Exhibit 8(b)(i)
FUND PARTICIPATION AGREEMENT
SEPARATE ACCOUNT NO. 2
THIS FUND PARTICIPATION AGREEMENT ("Agreement") is made and entered into
this 30th day of December, 1988, by and among Mutual of America Life Insurance
Company, a mutual life insurance company licensed under New York insurance law
("Mutual"), Investors Research Corporation, a Delaware corporation ("IRC") and
TCI Variable Portfolios, Inc., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, Mutual has established Separate Account No. 2 (the "Account"), a
registered unit investment trust which offers to the public tax sheltered
annuity contracts (the "Contracts");
WHEREAS, the Contracts provide that the net amounts received by Mutual
from Contract owners shall be invested in specified investment companies which
are selected by Contract owners to act as underlying investment media; and
WHEREAS, Mutual, IRC and the Fund desire that shares of the Fund be made
available to serve as underlying investment media for the Contracts to be
offered by Mutual.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, conditions, representations and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. Establishment of Account; Availability of Funds.
Mutual hereby represents that it has established the Account, a separate
account under New York law, and has registered such Account as a unit investment
trust under the Investment Company Act of 1940 (the "Act") to serve as an
investment vehicle for the Contracts. Mutual represents that net amounts
received by it under the Contracts are invested by the Account in selected
investment companies designated by Contract owners.
Subject to the terms and conditions contained herein, Mutual, IRC and the
Fund agree to make shares of the Fund available as underlying investment media
for owners of the Contracts. The parties agree that selection of a particular
investment company, including the Fund, as underlying investment media of a
Contract will be made by the Contract owner, who may change such selection from
time to time in accordance with the terms of the Contract owner's applicable
Contract.
-1-
SECTION 2. Marketing and Promotion.
Mutual will use its best efforts to market and promote its Contracts.
Mutual will give the same emphasis and promotion to shares of the Fund as is
given to any other underlying investment media available to Contract owners.
In marketing its Contracts, Mutual will comply with all applicable State
and Federal laws. Mutual. and its agents shall make no representations or
warranties concerning the Fund or Fund shares except those contained in the then
current prospectus of the Fund and in the Fund's current printed sales
literature. Advertising and sales literature describing or concerning the Fund
which is prepared by Mutual or its agents for use in marketing its Contracts
will be submitted to the Fund for approval before such material is released to
the public, agents or brokers or is submitted to the Securities and Exchange
Commission ("SEC"), National Association of Securities Dealers, Inc. ("NASD") or
other regulatory body for review. Mutual shall be responsible for compliance
with any State or Federal filing or review requirements concerning advertising
and sales literature.
SECTION 3. Pricing Information; Orders.
IRC or any other agency specified by it will provide to Mutual closing net
asset value, dividend, and capital gain information as soon as practicable after
the close of trading on each business day. Mutual will use this Fund data to
calculate unit values, which will in turn be used to process that same business
day's Contract owner accounts. Contract owner account processing will be done
the same evening, and any orders will be placed the morning of the following
business day. Orders will be sent directly to the Fund and payment for purchases
will be wired to a custodial account designated by the Fund, so as to coincide
with the order for Fund shares.
The Fund hereby appoints Mutual as its agent for the limited purpose of
accepting orders for Fund shares for the Contracts. The Fund will execute orders
at the net asset value as determined as of the close of trading on the day of
receipt of such orders by Mutual, acting as agent. However, any orders received
by Mutual, acting as agent, after the close of the New York Stock Exchange will
be executed at the net asset value determined at the end of the following
business day. Dividends and capital gains distributions shall be reinvested in
additional shares at the ex-date net asset value.
SECTION 4. Administration of Accounts.
The performance of all administrative services relating to the Contract
owner accounts shall be the sole responsibility of Mutual and the Account and
shall not be the responsibility of IRC or the Fund. The Fund and Mutual
acknowledge that the Account will be the sole shareholder of Fund shares issued
pursuant to the Contracts.
IRC recognizes that it will derive a savings of administrative expense,
such as reductions in processing, postage and shareholder
-2-
communication expense, by virtue of having a single account in the name of the
Account rather than multiple accounts in the names of the Contract owners. In
consideration of the administrative savings resulting from such arrangement, IRC
agrees to make a monthly payment to Mutual for servicing the Contract owner
accounts which have allocated purchase payments to the Fund. The amount of such
payments, and the manner in which such payments shall be made to Mutual, are set
forth on Exhibit A, a copy of which is attached hereto and incorporated herein
by reference. The parties understand that IRC customarily pays, out of its total
investment management fee from the Fund, another affiliated corporation for the
type of administrative services to be provided by Mutual. The parties agree that
IRC's payments to Mutual, like IRC's payments to its affiliated corporation, are
for administrative services only and do not constitute payment in any manner for
investment advisory services or Mutual's sales or marketing expenses in
promoting the Contracts.
Mutual will distribute all proxy materials furnished by the Fund and will
vote Fund shares in accordance with instructions received from the Contract
owners of such Fund shares. Mutual shall vote the Fund shares for which no
instructions have been received in the same proportion as Fund shares for which
instructions have been received from Contract owners. Mutual and its agents will
in no way recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Fund shares held for such Contract owners.
SECTION 5. Expenses.
All expenses incident to the performance by IRC or the Fund of their
obligations under this Agreement shall be paid by IRC or the Fund, respectively.
IRC shall pay the cost of registration of Fund shares with the SEC. The Fund
shall distribute to Mutual its proxy materials, periodic Fund reports to
shareholders and other material the Fund may require to be sent to Contract
owners. IRC shall pay the cost of qualifying Fund shares in states where such
qualification is required. The Fund shall provide Mutual with a reasonable
quantity of the Fund's prospectus and sales literature to be used in connection
with the transactions contemplated by this Agreement. If, however, Mutual elects
to print the Fund's prospectus with the Account's prospectus as a single
document, the Fund agrees to pay that portion of Mutual's printing costs which
directly relates to the printing of the Fund's prospectus.
SECTION 6. Effective Date; Termination.
This Agreement shall be effective on the date set forth in the first
paragraph hereof, and shall terminate as provided below in this Section 6.
With respect to the sale and issuance of new Contracts only (or, at the
option of Mutual, with respect to both new and existing contracts), this
Agreement shall terminate:
-3-
a. at the option of Mutual, the Fund or IRC upon six months' advance
written notice to the others;
b. at the option of Mutual, if Fund shares are not available for any
reason to meet the requirements of Contracts as determined by
Mutual. Reasonable advance notice of election to terminate shall be
furnished by Mutual;
c. at the option of Mutual, the Fund or IRC, upon institution of formal
proceedings against the broker-dealer or broker-dealers marketing
the Contracts, the Account, Mutual, IRC or the Fund by the NASD, the
SEC or any other regulatory body;
d. upon assignment of this Agreement unless such assignment is made
with the written consent of each of the other parties; or
e. in the event Fund shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Fund
shares as an underlying investment medium of Contracts issued or to
be issued by Mutual.
Termination as the result of any cause listed in paragraphs (a) through
(e) above shall not affect the Fund's obligation to furnish Fund shares for
Contracts then in force for which the shares of the Fund are then serving as
underlying investment medium, unless such action is proscribed by law, the SEC
or other regulatory body, or unless Mutual, at its option, specifies that Fund
shares shall no longer be made available for existing Contracts.
SECTION 7. Indemnification.
a. Mutual agrees to indemnify and hold harmless IRC, the Fund and each of
their respective directors, officers, employee, agents and each person, if any,
who controls IRC or the Fund within the meaning of the Act against any losses,
claims, damages or liabilities to which IRC or the Fund or any such director,
officer, employee, agent or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) 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 Account 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; and Mutual will reimburse any legal or other expenses reasonably
incurred by IRC or the Fund or any such director, officer, employee, agent or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Mutual will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus or sales
literature in conformity with written information furnished to Mutual by IRC or
the Fund specifically for use therein. This indemnity will be in addition to any
liability which Mutual may otherwise have.
-4-
b. IRC agrees to indemnify and hold harmless Mutual and each of its
directors, officers, employees, agents and each person, if any, who controls
Mutual within the meaning of the Act against any losses, claims, damages or
liabilities to which Mutual or any such director, officer, employee, agent or
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
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 Fund 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; and IRC will
reimburse any legal or other expenses reasonably incurred by Mutual or any such
director, officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that IRC will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or omission or alleged omission made in such Registration
Statement or prospectus or sales literature in conformity with written
information furnished to IRC and the Fund by Mutual specifically for use
therein. This indemnity will be in addition to any liability which IRC may
otherwise have.
c. Promptly after receipt by an indemnified party under this paragraph of
notice of the commencement of an action or claim, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
upon notice to the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to such
indemnified party, and shall be responsible for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
SECTION 8. Notice.
Any notice required by this Agreement shall be given orally, by telegram
or by wire and shall immediately be confirmed by letter to:
Mutual of America Life Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X Xxxxx Esq.
(000) 000-0000
Investors Research Corporation
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
(000) 000-0000
-5-
TCI Variable Portfolios, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
(000) 000-0000
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives on the day and date first above written.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
December 30, 1988 BY /s/ Xxxxxx X. Xxxxxxxx, III
-------------------- ---------------------------------------
Date Name: Xxxxxx X. Xxxxxxxx, III
Title: President
INVESTORS RESEARCH CORPORATION
December 29, 1988 BY /s/ Xxxxxx Xxxxxxx
-------------------- ---------------------------------------
Date Name: Xxxxxx Xxxxxxx
Title: Executive Vice President
TCI VARIABLE PORTFOLIOS, INC.
December 29, 1988 BY /s/ Xxxxxxx X. Xxxxx
-------------------- ---------------------------------------
Date Name: Xxxxxxx X. Xxxxx
Title: Vice President
-6-
EXHIBIT A
Pursuant to Section 4 of the accompanying Fund Participation Agreement,
IRC shall reimburse the expenses of Mutual in administering Contract owner
accounts as follows:
1. Commencing with the month in which the aggregate market value of
investments by the Account (on behalf of the Contract owners) in the
Fund exceeds $10 million, IRC shall pay to Mutual $.50 per month per
Contract owner who has allocated purchase payments under his
Contract to the Fund. No payment obligation shall arise until the
Account's aggregate investment in the Fund reaches $10 million, and
such payment obligation, once commenced, shall be suspended with
respect to any month during which Mutual's average aggregate
investment drops below $10 million. The average aggregate amount
invested by the Account in the Fund over a one month period shall be
computed by totalling the Account's aggregate investment on each
business day during the month and dividing by the total number of
business days during such month.
2. The number of Contract owners for which IRC is billed will be based
on the average number of Contract owners allocating purchase
payments to the Fund during a month. This average will be determined
by adding the number of Contract owners allocating purchase payments
to the Fund at the beginning of the month and the number of Contract
owners allocating purchase payments to the Fund at month-end, and
dividing the total by two.
3. Notwithstanding paragraphs 1 and 2 of this Exhibit A, the maximum
payment which IRC shall be obligated to make to Mutual with respect
to any month shall be 1.667 basis points (0.01667%) of the average
aggregate amount invested by the Account in the Fund over such
month. The average aggregate amount invested by the Account in the
Fund over a one month period shall be computed by totalling the
Account's aggregate investment on each business day during the month
and dividing by the total number of business days during such month.
4. Mutual will xxxx IRC quarterly for any reimbursement which becomes
payable for each of the three months in that quarter. The xxxx will
be payable on receipt. The xxxx will be mailed after the close of
each calendar quarter, and will show by month the amount payable by
IRC. Each xxxx will be accompanied by supporting data which shows
Mutual's average aggregate investment in the Fund for each month and
the average number of Contract owners allocating purchase payments
to the Fund during each month.
-7-
