PARTICIPATION AGREEMENT
AMONG
XXXXXX VARIABLE TRUST
XXXXXX MUTUAL FUNDS CORP.
AND
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 12th day of December,
1997, among COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY (the "Company"), a
Missouri corporation, on its own behalf and on behalf of each separate account
of the Company set forth on Schedule A hereto, as such Schedule may be amended
from time to time (each such account hereinafter referred to as the "Account"),
XXXXXX VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and XXXXXX
MUTUAL FUNDS CORP. (the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Trust is an open-end diversified management investment company
and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into Participation Agreements with the Trust and
the Underwriter (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated December 29, 1993 (File No. 812-8612), granting the variable
annuity and variable life insurance separate accounts participating in the Trust
exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
Investment Company Act of 1940, as amended (the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of the Participating Insurance Companies (the
"Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the sale of its shares is registered under the
Securities Act of 1933, as amended (the " 1933 Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
WHEREAS, each Account is a duly organized, validly existing separate
account, established by resolution of the Board of Directors of the Company, on
the date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to one or more variable insurance contracts (the
"Contracts"); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the " 1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the 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 the promises herein, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
--------------------
1.1 The Underwriter agrees, subject to the Trust's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company
those Trust shares representing interests in Authorized Funds which each
Account orders, executing such orders on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the order
for the shares of the Trust. For purposes of this Section 1. 1, the Company
shall be the designee of the Trust for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 9:30 a.m. eastern
time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the
Trust calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission. The initial Authorized Funds are set
forth in Schedule B, as such schedule is amended from time to time.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Trust
shall use reasonable efforts to calculate such net asset value on each day
on which the New York Stock Exchange is open for trading. Notwithstanding
the foregoing, the Trustees of the Trust (the "Trustees") may refuse to
sell shares of any Fund to the Company or any other 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 over the Trust or if
the Trustees determine, in the exercise of their fiduciary
responsibilities, that to do so would be in the best interests of
shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will
be sold only to Participating Insurance Companies and their separate
accounts in accordance with the requirements of Section 817(h)(4) of the
Internal Revenue Code of 1986, as amended (the "Code"), and Treasury
Regulation 1.817-5 No shares of any Fund will be sold to the general
public.
1.4 The Trust shall redeem its shares in accordance with the terms of
its then current prospectus. For purposes of this Section 1.4, the Company
shall be the designee of the Trust for receipt of requests for redemption
from each Account and receipt by such designee shall constitute receipt by
the Trust; provided that the Trust receives notice of such request for
redemption by 9:30 a.m., Eastern time, on the next following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized
Funds offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded as instructed by the Company
to the Underwriter in an appropriate title for each Account or the
appropriate sub-account of each Account.
1.8 The Underwriter shall furnish prompt notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration 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 the Fund shares in additional
shares of that Fund. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Underwriter shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.9 The Underwriter 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 Trust calculates its net asset value per share and each
of the Trust and the Underwriter shall use its best efforts to make such
net asset value per share available by 7:00 p.m. Eastern time. To the
extent required by law, if the Underwriter provides materially inaccurate
information concerning the net asset value of per share, the Trust shall
adjust the number of shares purchased or redeemed with respect to the
Account.
1.10 The Company represents and warrants that it has reserved the
right to suspend or limit the rights of holders of Contracts to transfer
Contract values between Funds. The Company will not waive such right
without prior notice to the Trust. The Company agrees that it will consult
with the Trust at the Trust's request from time to time on problems arising
from frequent or rapid transfer among Funds and that the Company will
impose reasonable restrictions on transferees to or from the Funds as
reasonably requested by the Trust.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts are
or will be registered under the 1933 Act; the Contracts will be issued and
sold in compliance in all material respects with all applicable laws and
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 and that it has legally and validly
established each Account prior to any issuance or sale thereof as a
separate account under applicable law and has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or life
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.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance
with all applicable laws, subject to the terms of Section 2.4 below, and
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the Registration Statement for its shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify the
shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by the Trust or the Underwriter in
connection with their sale by the Trust to the Company and only as required
by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that it will use every effort to maintain
such qualification (under Subchapter M or any successor 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; and
(c) it is lawfully organized and validly existing under the laws of
Massachusetts and that it does and will comply in all material respects
with the 1940 Act.
2.3 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 Trust shares in accordance with all securities laws applicable to it,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4 Notwithstanding any other provision of this Agreement, the Trust
shall be responsible for the registration and qualification of its shares
and of the Trust itself under the laws of any jurisdiction only in
connection with the sales of shares directly to the Company through the
Underwriter. The Trust shall not be responsible, and the Company shall take
full responsibility, for determining any jurisdiction in which any
qualification or registration of Trust shares or the Trust by the Trust may
be required in connection with the sale of the Contracts or the indirect
interest of any Contract in any shares of the Trust and advising the Trust
thereof at such time and in such manner as is necessary to permit the Trust
to comply.
2.5 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.
ARTICLE II. PROSPECTUSES AND PROXY STATEMENTS; VOTING
-----------------------------------------
3.1 The Trust shall provide such documentation (including a camera
ready copy of its prospectus) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if
the prospectus for the Trust is amended) to have the prospectus for the
Contracts and the Trust's prospectus (and, at the Company's option,
prospectuses for other funds underlying the Contract) printed together in
one or more documents (such printing to be at the Company's expense).
3.2 The Trust's Prospectus shall state that the Statement of
Additional Information for the Trust is available from the Underwriter or
its designee (or in the Trust's discretion, the Prospectus shall state that
such Statement is available from the Trust), and the Underwriter (or the
Trust), at its expense, shall print and provide such Statement free of
charge to the Company and to any owner of a Contract or prospective owner
who requests such Statement.
3.3 The Trust, at its expense, shall provide the Company with copies
of its reports to shareholders, proxy material and other Communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to the Contract owners, such distribution to be at the expense
of the Company.
3.4 The Company shall vote all Trust shares as required by law and the
Shared Funding Exemptive Order. The Company reserves the right to vote
Trust shares held in any separate account in its own right, to the extent
permitted by law and the Shared Funding Exemptive Order. The Company shall
be responsible for assuring that each of its separate accounts
participating in the Trust calculates voting privileges in a manner
consistent with all legal requirements and the Shared Funding Exemptive
Order.
3.5 The Trust will comply with all applicable provisions of the 1940
Act requiring voting by shareholders, and in particular the Trust will
either provide for annual meetings or comply with Section 16(c) of the 1940
Act (although the Trust is not one of the trusts described in Section 16(c)
of that Act) as well as with Sections 16(a) and, if and when applicable,
16(b). Further, the Trust will act in accordance with the Securities and
Exchange Commission's interpretation of the requirements of Section 16(a)
with respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4.1 Without limiting the scope or effect of Section 4.2, the Company
shall furnish, or shall cause to be furnished, to the Underwriter each
piece of sales literature or other promotional material in which the Trust,
its investment adviser or the Underwriter is named at least 15 days prior
to its use. No such material shall be used if the Underwriter objects to
such use within five Business Days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus for the Trust shares, as such registration statement and
prospectus may be amended or supplemented from time to time, or in annual
or semi-annual reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee or by the Underwriter, except with the written permission of the
Trust or the Underwriter or the designee of either or as is required by
law.
4.3 The Underwriter or its designee shall furnish, or shall cause to
be furnished, to the Company or its designee, each piece of sales
literature or other promotional material prepared by the Underwriter in
which the Company and/or its separate account(s) is named at least 15 days
prior to its use. No such material shall be used if the Company or its
designee objects to such use within five Business Days after receipt of
such material. The Company acknowledges that the Underwriter does not
currently intend to prepare sales literature naming the Company or its
separate account.
4.4 Neither the Trust nor the Underwriter shall give any information
or make any representations on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the written permission
of the Company or as is required by law.
4.5 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e. any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
registered representatives.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1 The Trust and Underwriter shall pay no fee or other compensation
to the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall bear the expenses for
the cost of registration and qualification of the Trust's shares,
preparation and filing of the Trust's prospectus and registration
statement, proxy materials and reports, setting the prospectus and
shareholder reports in type, setting in type and printing the proxy
materials, and the preparation of all statements and notices required by
any federal or state law, in each case as may reasonably be necessary for
the performance by it of its obligations under this Agreement.
5.3 The Company shall bear the expenses of (a) printing and
distributing the Trust's prospectus in connection with sales of the
Contracts and (b) distributing shareholder reports to Trust's Shareholders
and (c) of distributing the Trust's proxy materials to owners of the
Contracts.
ARTICLE VI. DIVERSIFICATION
---------------
6.1 The Trust shall cause each Authorized Fund to maintain a
diversified pool of investments that would, if such Fund were a segregated
asset account, satisfy the diversification provisions of Treas. Reg. ss.
1.817-5(b)(1) or (2). The Trust will notify the Company immediately upon
having a reasonable basis for believing any Fund has failed to so qualify.
ARTICLE VII. POTENTIAL CONFLICTS
-------------------
7.1 The Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Trust. A material
irreconcilable 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 law 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 Trust shall promptly inform the
Company if the Trustees determine that a material irreconcilable conflict
exists and the implications thereof.
7.2 The Company will 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 Shared Funding Exemptive
Order, by providing the Trustees with all information reasonably necessary
for the Trustees to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Trustees whenever
Contract owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Trustees, or a majority
of the disinterested Trustees, that a material irreconcilable conflict
exists, the Company shall to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take, at the
Company's expense, whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Trust or
any Fund and reinvesting such assets in a different investment medium,
including (but not limited to) another Fund of the Trust, or submitting the
question whether such segregation should be implemented to a vote of all
affected contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed
separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the 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 one or more portfolios of 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. No charge or penalty shall be
imposed as a result of such withdrawal. Any such withdrawal and termination
must take place within six (6) months after the Trust gives written notice
that this provision is being implemented, and until the end of that six
month period the Underwriter and Trust shall, to the extent permitted by
law and any exemptive relief previously granted to the Trust, continue to
accept and implement orders by the Company for the purchase (or redemption)
of shares of the Trust.
7.5 If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company
to disregard Contract owner voting instructions and that decision
represents a minority position that would preclude a majority vote, then
the Company may be required, at the Trust's direction, to withdraw the
affected Account's investment in one or more Authorized Funds of the Trust;
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 this provision is being implemented, unless a shorter
period is required by law, and until the end of the foregoing six month
period (or such shorter period if required by law), the Underwriter and
Trust shall, to the extent permitted by law and any exemptive relief
previously granted to the Trust, continue to accept and supplement orders
by the Company for the purchase (and redemption) of shares of the Trust. No
charge or penalty will be imposed as a result of such withdrawal.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. Neither
the Trust nor the Underwriter shall be required to establish a new finding
medium for the Contracts, nor shall the Company be required to do so, if an
offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the material irreconcilable conflict. In
the event that the Trustees determine that any proposed action does not
adequately remedy any material irreconcilable conflict, then the Company
will withdraw the Account's investment in one or more Authorized Funds of
the Trust and terminate this Agreement within six (6) months (or such
shorter period as may be required by law or any exemptive relief previously
granted to the Trust) 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. No charge or penalty will be imposed as a result of such
withdrawal.
7.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear
the cost of such remedial action shall be the obligation of the Company,
and the obligation of the Company set forth in this Article VII shall be
carried out with a view only to the interests of Contract owners.
7.8 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 Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Shared
Funding Exemptive Order, then (a) 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; and (b) Sections 3.4,
3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
7.9 The Company has reviewed the Shared Funding Exemption Order and
hereby assumes all obligations referred to therein which are required,
including, without limitation, the obligation to provide reports, material
or data as the Trustees may request as conditions to such Order, to be
assumed or undertaken by the Company.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1. Indemnification by the Company
8. 1 (a). The Company shall indemnify and hold harmless the Trust and
the Underwriter and each of the Trustees, directors of the Underwriter,
officers, employees or agents of the Trust or the Underwriter and each
person, if any, who controls the Trust or the Underwriter within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8. 1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company which consent may not be unreasonably
withheld) or litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts or the performance by the parties of their obligations
thereunder and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a Registration Statement,
Prospectus or Statement of Additional Information for the Contracts or
contained in the Contracts or sales literature for the Contracts (or
any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Company by or on behalf of the Trust for use in the Registration
Statement, Prospectus or Statement of Additional Information for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or representations
(other than statements or representations contained in the Trust's
Registration Statement or Prospectus, or in sales literature for Trust
shares not supplied by the Company, or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus, or
sales literature of the Trust or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Trust or the
Underwriter by or on behalf of the Company; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Sections 8.1 (b)
and 8.1 (c) hereof.
8.1 (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party to the extent
such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Trust, whichever is
applicable.
8.1 (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), on the basis of which the
Indemnified Party should reasonably know of the availability of indemnity
thereunder in respect of such claim but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Company shall
be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Indemnified Party named in the action.
After notice from the Company to such Indemnified 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 Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1 (d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Underwriter in connection with the issuance or sale of the Trust Shares or
the Contracts or the operation of the Trust.
8. 1 (e) The provisions of this Section 8.1 shall survive any
termination of this Agreement.
8.2 Indemnification by the Underwriter
8.2 (a) The Underwriter shall indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or agent of
the foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter which consent may not be unreasonably withheld) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Trust's shares or the Contracts or the performance by
the parties of their obligations thereunder and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the sales literature of
the Trust prepared by or approved by the Trust or Underwriter (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 Trust by or on behalf of the Company for use in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or representations
(other than statements or representations contained in the
Registration Statement, Prospectus, Statement of Additional
Information or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) of the Underwriter or
persons under its control, with respect to the sale or distribution of
the Contracts or Trust shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus,
Statement of Additional Information 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 Underwriter; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Underwriter in this Agreement or arise out of or
result from any other breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
8.2 (b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to each Company or the Account, whichever is
applicable.
8.2 (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) on the basis
of which the Indemnified Party should reasonably know of the availability
of indemnity thereunder in respect of such claim, 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
Parties, 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 Indemnified
Party named in the action. After notice from the Underwriter to such
Indemnified 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 Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2 (d) The Company shall promptly notify the Underwriter of the Trust
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 each Account.
8.2 (e) The provisions of this Section 8.2 shall survive any
termination of this Agreement.
8.3 Indemnification by the Trust
8.3 (a) The Trust shall indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust
which consent may not be unreasonably withheld) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the operations of the Trust
and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement,
Prospectus and Statement of Additional Information of the Trust (or
any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Trust by or on behalf of the Company for use in the
Registration Statement, Prospectus, or Statement of Additional
Information for the Trust (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(ii) 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,
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3(c) hereof.
8.3 (b) The Trust shall not be liable under the indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party s willful misfeasance, bad faith, or
gross negligence or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Company,
the Trust, the Underwriter or each Account, whichever is applicable.
8.3 (c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against any Indemnified Party
unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent) on the basis of which the
Indemnified Party should reasonably know of the availability of indemnity
thereunder in respect of such claim, but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Trust will be entitled to
participate, at its own expense, in the defense thereof. The Trust also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the Indemnified Party named in the action. After notice
from the Trust to such Indemnified Party of the Trust'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 Trust will not be liable
to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3 (d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
officers or, directors, in connection with this Agreement, the issuance or
sale of the Contracts or the sale or acquisition of shares of the Trust.
8.3 (e) The provisions of this Section 8.3 shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
--------------
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 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
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall terminate:
(a) at the option of any party upon 120 days advance written notice to
the other parties; or
(b) at the option of the Trust or the Underwriter in the event that
formal administrative proceedings are instituted against the Company by the
NASD, the Securities and Exchange Commission, the Insurance Commissioner of
the State of Missouri or any other regulatory body regarding the Company's
duties under this Agreement or related to the sales of the Contracts, with
respect to the operation of any Account, or the purchase of the Trust
shares, provided, however, that the Trust 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
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Underwriter
by the NASD, the Securities and Exchange Commission, or any state
securities or insurance department or any other regulatory body in respect
of the sale of shares of the Trust to the Company, 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 Trust or Underwriter to perform its obligations
under this Agreement; or
(d) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to substitute
the shares of another investment company for the corresponding Fund shares
of the Trust in accordance with the terms of the Contracts for which those
Fund shares had been selected to serve as the underlying investment media.
The Company will give 60 days' prior written notice to the Trust of the
date of any proposed vote to replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 60 days advance written
notice from the Underwriter to the Company, upon a decision by the
Underwriter to cease offering shares of the Fund for sale; or
(f) At the option of the Company, if the Trust shares are not
reasonably available to meet the requirements of the variable Contracts as
determined by the Company. Prompt notice of election to terminate shall be
furnished by the Company, said termination to be effective ten days after
receipt of notice unless the Trust makes available a sufficient number of
shares to reasonably meet the requirements of the variable Contracts within
said ten-day period; or
(g) At the option of the Company, upon the Trust's or Underwriter's
breach of any material provision of this Agreement, which breach has not
been cured to the satisfaction of the Company within ten days after written
notice of such breach is delivered to the Trust; or
(h) At the option of the Trust, upon the Company's breach of any
material provision of this Agreement, which breach has not been cured to
the satisfaction of the Trust within ten days after written notice of such
breach is delivered to the Company.
10.2. It is understood and agreed that the right of any party hereto
to terminate this Agreement pursuant to Section 10. I (a) may be exercised
for any reason or for no reason.
10.3 No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to
all other parties to this Agreement of its intent to terminate, which
notice shall set forth the basis for such termination. Such prior written
notice shall be given in advance of the effective date of termination as
required by this Article X.
10.4 Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement, the Trust and the Underwriter shall, at the
option of the Company, continue to make available additional shares of the
Trust pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, subject to Section 1.2 of this Agreement, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Trust, redeem investments in the Trust and/or invest in the Trust upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.4 shall not apply to any termination
under Article VII and the effect of such Article VII termination shall be
governed by Article VII of this Agreement.
10.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract owner
initiated transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application.
Furthermore, except in cases where permitted under the terms of the
Contracts, subject to Section 1.2 of this Agreement, the Company shall not
prevent Contract owners from allocating payments to an Authorized Fund that
was otherwise available under the Contracts without first giving the Trust
or the Underwriter 90 days notice of its intention to do.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Trust:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
If to the Underwriter:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
If to the Company:
Cova Financial Life Insurance Company
Xxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx Xxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XII. MISCELLANEOUS
-------------
12.1 A copy of the Agreement and Declaration of Trust of the Trust is
on file with the Secretary of State of the Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of
the Trustees of the Trust as Trustees and not individually and that the
obligations of or arising out of this instrument, including without
limitation Article VII, are not binding upon any of the Trustees or
shareholders individually but binding only upon the assets and property of
the Trust.
12.2 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.4 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
12.6 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.7 Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Underwriter are several and, without
limiting in any way the generality of the foregoing, neither such party
shall have any liability for any action or failure to act by the other
party, or any person acting on such other party's behalf, provided that
this Section 12.7 shall not affect the express terms of Section 8.2(a)
pursuant to which the indemnity of the Underwriter is applicable to certain
of the Trust's documents.
12.8 This Agreement may not be assigned with the prior written consent
of the parties hereto.
12.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement executed by the parties hereto.
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 thereunder affixed hereto as of the date specified below.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
By its authorized officer,
______________________________________________
Name:
Title:
XXXXXX VARIABLE TRUST
By its authorized officer,
______________________________________________
Name:
Title:
XXXXXX MUTUAL FUNDS CORP.
By its authorized officer,
______________________________________________
Name:
Title:
SCHEDULE A
Cova Variable Annuity Account One
SCHEDULE B
Xxxxxx VT Growth & Income Fund
Xxxxxx VT International Growth Fund
Xxxxxx VT International New Opportunities Fund
Xxxxxx VT New Value Fund
Xxxxxx VT Vista Fund
