EXHIBIT A(9)(a)
PARTICIPATION AGREEMENT
AMONG
▇▇▇▇▇▇▇ INSURANCE FUNDS,
▇▇▇▇▇▇▇ FUND DISTRIBUTORS, INC.
AND
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT is made and entered into as of this ____ day of
______________,by and among THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY a
Wisconsin life insurance company (hereinafter the "Company"), on its own behalf
and on behalf of each segregated asset account of the Company set forth on
Schedule A hereto as such schedule may be amended from time to time (each such
account hereinafter referred to as the "Account" and collectively as the
"Accounts"), and ▇▇▇▇▇▇▇ INSURANCE FUNDS, a Massachusetts Business Trust
(hereinafter the "Investment Company"), and ▇▇▇▇▇▇▇ FUND DISTRIBUTORS, INC. a
Washington corporation (hereinafter the "Underwriter").
WHEREAS, Investment Company engages in business as a diversified open-end
management investment company and is available to act as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products");
and
WHEREAS, the beneficial interest in the Investment Company is divided into
several series of shares, referred to individually as "Funds" and representing
the interest in a particular managed portfolio of securities and other assets;
and
WHEREAS, Investment Company is registered as an open-end management
investment company under the 1940 Act, and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, ▇▇▇▇▇ ▇▇▇▇▇▇▇ Investment Management Company (the "Adviser") is
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life or
annuity contracts or both under the 1933 Act, and offers or will offer for sale
certain variable life or annuity contracts or both which are or will be exempt
from registration; and
WHEREAS, each Account is a duly organized, validly existing, segregated
asset account, established by resolution of the Board of Trustees of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life or annuity
contracts; and
WHEREAS, the Company has registered or will register some of the Accounts
as unit investment trusts under the 1940 Act and other Accounts are exempt from
registration; and
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WHEREAS, Investment Company has received "mixed and shared funding"
exemptive relief from the Securities and Exchange Commission permitting it to
offer its shares to life insurers in connection with variable annuity contracts
and variable life insurance policies offered by such insurers which may or may
not be affiliated with each other (SEC Release IC-16160, Dec. 7, 1987); and
WHEREAS, the Underwriter is registered as a broker/dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act") and is a member in good standing of the National Association of Securities
Dealers, Inc. (hereinafter the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life or annuity contracts
or both, and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1. SALE OF INVESTMENT COMPANY SHARES
1.1 The Underwriter agrees to sell to the Company those shares of Investment
Company which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Investment Company or its
designee of the order for the shares of the Investment Company. For purposes of
this Section 1.1, the Company shall be the designee of the Investment Company
for receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Investment Company; provided that the Investment
Company receives notice of such order by 8:00 a.m. Pacific time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which Investment Company calculated
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
1.2 The Investment Company agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Investment Company calculates its net asset
value pursuant to rules of the Securities and Exchange Commission, and the
Investment Company shall use reasonable efforts to calculate such net asset
value on each day on which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Investment Company
(hereinafter the "Board") may refuse to sell shares of any Fund, 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 is, in the sole discretion
of the Board acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Fund.
1.3 The Investment Company and the Underwriter agree that no shares of any Fund
will be sold to the general public.
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1.4 The Investment Company agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Investment Company held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Investment Company or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the designee
of the Investment Company for receipt of requests for redemption from each
Account, and receipt by such designee shall constitute receipt by the Investment
Company; provided that the Investment Company receives notice of such request
for redemption by 8:00 a.m. Pacific time on the next following Business Day.
1.5 The Company agrees to purchase and redeem the shares of selected Funds
offered by the then-current prospectus of the Investment Company and in
accordance with the provisions of such prospectus. The parties agree that all
net amounts available under the variable life and annuity contracts with the
form number(s) which are listed on Schedule B attached hereto and incorporated
herein by this reference, as such Schedule B may be amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"), may be invested in the Investment Company, in other separate
accounts of the Company, in other investment companies, in the Company's general
account, or in other funding vehicles.
1.6 The Company shall pay for Investment Company shares on the next Business
Day after an order to purchase Investment Company shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7 Issuance and transfer of the Investment Company's shares will be by book
entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Investment Company will be recorded in an
appropriate title for each Account.
1.8 The Investment Company shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the Investment Company's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. Investment
Company shall furnish same day notice to the Company of the number of shares so
issued as payment of such dividends and distributions.
1.9 The Investment Company shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are registered under
the 1933 Act or are exempt from registration thereunder; that the Contracts will
be issued and sold in compliance in all material respects with all applicable
Federal and State laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established each
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Account prior to any issuance or sale of Contracts funded thereby as a
segregated asset account under applicable state insurance law and that each
Account is or will be registered as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a segregated investment account for
the Contracts or is exempt from registration thereunder.
2.2 The Investment Company represents and warrants that Investment Company
shares sold pursuant to this Agreement shall be registered under the 1933 and
1940 Acts, duly authorized for issuance and sold in compliance with the laws of
the State of Washington and all applicable federal and state securities laws and
that the Investment Company is and shall remain registered under the 1940 Act.
The Investment Company shall amend the Registration Statement for its shares
under the 1933 and the 1940 Acts from time to time as required in order to
effect the continuous offering of its shares. The Investment Company shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Investment
Company or the Underwriter.
2.3 The Investment Company represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Investment Company and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5 The Investment Company currently does not intend to make any payments to
finance distribution expenses pursuant to Rule l2b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the
Investment Company undertakes to have its board of trustees, a majority of whom
are not interested persons of the Investment Company, formulate and approve any
plan under Rule l2b-1 to finance distribution expenses.
2.6 The Investment Company makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Investment
Company shares in accordance with any applicable state laws and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8 The Investment Company represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
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2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Investment Company in compliance in all material respects any applicable state
laws and federal securities laws.
2.10 The Investment Company and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money or securities of the Investment
Company are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Investment Company 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 shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other entities dealing with the money or
securities of the Investment Company are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit
of the Investment Company in an amount not less than five million dollars ($5
million). The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1 The Underwriter shall provide the Company with as many printed copies of
the Investment Company's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the
Company in lieu thereof, the Investment Company shall provide camera-ready
film or computer diskettes containing the Investment Company's prospectus and
Statement of Additional Information and such other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for
the Investment Company is amended during the year) to have the prospectus for
the Contracts and the Investment Company's prospectus printed together in one
document, and to have the Statement of Additional Information for the
Investment Company and the Statement of Additional Information for the
Contracts printed together in one document. Alternatively, the Company may
print the Investment Company's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following
three sentences, all expenses of printing and distributing Investment Company
prospectuses and Statements of Additional Information distributed by the
Company shall be the expense of the Company. For Prospectuses and Statement
of Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or
the 1940 Act, the cost of printing shall be borne by the Investment Company.
If the Company chooses to receive camera-ready film or computer diskettes in
lieu of receiving printed copies of the Investment Company's prospectus, the
Investment Company will reimburse the Company in an amount equal to the
product of A and B where A is the number of such prospectuses distributed to
owners of the Contracts, and B is the Investment Company's per unit cost of
typesetting and printing the Invstment Company's
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prospectus. The same procedures shall be followed with respect to the
Investment Company's Statement of Additional Information.
The Company agrees to provide the Investment Company or its designee with
such information as may be reasonably requested by the Investment Company to
assure that the Investment Company's expenses do not include the cost of
printing any prospectuses or Statements of Additional Information other than
those actually distributed to existing owners of the Contracts.
3.2 The Investment Company's prospectus shall state that the Statement of
Additional Information for the Investment Company is available from the
Underwriter or the Company (or in the Fund's discretion, the Prospectus shall
state that such Statement is available from the Investment Company).
3.3 The Investment Company, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other required
communications (except for prospectuses and Statement of Additional Information,
which are covered in Section 3.1) to shareholders in such quantity as the
Company shall reasonably require for distributing to Contract owners.
3.4 The Company will provide pass-through voting privileges to all Contract
owners to the extent that and so long as the SEC continues to interpret the
Investment Company Act of 1940 as requiring pass-through voting privileges for
Contract owners. Accordingly, the Company, where applicable, will vote shares
of the Fund held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Contract owners. The Company will be
responsible for assuring that each of its separate accounts that participates in
the Investment Company calculates voting privileges in a manner consistent with
other participating insurance companies. The Company will vote shares for which
it has not received timely voting instructions, as well as shares it owns, in
the same proportion as it votes those shares for which it has received voting
instructions.
3.5 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the
Investment Company Act of 1940 or the rules thereunder with respect to mixed and
shared funding on terms and conditions materially different from any exemptions
granted in the Investment Company's mixed and shared funding exemptive order,
then the Investment Company, and/or the Company, as appropriate, shall take such
steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such Rules are applicable.
3.6 The Investment Company will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Investment Company will
either provide for annual or special meetings or comply with the requirements of
Section 16(c) of the 1940 Act (although the Investment Company is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Investment Company 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.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee, each piece of sales literature or other
promotional material, or component thereof, in which the Investment Company,
the Adviser, or the Underwriter is named, at least fifteen Business Days
prior to its use. No such material shall be used if the Investment Company
or its designee object to such use within fifteen Business Days after receipt
of such material. Once any such material has been so furnished to the
Investment Company or its designee and fifteen Business days have elapsed,
such materials need not again be so furnished absent any subsequent changes
to such material that affect the materials' discussion or presentation
relating to the Investment Company, its advisor, the Underwriter, or any of
their affiliates (other than the Company or persons that are deemed
affiliates only by virtue of being controlled by the Company). In
particular, materials that have been changed merely to update performance or
financial information need not be so furnished.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Investment Company or concerning the Investment
Company in connection with the sale of the Contracts other than the information
or representations contained in the registration statement or prospectus for the
Investment Company shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy statements for
the Investment Company, or in sales literature or other promotional material
approved by the Investment Company or its designee or by the Underwriter, except
with the permission of the Investment Company or the Underwriter or the designee
of either.
4.3 The Investment Company, the Underwriter, or their designees shall furnish,
or shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material, or component thereof, in which
the Company or its separate Accounts are named at least fifteen Business Days
prior to its use. No such material shall be used if the Company or its designee
objects to such use within fifteen Business Days after receipt of such material.
4.4 The Investment Company and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus or offering materials for the
Contracts, as such may be amended or supplemented from time to time, or in
published reports for each Account which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company.
4.5 The Investment Company will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Investment Company or its
shares, contemporaneously with the filing of such document with the Securities
and Exchange Commission or other regulatory authorities.
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4.6 The Company will provide to the Investment Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities. In the case of unregistered
Contracts, in lieu of providing prospectuses and Statements of Additional
Information, the Company shall provide the Investment Company with one complete
copy of the offering materials for the Contracts.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, electronic media, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that Investment Company has received a "mixed and
shared funding "exemptive order from the SEC granting relief from various
provisions of the Investment Company Act of 1940 and the rules thereunder to the
extent necessary to permit Investment Company shares to be sold to and held by
Variable Insurance Products separate accounts of both affiliated and
unaffiliated participating insurance companies. The exemptive order requires
the Investment Company and each participating insurance company to comply with
conditions and undertakings substantially as provided in this Article V. The
Investment Company will not enter into a participation agreement with any other
participating insurance company unless it imposes the same conditions and
undertakings as are imposed on the Company.
5.2 The Investment Company's Board of Trustees ("Board") will monitor the
Investment Company for the existence of any material irreconcilable conflict
between the interests of Contract owners of all separate accounts investing in
the Investment Company. An irreconcilable material conflict may arise for a
variety of reasons, which may include: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of the Investment Company
are being managed; (e) a difference in voting instructions given by Contract
owners; and (f) a decision by a participating insurance company to disregard the
voting instructions of Contract owners.
5.3 The Company will report any potential or existing conflicts to the
Investment Company's Board. The Company will be responsible for assisting the
Board in carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to
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consider any issues raised. The responsibility includes, but is not limited to,
an obligation by the Company to inform the Board whenever it has determined to
disregard Contract owner voting instructions. These responsibilities of the
Company will be carried out with a view only to the interests of the Contract
owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting the Company,
then the Company, at its expense and to the extent reasonably practicable (as
determined by a majority of the Board's disinterested Trustees), will take any
steps necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the separate
accounts from the Investment Company or any Fund thereof and reinvesting those
assets in a different investment medium, which may include another Fund of the
Investment Company, or another investment company; (b) submitting the question
as to whether such segregation should be implemented to a vote of all affected
Contract owners and as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity or variable life insurance contract owners of one
or more participating insurance companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (c) establishing a new registered management investment
company (or series thereof) or managed separate account. If a material
irreconcilable conflict arises because of the Company's decision to disregard
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, the Company may be required at the
election of the Investment Company, to withdraw its separate accounts'
investment in the Investment Company, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial action
shall be carried out with a view only to the interests of the Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the Investment Company or any investment adviser of the Investment Company be
required to establish a new funding medium for any Contract. Further, the
Company shall not be required by this Section 5.4 to establish a new funding
medium for any Contract if any offer to do so has been declined by a vote of a
majority of Contract owners materially and adversely affected by the
irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to the
Company.
5.6 No less than annually, the Company shall submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
ARTICLE VI. FEES AND EXPENSES
6.1 The Investment Company and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Investment
Company or any Fund adopts and implements a plan pursuant to Rule l2b-1 to
finance distribution expenses, then the Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing and such payments will be made out of
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existing fees otherwise payable to the Underwriter, past profits of the
Underwriter, or other resources available to the Underwriter. No such
payments shall be made directly by the Investment Company. Currently, no such
payments are contemplated.
6.2 All expenses incident to performance by the Investment Company under this
Agreement shall be paid by the Investment Company. The Investment Company shall
ensure that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Investment Company, in accordance with applicable state laws
prior to their sale. The Investment Company shall bear the expenses for the
cost of registration and qualification of the Investment Company's shares,
preparation and filing of the Investment Company's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes and fees on the issuance or transfer of the Investment Company's
shares.
6.3 The Company shall bear the expenses of distributing the Investment
Company's prospectus, proxy materials, and reports to owners of Contracts issued
by the Company.
ARTICLE VII. DIVERSIFICATION
7.1 The Investment Company will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Investment
Company will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Investment
Company and each member of the Board and officers and each person, if any, who
controls the Investment Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or action in respect thereof)
or settlements are related to the Company's sale or acquisition of the
Investment Company's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in any Registration Statement,
prospectus or other offering materials for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or
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necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Investment Company for use in any Registration Statement or prospectus
for the Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
Investment Company's shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature of the Investment Company not supplied by the
Company, or persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or distribution of the
Contracts or Investment Company shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus, or sales
literature of the Investment Company or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon information
furnished to the Investment Company by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of a result from any material breach of any representation
or warranty made by the Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the
Investment Company, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall
11
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Investment Company shares or the Contracts or the
operation of the Investment Company.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls or is
controlled by the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
expenses (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Investment
Company's shares or the Contracts and;
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
prospectus or sales literature of the Investment Company (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Investment Company by or on
behalf of the Company for use in the Registration Statement or prospectus
for the Investment Company or in the sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Investment Company shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in any Registration Statement,
prospectus, other offering materials or sales literature for the Contracts
not supplied by the Underwriter or persons under its control) or wrongful
conduct of the Investment Company, Adviser, or Underwriter or persons under
their control, with respect to the sale or distribution of the Contracts or
Investment Company shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement, prospectus, other
offering materials or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Investment Company; or
12
(iv) arise as a result of any failure by the Investment Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise,
to comply with the diversification requirements specified in Article VII of
this Agreement); or
(v) arise out of or result from any material breach of any representation
or warranty made by the Underwriter in this Agreement or arise out of or
result from any other material breach of this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or each Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of any Account.
8.3 INDEMNIFICATION BY THE INVESTMENT COMPANY
8.3(a). The Investment Company agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls or is controlled by the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
8.3) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Investment Company) or
litigation expenses (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims,
13
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Investment Company
and:
(i) arise as a result of any failure by the Investment Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VII of this Agreement); or
(ii) arise out of or result from any material breach of any representation
or warranty made by the Investment Company in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Investment Company, as limited by and in accordance with the provisions of
Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Investment Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's will misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Investment Company, the Underwriter or any Account, which ever
is applicable.
8.3(c). The Investment Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Investment Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Investment
Company of any such claim shall not relieve the Investment Company from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Investment
Company will be entitled to participate, at its own expense, in the defense
thereof. The Investment Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Investment Company to such party of the Investment Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Investment
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Investment Company of the commencement of any litigation or proceeding against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, with respect to the operation
of any Account, or the sale or acquisition of shares of the Investment Company.
14
ARTICLE IX. APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Washington.
9.2 To the extent they are applicable, this Agreement shall be subject to the
provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and
rulings thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant and the terms
hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION OF AGREEMENT
10.1 This Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any fund based upon the Company's
determination that shares of such Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event any of the Fund's
shares are not registered, issued, or sold materially in accordance with
applicable state or federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or to be issued by the
Company; or
(d) Termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event that such Fund ceases
to qualify as a Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company reasonably believes
that the Investment Company may fail to so qualify; or
(e) termination by the Company by written notice to the Investment Company
and the Underwriter with respect to any Fund in the event that such Fund fails
to meet the diversification requirements specified in Article VII hereof; or
(f) termination by either the Investment Company or the Underwriter by
written notice to the Company, if either one or both of the Investment Company
or the Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company or its affiliated companies has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(g) termination by the Company by written notice to the Investment Company
and the Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Investment Company or the Underwriter
has suffered a material adverse change in its
15
business, operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity.
10.2 Notwithstanding any termination of this Agreement, the Investment Company
and the Underwriter shall at the option of the Company, continue to make
available additional shares of the Investment Company 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 shall be permitted to reallocate investment in the Investment Company,
redeem investments in the Investment Company, or invest in the Investment
Company upon the making of additional purchase payments under the Existing
Contracts.
10.3 The Company shall not redeem Investment Company shares attributable to the
Contracts (as opposed to Investment Company shares attributable to the Company's
assets held in any of the Accounts) except (i) as necessary to implement
Contract Owner initiated transactions, or (ii) as required by state or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request, the
Company will promptly furnish to the Investment Company and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Investment Company and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Existing Contract Owners from allocating payments
to a Fund that was otherwise available under the Contracts without first giving
the Investment Company or the Underwriter sixty (60) days notice of its
intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Investment Company:
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇, Esq.
If to the Company:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: _________________________
If to the Underwriter:
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇, Esq.
16
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Investment Company must look solely to the
property of the Investment Company for the enforcement of any claims against the
investment Company as neither the Board, officers, agents or shareholders assume
any personal liability for obligations entered into on behalf of the Investment
Company.
12.2 Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the owners
of the Contracts and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement,
shall not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain
without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5 If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Underwriter may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement.
17
12.9 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee copies of the following reports:
(a) the Company's annual statement prepared under statutory accounting
principles, as soon as practical and in any event within 90 days after the end
of each fiscal year;
(b) the Company's quarterly statement (statutory), as soon as practical
and in any event within 45 days after the end of each quarterly period; and
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders or policyholders, as soon as practical after the
delivery thereof; and
12.10 The Master Trust Agreement dated 11 July 1996, as amended from time to
time, establishing the Investment Company, which is hereby referred to and a
copy of which is on file with the Secretary of The Commonwealth of
Massachusetts, provides that the name ▇▇▇▇▇▇▇ Insurance Funds means the Trustees
from time to time serving (as Trustees but not personally) under said Master
Trust Agreement. It is expressly acknowledged and agreed that the obligations
of the Investment Company hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Investment Company,
personally, but shall bind only the trust property of the Investment Company as
provided in its Master Trust Agreement. The execution and delivery of this
Agreement have been authorized by the Trustees of the Investment Company and
signed by the President of the Investment Company, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Investment Company as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed in its name and on behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date first written above.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
ATTEST: BY:
---------------------------------------- ------------------------------
Secretary Title:
▇▇▇▇▇▇▇ INSURANCE FUNDS
ATTEST: BY:
---------------------------------------- ------------------------------
Secretary President
▇▇▇▇▇▇▇ FUND DISTRIBUTORS,
INC.
18
ATTEST: BY:
---------------------------------------- ------------------------------
Secretary President
19
SCHEDULE A
ACCOUNTS
Name of Account Date of Resolution of Company's
Board that established the Account
NML Variable Annuity Account A February 14, 1968
NML Variable Annuity Account B February 14, 1968
NML Variable Annuity Account C July 22, 1970
Northwestern Mutual Variable Life Account November 23, 1983
20
SCHEDULE B
CONTRACTS
1. Contract Form Numbers:
Variable Life:
RR.VJL.(1298) RR Series Variable Joint Life
RR.VEL.(0398) RR Series Variable Executive Life
QQ.VCL QQ Series Variable CompLife
MM 15 MM Series Variable Whole Life
MM 16 MM Series Variable Single Premium Life
MM 17 MM Series Variable Extraordinary Life
Individual Variable Annuity:
QQV.ACCT.A QQV.ACCT.B QQ Series VAs
MM V 1A MM V 1B MM V 1 MM Series VAs
LL V 1A LL V 1B LL V 1 LL Series VAs
KK V 1A KK V 1B KK V 1 KK Series VAs
JJ V 1A JJ V 1B JJ Series VAs
Group Variable Annuity
NPV.1C NN Series GPA
MP V 1C MM Series GPA
LL V 1C LL Series GPA
KK V 1C KK Series GPA
JJ V 1C JJ Series GPA
2. Funds currently available to act as investment vehicles for the
above-listed contracts:
▇▇▇▇▇▇▇ Insurance Funds: Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
▇▇▇▇▇▇▇ Real Estate Securities Fund
HOL03 116508
S-6's
21