EXHIBIT (8)(n)
PARTICIPATION AGREEMENT
AMONG
XXXXXXX XXXXX LIFE INSURANCE COMPANY,
LORD XXXXXX FAMILY OF FUNDS, AND
LORD XXXXXX DISTRIBUTOR LLC
THIS AGREEMENT, dated as of the _____ day of _________, 2002, by and
among Xxxxxxx Xxxxx Life Insurance Company (the "Company"), an Arkansas life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (hereinafter referred to individually and collectively as the
"Account"), each of the investment companies comprising the Lord Xxxxxx Family
of Funds, including each separate investment portfolio thereof, whether existing
at the date of this Agreement or established subsequent thereto (hereinafter
referred to individually and collectively as the "Fund"), and Lord Xxxxxx
Distributor LLC (the "Underwriter"), a New York limited liability corporation.
WHEREAS, the shares of beneficial interests of the Fund are divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets;
WHEREAS, the Fund is registered, or is a series of a fund registered, as
an open-end management investment company under the Investment Company Act of
1940, as amended, (the "1940 Act") and shares of the Fund are registered under
the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Lord, Xxxxxx & Co. LLC (the "Adviser"), a Delaware
limited liability company, which serves as investment adviser to the Fund, is
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD");
WHEREAS, the Account is duly established and maintained as a
segregated asset account, duly established by the Company, on the date shown for
such Account on Schedule A hereto, to set aside and invest assets attributable
to variable annuity contracts set forth in Schedule A hereto, as it may be
amended from time to time by mutual written agreement (the "Contracts");
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WHEREAS, the Fund issues shares to the general public and to
the separate accounts of insurance companies ("Participating Insurance
Companies") to fund variable annuity and/or variable life insurance contracts
sold to certain qualified pension and retirement plans;
WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to fund
the Contracts;
WHEREAS, the Fund and the Underwriter know of no reason why shares in
the Fund may not be sold to Participating Insurance Companies to fund variable
annuity contracts sold to certain qualified pension and retirement plans; and
WHEREAS, Company and the Fund desire to facilitate the purchase and
redemption of Shares of the Fund through one or more accounts in the Fund
established by the Company through the Fund's designated transfer agent in the
name of the Plans or in the name of the Account maintained by Company with
respect to or on behalf of the Plans.
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Class A shares ("Shares") of the
Fund on behalf of the Account to fund the aforesaid Contracts, and the
Underwriter is authorized to sell such Shares in the Fund to the Account at net
asset value to the extent such purchases qualify for net asset value treatment
under the terms of the Fund's then current prospectus and statement of
additional information ("SAI") .
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to distribute
the Fund's shares, and has agreed to instruct, and has so instructed, the
Underwriter to make available to the Company for purchase on behalf of the
Account Shares of the Fund . Pursuant to such authority and instructions, and
subject to Article IX hereof, the Underwriter agrees to make the Shares
available to the Company for purchase on behalf of the Account, such purchases
to be effected at net asset value in accordance with Section 1.3 of this
Agreement and the terms of the Fund's then current prospectus and SAI.
Notwithstanding the foregoing, the Board of Directors/Trustees of the Fund (each
a "Board" and collectively, the "Boards")) may suspend or terminate the offering
of Shares of the Fund, if such action is required by law or by regulatory
authorities having jurisdiction or if, 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, suspension or termination is necessary in the best
interests of the shareholders of the Fund. The Fund may refuse to sell Shares to
any person, or suspend or terminate the offering of the Shares of the Fund if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Fund, deemed necessary, desirable or
appropriate. Without limiting the foregoing, it has been determined that there
is a significant risk that the Fund and its shareholders
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may be adversely affected by short-term or excessive trading activity,
particularly activity used to try and take advantage of short-term swings in the
market. According, the Fund reserves right to reject any purchase order,
includes those purchase orders with respect to shareholders or accounts whose
trading has been or may be disruptive to the Fund or that may otherwise
adversely affect the Fund. The Company agrees to cooperate with the Fund with
respect to the Fund's policies and restrictions on short-term or excessive
trading activity.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Shares held by the Company on behalf of the Account, such redemptions
to be effected at net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Shares attributable to Contract owners except in the circumstances permitted in
Section 9.3 of this Agreement, and (ii) the Fund may delay redemption of Shares
of the Fund to the extent permitted by the 1940 Act, and any rules, regulations,
or orders thereunder.
1.3. Purchase and Redemption Procedures
The Fund hereby appoints the Company as an agent of the Fund for the limited
purpose of receiving purchase and redemption requests on behalf of the Account
(but not with respect to any Fund shares that may be held in the general account
of the Company) for the Shares made available hereunder, based on allocations of
amounts to the Account or subaccounts thereof under the Contracts and other
transactions relating to the Contracts or the Account. All transactions on
behalf of the Accounts shall be executed through the omnibus accounts of
Company's affiliate Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. ("Omnibus
Accounts"). Receipt of any such request (or relevant transactional information
therefor) on any day the New York Stock Exchange is open for trading and on
which a Fund calculates its net asset value pursuant to the rules of the SEC (a
"Business Day") by the Company as such limited agent of the Fund prior to the
time that the Fund ordinarily calculates its net asset value as described from
time to time in the Fund's Prospectus (which as of the date of execution of this
Agreement is 4:00 p.m. Eastern Time) shall constitute receipt by the Fund on
that same Business Day, provided that the Fund receives notice of such request
by 9:00 a.m. Eastern Time on the next following Business Day. Company will
provide to the Fund or its designee via the NSCC Fund SERV DCC & S platform
(which utilizes the "as of" record layout within Fund/SERV) one or more files
detailing the instructions received with respect to each Plan prior to 4:00 p.m.
ET on the prior Business Day for the Fund. If for any reason Xxxxxxx Xxxxx is
unable to transmit the file(s) with respect to any Business Day, Xxxxxxx Xxxxx
will notify the Fund or its designee by 9:00 a.m. ET on the next following
Business Day.
(b) The Company shall pay for Shares on the same day that it
notifies the Fund of a purchase request for such Shares. Payment for Shares
shall be made in federal funds transmitted to the Fund via the NSCC Fund/SERV
DCC&S platform to be received by the Fund by 6:30 p.m. Eastern Time on the day
the Fund is notified of the purchase request for Shares (unless the Fund
determines and so advises the Company that sufficient proceeds are available
from redemption of Shares of another Fund effected pursuant to redemption
requests tendered by the Company on behalf of the Account). Upon receipt of
federal funds transmitted via the NSCC Fund/SERV DCC&S platform, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Fund. Notwithstanding any provision of this
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Agreement to the contrary, for purchase and redemption instructions with respect
to any Shares, Company and the Fund will settle the purchase and redemption
transactions referred to herein, via the NSCC Fund/SERV platform settlement
process on the next Business Day following the effective trade date. The Fund
will provide to Company a daily transmission of positions and trading activity
taking place in the Omnibus Accounts using Company's affiliate's proprietary
Inventory Control System ("ICS").
(c) Payment for Shares redeemed by the Account or the
Company shall be made in federal funds transmitted via the NSCC Fund/SERV DCC&S
platform to the Company or any other designated person on the next Business Day
after the Fund is properly notified of the redemption order of such Shares
(unless redemption proceeds are to be applied to the purchase of Shares of
another Fund in accordance with Section 1.3(b) of this Agreement), except that
the Fund reserves the right to redeem Shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted under Section 22(e)
of the 1940 Act and any Rules thereunder, and in accordance with the procedures
and policies of the Fund as described in the Fund's then current prospectus. The
Fund shall not bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company; the Company alone shall be
responsible for such action.
(d) Any purchase or redemption request for Shares held or to
be held in the Company's general account shall be effected at the closing net
asset value per share next determined after the Fund's receipt of such request
as set forth in Section 1.3(a) herein.
1.4. The Fund shall use its best efforts to make the closing net asset
value per Share for each the Fund available to the Company by 6:30 p.m. Eastern
Time each Business Day via the NSCC Profile 1 platform, and in any event, as
soon as reasonably practicable after the closing net asset value per Share for
the Fund is calculated, and shall calculate such closing net asset value,
including any applicable daily dividend factor, in accordance with the Fund's
Prospectus. In the event the Fund is unable to make the 6:30 p.m. deadline
stated herein, it shall provide reasonable additional time for the Company to
place orders for the purchase and redemption of Shares. Such additional time
shall be equal to the additional time that the Fund takes to make the closing
net asset value available to the Company provided however, the additional time
shall not extend beyond the trade order deadline set forth in Section 1.3(a)
above (i.e., 9:00 a.m. Eastern time), unless the Fund receives estimates of
trade orders from Company prior to such trade order deadline. Neither the Fund,
the Underwriter, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based on
incorrect information supplied by the Company to the Fund or the Underwriter.
1.5. Notwithstanding anything to the contrary contained in this
Agreement, the Fund will make Shares available for purchase by the Company, on
its behalf and on behalf of the Account, at net asset value and agree to waive
any contingent deferred sales charge, redemption fees or exchange fees. The
parties agree that no selling concession or other similar compensation of any
sort shall be paid in connection with purchases of Shares pursuant to this
Agreement. The Fund shall furnish
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notice (via the NSCC Profile II platform to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Shares. The form of payment of dividends and capital gains distributions will be
determined in accordance with the Company's operational procedures in effect at
the time of the payment of such dividend or distribution and Company will notify
Fund of such form of payment. At this time, the Company, on its behalf and on
behalf of the Account, hereby elects to receive all such dividends and
distributions as are payable on any Shares in the form of cash. Company will
reinvest a portion or all of the cash proceeds for additional Shares of theFund
through a trade processed via the NSCC platform by 9:00 a.m. Eastern Time on the
Business Day next following the reinvest date. The Company reserves the right,
on its behalf and on behalf of the Account, to revoke this election and to
receive all such dividends and capital gain distributions in the form of
additional Shares of a the Fund The Fund shall notify the Company promptly of
the number of Shares so issued as payment of such dividends and distributions.
All transactions on behalf of Accounts contemplated herein shall be executed
through the Omnibus Accounts.
1.6. Issuance and transfer of Shares shall be by book entry only and
executed through the Omnibus Accounts. Stock certificates will not be issued to
the Company or the Account. Purchase and redemption orders for the Fund's shares
shall be recorded in an appropriate ledger for the Account or the appropriate
subaccount of the Account.
1.7 Fund Information.
(a) The Fund will provide (or cause to be provided) to Company the
information set forth in Schedule B hereto. In addition, notwithstanding
anything contained in this Agreement to the contrary, the Fund hereby agrees
that Company may use, subject to Article IV hereof and subject to Company's
compliance with applicable SEC and NASD rules and regulations, such information
in communications prepared for the Contracts, including, but not limited to,
application, marketing, sales and other communications materials. The Fund will
provide timely notification to Company of any change to the information
described in Part I of Schedule B including without limitation any change to the
CUSIP number or symbol designation of a Fund. Such notification shall be given
to Company at least ten (10) Business Days or as soon as practicable prior to
the effective date of the change.
1.8. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
investors and the cash value of the Contracts may be invested in other
investment companies.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are,
or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. 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 Account prior to any issuance or sale thereof as a segregated asset account
under Arkansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company shall register and qualify the Contracts or
interests therein as securities in accordance with the laws of the various
states only if and to the extent deemed advisable by the Company.
2.2 The Company represents and warrants that the Contracts provide
for the allocation of net amounts received by the Company to the Account, for
investment in the shares of specified investment companies selected among those
companies available through the Account to act as underlying investment media.
2.3. The Fund represents and warrants that Shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with applicable state and federal securities
laws and that the Fund is and shall remain registered under the 0000 Xxx. The
Fund shall amend the registration statement for its Shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its Shares. The Fund shall register and qualify the Shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund, the Adviser, or the Underwriter.
2.4. The Fund and the Underwriter agree to comply with any applicable
state insurance laws or regulations (including the furnishing of information not
otherwise available to the Company which is required by state insurance law to
enable the Company to obtain the authority needed to issue the Contracts in any
applicable state, and including cooperating with the Company in any filings of
sales literature for the Contracts), to the extent notified thereof in writing
by the Company.
2.5. TheFund represents that it is lawfully organized and validly
existing under the laws of the state of its incorporation and that it does and
will comply in all material respects with the 1940 Act.
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2.6. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.7. The Fund and the Underwriter represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage as required currently by 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 III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of
the Funds current prospectus and periodic reports to shareholders as the Company
may reasonably request. The Fund or the Underwriter shall bear the expense of
printing copies of the current prospectus and periodic reports to shareholders
for the Fund that will be distributed to existing Contract owners whose
Contracts are funded by Shares of the Fund, and the Company shall bear the
expense of printing copies of the Fund's prospectus and periodic reports to
shareholders that are used in connection with offering the Contracts issued by
the Company. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus on diskette at
the Fund's or Underwriter's expense) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Fund is amended) to have the prospectus and/or periodic
shareholder reports for the Contracts and the Fund's prospectus and/or periodic
reports to shareholders printed together in one document, provided however that
Company shall ensure that, except as expressly authorized in writing by Fund, no
alterations, edits or changes whatsoever are made to prospectuses, periodic
reports to shareholders or other Fund documentation after such documentation has
been furnished to Company or its designee, and Company shall assume liability
for any and all alterations, errors or other changes that occur to such
prospectuses, periodic reports to shareholders or other Fund documentation after
it has been furnished to Company or its designee. The Fund or its designee shall
reimburse the Company for the pro-rata share of the printing costs (excluding
any non-printing costs such as composition and document layout costs) for those
pages that contain the Fund's prospectus or periodic reports to shareholders
that the Company may reasonably print for distribution to existing Contract
owners whose Contracts are funded by Shares of the Fund. Company shall use best
efforts to minimize such printing costs and Company agrees that the Fund shall
not be responsible to reimburse Company for such pro-rata printing costs to the
extent such costs exceed the Fund's per/unit cost of printing prospectuses and
periodic reports to shareholders.
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3.2. The Fund's prospectus shall state that the current SAI for the
Fund is available, and the Underwriter (or the Fund), at its expense, shall
provide a reasonable number of copies of such SAI free of charge to the Company
for itself and for any owner of a Contract who requests such SAI.
3.3. As reasonably requested by Company, the Fund shall provide the
Company with information regarding the Fund's expenses, which information may
include a table of fees and related narrative disclosure for use in any
prospectus or other descriptive document relating to a Contract.
3.4. [Pass-through voting isn't required for this type of product.
Why include this provision? ]The Fund, at its or the Underwriter's 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 distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions received
from Contract owners; and
(iii) vote Shares for which no instructions have been received
in the same proportion as Shares of the Fund for which
instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Shares held in any
segregated asset account in the same proportion as Shares of the Fund for which
voting instructions have been received from Contract owners, to the extent
permitted by law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund or the Adviser or the
Underwriter is named. No such material shall be used until approved by the Fund
or its designee. The Fund or its designee will be deemed to have approved such
sales literature or promotional material unless the Fund or its designee objects
or provides comments to the Company within ten (10) Business Days after receipt
of such material. The Fund or its designee reserves the right to reasonably
object to the continued use of any such sales literature or other promotional
material in which the Fund or the Adviser or the Underwriter is named, and no
such material shall be used if the Fund or its designee so object.
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4.2. (a) The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or profiles or prospectus or SAI for the Fund Shares, as such
registration statement and profiles and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either. Neither Company nor its affiliates or
agents shall give such information or make such representations or statements in
a context that it knows or should have known causes the information,
representations or statements to be false or misleading.
(b) With the exception of (i) listings of product offerings; (ii)
materials already in the public domain (e.g., magazine articles and trade
publications); and (iii) materials used by Company on an internal basis only,
and subject to compliance with applicable NASD and SEC rules and regulations,
Company agrees not to furnish or cause to be furnished to any third parties or
to display publicly or publish any information or materials relating to the
Fund, except such materials and information as may be distributed to Company by
Fund or approved for distribution by the Fund upon Company's request.
4.3. The Fund and the Underwriter, or their designee, shall furnish,
or cause to be furnished, to the Company, each piece of sales literature or
other promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company.
The Company will be deemed to have approved such sales literature or promotional
material unless the Company objects or provides comments to the Fund, the
Underwriter, or their designee within ten Business Days after receipt of such
material. The Company reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which the
Company and/or its Account is named, and no such material shall be used if the
Company so objects.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement and prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account 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. Neither the Fund nor the
Underwriter shall give such information or make such representations or
statements in a context that knows or should have known causes the information,
representations or statements to be false or misleading.
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4.5. The Company shall provide to the Fund and the Underwriter any
complaints received from the Contract owners pertaining to the Fund.
4.6. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for the Fund, and of any
material change in the Fund's registration statement, particularly any change
resulting in a change to the registration statement or prospectus for any
Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. Except as otherwise expressly provided in this Agreement, each
party agrees to bear all expenses incident to performance by the party under
this Agreement. Fund and Company agree that, notwithstanding the existence of
any other agreement(s) between the parties and/or its affiliates as of the date
of this Agreement, the Company and/or its affiliates shall receive no other
compensation with respect to the Shares purchased by or on behalf of the Account
and/or with respect to the Contracts, except as set forth in the following four
agreements: (i) this Agreement; (ii) the Shareholder Services Agreement between
the Company and Underwriter dated ________________________; (iii) the
Sub-Transfer Agency Agreement between the Company and Fund dated
________________________; and (iv) the Administrative Services agreement between
the Company and Adviser dated ________________________.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the
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prospectus in type, setting in type and printing the proxy materials and reports
to shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
maintain such qualification (under Subchapter M or any successor or similar
provisions) and that it 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.
ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a).Subject to Section 7.3 below, the Company agrees to
indemnify and hold harmless the Fund and the Underwriter and each of its
trustees/directors and officers, and each person, if any, who controls the Fund
or the Underwriter within the meaning of Section 15 of the 1933 Act or who is
under common control with the Underwriter (collectively, the "Indemnified
Parties" for purposes of this Section 7.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including reasonable 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:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a written
description of a Contract that is not registered under the 1933
Act), or SAI for the Contracts or contained in sales literature
for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement,
prospectus or SAI for the Contracts or in the Contracts or
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sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
its agents or persons under the Company's authorization or
control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the Fund 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 a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional or
in good faith or otherwise, to comply with the qualification
requirements specified in Section 6.1 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;
(vi) arises out of information or instructions from the
Company or its agents concerning the purchase, redemption,
transfer or other transaction in Fund Shares;
as limited by and in accordance with the provisions of Sections 7.1(b)
and 7.1(c) hereof.
7.1(b). The Company 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 its obligations or
duties under this Agreement.
7.1(c). 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
12
Company from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against an Indemnified Party, 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.
7.1(d). 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 Fund shares or the Contracts or the operation of
the Fund.
7.2. Indemnification by the Funs and Underwriter
7.2(a). Subject to Section 7.3 below, each of the Fund and
Underwriter respectively agree 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 (collectively, the
"Indemnified Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including reasonable
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:
(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 profile or prospectus or SAI or sales
literature of the Fund (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, 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 Underwriter
or the Fund by or on behalf of the Company for use in the
registration statement, profile, prospectus or SAI for the Fund
or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or sales
literature for the Contracts not supplied by the Underwriter or
13
persons under their control) or wrongful conduct of the Fund or
the Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI 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 Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in Section
6.1 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Underwriter; or
as limited by and in accordance with the provisions of Sections 7.2(b)
and 7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the
14
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.2(d). The Indemnified Party will promptly notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
7.3. Indemnification for Errors. In the event of any error or
delay with respect to information regarding the purchase, redemption, transfer
or registration of Shares of the Fund, the parties agree that each is obligated
to make the Accounts and/or the Fund, respectively, whole for any error or delay
that it causes, subject in the case of pricing errors to the Fund's policies on
materiality of pricing errors. In addition, each party agrees that neither 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.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
8.2. 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.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to
some or all Fund, by three (3) months advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter based upon the Company's
determination that shares of the Fund are not reasonably
available to meet the requirements of the Contracts; or
15
(c) termination by the Company by written notice to the Fund
and the Underwriter in the event any of the Shares are
not registered, issued, or sold in accordance with
applicable state and/or federal law or such law precludes
the use of such Shares as the underlying investment media
of the Contracts issued or to be issued by the Company;
or
(d) termination by the Fund or the Underwriter in the event
that formal administrative proceedings are instituted
against the Company by the NASD, the SEC, the Insurance
Commissioner, or like official of any state or any other
regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Shares;
provided, however, that the Fund or the Underwriter
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Company
to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the
Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department, or any other
regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund or
the Underwriter to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to the Fund
and the Underwriter with respect to the Fund in the event
that the Fund ceases to qualify as a Regulated Investment
Company under Subchapter M as specified in Section 6.1
hereof, or if the Company reasonably believes that the
Fund may fail to so qualify or comply; or
(g) termination by the Fund or the Underwriter by written
notice to the Company, if the Fund or the Underwriter
respectively, shall determine, in their sole 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
(h) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that the Fund,
the Adviser, or the Underwriter has suffered a material
adverse change in its business, operations, financial
16
condition, or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(i) termination by the Company upon any substitution of the
shares of another investment company or series thereof
for Shares in accordance with the terms of the Contracts,
provided that the Company has given at least 45 days
prior written notice to the Fund and the Underwriter of
the date of substitution.
9.2. Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall, at the option of the Company, continue to make available
additional Shares pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"), unless the Underwriter
requests that the Company seek an order pursuant to Section 26(c) of the 1940
Act to permit the substitution of other securities for the Shares. The
Underwriter agree to split the cost of seeking such an order, and the Company
agrees that it shall reasonably cooperate with the Underwriter and seek such an
order upon request. Specifically, the owners of the Existing Contracts may be
permitted to reallocate investments in the Fund, redeem investments in the Fund,
and/or invest in the Fund upon the making of additional purchase payments under
the existing Contracts (subject to any such election by the Underwriter). The
parties agree that this Section 9.2 shall not apply to any terminations under
Section 9.1(i) of this Agreement.
9.3. The Company shall not redeem Shares attributable to the Contracts
(as opposed to Shares attributable to the Company's assets held in the Account)
except (i) as necessary to implement Contract owner initiated or approved
transactions, (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"), (iii) upon 45 days prior written notice
to the Fund and Underwriter, as permitted by an order of the SEC pursuant to
Section 26(c) of the 1940 Act, but only if a substitution of other securities
for the Shares is consistent with the terms of the Contracts, or (iv) as
permitted under the terms of the Contract. Upon request, the Company will
promptly furnish to the Fund and the Underwriter reasonable assurance that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contacts,
the Company shall not prevent Contract owners from allocating payments to the
Fund that was otherwise available under the Contracts without first giving the
Fund or the Underwriter 45 days notice of its intention to do so.
9.4. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
17
If to the Fund: Lord Xxxxxx Family of Funds
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
with a copy to:
Lord, Xxxxxx & Co. LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
If to the Company: Xxxxx X. Xxxxxxxx, Esq.
Senior Vice President and General Counsel
Xxxxxxx Xxxxx Life Insurance Company
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Underwriter: Lord Xxxxxx Distributor LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the Fund, as though each the Fund had separately contracted with the
Company and the Underwriter for the enforcement of any claims against the Fund.
The parties agree that neither the Board, officers, agents, or shareholders of
the Fund assume any personal liability or responsibility for obligations entered
into by or on behalf of the Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information has come into the
public domain.
18
11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.6. Each party hereto 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable contract
operations of the Company are being conducted in a manner consistent with the
Arkansas variable annuity laws and regulations and any other applicable law or
regulations.
11.7. The rights, remedies, and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
11.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
11.9. Company may hire or make arrangements for subcontractors, agents
or affiliates to perform the recordkeeping, administrative and other operational
services set forth in this Agreement. Company shall provide the Fund,
Underwriter and Adviser with written notice of the names of any subcontractors,
agents or affiliates Company hires or arranges to perform such services, and any
specific operational requirements that arise as a result of such arrangement.
Company agrees that it is and will be responsible for the acts and omissions of
its subcontractors, affiliates, and agents and that the indemnification provided
by Company in Article IX of this Agreement shall be deemed to cover the acts and
omissions of such subcontractors, affiliates, and agents to the same extent as
if they were the acts or omissions of Company.
11.10. 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 Company shall notify
the Fund and Underwriter of any additions it wishes to make to the list of
Accounts on SCHEDULE A by furnishing a signed written notice to the Fund and
Underwriter in the form of an "Additional Separate Account Letter" which shall
state name of the new Account(s) and include a revised SCHEDULE A. The
Additional
19
Separate Account Letter shall constitute an Amendment to this Agreement upon the
signed acknowledgement of such Additional Separate Account Letter by both the
Fund and Underwriter.
20
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
XXXXXXX XXXXX LIFE INSURANCE COMPANY:
By its authorized officer
By: Xxxxx X. SkolnickTitle:Senior
Vice President & General Counsel
Date:
---------------------------------
LORD XXXXXX FAMILY
OF FUNDS
By its authorized officer
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
Lord Xxxxxx Distributor LLC,
By: Lord, Xxxxxx & Co. LLC, it's Managing Member
By its authorized officer
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
21
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: September 18, 2002
Xxxxxxx Xxxxx Variable Annuity Separate Account D
SCHEDULE B
FUND MATERIALS
PART I. Fund Description
- The Fund will provide to Company or a common service provider designated
by Company within ten (10) days of the end of each month, the Fund's
average annual return for the 1, 5, and 10 year periods ending the
current month on a Net Asset Value basis.
- The Fund will provide to Company a description of the Fund including
holdings, portfolio composition, largest sectors and geographical
allocation and a statement of objective in a mutually acceptable format.
Part II. Fund Information and Materials
The Fund will provide to Company the following information and materials
on an as needed basis, as requested by Company:
- A supply of materials relating to the Fund (prospectuses,
quarterly reports and other brochures) to include with contract
application sales, marketing and communication materials.
- Specific investment performance information that may be requested
that cannot be obtained from the prospectus. This would include
specific calculations on various performance parameters and will
require an aggressive turnaround time (usually 5 business days).
