FORM OF FUND PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT
AMONG
OFFITBANK VARIABLE INSURANCE FUNDS, INC.,
OFFIT FUNDS DISTRIBUTOR, INC.
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
CONNECTICUT MUTUAL FINANCIAL SERVICES, L.L.C.
THIS AGREEMENT, made and entered into as of the day of June, 1995 by and
among C. M. LIFE INSURANCE COMPANY, (hereinafter the "Company"), a Connecticut
corporation, on its own behalf and on behalf of CML/OFFITBANK Variable Annuity
Separate Account, a validly existing segregated asset Separate Account of the
Company together with any other segregated asset separate account established
by the Company and which may become a party to this Agreement from time to time
(hereinafter referred to as the "Separate Account"), CONNECTICUT MUTUAL
FINANCIAL SERVICES, L.L.C., (hereinafter referred to as "CMFS") a limited
liability company organized under the laws of the state of Connecticut, and
OFFITBANK VARIABLE INSURANCE FUNDS, INC., a corporation organized under the
laws of the State of Maryland (hereinafter the "Fund") and OFFIT FUNDS
DISTRIBUTOR, INC., (hereinafter the "Underwriter"), a corporation organized
under the laws of the State of Delaware.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for Separate Accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by the Company,
as well as other affiliated life insurance companies, (collectively the
"Participating Insurance Companies"); and
WHEREAS, the common stock in the Fund is divided into several series of shares,
each designated and referred throughout as a Fund ("Portfolio") and
representing an interest in a particular managed portfolio of securities and
other assets; and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, OFFITBANK, a Trust Company organized under the banking laws of the
State of New York, (hereinafter the "Adviser); and
WHEREAS, the Company has registered or may register as securities under the
Securities Act of 1933 (the 1933 Act"), as amended, certain variable annuity
insurance contracts under the 1933 Act as more fully described in Schedule A
attached hereto (hereinafter the "Contracts"); and
WHEREAS, the Separate Account is a duly organized under the laws of the State
of Connecticut and established by resolution of the Board of Directors of the
Company to set aside and invest assets attributable to the aforesaid Contracts;
and
WHEREAS, CMFS is also registered as a broker-dealer under applicable state and
federal laws, and it will enter into a principal underwriting agreement with
the Company to distribute the Contracts; and
WHEREAS, the parties to this Agreement acknowledge that Contracts using
segregated asset separate accounts may be developed in the future, and such
segregated asset accounts may also purchase shares of the Fund; and
WHEREAS, the Company has registered the Separate Account as a unit investment
trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission (hereinafter "SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios on behalf of the
Separate Account to fund the Contracts and the Underwriter is authorized to
sell such shares to unit investment trusts such as each Separate Account at net
asset value; and
WHEREAS, the Contracts may also make available interests in other management
investment company shares under the Contracts (the "CML Funds"), in addition to
the Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Portfolios which the Separate Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the particular Portfolios. For
purposes of this Section 1.1, the Company shall be the designee of the Fund for
receipt of such orders from the Separate Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice of
such order by [4:15 p.m. Eastern Standard Time on each Business Day] "Business
Day" shall mean any day on which the New York Stock Exchange is open for
trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make shares of the Portfolios available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Separate Account on those days on which the Fund calculates its net asset value
pursuant to rules of the SEC and the Fund shall calculate such net asset value
on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter
the "Board") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws necessary in the
best interests of the shareholders of such Portfolio.
1.3. The Portfolios available under this Agreement are listed on Schedule B to
this Agreement, as such Schedule may be amended. The Company agrees that if a
decision is made to add a Portfolio, it will take the appropriate action
required under state and federal insurance and securities laws in connection
with making the Portfolios available. This activity may include, but is not
limited to:
(i) amending an existing registration statement filed with the SEC for a
Contract; or
(ii) obtaining the approval of applicable state insurance regulatory
authorities; or
(iii) notifying and/or obtaining Contract Owner approval.
1.4. The Company, the Fund, and the Underwriter agree that shares of the Fund
will not be sold to any other segregated asset separate account for the purpose
of providing an investment vehicle for variable annuity contracts. The parties
understand, however, that the Fund may sell shares to other variable life
insurance separate accounts, including separate accounts listed on Schedule C.
1.5. The Fund agrees to redeem for cash, at the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. The Fund shall pay and transmit
the redemption proceeds the next business day after redemption. Payment shall
be in federal funds transmitted by wire and/or a credit for shares purchased
the same day. For purposes of this Section 1.5 the Company shall be the
designee of the Fund for receipt of requests for redemption from the Separate
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such request [from the Company by
4:15 p.m.] for redemption on each Business Day.
1.6. The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund available to the Separate
Account and in accordance with the provisions of such prospectus. Amounts
received under the Contracts may also be invested in other investment companies
available to the Separate Account.
1.7. The Company shall pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire
and/or a credit for shares redeemed the same day. Upon receipt by the Fund of
the federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Separate Account.
Shares ordered from the Fund will be recorded in an appropriate title for the
Separate Account or the appropriate Sub-Account of the Separate Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company, either on behalf of
itself or on behalf of the Separate Accounts hereby elects to receive all such
income, dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of the particular Portfolio receiving
such income dividend or distribution. The Company reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the 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 such net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 7 p.m. Eastern
Time. If the Fund provides incorrect share net asset value information, the
Company, either on behalf of itself or on behalf of the Separate Account,
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share (and, if and to the
extent necessary, the Company shall make adjustments to the number of units
credited and/or unit values for the Contracts for the periods affected). Any
error in the calculation or reporting of net asset value per share, dividend or
capital gains information greater than or equal to $.01 per share shall be
reported immediately upon discovery to the Company. Such errors shall be
corrected as soon as is reasonably practical. Any error of a lesser amount
shall be corrected in the next Business Day's net asset value per share.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued in
compliance in all material respects with all applicable federal and state laws
and regulations. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has (or will have) legally and validly established the Separate Account
thereof as a segregated asset account under Section 38a-433 of the Connecticut
Insurance Laws and has registered or, prior to any issuance or sale of the
Contracts, will register the Separate 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 Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, on the form prescribed by
such Act (hereinafter referred to as the "Registration Statement"). The Fund
further represents and warrants that its shares are duly authorized for
issuance and are sold in compliance with all applicable federal and state laws,
and that the Fund is and shall remain registered under the 0000 Xxx. The Fund
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 Fund shall register and qualify the shares for
sale in accordance with the laws of the various states if and to the extent
required by law.
2.3. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter warrants that it is lawfully organized and validly existing under
the laws State of Delaware. The Underwriter further represents that it will
sell and distribute Fund shares in accordance with the laws of the State of
Delaware and all other applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act as such Acts
may be amended from time to time.
2.4. CMFS represents and warrants that it is a member in good standing of the
NASD and is registered as a broker-dealer with the SEC. CMFS warrants that it
is lawfully organized and validly existing under the laws State of Connecticut.
CMFS further represents that it will sell and distribute Fund shares in
accordance with the laws of the State of Connecticut and all other applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act as such Acts may be amended from time to time.
2.5. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that its organization and
operations will comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal
and state securities laws and that the Adviser shall perform its obligations
for the Fund in compliance in all material respects with any applicable state
and federal securities laws and regulations.
2.7. The Fund and Underwriter represent and warrant that all of their
respective Directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company acceptable to the Company.
2.8. The Fund and the Underwriter each represent and warrant that each will
notify the Company of any NASD or State inquiries, disciplinary actions, stop
orders, or customer complaints that could impact sales of either the Fund or
the Contracts. The Company and CMFS each agree that they shall likewise notify
the Underwriter of any such action or complaint that could impact sales of
either the Fund or the Contracts.
2.9. The Fund represents that it has obtained all necessary or customary
orders of exemption or approval from the SEC to permit sales of the Funds to
the Separate Account, and that it agrees to obtain any exemption or approval as
may be required in the future.
2.10. The Fund and the Underwriter each represent and warrant that all
financial statements contained in the Registration Statement for the Fund or to
be furnished in connection with amendments thereto, or annual or semiannual
reports to shareholders present or will present fairly the financial position
of the Fund on the dates indicated, and that such financial statements have
been prepared in conformity with generally accepted Accounting Principles.
2.11. The Fund and the Underwriter agree that if a change occurs triggering
the need to amend the Fund's Registration Statement, it will make all necessary
changes and it will take whatever action it deems appropriate for such
Amendment.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1. The Underwriter shall provide the Company with as many copies of the
Fund's current prospectus as the Company may reasonably request for marketing
purposes. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of any new prospectus as prepared at
the Fund's expense) and other assistance as is reasonably necessary in order
for the Company to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document. The Underwriter shall be
responsible for paying the costs associated with preparing the Fund's
prospectus.
3.2. The Fund's prospectus shall state that the statement of additional
information ("SAI") for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that the SAI is available from
the Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide the SAI free of charge to the Company and to any owner or prospective
owner of a Contract who requests an SAI.
3.3. The Underwriter, at its expense, shall provide the Company with copies of
its prospectus, proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to existing or prospective Contract owners.
3.4. If and to the extent required by law the Company shall:
(i)solicit voting instructions from Contract owners;
(ii)vote the Fund shares in accordance with timely instructions received from
Contract owners; and
(iii)vote Fund shares for which:
a) no instructions have been received, and
b) Fund shares not attributable to a particular Contract owner, in the same
proportion as Fund shares of such portfolio 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 Company reserves the right to vote Fund shares held in any segregated asset
Separate Account in its own right, to the extent permitted by law.
3.5. The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular the Fund will either provide for annual
meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not
one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund 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 Commission may promulgate with respect thereto.
3.6. It is understood and agreed that, except for information regarding the
Company , CMFS, or the Contract ;provided by the Fund or Underwriter, the
Company is not responsible for the content of either the Fund's prospectus or
its statement of additional . It is also understood and agreed that, except
with respect to information regarding the Fund, Adviser or the Portfolios,
neither the Fund nor the Underwriter are responsible for the content of the
prospectus or SAI for the Contracts.
ARTICLE IV. SALES MATERIAL AND COMMUNICATIONS WITH CONTRACT OWNERS
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund or the Advisor or the Underwriter is named, at least fifteen
Business Days prior to its use (or such different period as the parties hereto
may, from time to time, agree to in writing). No such material shall be used
if the Fund or its designee reasonably objects to such use within fifteen
Business Days after receipt of such material.
4.2. Any materials developed by the Company shall not give any information or
make any representations or statements on behalf of the Fund or concerning the
Fund in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or
its designee or by the Underwriter, except with the permission of the Fund or
the Underwriter or the designee of either.
4.3. The Fund, Underwriter, or their respective designee(s) 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 and/or its
Separate Account(s) and/or the Contract(s), is named at least fifteen Business
Days prior to its use, or such different period as the parties hereto may agree
upon from time to time in writing. No such material shall be used if the
Company or its designee reasonably objects to such use within fifteen Business
Days after receipt of such material, or such different period as the parties
hereto may agree upon from time to time in writing. All such materials will,
if necessary, be filed with the NASD or any applicable state regulatory
authority. Such materials will be presented in a form consistent with NASD
rules and applicable state insurance or security advertising laws and
regulations.
4.4. The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Separate Account, the CML Funds or the Contracts other than the information or
representations contained in the then current registration statement(s) or
prospectus(es) for the Contracts or the CML Funds, as such registration
statement(s) and prospectus(es) may be amended or supplemented from time to
time, or in published reports for the Separate Account which are in the public
domain or approved by the Company for distribution to Contract Owners (or
offerees), or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, annual and semiannual reports, prospectuses,
statements of additional information, reports, proxy statements, sales
literature or other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with the filing of such
document with the SEC or other regulatory authorities. If any such filings
directly discuss the Company, the Separate Account, the Contract, or the CML
Funds, the Fund shall obtain the approval of such party concerning the
statements relating to such party prior to filing or distributing such
documents.
4.6. The Fund shall provide the Company with copies of its annual and
semiannual reports to shareholders as required by Section 30 of the 1940 Act,
in a timely manner, and in no event later than: (i) for annual reports, within
a reasonable time after the end of each calendar year; and (ii) for semiannual
reports, within a reasonable time after the end of the second fiscal quarter of
each year. The Fund and the Company understand that the annual and semiannual
reports will be consolidated into one booklet and that such booklet will be
forwarded to Contract Owners and the SEC as required by Section 30 of the 1940
Act.
4.7. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature or other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts
or the Separate Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities. If any filing directly discusses
the Fund, the Adviser or the Underwriter, the Company or its designee shall
obtain the approval of such party concerning the statements relating to such
party prior to filing or distributing such documents.
4.8. CMFS will conduct its distribution activities to the best of its ability,
in compliance with applicable state and federal rules and regulations
concerning distribution of variable life and annuity contracts. Such
obligations and duties will be reflected in agreements it may enter into with
other distributors of the Contracts.
4.9. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(I.E., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar tests, reprints or excerpts of any other
advertisement, sales literature, or published article), and registration
statements, prospectuses, proxy materials, statements of additional
information, annual and semiannual reports and any other shareholder reports or
any other communications with the public that are designed to solicit sales of
the Contracts.
4.9. The Fund will provide the Company with as much advance notice as is
reasonably practicable and, if possible, with at least ninety (90) days advance
notice, of any material change affecting the Fund (including, but not limited
to, any material change in its registration statement or prospectus and any
proxy solicitation) and consult with the Company in order to implement any such
change in an orderly manner, recognizing the expenses of changes and attempting
to minimize such expenses by implementing them whenever possible in conjunction
with regular annual updates of the prospectuses for the Contracts. The Fund
agrees to share equitably in expenses incurred by the Company as a result of
actions taken by the Fund unless such changes;
(i) are mandated by changes in applicable law or regulation;
(ii)are the direct or indirect result of actions taken by the Company or the
Separate Account;
(iii)are necessary to resolve any material irreconcilable conflict among any
Participating Insurance Companies not caused by the fund, the Bank, or the
Distributor.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio, if
permitted to do so, adopts and implements a plan pursuant to Rule 12b-1 to
finance distribution expenses, then the Underwriter may make payments to the
Company or to the Underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter or other resources available to the
Underwriter. Although no such payments are currently contemplated, if such
payments are made in the future, such payments shall not be made directly by
the Fund.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal
law and in accordance with applicable state laws (if required) prior to their
sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, setting the
prospectus in type, printing and distributing the prospectus to the Contract
owners, setting in type and distributing the proxy materials and annual and
semiannual 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 Fund's shares.
5.3. The Underwriter shall bear the expenses of printing the Fund's prospectus
and providing as many copies as the Company may reasonably require for
marketing purposes as well as annual delivery to existing Contractholders.
5.4. The Underwriter shall bear the expenses of mailing the Fund's prospectus
to owners of Contracts issued by the Company and of mailing the Fund's proxy
materials and reports to such Contract owners.
ARTICLE VI DIVERSIFICATION AND QUALIFICATION
6.1. The Fund and Underwriter represent and warrant that the Fund will at all
times sell its shares and invest its assets in such a manner as to ensure that
the Contracts will be treated as variable contracts under the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund and Underwriter represent
and warrant that the Fund and each Portfolio thereof will at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended
from time to time, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor provisions to
such Section or Regulation. In the event that any Portfolio is not so
diversified, the Fund will notify the Company and will use reasonable efforts
to adequately diversify the Portfolio so as to achieve compliance within the
grace period afforded by Treasury Regulation 1.817-5.
6.2. No shares of any series or portfolio of the Fund will be sold to the
general public.
6.3. The Fund and Underwriter represent and warrant that the Fund and each
Portfolio are or will be qualified as a Regulated Investment Company under
Subchapter M of the Code, and that best efforts will be used to maintain such
qualification (under Subchapter M or any successor or similar provisions) as
long as shares of any Portfolio are held by the Separate Account.
6.4. The Fund or Underwriter will notify the Company immediately upon having a
reasonable basis for believing that the Fund or any Portfolio has ceased to
comply with the aforesaid Section 817(h) diversification or Subchapter M
qualification requirements or might not so comply in the future.
6.5. The Fund and Underwriter acknowledge that full compliance with the
requirements referred to in Sections 6.1, 6.3, and 6.4 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as variable life insurance contracts for federal
income tax purposes, which would have adverse tax consequences for Contract
owners and could also adversely affect the Company's corporate tax liability.
Accordingly, without in any way limiting or restricting any other remedies
available to the Company, the Underwriter will pay all costs associated with or
arising out of any failure, or any anticipated or reasonably foreseeable
failure, of the Fund or any Portfolio to comply with Sections 6.3 or 6.4
hereof, including all costs associated with correcting or responding to any
such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment company as a
funding medium for the Contracts and/or the costs of obtaining whatever
regulatory authorizations are required to substitute shares of another
investment company for those of the failed Portfolio (including but not limited
to an order pursuant to Section 26(b) of the 1940 Act), such costs are to
include, but are not limited to, fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes or tax penalties (or "toll
charges" or exactments or amounts paid in settlement) incurred by the Company
in connection with any such failure or anticipated or reasonably foreseeable
failure.
6.6. The Company agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of the Company
or, to the Company's knowledge, of any Contract owner, that any Portfolio has
failed to comply with the diversification requirements of section 817(h) of the
Code or the Company otherwise becomes aware of any facts that could give rise
to any claim against the Fund or its affiliates as a result of such a failure
or alleged failure, (i) the Company shall promptly notify the Fund of such
assertion or potential claim; (ii) the Company shall consult with the Fund as
to how to minimize any liability that may arise as a result of such failure or
alleged failure; (iii) the Company shall use its best efforts to minimize any
liability of the Fund; (iv) the Company, to the extent practical, shall permit
the Fund, its affiliates and their legal and accounting advisors to participate
in any conferences, settlement, discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof) with the IRS, any
Policy Owner or any other claimant regarding any claims that could give rise to
liability to the Fund or its affiliates as a result of such a failure or
alleged failure; and (v) any written materials to be submitted by the Company
to the IRS, any Contract owner or any other claimant in connection with any of
the foregoing proceedings or contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to Treasury Regulations Section
1.817-5(a)(2), (a) shall be provided by the Company to the Fund (together with
any supporting information or analysis) at least ten (10) business days prior
to the day on which such proposed materials are to be submitted, and (b) shall
not be submitted by the Company to any such person without the express written
consent of the Fund which shall not be unreasonably withheld; (vi) the Company
shall provide the Fund or its affiliates and their accounting and legal
advisors with such cooperation as the Fund shall reasonably request (including
without limitation, by permitting the Fund and its accounting and legal
advisors to review the relevant books and records of the Company) in order to
facilitate review by the Fund or its advisors of any written submissions
provided to it pursuant to the preceding clause or its assessment of the
validity or amount of any claim against its arising from such a failure of
alleged failure.
6.7. The Fund shall provide the Company or its designee with periodic reports
(on a quarterly basis) certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, substantially in
the form attached hereto as Schedule E, from independent auditors acceptable to
the Company; provided, however, that providing such reports does not relieve
the Fund or Underwriter of their responsibility for such compliance or of their
liability for any noncompliance.
ARTICLE VII. INDEMNIFICATION
7.1. INDEMNIFICATION BY THE COMPANY
7.1(a). The Company agrees to indemnify and hold harmless the Fund and each
Officer and Director of the Board of the Fund and Directors and officers of the
Underwriter (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including reasonable legal and other related 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 or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in any Registration Statement or
prospectus for the Contracts or contained in the Contracts or sales literature
for the Contracts prepared by or on behalf 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 misleading,
provided that this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Underwriter or the Fund for use in any
Registration Statement or prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other than
statements or representations contained in the Registration Statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
(iv) arise as a result of any material failure by the 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
and/or warranty made by the Company in this agreement or arise out of or result
from any other material breach of this agreement by the Company, as limited by
and in accordance with the provisions of Section 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this agreement or to
the Fund or to the Underwriter or to the Adviser, whichever may be applicable.
7.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on Separate Account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company
to such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of
the Fund.
7.2. INDEMNIFICATION BY THE UNDERWRITER
7.2(a). The Underwriter agrees to indemnify and hold harmless the Company its
agents, and each of its Directors and officers (collectively, the "Indemnified
Parties" for purposes of this Section 7.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including reasonable legal and other
related expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts, and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statements of any material fact contained in the Registration Statement or
prospectus or in sales literature prepared or on behalf of the Fund (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 statement therein not
misleading, provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
to the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus, or sales literature for the Fund (or any
amendment or supplement) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(ii)arise out of or as a result of statements or representations (other than
statements or representations contained in any Registration Statement,
prospectus or sales literature for the Contracts not supplied by the
Underwriter, Fund, or Adviser or persons under their control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature covering the Contracts and/or the Separate Account, or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or omission
was made in reliance upon information furnished to the Company by or on behalf
of the Fund or Underwriter; or
(iv)arise as a result of any material failure by the Fund or Underwriter to
provide the services and furnish the materials under the terms of this
Agreement; or
(v)arise from any failure by the Company to maintain qualification of the
Contracts for sales under applicable state or federal law; or
(vi)arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this agreement or arise out of or
result from any other material breach of this agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections 7.2(b) and 7.2(c)
hereof.
7.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Separate Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Underwriter
of any such claim shall not relieve the Underwriter from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on Separate Account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.2(d). The Company agrees promptly to notify the Underwriter, (or cause CMFS
to notify) the Underwriter and the Fund to be notified, 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
Separate Account.
7.3. INDEMNIFICATION BY THE FUND
7.3(a).The Fund agrees to indemnify and hold harmless the Company, and each of
its directors and officers, 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 7.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including reasonable legal and
other related expenses) to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Fund and:
(i)arise as a result of any failure by the Fund 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); or
(ii)arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this agreement or arise out of or result
from any other material breach of this agreement by the Fund.
7.3(b). The Fund shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this agreement.
7.3(c). The Fund shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Fund in writing within a reasonable time after
the summons or other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on Separate Account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such
party under this agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.3(d). The Fund agrees 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, with respect to the operation of the Separate Account, or the sale
or acquisition of shares of the Fund.
ARTICLE VIII APPLICABLE LAW
8.1. This agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of [Connecticut].
8.2. This Agreement shall be subject, to the extent applicable, to the
provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and
rulings thereunder, including such exemptions from those statutes, rules and
regulations as the SEC grant and the terms hereof shall be interpreted and
construed in accordance therewith.
8.3. The Fund and the Company acknowledge that the Separate Account and the
Fund may be subject to laws and regulations that restrict respective investment
activities. Should the Company become aware of any such law or regulation, in
particular those laws and regulations concerning insurance laws or rules, and
it notifies the Fund of any such investment restriction, the Fund agrees that
it will take reasonable measures to comply with any such rule or regulation.
ARTICLE IX. TERMINATION
9.1. This Agreement shall continue in full force and effect until the first to
occur of:
(a)termination by any party for any reason by six (6) months advance written
notice delivered to the other parties; or
(b)termination by the Company by written notice to the Fund and the Underwriter
with respect to any Portfolio based upon the Company's determination that
shares of such Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c)termination by the Company by written notice to the Fund and the Underwriter
with respect to any Portfolio in the event any of the Portfolio's shares are
not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or
(d)termination by the Company by written notice to the Fund and the Underwriter
with respect to any Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company reasonably believes
that the Fund may fail to so qualify; or
(e)termination by the Company by written notice to the Fund and the Underwriter
with respect to any Portfolio in the event that such Portfolio fails to meet
the diversification requirements specified in Article VI hereof; or
(f)termination by either the Fund or the Underwriter by written notice to the
Company, if either one or both of the Fund or the Underwriter respectively,
shall determine, in their sole judgment reasonably exercised in good faith,
that the Company and/or its affiliated companies has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material adverse
publicity and that such change or publicity will have a material adverse effect
on the ability of the Company to perform its obligations related to the
Contracts; or
(g)termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised in
good faith, that either the Fund or the Underwriter has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this agreement or is the subject of material adverse
publicity.
9.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this agreement, for all Contracts in effect on the effective
date of termination of this agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts.
ARTICLE X. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
OFFITBANK
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
If to the Company:
Connecticut Mutual Life Insurance Company
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
If to the Underwriter:
OFFIT Funds Distributors, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: President
ARTICLE XI. MISCELLANEOUS
11.1. 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 until such time as it may come
into the public domain without the express written consent of the affected
party.
11.2. 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.
11.3. This agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.4. 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.
11.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, state insurance regulators, and designee of the California Insurance
Commission) and shall permit such authorities reasonable access to its books
and records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
11.6. 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.
11.7. Neither the Underwriter nor the Fund nor the Company nor CMFS or any of
their respective agents will knowingly induce or cause, or attempt to induce or
cause either directly or indirectly, any Contract owner to lapse, terminate,
surrender, or exchange a Contract or to discontinue making payments thereunder.
11.8. This agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Underwriter upon prior written notice to the
Company, may assign this Agreement or any rights or obligations hereunder to
any affiliate of or company under common control with the Underwriter, if such
assignee is duly licensed and registered to perform the obligations of the
Underwriter under this Agreement.
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
and its seal to be hereunder affixed hereto as the date specified below.
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By:
Title:
Date:
OFFITBANK VARIABLE INSURANCE FUND, INC.
By:
Title:
Date:
CML/OFFITBANK VARIABLE ANNUITY SEPARATE ACCOUNT
By: CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By:
Title:
Date:
OFFIT FUNDS DISTRIBUTOR, INC.
By:
Title:
Date:
SCHEDULE A
VARIABLE ANNUITY CONTRACTS
-OFFITBANK Variable Annuity Contract
SCHEDULE B
PORTFOLIOS OFFERED BY THE FUND
(1.)OFFITBANK VIF -- High Yield Fund;
(2.)OFFITBANK VIF -- Investment Grade Global Deposit Fund;
(3.)OFFITBANK VIF -- Emerging Market Fund
SCHEDULE C - SEPARATE ACCOUNTS
CML/OFFITBANK Variable Annuity Separate Account
