AMENDMENT
TO
FUND PARTICIPATION AGREEMENT
This amendment (the "Amendment") is made and entered into as of September 3,
2002 by and among Neuberger Berman Advisers Management Trust ("Trust"),
Neuberger Berman Management Inc. ("NBMI"), and Principal Life Insurance Company
("Life Company") (Trust, NBMI, and Life Company collectively, the "Parties") in
order to modify that certain Fund Participation Agreement entered into by the
Parties as of May 1, 2002 (the "Agreement").
The Parties agree to amend the Agreement as follows:
1. The following is added to Article I of the Agreement:
The Parties intend that communications, processing and settlement
of purchase and redemption transactions for Shares (collectively, "Share
transactions") shall occur via the Fund/SERV and Networking systems of the
National Securities Clearing Corporation (hereinafter, "NSCC"). NBMI
represents and warrants that it: (a) has entered into an agreement with
NSCC, (b) has met and will continue to meet all of the requirements to
participate in Fund/SERV and Networking, and (c) intends to remain at all
times in compliance with the then-current rules and procedures of NSCC,
all to the extent necessary or appropriate to facilitate such
communications, processing, and settlement of Share transactions. LIFE
COMPANY represents that one or more of its affiliates (I) has entered into
an agreement with NSCC and (2) has met and will continue to meet all of
the requirements to participate in Fund/SERV and Networking, and (3)
intends to remain at all times in compliance with the then-currrent rules
and procedures of NSCC, all to the extent necessary or appropriate to
facilitate such communications, processing, and settlement of Share
transactions. NBMI or Trust agrees to provide Life Company or such other
entity as Life Company directs with account positions and activity data
relating to Share transactions via Networking. Life Company shall pay for
Shares in the manner and within the time as required by the Fund/SERV and
Networking rules.
For purposes of this Agreement, "Fund/SERV" shall mean NSCC's
system for automated, centralized processing of mutual fund purchase and
redemption orders, settlement, and account registration; "Networking"
shall mean NSCC's (Level Zero) system that allows mutual funds and life
insurance companies to exchange account level information electronically.
In all cases, communications, processing and settlement of Share
transactions shall be done in a manner consistent with applicable law.
In the event that any Party is prohibited or unable to communicate,
process or settle Share transactions via Fund/SERV or Networking, such
Party shall provide prompt notice to the other Parties. After all Parties
have been notified, the original provisions contained in the Agreement
regarding process or settlement of Share transactions shall apply.
2. Appendix B of this Agreement is also hereby amended to include the new
Benefit Variable Universal Life (BVUL) product.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect.
Acknowledged and agreed by:
NEUBERGER BERMAN
ADVISERS
MANAGEMENT TRUST
By: /s/Peter E. Sundman
Name: Peter E. Sundman
Title: Chairman and CEO
NEUBERGER BERMAN
MANAGEMENT INC.
By: /s/Peter E. Sundman
Name: Peter E. Sundman
Title: President
PRINCIPAL LIFE
INSURANCE COMPANY
By: /s/Sara Wiener
Name: Sara Wiener
Title: Assistant Director
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of the 1st day of May, 2002, by and between
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), NEUBERGER BERMAN
MANAGEMENT INC. ("NB MANAGEMENT"), a New York corporation, and Principal Life
Insurance Company ("LIFE COMPANY"), a life insurance company organized under the
laws of the State of Iowa, on behalf of one or more Separate Accounts.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended ("40 Act") as an
open-end, diversified management investment company; and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies") and also offers its
shares to certain qualified pension and retirement plans; and
WHEREAS. TRUST has received an order from the SEC. dated May 5,1995 (File
No. 812-9164), granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the '40 Act, and Rules 6e-2(b)( 15) and 6e-3(T)(b)(1 5) thereunder, to the
extent necessary to permit shares of the Portfolios of the TRUST to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, NB MANAGEMENT is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended; and
WHEREAS, NB MANAGEMENT is the investment manager and administrator of the
Portfolios of the Tnust and distributor of the shares of each Portfolio of
TRUST; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY.
TRUST, and NB MANAGEMENT agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts as listed in
Appendix B of LIFE COMPANY shares of the selected Portfolios for investment of
proceeds from Variable Contracts allocated to the designated Separate Accounts,
such shares to be offered as provided in TRUST's Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from LIFE
COMPANY and receipt by such designee shall constitute receipt by TRUST; provided
that TRUST receives notice of such order by 9:30 a.m. New York 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 TRUST calculates its net asset
value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any full or
fractional shares of TRUST held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption. For purposes of this Section 1.3, LIFE
COMPANY shall be the designee of TRUST for receipt of requests for redemption
from LIFE COMPANY and receipt by such designee shall constitute receipt by
TRUST; provided that TRUST receives notice of such request for redemption by
9:30 a.m. New York time on the next following Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to LIFE
COMPANY of any income dividends or capital gain distributions payable on the
shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive all such
income dividends and capital gain distributions as are payable on a Portfolio's
shares in additional shares of the Portfolio. TRUST shall notify LIFE COMPANY of
the number of shares so issued as payment of such dividends and distributions.
LIFE COMPANY reserves the right to revoke this election by written notice to the
Trust.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error (determined in accordance with SEC guidelines) in the calculation of net
asset value per share, dividend or capital gain information shall be reported
promptly upon discovery to LIFE COMPANY. In the event that such material error
is the result of the Trust's (or its designated agent's) negligence, the Trust
shall also be responsible for any of LIFE COMPANY's administrative or other
costs or losses incurred in correcting Variable Contract Owner accounts.
1.6 At the end of each Business Day, LIFE COMPANY shall use the information
described in Section 1.5 to calculate Separate Account unit values for the day.
Using these unit values, LIFE COMPANY shall process each such business day's
Separate Account transactions based on requests and premiums received by it by
4:00 p.m. New York time to determine the net dollar amount of TRUST shares which
shall be purchased or redeemed at that day's closing net asset value per share.
The net share purchase or redemption orders so determined shall be transmitted
to TRUST by LIFE COMPANY by 9:30 a.m. New York Time on the Business Day next
following LIFE COMPANY's receipt of such requests and premiums in accordance
with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the net purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is actually transmitted by
LIFE COMPANY by 3:00 p.m. New York Time. If LIFE COMPANY's order requests a net
redemption resulting in a payment of redemption proceeds to LIFE COMPANY, TRUST
shall wire the redemption proceeds to LIFE COMPANY on the day the order is
actually received by TRUST by 3:00 p.m. New York Time unless doing so would
require TRUST to dispose of portfolio securities or otherwise incur additional
costs, but in such event, proceeds shall be wired to LIFE COMPANY within seven
days and TRUST shall notify the person designated in writing by LIFE COMPANY as
the recipient for such notice of such delay by 3:00 p.m. New York Time the same
business day that LIFE COMPANY transmits the redemption order to TRUST. If LIFE
COMPANY's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another fund administered or
distributed by NB MANAGEMENT, TRUST shall so apply such proceeds on the same
Business Day that LIFE COMPANY transmits such order to TRUST.
1.8 Notwithstanding Section 1.7, TRUST reserves the right to suspend the
right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 40 Act and any rules thereunder.
1.9 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold directly
to the general public.
1.10 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board of Trustees of TRUST, acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
deemed necessary and in the best interests of the shareholders of such
Portfolios.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of Iowa and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws, and that Princor Financial Services Corporation, the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934.
2.2 LIFE COMPANY represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of the Trust as required to be delivered under applicable
federal or state law and interpretations of federal and state securities
regulators thereunder in connection with the offer, sale or acquisition of the
Variable Contracts.
2.6 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST shall amend its registration statement under the '33 Act and
the '40 Act from time to time as required in order to effect the continuous
offering of its shares. TRUST shall register and qualify its shares for sale in
accordance with the laws of the various states to the extent necessary to
perform its obligations under this Agreement.
2.7 TRUST represents and warrants that each Portfolio currently complies,
and will continue to comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder, including
without limitation Treasury Regulation 1.817-5 (or any successor or similar
provisions), and will notify LIFE COMPANY immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so comply
and will immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by Regulation
1.8 17-5.
2.8 TRUST represents and warrants that each Portfolio invested in by the
Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will maintain such qualification under
Subchapter M (or any successor or similar provisions) and will notify LIFE
COMPANY immediately upon having a reasonable basis for believing any Portfolio
has ceased to so qualify or might not so qualify in the future.
2.9 The Trust represents that to the extent that it decides to finance
distribution expenses pursuant to Rule I 2b- I under the 1940 Act, it will have
a board of trustees, a majority of whom are not interested persons of the Trust,
to formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.10 The Trust represents that the Trust's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Delaware and the Trust represents that its respective operations are
and shall at all times remain in material compliance with the laws of the State
of Delaware to the extent required to perform this Agreement.
2.11 The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
2.12 NB Management represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. NB
Management further represents that it will sell and distribute the Trust's share
in accordance with the laws of the State of Delaware and any applicable state
and federal securities law.
2.13 The Trust represents and warrants that its directors, officers,
employees dealing with the money and/or securities of the Trust are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less than the minimum
coverage as required by Rule I 7g-( 1) under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid blanket fidelity bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.14 NB Management represents and warrants that it is registered as an
investment adviser and shall remain duly registered under all applicable federal
and state securities laws and that it shall perform its obligations for the
Trust in compliance in all material respects with the laws of the State of
Delaware and any applicable state and federal securities laws.
2.15 Each party represents and warrants that the execution and delivery
of this Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate, partnership or trust
action, as applicable, by such party, and, when so executed and delivered, this
Agreement will be the valid and binding obligation of such party enforceable in
accordance with its terms.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares.
3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual Portfolio) documents,
and any supplements thereto, to existing Variable Contract owners of LIFE
COMPANY (regardless of whether such documents are printed together with, or
separate from, the documents for other trusts in the Variable Contracts):
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials (including, but not limited to, the
proxy cards, notice and statement, as well as the costs
associated with tabulating votes).
LIFE COMPANY will submit any bills for printing, duplicating and/or
mailing costs, relating to the TRUST documents described above, to TRUST for
reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use its
best efforts to control these costs. LIFE COMPANY will provide TRUST on a
semi-annual basis, or more frequently as reasonably requested by TRUST, with a
current tabulation of the number of existing Variable
Contract owners of LIFE COMPANY whose Variable Contract values are invested in
TRUST. This tabulation will be sent to TRUST in the form of a letter signed by a
duly authorized officer of LIFE COMPANY attesting to the accuracy of the
information contained in the letter. If requested by LIFE COMPANY, the TRUST
shall provide such documentation (including a final copy of the TRUST's
prospectus as set in type or in camera-ready copy) and other assistance as is
reasonably necessary in order for LIFE COMPANY to print together in one document
the current prospectus for the Variable Contracts issued by LIFE COMPANY and the
current prospectus for the TRUST. Should LIFE COMPANY wish to print any of these
documents in a format different from that provided by TRUST, LIFE COMPANY shall
provide Trust with sixty (60) days' prior written notice and LIFE COMPANY shall
bear the cost associated with any format change.
3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:
(i) camera-ready copy of the current prospectus for printing
by the LIFE COMPANY;
(ii) a copy of the statement of additional information
suitable for duplication;
(iii) camera-ready copy of proxy material suitable for
printing; and
(iv) camera-ready copy of the annual and semi-annual reports
for printing by the LIFE COMPANY.
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS; PRIVACY
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST and
NB MANAGEMENT, each piece of sales literature or other promotional material in
which TRUST or NB MANAGEMENT is named, at least five (5) Business Days prior to
its intended use. No such material will be used if TRUST or NB MANAGEMENT
objects to its use in writing within five (5) Business Days after receipt of
such material.
4.2 TRUST and NB MANAGEMENT will furnish, or will cause to be furnished, to
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least five (5)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY objects to its use in writing within five (5) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of LIFE COMPANY or concerning LIFE COMPANY,
the Separate Accounts, or the Variable Contracts issued by LIFE COMPANY, other
than the information or representations contained in a registration statement or
prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by LIFE COMPANY or its designee, except with the written permission of
LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form
letters, seminar texts, or reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and any other
material constituting sales literature or advertising under National Association
of Securities Dealers, Inc. rules, the '40 Act or the '33 Act.
4.6 Subject to law and regulatory authority, each party hereto shall treat
as confidential all information pertaining to the owners of the Variable
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. Each party hereto shall be solely
responsible for the compliance of their officers, directors, employees, agents,
independent contractors, and any affiliated and non-affiliated third parties
with all applicable privacy-related laws and regulations including but not
limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this
Section 4.6 shall survive the termination of this Agreement.
Article V. POTENTIAL CONFLICTS
5.1 The Board of Trustees of TRUST (the "Board") will monitor TRUST for the
existence of any material irreconcilable conflict between the interests of the
Variable Contract owners of Participating Insurance Company Separate Accounts
investing in the TRUST. A material irreconcilable conflict may arise for a
variety of reasons, including: (a) state insurance regulatory authority action;
(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 TRUST are being managed; (e) a difference in voting
instructions given by variable annuity and variable life insurance contract
owners or by contract owners of different Participating Insurance Companies; or
(f) a decision by a Participating Insurance Company to disregard voting
instructions of Variable Contract owners.
5.2 LIFE COMPANY will report any anticipated or existing conflicts to the
Board. LIFE COMPANY will be responsible for assisting the Board in carrying out
its responsibilities under the Conditions set forth in the notice issued by the
SEC for the TRUST on April 12, 1995 (the "Notice") (Investment Company Act
Release No. 21003), by providing the Board with all
information reasonably necessary for it to consider any issues raised. This
responsibility includes, but is not limited to, an obligation by LIFE COMPANY to
inform the Board whenever Variable Contract owner voting instructions are
disregarded by LIFE COMPANY. These responsibilities will be carried out with a
view only to the interests of the Variable Contract owners.
5.3 If a majority of the Board or a majority of its disinterested trustees
determines that a material irreconcilable conflict exists, affecting the LIFE
COMPANY, LIFE COMPANY, at its expense and to the extent reasonably practicable
(as determined by a majority of disinterested trustees), will take steps
reasonably 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 TRUST or any Portfolio thereof and reinvesting those
assets in a different investment medium, which may include another Portfolio of
TRUST or another investment company or submitting the question as to whether
such segregation should be implemented to a vote of all affected Variable
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., Variable Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Variable Contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed separate
account. If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at the election of the TRUST, to withdraw its Separate
Account's investment in the TRUST, 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 Variable Contract
owners.
For the purposes of this Section 5.3, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the TRUST or NB MANAGEMENT (or any other investment adviser of the TRUST) be
required to establish a new funding medium for any Variable Contract. Further,
LIFE COMPANY shall not be required by this Section 5.3 to establish a new
funding medium for any Variable Contract if any offer to do so has been declined
by a vote of a majority of Variable Contract owners materially affected by the
irreconcilable material conflict.
5.4 The Board's determination of the existence of a material irreconcilable
conflict and its implications shall be made known promptly and in writing to
LIFE COMPANY.
5.5 No less than annually, LIFE COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out the obligations imposed upon it by these Conditions. Such
reports, materials, and data shall be submitted more frequently if deemed
appropriate by the Board.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-though voting privileges to all Variable
Contract owners so long as the SEC continues to interpret the '40 Act as
requiring pass-though voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of TRUST held in
its Separate Accounts in a manner consistent with voting instructions timely
received from its Variable Contract owners. LIFE COMPANY will be responsible for
assuring that each of its Separate Accounts that participates in TRUST
calculates voting privileges as follows. LIFE COMPANY shall vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as it votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Order, then
TRUST and/or LIFE 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.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify and
hold harmless TRUST and NB MANAGEMENT and each of their Trustees, directors,
officers, employees and agents and each person, if any, who controls TRUST or NB
MANAGEMENT within the meaning of Section 15 of the '33 Act (collectively, the
"Indemnified Parties" for purposes of this Article VII) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY, which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement, prospectus, or sales literature for the
Variable Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY by or on behalf of
TRUST for use in the registration statement, prospectus or sales
literature for the Variable Contracts or in the Variable
Contracts (or any amendment or supplement) or otherwise for use
in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or any of its directors,
officers, employees or agents, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment thereof
or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to TRUST for inclusion therein by or on behalf of LIFE
COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to substantially
provide the services and furnish the materials under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful 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 TRUST,
whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from LIFE COMPANY to such party of
LIFE COMPANY's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
LIFE COMPANY will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.4 Indemnification by NB MANAGEMENT. NB MANAGEMENT agrees to indemnify and
hold harmless LIFE COMPANY and each of its directors, officers, employees, and
agents and each person, if any, who controls LIFE COMPANY within the meaning of
Section 15 of the '33 Act (collectively, the "Indemnified Parties" for the
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of NB
MANAGEMENT which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or sales literature of TRUST
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to NB MANAGEMENT or
TRUST by or on behalf of LIFE COMPANY for use in the registration
statement or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by NB MANAGEMENT or persons under
its control) or wrongful conduct of TRUST or NB MANAGEMENT or
persons under their control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable Contracts,
or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY for inclusion therein
by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Portfolio(s) invested in
by the Separate Account to comply with the diversification
requirements of Section 817(h) of the Code; or (iii) a failure by
a Portfolio(s) invested in by the Separate Account to qualify as
a "regulated investment company" under Subchapter M of the Code;
or
(e) arise out of or result from any material breach of any
representation and/or warranty made by NB MANAGEMENT or TRUST in
this Agreement or arise out of or result from any other material
breach of this Agreement by NB MANAGEMENT or TRUST.
7.5 NB MANAGEMENT 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 LIFE
COMPANY.
7.6 NB MANAGEMENT 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 NB MANAGEMENT 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 NB MANAGEMENT of
any such claim shall not relieve NB MANAGEMENT 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, NB MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof. NB MANAGEMENT also shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from NB MANAGEMENT to such party of NB
MANAGEMENT's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and NB
MANAGEMENT will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.7 The provision of this Article VII shall survive the termination of this
Agreement.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to
by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by LIFE COMPANY. Prompt notice of election to
terminate shall be furnished by LIFE COMPANY, said termination to
be effective ten days after receipt of notice unless TRUST makes
available a sufficient number of shares to reasonably meet the
requirements of the Variable Contracts within said ten-day
period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST or NB MANAGEMENT by the SEC, the
National Association of Securities Dealers, Inc., or any other
regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in LIFE COMPANY's reasonable judgment,
materially impair TRUST's or NB MANAGEMENT's ability to meet and
perform their respective obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by LIFE
COMPANY with said termination to be effective upon receipt of
notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC. the National
Association of Securities Dealers, Inc., or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in TRUST's reasonable judgment, materially impair
LIFE COMPANY's ability to meet and perform its obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by TRUST with said termination to be effective upon
receipt of notice;
(e) At the option of LIFE COMPANY, in the event TRUST's shares are
not registered, issued or sold in accordance with applicable
state or federal law, or such law precludes the use of such
shares as the underlying investment medium of Variable Contracts
issued or to be issued by LIFE COMPANY. Termination shall be
effective immediately upon notice to TRUST;
(f) At the option of TRUST if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable,
under the Code, or if TRUST reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective
upon receipt of notice by LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of LIFE COMPANY within ten days after
written notice of such breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of TRUST within ten days after written
notice of such breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon
such occurrence without notice to LIFE COMPANY;
(j) At the option of LIFE COMPANY in the event that any Portfolio
ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if LIFE COMPANY reasonably believes that any
Portfolio may fail to so qualify. Termination shall be effective
immediately upon notice to the TRUST;
(k) At the option of LIFE COMPANY in the event that any Portfolio
fails to meet the diversification requirements specified in
Article II hereof or if LIFE COMPANY reasonably believes that any
Portfolio may fail to meet such diversification requirements.
Termination shall be effective immediately upon notice to the
TRUST;
(1) In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, TRUST, and NB MANAGEMENT, termination
shall be effective immediately upon such occurrence without
notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, TRUST shall, at the option of the LIFE COMPANY, continue to make
available additional TRUST shares, as provided below, for so long as LIFE
COMPANY desires pursuant to the terms and conditions of this Agreement, for all
Variable Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, if LIFE COMPANY so elects to make additional TRUST shares
available, the owners of the Existing Contracts or LIFE COMPANY, whichever shall
have legal authority to do so, shall be permitted to reallocate investments in
TRUST, redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, LIFE COMPANY, as promptly as
is practicable under the circumstances, shall notify TRUST and NB MANAGEMENT
whether LIFE COMPANY elects to continue to make TRUST shares available after
such termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts or invested directly), and LIFE COMPANY shall not prevent Variable
Contract owners from allocating payments to a Portfolio that was otherwise
available under the Variable Contracts, until thirty (30) days after the LIFE
COMPANY shall have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST or NB MANAGEMENT:
Neuberger Berman Management Inc.
605 Third Avenue
New York, NY 10158-0006
Attention: Ellen Metzger, General Counsel
If to LIFE COMPANY:
Principal Life Insurance Company
711 High Street
Des Moines, IA 50392-0300
Attention: Sarah Pitts, Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 The parties agree that the assets and liabilities of each Portfolio
are separate and distinct from the assets and liabilities of each other
Portfolio. No Portfolio shall be liable or shall be charged for any debt,
obligation or liability of any other Portfolio. No Trustee, officer or agent
shall be personally liable for such debt, obligation or liability of any
Portfolio.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. 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.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
NB MANAGEMENT and the LIFE COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Fund Participation Agreement as of the date and year first above
written.
NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST
By: /s/Brian Gaffney
Name: Brian Gaffney
Title: Vice President
PRINCIPAL LIFE INSURANCE
COMPANY, On Behalf Of One Or More
Separate Accounts
By: /s/David House
Name: David House
Title: Asst. Dir.
NEUBERGER BERMAN
MANAGEMENT INC.
By: Brian Gaffney
Name: Brian Gaffney
Title: Senior Vice President
Appendix A
Neuberger Berman Advisers Management Trust Portfolios
Balanced Portfolio
Growth Portfolio
Guardian Portfolio
International Portfolio
Limited Maturity Bond Portfolio
Liquid Asset Portfolio
Mid-Cap Growth Portfolio
Partners Portfolio
Socially Responsive Portfolio
Appendix B
ACCOUNTS OF THE LIFE COMPANY
1. PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
Established: July 17, 1970
SEC Registration Number: 811-02091
2. PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE
ACCOUNT
Established: November 2, 1987
SEC Registration Number: 811-05118