Exhibit 26H-12
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this __ day of ________, 2005 by
and between XXXXX FARGO VARIABLE TRUST, a statutory trust formed under the laws
of Delaware (the "Trust"), XXXXX FARGO FUNDS DISTRIBUTOR, LLC, a Delaware
limited liability company (the "Distributor"), and NATIONAL LIFE INSURANCE
COMPANY, a Vermont life insurance company (the "Company"), on its own behalf and
on behalf of each separate account of the Company identified herein, and Equity
Services, Inc. (the "Insurance Underwriter"), a broker-dealer affiliated with
the Company.
WHEREAS, the Trust engages in business as an open-end, diversified
management investment company offering shares of beneficial interest (the "Trust
shares") consisting of one or more separate series ("Series") of shares, each
such Series representing an interest in a particular investment portfolio of
securities and other assets (a "Fund"), and which Series may be subdivided into
various classes ("Classes") with each such Class supporting a distinct charge
and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by insurance
companies and may also be utilized by qualified retirement plans; and
WHEREAS, an order of the Securities and Exchange Commission dated
September 28, 1998, (File No. 812-11158) grants certain separate accounts
supporting variable life insurance policies, their life insurance company
depositors, and their principal underwriters, exemptions from Sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, and from Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary for such
separate accounts to purchase and hold Trust shares at the same time that such
shares are sold to or held by separate accounts of affiliated and unaffiliated
insurance companies supporting either variable annuity contracts or variable
life insurance policies, or both, or by qualified pension and retirement plans
(the "SEC Order"); and
WHEREAS, the Distributor has the exclusive right to distribute Trust
shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the Distributor
desires to sell shares of certain Series and/or Class(es) to such separate
account(s); and
WHEREAS, the Insurance Underwriter serves as the principal underwriter
of one or more classes of variable annuity contracts and/or variable life
insurance policies issued by the Company and is party to this Agreement for the
sole purpose of receiving payments from the Distributor pursuant to Rule 12b-1
under the Investment Company Act of 1940;
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NOW, THEREFORE, in consideration of their mutual promises, the Trust,
the Distributor and the Company agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
1.1. "Accounts" -- the separate accounts of the Company described more
specifically in Schedules 1, 2 and 3 to this Agreement.
1.2. "Business Day"--each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code"--the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts"--the class or classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described more
specifically on Schedules 1, 2, or 3 to this Agreement.
1.5. "Contract Owners"--the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "Participating Account"--a separate account investing all or a
portion of its assets in Trust shares, including the Accounts.
1.7. "Participating Insurance Company"--any insurance company with a
Participating Account, including the Company.
1.8. "Participating Plan"--any qualified retirement plan investing
directly in the Trust.
1.9. "Participating Investor"--any Participating Account, Participating
Insurance Company or Participating Plan, including the Accounts and the Company.
1.10. "Products"--variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners"--owners of Products, including Contract Owners.
1.12. "Trust Board"--the board of trustees of the Trust.
1.13. "Registration Statement"--with respect to the Trust shares or a
class of Schedule 1 Contracts, the registration statement filed with the SEC to
register such securities under the 1933 Act, or the most recently filed
amendment thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of Contracts is
described more specifically on Schedule 1 to this Agreement. The Trust's
Registration Statement is filed on Form N-1A (File No. 333-74283).
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1.14. "1940 Act Registration Statement"--with respect to the Trust or
the Schedule 1 Accounts, the registration statement filed with the SEC to
register such person as an investment company under the 1940 Act, or the most
recently filed amendment thereto. The Schedule 1 Accounts' 1940 Act Registration
Statements are described more specifically on Schedule 1 to this Agreement. The
Trust's 1940 Act Registration Statement is filed on Form N-1A (File No.
811-09255).
1.15. "Prospectus"--with respect to shares of a Series (or Class) of
Trust shares or a class of Schedule 1 Contracts, each version of the definitive
prospectus or supplement thereto filed with the SEC pursuant to Rule 497 under
the 1933 Act. Unless indicated to the contrary, the term "Prospectus" in this
Agreement shall include any private placement memorandum or other similar
disclosure document used in connection with the offer or sale of Schedule 2 or
Schedule 3 Contracts. With respect to any provision of this Agreement requiring
a party to take action in accordance with a Prospectus, such reference thereto
shall be deemed to be to the version for the applicable Series, Class or class
of Schedule 1 Contracts last so filed prior to the taking of such action. For
purposes of Article IX, the term "Prospectus" shall include any statement of
additional information incorporated therein.
1.16. "Schedule 1 Accounts"--Accounts registered under the 1940 Act as
a unit investment trust and listed on Schedule 1.
1.17. "Schedule 2 Accounts"--Accounts excluded from the definition of
an investment company as provided for by Section 3(c)(11) of the 1940 Act and
listed on Schedule 2.
1.18. "Schedule 3 Accounts"--Accounts excluded from the definition of
an investment company as provided for by Section 3(c)(1) or Section 3(c)(7) of
the 1940 Act and listed on Schedule 3.
1.19. "Schedule 1 Contracts"--Contracts through which interests in
Schedule 1 Accounts are offered and issued, which interests are registered as
securities under the 0000 Xxx.
1.20. "Schedule 2 Contracts"--Contracts through which interests in
Schedule 2 Accounts are offered and issued to trustees of qualified pension and
profit-sharing plans and certain government plans identified in Section 3(a)(2)
of the 0000 Xxx.
1.21. "Schedule 3 Contracts"--Contracts through which interests in
Schedule 3 Accounts are offered and issued to "accredited investors", as that
term is defined in Regulation D under the 1933 Act, or other investors permitted
by Regulation D.
1.22. "Statement of Additional Information"--with respect to the shares
of the Trust or a class of Schedule 1 Contracts, each version of the definitive
statement of additional information or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Statement of
Additional Information, such reference thereto shall be deemed to be the last
version so filed prior to the taking of such action.
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1.23. "SEC"--the Securities and Exchange Commission.
1.24. "NASD"--The National Association of Securities Dealers, Inc.
1.25. "1933 Act"--the Securities Exchange Act of 1933, as amended.
1.26. "1940 Act"--the Investment Company Act of 1940, as amended.
ARTICLE II
SALE OF TRUST SHARES
2.1. AVAILABILITY OF SHARES
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Company for purchase on
behalf of the Account, shares of the Series and Classes listed on
Schedule 4 to this Agreement, such purchases to be effected at net
asset value in accordance with Section 2.3 of this Agreement. Such
Series and Classes shall be made available to the Company in accordance
with the terms and provisions of this Agreement until this Agreement is
terminated pursuant to Article X or the Distributor suspends or
terminates the offering of shares of such Series or Classes in the
circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now, or that may be established in
the future, will be made available to the Company only as the
Distributor may so provide, subject to the Distributor's rights set
forth in Article X to suspend or terminate the offering of shares of
any Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor, and (ii) the Trust
reserves the right in its sole discretion to refuse to accept a request
for the purchase of Trust shares.
2.2. REDEMPTIONS. The Trust shall redeem, at the Company's request, any
full or fractional Trust shares held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing: (a) the Company shall not
redeem Trust shares attributable to Contract Owners except in the circumstances
permitted in Article X of this Agreement, and (b) the Trust may delay redemption
of Trust shares of any Series or Class to the extent permitted by the 1940 Act,
any rules, regulations or orders thereunder, or the Prospectus for such Series
or Class.
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2.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as its agent for the
limited purpose of receiving purchase and redemption requests on behalf
of the Accounts for shares of those Series or Classes made available
hereunder, based on transactions in units issued by an Account (or
sub-account of an Account) under the Contracts, other transactions
relating to the Contracts or the Accounts and customary processing of
such transactions. Receipt of requests for transactions in Account (or
sub-account) units, or other transactions relating to the Contracts or
the Accounts, on any Business Day by the Company as such limited agent
of the Trust prior to the Trust's close of business as defined from
time to time in the applicable Prospectus for such Series or Class
(which as of the date of execution of this Agreement is the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. New
York Time)) shall constitute receipt by the Trust on that same Business
Day, provided that the Trust receives actual and sufficient notice of
such request by 9:00 a.m. Eastern Time on the next following Business
Day (the "Notice Day"). Such notice may be communicated by facsimile to
the office or person designated for such notice by the Trust.
(b) The Company shall pay for shares of each Series or Class
on the Notice Day. Payment for Series or Class shares shall be made in
federal funds transmitted to the Trust by wire to be received by the
Trust by 2:00 pm Eastern Time on the Notice Day (unless the Trust
determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Series or Classes effected
pursuant to redemption requests tendered by the Company on behalf of
the Account). In no event may proceeds from the redemption of shares
requested pursuant to an order received by the Company after the
Trust's close of business on any Business Day be applied to the payment
for shares for which a purchase order was received prior to the Trust's
close of business on such day. If the issuance of shares is canceled
because federal funds are not timely received, the Company shall
indemnify the respective Fund and Distributor with respect to all
costs, expenses and losses relating thereto. Upon the Trust's receipt
of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Trust. If federal funds are not received on time, such funds will
be invested, and Series or Class shares purchased thereby will be
issued, as soon as practicable after actual receipt of such funds but
in any event not on the same day that the purchase order was received.
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(c) Payment for Series or Class shares redeemed by the
Accounts or the Company shall be made in federal funds transmitted by
wire to the Company (or any person designated in writing by the
Company), such funds normally to be transmitted by 6:00 p.m. Eastern
Time on the Notice Day of the redemption order for Series or Class
shares (unless redemption proceeds are to be applied to the purchase of
Trust shares of other Series or Classes in accordance with Section
2.3(b) of this Agreement), except that the Trust reserves the right to
redeem Series or Class shares in assets other than cash and to delay
payment of redemption proceeds to the extent permitted by the 1940 Act,
any rules or regulations or orders thereunder, or the applicable
Prospectus. The Trust shall not bear any responsibility whatsoever for
the proper disbursement or crediting of redemption proceeds by the
Company.
(d) Prior to the first purchase of any Trust shares hereunder,
the Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Company, as
applicable, shall notify the other in writing of such changes,
observing the same protocols and security procedures, at least three
Business Days in advance of when such change is to take effect. The
Company and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall
not be liable to the Company for any breach of security.
(e) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. NET ASSET VALUE. The Trust shall inform the Company of the net
asset value per share for each Series or Class available to the Company as soon
as reasonably practicable after the net asset value per share for such Series or
Class is calculated and shall use its best efforts to provide this information
to the Company by 6:30 p.m. Pacific Time each Business Day. The Trust shall
calculate such net asset value in accordance with the Prospectus for such Series
or Class.
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such dividends
and distributions as are payable on any Series or Class shares in the form of
additional shares of that Series or Class. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends and capital gain distributions in cash; to be effective, such
revocation must be made in writing and received by the Trust at least ten
Business Days prior to a dividend or distribution date. The Trust shall notify
the Company promptly of the number of Series or Class shares so issued as
payment of such dividends and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Company or the
Accounts. Purchase and redemption orders for Trust shares shall be recorded in
an appropriate ledger for each Account (or sub-account).
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2.7. PRICING ERRORS. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported immediately
upon discovery to the Company. The Trust or its agent will promptly correct any
such errors and promptly recalculate transactions made under this Agreement
using the correct net asset value, dividends or capital gains consistent with
the Trust's then current net asset value error correction policy (including the
policy's definition of the term "material"). To the extent that recalculation of
one or more transactions does not make the Company's account with a Fund
"whole," the Distributor shall make such account "whole." The Distributor shall
not be responsible for payment of any costs of reprocessing transactions in
units issued by an Account (or a sub-account of an Account) under the Contracts
arising out of an error in the calculation of a Fund's net asset value,
dividends or capital gains distributions if such error is discovered and
corrected within five business days. Neither the Trust, any Fund, the
Distributor, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Company or any other
Participating Investor to the Trust or the Distributor.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall sell
Trust shares only to life insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Accounts to consider the portfolio investments of
the Trust as constituting investments of the Accounts for the purpose of
satisfying the diversification requirements of Section 817(h). The Company
hereby represents and warrants that it and each Account are Qualified Persons.
The Distributor and the Trust shall not sell Trust shares to any insurance
company or separate account unless an agreement is in effect between the
Distributor, the Trust and the insurance company containing provisions
substantially the same as those in Article VIII of this Agreement. The
Distributor and the Trust shall not sell more than 10% of any Series of Trust
shares to any Participating Plan unless an agreement is in effect between the
Distributor, the Trust and the trustee (or other fiduciary) of the Plan
containing provisions substantially the same as those in Article VIII of this
Agreement. The Distributor and the Trust shall not sell Trust shares to any
Participating Plan unless a written acknowledgment of the foregoing condition is
received from the trustee (or other fiduciary) of the Plan.
2.9 DISRUPTIVE TRADING. The Trust has adopted policies designed to
prevent frequent purchases and redemptions of any Series of Trust shares in
quantities great enough to disrupt orderly management of the corresponding
Fund's investment portfolio. These policies are disclosed in the Trust's
prospectus. From time to time, the Trust and the Distributor implement
procedures reasonably designed to enforce the Trust's disruptive trading
policies and shall provide a written description of such procedures (and
revisions thereto) to the Company. Such procedures may include the imposition of
redemption fees as identified in Article 7.5 of this Agreement. The Company
agrees to develop, adopt and maintain policies regarding transactions in Account
units reasonably designed to complement the Trust's disruptive trading policies,
and to implement Account transaction procedures reasonably designed, from time
to time, to effectuate the Trust's procedures for preventing disruptive trading
in Trust shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. COMPANY. The Company represents and warrants that: (a) it is an
insurance company duly organized and in good standing under applicable law; (b)
it has legally and validly established each Account as a segregated asset
account under applicable state law to serve as segregated investment accounts
for the Contracts; (c) each Schedule 1 Account is duly registered as a unit
investment trust under the 1940 Act and each such Account's 1940 Act
Registration Statement has been filed with the SEC in accordance with the 1940
Act; (d) the Schedule 2 Accounts and Schedule 3 Accounts each qualify for the
exclusions on which they rely for not registering as investment companies under
the 1940 Act; (e) it has registered, or will register, all Schedule 1 Contracts
offered and sold pursuant to this Agreement under the 1933 Act and has an
effective Registration Statement for that purpose; (f) it will offer and sell
the Contracts in compliance in all material respects with all applicable federal
and state laws and regulations, including, but not limited to, state insurance
law and federal securities law suitability requirements; (g) the Contracts have
been filed, qualified and/or approved for sale, as applicable, under the
insurance laws and regulations of the states in which the Contracts will be
offered; (h) sales of the Schedule 2 Contracts and Schedule 3 Contracts properly
qualify for exemptions on which the Company relies in not registering such
Contracts, or interests in the Account through which each is issued, under the
1933 Act; (i) its activities and those of its employees in promoting the sale
and distribution of the Contracts and effecting Contract Owner transactions in
Account units have not caused, and will not cause, the Company to be deemed a
broker-dealer, (j) orders it places for the purchase and redemption of Trust
shares pursuant to Article 2.3 of this Agreement are the net result of
transactions in units issued by an Account, instructions for which are received
by the Company prior to the Trust's close of business as defined from time to
time in the applicable Prospectus for such Series or Class (which as of the date
of execution of this Agreement is the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. New York Time)), (k) as long as this
Agreement remains in effect, it shall remain in continuous compliance with
Article 6.3, Article 6.4 and Article 6.5 of this Agreement and (l) it will
notify the Distributor and the Trust promptly if for any reason it is unable to
perform its obligations under this Agreement.
3.2. TRUST. The Trust represents and warrants that: (a) it is a
statutory trust duly organized and validly existing under the Delaware law; (b)
it is duly registered under the 1940 Act as an open-end management investment
company and has filed a 1940 Act Registration Statement with the SEC in
accordance with the provisions of the 1940 Act; (c) Trust shares issued pursuant
to this Agreement have been, or will be, duly authorized and validly issued in
accordance with applicable law; (d) it will offer and sell Trust shares pursuant
to this Agreement in compliance in all material respects with all applicable
federal and state laws and regulations; (e) it has registered, or will register,
all Trust shares offered and sold pursuant to this Agreement under the 1933 Act
and has an effective Registration Statement for that purpose; (f) as long as
this Agreement remains in effect, it shall remain in continuous compliance with
Article 6.1 and Article 6.2 of this Agreement; and (g) the Trust's Board, a
majority of whom are not interested persons of the Trust, has formulated and
approved a plan under Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution
expenses.
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3.3. DISTRIBUTOR. The Distributor represents and warrants that: (a) it
is a limited liability company duly organized and in good standing under
Delaware law; (b) it is registered as a broker-dealer under federal and
applicable state securities laws and is a member in good standing of the NASD;
and (c) Xxxxx Fargo Funds Management, LLC ("Xxxxx Fargo"), the Trust's
investment adviser, is registered as an investment adviser under all applicable
federal and state securities laws and that Xxxxx Fargo will perform its
obligations to the Trust in accordance with any applicable state and federal
securities laws.
3.4. LEGAL AUTHORITY. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all
of its directors, trustees, officers, members and employees 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 amount required by the applicable rules of
the NASD and the federal securities laws. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. All parties shall make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, shall provide
evidence thereof promptly to any other party upon written request therefor, and
shall notify the other parties promptly in the event that such coverage no
longer applies.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration
Statement from time to time and maintain its effectiveness as required in order
to effect the continuous offering of Trust shares in compliance with applicable
law. Notwithstanding the foregoing, the Trust shall register and qualify Trust
shares for sale in accordance with the laws of various states if, and to the
extent, deemed advisable by the Trust or the Distributor. The Trust shall amend
the Trust's 1940 Act Registration Statement as required by the 1940 Act to
maintain the Trust's registration under the 1940 Act for as long as Trust shares
are outstanding. The Trust shall comply in all material respects with the 1940
Act.
4.2. ACCOUNT FILINGS. The Company shall amend the Registration
Statement for each Schedule 1 Contract from time to time and maintain its
effectiveness as required in order to effect the continuous offering of such
Contracts in compliance with applicable law for as long as purchase payments are
made under such Contracts. Notwithstanding the foregoing, the Company: (a) may
permit the effectiveness of a Schedule 1 Contract's Registration Statement to
expire if the Company has supplied the Trust with an SEC no-action letter or
opinion of counsel satisfactory to the Trust's counsel to the effect that
maintaining such Registration Statement on a current basis is no longer
required, and (b) shall register and qualify the Contracts for sale in
accordance with the securities laws of the various states only if, and to the
extent, it considers such registration and qualification necessary. The Company
shall amend each Schedule 1 Account's 1940 Act Registration Statement as
required by the 1940 Act to maintain the Account's registration under the 1940
Act for as long as the Schedule 1 Contracts issued through that Account are in
force. With regard to each Schedule 1 Account, the Company shall comply in all
material respects with the 1940 Act.
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The Company shall be responsible for filing all Contract forms,
applications, marketing materials and other documents relating to the Contracts
and/or the Account with state insurance commissions, as required or customary,
and shall use its best efforts: (a) to obtain any and all approvals thereof,
under applicable state insurance law, of each state or other jurisdiction in
which Contracts are or may be offered for sale; and (b) to keep such approvals
in effect for so long as the Contracts are outstanding.
4.3 DELIVERY OF PROSPECTUSES BY THE COMPANY. The Company shall deliver
(or arrange for delivery of) an appropriate Prospectus to each prospective
Contract Owner describing in all material respects the terms and features of the
Contract being offered. The Company also shall deliver (or arrange for delivery
of) a Prospectus for each Fund that a prospective Contract Owner identifies on
his or her application as an intended investment option under a Contract or to
which a Schedule 1 Contract Owner allocates premium payments to or transfers
Contract value. The Company shall deliver (or arrange for delivery of) such
Prospectuses at the times required by applicable provisions of the 1933 Act and
rules or regulations thereunder.
4.3. VOTING OF TRUST SHARES. The extent required by applicable law,
whenever the Trust shall have a meeting of holders of any Series or Class of
Trust shares, the Company shall:
o solicit voting instructions from Contract Owners;
o vote Trust shares held in each Account at such shareholder
meetings in accordance with instructions received from Contract
Owners, and
o vote Trust shares held in each Account for which it has not
received timely instructions in the same proportion as it votes
the applicable Series or Class of Trust shares for which it has
received timely instructions.
Except with respect to matters as to which the Company has the right under Rule
6e-2 or Rule 6e-3(T) under the 1940 Act, to vote Trust shares without regard to
voting instructions from Contract Owners, neither the Company nor any of its
affiliates will recommend action in connection with, or oppose or interfere
with, the actions of the Trust Board to hold shareholder meetings for the
purpose of obtaining approval or disapproval from shareholders (and, indirectly,
from Contract Owners) of matters put before the shareholders.
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As required by the conditions attaching to the SEC Order, the Company shall
remain responsible for ensuring that it calculates voting instructions and votes
Trust shares at shareholder meetings in a manner consistent with other
Participating Investors. The Trust will notify the Company of any changes to the
SEC Order, the conditions attaching thereto, or to any interpretation of the
Order or conditions.
The Trust will comply with all provisions of the 1940 Act requiring voting by
shareholders, and in particular, the Trust will either provide for annual
meetings (except to the extent that the SEC may interpret Section 16 of the 1940
Act not to require such 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) of the
1940 Act. Further, the Trust will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the SEC may promulgate with
respect thereto.
4.4. STATE INSURANCE RESTRICTIONS. The Company acknowledges and agrees
that it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state insurance law applicable to any Fund or
the Trust or the Distributor, and that neither the Trust nor the Distributor
shall bear any responsibility to the Company, other Participating Insurance
Companies or any Product Owners for any such determination or the correctness of
such determination.
4.5. INTERPRETATION OF LAW. Under no circumstances will the Trust, the
Distributor or any of their affiliates (excluding Participating Investors) be
held responsible or liable in any respect for any statements or representations
made by them or their legal advisers to the Company or any Contract Owner
concerning the applicability of any federal or state laws, regulations or other
authorities to the activities contemplated by this Agreement.
4.6. DISCLOSURE. The Trust's prospectus shall state that the statement
of additional information for the Trust is available from either the Distributor
or the Trust. The Trust hereby notifies the Company that it is appropriate to
include in Contract Prospectuses, disclosure of the potential risks of mixed and
shared funding.
4.7. DRAFTS OF FILINGS. As requested, the Trust and the Company shall
provide to each other copies of draft versions of any Registration Statements,
Prospectuses, Statements of Additional Information, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations for
voting instructions, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, prepared by or
on behalf of either of them and that mentions the other party by name. Such
drafts shall be provided to the other party sufficiently in advance of filing
such materials with regulatory authorities in order to allow such other party a
reasonable opportunity to review the materials.
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4.8. COPIES OF FILINGS. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities
(it being understood that this provision is not intended to require the Trust to
provide to the Company copies of any such documents prepared, filed or used by
Participating Investors other than the Company and the Account).
4.9. REGULATORY RESPONSES. Each party shall promptly provide to all
other parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.8 of this Agreement.
4.10. COMPLAINTS AND PROCEEDINGS
(a) The Trust and/or the Distributor shall immediately notify
the Company of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Trust's
Registration Statement or the Prospectus of any Series or Class; (ii)
any request by the SEC for any amendment to the Trust's Registration
Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other
purposes relating to the registration or offering of the Trust shares;
or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Trust shares or any Class or Series in any state or
jurisdiction, including, without limitation, any circumstance in which
(A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or
(B) such law precludes the use of such shares as an underlying
investment medium for the Contracts or the Accounts. The Trust will
make every reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any such order
is issued, to obtain the lifting thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Contracts'
Registration Statement or the Contracts' Prospectus; (ii) any request
by the SEC for any amendment to the Contracts' Registration Statement
or Prospectus; (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of
the Contracts; or (iv) any other action or circumstances that may
prevent the lawful offer or sale of the Contracts or any class of
Contracts in any state or jurisdiction, including, without limitation,
any circumstance in which such Contracts are not registered, qualified
and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will
make every reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any such order
is issued, to obtain the lifting thereof at the earliest possible time.
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(c) Each party shall immediately notify the other parties when
it receives notice, or otherwise becomes aware of, the commencement of
any litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the Contracts.
(d) The Company shall provide to the Trust and the Distributor
any complaints it has received from Contract Owners pertaining to the
Trust or a Fund, and the Trust and Distributor shall each provide to
the Company any complaints it has received from Contract Owners
relating to the Contracts or the Company.
4.11. COOPERATION. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any examination, inquiry, or investigation by any such authority relating
to this Agreement or the transactions contemplated hereby. However, such access
shall not extend to attorney-client privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be fully responsible as
to the Trust and the Distributor for the sale and marketing of the Contracts.
The Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. Without limiting
the generality of the foregoing, the Company shall: (1) enter into and enforce
agreements with affiliated and unaffiliated parties to, and (2) adopt and
implement written compliance policies and procedures reasonably designed to,
ensure that:
o all persons offering or selling the Contracts are duly licensed
and registered under applicable insurance and securities laws,
o all individuals offering or selling the Contracts are duly
appointed agents of the Company and are registered
representatives of a NASD member broker-dealer,
o each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations,
including without limitation the rules of the NASD,
o persons offering or selling the Contracts disclose to prospective
Contract Owners remuneration each expects to receive in
connection with sales of the Contracts and any conflicts of
interest arising therefrom as required by applicable law, and
o persons offering or selling the Contracts do not intend to engage
in Account unit transactions that would violate the Company's or
the Trust's disruptive trading policies.
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5.2. ANTI-MONEY LAUNDERING. The Company shall comply with all
applicable laws and regulations designed to prevent money "laundering", and if
required by such laws or regulations, to share with the Trust information about
individuals, entities, organizations and countries suspected of possible
terrorist or money "laundering" activities in accordance with Section 314(b) of
the USA Patriot Act. In particular, the Company agrees that:
o as part of processing an application for a Contract, it will
verify the identity of applicants and, if an applicant is not a
natural person, will verify the identity of prospective principal
and beneficial owners submitting an application for a Contract,
o as part of processing an application for a Contract, it will
verify that no applicant, including prospective principal or
beneficial Contract Owners, is a "specially designated national"
or a person from an embargoed or "blocked" country as indicated
by the Office of Foreign Asset Control ("OFAC") list of such
persons,
o as part of its ongoing compliance with the USA Patriot Act, it
will, from time to time, reverify that no Contract Owner,
including a principal or beneficial Contract Owners, is a
"specially designated national" or a person from an embargoed or
"blocked" country as indicated by the Office of Foreign Asset
Control ("OFAC") list of such persons, and
o if any of the foregoing cease to be true, the Trust or its
agents, in compliance with the USA Patriot Act or Bank Secrecy
Act, may seek authority to block transactions in Account units
arising from accounts of one or more such Contract Owners with
the Company or of one or more of the Company's accounts with the
Trust.
The Trust and the Distributor shall comply with all applicable laws and
regulations designed to prevent money "laundering", and if required by such laws
or regulations, to share with the Company information about individuals,
entities, organizations and countries suspected of possible terrorist or money
"laundering" activities in accordance with Section 314(b) of the USA Patriot
Act.
5.3. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall
be fully responsible for the underwriting, issuance, service and administration
of the Contracts and for the administration of the Account, including, without
limitation, the calculation of performance information for the Contracts, the
timely payment of Contract Owner redemption requests and processing of Contract
transactions, and the maintenance of a service center, such functions to be
performed in all respects at a level commensurate with those standards
prevailing in the variable insurance industry. The Company shall provide to
Contract Owners all Trust reports, solicitations for voting instructions
including any related Trust proxy solicitation materials, and updated Trust
Prospectuses as required under the federal securities laws.
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5.4. CUSTOMER COMPLAINTS. The Company shall promptly address all
complaints from Contract Owners and resolve such complaints consistent with high
ethical standards and principles of ethical conduct.
5.5. TRUST PROSPECTUSES AND REPORTS. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (a) the Trust's Prospectus
for the Series and Classes listed on Schedule 4 and any supplement thereto; (b)
any Trust proxy soliciting material for such Series or Classes; and (c) any
Trust periodic shareholder reports. The Trust and the Company may agree upon
alternate arrangements, but in all cases, the Trust reserves the right to
approve the printing of any such material. The Trust shall make available to the
Company on the Trust's website each Statement of Additional Information and
supplement thereto. The Trust shall provide the Company at least 10 days advance
written notice when any such material shall become available, provided, however,
that in the case of a supplement, the Trust shall provide the Company reasonable
notice in the circumstances, it being understood that circumstances surrounding
such supplement may not allow for advance notice. The Company may not alter any
material so provided by the Trust or the Distributor (including, without
limitation, presenting or delivering such material in a different medium such as
electronic mail or attachments thereto) without the prior written consent of the
Distributor.
5.6. TRUST ADVERTISING MATERIAL. Neither the Company or any person
directly or indirectly authorized by the Company (including, without limitation,
underwriters, distributors, and sellers of the Contracts) shall use any piece of
advertising, sales literature or other promotional material in which the Trust,
the Distributor, Xxxxx Fargo, or a sub-adviser retained by Xxxxx Fargo to manage
a Fund, is named, except with the prior written consent of the Trust or the
Distributor. The Company shall furnish to the Trust or the Distributor each such
piece of advertising, sales literature or other promotional material at least
five (5) days prior to its use. The Trust or the Distributor shall respond to
any request for written consent on a prompt and timely basis, but failure to
respond shall not relieve the Company of the obligation to obtain the prior
written consent of the Trust or the Distributor. After receiving the Trust's or
Distributor's consent to the use of any such material, no further changes may be
made without obtaining the Trust's or Distributor's consent to such changes. The
Trust or Distributor may at any time in its sole discretion revoke such written
consent, and upon notification of such revocation, the Company shall no longer
use the material subject to such revocation. The Company shall be responsible
for filing any such materials with the NASD as applicable.
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5.7. CONTRACTS ADVERTISING MATERIAL. The Trust and the Distributor
shall not use any piece of advertising or sales literature or other promotional
material in which the Company, an Account or a Contract is named, except with
the prior written consent of the Company. The Trust or the Distributor shall
furnish to the Company each such piece of advertising, sales literature or other
promotional material at least five (5) days prior to its use. The Company shall
respond to any request for written consent on a prompt and timely basis, but
failure to respond shall not relieve the Trust or the Distributor of the
obligation to obtain the prior written consent of the Company. After receiving
the Company's consent to the use of any such material, no further changes may be
made by the Trust or Distributor without obtaining the Company's consent to such
changes. The Company may at any time in its sole discretion revoke any written
consent, and upon notification of such revocation, neither the Trust nor the
Distributor shall use the material subject to such revocation. The Trust and the
Distributor shall be responsible for filing any such materials with the NASD as
applicable.
5.8. TRADE NAMES. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor has
been revoked. The Company shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance.
5.9. REPRESENTATIONS BY COMPANY. Except with the prior written consent
of the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in
advertisements, sales literature or other promotional material approved in
writing by the Trust or its designee in accordance with this Article V, or in
published reports or statements of the Trust in the public domain.
The Company agrees to ensure that advertisements, sales literature or
other promotional material for the Contracts prepared by the Company or its
affiliates will be consistent with every law, rule, and regulation of any
regulatory agency or self-regulatory agency that applies to the Contracts or to
the sale of the Contracts, including, but not limited to, NASD Conduct Rule 2210
and XX-0000-0, XX-0000-0 and IM-2210-3 thereunder.
The Company and/or the appropriate affiliate has adopted and
implemented, or shall adopt and implement, written compliance procedures
reasonably designed to ensure that information concerning the Trust, the
Distributor, or any of their affiliates which is intended for use by brokers or
agents selling the Contracts (I.E., information that is not intended for
distribution to Contract Owners or prospective Contract Owners) is so used, and
neither the Trust, the Distributor, nor any of their affiliates shall be liable
for any losses, damages, or expenses relating to the improper use of such broker
only materials by agents of the Company or its affiliates who are unaffiliated
with the Trust or the Distributor. The parties hereto agree that this Section
5.9 is not intended to designate nor otherwise imply that the Company is an
underwriter or distributor of the Trust's shares.
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5.10. REPRESENTATIONS BY TRUST. Except with the prior written consent
of the Company, the Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Accounts
or the Contracts other than the information or representations contained in the
appropriate Contract Registration Statement or Contract Prospectus or in
published reports of the Company or the Accounts which are in the public domain
or in advertisements, sales literature or other promotional material approved in
writing by the Company in accordance with this Article V.
The Trust agrees to ensure that advertisements, sales literature or
other promotional material for the Trust prepared by the Distributor or its
affiliates in connection with the sale of the Contracts will be consistent with
every law, rule, and Regulation of any regulatory agency or self regulatory
agency that applies to the Trust or to the sale of Trust shares, including, but
not limited to, NASD Conduct Rule 2210 and XX-0000-0, XX-0000-0 and IM-2210-3
thereunder.
The Trust or the Distributor shall xxxx information produced by or on
behalf of the Trust which is intended for use by brokers or agents selling the
Contracts (I.E., information that is not intended for distribution to Contract
Owners or prospective Contract Owners) "FOR BROKER USE ONLY," and neither the
Company nor any of its affiliates shall be liable for any losses, damages, or
expenses arising on account of the use by brokers of such information with third
parties in the event that is not so marked.
5.11. ADVERTISING. For purposes of this Article V, the phrase
"advertising, sales literature or other promotional material" includes, but is
not limited to, any material constituting sales literature or advertising under
the NASD Conduct rules, the 1940 Act or the 1933 Act. Such material includes,
without limitation, the following materials for prospective Contract Owners,
existing Contract Owners, wholesalers and other broker-dealers, rating or
ranking agencies, or the press:
o 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, websites, or other public media),
o 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, electronic mail, or published
article),
o educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, and
o registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
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ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(H). The Trust will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts the Code and regulations thereunder. Without limiting the
scope of the foregoing, the Trust shall ensure that each Fund will comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5 thereunder, relating
to the diversification requirements for variable annuity, endowment, or life
insurance contracts, and any amendments or other modifications to such Section
and Regulation or successors thereto. The Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has failed
to so comply or that it might not comply in the future.
6.2. SUBCHAPTER M. The Trust shall maintain the qualification of each
Fund as a regulated investment company (under Subchapter M or any successor or
similar provision), and the Trust shall notify the Company immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall ensure that at the time each Contract
is issued it is treated as a life insurance, endowment, or annuity contract
under applicable provisions of the Code, and that as long as the Accounts hold
shares of the Trust the Company shall maintain such treatment for each
outstanding Contract. The Company shall notify the Trust and the Distributor
immediately upon having any basis for believing that the Contracts will not be
treated as life insurance, endowment, or annuity contracts under applicable
provisions of the Code.
6.4 REGULATION 1.817-5(F). The Company shall ensure that no Fund fails
to remain eligible for "look-through" treatment under Treasury Regulation
1.817-5(f) by reason of a current or future failure of the Company, the Accounts
or the Contracts to comply with any applicable requirements of the Code or
Treasury Regulations. The Company shall notify the Trust and the Distributor
immediately upon having any basis for believing that the failure of the Company,
the Accounts or the Contracts to comply with any applicable requirements of the
Code or Treasury Regulations could render a Fund ineligible, or jeopardize a
Fund's eligibility, for "look-through" treatment under Treasury Regulation
1.817-5(f). In the event of such a failure, the Company shall take all necessary
steps to cure any such failure, including, if necessary, obtaining a waiver or
closing agreement with respect to such failure from the U.S. Internal Revenue
Service at the Company's expense.
6.5 MODIFIED ENDOWMENT CONTRACTS. The Company shall ensure that any
Prospectus offering a variable life insurance Contract in circumstances where it
is reasonably probable that such Contract would be a "modified endowment
contract," as that term is defined in Section 7702A of the Internal Revenue
Code, will identify such Contract as a modified endowment contract.
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ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under
the federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information, Trust's
Registration Statement, Trust proxy materials and shareholder reports,
and preparation of a "camera-ready" copy of the foregoing;
(c) preparation of all statements and notices required by any
federal or state securities law;
(d) printing of all proxy materials, shareholder reports,
prospectuses and other documents required to be provided by the Trust
to its existing shareholders, and providing sufficient copies of the
same to the Company for distribution to Contract Owners currently
invested in the Trust; provided, however, that if the Company prints
copies of the Trust's prospectuses (or portions thereof) as part of a
larger document containing prospectuses of other investment companies,
the Trust shall bear the expense only of its share of the cost of
printing the document (for this purpose, the Trust's share shall be the
percentage of the total cost of the document represented by the ratio
that the number of pages of the Trust's prospectus bears to the total
number of pages);
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2 in
connection with sales of Trust shares to qualified retirement plans,
custodial, auditing, transfer agent and advisory fees, fees for
insurance coverage and Trustees' fees; and
(g) any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. COMPANY EXPENSES. Expenses incident to the Company's performance
of its duties and obligations under this Agreement include, but are not limited
to, the costs of:
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(a) registration and qualification of the Contracts under the
federal securities laws; (b) preparation and filing with the
SEC of the Contracts' Prospectus and Contracts' Registration
Statement;
(c) the sale, marketing and distribution of the Contracts,
including printing and dissemination of Contract Prospectuses to
current and prospective Contract owners and of the Trust's Prospectuses
to prospective Contract Owners as well as compensation for Contract
sales;
(d) administration of the Contracts;
(e) solicitation of voting instructions, including
distribution of Trust proxy materials to Contract Owners;
(f) payment of all applicable fees relating to Accounts and
the Contracts, including, without limitation, all fees due under Rule
24f-2;
(g) preparation, printing and dissemination of all statements
and notices to Contract Owners required by any federal or state
insurance law other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing
materials for the Contracts and Trust except where other arrangements
are made in advance.
7.4. OTHER EXPENSES AND PAYMENTS. The Trust and the Distributor shall
pay no fee or other compensation to the Company under this Agreement. Each
party, however, shall, in accordance with the allocation of expenses specified
in this Agreement, reimburse other parties for expenses initially paid by one
party, but allocated to another party. In addition, nothing herein shall prevent
the parties from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust, the Distributor, the
Company or the Accounts. Notwithstanding the foregoing, pursuant to the
distribution plan adopted by the Trust pursuant to Rule 12b-1 under the 1940
Act, and as contemplated by Article 3.2(g) of this Agreement, the Trust or any
Series or Class thereof shall pay the Distributor and the Distributor shall pay
the principal underwriter or distributor of one or more classes of Contracts for
activities primarily intended to result in the sale of Contracts or of Trust
shares the Accounts through which such Contracts are issued. Likewise, if the
Trust or any Series or Class adopts and implements a shareholder service plan
pursuant to Rule 12b-1 under the 1940 Act, or otherwise, then the Trust or the
appropriate Series or Class may pay the Distributor and the Distributor may pay
the principal underwriter or distributor of one or more classes of Contracts, or
the Company, for activities related to personal service and/or maintenance of
Contract Owner accounts, as permitted by such Plan.
-20-
7.5. REDEMPTION FEES. As a procedure in furtherance of its policies on
disruptive trading of Trust shares, the Trust may assess fees, to be paid by one
or more Accounts or by the Company, upon redemption of shares of one or more
Series or Classes of the Trust within certain stated time periods after such
shares have been purchased.
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. SEC ORDER. The parties to this Agreement acknowledge that the
Trust has obtained an SEC order (the "SEC Order") granting exemptions from
various provisions of the 1940 Act and the rules thereunder to Participant
Accounts supporting variable life insurance policies to the extent necessary to
permit them to hold Trust shares when Trust share also are sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and other
Qualified Persons (as defined in Section 2.8 hereof). The SEC Order is
conditioned upon the Trust and each Participating Insurance Company complying
with conditions and undertakings substantially as provided in this Article VIII.
The Trust will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes the same conditions and
undertakings on that company as are imposed on the Company pursuant to this
Article VIII.
8.2. COMPANY MONITORING REQUIREMENTS. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. COMPANY REPORTING REQUIREMENTS. The Company shall report any
conflicts or potential conflicts to the Trust Board and will provide the Trust
Board, at least annually, with all information reasonably necessary for the
Trust Board to consider any issues raised by such existing or potential
conflicts or by the conditions and undertakings required by the Exemptive Order.
The Company also shall assist the Trust Board in carrying out its obligations
including, but not limited to: (a) informing the Trust Board whenever it
disregards Contract Owner voting instructions with respect to variable life
insurance policies, and (b) providing such other information and reports as the
Trust Board may reasonably request. The Company will carry out these obligations
with a view only to the interests of Contract Owners.
8.4. TRUST BOARD MONITORING AND DETERMINATION. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination. Minutes
of the meetings of the Trust Board, or other appropriate records of the Trust,
shall record all reports received by the Board regarding such conflicts and all
actions taken by the Board in response.
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8.5. UNDERTAKING TO RESOLVE CONFLICT. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund) or submitting the question of whether
such withdrawal should be implemented to a vote of all affected Contract Owners,
and, as appropriate, segregating the assets supporting the Contracts of any
group of such owners that votes in favor of such withdrawal, or offering to such
owners the option of making such a change. The Company will carry out the
responsibility to take the foregoing action with a view only to the interests of
Contract Owners.
8.6. WITHDRAWAL. If a material irreconcilable conflict arises because
of the Company's decision to disregard the voting instructions of Contract
Owners of variable life insurance policies and that decision represents a
minority position or would preclude a majority vote at any Fund shareholder
meeting, then, if Trust Board so requests, the Company will redeem the shares of
the Trust to which the disregarded voting instructions relate and terminate this
Agreement with respect to the Account through which such Contracts were issued.
No charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. EXPENSES ASSOCIATED WITH REMEDIAL ACTION. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
any Contract. The Company shall not be required by this Article VIII to
establish a new funding medium for any Contract if an offer to do so has been
declined by vote of a majority of the Contract Owners materially adversely
affected by the irreconcilable material conflict.
8.8. SUCCESSOR RULES. 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 provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the SEC Order, then (a) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.7 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.
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ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Company by the Trust or the Distributor for use in the Contracts
Registration Statement, Contracts Prospectus or in the Contracts or
sales literature or promotional material for the Contracts (or any
amendment or supplement to any of the foregoing) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Trust Registration
Statement, any Prospectus for Series or Classes or sales literature or
other promotional material of the Trust (or any amendment or supplement
to any of the foregoing), or the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust or Distributor in
writing by or on behalf of the Company; or
(c) arise out of or are based upon statements or
representations by or on behalf of the Company (other than statements
or representations contained in the Trust Registration Statement, Trust
Prospectus, or advertisements, sales literature or other promotional
material of the Trust not prepared or supplied by the Company or
persons under its control) or any wrongful conduct of, or violation of
federal or state law by, the Company or persons under its control or
subject to its authorization, including without limitation, any
broker-dealers or agents authorized to sell the Contracts, with respect
to the sale, marketing or distribution of the Contracts or Trust
shares, including, without limitation, any impermissible use of
broker-only material, unsuitable or improper sales of the Contracts or
unauthorized representations about the Contracts or the Trust; or
-23-
(d) arise as a result of any failure by the Company or persons
under its control (or subject to its authorization) to provide
services, furnish materials or make payments as required under this
Agreement; or
(e) arise out of or result from any material breach by the
Company or persons under its control (or subject to its authorization)
of this Agreement; or
(f) arise out of or result from any breach of any
representation or warranty made by the Company in this Agreement
hereof, any failure to transmit a request for redemption or purchase of
Trust shares or payment therefor on a timely basis in accordance with
the procedures set forth in Article II, or any failure to deliver a
Fund's prospectus as required by Article 4.3 hereunder.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Company and each person who controls or
is affiliated with the Company within the meaning of such terms under the 1933
Act or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, expenses or liabilities are related to the
operations of the Trust and:
(a) arise out of or are based upon any failure by the Trust to
provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements and
procedures related thereto as specified in Article VI of this
Agreement); or
(b) arise out of or result from any material breach of any
representation or warranty made by the Trust under this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust.
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
-24-
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor hereby agrees
to, and shall, indemnify and hold harmless the Company and each person who
controls or is affiliated with the Company within the meaning of such terms
under the 1933 Act or 1940 Act and any officer, director, employee or agent of
the foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Trust
Registration Statement, any Prospectus for Series or Classes or sales
literature or other promotional material of the Trust (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon 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 in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if
such statement or omission or alleged statement or omission was made in
reliance upon and in conformity with information furnished in writing
by the Company to the Trust or Distributor for use in the Trust
Registration Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or supplement to
any of the foregoing) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for the Contracts (or any amendment or supplement
to any of the foregoing), 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 in light of the
circumstances in which they were made, if such statement or omission or
alleged statement or omission was made in reliance upon information
furnished in writing by the Distributor to the Company; or
(c) arise out of or are based upon statements or
representations by or on behalf of the Distributor (other than
statements or representations contained in the Contracts or in the
Contract or Trust Registration Statement, Contract or Trust Prospectus,
or advertisements, sales literature or other promotional material of
the Contracts or Trust not prepared or supplied by the Distributor or
persons under its control) or wrongful conduct of the Distributor or
persons under its control with respect to the sale of Trust shares or
the Contracts; or
(d) arise as a result of any failure by the Distributor or
persons under its control to provide services, furnish materials or
make payments as required under the terms of this Agreement; or
-25-
(e) arise out of or result from any material breach by the
Distributor or persons under its control of this Agreement; or
(f) arise out of or result from any breach of any
representation or warranty made by the Distributor in this Agreement
hereof.
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.4. RULE OF CONSTRUCTION. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Company,
the Company shall seek indemnification from the Trust only in circumstances in
which the Trust is entitled to seek indemnification from a third party with
respect to the same event or cause thereof.
9.5. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability under this Article IX,
except to the extent that the omission results in a failure of actual notice to
the indemnifying party and such indemnifying party is damaged solely as a result
of the failure to give such notice. The indemnifying party, upon the request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless: (a) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, or (b) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
-26-
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. RELATIONSHIP OF PARTIES. The Company is an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of Trust shares, as those terms variously are
used in the 1940 Act, the 1933 Act, and rules and regulations promulgated
thereunder. Likewise, the Company is not a "transfer agent" of the Trust as that
term is used in the 1934 Act and rules and regulations thereunder.
Notwithstanding the foregoing, the Company and the Trust agree that the Company
is a "service provider" to the Trust as that term is defined in Rule 38a-1 under
the 1940 Act and the Company agrees to cooperate with the Trust in the Trust's
efforts to comply with Rule 38a-1, including, but not limited to:
o adopting and implementing written compliance policies and
procedures reasonably designed to prevent the Company violating
the federal securities laws (as defined in the Rule) in its
provision of services to the Trust pursuant to this Agreement,
and
o providing copies of such written compliance policies and
procedures to the Trust's chief compliance officer on an annual
basis.
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other insurance companies and
investors (subject to Section 2.8 hereof) and the cash value of the Contracts
may be invested in other investment companies, provided, however, that until
this Agreement is terminated pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made
available hereunder on the same basis as other mutual funds available
as investment options under the Contracts;
(b) the Company shall not, without prior notice to the
Distributor (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under
the 1940 Act;
-27-
(c) the Company shall not, without the prior written consent
of the Distributor (unless otherwise required by applicable law),
solicit, induce or encourage Contract Owners to change or modify the
Trust to change the Trust's distributor or investment adviser, to
transfer or withdraw Contract Values allocated to a Fund, or to
exchange their Contracts for contracts not allowing for investment in
the Trust;
(d) the Company shall not substitute shares of another
investment company for shares one or more Funds without providing
written notice to the Distributor at least 90 days in advance of
effecting any such substitution; and
(e) the Company shall not withdraw the Account's investment in
the Trust or a Fund of the Trust except as necessary to facilitate
Contract Owner requests and routine transactions in Account units.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate
until (a) the Trust is dissolved, liquidated, or merged into another entity, or
(b) as to any Fund that has been made available hereunder, no Accounts continue
to invest in that Fund and the Company has confirmed in writing to the
Distributor that it no longer intends to invest in such Fund. However, certain
obligations of, or restrictions on, the parties to this Agreement may terminate
as provided in Sections 10.4 through 10.6 and the Company may be required to
redeem Trust shares pursuant to Section 10.7 or in the circumstances
contemplated by Article VIII. Article IX and Sections 5.8, and 10.8 shall
survive any termination of this Agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the
Trust and the Distributor to make Trust shares available to the Company for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the
Company, or the Distributor's reasonable determination that institution
of such proceedings is being considered by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to the
sale of the Contracts, the operation of the Account, the administration
of the Contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith, materially
impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event that any Schedule 1 Contract is not
registered or in the event any of the Contracts are not otherwise
issued or sold in accordance with applicable federal and/or state law,
such termination effective immediately upon receipt of written notice;
-28-
(c) if the Distributor shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition or (2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse impact
upon the business and operations of either the Trust or the
Distributor, such termination effective upon 30 days prior written
notice;
(d) if the Distributor suspends or terminates the offering of
Trust shares of any Series or Class to all Participating Investors or
only designated Participating Investors, if such action is required by
law or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Distributor acting in good faith, suspension or
termination is necessary in the best interests of the shareholders of
any Series or Class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such notice effective immediately
upon receipt of written notice, it being understood that a lack of
Participating Investor interest in a Series or Class may be grounds for
a suspension or termination as to such Series or Class and that a
suspension or termination shall apply only to the specified Series or
Class;
(e) upon the Company's assignment of this Agreement
(including, without limitation, any transfer of the Contracts or the
Account to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto, such
termination effective upon 30 days prior written notice;
(f) if the Company is in material breach of any provision of
this Agreement, which breach has not been cured to the satisfaction of
the Trust within 10 days after written notice of such breach has been
delivered to the Company, such termination effective upon expiration of
such 10-day period; or
(g) upon the determination of the Trust's Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(a), upon
termination of the Agreement pursuant to Section 10.3(b), or upon
notice from the Company pursuant to Section 10.5 or 10.6, such
termination pursuant hereto to be effective upon 30 days prior written
notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") 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.
10.5. TERMINATION BY THE COMPANY OF INVESTMENT IN A FUND. The Company
may elect to cease investing in a Fund, promoting a Fund as an investment option
under the Contracts, or withdraw its investment or the Account's investment in a
Fund, subject to compliance with applicable law, upon 60 days written notice to
the Trust, or upon written notice to the Trust within 15 days of the occurrence
of any of the following events (unless provided otherwise below):
-29-
(a) if the Trust informs the Company pursuant to Section 4.4
that it will not cause such Fund to comply with investment restrictions
as requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations; or
(b) if shares in such Fund are not reasonably available to
meet the requirements of the Contracts as determined by the Company
(including any non-availability as a result of notice given by the
Distributor pursuant to Section 10.4(d)), and the Distributor, after
receiving written notice from the Company of such non-availability,
fails to make available, within 10 days after receipt of such notice, a
sufficient number of shares in such Fund or an alternate Fund to meet
the requirements of the Contracts; or
(c) if such Fund fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure; or
(d) if such Fund ceases to qualify as a regulated investment
company under Subchapter M of the Code, as defined therein, or any
successor or similar provision, or if the Company reasonably believes
that the Fund may fail to so qualify, and the Trust, upon written
request, fails to provide reasonable assurance that it will take action
to cure or correct such failure within 30 days.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. TERMINATION BY THE COMPANY OF INVESTMENT IN ALL FUNDS. The
Company may elect to cease investing in all Series or Classes of the Trust made
available hereunder, promoting the Trust as an investment option under the
Contracts, or withdraw its investment or an Account's investment in the Trust,
subject to compliance with applicable law, upon 60 days written notice to the
Trust, or upon written notice to the Trust within 15 days of the occurrence of
any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust
or the Distributor (but only with regard to the Trust) by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body; or
(b) if the Trust or Distributor is in material breach of a
provision of this Agreement, which breach has not been cured to the
satisfaction of the Company within 10 days after written notice of such
breach has been delivered to the Trust or the Distributor, as the case
may be.
-30-
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and
acknowledge that it is essential for compliance with Section 817(h) of the Code
that the Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the SEC Order described in
Article VIII or any conditions or undertakings set forth or referenced therein,
or other SEC rule, regulation or order that may be adopted after the date
hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the event
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.4(d) of this Agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.8. CONFIDENTIALITY. The Company will keep confidential any
information acquired as a result of this Agreement regarding the business and
affairs of the Trust, the Distributor, and their affiliates.
ARTICLE XI
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by each party acknowledging in writing its
approval of a copy of the revised schedule. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
-31-
If to the Trust or the Distributor:
National Accounts
Xxxxx Fargo Advantage Funds
000 Xxxxxx Xxxxxx, 00xx Xxxxx
MAC A0103-123
Xxx Xxxxxxxxx, XX 00000
If to the Company:
Xxxxx X. Xxxx
Senior Counsel
National Life Insurance Company
One National Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Delaware, without giving effect to the conflicts of laws provisions thereof,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the
1933 Act, 1940 Act and Securities Exchange Act of 1934, as amended, and
the rules, regulations and rulings thereunder, including the SEC Order
and such other exemptions from those statutes, rules, and regulations
as the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
(b) 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.
(c) 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.
(d) 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.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
-32-
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Certificate of Trust of the
Trust is on file with the Secretary of State of the State of Delaware, and
notice is hereby given that this Agreement is executed on behalf of the Trustees
of the Trust as trustees, and is not binding upon any of the Trustees, officers
or shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
-33-
XXXXX FARGO VARIABLE TRUST
(Trust)
Date: ___________ By: _______________________________________
Name:
Title:
XXXXX FARGO FUNDS DISTRIBUTORS, LLC
(Distributor)
Date: ___________ By: _______________________________________
Name:
Title:
NATIONAL LIFE INSURANCE COMPANY
(Company)
Date: ___________ By: _______________________________________
Name:
Title:
EQUITY SERVICES, INC.
By: _________________________________________
Name:
Title:
-34-
SCHEDULE 1
Registered Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
============================================= ============================= ==================== =========================
Date Established by
Name of Account Board of Directors of the SEC 1940 Act Type of Product
Company Registration Number Supported by Account
============================================= ============================= ==================== =========================
--------------------------------------------- ----------------------------- -------------------- -------------------------
National Variable Life Insurance Account February 1, 1985 811-9044 Variable Universal Life
--------------------------------------------- ----------------------------- -------------------- -------------------------
--------------------------------------------- ----------------------------- -------------------- -------------------------
National Variable Annuity Account II November 1, 1996 811-08015 Variable Annuity
--------------------------------------------- ----------------------------- -------------------- -------------------------
--------------------------------------------- ----------------------------- -------------------- -------------------------
============================================= ============================= ==================== =========================
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
============================================= ========================== ========================= ====================
Marketing Name SEC 1933 Act Contract Form Number Annuity or Life
Registration Number
============================================= ========================== ========================= ====================
--------------------------------------------- -------------------------- ------------------------- --------------------
VariTrak 33-91938 Life
Sentinel Estate Provider 333-44723 Life
--------------------------------------------- -------------------------- ------------------------- --------------------
--------------------------------------------- -------------------------- ------------------------- --------------------
Sentinel Benefit Provider 333-67003 Life
--------------------------------------------- -------------------------- ------------------------- --------------------
--------------------------------------------- -------------------------- ------------------------- --------------------
Sentinel Advantage 333-19583 Annuity
============================================= ========================== ========================= ====================
S-1
SCHEDULE 2
Qualified Plan Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
============================================= ============================= ============================ ===========================
SEC 1940 Act
Date Established by Registration
Name of Account Board of Directors of the Type of Product Supported
Company by Account
============================================= ============================= ============================ ===========================
--------------------------------------------- ----------------------------- ---------------------------- ---------------------------
National Variable Life Insurance Account February 1, 1985 811-9044 Variable Universal Life
--------------------------------------------- ----------------------------- ---------------------------- ---------------------------
--------------------------------------------- ---------------------------------------------------------- ---------------------------
National Variable Annuity Account II November 1,1996 811-08015 Variable Annuity
--------------------------------------------- ---------------------------------------------------------- ---------------------------
--------------------------------------------- ----------------------------- ---------------------------- ---------------------------
============================================= ============================= ============================ ===========================
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 2
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
============================================= ============================= ============================
Marketing Name Contract Form Number Annuity or Life
============================================= ============================= ============================
--------------------------------------------- ----------------------------- ----------------------------
VariTrak 33-91938 Life
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
Sentinel Estate Provider 333-44723 Life
Sentinel Benefit Provider 333-19583 Life
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
333-19583
Sentinel Advantage Annuity
--------------------------------------------- ----------------------------- ----------------------------
S-2
SCHEDULE 3
Private Placement Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
============================================= ============================= ============================
Date Established by
Name of Account Board of Directors of the Type of Product Supported
Company by Account
============================================= ============================= ============================
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
============================================= ============================= ============================
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 3
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
============================================= ============================= ============================
Marketing Name Contract Form Number Annuity or Life
============================================= ============================= ============================
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
--------------------------------------------- ----------------------------- ----------------------------
============================================= ============================= ============================
S-3
SCHEDULE 4
Trust Share Series and Classes
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
========================================================== ===================================================
Contract Marketing Name Fund/Series -- Share Classes
========================================================== ===================================================
---------------------------------------------------------- ---------------------------------------------------
---------------------------------------------------------- ---------------------------------------------------
---------------------------------------------------------- ---------------------------------------------------
---------------------------------------------------------- ---------------------------------------------------
---------------------------------------------------------- ---------------------------------------------------
========================================================== ===================================================
S-4
