EXHIBIT 8
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the ____ day of _________,
2001, by and between OHIO NATIONAL FUND, INC. ("FUND"), a Maryland corporation,
and NATIONAL SECURITY LIFE and ANNUITY COMPANY ("LIFE COMPANY"), a life
insurance company organized under the laws of the State of New York.
WHEREAS, FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"),
as an open-end, diversified management investment company; and
WHEREAS, FUND is organized as a series fund comprised of several
portfolios ("Portfolios"), with those currently available being listed on
Appendix A hereto; and
WHEREAS, FUND offers its shares to be purchased for the separate
accounts ("Separate Accounts") of life insurance companies ("Participating
Insurance Companies") to fund certain variable life insurance and/or variable
annuity contracts ("Variable Contracts") issued by them; and
WHEREAS, FUND may also offer its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, FUND has received an order from the SEC 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 FUND to be sold to and held by the Separate Accounts of both
affiliated and unaffiliated Participating Insurance Companies and Qualified
Plans ("Exemptive Order"); and
WHEREAS, LIFE COMPANY desires to become a Participating Insurance
Company with Separate Accounts to which shares of the FUND will be offered; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of FUND for the purposes
described herein and FUND is authorized to sell such shares to LIFE COMPANY at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY
and FUND agree as follows:
Article I. SALE OF FUND SHARES
1.1 Life Company is hereby designated as a Participating Insurance Company, one
or more with Separate Accounts as defined herein, and FUND agrees to make
available for purchase by LIFE COMPANY shares of the selected Portfolios as
listed on Appendix A
for investment of purchase payments of Variable Contracts allocated to LIFE
COMPANY's designated Separate Accounts as provided in FUND's registration
statement.
1.2 FUND agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of FUND which LIFE 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, LIFE
COMPANY shall be the designee of FUND for receipt of such orders with respect to
the designated Separate Account and receipt by such designee shall constitute
receipt by FUND; provided that LIFE COMPANY receives the order by 4:00 p.m.
Eastern time and FUND receives notice from LIFE COMPANY by telephone, facsimile
or electronic mail (or by such other means as FUND and LIFE COMPANY may agree in
writing) of such order by 7:30 a.m. Eastern time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for unrestricted trading and on which FUND calculates its net asset values
pursuant to the rules of the SEC.
1.3 FUND agrees to redeem on LIFE COMPANY's request, any full or
fractional shares of FUND held by LIFE 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 registration statement. For purposes of this Section
1.3, LIFE 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 LIFE COMPANY receives the
request for redemption by 4:00 p.m. Eastern time and FUND receives notice from
LIFE COMPANY by telephone, facsimile or electronic mail (or by such other means
as FUND and LIFE COMPANY may agree in writing) of such request for redemption by
7:30 a.m. Eastern time on the next following Business Day.
1.4 FUND shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of FUND. LIFE 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 LIFE
COMPANY or its designee of the number of shares so issued as payment of such
dividends and distributions.
1.5 FUND shall make the net asset value per share for the selected
Portfolios available to LIFE COMPANY on a daily basis 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 values available by 7:00 p.m. Eastern time.
If FUND provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, then LIFE COMPANY for its Separate
Accounts, shall be entitled to an adjustment to the number of shares purchased
or redeemed to reflect the correct share net asset value. Any material error in
the calculation of net asset value per share, dividend or capital gain
information shall be reported to LIFE COMPANY promptly upon discovery.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate its Separate Account unit
values for the day. Using these unit values, LIFE COMPANY shall process each
such Business Day's Separate Account transactions based on requests and premiums
or purchase payments received by it by 4:00 p.m. Eastern time to determine the
net dollar amount of FUND shares that shall be
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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 LIFE
COMPANY by 7:30 a.m. Eastern time on the Business Day next following LIFE
COMPANY's receipt of such requests and premiums or purchase payments in
accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the purchase of FUND shares, LIFE
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 LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, FUND shall use its best efforts
to wire the redemption proceeds to LIFE COMPANY by the close of the Business Day
on which the order is transmitted to the FUND or its designee, unless doing so
would require FUND to dispose of Portfolio securities or otherwise incur
additional costs. In any event, proceeds shall be wired to LIFE COMPANY within
three Business Days or such longer period permitted by the 1940 Act or the
rules, orders or regulations thereunder, and FUND shall notify the person
designated in writing by LIFE COMPANY as the recipient for such notice of such
delay by 3:00 p.m. Eastern time the same Business Day that LIFE 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 that have agreed to purchase shares of
FUND to fund their Separate Accounts and/or their Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue Code
of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
Portfolios of FUND will not be sold directly to the general public unless and
until Section 817(h) and Regulation 1.817-5 shall be amended to permit FUND to
offer its shares to both Participating Insurance Companies and to the general
public.
1.9 FUND may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
the FUND if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Directors of the FUND
(the "Board"), acting in good faith and in light of its duties under the federal
and any applicable state laws, deemed necessary, desirable or appropriate and in
the best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to LIFE COMPANY for its Separate
Accounts. Shares ordered from Portfolios will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each of its Separate
Accounts as a segregated asset account under such laws, and that Ohio National
Equities, Inc., the principal underwriter for the Variable Contracts, is
registered as a broker-dealer under the Securities Exchange Act of 1934.
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2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance of sale of its Variable Contracts, will register each of
its Separate Accounts as a unit investment trust ("UIT") in accordance with the
provisions of the 1940 Act and it will cause each such Separate Account to
remain so registered to serve as a segregated asset account for its Variable
Contracts, unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that its Variable Contracts
will be registered under the Securities Act of 1933 (the "1933 Act") unless an
exemption from registration is available prior to any issuance or sale of
itsVariable Contracts and that its 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 will comply in all material
respects with applicable state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that its Variable Contracts
currently are, and will be at the time of issuance, 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 its Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 FUND represents and warrants that the Fund 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 FUND will be
registered under the 1940 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 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. FUND will 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.
2.6 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 LIFE 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.
2.7 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 LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 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
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statements of additional information of FUND. FUND shall bear the costs of
registration and qualification of shares of the Portfolios, preparation and
filing of the documents listed in this Section 3.1 and all taxes and filing fees
to which an issuer is subject on the issuance and transfer of its shares.
3.2 At least annually, FUND or its designee shall provide LIFE COMPANY,
free of charge, with as many copies of the current prospectus for the shares of
the Portfolios as LIFE COMPANY may reasonably request for distribution to its
existing Variable Contract owners whose Variable Contracts are funded by such
shares. FUND or its designee shall provide LIFE COMPANY, at LIFE COMPANY's
expense, with as many copies of the current prospectus for the shares as LIFE
COMPANY may reasonably request for distribution to prospective purchasers of its
Variable Contracts. If requested by LIFE COMPANY in lieu thereof, FUND or its
designee will provide such documentation (including a "camera ready" copy of the
new prospectus as set in type or, at the request of LIFE COMPANY, as a diskette
in the form sent to the financial printer) and 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 printed together
in one document if LIFE COMPANY shall so choose. The expenses of such printing
will be apportioned between (a) LIFE COMPANY and (b) FUND in proportion to the
number of pages of the Variable Contract and FUND's prospectus, taking account
of other relevant factors affecting the expense of printing, such as covers,
columns, graphs and charts; FUND to bear the cost of printing the FUND's
prospectus portion of such document for distribution only to owners of existing
Variable Contracts funded by the FUND's shares and LIFE COMPANY to bear the
expense of printing the portion of such documents relating to the Separate
Account; provided, however, LIFE COMPANY shall bear all printing expenses of
such combined documents where used for distribution to prospective purchasers or
to owners of its Variable Contracts no longer funded by the FUND's shares. In
the event that LIFE COMPANY requests the FUND or its designee to provide FUND's
prospectus in a "camera ready" or diskette format, FUND shall be responsible for
providing the prospectus in the format in which it is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g. typesetting expenses), and LIFE COMPANY shall bear the expense of
adjusting or changing the format to conform with any of its prospectuses.
3.3 FUND will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications 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. LIFE
COMPANY will provide FUND with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications 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 IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to FUND,
each piece of sales literature or other promotional material in which FUND is
named, at least
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fifteen (15) Business Days prior to its intended use. No such material will be
used if FUND reasonably and validly objects to its use in writing within ten
(10) Business Days after receipt of such material.
4.2 FUND will furnish, or will cause to be furnished, to LIFE COMPANY,
each piece of sales literature or other promotional material in which LIFE
COMPANY or its Separate Accounts are named, at least fifteen (15) Business Days
prior to its intended use. No such material will be used if LIFE COMPANY
reasonably and validly objects to its use in writing within ten (10) Business
Days after receipt of such material.
4.3 FUND and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, its Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
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 or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or concerning FUND
other than the information or representations contained in a registration
statement or prospectus for FUND, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by FUND or its designee, except with the
written permission of FUND.
4.5 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 National Association of Securities Dealers, Inc.
("NASD") rules, the 1940 Act or the 1933 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that FUND intends to file an application
with the SEC to request an order granting relief from various provisions of the
1940 Act and the rules thereunder to the extent necessary to permit FUND shares
to be sold to and held by Separate Accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. It is anticipated that
the Exemptive Order, when and if issued, will require FUND and each
Participating Insurance Company to comply with conditions and
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undertakings substantially as provided in this Section 5. If the Exemptive Order
imposes conditions materially different from those provided for in this Section
5, the conditions and undertakings imposed by the Exemptive Order shall govern
this Agreement and the parties hereto agree to amend this Agreement consistent
with the Exemptive Order. The Fund will not enter into a participation agreement
with any other Participating Insurance Company unless it imposes the same
conditions and undertakings as are imposed on LIFE COMPANY hereby.
5.2 FUND's Board of Directors ("Board") will monitor FUND for the
existence of any irreconcilable material conflict between the interests of
Variable Contract owners of all Separate Accounts investing in FUND. 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 Contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of its Variable Contract owners and
(g) if applicable, a decision by a Qualified Plan to disregard the voting
instructions of plan participants.
5.3 LIFE COMPANY will report any potential or existing conflicts to the
Board. LIFE COMPANY will be responsible for assisting the Board in carrying out
its duties in this regard by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This responsibility
includes, but is not limited to, an obligation by the LIFE COMPANY to inform the
Board whenever it has determined to disregard its Variable Contract owner voting
instructions. These responsibilities of LIFE COMPANY will be carried out with a
view only to the interests of the Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested
directors, determines that an irreconcilable material conflict exists affecting
LIFE COMPANY, then to the extent reasonably practicable (as determined by a
majority of the Board's disinterested directors), LIFE COMPANY, at its expense
will take any steps necessary to remedy or eliminate the irreconcilable material
conflict, including; (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
or not 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 an
irreconcilable material conflict arises because of LIFE COMPANY's decision to
disregard its Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, LIFE COMPANY
may be required, at the election of FUND, to withdraw any affected Separate
Account's investment in FUND, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility
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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 Section 5.4, a majority of the Board's
disinterested directors shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
FUND be required to establish a new funding medium for any Variable Contract.
Further, LIFE COMPANY shall not be required by this Section 5.4 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.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 No less than annually, LIFE 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.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all its
Variable Contract owners so long as the SEC continues to interpret the 1940 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of each Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. LIFE 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. LIFE COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as it votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted to provide exemptive relief from any provision of the 1940
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Exemptive
Order, then FUND, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules apply.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless FUND and each of its directors, principals, officers,
employees and agents and each person, if any, who controls FUND within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY, which consent shall not be unreasonably withheld) or
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litigation (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 LIFE COMPANY'S Variable Contracts 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 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 LIFE COMPANY by or on
behalf of FUND for use in the registration statement or
prospectus for the Variable Contracts or for use 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
(b) 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 LIFE COMPANY or by persons under its control)
or wrongful conduct of LIFE COMPANY or persons under its
control, with respect to the sale or distribution of the
Variable Contracts or FUND shares; or
(c) 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 LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials 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 LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE 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
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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.
7.3 LIFE 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 LIFE 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 LIFE COMPANY of any
such claim shall not relieve LIFE 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, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
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 LIFE
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.
7.4 Indemnification by FUND. FUND agrees to indemnify and hold harmless
LIFE COMPANY and each of its directors, officers, employees and agents and each
person, if any, who controls LIFE COMPANY within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for the purposes of this
Article VII) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of FUND 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,
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:
(a) 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 or sales literature of
FUND (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
FUND by or on behalf of LIFE COMPANY for use in the
registration statement or prospectus for FUND or for use in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts
or FUND shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement,
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prospectus or sales literature for the Variable Contracts not
supplied by FUND or by persons under its control) or wrongful
conduct of FUND or persons under its control, with respect to
the sale or distribution of the Variable Contracts or FUND
shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature 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
LIFE COMPANY for inclusion therein by or on behalf of FUND; or
(d) arise as a result of (i) a failure by FUND to provide
substantially the services and furnish the materials under the
terms of this Agreement; or (ii) a failure by any Portfolio
invested in by the Separate Account to comply with the
diversification requirements of Section 817(h) of the Code; or
(iii) a failure by any Portfolio invested in by the Separate
Account to qualify as a "regulated investment company" under
Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by FUND in this Agreement
or arise out of or result from any other material breach of
this Agreement by FUND.
7.5 FUND 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 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.
7.6 FUND 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 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 of any such claim shall not relieve FUND 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 shall
be entitled to participate at its own expense in the defense thereof. FUND also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from FUND to such party of FUND'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 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.
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Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) at the option of LIFE COMPANY or FUND at any time from the
date hereof upon 60 days' notice, unless a shorter time is
agreed to by the parties;
(b) at the option of LIFE COMPANY, upon written notice to FUND, if
FUND shares are not reasonably available to meet the
requirements of the Variable Contracts as determined by LIFE
COMPANY, said termination to be effective ten days after
receipt of notice by FUND unless FUND makes available a
sufficient number of shares to reasonably meet the
requirements of the Variable Contracts within said ten-day
period;
(c) at the option of LIFE COMPANY, upon written notice to FUND, if
formal proceedings have been instituted against FUND by the
SEC, the NASD, or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in
LIFE COMPANY's reasonable judgment, materially impair FUND's
ability to meet and perform FUND's obligations and duties
hereunder, said termination to be effective upon receipt of
notice;
(d) at the option of FUND upon written notice to LIFE COMPANY, if
formal proceedings have been instituted against LIFE COMPANY
by the SEC, the NASD, a state insurance regulator or any other
regulatory body, the expected or anticipated ruling, judgment
or outcome of which would, in FUND's reasonable judgment,
materially impair LIFE COMPANY's ability to meet and perform
its obligations and duties hereunder, said termination to be
effective upon receipt of notice by LIFE COMPANY;
(e) upon occurrence without notice 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 LIFE COMPANY;
(f) at the option of FUND, upon written notice to LIFE COMPANY, if
its 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 issued
by LIFE
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COMPANY may fail to so qualify, said termination to be
effective upon receipt of notice by LIFE COMPANY;
(g) at the option of LIFE COMPANY, upon receipt by FUND of written
notice from LIFE COMPANY, if FUND has breached any material
provision of this Agreement, which breach has not been cured
to the satisfaction of LIFE COMPANY within ten days after
written notice of such breach is delivered to FUND;
(h) at the option of FUND, upon receipt by LIFE COMPANY of written
notice from FUND, if LIFE COMPANY has breached 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 LIFE COMPANY;
(i) at the option of FUND, by written notice to LIFE COMPANY,
effective upon receipt, if its Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law; or
(j) in the event this Agreement is assigned, or purported to be
assigned, without the prior written consent of LIFE COMPANY
and FUND, termination to be effective immediately upon such
occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, FUND at its option may elect to continue to make available
additional FUND shares, as provided below, for so long as FUND desires 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, if FUND
so elects to make additional FUND shares available, the owners of the Existing
Contracts or LIFE 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. In the event of a termination of this Agreement pursuant to Section
8.2 hereof, FUND, as promptly as is practicable under the circumstances, shall
notify LIFE COMPANY whether FUND elects to continue to make FUND shares
available after such termination. If FUND shares continue to be made available
after such termination, the provisions of this Agreement shall remain in effect
with respect thereto, and thereafter either FUND or LIFE COMPANY may terminate
this Agreement, as so continued pursuant to this Section 8.3, in accordance with
the provisions of Section 8.2 above.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to its Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts), and LIFE COMPANY shall not prevent its Variable Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Contracts, until thirty (30) days after the LIFE COMPANY shall have
notified FUND of its intention to do so.
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Article IX. 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 FUND:
Ohio National Fund, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Treasurer
With a copy to:
Ohio National Fund, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
If to LIFE COMPANY:
National Security Life & Annuity Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
With a copy to:
National Security Life & Annuity Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
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10.3 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.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Ohio. 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.
10.5 Neither the shareholders of shares of any Portfolio nor the
directors or officers of FUND or any Portfolio shall be personally liable
hereunder. No Portfolio shall be liable for the liabilities of any other
Portfolio. All persons dealing with FUND or a Portfolio must look solely to the
property of Fund or that Portfolio, respectively, for enforcement of any claims
against FUND or that Portfolio. For this purpose, each of the Portfolios shall
be deemed to have entered into this Agreement with LIFE COMPANY as if each had
signed a separate agreement with LIFE COMPANY but with a single document signed
to facilitate the execution and administration of the Agreement.
10.6 Each party shall cooperate with the other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit the other party and such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or to the transactions
contemplated hereby.
10.7 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.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by FUND
and LIFE COMPANY.
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.
OHIO NATIONAL FUND, INC.
By: ___________________________________
Name:
Title:
NATIONAL SECURITY LIFE AND ANNUITY
COMPANY
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By: ___________________________________
Name:
Title:
APPENDIX A
OHIO NATIONAL FUND, INC. - PORTFOLIOS
Equity Portfolio
Money Market Portfolio
Bond Portfolio
Omni Portfolio
International Portfolio
International Small Company Portfolio
Capital Appreciation Portfolio
Small Cap Portfolio
Aggressive Growth Portfolio
Core Growth Portfolio
Growth & Income Portfolio
Capital Growth Portfolio
S&P 500 Index Portfolio
High Income Bond Portfolio
Equity Income Portfolio
Blue Chip Portfolio
Social Awareness Portfolio
Nasdaq-100 Index Portfolio
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