FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 1st day of May, 2001, between NATIONS
SEPARATE ACCOUNT TRUST, an open-end management investment company organized as a
Delaware business trust (the "Trust"), TRANSAMERICA LIFE INSURANCE COMPANY, a
life insurance company organized under the laws of the State of Iowa (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts"), XXXXXXXX INC. ("Underwriter"), an Arkansas corporation, and AFSG
Securities Corporation, an affiliate of the Company and the distributor of the
Contracts (as defined below) ("Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has registered
the offer and sale of its shares under the Securities Act of 1933, as amended
(the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable annuity contracts, and may, in the future,
desire to act as an investment vehicle for separate accounts established for
variable life insurance policies, in each case, to be offered by insurance
companies that have entered into participation agreements with the Trust (the
"Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Funds"), any one or more of which
may be made available under this Agreement, as set forth on Schedule A hereto
and as may be amended from time to time by mutual agreement of the parties
hereto; and
WHEREAS, the Company has registered or will register certain variable
annuity contract and/or variable life insurance policies under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more Funds as
an investment vehicle of the Accounts; and
WHEREAS, the Company desires to cooperate fully with the Trust so that
the Trust may comply with all necessary reporting and disclosure obligations,
the Company will coordinate with the Trust on such matters and will provide to
the Trust all necessary information, including disclosure documents, in a timely
manner; and
WHEREAS, Underwriter is a broker-dealer registered as such 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, the Distributor serves as the distributor for the Contracts
funded in the Accounts pursuant to an agreement with the Company on behalf of
itself and the Accounts, is a broker-dealer registered as such under the 1934
Act, and a member of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life insurance policies
and variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Funds available to the Accounts
at the net asset value next computed after receipt of such purchase order by the
Trust (or its agent), as established in accordance with the provisions of the
then current prospectus and statement of additional information (collectively,
the "Prospectus") of the Trust. Shares of a particular Fund of the Trust shall
be ordered in such quantities and at such times as determined by the Company to
be necessary to meet the requirements of the Contracts. The Officers or Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Fund to any
person, 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 Officers or Trustees acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Fund.
1.2 The Trust will redeem any full or fractional shares of any Fund
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
Prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 0000 Xxx.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that (i) such orders are received by the Company in good order prior to
the time the net asset value of each Fund is priced in accordance with its
Prospectus and (ii) the Trust receives written notice of such orders by 9:30
a.m. New York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading and on which
the Trust calculates its net asset value pursuant to the rules of the SEC.
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1.4 Purchase orders that are transmitted to the Trust in accordance
with Section 1.3 shall be paid by the Company by close of business on the same
Business Day that the Trust receives notice of the order. Payments shall be made
in federal funds transmitted by wire. Upon receipt by the Trust of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Trust.
1.5 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish same day notice 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 income dividends and capital gain
distributions as are payable on a Fund's 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.
1.7 The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis 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 6:30 p.m. New York time.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by any exemptive order that may be
obtained by the Trust from the SEC (any such order is referred to herein as the
Exemptive Order). No shares of any Fund will be sold directly to the general
public. The Company agrees that Trust shares will be used only for the purposes
of funding the Contracts and Accounts listed in Schedule A, as amended from time
to time.
1.9 The Trust agrees that, to the extent required by the SEC pursuant
to the Exemptive Order or otherwise, all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.9 and
Article IV of this Agreement.
ARTICLE II
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing, all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), and Prospectuses of the Trust. The Trust shall bear the
costs of registration and qualification of its shares, preparation and filing of
the documents listed in this Section 2.1 and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
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2.2. As mutually agreed, the Trust shall either (a) provide the Company
with as many copies of the Trust's current Prospectus, annual report,
semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, as the Company shall
reasonably request; or (b) provide the Company in electronic format (PDF) such
documents in a form suitable for printing. The Trust shall provide the Company
with copies of any Trust-sponsored proxy materials in such quantity as the
Company shall reasonably require for distribution to Contract owners.
2.3. The Trust and Company shall pay no fee or other compensation to
each other under this agreement. All expenses incident to the performance of the
Company's obligations under this agreement shall be borne by the Company, except
as expressly provided otherwise. All expenses incident to the performance of the
Trust's obligation under this agreement shall be borne by the Trust, except as
expressly provided otherwise. The Company shall bear all costs associated with
printing and distributing such documents to persons who are not Contract owners,
including the costs of printing Prospectuses that are used for marketing
purposes. The Trust shall bear the costs of printing and distributing the
Trust's Prospectus, shareholder reports and other shareholder communications to
Contract owners for which the Trust is serving or is to serve as an investment
vehicle. If the parties agree to have such documents printed by the Company in
accordance with Section 2.2(b), the Trust shall reimburse the Company for all
actual reasonable expenses incurred in connection therewith. The Trust shall
bear the costs of distributing Trust sponsored proxy materials (or similar
materials such as voting solicitation instructions) to Contract owners. The
Company assumes sole responsibility for ensuring that all proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
2.4. The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a draft of each Contract Prospectus in which the Trust is named
at least five Business Days prior to the filing of such document with the SEC
and a final copy of each Contract Prospectus in which the Trust is named
contemporaneously with the filing of such document. 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 ten Business Days prior to its use. No such material shall be used if the
Trust or its designee reasonably objects to such use within ten Business Days
after receipt of such material.
2.5. The Company and the Distributor shall not give any information or
make any representations or statements on behalf of the Trust or concerning the
Trust other than information or representations or statements contained in and
accurately derived from the registration statement or Prospectus for the Trust
shares (as such registration statement and Prospectus may be amended or
supplemented from time to time), reports of the Trust, Trust-sponsored proxy
statements, or in sales literature or other promotional material approved by the
Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
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2.6. The Trust or the Underwriter shall furnish, or cause to be
furnished, to the Company, each piece of sales literature or other promotional
material in which the Company is named, at least ten Business Days prior to its
use. No such material shall be used if the Company reasonably objects to such
use within ten Business Days after receipt of such material.
2.7. The Trust and the Underwriter shall not give any information or
make any representations or statements on behalf of the Company or the
Distributor or concerning the Company or the Distributor, the Accounts or the
Contracts other than information, statements or representations contained in and
accurately derived from the registration statement or Prospectus for the
Contracts (as such registration statement and Prospectus may be amended or
supplemented from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of the Company.
2.8. For purposes of this Article II, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Trust or any affiliate of the Trust: advertisements
(such as material published, or designed for use in a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts or
any other advertisement, sales literature, or published article), education or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
2.9. So long as, and to the extent that the SEC requires pass-through
voting privileges for variable Contract owners, pursuant to the Exemption Order
or otherwise, the Company will provide pass-through voting privileges to owners
of policies whose cash values are invested, through the Accounts, in shares of
the Trust. The Trust shall require all Participating Insurance Companies to
handle voting privileges in the same manner and the Company shall be responsible
for assuring that the Accounts handle voting privileges in the manner
established by the Trust. With respect to each Account, the Company will vote
shares of the Trust held by the Account and for which no timely voting
instructions from policyowners are received as well as shares it owns that are
held by that Account, in the same proportion as those shares for which voting
instructions are received. The Company and its agents will in no way recommend
or oppose or interfere with the solicitation of proxies for Trust shares held by
Contract owners without the prior written consent of the Trust, which consent
may be withheld in the Trust's sole discretion.
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2.10. The Company shall promptly notify the Trust of any applicable
state insurance laws that restrict the Funds' investments or otherwise affect
the operation of the Trust and shall promptly notify the Trust of any changes in
such laws.
2.11. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, as well as such related provisions of the
Trust's Amended and Restated Declaration of Trust.
ARTICLE III
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of Iowa
and that it has legally and validly established each Account as a segregated
asset account under such law on the date set forth in Schedule A. The Company
shall amend its registration statement under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
Contracts. The Company shall register and qualify the Contracts for sale in
accordance with securities laws of the various states only if and to the extent
deemed necessary by the Company.
3.2. The Company represents and warrants that each Account has been
legally and validly established as a segregated asset account under applicable
state law and has been registered or, prior to any issuance or sale of the
Contracts, will be registered as a unit investment trust in accordance with the
provisions of the 1940 Act.
3.3. The Company represents and warrants that the Contracts or
interests in the Accounts will be issued and sold in compliance in all material
respects with all applicable federal and state securities and insurance
suitability requirements and are or, prior to issuance, will be registered as
securities under the 1933 Act.
3.4. The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5. The Trust represents and warrants that the Trust shares offered
and sold pursuant to this Agreement will be registered under the 1933 Act and
the Trust shall be registered under the 1940 Act prior to any issuance or sale
of such shares. The Trust shall amend its registration statement under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify its
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Trust.
3.6. The Trust represents that each fund intends to qualify as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the 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.
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3.7. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Trust and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
3.8. The Trust represents and warrants that the investments of each
Fund currently satisfies and will continue to satisfy the diversification
requirements set forth in either Section 1.817-5(b)(1) or 1.817-5(b)(2) of the
Treasury Regulations for each quarter of the Fund's taxable year in accordance
with Section 1.817-5(c)(1) of the Treasury Regulations, taking into account
Section 1.817-5(d) of the Treasury Regulations and subject to the "start-up
period" and "liquidation period" exceptions to diversification set forth in
Sections 1.817-5(c)(2) and 1.817-5(c)(3) of the Treasury Regulations
3.9. The Company represents and warrants that (a) each of the Contracts
is and will continue to be a "variable contract," within the meaning of Section
817(d) of the Internal Revenue Code of 1986, as amended, (b) each Account is and
will continue to be a "segregated asset account" for U.S. federal income tax
purposes, and (c) shares of the Funds shall only be acquired by the Company on
behalf of the Accounts solely for the benefit of the Contracts.
3.10. The Distributor represents and warrants that it is duly
registered as a broker-dealer under the 1934 Act and a member of the NASD.
3.11. The Trust represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the
Trust undertakes to have its Board of Trustees approve any plan under Rule 12b-1
to finance distribution expenses.
3.12. The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Trust represents that the Trust's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
state of Iowa and the Trust and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the state of Iowa to the extent required to perform this Agreement.
3.13. The Trust and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the 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 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.
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3.14. The Company and Distributor represent and warrant that all of its
directors, officers, employees, investment advisers, and other
individuals/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 Company. The aforesaid Bond shall
include coverage for larceny and embezzlement in an amount of not less than $5
million and shall be issued by a reputable bonding company. The Company agrees
to notify the Trust and the Underwriter in the event that such coverage no
longer applies.
ARTICLE IV
Potential Conflicts
4.1 The Trust, if it determines to offer its shares to any other
insurance company, separate account or to a qualified plan shall furnish the
Company with a copy of its application for an order of the Securities and
Exchange Commission under Section 6(c) of the 1940 Act for mixed and shared
funding relief, and the notice of such application and order when issued by the
SEC. The Company agrees to comply with the conditions on which such order is
issued, including reporting any potential or existing conflicts promptly to the
Board of Directors of the Trust ("Board"), and in particular whenever contract
owner voting instructions are disregarded, to the extent such conditions are not
materially different from the conditions of the mixed and shared funding relief
that the Company has agreed to be bound by in similar participation agreements
with other fund providers, and recognizes that it shall be responsible for
assisting the Board in carrying out is responsibilities in connection with such
order. The Company agrees to carry out such responsibilities with a view to the
interests of existing contract owners.
4.2 The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Fund are being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.3 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
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4.4 If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (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 (b) submitting the question of whether
or not such segregation as described below should be implemented to a vote of
all affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of having their assets segregated; or (c)
establishing a new registered management investment company or separate account.
4.5 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that such an election has been made. Until the end of such six (6) month
period, the Trust shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
4.6 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affect Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.7 For purposes of Sections 4.4 through 4.7 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
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4.8 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out their duties and responsibilities as Trustees; and
said reports, materials and data shall be submitted more frequently if deemed
appropriate by the Trustees.
4.9 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 Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable. The provisions of the
Article IV shall become effective and shall continue in effect only so long as
the Trust operates pursuant to an Exemptive Order that contains conditions
substantially identical to those contained in this Article IV. The Company and
the Trustee agree to negotiate in good faith any modifications to the provisions
of this Article IV that may be necessary or appropriate to comply with the
Exemptive Order or any such Rule amendment or adoption.
ARTICLE V
Indemnification
5.1. Indemnification By the Company. Except to the extent provided in
Sections 5.5 and 5.6, the Company agrees to indemnify and hold harmless the
Trust and its Trustees, officers, employees and agents and each person, if any,
who controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or Prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or the Accounts (or any
amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V), 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
indemnity 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 was accurately derived from written information furnished to
the Company by or on behalf of the Trust for use in Company Documents
or otherwise for use in connection with the sale of the Contracts or
Trust shares; or
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(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) 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 and accurately derived
from written information furnished to the Trust by or on behalf of the
Company or persons under its control; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
5.2. Indemnification By the Trust. Except to the extent provided in
Sections 5.5 and 5.6, the Trust agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees and agents 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 Article
V) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or expenses (including
the reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
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(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or Prospectus for the Trust (or any amendment or
supplement thereto), (collectively, "Trust Documents" for the purposes
of this Article V), 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 indemnity 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 was accurately
derived from written information furnished to the Trust by or on behalf
of the Company or persons under its control for use in Trust Documents
or otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or distribution of
the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents 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 and accurately derived from written information
furnished to the Company by or on behalf of the Trust or persons under
its control; or
(d) arise out of or result from any failure by the Trust to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust.
5.3. Indemnification By the Underwriter. Except to the extent provided
in Sections 5.5 and 5.6, the Underwriter agrees to indemnify and hold harmless
the Trust and its Trustees, officers, employees and agents and each person, if
any, who controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Underwriter) or expenses (including
the reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
12
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or Prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or the Accounts (or any
amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V), 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
indemnity 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 was accurately derived from written information furnished to
the Company by or on behalf of the Trust for use in Company Documents
or otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Underwriter or persons under its control, with respect
to the sale or distribution of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) 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 and accurately derived
from written information furnished to the Trust by or on behalf of the
Underwriter or persons under its control; or
(d) arise out of or result from any failure by the Underwriter
to provide the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter.
5.4. Indemnification By the Distributor. Except to the extent provided
in Sections 5.5 and 5.6, the Distributor agrees to indemnify and hold harmless
the Trust and its Trustees, officers, employees and agents and each person, if
any, who controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Distributor) or expenses (including
the reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
13
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or Prospectus for the Contracts or for any fund
managed by the Company or any affiliated Company that is available as
an investment vehicle for the Contracts (a "Fund" for the purposes of
this Article V), or in the Contracts themselves or in sales literature
generated or approved by the Company on behalf of the Contracts, the
Funds, or the Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), 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 indemnity 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 was accurately derived from
written information furnished to the Company by or on behalf of the
Trust for use in Company Documents or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Distributor or persons under its control, with respect
to the sale or distribution of the Contracts, Fund shares or Trust
shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) 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 and accurately derived
from written information furnished to the Trust by or on behalf of the
Distributor or persons under its control; or
(d) arise out of or result from any failure by the Distributor
to provide the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Distributor.
5.5. Neither the Company, the Trust, the Underwriter nor the
Distributor shall be liable under the indemnification provisions of Sections
5.1, 5.2, 5.3 or 5.4, as applicable, with respect to any Losses incurred or
assessed against an Indemnified Party that arise from such Indemnified party's
willful misfeasance, bad faith or negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement.
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5.6. Neither the Company, the Trust, the Underwriter nor the
Distributor shall be liable under the indemnification provisions of Sections
5.1, 5.2, 5.3 or 5.4, as applicable, with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the other
party in writing within a reasonable time after the summons, or other first
legal process giving information on the nature of the claim, shall have been
served upon or otherwise received by such Indemnified Party (or after such
Indemnified Party shall have received notice of service upon or other
notification to any designated agent), but failure to notify the party against
whom indemnification is sought of any such claim shall not relieve that party
from any liability which it may have to the Indemnified Party in the absence of
Sections 5.1, 5.2, 5.3 and 5.4.
5.7. In case any such action is brought against any Indemnified Party,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI
Termination
6.1. This Agreement may be terminated by any party for any reason by
six months advance written notice delivered to the other parties.
6.2. Notwithstanding any termination of this Agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Trust (or any Fund) pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement, provided that the Company continues to pay the costs set forth
in Section 2.3.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.10 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
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.
15
If to the Trust:
Nations Separate Account Trust
NCI-002-33-31
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Corporate Secretary
If to the Company:
Transamerica Life Insurance Company
0000 Xxxxxxxx Xxxx X.X.
Xxxxx Xxxxxx, Xxxx, 00000-0000
Attention: FMD Division General Counsel
If to the Underwriter:
Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
If to the Distributor:
AFSG Securities Corporation
0000 Xxxxxxxx Xxxx XX
Xxxxx Xxxxxx, Xxxx 00000-0000
Attention: Vice-President
Chief Compliance Officer
ARTICLE VIII
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. This Agreement constitutes the entire agreement among the parties
with respect to the matters covered hereby. 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.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
16
8.5. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come in
to the public domain without the express written consent of the affected party.
8.6. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities. Obligations and liabilities with respect to a Fund may be satisfied
from the assets belonging to that Fund but no other assets.
8.7. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with an investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
8.8. 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.
8.9. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.10. Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the prior written approval of the other
party.
8.11. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
17
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
NATIONS SEPARATE ACCOUNT TRUST
By: /s/ A. Xxx Xxxxxx
-------------------------
A. Xxx Xxxxxx
President
TRANSAMERICA LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
President
XXXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
Xxxxxxx X. Xxxxx, Xx.
Senior Vice-President
AFSG SECURITIES CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
President
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SCHEDULE A
Accounts
------------------------------------- ----------------------------------- ---------------------------------------
Name of Account and Date of
Resolution of Company's Board which
established the Account Policies Funds
------------------------------------- ----------------------------------- ---------------------------------------
Retirement Builder Variable Annuity Retirement Income Builder II o Nations High Yield Bond
Account Variable Annuity Portfolio
(March 29, 1996) o Nations International Value
Portfolio
o Nations Xxxxxxx Growth &
Income Portfolio
o Nations Xxxxxxx Focused
Equities Portfolio
o Nations Xxxxxxx
International Opportunities
Portfolio
o Nations Xxxxxxx 21st Century
Portfolio
o Nations Mid-Cap Growth
Portfolio
------------------------------------- ----------------------------------- ---------------------------------------
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