and other communications
to stockholders in such quantity as the Company shall reasonably require for
distributing to Variable Contract owners.
3.6 If required by current law, LIFE COMPANY shall:
(i) Solicit voting instructions from Contract owners;
(ii) vote the TRUST shares in accordance with instructions received
from Contract owners; and
(iii) vote TRUST shares for which no instructions have been received
in the same proportion as TRUST shares of such portfolio for
which instructions have been received, to the extent that the
Securities and Exchange Commission continues to interpret the
`40 Act to require pass-through voting privileges for Variable
Contract owners. LIFE COMPANY reserves the right to vote TRUST
shares held in any segregated asset account in its own right,
to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their
separate accounts participating in the TRUST calculates voting
privileges in a similar manner.
Article IV. SALES MATERIALS
---------------
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to
TRUST and WPG, each piece of sales literature or other promotional material in
which TRUST or WPG is named, at least fifteen (15) Business Days prior to its
intended use. No such material will be used if TRUST or WPG objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and WPG will furnish, or will cause to be furnished, to
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its
7
8
intended use. No such material will be used if LIFE COMPANY objects to its use
in writing within ten (10) Business Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any
information or make any representations on behalf of LIFE COMPANY or
concerning LIFE COMPANY, the Separate Accounts, or the Variable Contracts
issued by LIFE COMPANY, other than the information or representations
contained in a registration statement (including prospectus) for such Variable
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports of the Separate Accounts or
reports prepared for distribution to owners of such Variable Contracts, or in
sales literature or other promotional material approved by LIFE COMPANY or its
designee, except with the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement (including prospectus) for TRUST, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by TRUST or its designee,
except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use,
in a newspaper, magazine or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures or
other public media), sales literature (such as any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or reprints or excerpts of any other advertisement, sales literature,
or published article), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees, registration statements, prospectuses, statements of additional
information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under National Association of
Securities Dealers, Inc., rules, the `40 Act or the x00 Xxx.
4.6 LIFE COMPANY will provide to the TRUST at least one copy of all
solicitations for voting instructions, sales literature and other promotional
materials, requests for no-action letters and all amendments to the above,
that relate to the Variable Contracts or the Separate Account(s) of LIFE
COMPANY promptly after filing of each with the SEC or other regulatory
authority.
Article V. POTENTIAL CONFLICTS
-------------------
5.1 The TRUST has received an Exemptive Order from the SEC granting
relief from various provisions of the `40 Act and the rules thereunder to the
extent necessary to permit TRUST shares to be sold to and held by variable
annuity and variable life insurance
8
9
separate accounts of both affiliated and unaffiliated Participating Insurance
Companies and Qualified Plans. The Exemptive Order requires the TRUST and each
Participating Insurance Company to comply with conditions and undertakings as
provided in this Section 5. The TRUST will not enter into a participation
agreement with any other Participating Insurance Company unless it imposes the
same conditions and undertakings as are imposed on LIFE COMPANY hereby.
5.2 The Board of Trustees of the TRUST will monitor the TRUST for
the existence of any material irreconcilable conflict between the interests of
Variable Contract owners of all separate accounts investing in the Trust. An
irreconcilable material conflict may arise for a variety of reasons, which may
include: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling or any similar action
by insurance, tax or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Trust are being managed; (e) a difference in voting
instructions given by variable annuity and variable life insurance Contract
owners; (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Variable Contract owners and (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of plan
participants.
5.3 LIFE COMPANY will report any potential or existing conflicts to
the Board. LIFE COMPANY will be responsible for assisting the Board in
carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
The responsibility includes, but is not limited to, an obligation by the LIFE
COMPANY to inform the Board whenever it has determined to disregard Variable
Contract owner voting instructions. These responsibilities of LIFE COMPANY
will be carried out with a view only to the interests of the Variable Contract
owners.
5.4 If a majority of the Board of Trustees of the Trust or majority
of its disinterested trustees, determines that a material irreconcilable
conflict exists, affecting LIFE COMPANY, LIFE COMPANY, at its expense and to
the extent reasonably practicable (as determined by a majority of the Board's
disinterested trustees), will take any steps necessary to remedy or eliminate
the irreconcilable material conflict, including: (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Trust or any Fund
thereof and reinvesting those assets in a different investment medium, which
may include another Fund of the Trust, or another investment company; (b)
submitting the questions as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and as appropriate,
segregating the assets of any appropriate group (i.e., variable annuity or
variable life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company (or series
thereof) or managed separate account. If a material irreconcilable conflict
arises because of LIFE COMPANY's decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, LIFE COMPANY may be required, at the election of the
TRUST, to withdraw the
9
10
Separate Account's investment in the TRUST, and no charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal must take place
within six (6) months after the TRUST gives written notice that this provision
is being implemented. The responsibility to take such remedial action shall be
carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposes action
adequately remedies any irreconcilable material conflict but in no event will
the TRUST or WPG (or any other investment advisor of the TRUST) be required to
establish a new funding medium for any Variable Contract. Further, LIFE
COMPANY shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely
affected by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 No less frequently than annually, LIFE COMPANY shall submit to
the Board such reports, materials or data as the Board may reasonably request
so that the Board may fully carry out its obligations. Such reports,
materials, and data shall be submitted more frequently if deemed appropriate
by the Board.
Article VI. VOTING
------
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the `40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of the Fund held
in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. LIFE COMPANY will be
responsible for assuring that each of its Separate Accounts that participates
in TRUST calculates voting privileges in a manner consistent with other
Participating Insurance Companies. LIFE COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as its votes those shares for which it has receiving voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3 (T) are amended,
or if Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the `40 Act or the rules thereunder with respect to mixed and shared funding
on terms and conditions materially different from any exemption granted in the
Exemptive Order, then TRUST, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-2 and Rule 6e-3 (T), as amended, and Rule 6e-3, as adopted, to the extent
such Rules are applicable.
10
11
Article VII. INDEMNIFICATION
---------------
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to
-------------------------------
indemnify and hold harmless TRUST, WPG and each of their Trustees, directors,
principals, officers, employees and agents and each person, if any, who
controls TRUST or WPG within the meaning of Section 15 of the `33 Act
(collectively, the "Indemnified Parties" for purposes of this Article VII)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of LIFE COMPANY, which consent
shall not be unreasonably withheld) or litigation (including 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 TRUST's shares or the
Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement or prospectus for the Variable Contracts
or contained in the Variable Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY by or on
behalf of TRUST for use in the registration statement or
prospectus for the Variable Contracts or the Variable Contracts
or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons under its control,
with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to TRUST by or on behalf
of LIFE COMPANY; or
11
12
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnification Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify LIFE COMPANY
of any such claim shall not relieve LIFE COMPANY from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against an Indemnified Party, LIFE COMPANY shall be entitled
to participate at its own expense in the defense of such action. LIFE COMPANY
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from LIFE COMPANY
to such party of LIFE COMPANY's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and LIFE COMPANY will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
7.4 Indemnification by WPG. WPG agrees to indemnify and hold
----------------------
harmless LIFE COMPANY and each of its directors, officers, employees and
agents and each person, if any, who controls LIFE COMPANY within the meaning
of Section 15 of the `33 Act (collectively, the "Indemnified Parties" for
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
WPG, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales
12
13
literature of TRUST (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to WPG or TRUST
by or on behalf of LIFE COMPANY for use in the registration
statement or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by WPG or persons under its
control) or wrongful conduct of TRUST or WPG or persons under
their control, with respect to the sale or distribution of the
Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable
Contracts, or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
LIFE COMPANY for inclusion therein by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide
substantially the services and furnish the materials under the
terms of this Agreement; or (ii) a failure by a Fund(s)
invested in by the Separate Account to comply with the
diversification requirements of Section 817(h) of the Code; or
(iii) a failure by a Fund(s) invested in by the Separate
Account to qualify as a "regulated investment company" under
Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by WPG in this Agreement or
arise out of or result from any other material breach of this
Agreement by WPG.
7.5 WPG shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
13
14
7.6 WPG 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 WPG 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 WPG of any such claim shall not
relieve WPG 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, WPG shall be entitled to participate at its own expense
in the defense thereof. WPG also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from WPG to such party of WPG's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and WPG 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.
Article VIII. TERM: TERMINATION
------------------
8.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the
date hereof upon 90 days' written notice, unless a shorter time
is agreed to by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the Variable
Contracts as determined by LIFE COMPANY. Prompt notice of
election to terminate shall be furnished by LIFE COMPANY, said
termination to be effective ten days after receipt of notice
unless TRUST makes available a sufficient number of shares to
reasonably meet the requirements of the Variable Contracts
within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, the National Association
of Securities Dealers, Inc., or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in LIFE COMPANY's reasonable judgment, materially impair
TRUST's ability to meet and perform TRUST's obligations and
duties hereunder. Prompt notice of election to terminate shall
be furnished by LIFE COMPANY with said termination to be
effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers,
14
15
Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in TRUST's reasonable
judgment, materially impair LIFE COMPANY's ability to meet and
perform its obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by TRUST with said
termination to be effective upon receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold
in accordance with applicable state or federal law, or such law
precludes the use of such shares as the underlying investment
medium of Variable Contracts issued or to be issued by LIFE
COMPANY. Termination shall be effective upon such occurrence
without notice;
(f) At the option of TRUST if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if TRUST reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by LIFE
COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of LIFE COMPANY within ten days after
written notice of such breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of TRUST within ten days after
written notice of such breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior
written consent of LIFE COMPANY, TRUST, and WPG, termination
shall be effective immediately upon such occurrence without
notice.
8.3 Notwithstanding any termination by the Trust or WPG of this
Agreement pursuant to Section 8.2 hereof, TRUST at its option may elect to
continue to make available additional TRUST shares, as provided below, for so
long as TRUST desires pursuant to the terms and conditions of this Agreement,
for all Variable Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts").
Notwithstanding any termination by the LIFE COMPANY of this Agreement pursuant
to Section 8.2 hereof, LIFE COMPANY at its option may elect to continue to
make available additional TRUST shares, as provided below, for so long as LIFE
COMPANY desires pursuant to the terms and conditions of this Agreement, for
all Existing Contracts. Specifically, without limitation, if a party so
elects to make additional TRUST shares
15
16
available, the owners of the Existing Contracts or LIFE COMPANY, whichever shall
have legal authority to do so, shall be permitted to reallocate investments in
TRUST, redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, the party with the option to
continue to make available additional TRUST shares to Existing Contracts, as
promptly as is practicable under the circumstances, shall notify the other party
whether it elects to continue to make TRUST shares available after such
termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the Agreement, as so
continued pursuant to this Section 8.3, in accordance with Section 8.2 hereof.
8.4 Except as necessary to implement Variable Contract owner
initiated transactions, or as required by state insurance laws or regulations,
LIFE COMPANY shall not redeem the shares attributable to the Variable
Contracts (as opposed to the shares attributable to LIFE COMPANY's assets held
in the Separate Accounts), and LIFE COMPANY shall not prevent Variable
Contract owners from allocating payments to a Fund that was otherwise
available under the Variable Contracts until thirty (30) days after the LIFE
COMPANY shall have notified TRUST of its intention to do so.
Article IX. NOTICES
-------
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time
specify in writing to the other party.
If to TRUST, or WPG:
Xxxxx, Xxxx & Xxxxx, L.L.C.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxx
If to LIFE COMPANY:
Security Equity Life Insurance Company
00 Xxxxxxxx Xxxx Xxxxx
Xxxxx 000X
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
16
17
With a copy to:
Xxxxxxxxxxx X. Xxxxxx
General American Life Insurance Company
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
-------------
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provisions 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.
10.4 This agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Fund nor the Trustees or officers of the TRUST
or any Fund shall be personally liable hereunder. No Fund shall be liable for
the liabilities of any other Fund. All persons dealing with the TRUST or a
Fund must look solely to the property of the TRUST or that Fund, respectively,
for enforcement of any claims against the TRUST or that Fund. It is also
understood that each of the Funds shall be deemed to be entering into a
separate Agreement with LIFE COMPANY so that it is as if each of the Funds had
signed a separate Agreement with LIFE COMPANY and that a single document is
being signed simply to facilitate the execution and administration of the
Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the National Association of Securities Dealers, Inc., and state insurance
regulators) and shall permit such authorities reasonable assess to its books
and records in connection with any authorized inspection, investigation or
inquiry relating to this Agreement or the transactions contemplated hereby.
17
18
10.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
10.8 No provision of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
Trust, WPG and the LIFE COMPANY.
IN WITNESS WHEREOF, the parties shave caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
TOMORROW FUNDS RETIREMENT TRUST
By: /s/ Xxxxxx Xxxxxxx
-------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
XXXXX, XXXX & XXXXX, L.L.C.
By: /s/ [xxx]
Name:
Title:
LIFE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
18
