EXHIBIT (8d)
PARTICIPATION AGREEMENT
AMONG
XXXXX AMERICAN FUND,
KEYPORT LIFE INSURANCE COMPANY
AND
XXXX XXXXX AND COMPANY, INCORPORATED
THIS AGREEMENT is made this 27th day of June, 1996, by and among The
Xxxxx American Fund (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust, Keyport Life Insurance Company,
a life insurance company organized as a corporation under the laws of the
State of Rhode Island, (the "Company"), on its own behalf and on behalf of
each segregated asset account of the Company set forth in Schedule A, as may
be amended from time to time (the "Accounts"), and Xxxx Xxxxx and Company,
Incorporated, a Delaware corporation, the Trust's distributor (the
"Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an opened management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used as
an investment vehicle for separate accounts established for variable life
insurance policies and
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variable annuity contracts to be offered by life insurance companies which
have entered into fund participation agreements with the Trust (the
"Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into the
following series which are available for purchase by the Company for the
Accounts: Xxxxx American Small Capitalization Portfolio, Xxxxx American Growth
Portfolio, Xxxxx American Income & Growth Portfolio, Xxxxx American Balanced
Portfolio, Xxxxx American MidCap Growth Portfolio and Xxxxx American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised:
WHEREAS, the Company desires to use shares of one or more Portfolios as
investment vehicles for the Accounts;
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NOW THEREFORE, in consideration of their mutual promises the parties agree
as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1. For purposes of this Article I, the Company shall be
the Trust's agent for the receipt from each account of
purchase orders and requests for redemption pursuant to the
Contracts relating to each Portfolio, provided that the
Company notifies the Trust of such purchase Orders and
requests for redemption by 9:30 a.m. Eastern time on the next
following Business Day, as defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios
available to the Accounts at the net asset value next computed
after receipt of a purchase order by the Trust (or its agent),
as established in accordance with the provisions of the then
current prospectus of the Trust describing Portfolio purchase
procedures. The Company will transmit orders from time to
time to the Trust for the purchase and redemption of shares of
the Portfolios. The Trustees of the Trust (the "Trustees")
may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio
if such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the
Trustees acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, such
action is deemed in the best interests of the shareholders of
such Portfolio.
1.3 The Company shall pay for the purchase of shares of a
Portfolio on behalf of an Account with federal funds to be
transmitted by wire to the Trust, with the reasonable
expectation
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of receipt by the Trust by 2:00 p.m. Eastern time on the next
Business Day after the Trust (or its agent) receives the
purchase order. Upon receipt by the Trust of the federal
funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the
responsibility of the Trust for this purpose. "Business Day"
shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the Commission.
1.4. The Trust will redeem for cash any full or fractional
shares of any Portfolio, when requested by the Company on
behalf of an Account, at the net asset value next computed
after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions
of the then current prospectus of the Trust describing
Portfolio redemption procedures. The Trust shall make payment
for such shares in the manner established from time to time by
the Trust. Proceeds of redemption with respect to a Portfolio
will normally be paid to the Company for an Account in federal
funds transmitted by wire to the Company by order of the Trust
with the reasonable expectation of receipt by the Company by
2:00 p.m. Eastern time on the next Business Day after the
receipt by the Trust (or its agent) of the request for
redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires or if extraordinary
market conditions exist, but in no event shall payment be
delayed for a greater period than is permitted by the 1940
Act. The Trust reserves the right to suspend the right of
redemption, consistent with Section 22(e) of the 1940 Act and
any rules thereunder.
1.5 Payments for the purchase of shares of the Trust's
Portfolios by the Company under Section 1.3 and payments for
the redemption of shares of the Trust's Portfolios under
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Section 1.4 on any Business Day may be netted against one
another for the purpose of determining the amount of any wire
transfer.
1.6. Insurance and transfer of the Trust's Portfolio
shares will be by book entry only. Stock certificates will
not be issued to the Company or the Accounts. Portfolio
Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate
subaccount of each Account.
1.7 The Trust 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 Portfolio of
the Trust. 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 that
Portfolio. The Trust shall notify the Company of the number of
shares so issued as payment of such dividends and
distributions.
1.8. The Trust shall calculate the net asset value of each
Portfolio on each Business Day, as defined in Section 1.3.
The Trust shall make the net asset value per share for each
Portfolio available to the Company or its designated agent on
a daily basis as soon as reasonably practical after the net
asset value per share is calculated and shall use its best
efforts to make such net asset value per share available to
the Company by 6:30 p.m. Eastern time each Business Day.
1 9. The Trust agrees that its Portfolio shares will be
sold only to Participating Insurance Companies and their
segregated asset accounts, to the Fund Sponsor or its
affiliates and to such other entities as may be permitted by
Section 817(h) of the Code, the regulations hereunder, or
judicial or administrative interpretations thereof. No shares
of any
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Portfolio will be sold directly to the general public. The
Company agrees that it will use Trust shares only for the
purposes of funding the Contracts through the Accounts listed
in Schedule A, as amended from time to time.
1.10 The Trust agrees that all Participating Insurance
Companies shall have the obligations and responsibilities
regarding pass-through voting and conflicts of interest
corresponding materially to those contained in Section 2.9 and
Article IV of this Agreement.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. The Trust shall prepare and be responsible for filing
with the Commission and any state regulators requiring such
filings all shareholder reports, notices, proxy materials (or
similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional
information of the Trust. The Trust shall bear the costs of
registration and qualification of shares of the Portfolios,
preparation and filing of the documents listed in this Section
2.1 and all taxes to which an issuer is subject on the
issuance and transfer of its shares.
2.2 The Company shall distribute such prospectuses, proxy
statements and periodic reports of the Trust to the Contract
owners as required to be distributed to such Contract owners
under applicable federal or state law.
2.3 The Trust shall provide such documentation (including
a final copy of the Trust's prospectus as set in type or in
camera-ready copy) and other assistance as is reasonably
necessary in order for the company to print together in one
document the current prospectus for the Contracts issued by
the Company and the current prospectus for the
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Trust. The Trust shall bear the expense of printing copies of
its current prospectus that will be distributed to existing
Contract owners, and the Company shall bear the expense of
printing copies of the Trust's prospectus that are used in
connection with offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at
the Trust's expense, one copy of the Trust's current Statement
of Additional Information ("SAI") to the Company and to any
Contract owner who requests such SAI, (2) at the Company's
expense, such additional copies of the Trust's current SAI as
the Company shall reasonably request and that the Company
shall require in accordance with applicable law in connection
with offering the Contracts issued by the Company.
2.5. The Trust, at its expense, shall provide the Company
with copies of its proxy material, periodic reports to
shareholders and other communications to shareholders in such
quantity as the Company shall reasonably require for purposes
of distributing to Contract owners. The Trust, at the
Company's expense, shall provide the Company with copies of
its periodic reports to shareholders and other communications
to shareholders in such quantity as the Company shall
reasonably request for use in connection with offering the
Contracts issued by the Company. If requested by the Company
in lieu thereof, the Trust shall provide such documentation
(including a final copy of the Trust's proxy materials,
periodic reports to shareholders and other communications to
shareholders, as set in type or in camera-ready copy) and
other assistance as reasonably necessary in order for the
Company to print such shareholder communications for
distribution to Contract owners.
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2.6 The Company agrees and acknowledges that the
Distributor is the sole owner of the name and xxxx "Xxxxx" and
that all use of any designation comprised in whole or part of
such name or xxxx under this Agreement shall inure to the
benefit of the Distributor. Except as provided in Section
2.5, the Company shall not use any such name or xxxx on its
own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without
the prior written consent of the Distributor. Upon
termination of this Agreement for any reason, the Company
shall cease all use of any such name or xxxx as soon as
reasonably practicable.
2.7. The Company shall furnish or cause to be furnished,
to the Trust or its designee a copy of each Contract
prospectus and/or statement of additional information
describing the Contracts, each report to Contract owners,
proxy statement, application for exemption or request for
no-action letter in which the Trust or the Distributor is
named contemporaneously with the filing of such document with
the Commission. The Company shall furnish, or shall cause to
be furnished, to the Trust or its designee each piece of sales
literature or other promotional material in which the Trust or
the Distributor is named, at least five Business Days prior to
its use. No such material shall be used if the Trust or its
designee reasonably objects to such use within three Business
Days after receipt of such material.
2.8. The Company shall not give any information or make
any representations or statements on behalf of the Trust or
concerning the Trust or the Distributor in connection with the
sale of the Contracts other than information or
representations contained in and
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accurately derived from the registration statement or
prospectus for the Trust shares (as such registration
statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust,
Trust-sponsored proxy statements, or in sales literature or
other promotional material approved by the Trust or its
designee, except as required by legal process or regulatory
authorities or with the prior written permission of the Trust,
the Distributor or their respective designees. The Trust and
the Distributor agree to respond to any request for approval
on a prompt and timely basis. The Company shall adopt and
implement procedures reasonably designed to ensure that
"broker only" materials including information therein about
the Trust or the Distributor are not distributed to existing
or prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the
company, on a timely basis, with such information about the
Trust, the Portfolios and the Distributor, in such form as the
Company may reasonably require, as the Company shall
reasonably request in connection with the preparation of
registration statements, prospectuses and annual and
semi-annual reports pertaining to the Contracts.
2.10. The Trust and the Distributor shall not give, and
agree that no affiliate of either of them shall give any
information or make any representations or statements on
behalf of the Company or concerning the Company, the Accounts
or the Contracts other than information or representations
contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by
the Company for distribution including sales literature or
other promotional materials, except
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as required by legal process or regulatory authorities or with
the prior written permission of the Company. The Company
agrees to respond to any request for approval on a prompt and
timely basis.
2.11. So long as, and to the extent that, the Commission
interprets the 1940 Act to require pass-through voting
privileges for Contract owners, the Company will provide
pass-through voting privileges to Contract owners whose cash
values are invested, through the registered Accounts, in
shares of one or more Portfolios of the Trust. The Trust
shall require all Participating Insurance Companies to
calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate
voting privileges in the manner established by the Trust.
With respect to each registered Account, the Company will vote
shares of each Portfolio of the Trust held by a registered
Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those
shares for which voting instructions are received. The
Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Portfolio
shares held to fund the Contracts without the prior written
consent of thee Trust, which consent may be withheld in the
Trust's sole discretion. The Company reserves the right, to
the extent permitted by law, to vote shares held in any
Account in its sole discretion.
2.12. The Company and the Trust will each provide to the
other information about the results of any regulatory
examination relating to the Contracts or the Trust, including
relevant portions of any "deficiency letter" and any response
thereto.
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2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified
expense reimbursements). However, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust,
the Accounts or both.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an
insurance company duly organized and in good standing under
the laws of the State of Rhode Island and that it has legally
and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A,
and that Keyport Financial Services Corp., the principal
underwriter for the Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is
a member in good standing of the National Association of
Securities Dealers, Inc.
3.2. The Company represents and warrants that it has
registered or, prior to any issuance or sale of the Contracts,
will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act and cause each
Account to remain so registered to serve as a segregated asset
account for the Contracts, unless an exemption from
registration is available.
3.3. The Company represents and warrants that the
Contracts will be registered under the 1933 Act unless an
exemption from registration is available prior to any issuance
or sale of the Contracts; the Contracts will be issued and
sold in compliance in all material
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respects with all applicable federal and state laws; and the
sale of the Contracts shall comply in all material respects
with state insurance law suitability requirements.
3.4. The Trust represents and warrants that it is duly
organized and validly existing under the laws of the
Commonwealth of Massachusetts and that it does and will comply
in all material respects with the 1940 Act and the rules and
regulations thereunder.
3.5. The Trust and the Distributor represent and warrant
that the Portfolio shares offered and sold pursuant to this
Agreement will be registered under the 1933 Act and sold in
accordance with all applicable federal and state laws, and the
Trust shall be registered under the 1940 Act prior to and at
the time of any issuance or sale of such shares. The Trust
shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Trust shall
register and qualify its shares for sale in accordance with
the laws of the various states only if and to the extend
deemed advisable by the Trust.
3.6 The Trust represents and warrants that the
investments of each Portfolio will comply with the
diversification requirements for variable annuity, endowment
or life insurance contracts set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended (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
within the grace period afforded by Regulation 1.817-5.
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3.7. The Trust represents and warrants that it is
currently qualified as a "regulated investment company" under
Subchapter M of the Code, that it will make every effort to
maintain such qualification and will notify the Company
immediately upon having a seasonable basis for believing it
has ceased to so qualify or might not so qualify in the
future.
3.8. The Trust represents and warrants that it, its
directors, officers, employees and others dealing with the
money or securities, or both, of a Portfolio shall at all
times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less
than the minimum coverage required by Rule 17g-1 or other
applicable regulations under the 1940 Act. Such bond shall
include coverage for larceny and embezzlement and be issued by
a reputable bonding company.
3.9. The Distributor represents that it is duly organized
and validly existing under the laws of the State of Delaware
and that it is registered, and will remain registered, during
the term of this Agreement, as a broker-dealer under the
Securities Exchange Act of 1934 and is a member in good
standing of the National Association of Securities Dealers,
Inc.
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ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that a Portfolio's shares may
be made available for investment to other Participating
Insurance Companies. In such event, the Trustees will monitor
the Trust for the existence of any material irreconcilable
conflict between the interests of the contract owners of all
Participating Insurance Companies. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter or any
similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments
of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable
life insurance contract owners; or (f) a decision by an
insurer to disregard the voting instructions of contract
owners. The Trust shall promptly inform the Company of any
determination by the Trustees that a material irreconcilable
conflict exists and of the implications thereof.
4.2. The Company agrees to report promptly any potential
or existing conflicts of which it is aware to the Trustees.
The Company will assist the Trustees in carrying out their
responsibilities under the Shared Funding Exemptive Order by
providing the Trustees with all information reasonably
necessary for and requested by the Trustees to consider any
issues raised including, but not limited to, information as to
a decision by the Company to disregard Contract owner voting
instructions. All communications from the Company to the
Trustees may be made in care of the Trust.
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4.3. If it is determined by a majority of the Trustees, or
a majority of the disinterested Trustees, that a material
irreconcilable conflict exists that affects the interests of
contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are
also affected, at its own expense and to the extent reasonably
practicable (as determined by the Trustees) take whatever
steps are necessary to remedy or eliminate the material
irreconcilable conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the
Accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the
question of whether or not such segregation should be
implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new
registered management investment company or managed separate
account.
4.4. If a material irreconcilable conflict arises because
of a decision by the Company to disregard Contract owner
voting instructions and that decision represents a minority
position or would preclude a majority vote, the Company may be
required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement
with respect to such Account; provided, however that such
withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any
such withdrawal
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and termination must take place within six (6) months after
the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the
Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the
Trust.
4.5. If a material irreconcilable conflict arises because
a particular state insurance regulator's decision applicable
to the Company conflicts with the majority of other state
regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement
with respect to such Account within six (6) months after the
Trustees inform the Company in writing that the Trust has
determined that such decision has created a material
irreconcilable conflict; provided, however, that such
withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Until
the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase
and redemption of shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this
Agreement, a majority of the disinterested Trustees shall
determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the
Trust be required to establish a new funding medium for any
Contract. The Company shall not be required to establish a
new funding medium for any Contracts if an offer to do so has
been declined by vote of a majority of Contract owners
materially adversely affected by the material irreconcilable
conflict. In the event that the Trustees determine that any
proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will
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withdraw the Account's investment in the Trust and terminate
this Agreement within six (6) months after the Trustees inform
the Company in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall
be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the
disinterested Trustees.
4.7. The Company shall at least annually submit to the
Trustees such reports, materials or data as the Trustees may
reasonably request so that the Trustees may fully carry out
the duties imposed upon them by the Shared Funding Exemptive
Order, and said reports, materials and data shall be submitted
more frequently if reasonably deemed appropriate by the
Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the
Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared
Funding Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take
such steps as may be necessary to comply with Rule 6e-3(T), as
amended, or Rule 6e-3, as adopted, to the extent such rules
are applicable.
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ARTICLE V.
INDEMNIFICATION
5.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Distributor, the Trust and
each of its Trustees, officers, employees and agents and each
person, if any, who controls the trust within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 5.1) 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 expenses
(including the reasonable costs of investigating or defending
any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or
at common law or otherwise, insofar as such Losses are related
to the sale or acquisition of the Contracts or Trust shares
and:
(a) arise out of or are based upon any untrue
statements or alleged true statements of any material
fact contained in a registration statement or prospectus
for the Contracts or in the Contracts themselves or in
sales literature generated or approved by the Company on
behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V),
or arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
indemnity shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or
omission was made in reliance
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upon and was accurately derived from written information
furnished to the Company by or on behalf of the Trust for
use in Company documents or otherwise for use in
connection with the sale of the Contracts or Trust
shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Trust Documents
as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control with respect to the
sale or acquisition of the Contracts or Trust shares;
(c) arise out of or result from any untrue
statement or alleged untrue statement of a material fact
contained in Trust Documents as defined in Section 5.2(a)
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading if such
statement or omission was made in reliance upon and
accurately derived from written information furnished to
the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by
the Company to provide the services or furnish the
materials required under the terms of this Agreement; or
(e) arise out of or result from any material
breach of any representation and/or warranty made by the
Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Company; or
(f) arise out of or result from the provision
by the Company to the Trust of insufficient or incorrect
information regarding the purchase or sale of shares of
any Portfolio, or the failure of the Company to provide
such information on a timely basis.
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5.2 INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor
agrees to indemnify and hold harmless the Company and each of
its directors, officers, employees, and agents and each
person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for the purposes of this Section 5.2) against any and
all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the
Distributor, which consent shall not be unreasonably withheld)
or expenses (including the reasonable costs of investigating
or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such
Losses are related to the sale or acquisition of the Contracts
or Trust shares and:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material
fact contained in the registration statement or
prospectus for the Trust (or any amendment or supplement
thereto) (collectively, "Trust Documents" for the
purposes of this Article V), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and was accurately derived from written information
furnished to the Distributor or the Trust by or on behalf
of the Company for use in Trust Documents or
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otherwise for use in connection with the
sale of the Contracts or Trust shares and; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company
Documents) or wrongful conduct of the Distributor or
persons under its control, with respect to the sale or
acquisition of the Contracts or Portfolio shares; or
(c) arise our of or result from any untrue
statement or alleged untrue statement of a material fact
contained in Company Documents or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written
information furnished to the Company by or on behalf of
the Trust; or
(d) arise out of or result from any failure by
the Distributor or the Trust to provide the services or
furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material
breach of any representation and/or warranty made by the
Distributor or the Trust in this Agreement or arise out
of or result from any other material breach of this
Agreement by the Distributor or the Trust.
5.3. None of the Company, the Trusts or the Distributor
shall be liable under the indemnification provisions of
Sections 5.1 or 5.2, as applicable, with respect to any Losses
incurred or assessed against an Indemnified Party that arise
from such
22
Indemnified Party's willful misfeasance, bad faith or
negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement.
5.4. None of the Company, the Trust or the Distributor
shall be liable under the indemnification provisions of
Sections 5.1 or 5.2, as applicable, with respect to any claim
made against an Indemnified party unless such Indemnified
Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written
notification, giving information of the nature of the claim
shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have
received notice of service upon or other notification to any
designated agent), but failure to notify the party against
whom indemnification is sought of any such claim shall not
relieve that party from any liability which it may have to the
Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against an
Indemnified Party, the indemnifying party shall be entitled to
participate, at its own expense, in the defense of such
action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice
from the indemnifying party to the Indemnified Party of an
election to assume such defense, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained
by it, and the indemnifying party will not be liable to the
Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such party
23
independently in connection with the defense thereof other
than reasonable costs of investigation.
ARTICLE VI.
TERMINATION
6.1. This Agreement shall terminate:
(a) at the option of any party upon 60 days
advance written notice to the other parties, unless a
shorter time is agreed to by the parties;
(b) at the option of the Trust or the
Distributor if the Contracts issued by the company cease
to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code or if the
Contracts are not registered, issued or sold in
accordance with applicable state and/or federal law; or
(c) at the option of any party upon a
determination by a majority of the Trustees of the Trust,
or a majority of its disinterested Trustees, that a
material irreconcilable conflict exists; or
(d) at the option of the Company upon
institution of formal proceedings against the Trust or
the Distributor by the NASD, the SEC or any state
securities or insurance department or any other
regulatory body regarding the Trust's or the
Distributor's duties under this Agreement or related to
the sale of Trust shares or the operation of the Trust; or
(e) at the option of the Company if the Trust
or a Portfolio fails to meet the diversification
requirements specified in Section 3.6 hereof; or
24
(f) at the option of the Company if shares of
the Series are not reasonably available to meet the
requirements of the Variable Contracts issued by the
Company, as determined by the Company, and upon prompt
notice by the Company to the other parties; or
(g) at the option of the Company in the event
any of the shares of the Portfolio are not registered,
issued or sold in accordance with applicable state and/or
federal law, or such law precludes the use of such shares
as the underlying investment media of the Variable
Contracts issued or to be issued by the Company; or
(h) at the option of the Company, if the
Portfolio fails to qualify as a Regulated Investment
Company under Subchapter M of the Code; or
(i) at the option of the Distributor if it
shall determine in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies
has suffered a material adverse change in its business,
operations, financial condition or prospects since the
date of this Agreement or is the subject of material
adverse publicity.
6.2. Notwithstanding any termination of this Agreement,
the Trust shall, at the option of the Company, continue to
make available additional shares of any Portfolio and redeem
shares of any Portfolio pursuant to the terms and conditions
of this Agreement for all Contracts in effect on the effective
date of termination of this Agreement.
6.3. The provisions of Article V shall survive the
termination of this Agreement, and the provisions of Article
IV and Section 2.9 shall survive the termination of this
Agreement
25
as long as shares of the Trust are held on behalf of Contract
owners in accordance with Section 6.2.
ARTICLE VII.
NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust or its Distributor:
Xxxx Xxxxx Management, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, 00000
Attn: Xxxxxxx X. Xxxx
If to the Company:
Keyport Life Insurance Company
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx, General Counsel
ARTICLE VIII.
MISCELLANEOUS
8.1. The captions in this Agreement are included for
convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect
their construction or effect.
8.2. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute
one and the same instrument.
26
8.3. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise,
the remainder of the Agreement shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of
the State of 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 Commission
granting exemptive relief therefrom and the conditions of such
orders. Copies of any such orders shall be promptly forwarded
by the Trust to the Company.
8.5. All liabilities of the Trust arising, directly or
indirectly, under this Agreement, of any and every nature
whatsoever, shall be satisfied solely out of the assets of the
Trust and no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable
for any such liabilities.
8.6. Each party shall cooperate with each other party and
all appropriate governmental authorities (including without
limitation the Commission, the National Association of
Securities Dealers, Inc. and state insurance regulators) and
shall permit such authorities reasonable access to its books
and records in connection with any investigation or inquiries
relating to this Agreement or the transactions contemplated
hereby.
8.7 The rights, remedies and obligations contained in
this Agreement are cumulative and are in addition to any and
all rights, remedies and obligations, at law or in equity,
which the parties hereto are entitled to under state and
federal laws.
8.8. This Agreement shall not be exclusive in any respect.
27
8.9. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior
written approval of the other party.
8.10. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties.
8.11. Each party hereto shall, except as required by law or
otherwise permitted by this Agreement, treat as confidential
the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing
by any other party hereto, and shall not disclose such
confidential information without the written consent of the
affected party unless such information has become publicly
available.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Xxxx Xxxxx and Company, Incorporated
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
Xxxxx American Fund
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
Keyport Life Insurance Company
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President