INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT (the "Agreement") made by and between ▇▇▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENTS, INC., a Delaware corporation ("▇▇▇▇▇▇▇ ▇▇▇▇▇▇"), with a
principal place of business in Boston, Massachusetts and [NAME OF INSURANCE
COMPANY], a [STATE OF INCORPORATION] corporation (the "Company"), with a
principal place of business in [PRINCIPAL PLACE OF BUSINESS - CITY, STATE] on
behalf of the [SEPARATE ACCOUNT NAME], a separate account of the Company, and
any other separate account of the Company as designated by the Company from time
to time, upon written notice to the Fund in accordance with Section 8 herein
(the "Account").
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ has caused to be organized ▇▇▇▇▇▇▇ Variable Life
Investment Fund (the "Fund"), a Massachusetts business trust created under a
Declaration of Trust dated March 15, 1985, as amended, the beneficial interest
in which is divided into several series, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities, each
of which series (except Money Market Portfolio) is divided into two classes of
shares of beneficial interest; and
WHEREAS, the purpose of the Fund is to act as the investment vehicle for
the separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies which have
entered into indemnification agreements substantially identical to this
Agreement; and
WHEREAS, the parties desire to express their agreement as to certain other
matters;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
1. ADDITIONAL DEFINITIONS.
For purposes of this Agreement, the following definitions shall apply:
(a) "Shares" means shares of beneficial interest, without par value,
of any class of any Portfolio, now or hereafter created, of the Fund.
2. ACCESS TO OTHER PRODUCTS.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall permit an Account to participate in any registered
investment company other than the Fund which is intended as the funding vehicle
for insurance products and for which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or an affiliate of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ acts as investment adviser, on the same basis as other insurance
companies are permitted to participate in such a registered investment company.
This provision shall not require ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to make available to the Company
shares of any investment company which is organized solely as the funding
vehicle for insurance products offered by a single insurance company or a group
of affiliated insurance companies.
3. RIGHT TO REVIEW AND APPROVE SALES MATERIALS.
The Company shall furnish, or shall cause to be furnished, to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or its designee, at least twenty days prior to its intended use, each
piece of promotional material in which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or the Fund is named. No
such material shall be used unless ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or its designee shall have
approved such use in writing, or twenty days shall have elapsed without
approval, rejection or objection since receipt by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or its designee
of such material.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall furnish, or shall cause to be furnished, to the
Company or its designee, at least twenty days prior to its intended use, each
piece of promotional material in which the Company or its separate account(s) is
named. No such material shall be used unless the Company or its designee shall
have approved such use in writing, or twenty days shall have elapsed without
approval, rejection or objection since receipt by the Company or its designee of
such material.
4. SALES ORGANIZATION MEETINGS.
Representatives of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or its designee shall meet with the sales
organizations of the Company at such reasonable times and places as may be
agreed upon by the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or its designee for the purpose of
educating sales personnel about the Fund.
5. DURATION.
This Agreement shall continue in effect for five (5) years from the date of
its execution, except that the obligation of each party hereto to indemnify the
other party hereto shall continue with respect to all losses, claims, damages,
liabilities or litigation based upon the acquisition of Shares
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purchased as the funding vehicle for any variable life insurance policy or
variable annuity contract issued by the Company or any affiliated insurance
company.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
each of its directors and officers and each person, if any, who controls ▇▇▇▇▇▇▇
▇▇▇▇▇▇ within the meaning of Section 15 of the Securities Act of 1933 (the
"Act") or any person, controlled by or under common control with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
("affiliate") against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) to which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or such
directors, officers or affiliate may become subject under the Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
Shares by any person which (i) may be based upon any wrongful act by the
Company, any of its employees or representatives, any affiliate of or any person
acting on behalf of the Company or a principal underwriter of its insurance
products, or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering Shares or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or the Fund by the Company, provided, however, that in no case (i) is the
Company's indemnity in favor of a director or officer or any other person deemed
to protect such director or officer or other person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Company to be liable under its indemnity agreement
contained in this Paragraph 6 with respect to any claim made against ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or any person indemnified unless ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or such person, as the
case may be, shall have notified the Company in writing pursuant to Paragraph 8
within a reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or upon such person (or after ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or such person shall have
received notice of such service on any designated agent), but failure to notify
the Company of any such claim shall not
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relieve the Company from any liability which it has to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or any
person against whom such action is brought otherwise than on account of the
indemnity agreement contained in this Paragraph 6. The Company shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if it elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, to its officers and
directors, or to any affiliates, defendant or defendants in the suit. In the
event that the Company elects to assume the defense of any such suit and retain
such counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, such officers and directors or affiliates,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Company does not elect to
assume the defense of any such suit, the Company will reimburse ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
such officers and directors or affiliates, defendant or defendants in such suit,
for the reasonable fees and expenses of any counsel retained by them. The
Company agrees promptly to notify ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ pursuant to Paragraph 8 of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any Shares.
(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which it or such directors, officers or controlling persons may become
subject under the Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, any of its employees or
representatives or a principal underwriter of the Fund, or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon information furnished to the Fund or the Company by ▇▇▇▇▇▇▇
▇▇▇▇▇▇; provided, however, that in no case (i) is ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ indemnity in
favor of a director or officer or any other person deemed to protect such
director or officer or other person against any liability to
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which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to be liable under its indemnity agreement
contained in this Paragraph 6 with respect to any claims made against the
Company or any such director, officer or controlling person unless the Company
or such director, officer or controlling person, as the case may be, shall have
notified ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in writing pursuant to Paragraph 8 within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon it or upon such director,
officer or controlling person (or after the Company or such director, officer or
controlling person shall have received notice of such service on any designated
agent), but failure to notify ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of any claim shall not relieve it
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
Paragraph 6. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but if ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Company, its directors, officers or controlling person or
persons, defendant or defendants, in the suit. In the event ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
elects to assume the defense of any such suit and retain such counsel, the
Company, its directors, officers or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ does not elect to assume
the defense of any such suit, it will reimburse the Company or such directors,
officers or controlling person or persons, defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ agrees promptly to notify the Company pursuant to Paragraph 8 of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any Shares.
(c) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees to indemnify and hold harmless the Company and
each of its directors and officers against any and all losses, claims, damages,
liabilities or litigation arising from the imposition of additional federal
income taxes on the Company or any policyholder solely as a
5
result of a Final Determination that any Portfolio has failed (x) to comply with
the diversification requirements of section 817(h) of the Internal Revenue Code
of 1986, as amended (the "Code"), relating to the diversification requirements
for variable annuity, endowment and life insurance contracts, or (y) to qualify
as a regulated investment company within the meaning of section 851 of the Code;
PROVIDED, HOWEVER, that (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have no liability under this
Paragraph 6(c) if such failure is caused by a third party who is not an employee
or agent of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (E.G., the Fund's custodian or another service
provider), and (ii) in no case is ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ indemnity under this
Paragraph 6(c) deemed to protect any person against any liability to which that
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of that person's duties or by reason of
reckless disregard by that person of obligations under this Agreement.
The Company agrees that if the Internal Revenue Service asserts in
writing in connection with any governmental audit or review of the Company or,
to the Company's knowledge, of any policyholder, that any Portfolio has failed
to comply with the diversification requirements of section 817(h) of the Code or
the Company otherwise becomes aware of any facts that could give rise to any
claim against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as a result of such a failure or alleged failure,
(i) the Company shall promptly notify ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of such assertion or
potential claim; (ii) the Company shall consult with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as to how to
minimize any liability that may arise as a result of such failure or alleged
failure; (iii) the Company shall use its best efforts to minimize any liability
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for indemnification resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury Regulations Section
1.817-5(a) (2), to the Commissioner of the Internal Revenue Service that such
failure was inadvertent; (iv) the Company shall permit ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and its
legal and accounting advisors to participate in any conferences, settlement
discussions or other administrative or judicial proceedings or contests
(including judicial appeals thereof) with the Internal Revenue Service, any
policyholder or any other claimant regarding any claims that could give rise to
indemnification by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as a result of such a failure or alleged
failure; (v) any written materials to be submitted by the Company to the
Internal Revenue Service, any policyholder or any other claimant in connection
with any of the foregoing proceedings
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or contests (including, without limitation, any such materials to be submitted
to the Internal Revenue Service pursuant to Treasury Regulations Section
1.817-5(a) (2)), (a) shall be provided by the Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(together with any supporting information or analysis) at least 10 business days
prior to the day on which such proposed materials are to be submitted and (b)
shall not be submitted by the Company to any such person without the express
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, which shall not be unreasonably withheld;
(vi) the Company shall provide ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and its advisors with such
cooperation as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall reasonably request (including, without
limitation, by permitting ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and its accounting and legal advisors
to review the relevant books and records of the Company) in order to facilitate
▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ review of any written submissions provided to it pursuant to
the preceding clause or its assessment of the validity or amount of any claim
against it arising from such a failure or alleged failure; (vii) the Company
shall not with respect to any claim of the IRS or any policyholder that would
give rise to a claim for indemnification against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (a) compromise
or settle any claim, (b) accept any adjustment on audit, or (c) forego any
allowable judicial appeals, without the express written consent of ▇▇▇▇▇▇▇
▇▇▇▇▇▇, which shall not be unreasonably withheld, PROVIDED that the Company
shall not be required to appeal any adverse judicial decision unless ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall have provided an opinion of independent counsel to the effect that
a reasonable basis (consistent with Formal Opinion 85-352 of the American Bar
Association) exists for taking such appeal; and (viii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have
no liability as a result of such failure or alleged failure if the Company fails
to comply with any of the foregoing clauses (i) through (vii). Should ▇▇▇▇▇▇▇
▇▇▇▇▇▇ refuse to give its written consent to any compromise or settlement of any
claim or liability hereunder, the Company may, in its discretion, authorize
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to act in the name of the Company in, and to control the conduct
of, such conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
shall bear the fees and expenses associated with the conduct of the proceedings
that it is so authorized to control.
For purposes of this Paragraph 6(c), "Final Determination" shall mean, with
respect to any claim, a settlement of such claim (including the acceptance of an
adjustment proposed by the Internal Revenue Service) or a decision of a court of
competent jurisdiction with respect to such claim that
7
has become final after either the (i) exhaustion of allowable appeals or (2)
expiration of the time to take any such appeal with respect to the claim.
7. MASSACHUSETTS LAW TO APPLY.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
8. NOTICES.
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company:
[PARTICIPATING INSURANCE COMPANY, ADDRESS AND ATTN:]
9. MISCELLANEOUS.
The captions in the 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. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the ___ day of ________, 1998.
SEAL ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENTS, INC.
By:
---------------------------
Authorized Officer
SEAL [PARTICIPATING INSURANCE
COMPANY]
By:
---------------------------
Name:
Title:
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