EXHIBIT 23(h)(iv)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ________, _____, by and between
Lord ▇▇▇▇▇▇ Series Fund, Inc. ("Fund"), a Maryland Corporation, on its behalf
and on behalf of each separate investment series thereof, whether existing as of
the date above or established subsequent thereto, (each a "Portfolio" and
collectively, the "Portfolios"), Lord ▇▇▇▇▇▇ Distributor LLC, a New York limited
liability Company (the "Distributor"), and _________________________ (the
("Company"), a life insurance company organized under the laws of the State of
________________.
WHEREAS, Fund is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the " '40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, Fund is organized as a series fund comprised of separate
investment series, namely the Portfolios; and
WHEREAS, Fund was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies and also offers its shares to certain qualified pension and
retirement plans; and
WHEREAS, Fund has filed an application with the SEC requesting an order
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated participating insurance companies accounts ("Participating
Companies") and qualified pension and retirement plans outside the separate
account context (including, without limitation, those trusts, plans, accounts
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(a),
408(b), 414(d), 457(b), 408(k), 501(c)(18) of the Internal Revenue Code of 1986,
as amended (the "Code") and any other trust, plan, account, contract or annuity
trust that is determined to be within the scope of Treasury Regulation
Section 1.817.5(f)(3)(iii)("Plans"); and
WHEREAS, the Company has established or will establish one or more separate
accounts ("Separate Accounts") to offer Variable Contracts and is desirous of
having Fund as one of the underlying funding vehicles for such Variable
Contracts; and
WHEREAS, Distributor is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934, as amended and acts as Fund's principal
underwriter; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of Fund to fund the
aforementioned Variable Contracts and Fund is authorized to sell such shares to
the Company at net asset value;
1
NOW, THEREFORE, in consideration of their mutual promises, the Company,
Fund, and Distributor agree as follows:
Article I. SALE OF FUND SHARES
1.1 Fund agrees to make Variable Contract Class shares ("Shares") of the
Fund available to the Separate Accounts of the Company for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in Fund's then current prospectus and statement of
additional information. Company agrees to purchase and redeem the Shares of the
Portfolios offered by the then current prospectus and statement of additional
information of the Fund in accordance with the provisions of such prospectus and
statement of additional information. Company shall not permit any person other
than a Variable Contract owner to give instructions to Company which would
require Company to redeem or exchange Shares of the Fund.
1.2 Fund agrees to sell to the Company those Shares of the selected
Portfolios of Fund which the Company orders, executing such orders on a daily
basis at the net asset value next computed after receipt by Fund or its designee
of the order for the Shares of Fund. For purposes of this Section 1.2, the
Company shall be the designee of Fund for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by Fund; provided that the Company receives the order by 4:00 p.m.
Eastern time and Fund receives notice from the Company by telephone, facsimile
(orally confirmed) or by such other means as Fund and the Company may mutually
agree of such order by 9:00 a.m. Eastern time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which Fund calculates its net asset value pursuant to
the rules of the SEC.
1.3 Fund agrees to redeem on the Company's request, any full or
fractional Shares of Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by Fund or its
designee of the request for redemption, in accordance with the provisions of
this agreement and Fund's then current registration statement. For purposes of
this Section 1.3, the Company shall be the designee of Fund for receipt of
requests for redemption from the designated Separate Account and receipt by such
designee shall constitute receipt by Fund; provided that the Company receives
the request for redemption by 4:00 p.m. Eastern time and Fund receives notice
from the Company by telephone, facsimile (orally confirmed) or by such other
means as Fund and the Company may mutually agree of such request for redemption
by 9:00 a.m. Eastern time on the next following Business Day.
1.4 Fund shall furnish, on or before the ex-dividend date, notice to the
Company of any income dividends or capital gain distributions payable on the
Shares of any Portfolios of Fund. The Company hereby elects to receive all such
income dividends and capital gain distributions as are payable on a Portfolio's
Shares in additional Shares of the Portfolio. Fund shall notify the Company or
its designee of the number of Shares so issued as payment of such dividends and
distributions.
2
1.5 Fund shall make the net asset value per share for the selected
Portfolios available to the Company on a daily basis, via a mutually agreeable
form, as soon as reasonably practicable after the net asset value per share is
calculated but shall use its best efforts to make such net asset value available
by 6:30 p.m. Eastern time.
1.6 At the end of each Business Day, the Company shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the Company shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar amount
of Fund Shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to Fund by the Company by 9:00 a.m. Eastern time on the Business
Day next following the Company's receipt of such requests and premiums in
accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the Company's order requests the purchase of Fund Shares, the
Company shall pay for such purchase by wiring federal funds to Fund or its
designated custodial account on the day the order is transmitted by the Company.
If the Company's order requests a net redemption resulting in a payment of
redemption proceeds to the Company, Fund shall use its best efforts to wire the
redemption proceeds to the Company by the next Business Day, unless doing so
would require Fund to dispose of Portfolio securities or otherwise incur
additional costs. In any event, proceeds shall be wired to the Company within
three Business Days or such longer period permitted by the '40 Act or the rules,
orders or regulations thereunder and Fund shall notify the person designated in
writing by the Company as the recipient for such notice of such delay by 3:00
p.m. Eastern time the same Business Day that the Company transmits the
redemption order to Fund.
1.8 Fund agrees that all Shares of the Portfolios of Fund will be sold
only to participating Insurance Companies which have agreed to participate in
Fund to fund their Separate Accounts and/or to Plans, all in accordance with the
requirements of Section 817(h) of the Code and Treasury Regulation 1.817-5.
Shares of the Portfolios of Fund will not be sold directly to the general
public.
1.9 Fund may refuse to sell Shares of any Portfolios to any person, or
suspend or terminate the offering of the Shares of any Portfolios if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board of Directors/Trustees of the Fund (the
"Board"), deemed necessary, desirable or appropriate. Without limiting the
foregoing, it has been determined that there is a significant risk that the Fund
and its shareholders may be adversely affected by short-term or excessive
trading activity, particularly activity used to try and take advantage of
short-term swings in the market. According, the Fund reserves right to reject
any purchase order, includes those purchase orders with respect to shareholders
or accounts whose trading has been or may be disruptive to the Fund or that may
otherwise adversely affect the Fund. The Company agrees to cooperate with the
Fund with respect to the Fund's policies and restrictions on short-term or
excessive trading activity.
3
1.10 Issuance and transfer of Portfolio Shares will be by book entry
only. Stock certificates will not be issued to the Company or the Separate
Accounts. Shares ordered from Portfolios will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. FEES AND EXPENSES
2.1 Except as otherwise provided under this Agreement, the Fund and
Distributor shall pay no fee or other compensation to Company under this
Agreement, and Company shall pay no fee or other compensation to the Fund or
Distributor, except as made a part of this Agreement as it may be amended from
time to time with the mutual consent of the parties hereto. All expenses
incident to performance by each party of its respective duties under this
Agreement shall be paid by that party, unless otherwise specified in this
Agreement
Article III. REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of ____________________ and
that it has legally and validly established each Separate Account as a
segregated asset account under such laws.
3.2 The Company represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
3.3 The Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to each Separate Account
are, in accordance with the applicable Variable Contracts, to be credited to or
charged against such Separate Account without regard to other income, gains or
losses from assets allocated to any other accounts of the Company. The Company
represents and warrants that the assets of the Separate Account are and will be
kept separate from the General Account of the Company and any other separate
accounts the Company may have, and will not be charged with liabilities from any
business that the Company may conduct or the liabilities of any companies
affiliated with the Company.
3.4 The Company represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with state insurance law
4
suitability requirements. Company agrees to notify each Fund promptly of any
investment restrictions imposed by state insurance law and applicable to the
Fund.
3.5 The Company represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify Fund immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
3.6 Fund represents and warrants that the Portfolio Shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and Fund shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such Shares. Fund, subject to Section 1.9 above, shall amend its registration
statement under the '33 Act and the '40 Act from time to time as required in
order to effect the continuous offering of its Shares. Fund shall register and
qualify its Shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by Fund.
3.7 Fund represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the Company immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance.
3.8 Fund represents and warrants that each Portfolio invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify the Company immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
3.9 Distributor represents and warrants that it is and will be a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD") and is and will be registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute Portfolio Shares
in accordance with all applicable state and federal laws and regulations,
including without limitation the '33 Act, the '34 Act and the '40 Act.
3.10 Distributor represents and warrants that it will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
3.11 Fund represents and warrants that all its directors, trustees,
officers, employees, and other individuals/entities who deal with the money
and/or securities of the Fund are and shall
5
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than that required by
Rule 17g-1 under the '40 Act. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. The
Fund shall make all reasonable efforts to see that this bond or another bond
containing these same provisions is always in effect, and each agrees to notify
the Company in the event such coverage no longer applies.
3.12 Company represents and warrants that all of its employees and agents
who deal with the money and/or securities of each Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage in an
amount not less than that required to be maintained by entities subject to the
requirements of Rule 17g-1 of the '40 Act. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. Company shall make all reasonable efforts to see that this bond or
another bond containing these same provisions is always in effect, and each
agrees to notify the Fund in the event such coverage no longer applies.
Article IV. PROSPECTUS AND PROXY STATEMENTS
4.1 Fund shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of Fund.
4.2 At least annually, Fund or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus for the Shares of
the Portfolios as the Company may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
Shares. Fund or its designee shall provide the Company, at the Company's
expense, with as many more copies of the current prospectus for the Shares as
the Company may reasonably request for distribution to prospective purchasers of
Variable Contracts. If requested by the Company in lieu thereof, Fund or its
designee shall provide such documentation in a mutually agreeable form and such
other assistance as is reasonably necessary in order for the parties hereto once
a year (or more frequently if the prospectus for the Shares is supplemented or
amended) to have the prospectus for the Variable Contracts and the prospectus
for the Fund Shares and any other fund shares offered as investments for the
Variable Contracts printed together in one document, provided however that
Company shall ensure that, except as expressly authorized in writing by Fund, no
alterations, edits or changes whatsoever are made to prospectuses or other Fund
documentation after such documentation has been furnished to Company or its
designee, and Company shall assume liability for any and all alterations, errors
or other changes that occur to such prospectuses or other Fund documentation
after it has been furnished to Company or its designee.
6
4.3 The Fund shall provide the Company with copies of the Fund's proxy
statements, Fund reports to shareholders, and other Fund communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Variable Contract owners.
4.4 Fund will provide the Company with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, and all amendments or supplements to any of the above
that relate to the Portfolios promptly after the filing of each such document
with the SEC or other regulatory authority. The Company will provide Fund with
at least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that relate to a Separate Account
promptly after the filing of each such document with the SEC or other regulatory
authority.
Article V. SALES MATERIALS
5.1 The Company will furnish, or will cause to be furnished, to Fund or
Distributor, each piece of sales literature or other promotional material in
which Fund, Distributor or any affiliate thereof is named, at least fifteen (15)
Business Days prior to its intended use. No such material shall be used unless
the Fund or Distributor approves such material. Such approval shall be presumed
given if notice to the contrary is not received by Company within fifteen
Business Days after receipt by the Fund or Distributor of such material.
5.2 Fund or Distributor will furnish, or will cause to be furnished, to
the Company, each piece of sales literature or other promotional material in
which the Company or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material shall be used unless
the Company approves such material. Such approval shall be presumed given if
notice to the contrary is not received by Fund or within fifteen Business Days
after receipt by the Company of such material.
5.3 Except with the permission of the Company, neither the Fund nor
Distributor shall give any information or make any representations on behalf of
the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts other than the information or representations contained in the
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts for distribution to owners of
such Variable Contracts, or in sales literature or other promotional material
approved by the Company or its designee. Neither the Fund nor Distributor shall
give such information or make such representations or statements in a context
that causes the information, representations or statements to be false or
misleading.
5.4 Except with the permission of the Fund or Distributor, neither the
Company nor its affiliates or agents shall give any information or make any
representations or statements on behalf of the Fund, Distributor or any
affiliate thereof or concerning the Fund, Distributor or any affiliate
7
thereof, other than the information or representations contained in the
registration statements or prospectuses for the Fund, as such registration
statements and prospectuses may be amended or supplemented from time to time, or
in reports to shareholders or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or Distributor or
designee thereof. Neither Company nor its affiliates or agents shall give such
information or make such representations or statements in a context that causes
the information, representations or statements to be false or misleading.
5.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the '40 Act or the '33 Act.
Article VI. POTENTIAL CONFLICTS
6.1 The parties acknowledge that Fund has received an exemptive order
from the SEC granting relief from various provisions of the '40 Act and the
rules thereunder to the extent necessary to permit Fund Shares to be sold to and
held by variable annuity and variable life insurance separate accounts of
Participating Companies and Plans. The terms of such exemptive order (the "Mixed
and Shared Funding Exemptive Order"), require Fund and each Participating
Company and Plan to comply with conditions and undertakings substantially as
provided in this Article. In the event of any inconsistencies between the terms
of the Mixed and Shared Funding Exemptive Order and those provided for in this
Article, the conditions and undertakings imposed by the Mixed and Shared Funding
Exemptive Order shall govern this Agreement.
6.2 The Fund's Board will monitor the Fund for the existence of any
material irreconcilable conflict between and among the interests of the Variable
Contract owners of all Participating Companies and of Plan Participants and
Plans investing in the Fund, and determine what action, if any, should be taken
in response to such conflicts. An irreconcilable material conflict may arise for
a variety of reasons, which may include: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of Fund are being managed;
(e) a difference in voting instructions given by variable annuity and variable
life insurance contract owners; (f) a decision by a Participating
8
Insurance Company to disregard the voting instructions of Variable Contract
owners and (g) if applicable, a decision by a Plan to disregard the voting
instructions of plan participants.
6.3 The Company will report any potential or existing conflicts to the
Board. The Company will be obligated to assist the Board in carrying out its
duties and responsibilities under the Mixed and Shared Funding Exemptive Order
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. The responsibility includes, but is not limited
to, an obligation by the Company to inform the Board whenever it has determined
to disregard Variable Contract owner voting instructions.
6.4 If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in the Fund, the Board shall give prompt notice of
the conflict and the implications thereof to all Participating Companies and
Plans. If the Board determines that Company is a relevant Participating Company
or Plan with respect to said conflict, Company shall at its sole cost and
expense, and to the extent reasonably practicable (as determined by a majority
of the disinterested Board members), take such action as is necessary to remedy
or eliminate the irreconcilable material conflict. Such necessary action may
include but shall not be limited to: (a) withdrawing the assets allocable to
some or all of the Separate Accounts from Fund or any Portfolio thereof and
reinvesting those assets in a different investment medium, which may include
another Portfolio of Fund, or another investment company; (b) submitting the
question as to whether such segregation should be implemented to a vote of all
affected Variable Contract owners and as appropriate, segregating the assets of
any appropriate group (i.e., variable annuity or variable life insurance
contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Variable Contract owners
the option of making such a change; and (c) establishing a new registered
management investment company (or series thereof) or managed separate account.
If a material irreconcilable conflict arises because of the Company's decision
to disregard Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the election of Fund to withdraw the Separate Account's
investment in Fund, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried out
with a view only to the interests of the Variable Contract owners.
For the purposes of this Article, a majority of the disinterested members
of the Board shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict but in no event will Fund or its
investment adviser (or any other investment adviser of Fund) be required to
establish a new funding medium for any Variable Contract. Further, the Company
shall not be required by this Article to establish a new funding medium for any
Variable Contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.
6.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the Company.
9
6.6 No less than annually, the Company shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
6.7 If and to the extent that the SEC promulgates new rules or
regulations with respect to mixed or shared funding on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies
as appropriate, shall take such steps as may be necessary to comply with such
rules and regulations, as adopted, to the extent such rules are applicable; and
(b) this Article VI shall be deemed to incorporate such new terms and
conditions, and any term or condition of this Article VI that is inconsistent
therewith, shall be deemed to be succeeded thereby.
6.8 The Company acknowledges it has been advised by Fund that it may be
appropriate for Company to disclose the potential risks of mixed and shared
funding in prospectuses or other applicable disclosure documents.
Article VII. VOTING
7.1 The Company will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the Company, where applicable, will vote Shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. The Company will be
responsible for assuring that each of its Separate Accounts that participates in
Fund calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The Company will vote Shares for which it has
not received timely voting instructions, as well as Shares it owns, in the same
proportion as its votes those Shares for which it has received voting
instructions. Company and its agents shall not oppose or interfere with the
solicitation of proxies for Fund Shares held for such Variable Contract owners.
Article VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
(a) Subject to Section 8.3 below, the Company agrees to indemnify and
hold harmless Fund and Distributor, and each of their trustees, directors,
members, principals, officers, partners, employees and agents and each person,
if any, who controls Fund or Distributor within the meaning of Section 15 of the
'33 Act (collectively, the "Indemnified Parties" for purposes of this Article)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company, which consent shall not
be unreasonably withheld) or litigation
10
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of Fund's
Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Variable
Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Company by or on behalf of an Indemnified Party for use
in the registration statement or prospectus for the Variable
Contracts or in the Variable Contracts or sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or Fund
Shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of
Fund not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the
Variable Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to Fund by or on behalf
of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(v) arises out of information or instructions from the Company or
its agents concerning the purchase, redemption, transfer or
other transaction in Fund Shares; or
11
(vi) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement.
(c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, the Company shall be entitled to participate at its own
expense in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2 INDEMNIFICATION BY FUND AND DISTRIBUTOR.
(a) Subject to Section 8.3 below, the Fund and Distributor agree to
indemnify and hold harmless the Company and each of its directors, officers,
employees, and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Fund and Distributor which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of Fund's Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus of Fund (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the
12
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
Fund or Distributor by or on behalf of the Company for use in
the registration statement or prospectus for Fund (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Variable Contracts or Fund Shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Variable Contracts not supplied by Fund or Distributor or
persons under its control) or wrongful conduct of Fund or
Distributor or persons under its control, with respect to the
sale or distribution of the Variable Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement or
prospectus covering the Variable Contracts, or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company for
inclusion therein by or on behalf of Fund or Distributor; or
(iv) arise as a result of a failure by Fund or Distributor to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Fund or Distributor in
this Agreement or arise out of or result from any other
material breach of this Agreement by Fund or Distributor.
(b) Fund or Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
13
(c) Fund or Distributor, as the case may be, shall not be liable under
this indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified Fund or
Distributor, as the case may be, in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Fund or Distributor of any such claim shall not
relieve Fund or Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, Fund or Distributor shall be entitled to participate at
its own expense in the defense thereof. Fund or Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from Fund or Distributor to such party of
Fund's or Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and Fund or Distributor will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.3 INDEMNIFICATION FOR ERRORS. In the event of any error or delay with
respect to information regarding the purchase, redemption, transfer or
registration of Shares of the Fund, the parties agree that each is obligated to
make the Separate Accounts and/or the Fund, respectively, whole for any error or
delay that it causes, subject in the case of pricing errors to the related
Portfolio's policies on materiality of pricing errors. In addition, each party
agrees that neither will receive compensation from the other for the costs of
any reprocessing necessary as a result of an error or delay. Each party agrees
to provide the other with prompt notice of any errors or delays of the type
referred to in this Section.
Article IX. TERM; TERMINATION
9.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
9.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the Company or Fund at any time from the date
hereof upon ninety (90) days notice, unless a shorter time is agreed
to by the parties;
(b) At the option of the Company, if Fund Shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by the Company. Prompt notice of election to terminate
shall be furnished by the Company, said termination to be effective
ten days after receipt of notice unless Fund makes available a
sufficient number of Shares to reasonably meet the requirements of
the Variable Contracts within said ten-day period;
14
(c) At the option of the Company, upon the institution of formal
proceedings against Fund by the SEC, the National Association of
Securities Dealers, Inc., or any other regulatory body, the expected
or anticipated ruling, judgment or outcome of which would, in the
Company's reasonable judgment, materially impair Fund's ability to
meet and perform Fund's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by the Company
with said termination to be effective upon receipt of notice;
(d) At the option of Fund, upon the institution of formal proceedings
against the Company by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in Fund's reasonable judgment, materially impair the
Company's ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to terminate shall be furnished
by Fund with said termination to be effective upon receipt of
notice;
(e) In the event Fund's Shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law
precludes the use of such Shares as the underlying investment medium
of Variable Contracts issued or to be issued by the Company.
Termination shall be effective upon such occurrence without notice;
(f) At the option of Fund if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under
the Code, or if Fund reasonably believes that the Variable Contracts
may fail to so qualify. Termination shall be effective upon receipt
of notice by the Company;
(g) At the option of the Company, upon Fund's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of the Company within ten days after written notice of
such breach is delivered to Fund;
(h) At the option of Fund, upon the Company's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of Fund within ten days after written notice of such
breach is delivered to the Company;
(i) At the option of Fund, if the Variable Contracts are not registered,
issued or sold in accordance with applicable federal and/or state
law. Termination shall be effective immediately upon such occurrence
without notice;
15
(j) In the event this Agreement is assigned without the prior written
consent of the Company, Fund, and Distributor, termination shall be
effective immediately upon such occurrence without notice.
9.3 Notwithstanding any termination of this Agreement pursuant to
Section 9.2 hereof, Fund at the option of the Company will continue to make
available additional Fund Shares, as provided below, pursuant to the terms and
conditions of this Agreement, for all Variable Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in Fund, redeem investments in
Fund and/or invest in Fund upon the payment of additional premiums under the
Existing Contracts.
Article X. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Funds:
Lord ▇▇▇▇▇▇ Family of Funds
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Lord, ▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Distributor:
Lord ▇▇▇▇▇▇ Distributor LLC
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
If to the Company:
[ address ]
Attention: [Name]
16
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article XI. MISCELLANEOUS
11.1 PRIVACY. Each party hereto acknowledges that, by reason of its
performance under this Agreement, it shall have access to, and shall receive
from the other party (and its affiliates, partners and employees), the
confidential information of the other party (and its affiliates, partners and
employees), including but not limited to the "nonpublic personal information" of
their consumers within the meaning of SEC Regulation S-P (collectively,
"Confidential Information"). Each party shall hold all such Confidential
Information in the strictest confidence and shall use such Confidential
Information solely in connection with its performance under this Agreement and
for the business purposes set forth in this Agreement. Under no circumstances
may a party cause any Confidential Information of the other party to be
disclosed to any third party or reused or redistributed without the other
party's prior written consent.
11.2 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
11.3 SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
11.4 GOVERNING LAW. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of New
York. It shall also be subject to the provisions of the federal securities laws
and the rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
11.5 LIABILITY. This Agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his or her capacity as an officer of the
Fund. The obligations of this Agreement shall be binding upon the assets and
property of the Fund and each respective Portfolio thereof only and shall not be
binding on any Director/Trustee, officer or shareholder of the Fund
individually. In addition, notwithstanding any other provision of this
Agreement, no Portfolio shall be liable for any loss, expense, fee, charge or
liability of any kind relating to or arising from the actions or omissions of
any other Portfolio or from the application of this Agreement to any other
Portfolio. It is also understood that each of the Portfolios shall be deemed to
be entering into a separate Agreement with the Company so that it is as if each
of the Portfolios had signed a separate Agreement with the Company and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
11.6 INQUIRIES AND INVESTIGATIONS. Each party shall cooperate with each
other party and all appropriate governmental authorities (including without
limitation the SEC, the NASD and state
17
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
11.7 SUBCONTRACTORS, AGENTS OR AFFILIATES. The Company may hire or make
arrangements for subcontractors, agents or affiliates to perform the services
set forth in this Agreement. Company shall provide the Fund with written notice
of the names of any subcontractors, agents or affiliates Company hires or
arranges to perform such services, and any specific operational requirements
that arise as a result of such arrangement. Company agrees that it is and will
be responsible for the acts and omissions of its subcontractors, affiliates, and
agents and that the indemnification provided by Company in Section 8 of this
Agreement shall be deemed to cover the acts and omissions of such
subcontractors, affiliates, and agents to the same extent as if they were the
acts or omissions of Company.
11.8 CLIENT LISTS. Company hereby consents to Distributor's, Fund's, or
its investment adviser's use or reference to the Company's name in connection
with any full, partial or representative list of clients.
11.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties hereto and supersedes all prior agreement
and understandings relating to the subject matter hereof.
11.10 AMENDMENT, WAIVER AND OTHER MATTERS. Neither this Agreement, nor any
provision hereof, may be amended, waived, modified or terminated in any manner
except by a written instrument properly authorized and executed by all parties
hereto. The 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.
18
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
Lord ▇▇▇▇▇▇ Series Fund, Inc.
By:
-----------------------------
Name:
Title:
Lord ▇▇▇▇▇▇ Distributor LLC
By: Lord, ▇▇▇▇▇▇ & Co. LLC, its Managing Member
By:
-----------------------------
Name:
Title:
[Company]
By:
-----------------------------
Name:
Title:
19
