Exhibit (h)(ii)
PARTICIPATION AGREEMENT
Among
XXXXX VARIABLE ACCOUNT FUND, INC.
XXXXX DISTRIBUTORS, LLC.
and
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
THIS AGREEMENT, made and entered into this 29th day of June, 1999, by and
among THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. (hereinafter the "Insurance
Company"), a Delaware corporation, on its own behalf and on behalf of each
segregated asset account of the Insurance Company set forth on Schedule A hereto
as may be amended from time to time (each such account hereinafter referred to
as the "Account"), XXXXX VARIABLE ACCOUNT FUND, INC., a Maryland Corporation
(the "Company") and Xxxxx Distributors, LLC., a Colorado Limited Liability
Company ("Xxxxx Distributors").
WHEREAS, the Company engages in business as an open-end management
investment company and is available to act as the investment vehicle for
variable annuity and life insurance contracts to be offered by separate accounts
of insurance companies which have entered into participation agreements
substantially similar to this Agreement ("Participating Insurance Companies")
and for qualified retirement and pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Company is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Company has obtained, or warrants and agrees that prior to
any issuance or sale of shares it will obtain an order from the Securities and
Exchange Commission (the "SEC"), 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 Investment Company Act of 1940, as amended, (the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Company to be sold to and held by Qualified
Plans and by variable annuity and variable life insurance separate accounts of
Participating Insurance Companies that may or may not be affiliated with one
another (the "Mixed and Shared Funding Exemptive Order"); and
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WHEREAS, the Company has registered, or warrants and agrees that prior to
any issuance or sale of its shares it will register as an open-end management
investment company under the 1940 Act and the offering of its shares has been
registered, or warrants and agrees that prior to any issuance or sale its shares
will be registered under the Securities Act of 1933, as amended (hereinafter the
"1933 Act"); and
WHEREAS, Xxxxx Distributors is duly registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended, (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, Xxxxx Distributors is a wholly owned subsidiary of Xxxxx Selected
Advisers, L.P. which is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law; and
WHEREAS, the Insurance Company has registered under the 1933 Act, or will
register under the 1933 Act, certain variable annuity or variable life insurance
contracts identified on Schedule B to this Agreement, as amended from time to
time hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds
listed on Schedule C to this Agreement as amended from time to time, at net
asset value on behalf of each Account to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Insurance
Company, the Company and Xxxxx Distributors agree as follows:
ARTICLE I. Sale of Company Shares
1.1. Xxxxx Distributors agrees to sell to the Insurance Company those
shares of the Company which each Account orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Company or
its designee of the order for the shares of the Company. For purposes of this
Section 1.1, the Insurance Company, or its designee, shall be the designee of
the Company for receipt of such orders from the Accounts and receipt by such
designee shall constitute receipt by the Company; provided that the Company
receives notice of such order by 10:00 a.m., Eastern Time, on the next following
Business Day. In this Agreement, "Business
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Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Company calculates its net asset value pursuant to the rules of
the SEC.
1.2. The Company agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Company calculates its Funds' net asset values
pursuant to rules of the SEC and the Company shall use reasonable efforts to
calculate its Funds' net asset values on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the directors of
the Company may refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the directors of the Company 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 that Fund.
1.3. The Company agrees that shares of the Company will be sold only to
Accounts of Participating Insurance Companies and to Qualified. Plans. No shares
of any Fund will be sold to the general public.
1.4. The Company will not sell its shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Sections 2.4, 3.4, 3.5, and Article VII of this Agreement is in effect
to govern such sales.
1.5. The Company agrees to redeem, on the Insurance Company's request, any
full or fractional shares of the Company held by the Account, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Company or its designee of the request for redemption. However, if one or
more Funds has determined to settle redemption transactions for all of its
shareholders on a delayed basis (more than one business day, but in no event
more than three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the SEC under Section 22(e)
of the 1940 Act), the Company shall be permitted to delay sending redemption
proceeds to the Insurance Company by the same number of days that the Company is
delaying sending redemption proceeds to the other shareholders of the Fund. For
purposes of this Section 1.5, the Insurance Company shall be the designee of the
Company for receipt of requests for redemption from each Account and receipt by
that designee shall constitute receipt by the Company; provided that the Company
receives notice of the request for redemption by 10:00 a.m., Eastern Time, on
the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the shares of
each Fund listed on Schedule C to this Agreement, as amended from time to time,
and offered by the then-current prospectus of the Company in accordance with the
provisions of that prospectus.
1.7. Each purchase, redemption and exchange order placed by the Insurance
Company shall be placed separately for each Fund and shall not be netted with
respect to any Fund. However, with respect to payment of the purchase price by
the Insurance Company and of redemption proceeds by
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the Company, the Insurance Company and the Company shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
for all of the Funds. Payment shall be in federal funds transmitted by wire. In
the event of net purchase, the Insurance Company shall pay for the Funds' shares
by 3:00 p.m. Eastern time on the next Business Day after an order to purchase
shares is made in accordance with the provisions of Section 1.1 hereof. For the
purpose of Sections 2.9 and 2.10, upon receipt by the Company of the wired
federal funds, such funds shall cease to be the responsibility of the Insurance
Company and shall become the responsibility of the Company. In the event of net
redemption, the Company shall pay the redemption proceeds by 3:30 p.m. Eastern
time on the next Business Day after an order to redeem the shares is made in
accordance with the provisions of Section 1.5 hereof. However, payment may be
postponed under unusual circumstances, such as when normal trading is not taking
place on the New York Stock Exchange, an emergency as defined by the SEC exists,
or as permitted by the SEC.
1.8. Issuance and transfer of the Company's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or any
Account. Shares ordered from the Company will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Company shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance Company of any income,
dividends or capital gain distributions payable on the Funds' shares. The
Insurance Company hereby elects to receive all income dividends and capital gain
distributions payable on a Fund's shares in additional shares of that Fund. The
Insurance Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Company shall
notify the Insurance Company of the number of shares issued as payment of
dividends and distributions.
1.10. The Company shall make the net asset value per share for each Fund
available to the Insurance Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make those per-share net asset values available by 7:00 p.m.,
Eastern Time. In the event that the Company is unable to meet the 7:00 p.m.
Eastern time stated herein, it shall provide additional time for the Insurance
Company to place orders for the purchase and redemption of shares. Such
additional time shall be equal to the additional time which the Company takes to
make the net asset value available to the Insurance Company. In accordance with
Section 8.3(a)(iii) hereof, if the Company provides materially incorrect share
net asset value information, the Company may make an adjustment to the number of
shares purchased or redeemed for the Account to reflect the correct net asset
value per share. Any material error in the calculation or reporting of net asset
value per share, dividend or capital gains information shall be reported to the
Insurance Company promptly upon discovery.
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ARTICLE II. Representations, Warranties and Agreements
2.1. The Insurance Company represents, warrants and agrees that the
offerings of the Contracts are, or will be, registered under the 1933 Act; 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 applicable state insurance
suitability requirements. The Insurance Company further represents that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established the Account prior to any issuance or
sale thereof as a segregated asset account under Delaware insurance law and has
registered, or warrants and agrees that prior to any issuance or sale of the
Contracts it will register, the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts.
2.2. The Company warrants and agrees that Company shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sale in compliance with the laws of the State of Maryland and all
applicable federal securities laws and that the Company is and shall remain
registered under the 1940 Act. The Company warrants and agrees that it shall
amend the registration statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. The 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 Company or Xxxxx Distributors.
2.3. The Company represents that each Fund is currently, or will elect at
the earliest opportunity to be, qualified as a Regulated Investment Company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and warrants and agrees that it will make all reasonable efforts to
maintain each Fund's qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Insurance Company immediately
upon having a reasonable basis for believing that any Fund has ceased to so
qualify or might not so qualify in the future.
2.4. The Insurance Company represents that the Contracts are currently
treated as annuity or life insurance contracts under applicable provisions of
the Code and warrants and agrees that it will make every effort to maintain such
treatment and that it will notify the Company and Xxxxx Distributors 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 Company may elect to make payments to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Company
undertakes to have a board of directors, a majority of whom are not interested
persons of the Company, formulate and approve any plan under Rule l2b-1 to
finance distribution expenses.
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2.6. The Company makes no representation or warranty as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) complies or will comply with the insurance laws or
regulations of the various states.
2.7. The Company represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and represents, warrants and
agrees that it does and will comply in all material respects with the 1940 Act
and the laws of the State of Maryland.
2.8. Xxxxx Distributors represents that it is and warrants that it shall
remain duly registered as a broker-dealer under all applicable federal and state
securities laws and agrees that it shall perform its obligations for the Company
in compliance in all material respects with the laws of the State of New Mexico
and any applicable state and federal securities laws.
2.9. The Company and Xxxxx Distributors represent and warrant that all of
their officers, employees, investment advisers, investment sub-advisers, and
other individuals or entities described in Rule l7g-1 under the 1940 Act dealing
with the money and/or securities of the Company are, and shall continue to be at
all times, covered by a blanket fidelity bond or similar coverage for the
benefit of the Company in an amount not less than the minimum coverage required
currently by Rule 17g-1 under the 1940 Act or related provisions as may be
promulgated from time to time. That fidelity bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.10. The Insurance Company represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Company are and shall continue
to be at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Company, in an amount not less than $1 million. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
2.11. Each party represents that it will use its best efforts to ensure
that the systems that would materially affect the performance of this Agreement
will be fully tested and year 2000 compliant prior to December 31, 1999 and they
will function without material disruption of such party's ability to perform
this Agreement in the year 2000 and beyond.
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ARTICLE III. Disclosure Documents and Voting
3.1. Xxxxx Distributors shall provide the Insurance Company (at the
Insurance Company's expense) with as many copies of the current prospectus for
each Fund listed on Schedule C herein as the Insurance Company may reasonably
request for distribution to prospective purchasers of contracts. Xxxxx
Distributors shall also provide the Insurance Company (free of charge) with as
many copies of the current prospectus for each Fund listed on Schedule C herein
as the Insurance Company may reasonably request for distribution to existing
Contract owners whose Contracts are funded by shares of such Fund(s). If
requested by the Insurance Company in lieu thereof, the Company shall provide
such documentation (including a final copy of the new prospectus as set in type
at the Company's expense) and other assistance as is reasonably necessary in
order for the Insurance Company once each year (or more frequently if the
prospectus for the Company is amended) to have the prospectus for the Contracts
and the Company's prospectus printed together in one document (at the Insurance
Company's expense).
3.2. The Company's prospectus shall state that the Statement of Additional
Information for the Company (the "SAI") is available from the Company, and Xxxxx
Distributors (or the Company), at its expense, shall print and provide the SAI
free of charge to the Insurance Company and to any owner of a Contract or
prospective owner who requests the SAI.
3.3. The Company, at its expense, shall provide the Insurance Company with
copies of its proxy material, reports to shareholders and other communications
to shareholders in such quantity as the Insurance Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Company shares of each Fund in accordance with
instructions received from Contract owners; and
(iii) vote Company shares for which no instructions have been
received in the same proportion as Company shares of that Fund
for which instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The
Insurance Company reserves the right to vote Company shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each of
their separate accounts participating in the Company calculates voting
privileges in a manner consistent with the standards set forth on Schedule D
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies. The Insurance
Company shall fulfill its obligation under, and abide by the terms and
conditions of, the Mixed and Shared Funding Exemptive Order.
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3.5. The Company will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Company will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Company currently intends, comply
with Section 16(c) of the 1940 Act as well as with Sections 16(a) and, if and
when applicable, 16(b). Further, the 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.
ARTICLE IV. Sales Material and Information
4.1. The Insurance Company shall furnish, or shall cause to be furnished,
to the Company or its designee, each piece of sales literature or other
promotional material in which the Company, Xxxxx Selected Advisers, L.P., or
Xxxxx Distributors is named, at least five Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects to
such use within five Business Days after receipt of such material.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Company or concerning the Company
in connection with the sale of the Contracts other than the information or
representations contained in the Company's registration statement, prospectus or
SAI, as that registration statement, prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the
Company, or in sales literature or other promotional material approved by the
Company or its designee or by Xxxxx Distributors, except with the permission of
the Company or Xxxxx Distributors.
4.3. The Company, Xxxxx Distributors, or its designee shall furnish, or
shall cause to be furnished, to the Insurance Company or its designee, each
piece of sales literature or other promotional material in which the Insurance
Company or the Account is named at least five Business Days prior to its use. No
such material shall be used if the Insurance Company or its designee reasonably
objects to such use within five Business Days after receipt of that material.
4.4. The Company and Xxxxx Distributors shall not give any information or
make any representations on behalf of the Insurance Company or concerning the
Insurance Company, any Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or statement
of additional information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or supplemented
from time to time, or in published reports for any Account which are in the
public domain or approved by the Insurance Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Insurance Company or its designee, except with the permission of the Insurance
Company.
4.5. The Company will provide to the Insurance Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, proxy
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statement, piece of sales literature or other promotional material, application
for exemption, request for no-action letter, and any amendment to any of the
above, that relate to the Company or its shares, contemporaneously with the
filing of the document with the SEC, the NASD, or other regulatory authorities.
4.6. The Insurance Company will provide to the Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions, piece of
sales literature and other promotional material, application for exemption,
request for no-action letter, and any amendment to any of the above, that
relates to the Contracts or the Account, contemporaneously with the filing of
the document with the SEC, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, shareholder
newsletters, 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.
4.8. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representative
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested.
ARTICLE V. Fees and Expenses
5.1. The Company and Xxxxx Distributors shall pay no fee or other
compensation to the Insurance Company under this agreement, except as set forth
in Section 5.4.
5.2. All expenses incident to performance by the Company under this
Agreement shall be paid by the Company. The Company shall see to it that any
offering of its shares is registered and that all of its shares are authorized
for issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Company or Xxxxx Distributors, in accordance with
applicable state laws prior to their sale. The Company shall bear the cost of
registration and qualification of the Company's shares, preparation and filing
of the 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, the preparation of all statements and
notices required by any federal or state law, and all taxes on the issuance or
transfer of the Company's shares.
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5.3. The Insurance Company shall bear the expenses of printing and
distributing to Contract owners the Contract prospectuses and of distributing to
Contract owners the Company's prospectus, proxy materials and reports.
5.4. The Insurance Company bears the responsibility and correlative
expense for administrative and support services for Contract owners. Xxxxx
Distributors recognizes the Insurance Company, on behalf of each Account, as the
sole shareholder of shares of the Company issued under this Agreement. From time
to time, Xxxxx Distributors may pay amounts from its past profits to the
Insurance Company for providing certain administrative services for the Company
or for providing other services that relate to the Company. In consideration of
the savings resulting from such arrangement, and to compensate the Insurance
Company for its costs, Xxxxx Distributors agrees to pay to the Insurance Company
an amount equal to 20 basis points (0.20%) per annum of the average aggregate
amount invested by the Insurance Company in the Company under this Agreement up
to $300 million of assets invested in the Company, and 25 basis points (0.25%)
per annum for any amount exceeding $300 million invested by the Insurance
Company in the Company under this Agreement. Such payments will be made monthly,
and only when the average aggregate amount invested exceeds $1,000,000. The
parties agree that such payments are for administrative services and investor
support services, and do not constitute payment for investment advisory,
distribution or other services. Payment of such amounts by Xxxxx Distributors
shall not increase the fees paid by the Company or its shareholders.
ARTICLE VI. Diversification
6.1. The Company will comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5 relating to the diversification requirements for variable
annuity, endowment, modified endowment or life insurance contracts and any
amendments or other modifications to that Section or Regulation at all times
necessary to satisfy those requirements.
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ARTICLE VII. Potential Conflicts
7.1. The directors of the Company will monitor each Fund for the existence
of any material irreconcilable conflict between the interests of the variable
Contract owners of all separate accounts investing in the Company and the
participants of all Qualified Plans investing in the Company. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The directors of
the Company shall promptly inform the Insurance Company if they determine that
an irreconcilable material conflict exists and the implications thereof. The
directors of the Company shall have sole authority to determine whether an
irreconcilable material conflict exists and their determination shall be binding
upon the Insurance Company.
7.2. The Insurance Company and Xxxxx Distributors each will report
promptly any potential or existing conflicts of which it is aware to the
directors of the Company. The Insurance Company and Xxxxx Distributors each will
assist the directors of the Company in carrying out their responsibilities under
the Mixed and Shared Funding Exemptive Order, by providing the directors of the
Company with all information reasonably necessary for them to consider any
issues raised. This includes, but is not limited to, an obligation by the
Insurance Company to inform the directors of the Company whenever Contract owner
voting instructions are to be disregarded. These responsibilities shall be
carried out by the Insurance Company with a view only to the interests of the
Contract owners and by Xxxxx Distributors with a view only to the interests of
Contract owners and Qualified Plan participants.
7.3. If it is determined by a majority of the directors of the Company, or
a majority of the directors who are not interested persons of the Company, any
of its Funds, or Xxxxx Distributors (the "Independent Directors"), that a
material irreconcilable conflict exists, the Insurance Company and/or other
Participating Insurance Companies or Qualified Plans that have executed
participation agreements shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets attributable to some
or all of the separate accounts from the Company or any Fund and reinvesting
those assets in a different investment medium, including (but not limited to)
another Fund of the Company, or submitting the question 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 (e.g., annuity
contract owners, life insurance contract owners, or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected variable contract owners the option of
making such a change; and (2) establishing a new
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registered management investment company or managed separate account and
obtaining any necessary approvals or orders of the SEC in connection therewith.
7.4. If a material irreconcilable conflict arises because of a decision by
the Insurance Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Insurance Company may be required, at the Company's election, to withdraw the
affected Account's investment in the Company and terminate this Agreement with
respect to that Account; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Independent Directors. Any such
withdrawal and termination must take place within six (6) months after the
Company gives written notice that this provision is being implemented, and,
until the end of that six month period, the Company shall continue to accept and
implement orders by the Insurance Company for the purchase (and redemption) of
shares of the Company.
7.5. If a material irreconcilable conflict. arises because a particular
state insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the Insurance
Company will withdraw the affected Account's investment in the Company and
terminate this Agreement with respect to that Account within six months after
the directors of the Company inform the Insurance Company in writing that they
have determined that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Until the end of the foregoing six month period, the Company shall
continue to accept and implement orders by the Insurance Company for the
purchase (and redemption) of shares of the Company.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the
Contracts. The Insurance Company shall not be required by Section 7.3 to
establish a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict. In the event that the directors of the
Company determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will withdraw the
Account's investment in the Company and terminate this Agreement within six (6)
months after the directors of the Company inform the Insurance Company in
writing of the foregoing determination, provided, however, that the withdrawal
and termination shall be limited to the extent required by the material
irreconcilable conflict, as determined by a majority of the Independent
Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding
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Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Company
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent those rules are applicable; and (b)
Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue
in effect only to the extent that terms and conditions substantially identical
to those Sections are contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Insurance Company
8.1(a). The Insurance Company agrees to indemnify and hold harmless the
Company and each director, officer, employee or agent of the Company, and each
person, if any, who controls the 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 ail losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Insurance 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
actions in respect thereof) or settlements are related to the sale, acquisition,
or redemption of the 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 the registration
statement, prospectus or statement of additional information for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact 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 in writing to the Insurance Company by or
on behalf of the Company for use in the registration statement,
prospectus or statement of additional information for the Contracts
or in the Contracts or sales literature (or any amendment or
supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or shares of the Company;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration
13
statement, prospectus, statement of additional information or sales
literature of the Company not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of the Insurance
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Company Shares;
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature
of the 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 in writing to the Company by or
on behalf of the Insurance Company;
(iv) arise as a result of any failure by the Insurance Company to
provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by the Insurance Company
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Insurance Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Insurance 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 that
may arise from that Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of that Indemnified Party's duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Company, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless that Indemnified Party shall have notified the Insurance 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 that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to the extent
that the Insurance Company has been prejudiced by such failure to give notice.
In addition, any failure by the Indemnified Party to notify the Insurance
Company of any such
14
claim shall not relieve the Insurance Company from any liability which it may
have to the Indemnified Party against whom the action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Insurance Company shall be entitled to
participate, at its own expense, in the defense of the action. The Insurance
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provide, however, that if the
Indemnified Party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Insurance Company, the Insurance Company shall not have the right to assume said
defense, but shall pay the costs and expenses thereof (except that in no event
shall the Insurance Company be liable for the fees and expenses of more than one
counsel for Indemnified Parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances). After notice from the Insurance Company
to the Indemnified Party of the Insurance Company's election to assume the
defense thereof, and in the absence of such a reasonable conclusion that there
may be different or additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Insurance Company will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Insurance Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Company's shares or the Contracts or the
operation of the Company.
8.2. Indemnification by Xxxxx Distributors
8.2(a). Xxxxx Distributors agrees to indemnify and hold harmless the
Insurance Company and each of its directors, officers, employees or agents, and
each person, if any, who controls the Insurance 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 Xxxxx
Distributors) or litigation (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, acquisition
or redemption of the 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, prospectus, statement of additional information or sales
literature of the 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
15
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if the statement or omission or
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to Xxxxx
Distributors or the Company by or on behalf of the Insurance Company
for use in the registration statement, prospectus, or statement of
additional information for the Company or in sales literature (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Company
shares;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature for the Contracts not supplied by
Xxxxx Distributors or persons under its control) or wrongful conduct
of the Company, Xxxxx Distributors or persons under their control,
with respect to the sale or distribution of the Contracts or shares
of the Company;
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished in writing
to the Insurance Company by or on behalf of the Company;
(iv) arise as a result of any failure by the Company to provide the
services and famish 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 VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by Xxxxx Distributors in
this Agreement or arise out of or result from any other material
breach of this Agreement by Xxxxx Distributors;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
16
8.2(b) Xxxxx Distributors 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 that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Insurance Company or the Account, whichever is applicable.
8.2(c) Xxxxx Distributors shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified Xxxxx Distributors 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 the
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve Xxxxx Distributors of its obligations hereunder except to the extent
that Xxxxx Distributors has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify Xxxxx Distributors of
any such claim shall not relieve Xxxxx Distributors 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, Xxxxx Distributors will be entitled to
participate, at its own expense, in the defense thereof. Xxxxx Distributors also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the Indemnified Party
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to Xxxxx Distributors, Xxxxx
Distributors shall not have the right to assume said defense, but shall pay the
costs and expenses thereof (except that in no event shall Xxxxx Distributors be
liable for the fees and expenses of more than one counsel for Indemnified
Parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances). After notice from Xxxxx Distributors to the Indemnified Party of
Xxxxx Distributors' election to assume the defense thereof, and in the absence
of such a reasonable conclusion that there may be different or additional
defenses available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and Xxxxx
Distributors will not be liable to that party under this Agreement for any legal
or other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Insurance Company agrees to notify Xxxxx Distributors promptly
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 the Account.
17
8.3 Indemnification By the Company
8.3(a). The Company agrees to indemnify and hold harmless the Insurance
Company, and each of its directors, officers, employees and agents, and each
person, if any, who controls the Insurance 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
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of any
director(s) of the Company, are related to the operations of the Company or:
(i) arise as a result of any failure by the 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 VI of this Agreement);
(ii) arise out of or result from any material breach of any
representation, warranty or agreement made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company; or
(iii) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate for any Fund.
With respect to net asset value information, the Company will make a
determination, in accordance with SEC guidelines, as to whether an
error has occurred. Any correction of pricing errors shall be
accomplished using the least costly corrective action, as agreed to
by the Company in writing. In no event shall the Company be required
to reimburse for pricing errors caused by conditions beyond the
control of the Company or its agent, including, but not limited to,
Acts of God, fires, electrical or phone outages.
as limited by, and in accordance with the provisions of, Sections 8.3(b) and
8.3(c) hereof.
8.3(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 that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Insurance Company, the Company, Xxxxx Distributors or the Account, whichever
is applicable.
18
8.3(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
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 the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Company of its
obligations hereunder except to the extent that the Company has been prejudiced
by such failure to give notice. In addition, any failure by the Indemnified
Party 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
will be entitled to participate, at its own expense, in the defense thereof. The
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; provide, however, that if the
Indemnified Party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Company, the Company shall not have the right to assume said defense, but shall
pay the costs and expenses there4 (except that in no event shall the Company be
liable for the fees and expenses of more than one counsel for Indemnified
Parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances). After notice from the Company to the Indemnified Party of the
Company's election to assume the defense thereof, and in the absence of such a
reasonable conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and the Company will not
be liable to that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Insurance Company and Xxxxx Distributors agree promptly to
notify the Company of the commencement of any litigation or proceedings against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, the operation of the Account,
or the sale or acquisition of shares of the Company.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and provisions hereof interpreted
under and in accordance with the laws of the State of Maryland.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
any exemptions from those statutes, rules and regulations the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
19
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written notice to the
other parties; provided, however, such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of the Insurance Company to the extent that shares of
Funds are not reasonably available to meet the requirements of the
Contracts as determined by the Insurance Company, provided, however, that
such a termination shall apply only to the Fund(s) not reasonably
available. Prompt written notice of the election to terminate for such
cause shall be furnished by the Insurance Company to the Company and Xxxxx
Distributors; or
(c) at the option of the Company or Xxxxx Distributors, in the event that
formal administrative proceedings are instituted against the Insurance
Company by the NASD, the SEC, an insurance commissioner or any other
regulatory body regarding the Insurance Company's duties under this
Agreement or related to the sale of the Contracts, the operation of any
Account, or the purchase of the Company's shares, provided, however, that
the Company determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material adverse effect
upon the ability of the Insurance Company to perform its obligations under
this Agreement; or
(d) at the option of the Insurance Company in the event that formal
administrative proceedings are instituted against the Company or Xxxxx
Distributors by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, provided, however, that the
Insurance Company determines in its sole judgement exercised in good
faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Company or Xxxxx Distributors to
perform its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the Contract
owners having an interest in that Account (or any subaccount) to
substitute the shares of another investment company for the corresponding
Fund shares in accordance with the terms of the Contracts for which those
Fund shares had been selected to serve as the underlying investment media.
The Insurance Company will give at least 30 days' prior written notice to
the Company of the date of any proposed vote to replace the Company's
shares; or
(f) at the option of the Insurance Company, in the event any of the
Company's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or
20
exemptions therefrom, or such law precludes the use of those shares as the
underlying investment media of the Contracts issued or to be issued by the
Insurance Company; or
(g) at the option of the Insurance Company, if the Company ceases to
qualify as a regulated investment company under Subchapter M of the Code
or under any successor or similar provision, or if the Insurance Company
reasonably believes that the Company may fail to so qualify; or
(h) at the option of the Insurance Company, if the Company fails to meet
the diversification requirements specified in Article VI hereof; or
(i) at the option of either the Company or Xxxxx Distributors, if (1) the
Company or Xxxxx Distributors, respectively, shall determine, in their
sole judgment reasonably exercised in good faith, that the Insurance
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity and
that material adverse change or material adverse ' publicity will have a
material adverse impact upon the business and operations of either the
Company or Xxxxx Distributors, (2) the Company or Xxxxx Distributors shall
notify the Insurance Company in writing of that determination and its
intent to terminate this Agreement, and (3) after considering the actions
taken by the Insurance Company and any other changes in circumstances
since the giving of such a notice, the determination of the Company or
Xxxxx Distributors shall continue to apply on the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Insurance Company, if (1) the Insurance Company
shall determine, in its sole judgment reasonably exercised in good faith,
that either the Company or Xxxxx Distributors has suffered a material
adverse change in its business or financial condition or is the subject of
material adverse publicity and that material adverse change or material
adverse publicity will have a material adverse impact upon the business
and operations of the Insurance Company, (2) the Insurance Company shall
notify the Company and Xxxxx Distributors in writing of the determination
and its intent to terminate the Agreement, and (3) after considering the
actions taken by the Company and/or Xxxxx Distributors and any other
changes in circumstances since the giving of such a notice, the
determination shall continue to apply on the sixtieth (60th) day following
the giving of the notice, which sixtieth day shall be the effective date
of termination.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3. No termination of this Agreement shall be effective unless and until
the party terminating this Agreement gives prior written notice to all other
parties to this Agreement of its intent to terminate, which notice shall set
forth the basis for the termination. Furthermore,
21
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i) or 10.1(j) of
this Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, the prior written notice
shall be given at least ninety (90) days before the effective date of
termination; provided that any party may terminate this Agreement
immediately with respect to any Fund if such party reasonably determines
that continuing to perform under this Agreement would violate any state or
federal law.
10.4. Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement and for so long as the Company continues to exist,
the Company and Xxxxx Distributors shall at the option of the Insurance Company,
continue to make available additional shares of the Company pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement ("Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments from any other investment option to any
Fund, redeem investments in the Company and/or invest in the Company upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.4 shall not apply to any terminations under Article
VII and the effect of Article VII terminations shall be governed by Article VII
of this Agreement.
10.5. The Insurance Company shall not redeem Company shares attributable
to the Contracts (as opposed to Company shares attributable to the Insurance
Company's assets held in the Account) except (i) as necessary to implement
Contract-owner-initiated transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"). Upon request, the Insurance
Company will promptly furnish to the Company and Xxxxx Distributors the opinion
of counsel for the Insurance Company (which counsel shall be reasonably
satisfactory to the Company and Xxxxx Distributors) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party set forth
below or at such other address as the other party may from time to time specify
in writing.
If to the Company:
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxx, Vice President
22
If to the Insurance Company:
The Guardian Insurance & Annuity Company, Inc.
0 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Executive Vice President
If to Xxxxx Distributors:
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxx, Vice President
ARTICLE XII. Miscellaneous
12.1. 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 without the express written consent
of the affected party unless and until that information may come into the public
domain.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. 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 those authorities
reasonable access to its books and records in connection with any lawful
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
23
12.7. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided, that no party may
assign this Agreement without the prior written consent of the others.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative as of the date specified below.
THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
("Insurance Company")
By its authorized officer,
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Title: Executive Vice President
Date: June 29, 1999
XXXXX VARIABLE ACCOUNT FUND
("Company")
By its authorized officer,
By: /s/ Xxxxxx Xxxx
-----------------------------------
Title: Vice President
Date: June 30, 1999
XXXXX DISTRIBUTORS, LLC
("Xxxxx Distributors")
By its authorized officer,
By: /s/ Xxxxxx Xxxx
-----------------------------------
Title: Vice President
Date: June 30, 1999
24
Schedule A
Accounts
Name of Account Date of Resolution of Insurance Company's
Board which Established the Account
The Guardian Separate Account E September 26, 1996
25
Schedule B
Contracts
1. The Guardian Investor Retirement Asset Manager
(Contract No. IVA 2020)
26
Schedule C
to
Participation Agreement
Name of Fund
------------
Xxxxx Financial Portfolio
Xxxxx Real Estate Portfolio
Xxxxx Value Portfolio
Dated: June__, 1999
27
Schedule D
Proxy Voting Procedure
The following is a list of procedures and corresponding responsibilities
for the handling of proxies relating to the Company by Xxxxx Distributors, the
Company and the Insurance Company. The defined terms herein shall have the
meanings assigned in the Participation Agreement except that the term "Insurance
Company" shall also include the department or third party assigned by the
Insurance Company to perform the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company by Xxxxx
Distributors as early as possible before the date set by the Company for
the shareholder meeting to facilitate the establishment of tabulation
procedures. At this time Xxxxx Distributors will inform the Insurance
Company of the Record, Mailing and Meeting dates. This will be done
verbally, with confirmation following promptly in writing, approximately
two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a "tape
run", or other activity, which will generate the names, addresses and
number of units which are attributed to each contract-owner/policyholder
(the "Customer") as of the Record Date. Allowance should be made for
account adjustments made after this date that could affect the status of
the Customers' accounts of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best efforts to call in
the number of Customers to Xxxxx Distributors, as soon as possible, but no later
than one week after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Insurance Company by the Company. The Insurance
Company, at its expense, shall produce and personalize the Voting
Instruction cards. Xxxxx Distributors must approve the Card before it is
printed. Allow approximately 2-4 business days for printing information on
the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Company).
(This and related steps may occur later in the chronological process due
to possible uncertainties relating to the proposals.)
4. During this time, Xxxxx Distributors will develop, produce, and the
Company will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Insurance Company for insertion into envelopes (envelopes
28
and return envelopes are provided and paid for by the Insurance Company).
Contents of envelope sent to customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Contract owners to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Company.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by Xxxxx Distributors.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date, and in no event later
than 3 business days before mail date. Individual in charge at Insurance
Company reviews and approves the contents of the mailing package to ensure
correctness and completeness. Copy of this approval sent to Xxxxx
Distributors.
6. Package mailed by the Insurance Company.
* The Company must allow at least a 15-day solicitation time to the
Insurance Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from
(but not including) the meeting, counting backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often-used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure.
8. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to the Customer with an explanatory letter, a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
9. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be
29
calculated. If the initial estimates and the actual vote do not coincide,
then an internal audit of that vote should occur. This may entail a
recount.
10. The actual tabulation of votes is done in units and then converted to
shares. (It is very important that the Company receives the tabulations
stated in terms of a percentage and the number of shares.) Xxxxx
Distributors must review and approve tabulation format.
11. Final tabulation in shares is verbally given by the Insurance Company to
Xxxxx Distributors on the day of the meeting not later than 1:00 p.m.
Eastern time. Xxxxx Distributors may request an earlier deadline if
required to calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be required
from the insurance Company as well as an original copy of the final vote.
Xxxxx Distributors will provide a standard form for each Certification.
13. The Insurance Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged or
if otherwise necessary for legal, regulatory, or accounting purposes,
Xxxxx Distributors will be permitted reasonable access to such Cards.
14. All approvals and "signing-off' may be done orally, but must always be
followed up in writing. For this purpose, signatures transmitted by
facsimile will be acceptable.
30
ADDENDUM
TO
PARTICIPATION AGREEMENT
ADDENDUM dated March 31, 2000, to the PARTICIPATION AGREEMENT (the
"PARTICIPATION AGREEMENT") among XXXXX VARIABLE ACCOUNT FUND, INC., XXXXX
DISTRIBUTORS, LLC. and THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. dated June
29, 1999.
In consideration of the mutual benefits which the parties anticipate, they
hereby agree to amend the PARTICIPATION AGREEMENT as follows:
I. In addition to the Accounts already listed on Schedule A, the following
Accounts are added:
Name of Account Date of Resolution of Insurance
Company's Board which Established
the Account
The Guardian Separate Account N September 23, 1999
The Guardian Separate Account D 1989
The Guardian Separate Account A 1981
II. In addition to the Contracts already listed on Schedule B, the following
Contracts are added:
Park Avenue VUL-Millennium Series
Park Avenue SVUL-Millennium. Series
The Guardian Investor Individual Annuity Contract
Value Guard II
All other terms of the PARTICIPATION AGREEMENT remain unchanged.
-1-
IN WITNESS WHEREOF, the parties have duly executed and sealed this ADDENDUM, all
as of the date first written above.
THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
("Insurance Company")
By its authorized officer,
By: /s/ Xxxxx X. Xxxx
------------------------------------
Title: Executive Vice President,
Equity Products
Date: __________________________________
XXXXX VARIABLE ACCOUNT FUND
("Company')
By its authorized officer,
By: /s/ Xxxxxx Xxxx
------------------------------------
Title: Vice President
Date: __________________________________
XXXXX DISTRIBUTORS, LLC
("Xxxxx Distributors")
By its authorized officer,
By: /s/ Xxxxxx Xxxx
------------------------------------
Title: Vice President
Date: __________________________________
-2-
SECOND ADDENDUM
TO
PARTICIPATION AGREEMENT
SECOND ADDENDUM dated October 5, 2000, to the PARTICIPATION AGREEMENT (the
"PARTICIPATION AGREEMENT") among XXXXX VARIABLE ACCOUNT FUND, INC., XXXXX
DISTRIBUTORS, LLC. and THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. dated June
29, 1999; and to the ADDENDUM TO PARTICIPATION AGREEMENT (the "FIRST ADDENDUM")
dated March 2000.
In consideration of the mutual benefits which the parties anticipate, they
hereby agree to amend the PARTICIPATION AGREEMENT and FIRST ADDENDUM as
follows:
I. In addition to the Accounts already listed on Schedule A, the following
Accounts are added:
Name of Account Date of Resolution of Insurance
Company's Board which Established
the Account
Separate Account K Established November 18, 1993
II. In addition to the Contracts already listed on Schedule B, the following
Contracts are added:
Park Avenue Life Millennium Series
All other terms of the PARTICIPATION AGREEMENT and FIRST ADDENDUM remain
unchanged.
-1-
IN WITNESS WHEREOF, the parties have duly executed and sealed this ADDENDUM, all
as of the date first written above.
THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
("Insurance Company")
By its authorized officer,
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Title: Executive Vice President,
Equity Products
Date: October 5, 2000
XXXXX VARIABLE ACCOUNT FUND
("Company")
By its authorized officer,
By: /s/ Xxxxxx Xxxx
-------------------------------------
Title: Vice President
Date: 10/9/00
XXXXX DISTRIBUTORS, LLC
("Xxxxx Distributors")
By its authorized officer,
By: /s/ Xxxxxx Xxxx
-------------------------------------
Title: Vice President
Date: 10/9/00
