PARTICIPATION AGREEMENT
among
TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
and
CHUBB LIFE INSURANCE COMPANY OF AMERICA
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
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THIS AGREEMENT, made and entered into as of this 1st day of May, 1995, by
and among Chubb Life Insurance Company of America, a New Hampshire Corporation,
and The Colonial Life Insurance Company of America, a New Jersey Corporation,
(hereinafter collectively the "Companies"), on their own behalf and on behalf of
each segregated asset account of the Companies set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and the TEMPLETON VARIABLE PRODUCTS SERIES FUND, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
(hereinafter the "Underwriter"), a California corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable annuity and variable life insurance contracts to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, as set forth on Schedule B hereto, each representing the interest in
a particular managed portfolio of securities and other assets and one or more of
which may be made available under this Agreement as set forth on Schedule C
hereto, as may be amended from time to time by mutual agreement of the parties
hereto (each such series hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated November 16, 1993 (File No.812-8546), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the Investment Company Act of 1940, as amended (the "1940 Act") and Rules 6e
2(b)( 15) and 6e3-T(b)( IS) thereunder, to the extent necessary to permit shares
of the Fund to be sold to and held by separate accounts funding variable annuity
and variable life insurance contracts issued by both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, Xxxxxxxxx Investment Counsel, Inc. (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state laws; and
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WHEREAS, the Companies have registered or will register certain variable
annuity and variable life insurance contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolutions of the Boards of Directors of the
Companies, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable annuity and variable life
insurance contracts; and
WHEREAS, the Companies have registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (hereinafter the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Companies intend to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable annuity and variable
life insurance contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value.
NOW THEREFORE, in consideration of their mutual promises, the Companies,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Companies those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. The Companies' order may net the purchase and
redemption requests related to each Portfolio. For purposes of this Section 1.1,
the Companies shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designees shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m., St.
Petersburg time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading and on which
the Fund calculates its net asset value pursuant to the rules of the Securities
and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Companies and their Accounts
on those days on which the Fund calculates its net asset value pursuant to rules
of the Securities and Exchange Commission and the Fund shall use reasonable
efforts to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of the fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
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1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Companies' request, any
full or fractional shares of the Fund held by the Companies executing such
requests on a daily basis at the net value asset next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Companies shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of such
request for redemption by 10:00 a.m., St. Petersburg time, on the next following
Business Day.
1.6 The Companies agree to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Companies agree that all net amounts
available under the variable annuity and variable life insurance contracts with
the form number(s) which are listed on Schedule D attached hereto and
incorporated herein by this reference, as such Schedule D may be amended from
time to time hereafter by mutual written agreement of all the parties hereto
(the ("Contracts"), shall be invested in the Fund, in such other Funds advised
by the Adviser as may be mutually agreed to in writing by the parties hereto, in
the Companies' general account, or invested in an investment company other than
the Fund.
1.7 The Companies shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purposes of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Companies
and shall become the responsibility of the Fund. Proceeds for liquidation of
shares of the Fund will be wired from the Fund's custodial account to an account
designated by the Companies.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Companies or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate sub-account of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. Dividends and capital gains
distributions shall be reinvested in additional shares at the ex-date net asset
value. The Company reserves the right to revoke this election and to receive all
such income, dividends or capital gain distributions in cash. The Fund shall
notify the Companies of the number of shares so issued as payment of such
dividends and distributions.
1.10 The Fund shall make the net asset value per share for each Portfolio
available to the Companies on a daily basis as soon as reasonably practical
after the net asset value per share is calculated (normally by 6:00 p.m., St.
Petersburg time) and shall use its best efforts to make such net asset value per
share available by 6:30 p.m., St Petersburg time.
1.11 The Fund shall send to the Companies within five business days after
the end of each month, separate month statements of account confirming all
transactions made in the Companies separate accounts listed in Schedule A.
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ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Companies represent and warrant that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material aspects with all applicable Federal and State laws
and that the sale of the Contract shall comply in all material aspects with
state insurance suitability requirements. The Companies further represent and
warrant that they are insurance companies duly organized and in good standing
under applicable law and that they have legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under the applicable state laws and have registered or, prior to any issuance or
sale of the Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable state and federal securities laws and that the
Fund is and shall remain registered under the 0000 Xxx. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required to order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3 The 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 make every effort to maintain such
qualification under Subchapter M or any successor or similar provision) and that
it will notify the Companies immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Companies represent that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that they will make every effort to maintain such treatment and
that they will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Fund does not intend to make any payments to finance distribution
expenses pursuant to Rule I 2b-l under the 1940 Act or otherwise, although it
may make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12 x-x, the Fund undertakes to have its
Board of Trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b- l to finance distribution
expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
Commonwealth of Massachusetts and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the Commonwealth of Massachusetts and the State of
California to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker dealer with the Securities
and Exchange Commission. The Underwriter further represents that it will sell
and distribute the Fund shares in accordance with the laws of the State of
California,
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and all applicable state and federal securities laws, including without
limitation, the 1933 Act, the 1934 Act and the 0000 Xxx.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material aspects with the 1940 Act
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable state and
federal securities laws and that the Adviser shall perform its obligations for
the Fund in compliance in all material respects with the laws of the State of
Florida and all applicable state and federal securities laws.
2.10 The Fund and the Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers and other
individuals/entities dealing with the money and or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund, in an amount not less than the
minimal coverage as required currently by Rule 17g-l of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.11 The Companies represent and warrant that all of their directors,
officers and employees dealing with money and/or securities of the Fund are and
shall continue to be at all times covered by a blanket fidelity bond, protecting
against losses resulting from any act of fraud or dishonesty by the Companies'
employees, in an amount not less than $5 million. The Companies agree to make
all reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
2.12 The Companies agree and acknowledges that the Underwriter or its
affiliates is the sole owner of the names "Xxxxxxxxx" and "Franklin Xxxxxxxxx"
and of the marks shown on Schedule F attached hereto, and that all use of any
designation comprised in whole or in part of such name or xxxx under this
Agreement shall inure to the benefit of the Underwriter or its affiliates.
Except as expressly provided herein, the Companies shall not use any such name
or xxxx on own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of the
Underwriter or its affiliates. Upon termination of this Agreement for any
reason, the Companies shall cease all use of any such name or xxxx as soon as
reasonably practicable.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1 The Underwriter shall provide the Companies (at the Companies'
expense) with as many copies of the Fund's current prospectus as the Companies
may reasonably request or, at the option of the Companies, with camera ready
copy of the Fund's current prospectus. If requested by the Companies in lieu
thereof, the Fund shall provide such documentation (including a final copy of
the new prospectus as set in type at the Fund's expense) and other assistance as
is reasonably necessary for the Companies once each year (or more frequently if
the prospectus for the Fund is amended) to have the prospectus for the Contracts
and the Fund's prospectus printed together in one document (such printing to be
at the Companies' expense).
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Companies and to any owner of a
Contract or prospective owner who requests such Statement.
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3.3 The Fund, at its expense, shah I provide the companies with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Companies shall reasonably require for
distributing to Contract Owners.
3.4 If and to the extent required by haw, the Companies shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Fund shares in
accordance with the instructions received from Contract owners: and (iii) vote
Fund shares for which no instructions have been received in the same proportion
as Fund shares of such Portfolio for which instructions have been received; so
long as and to the extent that the Securities and Exchange Commission continues
to interpret the 1940 Act to require pass-through voting privileges for variable
contract owners. The Companies reserve the right to vote Fund 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 Fund calculates voting privileges
in a manner consistent with the standards set forth on Schedule G attached
hereto, and incorporated herein by reference, which standards will also be
provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIALS AND INFORMATION
4.1 The Companies shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
materials in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such materials shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2 The Companies shall not give any information or make any
representation or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement or prospectus may be amended or
supplemented from time to time, or in published reports for the Fund which are
in the public domain, or in reports or proxy statements for the Fund, or in
sales literature or other promotional materials approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter or its designee shall furnish, or shall cause to
be furnished, to the Companies or its designee, each piece of sales literature
or other promotional material in which the Companies and/or their separate
account(s) are named, at least fifteen Business Days prior to its use. No such
material shall be used if the Companies or their designee reasonably objects to
such use within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Companies or concerning the Companies, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Companies for distribution to
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Contract Owners, or in sales literature or other promotional materials approved
by the Companies or its designee, except with the permission of the Companies.
4.5 The Fund will provide to the Companies at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, applications for exemptions, requests for no-action
letters, relevant portions of sales literature and other promotional materials,
and all amendments to any of the above that relate to the Fund and its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commissions.
4.6 The Companies will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such documents with the
Securities and Exchange Commission.
4.7 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, portions of the
following that refer to the Fund or affiliates of the Fund: advertisements (such
as material published or designed for use in a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1 The Fund and the Underwriter shall pay no fee or other compensation to
the Companies under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b- l to finance distribution
expenses, then the Underwriter may make payments to the Companies or to the
Underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all shares are
registered and authorized for issuance in accordance with applicable federal
law, and, if and to the extent deemed advisable by the Fund, in accordance with
the applicable state laws prior to their sale. The Fund shall bear the expenses
for the cost of registration and qualification of the Fund's shares, preparation
and filing of the Fund's prospectus and registration statement, proxy materials
and reports, setting the prospectus in type, setting in type and printing the
proxy materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any state or federal law, all taxes on the issuance and
transfer of the Fund's shares.
5.3 The Companies shall bear the expenses of printing and distributing the
Fund's prospectus to owners of the Contracts issued by the Companies and of
distributing the Fund's proxy materials and reports to such Contract owners.
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ARTICLE VI. DIVERSIFICATION
6.1 The Fund shall comply with Section 817(h) and 851 of the lnternal
Revenue Code of 1986, if applicable, and the regulations thereunder, and the
applicable provisions of Section 5(b)(1) of the 1940 Act. The Underwriter or the
Fund shall provide the Companies with a letter from the appropriate officer
within ten Business Days following the end of each calendar quarter of the Fund,
certifying the Fund's compliance during that calendar quarter with the
diversification requirements and qualification as a regulated investment
company, and including a detailed listing of individual securities held by each
Portfolio of the Fund. In the event of a breach of this Article VI by the Fund,
it will take all reasonable steps (a) to immediately notify the Companies of
such breach and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance, tax
or securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of contract owners. The Board
shall promptly inform the Companies if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2 The Companies will report any potential or existing conflicts of which
it is aware to the Board. The Companies will assist the Board in carrying out
its responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Companies to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Companies and other Participating Insurance companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the questions whether such segregation should be implemented to a
vote of all affected Contract Owners and, as appropriate, segregating the assets
of any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Companies to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Companies
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account: provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and
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termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Underwriter and the Fund shall continue to accept and implement
orders by the Companies for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because of a particular
state insurance regulator's decision applicable to the Companies conflicts with
the majority of other state regulators, then the Companies will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Companies
in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested member
of the Board. Until the end of the foregoing six month period, the Underwriter
and the Fund shall continue to accept and implement orders by the Companies for
the purchase (and redemption) of shares of the Fund.
7.6 For purposes of Section 7.3 and 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Companies shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Companies will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Companies in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7 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 of the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
the (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
continue to 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.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANIES
(a) The Companies agree to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act and to indemnify and hold
harmless the Underwriter and each director and officer and each person, if any,
who controls the Underwriter within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Companies) 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 the Fund's shares or
the Contracts and:
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(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Companies by
or on behalf of the Fund or the Underwriter for use in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Companies or persons under its control) or wrongful
conduct of the Companies or persons under its control, with respect to
the sale or distribution of the Contracts or Fund share; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus or
sales literature of the Fund or any amendment thereof or supplement
thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Companies; or
(iv) arise as a result of any failure by the Companies to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Companies in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Companies, as limited by and in accordance with the
provisions of Section 8.1(b) and 8.1(c) hereof.
(b) The Companies shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the Fund
or the Underwriter, whichever is applicable.
(c) The Companies 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 Companies 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 or any designated agent), but failure to notify the Companies of
any such claim shall not relieve the Companies from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Companies shall be entitled to participate,
at their own expense, in the defense of such action. The Companies also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Companies to such party of the
Companies'
10
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Companies
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by 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.
(d) The Indemnified Parties will promptly notify the Companies of the
commencement any litigation or proceedings against them in connection with the
issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
(a) The Underwriter agrees to indemnify and hold harmless the Companies,
the underwriter of the contracts and each of their directors and officers and
each person, if any, who controls the Companies within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, providing that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
Fund or the Underwriter by or on behalf of the Companies for use in
the Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon information
furnished to the Companies by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the qualification representation specified
in Section
11
2.3 of this Agreement and the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter, as limited by and in accordance
with the provisions of Section 8.2(b) and 8.2(c) hereof.
(b) The Underwriter 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 or to
the Companies or each Account, whichever is applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service or any designated agent), but failure to notify the Underwriter of
any such claims shall not relieve the Underwriter from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter shall be entitled to
participate, at its own expense, in the defense of such action. The Underwriter
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Underwriter to such
party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such 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.
(d) The Companies agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Contracts or the operation of each Account
8.3 INDEMNIFICATION BY THE FUND
(a) The Fund agrees to indemnify and hold harmless the Companies, and each
of their directors and officers and each person, if any, who controls the
Companies within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) 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
results from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund, and arise out
of or result from any material breach of any representation and/or warranty made
by the Fund in this Agreement or arise out of or result from any other material
breach of this Agreement by the Fund; as limited by and in accordance with the
provisions of Sections 8.3(b) and 8.3(c) hereof. It is understood and expressly
stipulated that neither the holders of shares of the fund nor any Trustee,
officer, agent or employee of the Fund shall be personally liable hereunder, nor
shall any resort be had to other private property for the satisfaction of any
claim or obligation hereunder, but only the Fund shall be liable.
12
(b) The Fund shall not be liable under this indemnification provision with
respect to any losses claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's will misfeasance, bad faith, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the
Companies, the Fund, the Underwriter or each Account, whichever is applicable.
(c) The Fund 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 Fund 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 or any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Fund shall be entitled to participate, at its own expense, in the defense of
such action. The Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Fund to such party of the Fund'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 Fund 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.
(d) The Companies and the Underwriter agree promptly to notify the Fund of
the commencement of any litigation or proceedings against it or any of its
respective officers and directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of the
Accounts, or the sale or acquisition of shares of the Fund.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) immediate termination by the Companies' upon written notice to the Fund
and the Underwriter with respect to any Portfolio based upon the Companies
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) immediate termination by the Companies upon written notice to the Fund
and the Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued, or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Companies; or
(d) immediate termination by the Companies upon written notice to the Fund
and the Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if
the Companies reasonably believe the Fund may fail to so qualify; or
13
(e) immediate termination by the Companies upon written notice to the Fund
and the Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
(f) immediate termination by the Companies upon written notice to the Fund
and the Underwriter, if the Companies shall determine, in their sole
judgment exercised in good faith, that either the Fund or the Underwriter
has suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(g) termination by the Fund or the Underwriter by written notice to the
Companies, if the Companies give the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however, any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
was given.
10.2 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall, at the option of the Companies, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
000 Xxxxxxx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Secretary
If to the Company:
Xxx Xxxxxxx Xxxxx
Xxxxxxx,XX 00000
Attn: General Counsel
If to the Underwriter:
000 Xxxxxxx Xxxxxx
Xx Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Vice President
14
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 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 constructions or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7 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.
12.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.9 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Florida. 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 Commission granting
exemptive relief therefrom and the conditions of such orders.
15
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date first above written.
Companies:
CHUBB LIFE INSURANCE COMPANY OF AMERICA
By its authorized officer
SEAL By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
----------------------------
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
By its authorized officer
SEAL By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
----------------------------
Fund:
XXXXXXXXX VARIABLE PRODUCTS SERIES FUND
By its authorized officer,
SEAL By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Title: Secretary
----------------------------
Underwriter:
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By its authorized officer,
SEAL By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Title: Vice President
-----------------------------
16
SCHEDULE A
BOARD DATE OF RESOLUTION OF COMPANY'S
NAME OF ACCOUNT WHICH ESTABLISHED THE ACCOUNT
--------------- -----------------------------
Chubb Separate Account A August 20, 1984
(Chubb Life Insurance
Company of America)
Colonial Separate Account B March 2, 1994
(The Colonial Life
Insurance Company of
America)
17
SCHEDULE B
TEMPLETON VARIABLE PRODUCTS SERIES FUND PORTFOLIOS
Templeton Money Market Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Xxxxxxxxx International Fund
18
SCHEDULE C
TEMPLETON VARIABLE PRODUCT SERIES FUND PORTFOLIOS
AVAILABLE UNDER THIS AGREEMENT:
Xxxxxxxxx International Fund
19
SCHEDULE D
VARIABLE ANNUITY CONTRACTS WHICH MAY BE INVESTED
IN THE PORTFOLIOS LISTED ON SCHEDULE C:
FORM NUMBER NAME
----------- ----
NONE
VARIABLE LIFE CONTRACTS WHICH MAY BE INVESTED
IN THE PORTFOLIOS LISTED ON SCHEDULE C:
FORM NUMBER NAME
----------- ----
Form 86-01 A (or such other form Flexible Premium
numbers as may be approved in Variable Life
certain states) (Chubb Life Insurance Policy
Insurance Company of America)
Form 94-141NY Flexible Premium
(The Colonial Life Insurance Variable Life
Company of America) Insurance Policy
20
SCHEDULE E
OTHER INVESTMENT COMPANIES CURRENTLY AVAILABLE UNDER
VARIABLE LIFE CONTRACTS LISTED ON SCHEDULE D:
Chubb America Fund, Inc.
World Growth Stock Portfolio
Money Market Portfolio
Gold Stock Portfolio
Bond Portfolio
Domestic Growth Stock Portfolio
Growth and Income Portfolio
Capital Growth Portfolio
Balanced Portfolio
Emerging Growth Portfolio
21
SCHEDULE F
[LOGO OF FRANKLIN XXXXXXXXX APPEARS HERE]
[LOGO OF FRANKLIN XXXXXXXXX APPEARS HERE]
22
SCHEDULE G
STANDARDS FOR VOTING SHARES OF THE XXXXXXXXX VARIABLE PRODUCTS SERIES FUND
("FUND") HELD BY CHUBB SEPARATE ACCOUNT A AND COLONIAL SEPARATE ACCOUNT B (THE
"ACCOUNTS") AND FOR TABULATING PARTICIPANT VOTING INSTRUCTIONS.
Chubb Separate Account A and Colonial Separate Account B will vote in accordance
with instructions received from owners of variable insurance contracts having
values allocated to the Fund. Shares of the Fund for which no instructions are
received will be voted by the Accounts for or against or in abstention with
respect to the proposal in the same proportion as shares for which instructions
are received by that entity.
Each contract Participant has the right to give instructions as to how shares of
the Fund attributable to the Participant's account should be voted,
notwithstanding that the contract owner may be the Participant's employer.
Contract owners will instruct the Accounts to vote in accordance with such
instructions. Fractional shares also will be voted in accordance with
instructions received.
23
