LETTER AGREEMENT
___________________________________, 2002
Life Insurance Company
Ladies and Gentlemen:
This letter sets forth the agreement ("Agreement") between ________________ Life
Insurance Company ("Company") (the "Company" and collectively "you," "your" or
the "Company"), on the one hand, and X. Xxxx Price Associates, Inc. ("Price
Associates"), X. Xxxx Price International, Inc. ("TRPI") (collectively, the
"Price Advisers"), and X. Xxxx Price Investment Services, Inc. (^Distributor^)
on the other, concerning certain administrative and distribution services to be
provided by you, with respect to the [X. Xxxx Price Equity Series, Inc.], [X.
Xxxx Price Fixed Income Series, Inc.], and the [X. Xxxx Price International
Series, Inc.] (individually a "Fund" and collectively, the "Funds").
1. The Funds. Each of the Funds is a Maryland Corporation registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "Act") as an open-end diversified management investment
company. Each Fund serves as a funding vehicle for variable annuity contracts
and variable life insurance contracts and, as such, sells its shares to
insurance companies and their separate accounts. Furthermore, the X. Xxxx Price
Equity Series, Inc. has issued multiple classes of shares (^Class" or "Classes^)
for purposes of paying for distribution services under Rule 12b-1 of the Act.
With respect to various provisions of the Act, the SEC requires that owners of
variable annuity contracts and variable life insurance contracts be provided
with materials and rights afforded to shareholders of a publicly-available
SEC-registered mutual fund.
2.
The Company. The Company is a [state] life insurance company. The Company
issues variable annuity contracts (the "Contracts") supported by one or more
separate accounts (individually a "Separate Account" and collectively the
"Separate Accounts") which are registered with the SEC as unit investment
trusts, or which are properly exempt from registration. The Company has entered
into a participation agreement with one or more of the Funds and the Distributor
(individually a "Participation Agreement" and collectively the "Participation
Agreements") pursuant to which the Company purchases shares of the Fund for the
Separate Account supporting the Company's Contracts.
3. Price Advisers. Price Associates serves as the investment adviser to the
[X. Xxxx Price Equity Series, Inc.] and [X. Xxxx Price Fixed Income Series,
Inc.], and TRPI serves as the investment adviser to the X. Xxxx Price
International Series, Inc. The Price Advisers supervise and assist in the
overall management of the Funds' affairs under respective investment management
agreements with each Fund (the "Management Agreements"), subject to the overall
authority of the Fund's Board of Directors in accordance with Maryland law.
Under the Management Agreements, the Price Advisers are compensated for
providing investment advisory and certain administrative services (either
directly or through affiliates).
Distributor. The Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934 and with the National Association of Securities Dealers,
Inc. (^NASD^), and serves as the principal underwriter of the Funds.
Services Provided by the Company. You have agreed to assist us, as we may
request from time to time, with the provision of distribution and administrative
services to the Funds, as they may relate to the investment in a Fund (or the
Classes) by the Separate Accounts.
Administrative Services. It is anticipated that such services may include (but
shall not be limited to): the distribution of Fund reports, notices, proxies
and proxy statements and other informational materials to holder of the
Contracts supported by the Separate Accounts; the maintenance of separate
records for each holder of the Contracts reflecting shares purchased and
redeemed and share balances; the preparation of various reports for submission
to Fund directors; the provision of advice and recommendations concerning the
operation of the series of the Funds as funding vehicles for the Contracts; the
provision of shareholder support services with respect to the Separate Account
portfolios serving as funding vehicles for the Contracts; telephone support for
holders of Contracts with respect to inquiries about the Funds; and the
provision of other administrative services as shall be mutually agreed upon from
time to time.
Distribution Services. It is anticipated that such services would include any
activities primarily intended to result in the sale of shares of one or more
Classes, including (but not limited to): distribution of Fund reports,
prospectuses, and SAIs for the Classes for other than existing holders of
Contracts; the preparation and distribution of sales literature and advertising
material for the Classes; continuing education and training of insurance agents
and other representatives of the Company with respect to the Classes and
Separate Account portfolios serving as funding vehicles for the Contracts; the
provision of distribution support services by insurance agents and other
representatives of the Company who will provide personal service and attention
to the foregoing; and other distribution services as mutually agreed upon from
time to time.
Payment for Administrative Services. In consideration of the administrative
services in Section 5.a. hereof to be provided by the Company, the Price
Advisers shall make payments to the Company on a quarterly basis ("Payments")
from their assets, including their bona fide profits as investment advisers to
the respective Funds, an amount equal to ___ basis points (_____%) per annum of
the average aggregate net asset value of shares of the Funds held by the
Separate Accounts under the Participation Agreements, provided, however, that
such payments shall only be payable with respect to a Fund for each calendar
quarter during which the aggregate dollar value of shares of all Funds purchased
pursuant to a Participation Agreement by the insurance companies in the
aggregate exceeds $__________. Further, this amount shall be increased to ____
basis points (_____%) per annum of the average aggregate net asset value of the
shares of the Funds held by the Separate Accounts under the Participation
Agreements, provided however, that such increased payments shall only be payable
with respect to the Funds for each calendar quarter during which the aggregate
dollar value of shares exceeds $_____________ at all times during that quarter.
Subject to the terms of paragraph 8 hereof, each Price Adviser shall be
responsible for payments due pursuant to this Paragraph 5 with respect to the
purchase of shares of a Fund managed by that Price Adviser.
Payment for Distribution Services. In consideration of the distribution
services in Section 5.b. hereof to be provided by the Company and its agents,
the Distributor, in accordance with each Class^s plan pursuant to Rule 12b-1
under the Act, shall pay to the Company a fee with respect to each Class equal
to 25 basis points (0.25%) per annum of the average aggregate net asset value of
the shares of each Class held by the Separate Accounts under the Participation
Agreements.
8.Payment Procedure. For purposes of computing the payments to the Company
contemplated under this Agreement, the average aggregate net asset value of
shares of the Funds held by the Separate Accounts over a quarterly period shall
be computed by totaling each Separate Account's aggregate investment (share net
asset value multiplied by total number of shares held by the Separate Account)
on each business day during the calendar quarter, and dividing by the total
number of business days during such quarter. The Payments contemplated by this
Paragraph 8 shall be calculated by Price Associates and Distributor at the end
of each month and will be paid to each Company within 30 calendar days
thereafter.
9. Nature of Payments. The parties to this Agreement recognize and agree that
Price Advisers' payments to the Company relates to administrative services only
and do not constitute payment in any manner for investment advisory services or
for costs of distribution of the Contracts or of Fund shares; and further, that
these payments are not otherwise related to investment advisory or distribution
services or expenses, or administrative services which the Price Advisers are
required to provide to owners of the Contracts pursuant to the terms thereof.
You represent that you may legally receive the payments contemplated by this
Agreement and that you will disclose to Contract holders the arrangements
provided for in this Agreement.
10. Term. This Agreement shall remain in full force and effect for an initial
term of two years, and shall automatically renew for successive one-year periods
unless any party informs each of the other parties upon 60-days written notice
of its intent not to continue this Agreement. This Agreement and all
obligations hereunder shall terminate automatically with respect to the Company
and its relationship with a Fund upon the redemption of the Company's and its
Separate Account's investment in the Fund, or upon termination of its
Participation Agreement with the Fund.
11. Amendment. This Agreement may be amended only upon mutual agreement of all
of the parties hereto in writing.
12. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall together constitute one
and the same instrument.
If this Agreement is consistent with your understanding of the matters we
discussed concerning your services, kindly sign below and return a signed copy
to us.
Very truly yours,
X. XXXX PRICE ASSOCIATES, INC.
By:
Name:
Title:
X. XXXX PRICE INTERNATIONAL,
INC.
By:
Name:
Title:
X. XXXX PRICE INVESTMENT
SERVICES, INC.
By:
Name:
Title:
Acknowledged and Agreed to:
LIFE INSURANCE COMPANY
By:
Name:
Title:
