PARTICIPATION AGREEMENT
AMONG
XXXXXX VARIABLE TRUST
XXXXXX RETAIL MANAGEMENT LIMITED PARTNERSHIP
AND
FORETHOUGHT LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this day of , 2012,
among FORETHOUGHT LIFE INSURANCE COMPANY (the "Company"), a Indiana corporation,
on its own behalf and on behalf of each separate account of the Company set
forth on Schedule A hereto, as such Schedule may be amended from time to time
(each such account hereinafter referred to as the "Account"), PUTNAM VARIABLE
TRUST (the "Trust"), a Massachusetts business trust, and XXXXXX RETAIL
MANAGEMENT LIMITED PARTNERSHIP (the "Underwriter"), a Massachusetts limited
partnership.
WHEREAS, the Trust is an open-end diversified management investment company and
is available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies and variable annuity contracts (collectively, the "Variable Insurance
Products") to be offered by insurance companies which have entered into
Participation Agreements with the Trust and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several series of
shares, each designated a "Fund" and each representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated December 29, 1993 (File No. 812-8612), granting the variable
annuity and variable life insurance separate accounts participating in the Trust
exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
Investment Company Act of 1940, as amended (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 Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of the Participating Insurance Companies (the
"Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment company
under the 1940 Act and the sale of its shares is registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
separate account, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to one or more variable
insurance contracts (the "Contracts", the Contract(s) and the Account(s) covered
by the Agreement are specified in Schedule A); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and is a member in good standing of the Financial Industry
Regulatory Authority (the "FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in certain Funds ("Authorized Funds," the
Authorized Funds covered by the Agreement are specified in the Separate Account
Registration Statement of the Company) on behalf of each Account to fund certain
of the Contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of the mutual promises herein, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
1.1 The Underwriter agrees, subject to the Trust's rights under Section 1.2 and
otherwise under this Agreement, to sell to the Company those Trust shares
representing interests in Authorized Funds which each Account orders, executing
such orders on a daily basis at the net asset value next computed after receipt
by the Trust or its designee of the order for the shares of the Trust. For
purposes of this Section 1.1, the Company shall be the designee of the Trust for
receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
order by 9:30 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 trading
and on which the Trust calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission. The initial Authorized Funds are set
forth in the Separate Account Registration Statement, as such registration
statement is amended from time to time.
1.2 The Trust agrees to make its shares available for purchase at the
applicable net asset value per share by the Company for their separate Accounts
listed on Schedule A, on those days on which the Trust calculates its net asset
value pursuant to rules of the Securities and
2
Exchange Commission and the Trust. Notwithstanding the foregoing, the Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Fund to the
Company or any other person, or suspend or terminate the offering of shares of
any Fund if such action is required by law or by regulatory authorities having
jurisdiction over the Trust or if the Trustees determine, in the exercise of
their fiduciary responsibilities, that to do so would be in the best interests
of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts. No shares
of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms of its then
current prospectus. For purposes of this Section 1.4, the Company shall be the
designee of the Trust for receipt of requests for redemption from each Account
and receipt by such designee by the close of trading on the New York Stock
Exchange on a day shall constitute receipt by the Trust on that day; provided
that the Trust receives written (or facsimile) notice of such request for
redemption by 9:30 a.m., Eastern time, on the next following Business Day. In
connection with the foregoing and Section 1.1 above, the Company agrees to
provide information, at the Underwriter's reasonable request, on its late
trading controls procedures, and the Company represents that it has controls and
procedures in place to prevent the acceptance of orders or requests for
redemption of shares of the Trust after the close of trading on the New York
Stock Exchange on a day for trades that will be based on the net asset value
determined as of the close of trading on the New York Stock Exchange on such
day.
1.5 The Company agrees that the Contracts are not intended to serve as
vehicles for frequent transfers among the Funds. As such, the Company agrees on
its own behalf, and on behalf of any designee of the Company, to review and
identify activity that might be construed as market timing and to abide by
Xxxxxx'x practices and policies by restricting activity of any Contract owner
identified, either by the Trust, the Underwriter, the Company, or its designee,
as a market timer. The parties acknowledge and agree that the transactions
contemplated under this Agreement shall be subject to the provisions of the Rule
22c-2 Agreement dated as of this date and entered into by and among Underwriter,
Company and Xxxxxx Investor Services, Inc.
1.6 The Company shall purchase and redeem the shares of Authorized Funds
offered by the then current prospectus of the Trust in accordance with the
provisions of such prospectus.
1.7 The Company shall pay for Trust shares on the next Business Day after an
order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.8 Issuance and transfer of the Trust's shares will be by book entry only.
Share certificates will not be issued to the Company or any Account. Shares
ordered from the Trust will be recorded as instructed by the Company to the
Underwriter in an appropriate title for each Account or the appropriate
sub-account of each Account.
3
1.9 The Underwriter shall furnish prompt notice (by wire or telephone, followed
by written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Underwriter
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10 The Underwriter shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the Trust calculates its net asset value per share and each of the Trust and the
Underwriter shall use its best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts are or
will be registered under the 1933 Act; the Contracts will be issued and
sold in compliance in all material respects with all applicable laws and
the sale of the Contracts shall comply in all material respects with state
insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a
separate account under applicable law and 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 to serve
as a segregated investment account for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or life
insurance contracts, under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every effort
to maintain such treatment and that it will notify the Trust and the
Underwriter immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance
with all applicable laws, subject to the terms of Section 2.4 below, and
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the Registration Statement for its shares 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 the
shares for sale in accordance with the laws of the various states only if
and to the
4
extent deemed advisable by the Trust or the Underwriter in connection with
their sale by the Trust to the Company and only as required by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that it will use its best efforts to maintain
such qualification (under Subchapter M or any successor provision), and
that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so
qualify in the future; and
(c) it is lawfully 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.
2.3 The Underwriter represents and warrants that it is a member in good
standing of the FINRA and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust shares
in accordance with all applicable securities laws applicable to it, including
without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4 Notwithstanding any other provision of this Agreement, the Trust shall be
responsible for the registration and qualification of its shares and of the
Trust itself under the laws of any jurisdiction only in connection with the
sales of shares directly to the Company through the Underwriter. The Trust shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Trust
shares or the Trust by the Trust may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the
Trust and advising the Trust thereof at such time and in such manner as is
necessary to permit the Trust to comply.
2.5 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Trust shall provide such documentation (including a camera-ready copy
of its prospectus or typeset electronic document) and other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Trust is amended) to have the prospectus for the
Contracts and the Trust's prospectus printed together in one or more documents
and/or may be delivered electronically.
3.2 The Trust's Prospectus shall state that the Statement of Additional
Information (the "Statement") for the Trust is available from the Underwriter or
its designee (or in the Trust's discretion, the Prospectus shall state that such
Statement is available from the Trust), and the Underwriter (or the Trust) shall
print and provide such Statement free of charge to the Company and to any owner
of a Contract or prospective owner who requests such Statement.
5
3.3 The Trust shall provide the Company with as many printed copies of the
current prospectus(es), Statement, reports to shareholders, proxy material and
other communications (including any supplements or amendments to any of the
foregoing) to shareholders in such quantity as the Company shall reasonably
require for distribution to the Contract owners, which may be delivered
electronically.
3.4 The Underwriter or its designee will provide the Company with reasonable
advance notice of any material change for a Fund, including the following
changes, to the extent material in the particular case: a) Fund objective
changes, (b) anticipated Fund mergers/substitutions, (c) Fund name changes, (e)
Fund adviser or sub-adviser changes; and/or (f) conditions or undertakings that
affect the Company's rights or obligations hereunder.
3.5 The Company shall vote all Trust shares as required by law and the Shared
Funding Exemptive Order. The Company reserves the right to vote Trust shares
held in any separate account in its own right, to the extent permitted by law
and the Shared Funding Exemptive Order. The Company shall be responsible for
assuring that each of its separate accounts participating in the Trust
calculates voting privileges in a manner consistent with all legal requirements
and the Shared Funding Exemptive Order.
3.6 The Trust will comply with all applicable provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 Without limiting the scope or effect of Section 4.2 hereof, the Company
shall furnish, or shall cause to be furnished, to the Underwriter each piece of
sales literature or other promotional material (as defined hereafter) in which
the Trust, its investment adviser or the Underwriter is named at least 10 days
prior to its use. No such material shall be used if the Underwriter objects to
such use within five Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in annual or semi-annual reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee or by the Underwriter, except with the written permission of the
Trust or the Underwriter or the designee of either or as is required by law.
6
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 10 days prior to its use. No
such material shall be used if the Company or its designee objects to such use
within five Business Days after receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the written permission of the Company or as is required by
law.
4.5 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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
(i.e. any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, 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 registered representatives.
ARTICLE V. FEES AND EXPENSES
5.1 Except as provided in Article VI, the Trust and Underwriter shall pay no
fee or other compensation to the Company under this Agreement.
5.2 All expenses incident to performance by each party of its respective duties
under this Agreement shall be paid in accordance with Schedule C hereof.
ARTICLE VI. SERVICE FEES
6.1 So long as the Company complies with its obligations in this Article VI,
the Underwriter shall pay the Company a service fee (the "Service Fee") on
shares of the Funds held in the Accounts at the annual rates specified in
Schedule B (excluding any accounts for the Company's own corporate retirement
plans), subject to Section 6.2 hereof.
6.2 The Company understands and agrees that all Service Fee payments are
subject to the limitations contained in each Fund's Distribution Plan, which may
be varied or discontinued
7
at any time and hereby waives the right to receive such Service Fee payments
with respect to the Fund if the Fund ceases to pay 12b-1 fees to the
Underwriter.
6.3 (a) The Company's failure to provide the services described in Section 6.4
or otherwise comply with the terms of this Agreement will render it ineligible
to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company, amend this
Article VI to change the terms of the Service Fee payments with prior written
notice to the Company.
6.4 The Company will provide the following services to the Contract Owners
purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and assisting in
answering inquiries concerning the Funds;
(ii) Assisting in printing and distributing shareholder reports,
prospectuses and other sale and service literature provided by the
Underwriter;
(iii) Assisting the Underwriter and its affiliates in the establishment and
maintenance of shareholder accounts and records;
(iv) Assisting Contract owners in effecting administrative changes, such as
exchanging shares in or out of the Funds;
(v) Assisting in processing purchase and redemption transactions; and
(vi) Providing any other information or services as the Contract owners or
the Underwriter may reasonably request.
The Company will support the Underwriter's marketing efforts by granting
reasonable requests for visits to the Company's offices by representatives of
the Underwriter.
6.5 The provisions of this Article VI shall remain in effect for not more than
one year from the date hereof and thereafter for successive annual periods only
so long as such continuance is specifically approved at least annually by the
Trustees in conformity with Rule 12b-1. This Agreement shall automatically
terminate in the event of its assignment (as defined by the 1940 Act). In
addition, this Article VI may be terminated at any time, without the payment of
any penalty, with respect to any Fund or the Trust as a whole by any party upon
written notice delivered or mailed by registered mail, postage prepaid, to the
other party, or, as provided in Rule 12b-1 under the 1940 Act by the Trustees or
by the vote of the holders of the outstanding voting securities of any Fund.
8
6.6 The Underwriter shall provide the Trustees of each of the Funds, and such
Trustees shall review at least quarterly, a written report of the amounts paid
to the Company under this Article VI and the purposes for which such
expenditures were made.
ARTICLE VII. DIVERSIFICATION
7.1 The Trust shall use its best efforts to cause each Authorized Fund to
maintain a diversified pool of investments that would, if such Fund were a
segregated asset account, satisfy the diversification provisions of Treas. Reg.
Section 1.817-5(b)(1) or (2).
ARTICLE VIII. POTENTIAL CONFLICTS
8.1 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. 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 law 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 Fund 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 if the Trustees determine that a
material irreconcilable conflict exists and the implications thereof.
8.2 The Company will report 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 the Trustees to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Trustees whenever Contract owner voting instructions are
disregarded.
8.3 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a majority
of the disinterested Trustees), take, at the Company's expense, whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, up to
and including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting the question whether 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
9
owners the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
8.4 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 one or more portfolios of 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. No charge or penalty shall be imposed as a result of such withdrawal.
Any such withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being implemented, and
until the end of that six month period the Underwriter and Trust shall, to the
extent permitted by law and any exemptive relief previously granted to the
Trust, continue to accept and implement orders by the Company for the purchase
(or redemption) of shares of the Trust.
8.5 If a material irreconcilable conflict arises because of a particular state
insurance regulator's decision applicable to the Company to disregard Contract
owner voting instructions and that decision represents a minority position that
would preclude a majority vote, then the Company may be required, at the Trust's
direction, to withdraw the affected Account's investment in one or more
Authorized Funds of the Trust; 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 and termination must take place within six (6)
months after the Trust gives written notice that this provision is being
implemented, unless a shorter period is required by law, and until the end of
the foregoing six month period (or such shorter period if required by law), the
Underwriter and Trust shall, to the extent permitted by law and any exemptive
relief previously granted to the Trust, continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Trust. No
charge or penalty will be imposed as a result of such withdrawal.
8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a majority of
the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. Neither the Trust nor
the Underwriter shall be required to establish a new funding medium for the
Contracts, nor shall the Company be required to do so, 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 withdraw the Account's investment
in one or more Authorized Funds of the Trust and terminate this Agreement within
six (6) months (or such shorter period as may be required by law or any
exemptive relief previously granted to the Trust) 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
10
determined by a majority of the disinterested Trustees. No charge or penalty
will be imposed as a result of such withdrawal.
8.7 The responsibility to take remedial action in the event of the Trustees'
determination of a material irreconcilable conflict and to bear the cost of such
remedial action shall be the obligation of the Company, and the obligation of
the Company set forth in this Article VIII shall be carried out with a view only
to the interests of Contract owners.
8.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are 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 (a) the Trust and/or the Company, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4,
3.5, 8.1, 8.2, 8.3, 8.4 and 8.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
8.9 The Company has reviewed the Shared Funding Exemption Order and hereby
assumes all obligations referred to therein which are required, including,
without limitation, the obligation to provide reports, material or data as the
Trustees may request as conditions to such Order, to be assumed or undertaken by
the Company.
ARTICLE IX. INDEMNIFICATION
9.1 Indemnification by the Company
9.1 (a) The Company shall indemnify and hold harmless the Trust and the
Underwriter and each of the Trustees, directors of the Underwriter, officers,
employees or agents of the Trust or the Underwriter and each person, if any, who
controls the Trust or the Underwriter within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
9.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company which consent may not
be unreasonably withheld) or litigation (including reasonable 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 the Trust's shares or the Contracts or
the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a Registration Statement,
Prospectus or Statement of Additional Information for the Contracts or
contained in the Contracts or sales literature for the 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
11
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Trust for use
in the Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or representations
(other than statements or representations contained in the Trust's
Registration Statement or Prospectus, or in sales literature for Trust
shares not supplied by the Company, or persons under its control) or
wrongful conduct of the Company or persons under its control, with respect
to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus, or sales
literature of the Trust or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon
information furnished to the Trust or the Underwriter by or on behalf of
the Company; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or result
from any other breach of this Agreement by the Company, as limited by and
in accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof.
9.1 (b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party to the extent such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Trust, whichever is applicable.
9.1 (c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such claim but
failure to notify the Company of any such claim shall not relieve the Company
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this
12
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Company to such Indemnified Party of
the Company's election to assume the defense thereof the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
9.1 (d) The Underwriter shall promptly notify the Company of the commencement
of any litigation or proceedings against the Trust or the Underwriter in
connection with the issuance or sale of the Trust Shares or the Contracts or the
operation of the Trust.
9.1 (e) The provisions of this Section 9.1 shall survive any termination of
this Agreement.
9.2 Indemnification by the Underwriter
9.2 (a) The Underwriter shall indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 9.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter which consent may not
be unreasonably withheld) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
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 the Trust's shares or the Contracts or the performance by
the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the sales literature of the
Trust prepared by or approved by the Trust or Underwriter (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Trust by or on behalf of the
Company for use in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
13
(ii) arise out of or as a result of written statements or representations
(other than statements or representations contained in the Registration
Statement, Prospectus, Statement of Additional Information or sales
literature for the Contracts not supplied by the Underwriter or persons
under its control) of the Underwriter or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus, Statement
of Additional Information or sales literature covering the 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 statement or statements therein not misleading, if
such statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Underwriter; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Underwriter in this Agreement or arise out of or
result from any other breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections 9.2(b) and
9.2(c) hereof.
9.2 (b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
9.2 (c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter 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) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Underwriter of any such claim
shall not relieve the Underwriter 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, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Underwriter to such Indemnified Party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
14
9.2 (d) The Company shall promptly notify the Underwriter of the Trust of the
commencement of any litigation or proceedings against it or any of its officers
or directors, in connection with the issuance or sale of the Contracts or the
operation of each Account.
9.2 (e) The provisions of this Section 9.2 shall survive any termination of
this Agreement.
9.3 Indemnification by the Trust
9.3 (a) The Trust shall indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 9.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Trust which consent may not be
unreasonably withheld) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
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
operations of the Trust and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement,
Prospectus and Statement of Additional Information of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished to the Underwriter or Trust by or on behalf of
the Company for use in the Registration Statement, Prospectus, or Statement
of Additional Information for the Trust (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement or arise out of or
result from any other material breach of this Agreement by the Trust, as
limited by and in accordance with the provisions of Sections 9.3(b) and
9.3(c) hereof.
9.3 (b) The Trust shall not be liable under the indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Trust, the Underwriter or each Account,
whichever is applicable.
15
9.3 (c) The Trust shall not be liable under this indemnification provision
with respect to any claim made against any Indemnified Party unless such
Indemnified Party shall have notified the Trust 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) on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such claim, but
failure to notify the Trust of any such claim shall not relieve the Trust 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, the Trust
will be entitled to participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party named in the action. After
notice from the Trust to such Indemnified Party of the Trust's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Trust will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.3 (d) The Company agrees promptly to notify the Trust of the commencement
of any litigation or proceedings against it or any of its officers or,
directors, in connection with this Agreement, the issuance or sale of the
Contracts or the sale or acquisition of shares of the Trust.
9.3 (e) The provisions of this Section 9.3 shall survive any termination of
this Agreement.
ARTICLE X. APPLICABLE LAW
10.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
10.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE XI. TERMINATION
11.1 This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written notice to the
other parties; or
16
(b) at the option of the Trust or the Underwriter in the event that formal
administrative proceedings are instituted against the Company by the FINRA,
the Securities and Exchange Commission, the Insurance Commissioner of any
state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sales of the Contracts, with respect to
the operation of any Account, or the purchase of the Trust shares,
provided, however, that the Trust or the Underwriter determines in its sole
judgment, exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(c) at the option of the Company in the event that formal administrative
proceedings are instituted against the Trust or Underwriter by the FINRA,
the Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body in respect of the sale of
shares of the Trust to the Company, provided, however, that the Company
determines in its sole judgment, exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the Trust or Underwriter to perform its obligations under this
Agreement; or
(d) with respect to any Account, upon requisite vote of the Contract owners
having an interest in such Account (or any subaccount) to substitute the
shares of another investment company for the corresponding Fund shares of
the Trust in accordance with the terms of the Contracts for which those
Fund shares had been selected to serve as the underlying investment media.
The Company will give 30 days' prior written notice to the Trust of the
date of any proposed vote to replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 30 days advance written
notice from the Underwriter to the Company, upon a decision by the
Underwriter to cease offering shares of the Fund for sale.
11.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for any
reason or for no reason.
11.3 No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
to this Agreement of its intent to terminate, which notice shall set forth the
basis for such termination. Such prior written notice shall be given in advance
of the effective date of termination as required by this Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to Section 1.2
of this Agreement, the Trust and the Underwriter shall, at the option of the
Company, continue to make available additional shares of the Trust pursuant to
the terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, subject to Section 1.2
of this Agreement, the owners of the Existing Contracts shall be permitted to
reallocate investments
17
in the Trust, redeem investments in the Trust and/or invest in the Trust upon
the making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 11.4 shall not apply to any termination under
Article VIII and the effect of such Article VIII termination shall be governed
by Article VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to the Company's assets held in either
Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally required Redemption"). Upon request, the Company will promptly
furnish to the Trust and the Underwriter an opinion of counsel for the Company,
reasonably satisfactory to the Trust, to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, subject to Section 1.2
of this Agreement, the Company shall not prevent Contract owners from allocating
payments to an Authorized Fund that was otherwise available under the Contracts
without first giving the Trust or the Underwriter 90 days notice of its
intention to do.
ARTICLE XII. 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:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention:
If to the Underwriter:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
18
If to the Company:
Forethought Life Insurance Company
000 Xxxxx Xxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, EVP, Chief Investment Officer
ARTICLE XIII. MISCELLANEOUS
13.1 A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of or arising
out of this instrument, including without limitation Article VII, are not
binding upon any of the Trustees or shareholders individually but binding only
upon the assets and property of the Trust.
13.2 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.
13.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4 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.
13.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the FINRA and state insurance regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
13.6 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.
13.7 Notwithstanding any other provision of this Agreement, the obligations of
the Trust and the Underwriter are several and, without limiting in any way the
generality of the foregoing, neither such party shall have any liability for any
action or failure to act by the other party, or any person acting on such other
party's behalf.
19
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
FORETHOUGHT LIFE INSURANCE COMPANY
By its authorized officer,
---------------------------------------------
Name:
Title:
XXXXXX VARIABLE TRUST
By its authorized officer,
---------------------------------------------
Name:
Title:
XXXXXX RETAIL MANAGEMENT LIMITED PARTNERSHIP
By its authorized officer,
---------------------------------------------
Name:
Title:
20
SCHEDULE A
Separate Accounts
Name of Separate Account
FORETHOUGHT LIFE INSURANCECOMPANY SEPARATE ACCOUNT A
Contracts Funded by Separate Account
ALL CONTRACTS FUNDED BY THE SEPARATE ACCOUNT
21
SCHEDULE B
Authorized Fund(s) and Service Fee(s)
AUTHORIZED FUND(S) SERVICE FEE
Funds as set forth in Separate Fee disclosed in the Prospectus for
Account Registration Statement Authorized Fund
22
SCHEDULE C
ALLOCATION OF EXPENSES
PAID BY THE TRUST
(UNLESS OTHERWISE DESCRIBED BELOW AS
ITEM PAID BY THE COMPANY AN UNDERWRITER COST) (2)
-----------------------------------------------------------------------------------------------------------------------
Registration Statements Preparing and filing the Separate Account's Preparing and filing the Trust's registration
registration statement statement
Prospectuses, Text composition and alterations for Separate Text composition and alterations for Series
Supplements, and Account prospectus, supplements and prospectuses, supplements and statements of
Statements of Additional statements of additional information additional information
Information Printing, processing, mailing and Printing, mailing and distributing and/or
distributing or electronically delivering of electronically delivering of Series
Separate Account prospectuses, supplements prospectuses, supplements and statements of
and statements of additional information to additional information for use with existing
new and existing Contract owners as required Contract owners, as required by applicable
by applicable law law (1)(3)
Printing, processing, mailing and
distributing Separate Account and Series
prospectuses, supplements and statements of
additional information for use with
prospective Contract owners and Contract
owners making an initial investment in a
Series (3)
Documents and Printing, mailing and distributing or
Communications related to electronically delivering Series and Separate
Fund changes Account supplements and other communications
related to Fund substitutions, Fund closings,
Fund mergers and other similar Fund
transactions to existing Contract owners
(1)(3)
These expenses shall be born by the
Underwriter; provided however, that Company
shall pay for the printing mailing and
distributing (or electronic delivering) of
Series and Separate Account supplements and
other communications if the Fund
substitution, Fund closing, Fund Merger or
other similar Fund transaction is initiated
as a result of action taken or a request
made, by the Company
Annual and Semi-Annual Text composition of annual and semi-annual Text composition of annual and semi-annual
Reports reports of the Separate Account reports of the Series
Printing, processing, mailing, and Printing, mailing, and distributing or
distributing or electronically delivering electronically delivering annual and
annual and semi-annual reports of the semi-annual reports of the Series to existing
Separate Account to Contract owners Contract owners (1)(3)
23
PAID BY THE TRUST
(UNLESS OTHERWISE DESCRIBED BELOW AS
ITEM PAID BY THE COMPANY AN UNDERWRITER COST) (2)
-----------------------------------------------------------------------------------------------------------------------
Proxies Text composition, printing, processing, Text composition, printing, mailing,
mailing, distributing or electronically distributing or electronically delivering and
delivering and tabulation of proxy statements tabulation of proxy statements and voting
and voting instruction solicitation materials instruction solicitation materials to
to Contract owners with respect to proxies existing Contract owners with respect to
sponsored by the Separate Accounts proxies sponsored by a Series or the Trust
(1)(3)
------------
(1) The Company may request that the Trust provide typeset electronic document
files of such documents for use with Contract owners. The Company may
choose to print the Series' prospectus(es), statement of additional
information, and semi-annual and annual reports, or any of such documents,
in combination with such documents of other fund companies; or may utilize
electronic delivery for such fund documents. In this case, the Trust's
share of the total expense for printing, mailing, and distribution of the
combined materials or of electronic delivery of such materials shall be
allocated based upon the methodology deemed reasonable and appropriate by
the Company and approved by the Trust.
(2) The Company will xxxx the Trust only for the "reasonable" costs of printing
and distribution of the prospectus, SAI, supplements, proxies, reports or
other communications (collectively, "Reports"). For purposes of this
Agreement "reasonable" costs shall be based on the costs of printing and
delivering (including electronic delivery) incurred by the Trust to print
and distribute these types of Reports.
(3) The term "prospective" is defined as a potential new Contract Owner. The
term "existing" is defined as a current Contract owner with value allocated
to one or more Series at the time of the scheduled mailing. For Fund
prospectuses, this includes only the annual update mailing (i.e. "Evergreen
only").
24
