Exhibit 1.A(8)(F)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 23rd day of August, 2002, by and among The World
Insurance Trust (the "Trust"), a business trust organized under the laws of the
State of Delaware, First Dominion Capital Corporation, a corporation organized
under the laws of the Commonwealth of Virginia (the "Distributor"), CSI Capital
Management, Inc. (the "Adviser"), a corporation organized under the laws of the
State of California and Xxxx Xxxxxxx Variable Life Insurance Company (the
"Company"), a life insurance company organized under the laws of the
Commonwealth of Massachusetts.
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust was organized to act as a funding vehicle for variable
life insurance and/or variable annuity contracts, and shares of beneficial
interest of the Trust are divided into several series of shares, each
representing the interests in a particular managed pool of securities and other
assets (each a "Fund" and collectively, the "Funds"); and
WHEREAS, the Funds offered by Trust and Distributor to the Company, and
each class of Fund shares so offered (the "Shares"), are set forth on Schedule A
hereto; and
WHEREAS, the Distributor is a member firm of the National Association of
Securities Dealers, Inc., and is duly registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and any
applicable state securities law, and is the Trust's principal underwriter; and
WHEREAS, the Adviser is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
any applicable state securities law, and is the Trust's investment adviser; and
WHEREAS, the Company has established one or more separate accounts set
forth in Schedule B, as may be amended from time to time (the "Separate
Accounts") to offer certain variable life insurance and/or variable annuity
contracts (the "Variable Contracts"); and
WHEREAS, the Separate Accounts are or will be duly organized, validly
existing segregated asset accounts of the Company, to set aside and invest
assets attributable to the Variable Contracts;
WHEREAS, the Company has registered or will register the Separate Accounts
as unit investment trusts under the 1940 Act (unless an exemption from
registration is available) and has registered or will register the Variable
Contracts under the 1933 Act (unless an exemption from registration is
available);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Shares of one or more of the Funds
specified in Schedule A to fund the Variable Contracts, and the Trust and the
Distributor intend to sell such Shares to the Company for its Separate Accounts
at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor, the Adviser and the Company agree as follows:
Article I. PURCHASE AND REDEMPTION OF FUND SHARES
1.1 Purchase of Shares. The Trust and the Distributor agree to sell Shares to
the Company that the Company orders on behalf of the Separate Accounts,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the Shares. For
purposes of this Section 1.1, the Company shall be the designee of the Trust for
receipt of such orders from each Separate Account and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust receives notice
by telephone, facsimile (orally confirmed) or by such other means as the Trust
and the Company may mutually agree of such purchase order by 10:00 a.m. Boston
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for regular trading.
1.2 Redemption of Shares. The Trust agrees to redeem, upon the Company's
request, any full or fractional Shares held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. For purposes of this
Section 1.2, the Company shall be the designee of the Trust for receipt of
requests for redemption and receipt by such designee shall constitute receipt by
the Trust; provided that the Trust receives notice by telephone, facsimile
(orally confirmed) or by such other means as Trust and Company may mutually
agree of such request for redemption by 10:00 a.m. Boston time on the next
following Business Day.
1.3 Timely Pricing and Orders. The Trust and the Adviser will provide closing
net asset value information per share for each Fund specified on Schedule A to
the Company at the close of trading on each Business Day. The Trust and the
Adviser will use their best efforts to provide this information by 6:00 p.m.
Boston time. In the event that the Trust or the Adviser is unable to meet the
6:00 p.m. time stated herein, the Company shall be provided additional time to
provide notice of orders for the purchase and redemption of Shares equal to the
additional time it takes the Trust and the Adviser to make this information
available to the Company. However, if this information is not available for
inclusion in the next business cycle and purchase orders/redemptions are not
able to be calculated and available for the Company to provide notice within the
time specified in sections 1.1 and 1.2 hereof (i.e., 10:00 a.m. Boston time on
the next following Business Day), then the Company and its Separate Accounts
shall be entitled to an adjustment to the number of Shares purchased or redeemed
to reflect the correct share net asset value, and the Trust shall reimburse the
Company for reasonable incidental expenses related to such unavailability of net
asset value(s) per share within the time specified herein. Subject to the
foregoing, at the end of each Business Day, the Company shall use the net asset
value information described above to calculate Separate Account unit values for
the day. Using these unit values, the Company shall process each such Business
Day's Separate Account transactions
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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. Eastern time) to
determine the net dollar amount of Fund Shares which shall be purchased or
redeemed at that day's closing net asset value per share. The Company will use
its best efforts to place notice of net purchase or redemption orders with the
Trust by 10:00 a.m. Boston time, on the Business Day next following the
Company's receipt of such requests in accordance with the terms of Sections 1.1
and 1.2 hereof and neither the Trust or the Adviser will be liable for a delay
in the calculation of the net asset value(s) that results from the failure of
the Company to provide by 10:00 a.m. all required information concerning sales
and redemptions during the preceding business day.
1.4 Payment for Purchase of Shares. The Company shall pay for Shares purchased
at its direction by 4:00 p.m. Boston time on the Business Day it provides notice
of an order to purchase such Shares in accordance with section 1.1 hereof.
Payment shall be in federal funds transmitted by wire less, with respect to
purchase of Shares of a Fund specified in schedule A, a credit for any Shares
redeemed from that Fund by Company.
1.5 Payment Upon Redemption of Shares. Under normal circumstances, the Trust
shall make payment to the Company by 2:00 p.m. Boston time for Shares redeemed
on the Business Day the Company provides notice to redeem Shares in accordance
with section 1.2 hereof; provided, however that Trust may delay redemptions
uniformly to all holders of shares of that Fund during any time period specified
in the Trust's prospectus or statement of additional information. Payment shall
be in federal funds transmitted by wire to the Company's bank accounts as
designated by Company.
1.6 Dividends and Distributions. The Trust or the Adviser shall furnish notice
on or before the ex-dividend or ex-distribution date of this Agreement, of the
declaration and amount per share of any income, dividends or capital gain
distributions payable on the Shares of any Fund. The Company hereby elects to
receive all such income dividends and capital gain distributions as are payable
on Shares of a Fund in additional Shares of that Fund, and the Trust shall
notify the Company or its designee of the number of Shares so issued as payment
of such dividends and distributions. The Company reserves the right to change
this election in the future.
1.7 No Public Sales. The Trust agrees that all shares of the Funds will be sold
only to Company, its affiliates, and other non-affiliated insurance companies
which have agreed to participate in the Trust to be held in their respective
separate accounts and/or to certain qualified retirement plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue Code
of 1986, as amended ("Code") and Treasury Regulation 1.817-5. No shares of the
Trust will be sold directly to the general public.
1.8 Suspension, Termination of Sales. The Trust may refuse to sell shares of any
Fund to any person, or may suspend or terminate the offering of the Shares of
any Fund 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 their fiduciary duties under
federal and any applicable state laws, necessary and in the best interests of
shareholders of that Fund.
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1.9 Book-Entry. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or to the Separate
Accounts. Shares ordered from the Trust will be recorded in appropriate book
entry titles for Separate Accounts.
1.10 Pricing Errors. In the event of an error in the computation of a Fund's net
asset value per share ("NAV") or any dividend or capital gain distribution
(each, a "pricing error"), the Adviser or the Trust shall notify the Company as
soon as possible after discovery of the error. Such notification may be verbal,
but shall be confirmed promptly in writing. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, the Trust shall make an adjustment to the number of shares
purchased or redeemed by the Company to reflect the current NAV. If an
adjustment is necessary to correct a material error that has caused Variable
Contract owners to receive less than the amount to which they are entitled, the
number of shares of the appropriate Fund(s) attributable to the accounts of the
Variable Contract owners will be adjusted and the amount of any underpayments
shall be credited by the Trust to the Company for crediting of such amount to
the applicable Variable Contract owners accounts. Upon notification by the Trust
of any overpayment due to a material error, the Company shall promptly remit to
Trust any overpayment that has not been paid to Variable Contract owners;
provided, that the Adviser, the Distributor and the Trust each acknowledge that
the Company shall not be required to recover overpayments from any Variable
Contract owner that, because of a pricing error, may have been overpaid for
units of interest redeemed from his/her account, but shall reasonably cooperate
with the Trust should it determine to seek such recovery. In furtherance
thereof, upon the request of the Trust, the Company shall authorize the Trust to
institute and prosecute, at its expense, any action to recover material
overpayments from any Variable Contract owner arising from such a pricing error;
provided, however, that in any such event, the Trust shall indemnify and hold
harmless Company and each of its officers, directors, employees and agents
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company, which consent shall not
be unreasonably withheld) or litigation (including legal and other expenses), to
which such indemnified parties may become subject under any statute, regulation,
at common law or otherwise, to the extent such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements result
from or are related to the pricing error. In no event shall the Company be
liable to Variable Contract owners for any such adjustments or underpayment
amounts. The provisions of this Section 1.10 shall survive termination of the
Agreement.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 Company Representations and Warranties. The Company represents and warrants
that:
(a) it is an insurance company duly organized and in good standing under
the laws of Massachusetts and that it has legally and validly
established each Separate Account as a segregated asset account under
such laws; and
(b) it has registered or, prior to any issuance or sale of the Variable
Contracts, will register each Separate Account as a unit investment
trust in accordance with the
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provisions of the 1940 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable
Contracts, unless an exemption from registration is available; and
(c) the Variable Contracts will be registered under 1933 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
(d) for purposes other than diversification under section 817 of the Code
and "investor control," the Variable Contracts are currently, and at
the time of issue shall be, treated as life insurance, endowment or
annuity contracts under applicable provisions of the Code, and that the
Company will make every effort to maintain such treatment and that it
will notify the Trust 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. In addition, the Company
represents that each of its Separate Accounts is a "segregated asset
account" and that interests in the Separate Accounts are offered
exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. The Company will use every effort
to continue to meet such definitional requirements, and it will notify
the Trust immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met
in the future.
2.2 Trust Representations and Warranties. The Trust represents and warrants
that:
(a) it has appointed Distributor as the principal underwriter of shares of
the Funds within the meaning of the federal securities laws;
(b) Trust shares offered and sold pursuant to this Agreement will be
registered under the 1933 Act and sold in accordance with all
applicable federal and state laws;
(c) it shall be registered under the 1940 Act prior to and at the time of
any issuance or sale of such shares and, subject to Section 1.9 above,
Trust shall amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the
continuous offering of its shares;
(d) it shall register and qualify its shares for sale in accordance with,
and to the extent required by, the laws of the various states;
(e) 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 that in the event a Fund should fail to so qualify or if the Trust
shall have a reasonable basis for believing that a Fund might not so
comply, the Trust will notify the Company immediately and will
immediately take all steps necessary to adequately diversify the Fund
to achieve compliance within the grace period provided under such
regulations; and
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(f) each Fund is qualified as a Regulated Investment Company under
Subchapter M of the Code and will maintain such qualification (under
Subchapter M or any successor provision), and that it in the event a
Fund should fail to so qualify or the Trust shall have a reasonable
basis for believing that a Fund might not so qualify, the Trust will
notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so
qualify in the future and will immediately take all steps necessary to
qualify for such treatment for each taxable year; and
(g) each Fund will comply in all material respects with any applicable
state insurance law restrictions; provided, however, that Company
provides specific written notification of such restrictions to the
Trust or the Adviser, and it will furnish information to the Company
about the Trust that is not otherwise available to the Company so long
as the Company has advised the Trust that such information is required
by state insurance law;
(h) each of its trustees, officers, employees, investment advisers, 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 one
or more blanket fidelity bonds or similar coverage for the benefit of
the Trust in an amount not less than the minimal coverage required by
Rule 17g-1 under the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a
reputable bonding company and the Trust agrees 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 Company in the
event that such coverage no longer applies;
(i) to the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1 under the 1940 Act, the Trust undertakes to have its
Board, the majority of whose members are not "interested persons" of
the Trust, formulate and approve any plan to finance distribution and,
in such event, the Trust shall immediately notify the Company of such
plan; and
(j) it shall comply in all material respects with applicable provisions of
the 1940 Act and the regulations thereunder so that any investment
advisory, distribution or management fees paid by a Fund are in
accordance with the requirements of the 0000 Xxx.
2.3 Distributor Representations and Warranties. Distributor represents and
warrants that:
(a) it is and will remain a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD");
(b) it is registered as a broker-dealer under the 1934 Act and will remain
duly registered and licensed under all applicable federal and state
securities laws; and
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(c) it serves as principal underwriter of the Trust, and it will distribute
Fund shares and perform its obligations hereunder in compliance in all
material respects with all applicable state and federal laws and
regulations.
2.4 Adviser Representations and Warranties. Adviser represents and warrants
that:
(a) it is and will remain duly registered under the Advisers Act and under
all other applicable federal and state securities laws and that it
shall perform its obligations for the Trust in compliance with any
applicable state and federal securities laws; and
(b) it will furnish services to the Trust in a manner that will cause each
Fund to comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder,
including without limitation Treasury Regulation 1.817-5, and in the
event a Fund should fail to so qualify or if Adviser shall have a
reasonable basis for believing that a Fund might not so comply, the
Adviser will notify the Company immediately and will immediately seek
to take all steps necessary to adequately diversify the Fund to achieve
compliance within the grace period provided under such regulations; and
(c) in providing services to the Trust, it will use best efforts to cause
each Fund to be qualified as a Regulated Investment Company under
Subchapter M of the Code and will maintain such qualification (under
Subchapter M or any successor provision), and in the event a Fund
should fail to so qualify or if the Adviser shall have a reasonable
basis for believing that a Fund might not so qualify, the Adviser will
notify the Company immediately and will immediately take all steps
within its power necessary to qualify for such treatment for each
taxable year; and
(d) in providing its services to the Trust, the Adviser will use best
efforts to cause each Fund to comply in all material respects with any
applicable state insurance law restrictions; provided, however, that
the Company provides specific written notification of such restrictions
to the Trust or the Adviser, and the Adviser will furnish information
to the Company about the Trust not otherwise available to the Company
which it has been advised by the Company is required by state insurance
law; and
(e) each of its directors, officers, employees, 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 one or more blanket
fidelity bonds or similar coverage for the benefit of the Trust in an
amount not less than the minimal coverage required by Rule 17g-1 under
the 1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bonds shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company. The
Adviser agrees 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 Company in the event that such coverage no longer
applies; and
(f) it shall comply in all material respects with applicable provisions of
the 1940 Act and the regulations adopted thereunder so that any
investment advisory, distribution or
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management fees it receives from, or pays on behalf of, the Trust are
in accordance with the requirements of the 1940 Act.
Article III. PROSPECTUS, REPORTS AND PROXY STATEMENTS
3.1 Registration. The Trust shall prepare and be responsible for filing with the
SEC and any state regulators requiring such filing all of the Trust's
registration statements, shareholder reports, notices, proxy materials (or
similar materials such as voting instruction solicitation materials),
prospectuses and statements of additional information.
3.2 Trust Prospectus. At least annually, the Trust or its designee shall provide
to the Company, free of charge, as many copies of the current prospectus for the
shares of the selected Funds as the Company may reasonably request for
distribution to existing Variable Contract owners whose Variable Contracts are
funded by such shares. The Trust or its designee shall provide the Company, at
the Company's expense, with as many more copies of the current prospectus for
the selected Funds as the Company may reasonably request for distribution to
prospective purchasers of Variable Contracts (including existing Variable
Contract owners whose Variable Contracts are not funded by such shares). Except
as required by regulation or law, the Trust and the Distributor agree that the
prospectus for the selected class of the selected Fund(s) will describe only
such class and such Fund(s) and will not offer the shares of any other Fund or
any other class or shares that may be organized within the Trust. If requested
by the Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" final copy of such documentation on
diskette at the Trust's expense) and such other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if the
prospectus for the Shares is supplemented or amended) to have the prospectus for
the Variable Contracts, the prospectus for the Trust shares, and the prospectus
for any other investment company or fund offered as investments for the Variable
Contracts printed together in one document. The Trust and the Distributor agree
to cooperate with the Company to provide the documents on a timely basis to meet
the Company's reasonable deadline requirements for production. The Trust or the
Distributor shall reimburse the Company for additional expenses it reasonably
incurs as a direct result of late delivery of Trust's prospectus which is caused
by the Trust or the Distributor. The reimbursements provided for under this
section 3.2 shall be in addition to any indemnification provided under Article
VIII.
3.3 Shareholder Reports. The Trust shall provide the Company with copies of the
Trust's reports to shareholders, and other Trust communications to shareholders
in such quantity as the Company shall reasonably require for distribution to
Variable Contract owners. If requested by the Company in lieu thereof, the Trust
or its designee shall provide to the Company reports to shareholders in a
camera-ready format. The Trust agrees that the Trust's reports delivered to the
Company for dissemination to Variable Contract owners will describe only the
Funds and the Shares specified in Schedule A and, except as required by law or
regulation, will not refer to any other Funds, or other classes of shares of the
Trust. The Trust (or the Distributor) shall reimburse the Company for reasonable
expense of distribution of reports to existing Variable Contract owners
investing in the Funds. The Trust and the Distributor agree to cooperate with
the Company to provide the Trust's report to shareholders within 45 calendar
days of the end of the reporting period so as to meet the Company's requirements
for production and delivery on a timely basis. The Trust or the Distributor
shall reimburse the Company for additional expenses it
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reasonably incurs as a direct result of late delivery of the Trust's reports to
shareholders caused by the Trust or Distributor. The reimbursements provided for
under this Section 3.3 shall be in addition to any indemnification provided
under Article VIII.
3.4 Proxy Statements. The Trust shall provide the Company with copies of the
Trust's proxy statements and other related Trust communications to shareholders,
in such quantity as the Company shall reasonably require for distribution to
Variable Contract owners. The Trust or the Distributor shall reimburse the
Company for reasonable expenses in connection with a proxy statement, including
without limit, the reasonable expense of distribution of the Trust's proxy
material to Variable Contract owners and the expense of a proxy tabulator.
3.5 Notification of Filing. The Trust will provide the Company with at least one
complete copy of all prospectuses, statements of additional information, annual
and semi-annual reports, proxy statements, 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. The Company will provide
Trust with at least one complete copy of all prospectuses, statements of
additional information, annual and semi-annual reports, proxy statements, and
all amendments or supplements to any of the above that relate to a selected Fund
promptly after the filing of each such document with the SEC or other regulatory
authority.
Article IV. SALES MATERIAL AND INFORMATION
4.1 Definition. 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 NASD rules, the 1940 Act or the 0000 Xxx.
4.2 Review by the Trust or the Distributor. The Company will furnish, or will
cause to be furnished, to the Trust or the Distributor, each piece of sales
literature or other promotional material in which the Trust, the Distributor or
any affiliate thereof is named, at least ten (10) Business Days prior to its
intended use. No such material shall be used unless the Trust or the Distributor
approves such material. Such approval shall be presumed given if notice to the
contrary is not received by the Company within fifteen (15) Business Days after
receipt by the Trust or Distributor of such material.
4.3 Review by Company. The Trust or the Distributor will furnish, or will cause
to be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company or its Separate Accounts are named, at
least ten (10) Business Days prior to its
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intended use. No such material shall be used unless the Company approves such
material in writing.
4.4 Information about Company, Separate Accounts or Variable Contracts. Except
with the permission of the Company, neither the Trust, the Adviser nor the
Distributor shall give any information or make any representations on behalf of
the Company or concerning the Company or any affiliate thereof, the Separate
Accounts, or the Variable Contracts other than the information or
representations contained in the registration statement or prospectus for such
Variable Contracts, as such registration statement and prospectus may be amended
or supplemented from time to time, or in reports of the Separate Accounts for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Company or its designee, provided
however that such information or representations are used in a context that does
not cause the information, representations or statements contained in the
registration statement or prospectus for the Variable Contracts, reports of the
Separate Account, or sales literature or other promotional material approved by
the Company or its designee to be untrue or omit information contained in such
documentation otherwise required to be stated or necessary to make the
information, representations, or statements not misleading.
4.5 Information about the Trust, the Adviser or the Distributor. Except with the
permission of the Trust, the Adviser or the Distributor, the Company shall not
give any information or make any representations on behalf of the Trust, the
Adviser or the Distributor or any affiliate thereof other than the information
or representations contained in the registration statements or prospectuses for
the Trust, as such registration statements and prospectuses may be amended or
supplemented from time to time, or in reports to shareholders or proxy
statements for the Trust, or in sales literature or other promotional material
approved by the Trust, the Adviser or the Distributor or designee thereof,
provided however that such information or representations are used in a context
that does not cause the information, representations or statements contained in
the registration statements or prospectuses for the Trust, reports to
shareholders or proxy statements for the Trust, or sales literature or other
promotional material approved by the Trust or Distributor or designee thereof to
be untrue or omit information contained in such documentation otherwise required
to be stated or necessary to make the information, representations, or
statements not misleading.
4.6 Use of Xxxx Xxxxxxx Name. Neither the Trust, the Adviser nor the Distributor
shall use any designation comprised in whole or part of the names or marks "Xxxx
Xxxxxxx" or "Xxxxxxx" or any logo or other trademark relating to the Company,
the Separate Accounts or the Variable Contracts without the prior written
consent of the Company. The Company reserves the right to object to the
continued use of any sales literature or other material in which any such name
or xxxx is used and no such material shall be used if the Company or its
designee so objects. Upon termination of this Agreement for any reason, the
Trust, Distributor and Adviser shall all cease use of any such name or xxxx.
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ARTICLE V. FEES, COSTS AND EXPENSES
5.1 No Fees Payable Under Agreement. The Trust, Distributor and Adviser shall
pay no fee or other compensation to the Company under this Agreement and the
Company shall pay no fee or other compensation to the Trust, the Distributor or
the Adviser under this Agreement, although the parties hereto will bear certain
expenses in accordance with this Agreement.
5.2 Allocation of Expenses. Each party shall, in accordance with the allocation
of expenses specified in this Agreement, reimburse other parties for expenses
initially paid by one party but allocated to another party. In addition, nothing
herein shall prevent the parties hereto from otherwise agreeing to perform and
arranging for appropriate compensation for (a) distribution and
shareholder-related services under a plan adopted in accordance with Rule 12b-1
under the 1940 Act and (b) other services that are not primarily intended to
result in the sale of shares of the Funds, which are provided to Variable
Contract owners relating to the Funds.
5.3 Trust Expenses for Registration and Qualification. Except as otherwise set
forth in this Agreement, all expenses incident to performance by the Trust of
this Agreement will be paid by the Trust or the Distributor to the extent
permitted by law. All shares of the Funds specified on Schedule A will be duly
authorized for issuance and registered in accordance with applicable federal law
and, to the extent deemed advisable by the Trust, in accordance with applicable
state law, prior to sale. The Trust will bear the expenses for the cost of
registration and qualification of the Shares, including without limitation, the
preparation of and filing with the SEC of Forms N-1A and Rule 24f-2 Notices on
behalf of the Trust and payment of all applicable registration or filing fees
(if applicable) with respect to shares of the Trust; preparation and filing of
the Trust's prospectus, SAI and registration statement, proxy materials and
reports; typesetting the Trust's prospectus; typesetting and printing proxy
materials and reports to Variable Contract owners (including the costs of
printing a Trust prospectus that constitutes an annual report); the preparation
of all statements and notices required by any federal or state law; all taxes on
the issuance or transfer of shares of the Funds; any expenses permitted to be
paid or assumed by the Trust with respect to the Funds pursuant to a plan, if
any, under Rule 12b-1 under the 1940 Act; and other costs associated with
preparation of prospectuses and SAIs regarding the Funds in electronic or
typeset format for distribution to existing Variable Contract owners determined
in accordance with Section 3.2 hereof.
5.4 Company Expenses for Registration and Qualification. Except as otherwise
provided in Sections 1.3, 1.10, 3.2, 3.3, 3.4, 5.5, 8.3, 8.4, 8.5 and 9.4, the
Company shall bear all expenses associated with the registration, qualification,
and filing of the Variable Contracts under applicable federal securities and
state insurance laws; the cost of preparing, printing, and distributing the
Variable Contracts' prospectus and SAI; the cost of printing the Trust's
prospectus for use in connection with offering the Variable Contracts; and the
cost of printing and distributing such annual individual account statements for
Variable Contract owners as are required by state insurance laws.
5.5 Reimbursement for Substitution. Notwithstanding anything herein to the
contrary, the Trust, the Distributor or the Adviser shall reimburse the Company
for the costs associated with substituting the securities of a registered
investment company for the shares of any Fund that has discontinued or intends
to discontinue the offering of its shares to Variable Contract owners, or
-11-
that implements, or intends to implement, a fundamental change in investment
objective or policy or other change requiring shareholder approval, or with
respect to which the Company determines to terminate the Agreement pursuant to
Section 9.2(b)-(d) or (g) hereof. The costs of such substitution shall include,
without limitation, reasonable legal fees for obtaining any required SEC order
approving such substitution, and expenses for printing and distributing any
prospectus supplement or other disclosure of the substitution or elimination of
the affected Fund as an investment vehicle under the Contracts.
Article VI. POTENTIAL CONFLICTS
6.1 Application for Mixed and Shared Funding Exemptive Order. The parties
acknowledge that the Trust will file an application with the SEC, at its
expense, requesting an order granting relief from various provisions of the 1940
Act and the rules adopted thereunder to the extent necessary to permit Trust
shares to be sold to and held by variable annuity and variable life insurance
separate accounts of other insurance companies that are unaffiliated with the
Company (the "Participating Companies") and qualified pension and retirement
plans outside the separate account context (the "Qualified Plans"). It is
anticipated that such exemptive order (the "Mixed and Shared Funding Exemptive
Order"), when and if issued, shall require Trust, the Company and each
Participating Company and Qualified Plan to comply with conditions and
undertakings substantially as provided in this Article. If the Mixed and Shared
Funding Exemptive Order imposes conditions materially different from those
provided for in this Article, the conditions and undertakings imposed by the
Mixed and Shared Funding Exemptive Order shall govern this Agreement and the
parties hereto agree to amend this Agreement consistent with the Mixed and
Shared Funding Exemptive Order to the extent reasonably practicable.
6.2 Determination by Board. The Trust's Board will monitor the Trust for the
existence of any material irreconcilable conflict between and among the
interests of the Variable Contract owners and the owners of variable contacts of
all Participating Companies and of Qualified Plan Participants and Qualified
Plans investing in the Trust, and determine what action, if any, should be taken
in response to such conflicts. 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 the Company or 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. The Board's
determination of the existence of an irreconcilable material conflict and its
implications shall be made known promptly and in writing to the Company.
6.3 Assistance of the Company. The Company will be responsible for assisting the
Board in carrying out its duties and responsibilities under the Mixed and Shared
Trusting Exemptive Order 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 Company to inform the
Board whenever it has determined to disregard Variable Contract owner
-12-
voting instructions. No less than annually, the 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.
6.4 Remedial Action. If a majority of the Board, or a majority of its
disinterested Board members, determines that a material irreconcilable conflict
exists with regard to contract owner investments in the Trust, the Board shall
give prompt notice of the conflict and the implications thereof to the Company
and all Participating Companies and Qualified Plans. If the Board determines
that Company is a relevant Participating Company or Qualified Plan with respect
to said conflict, the Company shall at its sole cost and expense, and to the
extent reasonably practicable (as determined by a majority of the disinterested
Board members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include but shall
not be limited to:
(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 question 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 the Company's decision to disregard Variable
Contract owner voting instructions, and that decision represents a
minority position or would preclude a majority vote, the Company may be
required, at the election of the Trust to withdraw the Separate
Account's investment in the Trust, and no charge or penalty will be
imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests
of the Variable Contract owners.
6.5 Disregard of Voting Instructions. If a material irreconcilable conflict
arises because of a decision by the Company to disregard Variable Contract owner
voting instructions, and such disregard of voting instructions could conflict
with the majority of variable contract owner voting instructions, and the
Company's judgment represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw the
investment of the affected sub-account(s) of the Separate Account(s) in the Fund
and terminate this Agreement with respect to such sub-account(s) provided,
however, that such withdrawal and termination will be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board of the Trust. No charge or
penalty will be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice to the Company that
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this provision is being implemented. Until the end of such six-month period, the
Distributor and the Adviser will, to the extent permitted by law and the Mixed
and Shared Funding Order, continue to accept and implement orders by the Company
for the purchase (and redemption) of shares of the Trust.
6.6 State Insurance Regulatory Decision. If a material irreconcilable conflict
arises because a particular state insurance regulator's decision applicable to
the Company conflicts with the decisions of the majority of other state
insurance regulators, then the Company will withdraw the investment of the
affected sub-account(s) of the Separate Account(s) in the Fund and terminate
this Agreement with respect to such sub-account(s); provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. The Trust agrees that it shall seek to
assure that no charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal and termination must take place within six (6) months after
the Trust gives written notice to the Company that this provision is being
implemented. Until the end of such six-month period the Trust will, to the
extent permitted by law and the Mixed and Shared Funding Order, continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Funds.
6.7 Resolution of Material Conflict. For purposes of Section 6.4 through 6.6 of
this Agreement, a majority of the disinterested members of the Board will
determine whether any proposed action adequately remedies any material
irreconcilable conflict, but in no event will the Trust be required to establish
a new funding medium for the Variable Contracts. The Company will not be
required by Section 6.4 to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Variable Contract
owners affected by the material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy any
material irreconcilable conflict, then the Company will withdraw the investment
of the affected sub-account(s) of the Separate Account(s) in the affected Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination will be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board of the Trust.
Article VII. VOTING
7.1 Pass-Through Voting. The Company will provide pass-through voting privileges
to all Variable Contract owners so long as the SEC continues to interpret the
1940 Act as requiring pass-through voting privileges for Variable Contract
owners. Accordingly, the Company, where applicable, will vote shares of the
Funds held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. The Company will
be responsible for assuring that each of its Separate Accounts that participates
in a Fund calculates voting privileges in a manner consistent with other
Participating Insurance Companies; provided the Trust, the Distributor or the
Adviser provides timely notice to the Company of the manner of calculation of
such other Participating Insurance Companies. The 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 received
voting
-14-
instructions. The Company shall not oppose or interfere with the solicitation of
proxies for Trust shares held for such Variable Contract owners.
7.2 Compliance with Rules 6e-2 and Rule 6e-3(T). 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 1940 Act or the rules thereunder with respect
to mixed and shared funding on terms and conditions materially different from
any exemptions granted in any Mixed and Shared Funding Exemptive Order obtained
by the Trust, then Trust, and/or the Company, as appropriate and as reasonably
practicable, shall take such steps as may be necessary to comply with Rule 6e-2
and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
Rules are applicable.
Article VIII. INDEMNIFICATION
8.1 Indemnified Parties.
(a) For purposes of Sections 8.2, 8.7 and 8.8, the term "Indemnified
Parties" shall mean the Trust, the Adviser and the Distributor, and each of
their trustees, directors, members, principals, officers, partners,
employees and agents and each person, if any, who controls the Trust, the
Adviser or the Distributor within the meaning of Section 15 of the 0000
Xxx.
(b) For purposes of Sections 8.3 through 8.5, 8.7 and 8.8, the term
"Indemnified Parties" shall mean the Company and each of its directors,
members, principals, officers, partners, employees and agents and each
person, if any, who controls the Company within the meaning of Section 15
of the 0000 Xxx.
8.2 Indemnification by the Company.
(a) Subject to Section 8.6 below, the Company agrees to indemnify and hold
harmless the Indemnified Parties against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the 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 the Trust's shares or the Variable
Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement, prospectus, or sales literature for the Variable Contracts
or contained in the Variable Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any of the Indemnified Parties if such statement
or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of any of the Indemnified
-15-
Parties for use in the registration statement or prospectus for the
Variable Contracts or in 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
(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 Trust
not supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Variable Contracts or Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, or
sales literature of the Trust or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Trust by or on behalf of
the Company; or
(iv) arise as a result of any failure by the Company 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 Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party 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.
8.3 Indemnification by the Trust.
(a) Subject to Section 8.6 below, the Trust agrees to indemnify and hold
harmless the Indemnified Parties against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust, 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:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus or sales
-16-
literature of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified 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 Trust, the Adviser or the
Distributor by the Company for use in the registration statement or
prospectus for the Trust (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts or Trust
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
Variable Contracts not supplied by the Trust, the Adviser or the
Distributor or persons under their control) or wrongful conduct of the
Trust, the Adviser or the Distributor or persons under their control,
with respect to the sale or distribution of the Variable Contracts or
Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement or prospectus
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 the Company for
inclusion therein by or on behalf of the Trust, the Adviser or the
Distributor; or
(iv) arise as a result of a failure by the Trust, the Adviser or the
Distributor 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 Trust, the Adviser or the
Distributor in this Agreement or arise out of or result from any other
material breach of this Agreement by the Trust.
(b) The Trust shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
8.4 Indemnification by the Adviser.
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(a) Subject to Section 8.6 below, the Adviser agrees to indemnify and hold
harmless the Indemnified Parties against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser 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:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement made by the Adviser of any material fact contained in
the registration statement, prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission by
the Adviser 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 Trust, the Adviser or the Distributor by
the Company for use in the registration statement or prospectus for
the Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or Trust 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
Variable Contracts not supplied by the Adviser or persons under its
control) or wrongful conduct of the Adviser or persons under its
control, with respect to the sale or distribution of the Variable
Contracts or Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement or prospectus
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 the Company for
inclusion therein by or on behalf of the Adviser; or
(iv) arise as a result of a failure by the Adviser 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 Adviser in this Agreement
or arise out of or result from any other material breach of this
Agreement by the the Adviser.
(b) The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would
-18-
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
8.5 Indemnification by the Distributor.
(a) Subject to Section 8.6 below, the Distributor agrees to indemnify and
hold harmless the Indemnified Parties against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Distributor 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:
(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 of the Trust (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified 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 Distributor
by or on behalf of the Company for use in the registration statement
or prospectus for the Trust (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts or Trust 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
Variable Contracts not supplied by the Distributor, the Adviser or
persons under their control) or wrongful conduct of the Distributor,
the Adviser or persons under their control, with respect to the sale
or distribution of the Variable Contracts or Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement or prospectus
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 the Company for
inclusion therein by or on behalf of the Trust, the Adviser or the
Distributor; or
-19-
(iv) arise as a result of a failure by the Trust, the Adviser or the
Distributor 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 Trust or the Distributor in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Trust or the Distributor.
(b) The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement.
8.6 Indemnification for Errors. In the event of any error or delay with respect
to information regarding the pricing, purchase, redemption, transfer or
registration of shares of the Trust, the parties agree that each is obligated to
make the Separate Accounts and/or the Trust, respectively, whole for any error
or delay that it causes, subject in each case to the related Fund's policies on
materiality of pricing errors, if applicable. In addition, each party agrees
that no party will receive compensation from the other for the costs of any
reprocessing necessary as a result of an error or delay. Each party agrees to
provide the other with prompt notice of any errors or delays of the type
referred to in this Section in a mutually agreeable form and which shall be
confirmed in writing.
If an adjustment is necessary to correct a material error which has caused
Variable Contract owners to receive less than the amount to which they are
entitled, the number of shares of the appropriate Fund(s) attributable to the
accounts of the Variable Contract owners will be adjusted and the amount of any
underpayments shall be credited by the Trust to the Company for crediting of
such amounts to the applicable Variable Contract owners' accounts. Upon
notification by the Trust or its designee of any overpayment due to a material
error, the Company shall promptly remit to the Trust any overpayment that has
not been paid to Variable Contract owners. If any such overpayment has been paid
to Variable Contract owners, upon request by Trust or its designee, the Company
shall provide reasonable assistance to recover overpayments from Variable
Contract owners or make other adjustments of applicable Shares in the applicable
Variable Contract owners' accounts in lieu thereof. If because of a pricing
error Variable Contract owners underpaid for units of interest credited to
his/her account, upon request by Trust, the Company shall provide reasonable
assistance to recover any such underpayments or make or other adjustment of
applicable shares in the applicable Variable Contract owners' accounts in lieu
thereof.
8.7 Notification of Claim. A party shall not be liable under this Article with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified such indemnifying party, 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 such indemnifying
party of any such claim shall not
-20-
relieve the the Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision.
8.8 Participation in, and Assumption of, Defense of a Claim. In case any action
is brought against the Indemnified Parties and a party is notified thereof in
accordance with section 8.7, that party shall be entitled (a) to participate at
its own expense in the defense thereof and (b) to elect to assume the defense
thereof with counsel satisfactory to the party named in the action; provided,
however, that in the event an Indemnified Party receives notice to assume
defense of the same or related claim from any two or more of the Trust, Adviser
and Distributor, the Indemnified Party, in its sole discretion, shall determine
which election to accept. After an election is made to assume the defense of an
action, the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the party assuming the defense will not be liable to
such Indemnified 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 IX. TERM; TERMINATION
9.1 Term of Agreement. This Agreement shall be effective as of the date hereof
and shall continue in force until terminated in accordance with the provisions
herein.
9.2 Termination of Agreement. This Agreement shall terminate as to one, some,
or all of the Funds in accordance with the following provisions:
(a) at the option of any party as to any Fund, upon ninety (90) days'
advance written notice to the other parties; or
(b) at the option of the Company as to any Fund, upon written notice to the
other parties, to the extent that the Shares of that Fund are not
reasonably available to meet the requirements of the Variable Contracts
or are not appropriate funding vehicles for the Variable Contracts, as
determined by the Company. Without limiting the generality of the
foregoing, Shares of a Fund are "not appropriate funding vehicles for
the Variable Contracts" in instances where, for example: (i) Fund
shares for any class are offered at public sale; (ii) the Fund ceases
to qualify as a regulated investment company under Subchapter M of the
Code (or any successor or similar provision); (iii) the Fund has failed
to comply with the diversification requirements of Section 817(h) of
the Code (or any successor or similar provision), (iv) the Company
reasonably believes that the Fund will cease to qualify as a regulated
investment company under Subchapter M of the Code (or any successor or
similar provision) or (v) the Company reasonably believes that the Fund
will fail to comply with the diversification requirements of Section
817(h) of the Code (or any successor or similar provision); or
(c) at the option of the Company, upon written notice to the other parties,
in the event formal proceedings are instituted against Trust,
Distributor or Adviser by the SEC, the NASD, or any other regulatory
body, regarding the Trust's, Distributor's or Adviser's obligations and
duties hereunder or related to the sales of the Shares and, in
-21-
the reasonable opinion of Company, such proceedings are deemed unlikely
to be resolved within 90 days to Company's satisfaction; or
(d) at the option of Company, upon written notice to the other parties, if
the Company shall determine, in its sole judgment exercised in good
faith, that the Trust, the Distributor or the Adviser 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
(e) at the option of the Trust, Distributor or Adviser, upon written notice
to the Company, in the event formal proceedings are instituted against
the Company by the SEC, the NASD, or any other regulatory body,
regarding the Company's obligations and duties hereunder; or
(f) at the option of the Trust, the Distributor or the Adviser, upon
written notice to the Company, if they shall determine, in their
judgment exercised in good faith, that the Company 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) at the option of the Company, upon the Trust's, the Distributor's or
the Adviser's material breach of any provision of this Agreement, which
breach has not been cured to the satisfaction of the Company within ten
(10) days after written notice of such breach is delivered to the
Trust, the Distributor or the Adviser, as the case may be; or
(h) at the option of the Trust, upon the Company's material breach of any
provision of this Agreement, which breach has not been cured to the
satisfaction of the Trust within ten (10) days after written notice of
such breach is delivered to the Company; or
(i) upon assignment of this Agreement, unless made with consent of the
parties hereto; or
(j) as provided in Article VI hereof.
9.3 Availability of Shares Following Termination. Notwithstanding any
termination of this Agreement pursuant to Section 9.2 hereof, the Trust at the
option of the Company will continue to make available additional Trust Shares,
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"). Specifically, without
limitation, the owners of the Existing Contracts or the Company, whichever shall
have legal authority to do so, shall be permitted to reallocate investments in
the Trust, redeem investments in the Trust and/or invest in the Trust upon the
payment of additional purchase payments or reallocation of Variable Contract
investments under the Existing Contracts.
9.4 Substitution of Shares Following Termination. Notwithstanding anything
herein to the contrary, the Trust, the Adviser, or the Distributor shall
reimburse the Company for the costs
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associated with substituting the securities of a registered investment company
for the Shares of any Fund where due to the acts of the Trust, the Distributor
or the Adviser: (a) the Fund either offers its Shares at public sale, ceases to
qualify as a regulated investment company under Subchapter M of the Code (or any
successor or similar provision), or fails to comply with the diversification
requirements of Section 817(h) of the Code (or any successor or similar
provision), and as a result the Fund no longer qualifies to serve as a Trusting
vehicle for the Variable Contracts, or (b) there is a material change in a
fundamental investment objective of the Fund requiring shareholder approval
which results in the reclassification of the investment style of the Fund by a
nationally recognized mutual fund ranking organization, and the Company
furnishes the Trust or the Distributor with written notice of its objection to
such change prior to shareholder approval of such change. The costs of such
substitution shall include, without limitation, reasonable legal fees for
obtaining any required SEC order approving such substitution, and expenses for
printing and distributing any prospectus supplement or other disclosure of the
substitution or elimination of the Fund as an investment vehicle under the
Variable Contracts. The parties agree that any reimbursements for costs under
this Section 9.4 shall be limited to necessary and reasonable expenses.
9.5 Survival of Provisions. The provisions of Articles VI and VIII and Section
11.1 shall survive any termination of this Agreement, and all relevant
provisions of the Agreement shall continue to apply to the sale and redemption
of Shares after termination with respect to Existing Contracts.
Article X. 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: The World Insurance Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Copy to: Xxxxxx X. Xxxxxxxxxxx, Esq.
Xxxxxxxxx Traurig, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
If to Adviser: CSI Capital Management, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to Distributor: First Dominion Capital Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Copy to: Xxxxxx X. Xxxxxxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
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0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
If to Company: Xxxx Xxxxxxx Variable Life Insurance Company
Xxxx Xxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Vice President and Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article XI. MISCELLANEOUS
11.1 Privacy. Each party hereto acknowledges that, by reason of its performance
under this Agreement, it shall have access to, and shall receive from the other
party (and its affiliates, partners and employees), the confidential information
of the other party (and its affiliates, partners and employees), including but
not limited to the "nonpublic personal information" of their consumers within
the meaning of SEC Regulation S-P (collectively, "Confidential Information"), it
being understood that Confidential Information of the Company includes the names
and addresses of all of the Variable Contract owners. Each party shall hold all
such Confidential Information in the strictest confidence and shall use such
Confidential Information solely in connection with its performance under this
Agreement and for the business purposes set forth in this Agreement. Under no
circumstances may a party cause any Confidential Information of the other party
to be disclosed to any third party or reused or redistributed without the other
party's prior written consent
11.2 Compliance. The Trust, the Distributor and the Adviser agree to maintain a
commitment to compliance as demonstrated by such factors as, without limit, a
Code of Ethics policy and procedures, monitoring procedures for compliance with
applicable tax requirements (e.g., Section 817(h) of the Internal Revenue Code),
restrictions in the Prospectus or Statement of Additional Information, other
legal requirements (e.g., 1940 Act), and internal compliance policies and
procedures, and to provide the Company or its designee periodic compliance
reports as may be reasonably requested by the Company or its designee to keep
them reasonably apprised of the Trust's compliance activities.
11.3 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.4 Captions. 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.
-24-
11.5 Severability. 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.
11.6 Governing Law. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts. 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.
11.7 Liability. This Agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his or her capacity as an officer of the
Trust. The obligations of the Trust under this Agreement shall be binding upon
the assets and property of the Trust and each respective Fund thereof only and
shall not be binding on any member of the Board of the Trust or officer or
shareholder of the Trust individually. In addition, notwithstanding any other
provision of this Agreement, no Fund shall be liable for any loss, expense, fee,
charge or liability of any kind relating to or arising from the actions or
omissions of any other Fund or from the application of this Agreement to any
other Fund. It is also understood that each of the Funds shall be deemed to be
entering into a separate Agreement with the Company so that it is as if each of
the Funds had signed a separate Agreement with the Company and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
11.8 Inquiries and Investigations. Each party shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, 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.
11.9 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreement and
understandings relating to the subject matter hereof.
11.10 Amendment, Waiver and Other Matters. Neither this Agreement, nor any
provision hereof, may be amended, waived, modified or terminated in any manner
except by a written instrument properly authorized and executed by all parties
hereto. 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.
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SIGNATURES
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
Trust: The World Insurance Trust
By: /s/ XXXX XXXXX III
--------------------------------
Name: Xxxx Xxxxx III
Title: Chairman
Adviser: CSI Capital Management, Inc.
By: /s/ XXXXXX XXXXX
--------------------------------
Name: Xxxxxx Xxxxx
Title: President
Distributor: First Dominion Capital Corp.
By: /s/ XXXX XXXXX III
--------------------------------
Name: Xxxx Xxxxx III
Title: President
Company: Xxxx Xxxxxxx Variable Life Insurance Company
By: /s/ XXXXXXX X. XXX XXXX
--------------------------------
Name: Xxxxxxx X. Xxx Xxxx
Title: President
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PARTICIPATION AGREEMENT
SCHEDULE A
Funds and Share Classes
In accordance with the provisions of the Participation Agreement, the
following Funds and share classes of the Trust are available for purchase by the
Company on behalf of the Separate Accounts shown on Schedule B:
--------------------------------------------------------------------------------
Name of Fund Class(es)
--------------------------------------------------------------------------------
CSI Equity Portfolio Initial
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date:_____________________
A-1
PARTICIPATION AGREEMENT
SCHEDULE B
Separate Accounts
In accordance with the provisions of the Participation Agreement, the following
Separate Accounts of the Company are permitted to invest in the Fund(s) and
class(es) of shares of the Trust shown in Schedule A.
For Xxxx Xxxxxxx Variable Life Insurance Company:
NAME OF SEPARATE ACCOUNTS: Xxxx Xxxxxxx Variable Life Account S
Xxxx Xxxxxxx Variable Life Acoount U
Dated: _____________
B-1
