AMENDMENT TO PARTICIPATION AGREEMENT
Exhibit (h)(xii)(b)
AMENDMENT TO PARTICIPATION AGREEMENT
This AMENDMENT TO PARTICIPATION AGREEMENT (the “Amendment”) is made and entered into as of this 1st day of May, 2008, by and among THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. (the “Company”), on its own behalf and on behalf of each separate account of the Company (each an “Account”) identified in the Participation Agreement (as defined below), XXX XXXXXX LIFE INVESTMENT TRUST (the “Fund”), XXX XXXXXX FUNDS INC. (the “Underwriter”), and XXX XXXXXX ASSET MANAGEMENT (the “Adviser”).
WHEREAS, the Company, the Fund, the Underwriter and the Adviser have entered into a Participation Agreement dated as of May 1, 2002, as such agreement may be amended from time to time (the “Participation Agreement”), which provides that the Fund will make available for purchase, exchange and redemption by the Company, on behalf of the Accounts, shares of certain Portfolios to fund certain Variable Insurance Products; and
WHEREAS, the Fund, acting through the Fund’s transfer agent, has established one or more master accounts on its mutual fund shareholder account recordkeeping system (each, a “T/A Account”) reflecting the aggregate ownership of shares of each Portfolio of the Fund and all transactions involving such shares by the Company on behalf of the Accounts; and
WHEREAS, the Company, the Fund, the Underwriter and the Adviser wish to permit the Fund to receive, and the Company, or its authorized agent, to transmit, purchase, exchange and redemption orders of Portfolio shares using either manual procedures or the National Securities Clearing Corporation (“NSCC”) Fund/SERV System (“Fund/SERV”), as set forth in the attached Exhibit A; and
WHEREAS, the Company, the Fund, the Underwriter and the Adviser wish to amend the Participation Agreement as necessary to permit the Fund to receive, and the Company, or its authorized agent, to transmit, purchase, exchange and redemption orders of Portfolio shares using the National Securities Clearing Corporation (“NSCC”) Fund/SERV system (“Fund/SERV”); and
WHEREAS, it is intended that the parties will participate with each other in the NSCC’s Networking system (“Networking”) to enable the exchange of account-level information such as transaction activity, including Fund/SERV activity, and Portfolio share balances in the T/A Accounts; and
WHEREAS, the Company, the Fund, the Underwriter and the Adviser further wish to amend the Participation Agreement as necessary to revise Schedule A and Schedule B thereto, as well as to add certain provisions relating to anti-money laundering rules and regulations.
NOW, THEREFORE, in consideration of their mutual promises, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Fund, the Underwriter and the Adviser agree to amend the Participation Agreement as follows:
1. Section 1.1 of the Participation Agreement is deleted in its entirety and replaced with the following:
The Fund and the Underwriter agrees to make available for purchase by the Company shares of the Portfolio(s) and shall execute purchase orders placed for each Account on each Business Day at the net asset value next computed after receipt by the Fund or its designee of such purchase order. For purposes of this Section 1.1, and for purposes of Rule 22c-1 of the 1940 Act, the Company shall be the designee of the Fund and the Underwriter for receipt of such purchase orders from each Account and receipt by the Company shall constitute receipt by the Fund; provided that such purchase orders are received and transmitted in accordance with the Operating Procedures attached hereto as Exhibit A (the “Operating Procedures”). “Business Day” shall mean any day on which the New York Stock Exchange, Inc. is open for trading and on which the Fund calculates its net asset value pursuant to SEC rules.
2. Section 1.4 of the Participation Agreement is deleted in its entirety and replaced with the following:
The Fund and the Underwriter agrees to redeem for cash, on the Company’s request, any full or fractional shares of the Portfolio(s) held by the Company, executing such redemption requests for each Account on each Business Day at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.4, and for purposes of Rule 22c-1 of the 1940 Act, Company shall be the designee of the Fund and the Underwriter for receipt of requests for redemption from each Account and receipt by the Company shall constitute receipt by the Fund; provided that such redemption requests are received and transmitted in accordance with the Operating Procedures.
3. Section 1.6 of the Participation Agreement is deleted in its entirety and replaced with the following:
The Fund and the Company will settle all purchase and redemption orders transmitted pursuant to Sections 1.1 and 1.4 of this Agreement, respectively, in accordance with the Operating Procedures.
4. Sections 1.8 and 1.9 of the Participation Agreement are deleted in their entirety, and Section 1.10 is now effectively renumbered as Section 1.8.
5. The following new Section 2.10 is hereby added to the Participation Agreement:
2.10 Anti-Money Laundering
a. The Company represents and warrants that it is in compliance and will continue to be in compliance with all applicable anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA
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PATRIOT Act, and implementing regulations of the Bank Secrecy Act (“BSA Regulations”) and applicable guidance issued by the SEC and the guidance and rules of the applicable Exchanges, SROs and the NASD (collectively, “Guidance”).
b. In connection with the Fund’s reliance on Company to perform Customer Identification Program (“CIP”) procedures on its behalf, the Company represents and warrants that (1) Company is subject to a rule implementing 31 U.S.C. 5318(h) and maintains an anti-money laundering program consistent with the USA PATRIOT Act and the rules thereunder; (2) Company is regulated by a Federal functional regulator as that term is defined under 31.C.F.R. §103.120(a)(2); (3) Company has implemented a CIP compliant with Section 326 and 31 C.F.R. §103.137(b) that enables Company to form a reasonable belief that it knows the true identity of its customers, including procedures to obtain information from and verify the identity of customers, maintain records of the information used to verify identity, determine whether the customer appears on any government list of known or suspected terrorists or terrorist organizations, and provide customers with adequate notice that the institution is requesting information to verify their identities; and (4) At the Funds request, Company will certify annually that it has implemented its anti-money laundering program and that it or its agent will perform all aspects of its CIP procedures with respect to customers referred to the Fund by the Company.
c. The Company represents and warrants that to the extent any owner of a Contract is a foreign bank, it has taken reasonable measures and has obtained certifications and will obtain re-certifications that indicate that such Contract owner is not a foreign shell bank, as defined in the BSA Regulations.
d. The Company will take all reasonable and practicable steps to ensure that it does not accept or maintain investments in any Contract from:
(i) A person or entity who is or becomes subject to sanctions administered by the U.S. Office of Foreign Assets Control (“OFAC”), is included in any executive order or is on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC.
(ii) A foreign shell bank (i.e., a bank with no physical presence in any country).
e. The Company agrees to immediately notify in writing the Anti-Money Laundering Compliance Officer of the Fund if it becomes aware of any suspicious activity or pattern of activity or any activity that may require further review to determine whether it is suspicious in connection with the Funds.
f. The Company agrees that if the Fund, Underwriter or Adviser is required to supply information, documentation or guidance to a securities regulatory organization (“SRO”) or government department or agency about the CIP of the Fund or
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the Underwriter or the Adviser or the measures taken to obtain information and to verify the identity of any owner of a Contract who has allocated purchase payments or Contract value to Portfolios available under the Contract, Company shall allow such SRO or government department or agency to examine its files pertaining to such Contract owner.
6. Operating Procedures. The Operating Procedures governing the responsibilities of the Fund and the Company under the Participation Agreement and this Amendment with respect to the purchase and redemption of Fund shares and share price communication are hereby incorporated into the Participation Agreement as Exhibit A thereto.
7. NSCC Covenants. Each of the Fund and the Company represents and warrants that either (i) it, or an affiliate, is a member of the NSCC and thus is authorized or entitled to use Fund/SERV and Networking, or (ii) it otherwise has access to Fund/SERV and Networking through a duly authorized agent that is a member of the NSCC. Each of the Fund and the Company further represents, warrants and covenants that (i) it will abide by the rules, guidelines and procedures of the NSCC relating to Fund/SERV and Networking; (ii) any information provided to the other party through Fund/SERV and Networking will be accurate, complete, and in the format prescribed by the NSCC; and (iii) it will adopt, implement and maintain procedures reasonably designed to ensure the accuracy of all transmissions through Fund/SERV and Networking and shall limit the access to, and the inputting of data into, Fund/SERV and Networking to specifically authorized persons.
8. Revised Schedules. Schedule A and Schedule B of the Participation Agreement are deleted and replaced in their entirety with the attached Schedule A and Schedule B, respectively.
9. Full Force and Effect. Except as expressly supplemented, amended or consented to hereby, all of the representations, warranties, terms, covenants and conditions of the Participation Agreement shall remain in full force and effect.
10. Amendments. This Amendment may be amended only by written instrument executed by each party hereto.
11. Capitalized Terms. All capitalized words and phrases used but not otherwise defined herein shall have the meaning ascribed to them in the Participation Agreement.
12. Entire Agreement. This Amendment and the Participation Agreement, as amended, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersede any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof.
13. Notices. All notices and other communications hereunder shall be in writing and shall be delivered as provided for by the Participation Agreement.
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14. Governing Law. This Amendment, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Illinois, without reference to the conflicts of law principles thereof.
15. Counterparts. This Amendment may be executed in any number of multiple counterparts (and may be delivered by facsimile), each of which shall be deemed to be an original and all of which, taken together, shall constitute one agreement, binding on all parties hereto.
16. Effective Date. This Amendment shall be effective as of the date written above.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and on its behalf by its duly authorized representative as of the date specified above.
| THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. | ||
| By: |
| |
| Name: | ||
| Title: | ||
| XXX XXXXXX LIFE INVESTMENT TRUST | ||
| By: | /s/ Xxxxxx X. Xxxxxxx | |
| Name: | Xxxxxx X. Xxxxxxx | |
| Title: | CFO and Treasurer | |
| XXX XXXXXX ASSET MANAGEMENT | ||
| By: | /s/ Xxxxxx Xxxx | |
| Name: | Xxxxxx Xxxx | |
| Title: | Managing Director | |
| XXX XXXXXX FUNDS INC. | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | Managing Director | |
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EXHIBIT A
Operating Procedures
Unless otherwise defined below, all capitalized terms have the meanings specified in the Amendment and the Participation Agreement, each of which this Exhibit is a part.
I. FUND/SERV AND NETWORKING ROCEDURES
A. Account Establishment. All parties hereto agree and acknowledge that the Company or its designee, if applicable, may not open or establish any new accounts through Fund/SERV or NSCC’s Networking system (“Networking”) without the prior written consent of the Fund. The Company further acknowledges that the Fund reserves the right to reject any new Fund/SERV or Networking accounts established by the Company that have not been previously approved by the Fund in writing.
B. Transmittal of Portfolio Information. With respect to each Portfolio, the Fund will provide the Company or its designee, via the NSCC’s Mutual Fund Profile System, with (i) the net asset value per share of the Portfolio (the “Share Price”) on each Business Day, determined as of the time specified in the Portfolio’s prospectus (“Close of Trading”); (ii) dividend and capital gains distribution information on ex-date, but no later than the first Business Day following each ex-date established for the payment of dividends or capital gains distributions by the Portfolio; and (iii) in the case of fixed income and money market Portfolios which declare dividends daily, the daily accrual interest rate factor. The Fund will use its best efforts to communicate such information to the Company or its designee via the NSCC’s Mutual Fund Profile System by 7:00 p.m. Eastern Time each Business Day; provided, however, that the Fund reserves the right to communicate the Share Price at a time later than 7:00 p.m. Eastern Time due to extraordinary or unforeseen circumstances.
C. Transmittal of Orders. The Company agrees that, unless otherwise agreed to in writing with the Fund, orders for the purchase, exchange or redemption of Fund shares (“Instructions”) received by the Company prior to the Close of Trading on any Business Day (“Day 1”) will be transmitted to the Fund’s transfer agent via Fund/SERV and accepted by Fund/SERV prior to 6:00 a.m. Eastern Time on the following Business Day (“Day 2”) (such orders are referred to as “Day 1 Trades”). Each transmission by the Company or its designee of a purchase, exchange or redemption order relating to a Business Day (“Order”) will constitute a representation by the Company that such Order was based on Instructions that the Company received and accepted as being in good order prior to the Close of Trading on that Business Day, and that the Order included all purchase, exchange and redemption Instructions so received by the Company.
In the event that Orders for any Business Day are not transmitted to the Fund via Fund/SERV and accepted by Fund/SERV prior to 6:00 a.m. Eastern Time on Day 2, the Company or its designee shall transmit such Orders to the Fund in accordance with the Manual Procedures below. If such Orders are not transmitted to the Fund in accordance with the Manual Procedures, the Fund reserves the right, in its sole discretion, to reject, reverse or re-price the Orders (notwithstanding that the Company may have received
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Fund/Serv confirmation of the Orders) and the Company will be responsible for reimbursement of any loss sustained by the Fund that may arise out of the improper transmittal of such Orders.
All Orders transmitted to the Fund via Fund/SERV will be communicated in accordance with Fund/SERV rules, guidelines and procedures. The Company acknowledges that certain cash flows may be known on or before a trade date, and the Company agrees to use its reasonable efforts to notify the Fund of such cash flows before such trade date.
D. Fund/SERV Confirmation. All Orders transmitted in accordance with Section C of these Fund/SERV and Networking Procedures are subject to acceptance by the Fund and shall become effective only upon confirmation by the Fund. The Fund’s transfer agent will transmit a confirmation via Fund/SERV that will set forth, for each T/A Account, the number of Portfolio shares purchased, exchanged and redeemed, the beginning and ending share balances, and the net asset value per share. The Fund reserves the right, in its sole discretion, to require any Order to be settled outside of Fund/SERV, in which case the Fund shall not confirm such Order via Fund/SERV and such Order shall settle in accordance with the Manual Procedures discussed below.
E. Pricing of Orders. Day 1 Trades communicated to the Fund as provided under Section C of these Fund/SERV Procedures will be effected at the Share Price for the applicable Portfolio on Day 1.
F. Settlement. Day 1 Trades confirmed by the Fund via Fund/SERV will settle in U.S. dollars in accordance with the Fund’s profile within Fund/SERV applicable to the Company.
G. Dividends and Other Distributions. The Fund or its designee will furnish the Company or its designee notice of any dividends or other distributions payable on the shares of each Portfolio via Networking. Dividends and distributions with respect to a Portfolio will be automatically reinvested in additional shares of the Portfolio held by the T/A Account(s) and the Fund or its transfer agent will notify the Company or its designee, via Networking, as to the number of shares so issued.
H. Activity Reporting and Verification. If the Company chooses to utilize Networking, the Fund or its designee will transmit or make available to the Company, via Networking, a report containing any transactions or other activity occurring in a T/A Account on a Business Day, including any Fund/SERV transactions, and the share balance for each T/A Account in accordance with Fund/SERV’s Networking guidelines. The Company will promptly review and verify this information on Networking and immediately advise the Fund or its transfer agent in writing of any discrepancies between the Company’s records and the balance in the T/A Account(s).
If the Company chooses not to utilize Networking, the Fund or its designee will deliver to the Company a physical statement for the preceding calendar month reflecting the shares of each Portfolio held by the T/A Account(s) as of the end of such preceding month and all purchases, exchanges and redemptions by the Company of shares of a Portfolio during such preceding month. The
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Company will, immediately on receipt of any physical statement concerning an Account, verify the information contained therein against the information contained on the Company’s record-keeping system and immediately advise the Fund in writing of any discrepancies between such information.
The Fund and the Company will cooperate to resolve any such discrepancies mentioned in this Section H as soon as reasonably practicable.
I. Processing Adjustments. In the event of any error or delay with respect to these Fund/SERV and Networking Procedures that is caused by the Fund or its designee, the Fund will make any adjustments on its (or its transfer agent’s) accounting system necessary to correct such error or delay. The Company will make the corresponding adjustments on its record-keeping system. The Company and the Fund will each provide the other with prompt notice of any errors or delays of the type referred to in these Fund/SERV and Networking Procedures.
J. Fund/SERV Unavailability. If the Fund/SERV and Networking systems are unavailable for any reason, or if it is otherwise impracticable to operate in accordance with these Fund/SERV and Networking Procedures, transactions shall be processed in accordance with the Manual Procedures outlined below.
II. MANUAL PROCEDURES
A. Transmittal of Portfolio Information. With respect to each Portfolio, the Fund or its transfer agent will provide the Company with (i) the Share Price determined as of the Close of Trading on each Business Day; (ii) dividend and capital gains distribution information on ex-date, but no later than the first Business Day following each ex-date established for the payment of dividends or capital gains distributions by the Portfolio; and (iii) in the case of fixed income and money market Portfolios which declare dividends daily, the daily accrual interest rate factor. The Fund will use its best efforts to communicate, or have its transfer agent communicate, such information to the Company or its designee via facsimile or other method agreed upon by the parties by 7:00 p.m. Eastern Time each Business Day; however, the Fund reserves the right to communicate the Share Price at a time later than 7:00 p.m. Eastern Time due to extraordinary or unforeseen circumstances.
B. Transmittal of Orders. The Company agrees that, unless otherwise agreed to in writing with the Fund, Instructions received by the Company prior to the Close of Trading on any Business Day (“Day 1”) will be transmitted to the Fund by facsimile no later than 9:00 a.m. Eastern Time on the following Business Day (“Day 2”) (such Orders are referred to as “Day 1 Trades”). Each transmission by the Company or its designee of a purchase, exchange or redemption order relating to a Business Day (“Order”) will constitute a representation by the Company that such Order was based on Instructions that the Company received and accepted as being in good order prior to the Close of Trading on that Business Day, and that the Order included all purchase, exchange and redemption Instructions so received by the Company.
All Orders transmitted to the Fund will be communicated in U.S. dollars and will indicate the date of the transaction. On Business Days where there are no Orders, or where the net dollar amount for purchases and redemptions for an Account equals zero,
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the communication will so indicate. The Company acknowledges that certain cash flows may be known on or before a trade date, and the Company agrees to use its reasonable efforts to notify the Fund of such cash flows before such trade date.
C. Confirmation. All Orders transmitted in accordance with Section B of these Manual Procedures are subject to acceptance by the Fund and shall become effective only upon confirmation by the Fund, which confirmation shall be sent to the Company or its designee via facsimile. The Fund reserves the right, in its sole discretion, to reject any Order.
D. Pricing of Orders. Day 1 Trades communicated to the Fund by 9:00 a.m. Eastern Time on Day 2 will be effected at the Share Price for the applicable Portfolio on Day 1.
E. Settlement.
1. Net Wiring of Orders. Orders shall be wired by the Company or its designee on a net basis according to the following procedures:
(i) Net Purchase Orders. In the case of Day 1 Trades that constitute a net purchase (including exchanges) Order, the Company or its designee will arrange for a federal funds wire transfer of the net purchase amount to a custodial account designated by the Fund by 2:00 p.m. Eastern Time on Day 2.
(ii) Net Redemption Orders. In the case of Day 1 Trades that constitute a net redemption (including exchanges) Order, the Fund or its transfer agent will arrange for a federal funds wire transfer of the net redemption amount to a custodial account designated by the Company on Day 2, in no instance later than the time provided for in the applicable Portfolio’s Prospectus.
2. Generally. Settlements will be in U.S. dollars, except that each Portfolio reserves the right, in cases of substantial liquidations, to pay redemption proceeds in whole or in part by a distribution in-kind of readily marketable securities that it holds in lieu of cash in accordance with applicable law, and the Portfolio’s redemption policy as described in the Prospectus. On any Business Day when the Federal Reserve Wire Transfer System is closed, all communication and processing rules will be suspended for the settlement of Orders. Orders will be settled on the next Business Day on which the Federal Reserve Wire Transfer System is open. Transactions that are the subject of such Orders will be processed at the Share Price for the applicable Portfolio on the Business Day to which the Orders originally relate.
F. Dividends and Other Distributions. The Fund or its designee will furnish the Company or its designee written notice of any dividends or other distributions payable on the shares of each Portfolio, via facsimile or other method agreed upon by the parties. Dividends and distributions with respect to a Portfolio will be automatically reinvested in additional shares of the Portfolio held by the T/A Account(s) and the Fund or its transfer agent will notify the Company or its designee as to the number of shares so issued.
G. Activity Reporting and Verification. The Fund or its transfer agent will deliver to the Company or its designee in writing, via facsimile or other method agreed upon by the parties a statement for the preceding calendar month reflecting the shares of each
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Portfolio held by the T/A Account(s) as of the end of such preceding month and all purchases, exchanges and redemptions by the Company of shares of a Portfolio during such preceding month. The Company will, immediately upon receipt of any statement concerning a T/A Account, verify the information contained therein against the information contained on the Company’s record-keeping system and immediately advise the Fund or its transfer agent, in writing, of any discrepancies between such information. The Fund and the Company will cooperate to resolve any such discrepancies as soon as reasonably practicable.
H. Processing Adjustments. In the event of any error or delay with respect to these Manual Procedures that is caused by the Fund or its transfer agent, the Fund will make any adjustments on its (or its transfer agent’s) recordkeeping system necessary to correct such error or delay. The Company will make the corresponding adjustments on its record-keeping system. The Company and the Fund will each provide the other with prompt notice of any errors or delays of the type referred to in these Manual Procedures.
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
| Name of Separate Account and Date Established by Board of Directors |
Form Number and Name of Contract Funded by Separate Account | |
| The Guardian Separate Account E |
The Guardian Investor Retirement Asset Manager (Form | |
| The Guardian Separate Account F |
The Guardian C+C Variable Annuity (Form IVA – 2040) | |
| The Guardian CXC Variable Annuity Contract (Form | ||
| The Guardian Separate Account Q |
The Guardian Investor Income Access Variable Annuity (Form IVA – 2050) | |
| The Guardian Separate Account A |
Value Guard II (Form IVA – 2006) | |
| The Guardian Separate Account D |
The Guardian Investor (Form IVA – 2006) | |
| The Guardian Separate Account R |
The Guardian Investor Asset Builder Variable Annuity Contract (Form IVA - 2060) | |
| The Guardian Separate Account N |
Executive Benefit VUL | |
A-1
SCHEDULE B
PORTFOLIOS OF THE XXX XXXXXX LIFE INVESTMENT TRUST
AVAILABLE UNDER THIS AGREEMENT
Class II Shares
Government Portfolio – Class II Shares
Growth & Income Portfolio – Class II Shares
B-1
