EXECUTION VERSION
PARTICIPATION AGREEMENT
AMONG
CUNA MUTUAL INSURANCE SOCIETY,
PIMCO VARIABLE INSURANCE TRUST,
AND
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the 1st day of May 1, 2008, by and among CUNA
Mutual Insurance Society, (the "Company"), an Iowa life insurance company, on
its own behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A hereto as may be amended from time to time (each account
hereinafter referred to as the "Account"), PIMCO Variable Insurance Trust (the
"Fund"), a Delaware statutory trust, and Allianz Global Investors Distributors
LLC (the "Underwriter"), a Delaware limited liability company.
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 and variable annuity contracts (the
"Variable Insurance Products") to be offered by insurance companies which have
entered into participation agreements with the Fund and Underwriter
("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order {PIMCO Variable Insurance Trust, et
al, Investment Company Act Rel. Nos. 22994 (Jan. 7, 1998) (Notice) and 23022
(Feb. 9, 1998)(Order)) from the Securities and Exchange Commission (the "SEC")
granting Participating Insurance Companies and variable annuity and variable
life insurance 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, if and to
the extent necessary to permit shares of the Fund to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies, and to qualified pension
and retirement plans (the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company LLC (the "Adviser"), which
serves as investment adviser to the Fund, is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
Financial Industry Regulatory Authority ("FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Advisor Class shares in the
Portfolios listed in Schedule A hereto, as it may be amended from time to time
by mutual written agreement (the "Designated Portfolios") on behalf of the
Account to fund the aforesaid Contracts, and the Underwriter is authorized to
sell such shares to the Account at net asset value;
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 Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so instructed,
the Underwriter to make available to the Company for purchase on behalf of the
Account Fund shares of those Designated Portfolios selected by the Underwriter.
Pursuant to such authority and instructions, and subject to Article IX hereof,
the Underwriter agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Portfolios listed on Schedule A to
this Agreement, such purchases to be effected at net "asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Fund
series (other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the
Underwriter may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, or liquidate any Designated Portfolio or class
thereof, if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good faith,
suspension, termination or liquidation is necessary in the best interests of the
shareholders of such Designated Portfolio (in which event notice shall be
provided to the Company).
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the Company
shall not redeem Fund shares attributable to Contract owners except in the
circumstances permitted in Section 1.3 of this Agreement, and (ii) the Fund may
delay redemption of Fund shares of any Designated Portfolio to the extent
permitted by the 1940 Act, and any rules, regulations or orders thereunder.
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1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund
for the limited purpose of receiving purchase and redemption requests on behalf
of the Account (but not with respect to any Fund shares that may be held in the
general account of the Company) for shares of those Designated Portfolios made
available hereunder, based on allocations of amounts to the Account or
subaccounts thereof under the Contracts and other transactions relating to the
Contracts or the Account. Receipt and acceptance of any such request (or
relevant transactional information therefor) on any day 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 SEC (a "Business Day") by the Company as such
limited agent of the Fund prior to the time that the Fund ordinarily calculates
its net asset value as described from time to time in the Fund Prospectus (which
as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) shall
constitute receipt and acceptance by the Fund on that same Business Day,
provided that the Fund or its designated agent receives notice of such request
by 9:00 a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each Designated Portfolio
on the same day that it notifies the Fund of a purchase request for such shares.
Payment for Designated Portfolio shares shall be made in federal funds
transmitted to the Fund by wire to be received by the Fund by 4:00 p.m. Eastern
Time on the Business Day the Fund is notified of the purchase request for
Designated Portfolio shares (which request may be net of redemptions of shares).
If federal funds are not received on time, such funds will be invested, and
Designated Portfolio shares purchased thereby will be issued, as soon as
practicable and the Company shall promptly, upon the Fund's request, reimburse
the Fund for any charges, costs, fees, interest or other expenses incurred by
the Fund in connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result-of portfolio
transactions effected by the Fund based upon such purchase request. Upon receipt
of federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
(c) Payment for Designated Portfolio shares redeemed by the
Account or the Company shall be made in federal funds transmitted by wire to the
Company or any other designated person on the next Business Day after the Fund
is properly notified of the redemption order of such shares (which order shall
be net of any purchase orders) except that the Fund reserves the right to redeem
Designated Portfolio shares in assets other than cash and to delay payment of
redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act
and any Rules thereunder, and in accordance with the procedures and policies of
the Fund as described in the then current prospectus and/or SAI The Fund shall
not bear any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds by the Company; the Company alone shall be responsible
for such action.
(d) Any purchase or redemption request for Designated Portfolio
shares held or to be held in the Company's general account shall be effected at
the net asset value per share next determined after the Fund's receipt of such
request, provided that, in the case of a purchase request, payment for Fund
shares so requested is received by the Fund in federal funds prior to close of
business for determination of such value, as defined from time to time in the
Fund Prospectus.
(e) The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 45 days
prior written notice to the Fund and the
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Underwriter, as permitted by an order of the SEC pursuant to Section 26(c) of
the 1940 Act, but only if a substitution of other securities for the shares of
the Designated Portfolios is consistent with the terms of the Contracts, or (iv)
as permitted under the terms of the Contracts. Upon request, the Company will
promptly furnish to the Fund reasonable assurance that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract owners from allocating payments to a Designated Portfolio that
was otherwise available under the Contracts without first giving the Fund 45
days notice of its intention to do so.
1.4. The Fund shall use its best efforts to make the net asset value
per share for each Designated Portfolio available to the Company by 7:00 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio is
calculated, and shall calculate such net asset value in accordance with the
Fund's Prospectus. Neither the Fund, any Designated Portfolio, the Underwriter,
nor any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company or any other Participating Insurance Company
to the Fund or the Underwriter.
1.5. 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 any Designated Portfolio shares. The
Company, on its behalf and on behalf of the Account, hereby elects to receive
all such dividends and distributions as are payable on any Designated Portfolio
shares in the form of additional shares of that Designated Portfolio. The
Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash. The Fund shall notify the Company promptly of the number
of Designated Portfolio shares so issued as payment of such dividends and
distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only.
Share certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Fund shares shall be recorded in an appropriate ledger
for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other insurance companies (subject to Section 1.8 hereof) and the cash value
of the Contracts may be invested in other investment companies, provided,
however, that until this Agreement is terminated pursuant to Article DC, the
Company shall promote the Designated Portfolios on the same basis as other
funding vehicles available under the Contracts.
(b) The Company shall not, without prior notice to the Fund
(unless otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Fund
(unless otherwise required by applicable law), induce Contract owners to change
or modify the Fund or change the Fund's distributor or investment adviser:
(d) The Company shall not, without prior notice to the Fund,
induce Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the Board of
Trustees of the Fund.
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1.8. The Company acknowledges that, pursuant to Form 24F-2, the Fund
is not required to pay fees to the SEC for registration of its shares under the
1933 Act with respect to its shares issued to an Account that is a unit
investment trust that offers interests that are registered under the 1933 Act
and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The Company agrees to provide the Fund or its agent each
year within 60 days of the end of the Fund's fiscal year, or when reasonably
requested by the Fund, information as to the number of shares purchased by a
Registered Account and any other Account the interests of which are not
registered under the 0000 Xxx. The Company acknowledges that the Fund intends to
rely on the information so provided.
1.9. The Fund has in place an NAV error correction policy, and the
Fund will follow such policy in the event of an NAV error.
ARTICLE II. Representations and Warranties
2.1. The Fund represents and warrants that (i) the Fund is lawfully
organized and validly existing under the laws of the State of Delaware, (ii) the
Fund is and shall remain registered under the 1940 Act, (iii) the Fund does and
will comply in all material respects with the 1940 Act, (iv) Designated
Portfolio shares sold pursuant to this Agreement are registered under the 1933
Act (to the extent required by that Act) and are duly authorized for issuance,
(v) the Fund shall amend the registration statement for the shares of the
Designated Portfolios under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of such shares, and (vi) the
Board has elected for each Designated Portfolio to be taxed as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund makes no representations or warranties as to
whether any aspect of the Designated Portfolios' operations, including, but not
limited to, investment policies, fees and expenses, complies with the insurance
laws and other applicable laws of the various states.
2.2. The Underwriter represents and warrants that shares of the
Designated Portfolios (i) shall be offered and sold in compliance with
applicable state and federal securities laws, (ii) are offered and sold only to
Participating Insurance Companies and their separate accounts and to persons or
plans that communicate to the Fund that they qualify to purchase shares of the
Designated Portfolios under Section 817(h) of the Code and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Designated Portfolios as constituting investments
of the Account for the purpose of satisfying the diversification requirements of
Section 817(h) ("Qualified Persons"), and (iii) are registered and qualified for
sale in accordance with the laws of the various states to the extent required by
applicable law.
2.3. Subject to Company's representations and warranties in Sections
2.5 and 2.6, the Fund represents and warrants that it will invest the assets of
each Designated Portfolio in such a manner as to ensure that the Contracts will
be treated as annuity or life insurance contracts, whichever is appropriate,
under the Code and the regulations issued thereunder (or any successor
provisions). Without limiting the scope of the foregoing, the Fund represents
and warrants that each Designated Portfolio has complied and will continue to
comply with Section 817(h) of the Code and Treasury Regulation section 1.817-5,
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. The Fund will make every reasonable effort (a) to notify the Company
immediately upon having a reasonable basis for believing that a breach of this
Section 2.3 has occurred, and (b) in the event of such a breach, to adequately
diversify the Designated Portfolio so as to achieve compliance within the grace
period afforded by Treasury Regulation Section 1.817-5.
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2.4. The Fund represents and warrants that each Designated Portfolio
is or will be qualified as a Regulated Investment Company under Subchapter M of
the Code, that the Fund will make every reasonable effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that the Fund will notify the Company immediately upon having a reasonable basis
for believing that a Designated Portfolio has ceased to so qualify or that it
might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are,
or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company also represents and warrants that
it is an insurance company duly organized and in good standing under applicable
law, that it has legally and validly established the Account prior to any
issuance or sale thereof as a segregated asset account under Iowa insurance
laws, and that it (a) has registered or, prior to any issuance or sale of the
Contracts, 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, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act. The Company
further represents and warrants that (i) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal securities
and state securities and insurance laws, (ii) the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements;
(iii) the information provided pursuant to Section 1.8 shall be accurate in all
material respects; and (iv) it and the Account are Qualified Persons. The
Company shall register and qualify the Contracts or interests therein as
securities in accordance with the laws of the various states only if and to the
extent required by applicable law.
2.6. The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity contracts, under applicable provisions of the Code, and that it will
make every reasonable effort to maintain such treatment, and that it will notify
the Fund and the Underwriter immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, the Company represents and warrants that
each of its Accounts is a "segregated asset account*' and that interests in the
Accounts are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. Company will use every reasonable effort to
continue to meet such definitional requirements, and it will notify the Fund and
the Underwriter immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future. The Company represents and warrants that it will not purchase Fund
shares with assets derived from tax-qualified plans except indirectly through
Contracts purchased in connection with such plans.
2.7. The Underwriter represents and warrants that it is a member in
good standing of FINRA and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.8. The Fund and the Underwriter represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, and other
individuals or 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
minimum coverage as required currently by Rule 17g-l 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.
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2.9. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Fund and to pay to the Fund any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Fund pursuant to the
terms of this Agreement. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies.
2.10. The Company represents and warrants that it shall comply with
any applicable privacy and notice provisions of 15 U.S.C. Sections 6801-6827 and
any applicable regulations promulgated thereunder (including but not limited to
17 C.F.R. Part 248) as they may be amended.
2.11. The Company represents and warrants that it has in place an
anti-money laundering program ("AML program") that does now and will continue to
comply with applicable laws and regulations, including the relevant provisions
of the USA PATRIOT Act (Pub. L. No. 107-56 (2001)) and the regulations issued
thereunder.
2.12. The Company represents and warrants that (a) the Company has,
and will maintain, policies and procedures reasonably designed to monitor and
prevent market timing or excessive trading activity by its customers and (b) the
Company will provide the Fund or its agent with assurances regarding the
compliance of its handling of orders with respect to shares of the Designated
Portfolios with the requirements of Rule 22c-1, regulatory interpretations
thereof, and the Fund's market timing and excessive trading policies upon
reasonable request. Additionally, the Company shall comply with provisions of
the prospectuses and statement of additional information ("SAI") of the Fund,
and with applicable federal and state securities laws. Among other things, the
Company shall be responsible for reasonably assuring that: (a) only orders to
purchase, redeem or exchange Shares received by the Company or any Indirect
Intermediary (as defined below) prior to the Valuation Time (as defined below)
shall be submitted directly or indirectly by the Company to the Fund or its
transfer agent or other applicable agent for receipt of a price based on the net
asset value per share calculated for that day in accordance with Rule 22c-1
under the 1940 Act (Orders to purchase, redeem or exchange Fund shares received
by the Company subsequent to the Valuation Time on any given day shall receive a
price based on the next determined net asset value per share in accordance with
Rule 22c-1 under the 1940 Act.); and (b) the Company shall cause to be imposed
and/or waived applicable redemption fees, if any, only in accordance with the
Fund's then current prospectuses or SAI and as instructed by the Underwriter.
The Company further agrees to make reasonable efforts to assist the Fund and its
service providers (including but not limited to the Underwriter) to detect,
prevent and report market timing or excessive short-term trading of shares. To
the extent the Company has actual knowledge of violations of Fund policies (as
set forth in the Fund's then current prospectuses or SAI) regarding (i) the
timing of purchase, redemption or exchange orders and pricing of shares, (ii)
market timing or excessive short-term trading, or (iii) the imposition of
redemption fees, if any, the Company agrees to report such known violations to
the Underwriter. For. purposes of this provision, the term "Valuation Time"
refers to the time as of which the shares are valued on each business day,
currently the close of regular trading on the New York Stock Exchange (normally,
4:00 p.m., Eastern Time) on each day that the New York Stock Exchange is open
for business.
2.13 The Company agrees to provide the Underwriter, upon written
request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number
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("ITIN"), or other government-issued identifier ("GII") and the Contract owner
number or participant account number, if known, of any or all Contractholder(s)
of the account, the name or other identifier of any investment professional(s)
associated with the Contractholder(s) or account (if known), and the amount,
date and transaction type (purchase, redemption, transfer, or exchange) of every
purchase, redemption, transfer, or exchange of shares held through an account
maintained by the Company during the period covered by the request. Unless
otherwise specifically requested by the Underwriter, the Company shall only be
required to provide information relating to Contractholder-Initiated Transfer
Purchases or Contractholder-Initiated Transfer Redemptions.
(a) Period Covered by Request. Requests must set forth a specific period, not to
exceed 180 days from the date of the request, for which transaction information
is sought. The Underwriter may request transaction information older than 180
days from the date of the request as it deems necessary to investigate
compliance with policies established or utilized by the Fund or the Underwriter
for the purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by a Portfolio. If requested by the Underwriter, the
Company will provide the information specified in this Section 2.13 for each
trading day.
(b) Form and Timing of Response. The Company agrees to provide, promptly upon
request of the Underwriter, the requested information specified in this Section
2.13. The Company agrees to use its best efforts to determine promptly whether
any specific person about whom it has received the identification and
transaction information specified in this Section 2.13 is itself a "financial
intermediary," as that term is defined in Rule 22c-2 under the 1940 Act (an
"Indirect Intermediary") and, upon request of the Underwriter, promptly either
(i) provide (or arrange to have provided) the information set forth in this
Section 2.13 for those Contractholders who hold an account with an Indirect
Intermediary or (ii) restrict or prohibit the Indirect Intermediary from
purchasing shares in nominee name on behalf of other persons. The Company
additionally agrees to inform the Underwriter whether it plans to perform (i) or
(ii) above. Responses required by this paragraph must be communicated in writing
and in a format mutually agreed upon by the parties. To the extent practicable,
the format for any Contractholder and transaction information provided to the
Underwriter should be consistent with the NSCC Standardized Data Reporting
Format.
(c) Limitations on Use of Information. The Underwriter agrees not to use the
information received under this Section 2.13 for marketing or any other similar
purpose without the prior written consent of the Company; provided, however,
that this provision shall not limit the use of publicly available information,
information already in the possession of the Underwriter, the Fund or their
affiliates at the time the information is received pursuant to this Section 2.13
or information which comes into the possession of the Underwriter, the Fund or
their affiliates from a third party.
(d) Agreement to Restrict Trading. The Company agrees to execute written
instructions from the Underwriter to restrict or prohibit further purchases or
exchanges of shares by a Contractholder that has been identified by the
Underwriter as having engaged in transactions in shares (directly or indirectly
through the Company's account) that violate policies established or utilized by
the Fund or the Underwriter for the purpose of eliminating or reducing any
dilution of the value of the outstanding shares issued by a Portfolio. Unless
otherwise directed by the Underwriter, any such restrictions or prohibitions
shall only apply to Contractholder-Initiated Transfer Purchases or
Contractholder-Initiated Transfer Redemptions that are effected directly or
indirectly through the Company.
(e) Form of Instructions. Instructions must include the TIN, ITIN or GII and the
specific individual Contract owner number or participant account number
associated with the Contractholder, if known, and the specific restriction(s) to
be executed. If the TIN, ITIN, GII or the specific individual Contract owner
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number or participant account number associated with the Contractholder is not
known, the instructions must include an equivalent identifying number of the
Contractholder(s) or account(s) or other agreed upon information to which the
instruction relates.
(f) Timing of Response. The Company agrees to execute instructions from the
Underwriter as soon as reasonably practicable, but not later than five (5)
business days after receipt of the instructions by the Company.
(g) Confirmation by the Company. The Company must provide written confirmation
to the Underwriter that the Underwriter's instructions to restrict or prohibit
trading have been executed. The Company agrees to provide confirmation as soon
as reasonably practicable, but not later than ten (10) business days after the
instructions have been executed.
(h) Definitions. For purposes of this Section 2.13, the following terms shall
have the following meanings, unless a different meaning is clearly required by
the context:
(i) The term "Contractholder" means the holder of interests in a
Contract or a participant in an employee benefit plan with a
beneficial interest in a Contract.
(ii) The term "Contractholder-Initiated Transfer Purchase" means
a transaction that is initiated or directed by a Contractholder
that results in a transfer of assets within a Contract to a Fund,
but does not include transactions that are executed: (i)
automatically pursuant to a contractual or systematic program or
enrollment such as a transfer of assets within a Contract to a
Portfolio as a result of "dollar cost averaging" programs,
insurance company approved asset allocation programs, or
automatic rebalancing programs; (ii) pursuant to a Contract death
benefit; (iii) as a result of a one-time step-up in Contract
value pursuant to a Contract death benefit; (iv) as a result of
an allocation of assets to a Portfolio through a Contract as a
result of payments such as loan repayments, scheduled
contributions, retirement plan salary reduction contributions, or
planned premium payments to the Contract; or (v) pre-arranged
transfers at the conclusion of a required "free look" period.
(iii) The term "Contractholder-Initiated Transfer Redemption"
means a transaction that is initiated or directed by a
Contractholder that results in a transfer of assets within a
Contract out of a Portfolio, but does not include transactions
that are executed: (i) automatically pursuant to a contractual or
systematic program or enrollments such as transfers of assets
within a Contract out of a Portfolio as a result of annuity
payouts, loans, systematic withdrawal programs, insurance company
approved asset allocation programs and automatic rebalancing
programs; (ii) as a result of any deduction of charges or fees
under a Contract; (iii) within a Contract out of a Portfolio as a
result of scheduled withdrawals or surrenders from a Contract; or
(iv) as a result of payment of a _ death benefit from a Contract.
(iv) The term "Portfolios" shall mean the constituent series of
the Fund, but for purposes of this Section 2.13 shall not include
Portfolios excepted from the requirements of paragraph (a) of
Rule 22c-2 by paragraph (b) of Rule 22c-2.
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(v) The term "promptly" shall mean as soon as practicable but in
no event later than five (5) business days from the Company's
receipt of the request for information from the Underwriter.
(vi) The term "written" includes electronic writings and
facsimile transmissions.
(vii) In addition, for purposes of this Section 2.13, the term
"purchase" does not include the automatic reinvestment of
dividends or distributions.
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. The Company
shall bear the expense of printing copies of the current prospectus for the
Contracts that will be distributed to existing Contract owners, and the Company
shall bear the expense of printing copies of the Fund's prospectus that are used
in connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus in electronic format at the Fund's
expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document (such printing to be at the Company's expense).
The Fund shall provide the Company with information regarding the Fund's
expenses, which information may include a table of fees and related narrative
disclosure for use in any prospectus or other descriptive document relating to a
Contract. The Company agrees that it will use such information in the form
provided. The Company shall provide prior written notice of any proposed
modification of such information, which notice will describe in detail the
manner in which the Company proposes to modify the information, and agrees that
it may not modify such information in any way without the prior consent of the
Fund. Notwithstanding the foregoing, the Fund or the Underwriter will reimburse
the Company for expenses incurred in printing copies of the Fund's prospectus
that are used in connection with offering the Contracts issued by the Company in
an amount not to exceed $5,000 per year.
3.2. The Underwriter (or the Fund), at its expense, shall provide a
reasonable number of copies of the current SAI for the Fund free of charge to
the Company for itself and for any owner of a Contract who requests such SAI.
The Company shall:
3.3. The Fund shall provide the Company with information regarding the
Fund's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract. The Company agrees that it will use such information in
the form provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
the manner in which the Company proposes to modify the information, and agrees
that it may not modify such information in any way without the prior consent of
the Fund.
3.4 The Fund, at its expense, or at the expense of its designee,
shall; provide the Company with copies of its proxy material, reports to
shareholders, and other communications to shareholders in such quantity as the
Company shall reasonably require for distributing to Contract owners.
3.5. The Company shall:
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(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received 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 or to the
extent otherwise required by law. The Company will vote Fund shares held in any
segregated asset account in the same proportion as Fund shares of such portfolio
for which voting instructions have been received from Contract owners, to the
extent permitted by law.
3.6. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in a Designated
Portfolio calculates voting privileges as required by the Shared Funding
Exemptive Order and consistent with any reasonable standards that the Fund may
adopt and provide in writing. The Fund agrees to promptly notify the Company of
any changes of interpretations or amendments to its Mixed and Shared Funding
Exemptive Order.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be famished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter is named, at least five
Business Days prior to its use. No such material shall be used if the Fund or
its designee objects to such use within three Business Days after receipt of
such material. The Fund or its designee reserves the right to reasonably object
to the continued use of any such sales literature or other promotional material
in which the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named, and no such material shall be used if the Fund or its
designee so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or prospectus or SAI for the Fund shares, as such registration
statement and prospectus or SAI 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 and the Underwriter, or their designee, shall furnish,
or cause to be furnished, to the Company, each piece of sales literature or
other promotional material that it develops and in which the Company, and/or its
Account, is named, at lease five Business Days prior to its use. No such
material shall be used if the Company objects to such use within three Business
Days after receipt of such material. The Company reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Company and/or its Account is named, and no
such material shall be used if the Company so objects.
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
Account, or the Contracts
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other than the information or representations contained in a registration
statement, prospectus (which shall include an offering memorandum, if any, if
the Contracts issued by the Company or interests therein are not registered
under the 1933 Act), or SAI for the Contracts, as such registration statement,
prospectus, or SAI may be amended or supplemented from time to time, or in
published reports for the Account which are in the public domain or approved by
the Company for distribution to Contract owners, 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, prospectuses, SAIs, reports, proxy statements,
sales literature and 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, promptly after the filing of such document(s)
with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and 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 Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Underwriter any complaints received from the
Contract owners pertaining to the Fund or the Designated Portfolio.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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, reports,
market letters, form letters, 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 shareholder reports, proxy materials, and
any other material constituting sales literature or advertising under FINRA
rules, the 1933 Act or the 1940 Act.
ARTICLE V. Fees and Expenses
5.1. Except as otherwise provided herein, no party to this Agreement
shall pay any fee or other compensation to any other party to this Agreement.
Except as otherwise provided herein, all expenses incident to performance by a
parry under this Agreement shall be paid by such party.
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, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws 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, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), 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.
-12-
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Potential Conflicts
6.1. The parties to this Agreement agree that the conditions or
undertakings required by the Mixed and Shared Funding Exemptive Order that may
be imposed on the Company, the Fund and/or the Underwriter by virtue of such
order by the SEC: (i) shall apply only upon the sale of shares of the Designated
Portfolios to variable life insurance separate accounts (and then only to the
extent required under the 1940 Act); (ii) will be incorporated herein by
reference; and (iii) such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party notwithstanding any
provision of this Agreement to the contrary.
6.2. 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 Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the parties to this Agreement 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 such rules are applicable; and (b) Sections
3.5 and 3.6 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1 (a). The Company agrees to indemnify and hold harmless the
Fund and the Underwriter and each of its trustees/directors and officers, and
each person, if any, who controls the Fund or Underwriter within the meaning of
Section 15 of the 1933 Act or who is under common control with 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 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, prospectus (which shall include a written
description of a Contract that is not registered under the 1933
Act), or SAI 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 to the Company by or on behalf of the Fund
for use in the registration statement, prospectus or SAI for the
Contracts or in the Contracts or
-13-
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, SAI, or sales literature of
the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or its agents or
persons under the Company's authorization or 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, SAI, 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 (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
requirements specified in Section 2.6 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 Sections 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 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 its obligations or
duties under this Agreement.
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
account of this indemnification provision, except to the extent the Company has
been prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, 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
-14-
investigation. The Company shall not be liable under this indemnification
provision with respect to any claim, action, suit or proceeding settled by an
Indemnified Party without the Company's written approval, which approval shall
not unreasonably be withheld.
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 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 7.2)
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 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 are related to the sale or acquisition of the Fund's shares
or the Contracts and settlements.
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
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 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 Underwriter
or Fund by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Fund or in
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, SAI or sales literature for
the Contracts not supplied by the Underwriter or persons under
its control) or wrongful conduct of the Fund 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, SAI 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 to the
Company by or on behalf of the Fund or the Underwriter; or
-15-
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Sections 2.3 and 2.4 of this
Agreement); or
(v) 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 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 account of this indemnification provision, except to the extent the
Underwriter has been prejudiced by such failure to give notice. In case any such
action is brought against the Indemnified Party, 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 Parry 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. The Underwriter shall not be liable under this indemnification
provision with respect to any claim, action, suit or proceeding settled by an
Indemnified Parry without the Underwriter's written approval, which approval
shall not unreasonably be withheld.
7.2(d). The Company agrees promptly to notify the Underwriter 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.
-16-
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, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or litigation
(including reasonable legal and other expenses) to which the Indemnified Parties
may be required to pay or may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses, 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 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, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Section 2.3 and 2.4 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;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof. The parties acknowledge that the Fund's indemnification
obligations under this Section 7.3 are subject to applicable law.
7.3(b). The Fund 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, the Fund, the Underwriter or the Account, whichever is applicable.
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
account of this indemnification provision, except to the extent that the Fund
has been prejudiced by such failure to give notice. 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. The Fund shall not be
liable under this indemnification provision with respect to any claim, action,
suit or proceeding settled by an Indemnified Party without the Fund's written
approval, which approval shall not unreasonably be withheld.
-17-
7.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceeding against it or any
of its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the 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 the State of California.
8.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, any Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith. If, in the future, the Mixed and Shared Funding Exemptive Order
should no longer be necessary under applicable law, then Article VI shall no
longer apply.
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 with respect to some or
all Designated Portfolios, by three (3) months advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter based upon the Company's determination that shares of
the Fund 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 in the event any of the Designated 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 Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by
FINRA, the SEC, the insurance commissioner or like official of
any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Fund's shares; provided, however, that the Fund or Underwriter
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 Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by FINRA, the SEC, or any state securities or
insurance department or any other regulatory body; 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
-18-
upon the ability of the Fund or Underwriter to perform its
obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event
that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M or fails to comply with the Section
817(h) diversification requirements specified in Section 2.3
hereof, or if the Company reasonably believes that such Portfolio
may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Section 2.6 hereof; or
(h) 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
exercised in good faith, that the Company 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; or
(i) 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 the Fund, Adviser, 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; or
(j) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares of a
Designated Portfolio of the Fund in accordance with the terms of
the Contracts, provided that the Company has given at least 45
days prior written notice to the Fund and Underwriter of the date
of substitution; or
(k) termination by the Fund if the Board has decided to (i) refuse to
sell shares of any Designated Portfolio to the Company and/or any
of its Accounts; (ii) suspend or terminate the offering of shares
of any Designated Portfolio; or (iii) dissolve, reorganize,
liquidate, merge or sell all assets of the Fund or any Designated
Portfolio, subject to the provisions of Section 1.1; or
(l) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict
exists as provided in Article VI.
9.2. (a) Notwithstanding any termination of this Agreement, and except
as provided in Section 9.2(b), the Fund and the Underwriter shall, at the option
of the Company, continue, until the one year anniversary from the date of
termination, and from year to year thereafter if deemed appropriate by the Fund
and the Underwriter, to make available additional shares of the Designated
Portfolios 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, based on
instructions from the owners of the Existing Contracts, the Accounts shall be
permitted to reallocate investments in the Designated Portfolios of the Fund and
redeem investments in
-19-
the Designated Portfolios, and shall be permitted to invest in the Designated
Portfolios in the event that owners of the Existing Contracts make additional
premium payments under the Existing Contracts.
The Company agrees, promptly after any termination of this
Agreement, to take all steps necessary to redeem the investment of the Accounts
in the Designated Portfolios within one year from the date of termination of the
Agreement as provided in Article IX. Such steps shall include, but not be
limited to, obtaining an order pursuant to Section 26(c) of the 1940 Act to
permit the substitution of other securities for the shares of the Designated
Portfolios. The Fund may, in its discretion, permit the Accounts to continue to
invest in the Designated Portfolios beyond such one year anniversary for an
additional year beginning on the first annual anniversary of the date of
termination, and from year to year thereafter; provided that the Fund agrees in
writing to permit the Accounts to continue to invest in the Designated
Portfolios at the beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to
Sections 10.1(g) or 10.1(l), at the option of the Fund or the Underwriter; or
(ii) the one year anniversary of the termination of the Agreement is reached or,
after waiver as provided in Section 9.2(a), such subsequent anniversary is
reached (each of (i) and (ii) referred to as a "triggering event" and the date
of termination as provided in (i) or the date of such anniversary as provided in
(ii) referred to as the "request date"), the parties agree that such triggering
event shall be considered as a request for immediate redemption of shares of the
Designated Portfolios held by the Accounts, received by the Fund and its agents
as of the request date, and the Fund agrees to process such redemption request
in accordance with the 1940 Act and the regulations thereunder and the Fund's
registration statement.
(c) The parties agree that this Section 9.2 shall not apply to
any terminations under Article VI and the effect of such Article VI terminations
shall be governed by Article VI of this Agreement. The parties further agree
that, to the extent that all or a portion of the assets of the Accounts continue
to be invested in the Fund or any Designated Portfolio of the Fund, Articles I,
II, VI, VII and VIII will remain in effect after termination.
9.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
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: PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
If to the Company: CUNA Mutual Insurance Society
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx; WI; 53701
If to Underwriter: Allianz Global Investors Distributors LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
11.2. 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 until such time as such information has come into the
public domain.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. 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.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
FINRA, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Iowa Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with the
Iowa variable annuity laws and regulations and any other applicable law or
regulations.
11.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
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.
11.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its desigriee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles) filed with any state or
federal regulatory body or otherwise made available to the
-21-
public, as soon as practicable and in any event within 90 days
after the end of each fiscal year; and
(b) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulatory, as soon as
practicable after the filing thereof.
11.10. The Company is to be an independent contractor vis-a-vis the
Fund; the Underwriter, or any of their affiliates for all purposes hereunder and
will have no authority to act for or represent any of them. In addition, no
officer or employee of the Company will be deemed to be an employee or agent of
the Fund, Underwriter, or any of their affiliates. The Company will not act as
an "underwriter" or "distributor" of the Fund, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
Likewise, the Company is not a "transfer agent" of the Fund as that term is used
in the 1934 Act and rules and regulations thereunder. Consistent with the
foregoing, the Company is not a "transfer agent" or "administrator" to the Fund
as those terms are referenced in Rule 38a-l under the 1940 Act.
-22-
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 of the date specified below.
CUNA MUTUAL INSURANCE SOCIETY:
By its authorized officer
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
Date: 3/26/08
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
Date:
----------------------------------
(SEAL)
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
By its authorized officer
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
Date: 4/10/2008
(SEAL)
-23-
SCHEDULE A
The term "Designated Portfolio" of the Fund will include any currently offered
class of any Portfolio of the Fund (as listed below) as well as any Portfolio of
the Fund or any share class of any Portfolio (now existing or hereafter created)
created subsequent to the date hereof.
DESIGNATED PORTFOLIOS/CLASSES:
Advisor Class Shares
All Asset Portfolio
CommodityRealReturn Strategy Portfolio
Emerging Markets Bond Portfolio
Foreign Bond Portfolio (Unhedged)
Global Bond Portfolio (Unhedged)
High Yield Portfolio
Low Duration Portfolio
Real Return Portfolio
RealEstateRealReturn Strategy Portfolio
SmallCap StocksPLUS(R) TR Portfolio
StocksPLUS(R) Total Return Portfolio
Total Return Portfolio
