ADMINISTRATIVE SERVICES AGREEMENT
Modern Woodmen of America ("INSURER") and Summit Investment Partners, Inc.
("Summit") (collectively, the "Parties") mutually agree to the arrangements set
forth in this Administrative Services Agreement (the "Agreement") dated as of
October 29, 2001.
WHEREAS, Summit is the investment adviser to Summit Mutual Funds, Inc. (the
"Fund"); and
WHEREAS, Summit has entered into an Investment Advisory Agreement, dated
March 22, 1984, with the Fund ("Advisory Agreement") pursuant to which it has
agreed to provide, or arrange to provide, not only investment advisory services,
but also certain administrative services, including such services as may be
requested by the Fund's Board of Directors from time to time; and
WHEREAS, INSURER issues variable life insurance contracts and/or variable
annuity contracts (collectively, the "Contracts"); and
WHEREAS, INSURER has entered into a participation agreement, dated
October 29, 2001 ("Participation Agreement"), with the Fund, pursuant to
which the Fund has agreed to make shares of certain of its portfolios
("Portfolios") available for purchase by one or more of INSURER's separate
accounts or divisions thereof (each, a "Separate Account"), in connection with
the allocation by Contract owners of purchase payments to corresponding
investment options offered under the Contracts; and
WHEREAS, INSURER and Summit expect that the Fund, and its Portfolios, can
derive substantial savings in administrative expenses by virtue of having one or
more Separate Accounts of INSURER each as a single shareholder of record of
Portfolio shares, rather than having numerous public shareholders of such
shares; and
WHEREAS, INSURER and Summit expect that the Fund, and its Portfolios, can
derive such substantial savings because INSURER performs the administrative
services listed on Schedule A hereto for the Fund in connection with the
Contracts issued by INSURER; and
WHEREAS, INSURER has no contractual or other legal obligation to perform
such administrative services, other than pursuant to this Agreement and the
Participation Agreement; and
WHEREAS, INSURER desires to be compensated for providing such
administrative services; and
WHEREAS, Summit desires that the Fund benefit from the lower administrative
expenses resulting from the administrative services performed by INSURER; and
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WHEREAS, Summit desires to retain the administrative services of INSURER
and to compensate INSURER for providing such administrative services;
NOW, THEREFORE, the Parties agree as follows:
SECTION 1. ADMINISTRATIVE SERVICES; PAYMENTS THEREFOR.
(a) INSURER shall provide the administrative services set out in Schedule A
hereto and made a part hereof, as the same may be amended from time to time. For
such services, Summit agrees to pay to INSURER a quarterly fee ("Quarterly Fee")
equal to a percentage of the average daily net assets of the Fund attributable
to the Contracts issued by INSURER ("INSURER Fund Assets") at the following
annual rates:
ANNUAL RATE TOTAL AVERAGE QUARTERLY NET ASSETS FOR ALL PORTFOLIOS
----------- -----------------------------------------------------
10 basis On all net assets attributable to the Contracts issued by INSURER
points
(b) Summit shall calculate the Quarterly Fee at the end of each calendar
quarter and will make such payment to INSURER, without demand or notice by
INSURER, within 30 days thereafter. For purposes of computing the Quarterly Fee
payable to the INSURER contemplated under this paragraph, the average aggregate
net asset value of shares of the Portfolios held by a Separate Account over a
calendar quarter shall be computed by totaling the 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.
(c) From time to time, the Parties shall review the Quarterly Fee to
determine whether it reasonably approximates the incurred and anticipated costs,
over time, of INSURER in connection with its duties hereunder. The Parties agree
to negotiate in good faith any change to the Quarterly Fee proposed by a Party
in good faith.
SECTION 2. NATURE OF PAYMENTS.
The Parties to this Agreement recognize and agree that Summit's payments to
INSURER hereunder are for administrative services only and do not constitute
payment in any manner for investment advisory services or for costs of
distribution of Contracts or of Portfolio shares, and are not otherwise related
to investment advisory or distribution services or expenses. INSURER represents
and warrants that the fees to be paid by Summit for services to be rendered by
INSURER pursuant to the terms of this Agreement are to compensate the INSURER
for providing administrative services to the Fund, and are not designed to
reimburse or compensate INSURER for providing administrative services with
respect to the Contracts or any Separate Account.
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SECTION 3. TERM AND TERMINATION.
Any Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Party. Unless so terminated, this Agreement shall
continue in effect for so long as Summit or its successors) in interest, or any
affiliate thereof, continues to perform in a similar capacity for the Fund, and
for so long as INSURER provides the services contemplated hereunder with respect
to Contracts under which values or monies are allocated to a Portfolio.
SECTION 4. AMENDMENT.
This Agreement may be amended upon mutual agreement of the Parties in
writing.
SECTION 5. NOTICES.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered to
MODERN WOODMEN OF AMERICA
c/o Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxxx Xxxxxx, Vice-President
Investment Administration
SUMMIT INVESTMENT PARTNERS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq., Law Dept.
Xxxxxx X. Xxxxxxxxxxxx
SECTION 6. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Parties and their transferees, successors and assigns. The benefits of and the
right to enforce this Agreement shall accrue to the Parties and their
transferees, successors and assigns.
(b) ASSIGNMENT. Neither this Agreement nor any of the rights, obligations
or liabilities of any Party hereto shall be assigned without the written consent
of the other Party.
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(c) INTENDED BENEFICIARIES. Nothing in this Agreement shall be construed to
give any person or entity other than the Parties, as well as the Fund, any legal
or equitable claim, right or remedy. Rather, this Agreement is intended to be
for the sole and exclusive benefit of the Parties, as well as the Fund.
(d) 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.
(e) APPLICABLE LAW. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the State of
Ohio without reference to
the conflict of law principles thereof.
(f) SEVERABILITY. If any portion of this Agreement shall be found to be
invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
of first above written.
MODERN WOODMEN OF AMERICA
BY: /s/ X.X. Xxxxxxxxx
------------------
Title: National Secretary
SUMMIT INVESTMENT PARTNERS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Title: Secretary
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SCHEDULE A
ADMINISTRATIVE SERVICES FOR
SUMMIT MUTUAL FUNDS, INC.
INSURER shall provide certain administrative services respecting the
operations of the Fund, as set forth below. This Schedule, which may be amended
from time to time as mutually agreed upon by INSURER and Summit, constitutes an
integral part of the Agreement to which it is attached. Capitalized terms used
herein shall, unless otherwise noted, have the same meaning as the defined terms
in the Agreement to which this Schedule relates.
A. RECORDS OF PORTFOLIO SHARE TRANSACTIONS; MISCELLANEOUS RECORDS
1. INSURER shall maintain master accounts with the Fund, on behalf of each
Portfolio, which accounts shall bear the name of INSURER as the record owner of
Portfolio shares on behalf of each Separate Account investing in the Portfolio.
2. INSURER shall maintain a daily journal setting out the number of shares
of each Portfolio purchased, redeemed or exchanged on behalf of Contract owners
each day, as well as the net purchase or redemption orders for Portfolio shares
submitted each day, to assist Summit, the Fund and/or the Fund's transfer agent
in tracking and recording Portfolio share transactions, and to facilitate the
computation of each Portfolio's net asset value per share. INSURER shall
promptly provide Summit, the Fund, and the Fund's transfer agent with a copy of
such journal entries or information appearing thereon in such format as may be
reasonably requested from time to time. INSURER shall provide such other
assistance to Summit, the Fund, and the Fund's transfer agent as may be
necessary to cause various Portfolio share transactions effected on behalf of
Contract owners to be properly reflected on the books and records of the Fund.
3. In addition to the foregoing records, and without limitation, INSURER
shall maintain and preserve all records as required by law to be maintained and
preserved in connection with providing administrative services hereunder.
B. ORDER PLACEMENT AND PAYMENT
1. INSURER shall determine the net amount to be transmitted to the Separate
Accounts as a result of redemptions of each Portfolio's shares based on Contract
owner redemption requests and shall disburse or credit to the Separate Accounts
all proceeds of redemptions of Portfolio shares. INSURER shall notify the Fund
of the cash required to meet redemption payments.
2. INSURER shall determine the net amount to be transmitted to the Fund as
a result of purchases of Portfolio shares based on Contract owner purchase
payments and transfers
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allocated to the Separate Accounts investing in each Portfolio. INSURER shall
transmit net purchase payments to the Fund's custodian.
C. ACCOUNTING SERVICES
INSURER shall perform miscellaneous accounting services as may be mutually
agreed to between INSURER and Summit or the Fund, which services shall relate to
the business contemplated by the Participation Agreement between INSURER and the
Fund, as amended from time to time. Such services may include, without
limitation, periodic reconciliation (at least quarterly) and balancing of
INSURER's books and records with those of the Fund with respect to such matters
as cash accounts, Portfolio share purchase and redemption orders placed with the
Fund, dividend and distribution payments by the Fund, and such other accounting
matters that may arise from time to time in connection with the operations of
the Fund as related to the business contemplated by the Participation Agreement.
D. REPORTS
INSURER acknowledges that Summit may, from time to time, be called upon by
the Fund's Board of Directors ("Board"), to provide various types of information
pertaining to the operations of the Fund and related matters, and that Summit
also may, from time to time, decide to provide such information to the Board in
its own discretion. Accordingly, INSURER shall provide Summit with such
assistance as mutually agreed upon between INSURER and SUMMIT so that Summit can
report such information to the Fund's Board in a timely manner. INSURER
acknowledges that such information and assistance shall be in addition to the
information and assistance required of INSURER pursuant to the Fund's mixed and
shared funding SEC exemptive order, described in the Participation Agreement.
INSURER shall provide Summit with such assistance as mutually agreed upon
between INSURER and SUMMIT with respect to the preparation and submission of
reports and other documents pertaining to the Fund to appropriate regulatory
bodies and third party reporting services.
E. FUND-RELATED CONTRACT OWNER SERVICES
INSURER agrees to print and distribute, in a timely manner, prospectuses,
statements of additional information, supplements thereto, periodic reports,
proxy materials and any other materials of the Fund required by law or otherwise
to be given to its shareholders, including, without limitation, Contract owners
investing in Portfolio shares. INSURER further agrees to provide telephonic
support for Contract owners, including, without limitation, responding to
inquiries about the Fund and each Portfolio thereof (not including information
about performance or related to sales), and assisting with proxy solicitations,
specifically with respect to soliciting voting instructions from Contract
owners.
6
F. MISCELLANEOUS SERVICES
INSURER shall provide such other administrative support to the Fund as
mutually agreed between INSURER and Summit or the Fund from time to time.
INSURER shall, from time to time, relieve the Fund of other usual or incidental
administration services of the type ordinarily borne by mutual funds that offer
shares to individual members of the general public, as mutually agreed between
INSURER and Summit.
9/13/01
7
PARTICIPATION AGREEMENT
BY AND AMONG
SUMMIT MUTUAL FUNDS, INC.,
CARILLON INVESTMENTS, INC.,
MODERN WOODMEN OF AMERICA
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
MWA FINANCIAL SERVICES, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
------------------------------------------------------------------------------------------------------------------
Section 1. Available Funds 2
1.1 Availability 2
1.2 Addition, Deletion or Modification of Funds 2
1.3 No Sales to the General Public 2
Section 2. Processing Transactions 3
2.1 Timely Pricing and Orders 3
2.2 Timely Payments 3
2.3 Applicable Price 4
2.4 Dividends and Distributions 4
2.5 Book Entry 5
Section 3. Costs and Expenses 5
3.1 General 5
3.2 Parties To Cooperate 5
Section 4. Legal Compliance 5
4.1 Tax Laws 5
4.2 Insurance and Certain Other Laws 6
4.3 Securities Laws 7
4.4 Notice of Certain Proceedings and Other Circumstances 8
4.5 INSURER To Provide Documents; Information About SMFI 9
4.6 SMFI To Provide Documents; Information About INSURER 10
Section 5. Mixed and Shared Funding 12
5.1 General 12
5.2 Disinterested Directors 12
5.3 Monitoring for Material Irreconcilable Conflicts 12
5.4 Conflict Remedies 13
5.5 Notice to INSURER 14
5.6 Information Requested by Board of Directors 14
5.7 Compliance with SEC Rules 15
5.8 Other Requirements 15
Section 6. Termination 15
6.1 Events of Termination 15
6.2 Notice Requirement for Termination 17
6.3 Funds To Remain Available 17
6.4 Continuance of Agreement 17
Section 7. Amendments 17
Section 8. Assignment 17
Section 9. Notices 18
Section 10. Voting Procedures 18
Section 11. Foreign Tax Credits 19
Section 12. Indemnification 19
12.1 Of SMFI and Carillon by INSURER and UNDERWRITER 19
12.2 Of INSURER and UNDERWRITER by SMFI and Carillon 21
12.3 Effect of Notice 24
12.4 Successors 24
Section 13. Applicable Law 24
Section 14. Execution in Counterparts 25
Section 15. Severability 25
Section 16. Rights Cumulative 25
Section 17. Headings 25
Section 18. Confidentiality 25
Section 19. Trademarks and Fund Names 26
Section 20. Parties to Cooperate 2
Schedule A
Schedule B
Schedule C
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of
October, 2001 ("Agreement"), by and among Summit Mutual Funds, Inc., a
Maryland corporation ("SMFI"), Carillon Investments, Inc., an
Ohio Corporation
("Carillon"), Modern Woodmen of America, a fraternal benefit society
("INSURER"), on behalf of itself and each of its segregated asset accounts
listed in Schedule A hereto, as the parties hereto may amend from time to time
(each, an "Account," and collectively, the "Accounts"); and MWA Financial
Services, Inc., an affiliate of INSURER and the principal underwriter of certain
variable annuity and variable life insurance contracts ("UNDERWRITER")
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, SMFI is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, SMFI currently consists of seven separate series ("Series") within
its Pinnacle series of funds, shares ("Shares") of each of which are registered
under the Securities Act of 1933, as amended (the "1933 Act") and are currently
sold to one or more separate accounts of life insurance companies to fund
benefits under variable annuity contracts and variable life insurance contracts;
and
WHEREAS, SMFI will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; references
herein to "SMFI" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, INSURER will be the issuer of certain variable annuity contracts
and variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, INSURER will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; references
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, INSURER will serve as the depositor of the Accounts, each of which
is registered as a unit investment trust investment company under the 1940 Act
(or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
1
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, INSURER intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, Carillon is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
SMFI will make Shares of each Fund available to INSURER for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of SMFI may refuse to
sell Shares of any Fund to any 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 or if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund (it being understood that for this purpose
shareholders mean Contract owners). SMFI shall use its best efforts to provide
to the INSURER as much advance notice of its election to suspend or terminate as
is reasonably practicable in order to give the INSURER sufficient time to take
appropriate steps in response to such suspension or termination.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, SMFI, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
SMFI represents and warrants that no Shares of any Fund on Schedule A have
been or will be sold to the general public.
2
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) SMFI or its designated agent will use its best efforts to provide
INSURER with the net asset value per Share for each Fund by 7:00 p.m. Eastern
Standard Time on each Business Day. As used herein, "Business Day" shall mean
any day on which (i) the New York Stock Exchange is open for regular trading
(ii) SMFI calculates the Fund's net asset value, and (iii) INSURER is open for
business.
(b) INSURER will use the data provided by SMFI each Business Day pursuant
to paragraph (a) immediately above to calculate Account unit values and to
process transactions that receive that same Business Day's Account unit values.
INSURER will perform such Account processing the same Business Day, and will
place corresponding orders to purchase or redeem Shares with SMFI by 10:00 a.m.
Eastern Time the following Business Day; provided, however, that SMFI shall
provide additional time to INSURER in the event that SMFI is unable to meet the
7:00 p.m. time stated in paragraph (a) immediately above. Such additional time
shall be equal to the additional time that SMFI takes to make the net asset
values available to INSURER.
(c) With respect to payment of the purchase price by INSURER and of
redemption proceeds by SMFI, INSURER and SMFI shall net purchase and redemption
orders with respect to each Fund and shall transmit one net payment per Fund in
accordance with Section 2.2, below.
(d) If SMFI provides materially incorrect Share net asset value information
(as determined under SEC guidelines), INSURER shall be entitled to an adjustment
to the number of Shares purchased or redeemed to reflect the correct net asset
value per Share. Any material error in the calculation or reporting of net asset
value per Share, dividend or capital gain information shall be reported promptly
upon discovery to INSURER. In the event INSURER realizes any losses resulting
from overpayments to Contract owners attributable to the provision of materially
incorrect Share net asset value information by SMFI that is not subsequently
corrected and communicated to INSURER in reasonably sufficient time to prevent
the overpayment, SMFI and Carillon agree to reimburse INSURER for the amount of
such losses, provided the INSURER has made reasonable efforts to recoup the
overpayments.
2.2 TIMELY PAYMENTS.
INSURER will wire payment for net purchases to a custodial account
designated by SMFI by 2:00 p.m. Eastern Time on the same day as the order for
Shares is placed, to the extent practicable. SMFI will wire payment for net
redemptions to an account designated by INSURER by 2:00 p.m. Eastern Time on the
same day as the Order is placed, to the extent practicable, but in any event
within five (5) calendar days after the date the order is placed in order to
enable INSURER to pay redemption proceeds within the time specified in Section
22(e) of the 1940 Act or such shorter period of time as may be required by law.
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2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that INSURER receives prior to the
close of regular trading on the New York Stock Exchange on a Business Day will
be executed at the net asset values of the appropriate Funds next computed after
receipt by SMFI or its designated agent of the orders. For purposes of this
Section 2.3(a), INSURER shall be the designated agent of SMFI for receipt of
orders relating to Contract transactions on each Business Day and receipt by
such designated agent shall constitute receipt by SMFI; provided that SMFI
receives notice of such orders by 10:00 a.m. Eastern Standard Time on the next
following Business Day or such later time as computed in accordance with Section
2.1 (b) hereof.
(b) All other Share purchases and redemptions by INSURER will be effected
at the net asset values of the appropriate Funds next computed after receipt by
SMFI or its designated agent of the order therefor, and such orders will be
irrevocable.
(c) Notwithstanding any provision of the Agreement to the contrary, the
Parties agree that SMFI shall determine the applicable price for Share orders
attributable to Contracts funded by unregistered Accounts in accordance with
Section 2.3(a) hereof, provided that INSURER represents and warrants that it is
legally or contractually obligated to treat such orders in the same manner as
orders attributable to Contracts funded by registered Accounts. Each Share order
placed by INSURER that is attributable, in whole or in part, to Contracts funded
by an unregistered Account, shall be deemed to constitute such representation
and warranty by INSURER unless the order specifically states to the contrary.
Otherwise, SMFI shall determine the applicable price for Share orders
attributable to Contracts funded by unregistered Accounts in accordance with
Section 2.3(b) hereof. As used herein, an Account is registered if it is
registered under the 1940 Act.
2.4 DIVIDENDS AND DISTRIBUTIONS.
SMFI will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to INSURER of any income dividends
or capital gain distributions payable on the Shares of any Fund. INSURER hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the ex-dividend date net asset values until
INSURER otherwise notifies SMFI in writing, it being agreed by the Parties that
the ex-dividend date and the payment date with respect to any dividend or
distribution will be the same Business Day. INSURER reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
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Issuance and transfer of SMFI Shares will be by book entry only. Stock
certificates will not be issued to INSURER. Shares ordered from SMFI will be
recorded in an appropriate title for INSURER, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear, or arrange for other to bear, all
expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in arranging
to print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of SMFI and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) SMFI represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will use its best
efforts to qualify and to maintain qualification of each Fund as a RIC. SMFI
will notify INSURER immediately upon having a reasonable basis for believing
that a Fund has ceased to so qualify or that it might not so qualify in the
future.
(b) SMFI represents that it currently complies and will continue to comply
with the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code. SMFI will notify
INSURER immediately upon having a reasonable basis for believing that a Fund has
ceased to so comply or that a Fund might not so comply in the future. In the
event of a breach of this Section 4.1(b) by SMFI, it will use its best efforts
to adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Section 1.817-5 of the regulations under the Code. The
representations and warranties of this Section 4.1(b) shall not apply with
respect to any Fund whose beneficial interests are held solely by owners of
"pension plan contracts" within the meaning of Section 818(a) of the Code and
other persons whose federal income tax treatment is not dependent on the Fund's
compliance with the requirements of Section 817(h) of the Code.
(c) INSURER agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of INSURER or, to
INSURER's knowledge, of any Participant, that any Fund has failed to comply with
the
5
diversification requirements of Section 817(h) of the Code or INSURER otherwise
becomes aware of any facts that could give rise to any claim against SMFI or its
affiliates as a result of such a failure or alleged failure INSURER will
promptly notify SMFI of such assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any Participant);
(d) Upon the occurrence of any event contemplated under Section 4.1(c) to
this Agreement, each party agrees to act in good faith to minimize any liability
to the other party that may arise as a result of such failure or alleged failure
to the extent practicable and except where a party's respective interests are
adverse to or in conflict with the other party's interests.
(e) INSURER represents and warrants that the Contracts currently are and
will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; INSURER will notify SMFI immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
(f) INSURER represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. INSURER will use its best efforts to continue to meet such
definitional requirements, and it will notify SMFI immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) SMFI will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by INSURER, including, the furnishing of information not otherwise available to
INSURER which is required by state insurance law to enable INSURER to obtain the
authority needed to issue the Contracts in any applicable state.
(b) INSURER represents and warrants that (i) it is a fraternal benefit
society duly organized, validly existing and in good standing under the laws of
the State of Illinois and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under Illinois Insurance Law and the
regulations thereunder, and (iii) the Contracts comply in all material respects
with all other applicable federal and state laws and regulations.
(c) SMFI represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
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4.3 SECURITIES LAWS.
(a) INSURER represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Illinois law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) INSURER will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account's prospectus, statement of additional
information, private placement memoranda and other documents pursuant to which
Contracts are offered, and any amendments or supplements thereto (collectively,
the "Account Prospectus"), will at all times comply in all material respects
with all applicable requirements of the 1933 Act and the rules thereunder.
(b) SMFI represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Maryland
law, (ii) SMFI is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) SMFI will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) SMFI
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) SMFI's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
SMFI's prospectus, statement of additional information and any amendments or
supplements thereto (collectively, the "SMFI Prospectus") will at all times
comply in all material respects with all applicable requirements of the 1933 Act
and the rules thereunder.
(c) SMFI will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by SMFI.
(d) SMFI currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
SMFI undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
7
(e) SMFI represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
(f) Carillon represents and warrants that it is a member in good standing
of the NASD and is registered as a broker-dealer under the 1934 Act. Carillon
further represents that it will sell and distribute SMFI's shares in accordance
with all applicable federal and state securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 1940 Act.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) SMFI will immediately notify INSURER of (i) the issuance by any court
or regulatory body of any stop order, cease and desist order, or other similar
order with respect to SMFI's registration statement under the 1933 Act or SMFI
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or SMFI Prospectus that may affect the offering of Shares of SMFI,
(iii) the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of SMFI's Shares, or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by INSURER. SMFI will
make every reasonable effort to prevent the issuance, with respect to any Fund,
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
(b) INSURER will immediately notify SMFI of (i) the issuance by any court
or regulatory body of any stop order, cease and desist order, or other similar
order with respect to each Account's registration statement under the 1933 Act
relating to the Contracts or each Account Prospectus, (ii) any request by the
SEC for any amendment to such registration statement or Account Prospectus that
may affect the offering of Shares of SMFI, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. INSURER will make every reasonable effort to prevent the issuance
of any such stop order, cease and desist
8
order or similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
4.5 INSURER TO PROVIDE DOCUMENTS; INFORMATION ABOUT SMFI.
(a) INSURER will provide to SMFI or its designated agent at least one (1)
complete copy of all SEC registration statements, Account Prospectuses, reports,
any preliminary and final voting instruction solicitation material, applications
for exemptions, requests for no-action letters, and notices, orders or responses
relating thereto, and all amendments and supplements to any of the above, that
relate to each Account or the Contracts, contemporaneously with the filing of
such document with the SEC or NASD.
(b) INSURER will provide to SMFI or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which SMFI or any of its affiliates is named, at least five (5) Business Days
prior to its use or such shorter period as the Parties hereto may, from time to
time, agree upon. No such material shall be used if SMFI or its designated agent
objects to such use within five (5) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
SMFI hereby designates Summit Investment Partners, Inc. as the entity to receive
such sales literature, until such time as SMFI appoints another designated agent
by giving notice to INSURER in the manner required by Section 9 hereof. SMFI or
its designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which SMFI or any of its
affiliates is named, and no such material shall be used if SMFI or its designee
so object.
(c) Neither INSURER nor any of its affiliates, will give any information or
make any representations or statements on behalf of or concerning SMFI or its
affiliates in connection with the sale of the Contracts other than (i) the
information or representations contained in the registration statement,
including the SMFI Prospectus contained therein, relating to Shares, as such
registration statement and SMFI Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for SMFI; or (iii) in published reports for
SMFI that are in the public domain and approved by SMFI for distribution; or
(iv) in sales literature or other promotional material approved by SMFI, except
with the express written permission of SMFI.
(d) UNDERWRITER shall adopt and implement procedures reasonably designed to
ensure that information concerning SMFI and its affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e., information that is
not intended for distribution to Participants) ("broker only materials") is so
used, and neither SMFI nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, 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,
9
television, telephone or tape recording, videotape display, signs or billboards,
motion pictures, telephone directories (other than routine listings), electronic
media, computerized media, or other public media, (e.g., on-line networks such
as the Internet or other electronic messages), sales literature (i.e., any
written or electronic communication distributed or made generally available to
customers or the public, including, but not limited to, brochures, circulars,
research reports, market letters, performance reports or summaries, form
letters, telemarketing scripts, 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 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 the
NASD rules, the 1933 Act or the 0000 Xxx.
4.6 SMFI TO PROVIDE DOCUMENTS; INFORMATION ABOUT INSURER.
(a) SMFI will provide to INSURER at least one (1) complete copy of all SEC
registration statements, SMFI Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
notices, orders or responses relating thereto, and all amendments and
supplements to any of the above, that relate to SMFI or the Shares of a Fund,
contemporaneously with the filing of such document with the SEC or NASD.
(b) SMFI will provide to INSURER camera ready copy of all SMFI prospectuses
and printed copies, in an amount specified by INSURER, of SMFI statements of
additional information, proxy materials, periodic reports to shareholders and
other materials required by law to be sent to Participants who have allocated
any Contract value to a Fund. SMFI will provide such copies to INSURER in a
timely manner so as to enable INSURER, as the case may be, to print and
distribute such materials within the time required by law to be furnished to
Participants.
(c) SMFI will provide to INSURER or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which INSURER, or any of its respective affiliates is named, or that refers to
the Contracts, at least five (5) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if INSURER or its designated agent objects to such use
within five (5) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. INSURER shall
receive all such sales literature until such time as it appoints a designated
agent by giving notice to SMFI in the manner required by Section 9 hereof.
INSURER or its designee reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which INSURER
or any of its affiliates is named, and no such material shall be used if INSURER
or its designee so object.
(d) Neither SMFI nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning INSURER, each
Account, or
10
the Contracts other than (i) the information or representations contained in the
registration statement, including each Account Prospectus contained therein,
relating to the Contracts, as such registration statement and Account Prospectus
may be amended from time to time; or (ii) in published reports for the Account
or the Contracts that are in the public domain and approved by INSURER for
distribution; or (iii) in sales literature or other promotional material
approved by INSURER or its affiliates, except with the express written
permission of INSURER.
(e) SMFI shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning INSURER,
and its respective affiliates that is intended for use only by brokers or agents
selling the Contracts (i.e., information that is not intended for distribution
to Participants) ("broker only materials") is so used, and neither INSURER, nor
any of its respective affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6, 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, telephone directories (other than
routine listings), electronic media, computerized media, or other public media,
(e.g., on-line networks such as the Internet or other electronic messages),
sales literature (i.e., any written or electronic communication distributed or
made generally available to customers or the public, including, but not limited
to, brochures, circulars, research reports, market letters, performance reports
or summaries, form letters, telemarketing scripts, 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 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 the NASD rules, the 1933 Act or the 1940 Act.
(g) SMFI will provide the INSURER with as much notice as is reasonably
practicable of any proxy solicitation for any Fund, and of any change in the
Fund's registration statement or prospectus, particularly any change resulting
in a change to the registration statement or prospectus for any Account. SMFI
will work with the INSURER so as to enable the INSURER to solicit proxies from
Contract owners, or to make changes to its registration statement or prospectus,
in an orderly manner. SMFI will make reasonable efforts to attempt to have
changes effecting Contract prospectuses become effective simultaneously with the
annual updates for such prospectuses.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
11
SMFI has received an order from the SEC exempting it from certain
provisions of the 1940 Act and rules thereunder so that SMFI may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with INSURER,
and trustees of qualified pension and retirement plans (collectively, "Mixed and
Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to SMFI. SMFI hereby notifies
INSURER that it may be appropriate to include in the prospectus pursuant to
which a Contract is offered disclosure regarding the potential risks of Mixed
and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
SMFI agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of SMFI within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board;(b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
SMFI agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing SMFI
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in SMFI ("Participating
Plans"). INSURER agrees to inform the Board of Directors of SMFI of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
12
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, INSURER will assist the Board of
Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by INSURER
to disregard voting instructions of Participants. INSURER's responsibilities in
connection with the foregoing shall be carried out with a view only to the
interests of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, INSURER will, if it is a Participating
Insurance Company for which a material irreconcilable conflict is relevant, at
its own expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Directors), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts from
SMFI or any Fund and reinvesting such assets in a different investment
medium, including another Fund of SMFI, or submitting the question
whether such segregation should be implemented to a vote of all
affected Participants and, as appropriate, segregating the assets of
any particular group (e.g., annuity Participants, life insurance
Participants or all Participants) that votes in favor of such
segregation, or offering to the affected Participants the option of
making such a change; and
(ii) establishing a new registered investment company of the type defined
as a "management company" in Section 4(3) of the 1940 Act or a new
separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of INSURER's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, INSURER may be
required, at SMFI's election, to withdraw each Account's investment in SMFI or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take
13
place within six (6) months after SMFI gives notice to INSURER that this
provision is being implemented, and until such withdrawal SMFI shall continue to
accept and implement orders by INSURER for the purchase and redemption of Shares
of SMFI.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to INSURER conflicts with the majority
of other state regulators, then INSURER will withdraw each Account's investment
in SMFI within six (6) months after SMFI's Board of Directors informs INSURER
that it has determined that such decision has created a material irreconcilable
conflict, and until such withdrawal SMFI shall continue to accept and implement
orders by INSURER for the purchase and redemption of Shares of SMFI. No charge
or penalty will be imposed as a result of such withdrawal.
(d) INSURER agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will SMFI or any of its
affiliates be required to establish a new funding medium for any Contracts.
INSURER will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO INSURER.
SMFI will promptly make known in writing to INSURER the Board of Directors'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
INSURER and SMFI (or its investment adviser) will at least annually submit
to the Board of Directors of SMFI such reports, materials or data as the Board
of Directors may reasonably request so that the Board of Directors may fully
carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Directors or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
14
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which SMFI is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding. SMFI agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
SMFI will require that each Participating Insurance Company and
Participating Plan enter into an agreement with SMFI that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon six (6) months advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of SMFI upon institution of formal proceedings against
INSURER or its affiliates by the NASD, the SEC, any state insurance regulator or
any other regulatory body regarding INSURER's obligations under this Agreement
or related to the sale of the Contracts, the operation of each Account, or the
purchase of Shares, if, in each case, SMFI reasonably determines that such
proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(c) at the option of INSURER upon institution of formal proceedings against
SMFI, its principal underwriter, or its investment adviser by the NASD, the SEC,
or any state insurance regulator or any other regulatory body regarding SMFI's
obligations under this Agreement or related to the operation or management of
SMFI or the purchase of SMFI Shares, if, in each case, INSURER reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on INSURER, or the Subaccount corresponding to the Fund with respect to which
the Agreement is to be terminated; or
15
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered, where required, and, in all material respects, issued and sold
in accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by INSURER; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of INSURER if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if INSURER
reasonably believes that the Fund may fail to so qualify; or
(g) at the option of INSURER if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, as applicable, or if
INSURER reasonably believes that the Fund may fail to so comply; or
(h) at the option of SMFI if the Contracts issued by INSURER cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under the Contracts are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement; or
(j) by either SMFI or Carillon by written notice to the INSURER, if either
one or both of SMFI or Carillon respectively, shall determine, in their sole
judgment exercised in good faith, that the INSURER has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this Agreement or is subject to material adverse publicity; or
(k) by the INSURER by written notice to the SMFI and Carillon, if the
INSURER shall determine, in its sole judgment exercised in good faith, that
either SMFI or Carillon has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this Agreement or
is subject to material adverse publicity.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination.
6.3 FUNDS TO REMAIN AVAILABLE.
16
Notwithstanding any termination of this Agreement, SMFI will, at the option
of INSURER, continue to make available additional shares of the Fund 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, the owners of the
Existing Contracts will be permitted to reallocate investments in the Fund (as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The Parties agree that this Section 6.3 will not apply to any
terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 CONTINUANCE OF AGREEMENT.
The provisions of Section 4 and Sections 12 through 20 shall survive
termination of this Agreement. In addition, all other applicable provisions of
this Agreement shall survive termination as long as shares of the Fund are held
on behalf of Contract owners in accordance with Section 6.3, except that SMFI
and Carillon shall have no further obligation to make Fund shares available in
Contracts issued after termination.
SECTION 7. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all Parties hereto.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by this Agreement will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement will be given to the
following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
MODERN WOODMEN OF AMERICA
c/o Farm Bureau Life Insurance Co.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxxx Xxxxxx, Vice President
17
Investment Administration
MWA FINANCIAL SERVICES, INC.
0000 0xx Xxxxxx
Xxxx Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: C. Xxxxxx Xxxxx, General Counsel
SUMMIT MUTUAL FUNDS, INC.
CARILLON INVESTMENTS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxxx, Esq., Law Dept.
Xxxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxxxxx
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
INSURER will distribute all proxy material furnished by SMFI to Participants
and/or Policyholders to whom pass-through voting privileges are required to be
extended and will solicit voting instructions from Participants. INSURER will
vote Shares in accordance with timely instructions received from Participants.
INSURER will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
INSURER nor any of its affiliates will in any way oppose or interfere with the
solicitation of proxies for the Shares held for such Participants. INSURER
reserves the right to vote shares held in any Account in its own right, to the
extent permitted by law. INSURER shall be responsible for assuring that each of
its Accounts holding Shares calculates voting privileges in a manner consistent
with that of other Participating Insurance Companies or in the manner required
by the Mixed and Shared Funding exemptive order obtained by SMFI. SMFI will
notify INSURER of any changes of interpretations or amendments to Mixed and
Shared Funding exemptive order it obtains. SMFI will comply with all provisions
of the 1940 Act requiring voting by shareholders, and in particular, SMFI either
will provide for annual meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such meetings) or will comply with
Section 16(c) of the 1940 Act (although SMFI 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, SMFI will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
18
SECTION 11. FOREIGN TAX CREDITS
SMFI agrees to consult in advance with INSURER concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF SMFI AND CARILLON BY INSURER AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
INSURER and UNDERWRITER agree to indemnify and hold harmless SMFI, Carillon,
their affiliates, and each person, if any, who controls SMFI, Carillon, or their
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers (but not including any Participating Insurance
Company), (collectively, the "Indemnified Parties" for purposes of this Section
12.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of INSURER and UNDERWRITER)
or actions in respect thereof (including, to the extent 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 actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising 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 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 INSURER or
UNDERWRITER by or on behalf of SMFI or Carillon for use in any
Account's 1933 Act, registration statement, any Account
Prospectus, the Contracts, or sales literature or advertising or
otherwise for use in connection with the sale of Contracts or
Shares (or any amendment or supplement to any of the foregoing);
or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in SMFI's 1933 Act registration statement, SMFI
Prospectus, sales literature or advertising of SMFI, or any
amendment or supplement to any
19
of the foregoing, not supplied for use therein by or on behalf of
INSURER, UNDERWRITER or their respective affiliates and on which
such persons have reasonably relied) or the negligent, illegal or
fraudulent conduct of INSURER, UNDERWRITER or their respective
affiliates or persons under their control (including, without
limitation, their employees and "Associated Persons," as that
term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in SMFI's 1933
Act registration statement, SMFI Prospectus, sales literature or
advertising of SMFI, or any amendment or supplement to any of the
foregoing, 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 and in conformity with
information furnished to SMFI, Carillon or their affiliates by or
on behalf of INSURER, UNDERWRITER or their respective affiliates
for use in SMFI's 1933 Act registration statement, SMFI
Prospectus, sales literature or advertising of SMFI, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by INSURER or UNDERWRITER to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement, or
any material breach of any representation and/or warranty made by
INSURER or UNDERWRITER in this Agreement or arise out of or
result from any other material breach of this Agreement by
INSURER or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by INSURER
to qualify as annuity contracts or life insurance contracts under
the Code, otherwise than by reason of any Fund's failure to
comply with Subchapter M or Section 817(h) of the Code.
(b) Neither INSURER nor UNDERWRITER shall be liable under this Section 12.1
with respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of that Indemnified Party's reckless disregard of
obligations or duties (i) under this Agreement, or (ii) INSURER, UNDERWRITER,
each Account or Participants.
(c) Neither INSURER nor UNDERWRITER shall be liable under this Section 12.1
with respect to any action against an Indemnified Party unless SMFI or Carillon
20
shall have notified INSURER and UNDERWRITER in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action 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 INSURER and UNDERWRITER of any such action shall
not relieve INSURER and UNDERWRITER from any liability which they may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this Section 12.1. Except as otherwise provided herein, in case any
such action is brought against an Indemnified Party, INSURER and UNDERWRITER
shall be entitled to participate, at their own expense, in the defense of such
action and also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from INSURER or UNDERWRITER to such
Indemnified Party of INSURER's or UNDERWRITER's election to assume the defense
thereof, the Indemnified Party will cooperate fully with INSURER and UNDERWRITER
and shall bear the fees and expenses of any additional counsel retained by it,
and neither INSURER nor UNDERWRITER will 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.
12.2 OF INSURER AND UNDERWRITER BY SMFI AND CARILLON.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e),
below, SMFI and Carillon agree to indemnify and hold harmless INSURER,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
INSURER, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of SMFI and/or Carillon) or actions in
respect thereof (including, to the extent 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 actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in SMFI's 1933
Act registration statement, SMFI Prospectus or sales literature
or advertising of SMFI (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 SMFI or its
affiliates by or on behalf of INSURER, UNDERWRITER or their
respective
21
affiliates for use in SMFI's 1933 Act registration statement,
SMFI Prospectus, or in sales literature or advertising or
otherwise for use in connection with the sale of Contracts or
Shares (or any amendment or supplement to any of the foregoing);
or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of SMFI,
Carillon or their affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of SMFI, Carillon or their affiliates or persons under
their control (including, without limitation, their employees and
"Associated Persons" as that term is defined in Section (m) of
Article I of the NASD By-Laws), in connection with the sale or
distribution of SMFI Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished to INSURER,
UNDERWRITER or their respective affiliates by or on behalf of
SMFI, Carillon or their affiliates for use in any Account's 1933
Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by SMFI to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by SMFI in this
Agreement or arise out of or result from any other material
breach of this Agreement by SMFI; or
(v) arise as a result of any failure by Carillon to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by Carillon in
this Agreement or arise out of or result from any other material
breach of this Agreement by Carillon, it being expressly
understood by the
22
parties hereto that only Carillon and not SMFI shall be
responsible for any indemnification arising from this subsection
(v).
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e)
hereof, SMFI and Carillon agree to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses) to which the
Indemnified Parties may become subject directly or indirectly under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or actions directly or indirectly result from or arise out of the failure of any
Fund to operate as a regulated investment company in compliance with (i)
Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of
the Code and regulations thereunder, including, without limitation, any income
taxes and related penalties, rescission charges, liability under state law to
Participants asserting liability against LIFE COMPANY pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by INSURER of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that INSURER reasonably deems necessary or appropriate
as a result of the noncompliance.
(c) Neither SMFI nor Carillon shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to SMFI or Carillon.
(d) Neither SMFI nor Carillon shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified SMFI and/or Carillon in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action 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 SMFI or Carillon of any such action shall not
relieve SMFI or Carillon from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
Section 12.2. Except as otherwise provided herein, in case any such action is
brought against an Indemnified Party, SMFI and/or Carillon will be entitled to
participate, at its own expense, in the defense of such action and also shall be
entitled to assume the defense thereof, with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably withheld.
After notice from SMFI and/or Carillon to such Indemnified Party of SMFI's or
Carillon's election to assume the defense thereof, the Indemnified Party will
cooperate fully with SMFI and Carillon and shall bear the fees and expenses of
any additional counsel retained by it, and SMFI and Carillon 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.
23
(e) In no event shall SMFI or Carillon be liable under the indemnification
provisions contained in this Agreement to INSURER or UNDERWRITER with respect to
any losses, claims, damages, liabilities or expenses that arise out of or result
from (i) a breach of any representation, warranty, and/or covenant made by
INSURER or UNDERWRITER hereunder; (ii) the failure by INSURER to maintain its
segregated asset account (which invests in any Fund) as a legally and validly
established segregated asset account under applicable state law and as a duly
registered unit investment trust under the provisions of the 1940 Act (unless
exempt therefrom); or (iii) the failure by INSURER to maintain its variable
annuity or life insurance contracts (with respect to which any Fund serves as an
underlying funding vehicle) as annuity contracts or life insurance contracts
under applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Sections 12.1 (c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with
Ohio law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
24
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, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
SECTION 18. CONFIDENTIALITY
SMFI acknowledges that the identities of the customers of INSURER or any of
its affiliates (collectively, the "INSURER Protected Parties" for proposes of
this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the INSURER
Protected Parties or any of their employees or agents in connection with
INSURER's performance of its duties under this Agreement are the valuable
property of the INSURER Protected Parties. SMFI agrees that if it comes into
possession of any list or compilation of the identities of or other information
about the INSURER Protected Parties' customers, or any other information or
property of the INSURER Protected Parties, other than such information as may be
independently developed or compiled by SMFI from information supplied to it by
the INSURER Protected Parties' customers who also maintain accounts directly
with SMFI, SMFI will hold such information or property in confidence and refrain
from using, disclosing or distributing any of such information or other property
except: (a) with INSURER'S prior written consent; or (b) as required by law or
judicial process. INSURER acknowledges that the identities of the customers of
SMFI or any of its affiliates (collectively, the "SMFI Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
SMFI Protected Parties or any of their employees or agents in connection with
SMFI's performance of its duties under this Agreement are the valuable property
of the SMFI Protected Parties. INSURER agrees that if it comes into possession
of any list or compilation of the identities of or other information about the
SMFI Protected Parties' customers or any other information or property of the
SMFI Protected Parties, other than such information as may be independently
developed or compiled by INSURER from information supplied to it by the SMFI
Protected Parties' customers who also maintain accounts directly with INSURER,
INSURER will hold such information or property in confidence and refrain from
using, disclosing or distributing any of such information or other property
except: (a) with SMFI's prior written consent; or (b) as required by law or
judicial process. Each party acknowledges that any breach of the agreements in
this Section 18 would result in immediate and irreparable harm to the other
parties for which there would be no adequate remedy at law and agree that in the
event of such a breach, the other parties will be entitled to equitable relief
by way of temporary and permanent injunctions, as well as such other relief as
any court of competent jurisdiction deems appropriate.
25
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Summit Investment Partners, Inc. ("Summit" or "licensor"), an affiliate
of SMFI, owns all right, title and interest in and to the name, trademark and
service xxxx "Summit Pinnacle" and such other tradenames, trademarks and service
marks as may be set forth on Schedule B, as amended from time to time by written
notice from Summit to INSURER (the "Summit licensed marks" or the "licensor's
licensed marks") and is authorized to use and to license other persons to use
such marks. INSURER and its affiliates are hereby granted a non-exclusive,
non-transferable and non-sublicensable license to use the Summit licensed marks
in connection with INSURER's performance of the services contemplated under this
Agreement, subject to the terms and conditions set forth in this Section 19.
(b) The grant of license to INSURER and its affiliates ( the "licensee")
shall terminate automatically upon termination of this Agreement. Upon automatic
termination, the licensee shall cease to use the licensor's licensed marks,
except that INSURER shall have the right to continue to service any outstanding
Contracts bearing any of the Summit licensed marks. Upon Summit's elective
termination of this license, INSURER and its affiliates shall immediately cease
to issue any new annuity or life insurance contracts bearing any of the Summit
licensed marks and shall likewise cease any activity which suggests that it has
any right under any of the Summit licensed marks or that it has any association
with Summit, except that INSURER shall have the right to continue to service
outstanding Contracts bearing any of the Summit licensed marks. Should Summit
electively terminate this license, Summit shall assume the reasonable expenses
incurred by the licensee as to its printed materials in changing to a new name.
(c) The licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld. Any
disapproval shall likewise be in writing and indicate the reasons therefor.
Notwithstanding the foregoing, should licensor fail to provide a written
response to a request for an approval within five business days of its receipt,
such request shall be deemed approved.
(d) During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks which were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider. If, on reconsideration, or
on initial review, respectively, any such samples fail to meet with the written
approval of the licensor, then the licensee shall immediately cease distributing
such disapproved materials. The licensor's approval shall not be unreasonably
withheld, and the licensor, when requesting reconsideration of a prior approval,
shall assume the reasonable expenses of withdrawing and replacing such
disapproved materials. The licensee shall obtain the prior written approval of
the licensor for the use of any new materials developed to replace the
disapproved materials, in the manner set forth above.
26
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the
best of the knowledge of the licensee, the licensor's licensed marks are valid
and enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
(f) INSURER and UNDERWRITER understand that (i) the S&P MidCap 400(R) Index
is a trademark of The XxXxxx-Xxxx Companies, Inc., the Nasdaq-100(R) Index is a
trademark of The Nasdaq Stock Market, Inc., and the Xxxxxxx 2000(R) Index is a
trademark of the Xxxxx Xxxxxxx Company (collectively, the "Third-Party Marks");
(ii) these Third-Party Marks have been licensed by Summit or its affiliate for
use by SMFI; and (iii) the Funds are not sponsored, endorsed, sold or promoted
by any of the licensing organizations, and they make no representation or
warranty regarding the Funds, and bear no liability with respect to the Funds.
INSURER and UNDERWRITER agree to comply with any reasonable requirements of the
licensing organizations disclosed to INSURER and UNDERWRITER regarding the use
of Third-Party Marks in any prospectuses, sales literature or other promotional
material, including without limitation the approval process for, and the
required use of certain notices and disclaimers in, all materials referencing
the Third-Party Marks. Summit or its affiliate shall use its reasonable
commercial efforts to continue in full force and effect those separate
agreements with the respective licensing organizations for continued use of the
Third-Party Marks for the duration of the term of the license granted under this
Section 19.
(g) During the term of the license granted under this Section 19, the
licensor shall use its best efforts to maintain in effect and protect the value
of the licensor's licensed marks as authorized herein. The licensor shall at its
own expense exercise licensor's common law and statutory rights against
infringement of the licensed marks as authorized herein, provided, however,
nothing herein shall obligate the licensor to undertake an action or settlement,
or refrain from an action or settlement with respect to any particular
potential, threatened or actual infringement of such licensed marks. INSURER and
UNDERWRITER shall cooperate with the licensor in the maintenance, registration
(if any) and policing of licensor's rights in such licensed marks, and in any
action, settlement or undertaking with respect to any particular potential,
threatened or actual infringement of such licensed marks. Such cooperation is
not a waiver of nor shall it require violation of INSURER's, UNDERWRITER's or
their affiliates' attorney/client, work product or other privilege.
SECTION 20. PARTIES TO COOPERATE
Each Party to this Agreement will cooperate with each other Party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated
27
hereby to the extent practicable and except where a Party's respective interests
are adverse to or in conflict with another Party's interests.
-----------------------------------------
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
SUMMIT MUTUAL FUNDS, INC.
Attest: /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------- --------------------
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary Title: Vice President
CARILLON INVESTMENTS, INC.
Attest: /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------- --------------------
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary Title: Vice President
MODERN WOODMEN OF AMERICA,
on behalf of itself and its separate
accounts
Attest: /s/ X.X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------ --------------------
Name: X.X. Xxxxxxxxx Name: Xxxxx X. Xxxxxxx
Title: National Secretary Title: President
MWA FINANCIAL SERVICES, INC.
Attest: /s/ X.X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxx
------------------ ------------------
Name: X.X. Xxxxxxxxx Name: Xxxxxx X. Xxxx
Title: National Secretary Title: President
10/11/01
28
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
Summit Mutual Funds, Inc. Pinnacle Series:
S&P MidCap 400 Index Portfolio
Xxxxxxx 2000 Small Cap Index Portfolio
Nasdaq-100 Index Portfolio
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Modern Woodmen of America Variable Annuity Account
Modern Woodmen of America Variable Account
UNREGISTERED SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Individual Flexible Premium Deferred Variable Annuity Contract
Flexible Premium Deferred Variable Life Contract
SCHEDULE B
SUMMIT MUTUAL FUNDS, INC.
Summit Pinnacle Series:
S&P MidCap 400 Index Portfolio
Xxxxxxx 2000 Small Cap Index Portfolio
Nasdaq-100 Index Portfolio
Summit and Design
SCHEDULE C
EXPENSE ALLOCATIONS
-----------------------------------------------------------------------------------------------------------------
INSURER SMFI /CARILLON
-----------------------------------------------------------------------------------------------------------------
preparing and filing the Account's preparing and filing the Fund's registration
registration statement statement
text composition for Account prospectuses text composition for Fund prospectuses and
and supplements supplements
-----------------------------------------------------------------------------------------------------------------
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
printing Account and Fund prospectuses and a camera ready Fund prospectus
supplements
-----------------------------------------------------------------------------------------------------------------
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to policy
policy owners and prospective purchasers upon request owners and prospective purchasers upon request
-----------------------------------------------------------------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities Laws
and to prospective purchasers; mailing and distributing
Fund prospectuses and supplements to prospective
purchasers
text composition (Account), printing, mailing, text composition of annual and semi-annual
and distributing annual and semi-annual reports (Fund)
reports for Account (Fund and Account as,
applicable)
-----------------------------------------------------------------------------------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction solicitation statements and voting instruction solicitation
materials to policy owners with respect to materials to policy owners with respect to
proxies related to the Account proxies related to the Fund
-----------------------------------------------------------------------------------------------------------------
preparation, printing and distributing sales
material and advertising relating to the Funds,
insofar as such materials relate to the
Contracts and filing such materials with and
obtaining approval from, the SEC, the NASD,
any state insurance regulatory authority, and
any other appropriate regulatory authority, to
the extent required
-----------------------------------------------------------------------------------------------------------------
