E X H I B I T 10
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THE WHITE ELK FUNDS
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Form of Participation Agreement
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FORM OF PARTICIPATION AGREEMENT
THIS AGREEMENT is made and entered into this ___ day of _________,
1998 by and between [Name of Participating Insurance Company], a _________
corporation (the "Company"), on its own behalf and on behalf of the segregated
asset accounts of the Company set forth on Schedule A attached hereto (each, an
"Account"; collectively, the "Accounts"), and THE WHITE ELK FUNDS, a
Massachusetts business trust (the "Trust").
WHEREAS, the Trust is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Trust issues shares of beneficial interest (the
"Shares") registered under the Securities Act of 1933, as amended (the "1933
Act") pursuant to a registration statement initially filed with the Securities
and Exchange Commission (the "SEC") on February ___, 1998, as amended from time
to time (the "Registration Statement");
WHEREAS, the Trust has established eleven separate series of Shares,
each corresponding to a separate investment portfolio having its own investment
objective, and may establish additional series of Shares in the future (such
existing and future series are collectively referred to herein as the "Funds");
WHEREAS, the Trust will, to the extent necessary, obtain an order
from the SEC 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 1940 Act and Rules 6e-2 (b) (15)
and 6e-3(T) (b) (15) thereunder, if and to the extent necessary to permit shares
of the Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Trust is available to act as the investment vehicle for
the Accounts, and other separate accounts established in connection with
variable life insurance policies and variable annuity contracts issued by the
Company and its affiliates (the "Contracts");
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolutions of the Board of Directors of the
Company, to set aside and invest assets attributable to the Contracts that are
allocated to the Accounts (the Contracts and the Accounts covered by this
agreement, and the corresponding Funds covered by this agreement in which the
Accounts invest, are specified in Schedule A attached hereto as may be modified
from time to time);
WHEREAS, the Company has registered the Accounts as unit investment
trusts under the 1940 Act;
WHEREAS, White Elk Asset Management, Inc. (the "Adviser"), which
serves as investment adviser to the Trust, is duly registered as an investment
adviser under the 1940 Act;
[WHEREAS, [Name of Participating Insurance Company's broker-dealer
affiliate, if any], which serves as a distributor of the Trust, is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and a member of the National Association of Securities
Dealers, Inc. (the "NASD");] and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Trust intends to make a continuous offering of its shares at
net asset value, and the Company has and intends to purchase the shares of the
Funds on behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Company and the Trust, agree as follows:
ARTICLE 1
SALE OF TRUST SHARES
1.1 The Trust agrees to sell to the Company those shares of the Trust
which the Accounts order, executing such orders on a daily basis at the net
asset value next computed after receipt by the Trust for the order of the shares
of the Trust. For purposes of this Section 1.1, the Company shall be the Trust's
for receipt of such orders from Contract owners and receipt by the Company shall
constitute receipt by the Trust; provided, that the Trust receives notice of
such order by 4:00 p.m. Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the SEC.
1.2 The Trust agrees to make Trust shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC. The Trust shall use reasonable efforts to
calculate its net asset values on the days and at the times described in the
Trust's prospectus (as of the date hereof, as of the close of the New York Stock
Exchange on each day on which the New York Stock Exchange is open for trading,
but not on the Friday following Thanksgiving). Notwithstanding the foregoing,
the Board of Trustees of the Trust (the "Board") may refuse to sell shares of
any Fund to the Company and the Accounts, or suspend or terminate the offering
of 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
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Fund.
1.3 The Trust agrees that shares of the Trust will be sold to the
Company and the Accounts. In addition, shares of the Trust may be sold to other
insurance companies affiliated with the Company or their separate accounts.
Shares will not be sold to natural persons. Nothing herein shall prohibit the
Company from establishing separate accounts or sub-accounts other than the
Accounts which purchase shares from investment companies other than the Trust.
1.4 The Company shall pay for the Trust shares in federal funds
transmitted by wire on the next Business Day after an order to purchase shares
is made in accordance with the provisions of Section 1.1 hereof. Orders received
by the Trust or the Trust's transfer agent are effected on days on which the New
York Stock Exchange (the "NYSE") is open for trading. For orders received before
the close of regular trading on the NYSE, purchases of the shares of each
Portfolio are effected at the respective net asset values per share determined
as of the close of regular trading on the NYSE on that same day. Orders received
after the close of regular trading on NYSE are effected the next calculated net
asset value.
1.5 Payment for redemptions will be made by the Trust's transfer
agent on behalf of the Trust and the relevant Portfolios within seven days after
the request is received. The Trust does not assess any fees when it redeems
shares. Surrender charges, mortality and expense risk fees and other charges may
be assessed by the Company, as described in their prospectus. Any changes
assessed by the Funds will be described in the Fund documents. Shares of a
Portfolio may be redeemed "in kind" which means that the redemption proceeds
will be paid with securities which are held by the Portfolio. If notification of
redemption is received after 4:00 p.m. Eastern time, payment for redeemed shares
will be made on the next following Business Day.
1.6 Unless otherwise determined by the Board, issuance and transfer
of the Trust's shares will be by book entry only and share certificates will not
be issued to the Company or the Accounts. Shares ordered from the Trust will be
recorded in an appropriate title for the Accounts or the appropriate subaccounts
of the Accounts.
1.7 The Trust 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 Trust's shares. The Company hereby
elects to receive all such dividends and distributions as are payable on the
Fund shares in additional shares of that Fund. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust or its custodian shall make the net asset value per
share for each Fund available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:00
p.m. Eastern time.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act, and that the Contracts will be issued,
sold, and distributed in material compliance with all applicable state and
federal laws, including without limitation the 1933 Act, the 1934 Act, and the
1940 Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law, that it has
legally and validly established the Accounts as segregated asset accounts under
the law of the Company's domicile, and that it has registered the Accounts as
unit investment trusts in accordance with the provisions of the 1940 Act (unless
exempt therefrom) to serve as segregated investment accounts for the Contracts
and that it will maintain such registrations for so long as any Contracts are
outstanding. The Company shall amend the registration statements under the 1933
Act for the Contracts and the registration statements under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale in accordance with the
securities laws of the various states only to the extent deemed necessary to
comply with such laws.
2.2 The Company represents that it believes, in good faith, that the
Contracts are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), that it 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.
2.3 The Trust represents and warrants that Trust shares sold pursuant
to this agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in material compliance with the laws of Massachusetts and all
applicable federal and state securities laws. The Trust further represents that
it is and shall remain registered under the 1940 Act, and that it shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in accordance
with the laws of the various states to the extent that the Trust is required to
do so by law.
2.4 The Trust represents that each Fund of the Trust is currently
qualified or will be qualified as a Regulated Investment Company under
Subchapter M of the Code and that every effort will be made to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that the Trust will notify the Company orally (followed by written notice) or by
wire immediately upon having a reasonable basis for believing that any Fund of
the Trust has ceased to so qualify or that any Fund might not so qualify in the
future.
2.5 The Trust currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. However, if the
Trust were authorized to establish a 12b-1 plan, the Trust would undertake to
have the Boards of which a majority of trustees are not interested persons, as
defined in the 1940 Act, of the Trust, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.6 The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
[2.7 [Name of Participating Insurance Company's broker-dealer
affiliate, if any] represents that it is and shall remain duly registered a
broker-dealer under all applicable federal and state securities laws at all
times when it is a Trust's distributor and that it shall perform its obligations
for the Trust in material compliance with any applicable state and federal
securities laws and NASD rules and regulations relating to broker-dealers.]
2.8 The Trust and the Company each represents and warrants that all
of its directors, 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 a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than the
minimal coverage as required currently by Section 17(g) and Rule 17g-1 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.
ARTICLE 3
PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1 At least annually, the Trust shall , at its expense, provide the
Company, free of charge, with as many copies of the Trust's current prospectus
as the Company may reasonably request for distribution to both existing Contract
owners and prospective purchasers. If requested by the Company in lieu thereof,
the Trust shall provide such documentation (including a final "camera ready"
copy of the new prospectus as set in type at the Trust's expense) and other
assistance as is reasonably necessary in order for the parties hereto once each
year (or more frequently if the prospectus for the Trust is supplemented or
amended) to have the prospectus for the Contracts and the Trust's prospectus
printed together in one document; the expenses of such printing to be
apportioned between the Company and the Trust in proportion to the number of
pages of the Contract and Trust prospectuses, taking account of other relevant
factors affecting the expense of printing, such as columns, charts, etc.; the
Trust will bear the cost of printing the Trust's portion of such document, and
the Company will bear the expenses of printing the Accounts' portion of such
document.
3.2 The Trust's prospectus shall state that the Statement of
Additional Information ("SAI") for the Trust is available from the Trust. The
Trust shall print and provide the SAI to the Company (or a master of the SAI
suitable for duplication by the Company) for any Contract owner or prospective
purchaser who requests the SAI. The Company shall provide the SAI to any
Contract owner or prospective purchaser who requests it.
3.3 The Trust , at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to Contract owners.
3.4 The Company shall: (a) solicit voting instructions from Contract
owners; (b) vote the Trust shares in accordance with instructions received from
Contract owners; and (c) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such Fund for which
instructions have been received. The Company reserves the right to vote Trust
shares held in the Accounts in its own right, to the extent permitted by law.
3.5 The process of soliciting Contract owners' voting instructions,
tabulating votes, and other shareholder voting procedures shall be conducted in
accordance with procedures adopted by the Company.
ARTICLE 4
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust is named, at least five (5) Business Days prior to
its use by the Company. No such material shall be used by the Company if the
Trust or its designee object to such use within five (5) Business Days after
receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust
which are in the public domain or approved by the Trust for distribution to
Contract owners, or in sales literature or other promotional material approved
by the Trust or its designee, except with the permission of the Trust. The Trust
or its designee agrees to respond to any request for approval on a prompt and
timely basis.
4.3 The Trust shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company and/or the Accounts is named, at least five (5)
Business Days prior to its use by the Trust. No such material shall be used by
the Trust if the Company or its designee object to such use within five (5)
Business Days after receipt of such material.
4.4 The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts other than 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 reports for the Accounts which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company or its designee
agrees to respond to any request for approval on a prompt and timely basis.
4.5 The Company and the Trust may each request that the other provide
at least one complete copy of all registration statements, prospectuses, SAIs,
reports, proxy statements, 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 to the Trust or
its shares, prior to or contemporaneously with the filing of such document with
the SEC or other regulatory authority. The Company or Trust shall also each
promptly inform the other of the results of any examination by the SEC (or other
regulatory authority) that relates to the Contracts, the Trust or its shares,
and the party that was the subject of the examination shall provide the other
party with a copy of any "deficiency letter" or other correspondence or written
report regarding any such examination.
4.6 For purposes of this Article 4, the phrase "sales literature or
other promotional material" means advertisements (defined 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, telephone directories (other than routine listings), electronic
or other public media), sales literature (defined as any written or electronic
communication distributed or made generally available to customers or the public
that is not an advertisement as defined above, including, but not limited to,
circulars, research reports, market letters, performance reports or summaries,
form letters, telemarketing scripts, seminar texts, and reprints or excerpts of
any other advertisement, sales literature or published article), and educational
or training materials or communications distributed or made generally available
to some or all agents or employees.
ARTICLE 5
FEES AND EXPENSES
5.1 No party hereto shall pay any fee or other compensation to any
other party hereto pursuant to this agreement, except that if the Trust or any
Fund adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then, subject to obtaining any regulatory
approvals, the Trust may make payments to the Company for the Contracts if and
in amounts agreed to by the Trust in writing.
5.2 Each party shall reimburse each other party for expenses
initially paid by such other party but allocated to it in accordance with any
allocation of expenses specified in Article 3 hereof.
ARTICLE 6
DIVERSIFICATION AND RELATED LIMITATIONS
6.1 Subject to the Company's obligations under Section 2.2 hereof,
the Trust represents and warrants that the Trust will at all times invest its
assets in such a manner as to ensure that the Contracts will be treated as
annuity or life insurance contracts under the Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Trust will at all
times ensure that the Trust complies with Section 817(h) of the Code and Treas.
Reg. (S) 1.817-5, as amended from time to time, and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity or
life insurance contracts and any amendments or other modifications to such
Section or Regulations.
6.2 Trust shares will not be sold to any person or entity that would
result in the Contracts not being treated as annuity or life insurance
contracts, in accordance with the statutes and regulations referred to in
Section 6.1 hereof.
ARTICLE 7
POTENTIAL MATERIAL CONFLICTS
7.1 The Board shall monitor each Fund of the Trust for the existence
of any material irreconcilable conflict between the interests of the variable
annuity contract owners and the variable life policy owners of the Company
and/or affiliated companies (collectively, "contract owners") investing
indirectly in the Trust. The Trust represents that at all times at least a
majority of the trustees of the Trust shall not be interested persons, as
defined in the 1940 Act (the "disinterested trustees"). The Board shall have the
sole authority to determine if a material irreconcilable conflict exists, and
such determination shall be binding on the Company only if approved in the form
of a resolution by a majority of the Board, or a majority of the disinterested
trustees of the Board. The Board will give prompt notice of any such
determination to the Company.
7.2 The Company agrees that it will be responsible for reporting any
potential or existing conflicts to the Board. The Trust agrees that, if a
material irreconcilable conflict arises, it will at its own cost remedy such
conflict up to and including: (a) withdrawing the assets allocable to some or
all of the Accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting to a vote of all affected contract owners whether to
withdraw assets from the Trust or any Fund and reinvesting such assets in a
different investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in favor of
such segregation, or offering to any of the affected contract owners the option
of segregating the assets attributable to their contracts or policies; and/or
(b) establishing and registering a new management investment company and
segregating the assets underlying the Contracts, unless a majority of Contract
owners materially adversely affected by the conflict have voted to decline the
offer to establish and register a new management investment company.
7.3 A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately remedies any
material irreconcilable conflict. In the event that the Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw each Account designated by the disinterested
trustees from investment in the Trust and terminate this agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination; provided, that such withdrawal and termination shall be limited
to the extent required to remedy any such material irreconcilable conflict as
determined by a majority of the disinterested trustees of the Board.
7.4 The Trust agrees that it will not enter into any participation
agreement with any life insurance company unless such agreement includes a
section substantially identical to this Article 7.
7.5 If and to the extent the Mixed and Shared Funding Exemption Order
or any amendment thereto contains terms and conditions different from Article 3
and Article 7 of this Agreement, then the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with the Mixed
and Shared Funding Exemptive Order, and Article 3 and Article 7 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Articles are contained in the Mixed and Shared
Funding Exemptive Order or any amendment thereto. If and to the extent that Rule
6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust
and/or Company, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-e(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Article 3 and Article 7 of this
Agreement shall continue in effect only the extent that terms and conditions
substantially identical to such Articles are continued in such Rule(s) as so
amended or adopted.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Trust and
each of the Trust's trustees, directors, and officers and each person, if any,
who controls the Trust within the meaning of Section 15 of the 1933 Act, and any
agents or employees of the foregoing (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 Company) 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 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 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 the
Company by or on behalf of the Trust for use in the registration
statement or prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Trust shares;
(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 Contracts or Trust shares;
(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 was made in reliance upon information furnished to the Trust
by or on behalf of the Company; or
(iv) 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; except to the extent provided in Sections
8.1(b) and 8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that failure to
notify results in failure of actual notice to the Company and the Company is
damaged solely as a result of failure to give notice. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to such 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, unless: (i) the Company and the Indemnified Party shall have
mutually agreed on the retention of such counsel; or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the Company
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Company shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the Company agrees to indemnify the
Indemnified Party from all and against any loss or liability by reason of such
settlement or judgment.
(c) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Company with all relevant
information and documents requested by the Company. For purposes of this Section
8.1(c), the "commencement" of proceedings shall include any formal
communications from the SEC or its staff indicating that enforcement action by
said Commission or staff may be contemplated or forthcoming; this includes any
information to the effect that any matter(s) has been referred to the SEC's
Division of Enforcement.
8.2 INDEMNIFICATION BY THE TRUST.
(a) The Trust agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act, and any agents or
employees of the foregoing (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 Trust) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Trust's
shares or the Contracts 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 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 by or on behalf of the
Company for use in the registration statement or prospectus for the
Trust or in sales literature for the Trust (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares;
(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 Trust, or persons under its control) or
wrongful conduct of the Trust or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Trust; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this agreement or
arise out of or result from any other material breach of this
agreement by the Trust (including a failure, whether unintentional or
in good faith or otherwise, to comply with the requirements specified
in Article 6 of this agreement);
except to the extent provided in Sections 8.2(b) and 8.2(c) hereof.
(b) The Trust 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 Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that failure to
notify results in the failure of actual notice to the Trust and the Trust is
damaged solely as a result of failure to give such notice. In case any such
action is brought against the Indemnified Parties, the Trust will be entitled to
participate, at their own expense, in the defense thereof. The Trust also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Trust to such party of its
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Trust shall
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, unless (i) the Trust and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include the Trust and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The Trust shall not be
liable for any settlement of any proceeding effected without their written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the Trust agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
(c) The Indemnified Parties will promptly notify the Trust of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Trust with all relevant
information and documents requested by the Trust, respectively. For purposes of
this Section 8.1(c), the "commencement" of proceedings shall include any formal
communications from the SEC or its staff indicating that enforcement action by
said Commission or staff may be contemplated or forthcoming; this includes any
information to the effect that any matter(s) has been referred to the SEC's
Division of Enforcement.
8.3 A successor by law of the parties to this agreement shall be
entitled to the benefits of the indemnification contained in this Article 8. The
indemnification provisions contained in this Article 8 shall survive any
termination of this agreement.
ARTICLE 9
LIMITATIONS OF LIABILITY
9.1 LIMITATION OF LIABILITY OF COMPANY. The Company shall give the
Trust the benefit of the Company's best judgment and efforts in fulfilling its
obligations under this agreement; provided, that the Company shall not be liable
for any error of judgment or for any loss suffered by the Trust in connection
with the matters to which this agreement relates, except loss resulting from:
(i) willful misfeasance, bad faith or gross negligence on the part of the
Company in the performance of its obligations and duties under this agreement;
(ii) its reckless disregard of its obligations and duties under this agreement;
or (iii) a breach of Section 2.2 of this agreement.
9.2 LIMITATION OF LIABILITY OF TRUST. The Trust shall give the
Company the benefit of the Trust's best judgment and efforts in fulfilling its
obligations under this agreement; provided, that the Trust shall not be liable
for any error of judgment or for any loss suffered by the Company in connection
with the matters to which this agreement relates, except loss resulting from:
(i) willful misfeasance, bad faith or gross negligence on the part of the Trust
in the performance of its obligations and duties under this agreement or (ii)
its reckless disregard of its obligations and duties under this agreement. [The
Company agrees that the Trust's obligations hereunder shall be limited to the
assets of the Funds, and with respect to each Fund shall be limited to the
assets of such Fund, and no party shall seek satisfaction of any such obligation
from any shareholder of the Trust, nor from any trustee, officer, employee or
agent of the Trust.]
9.3 [Limitation of Liability of Participating Insurance Company's
broker-dealer affiliate, if any]
ARTICLE 10
DURATION AND TERMINATION OF THIS AGREEMENT
10.1 EFFECTIVE DATE AND TERM. This agreement shall not become
effective unless and until it is approved by the Trust's Board. This agreement
shall come into full force and effect on the date which it is so approved,
provided that it shall not became effective as to any subsequently created Fund
until it has been approved by the Board specifically for such Fund.
10.2 TERMINATION.
(a) This agreement shall terminate with respect to one, some, or all
the Accounts, or one, some, or all Funds:
(i) at the option of any party upon six months' advance written
notice to the other party;
(ii) at the option of the Company to the extent that shares of
the Funds are not reasonably available to meet the requirements of
the Contracts or are not "appropriate funding vehicles" for the
Contracts, as determined by the Company reasonably and in good faith;
provided, that prompt notice of the election to terminate for such
cause and an explanation of such cause shall be furnished by the
Company;
(iii) at the option of the Trust upon institution of formal
proceedings against the Company by the SEC or any insurance
department or any other regulatory body regarding the Company's
duties under this agreement or related to the sale of the Contracts,
the operation of the Accounts, or the purchase of the Trust shares;
(iv) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body;
(v) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Accounts (or any subaccount) to substitute
the shares of another investment company for the corresponding Fund
shares of the Trust in accordance with the terms of the Contracts for
which those Fund shares had been selected to serve as the underlying
investment media; provided, that the Company will give 30 days' prior
written notice to the Trust of the date of any proposed vote or other
action taken to replace the Trust's shares; or
(vi) at the option of the Company or the Trust, upon the other
party's material breach of any provision of this agreement.
(b) Without limiting the generality of Section 10.1(a)(ii), shares of
a Fund would not be "appropriate funding vehicles" if, for example, such shares
did not meet the diversification or other requirements referred to in Article 6
hereof, the Fund did not qualify under Subchapter M of the Code, as referred to
in Section 2.4 hereof, the investments or investment policies, objectives,
and/or limitations of the Fund would impose unanticipated risks on the Company,
or if the Company would be permitted to disregard policy owner voting
instructions under the 1940 Act or the rules promulgated thereunder.
10.3 Any notice pursuant to Section 10.1 shall specify the Fund or
Funds, Contracts and, if applicable, the Accounts as to which the agreement is
to be terminated.
10.4 It is understood and agreed that the right of any party hereto
to terminate this agreement pursuant to Section 10.1(a) may be exercised for
cause or for no cause.
10.5 Except as necessary to implement Contract owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Trust shares attributable to the Contracts (as opposed to Trust
shares attributable to the Company's assets held in the Accounts), and the
Company shall not prevent Contract owners from allocating payments to a Fund
that was otherwise available under the Contracts, until thirty (30) days after
the Company shall have notified the Trust of its intention to do so.
10.6 Notwithstanding any termination of this agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Funds pursuant to the terms and conditions of this agreement for
all Contracts in effect on the effective date of termination of this agreement
(the "Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to transfer or reallocate investments
under the Contracts, redeem investments in the Trust and/or invest in the Trust
upon the making of additional purchase payments under the Existing Contracts.
ARTICLE 11
NOTICES
11.1 Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Company:
[Name of Participating Insurance Company]
[Address]
Attn: _________________________
If to the Trust:
The White Elk Funds
c/o Xxxxxxx X. Xxxxxx, Inc.
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx
[Name of Participating Insurance Company's broker-dealer
affiliate, if any]
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 APPLICABLE LAW.
(a) This agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of New York without regard to
conflicts of law principles or precedents.
(b) This agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
12.2 SEVERABILITY. If any provision of this agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this agreement shall not be affected thereby.
12.3 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.
12.4 COUNTERPARTS. This agreement may be executed simultaneously in
multiple counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 SCHEDULES. The Schedules attached hereto, as modified from time
to time, are incorporated herein by reference and are part of this agreement.
12.6 COOPERATION WITH AUTHORITIES. Each party hereto shall cooperate
with the 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.
12.7 CUMULATIVE RIGHTS. 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 AMENDMENTS. This agreement may be amended at any time upon the
consent of all of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed in their names and on their behalf by their duly authorized officers
all on the day and year first above written.
[NAME OF PARTICIPATING INSURANCE CO.]
By:
---------------------------------
Title:
------------------------------
THE WHITE ELK FUNDS
By:
---------------------------------
Title:
------------------------------
SCHEDULE A
ACCOUNTS, CONTRACTS AND FUNDS SUBJECT
TO THE PARTICIPATION AGREEMENT
[NAME OF PARTICIPATING INSURANCE COMPANY] VARIABLE ANNUITY SEPARATE ACCOUNT:
---------------------------------------------------------------------------
CONTRACTS: */
---------
FUNDS: White Elk Large Cap Growth Fund**/
-----
White Elk Mid Cap Growth Fund**/
White Elk Small Cap Growth Fund**/
White Elk Large Cap Value Fund**/
White Elk Mid Cap Value Fund**/
White Elk Small Cap Value Fund**/
White Elk Leveraged All Cap Fund**/
White Elk Global Equity Fund**/
White Elk Long-Term Bond Fund**/
White Elk Medium-Term Bond Fund**/
White Elk Money Market Fund**/
[NAME OF PARTICIPATING INSURANCE COMPANY] VARIABLE LIFE SEPARATE ACCOUNT:
------------------------------------------------------------------------
CONTRACTS: */
---------
FUNDS: White Elk Large Cap Growth Fund**/
-----
White Elk Mid Cap Growth Fund**/
White Elk Small Cap Growth Fund**/
White Elk Large Cap Value Fund**/
White Elk Mid Cap Value Fund**/
White Elk Small Cap Value Fund**/
White Elk Leveraged All Cap Fund**/
White Elk Global Equity Fund**/
White Elk Long-Term Bond Fund**/
White Elk Medium-Term Bond Fund**/
White Elk Money Market Fund**/
-----------------------
*/ After effectiveness of registration statements for the Contract.
**/ After effectiveness of registration statement for the Fund.
