EXHIBIT 24(C)(8)(GG)
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this first day of April, 2010 by and
between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, statutory trust formed under
the laws of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a New York limited
partnership (the "Distributor"), and MINNESOTA LIFE INSURANCE COMPANY, a
Minnesota life insurance company (the "Company"), on its own behalf and on
behalf of each separate account of the Company identified herein.
WHEREAS, the Trust engages in business as an open-end management investment
company of the series-type mutual fund offering shares of beneficial interest
(the "Trust shares") consisting of one or more separate series ("Series") of
shares, each such Series representing an interest in a particular investment
portfolio of securities and other assets (a "Fund"), and which Series is
subdivided into various classes ("Classes") with each such Class supporting a
distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for life insurance company separate accounts supporting
variable annuity contracts and variable life insurance policies to be offered
by insurance companies and may also be utilized by qualified retirement plans;
and
WHEREAS, an order of the Securities and Exchange Commission dated
February 2, 1998, (File No. 812-10794) grants certain separate accounts
supporting variable life insurance policies, their life insurance company
depositors, and their principal underwriters, exemptions from Sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, and from Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary for such
separate accounts to purchase and hold Trust shares at the same time that such
shares are sold to or held by separate accounts of affiliated and unaffiliated
insurance companies supporting either variable annuity contracts or variable
life insurance policies, or both, or by qualified pension and retirement plans
(the "SEC Order"); and
WHEREAS, the Distributor has the exclusive right to distribute Trust shares
to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment vehicle
for a certain separate account(s) of the Company and the Distributor desires to
sell shares of certain Series and/or Class(es) to such separate account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor and the Company agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
1.1. "Accounts" -- the separate accounts of the Company described more
specifically in Schedules 1A, 2A and 3A to this Agreement.
1.2. "Business Day"--each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code"--the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts"--the class or classes of variable annuity contracts and/or
variable life insurance policies issued by the Company and described more
specifically on Schedules 1B, 2B, or 3B to this Agreement.
1.5. "Contract Owners"--the owners of the Contracts, as distinguished from
all Product Owners.
1.6. "Participating Account"--a separate account investing all or a portion
of its assets in the Trust, including the Accounts.
1.7. "Participating Insurance Company"--any insurance company with a
Participating Account, including the Company.
1.8. "Participating Plan"--any qualified retirement plan investing in the
Trust.
1.9. "Participating Investor"--any Participating Account, Participating
Insurance Company or Participating Plan, including the Accounts and the Company.
1.10. "Products"--variable annuity contracts and variable life insurance
policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners"--owners of Products, including Contract Owners.
1.12. "Trust Board"--the board of trustees of the Trust.
1.13. "Registration Statement"--with respect to the Trust shares or a class
of Contracts, the registration statement filed with the SEC to register such
securities under the 1933 Act, or the most recently filed amendment thereto, in
either case in the form in which it was declared or became effective. The
Contracts' Registration Statement for each class of Contracts is described more
specifically on Schedule 1B to this Agreement. The Trust's Registration
Statement is filed on Form N-1A (File No. 333-35883).
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1.14. "1940 Act Registration Statement"--with respect to the Trust or the
Schedule 1 Accounts, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Schedule 1 Accounts' 1940 Act Registration
Statements are described more specifically on Schedule 1A to this Agreement.
The Trust's 1940 Act Registration Statement is filed on Form N-1A (File
No. 811-08361).
1.15. "Prospectus"--with respect to shares of a Series (or Class) of the
Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take
action in accordance with a Prospectus, such reference thereto shall be deemed
to be to the version for the applicable Series, Class or Contracts last so
filed prior to the taking of such action. For purposes of Article IX, the term
"Prospectus" shall include any statement of additional information incorporated
therein.
1.16. "Schedule 1 Accounts"--Accounts registered under the 1940 Act as unit
investment trusts and listed on Schedule 1A.
1.17. "Schedule 2 Accounts"--Accounts excluded from the definition of an
investment company as provided for by Section 3(c)(11) of the 1940 Act and
listed on Schedule 2A.
1.18. "Schedule 3 Accounts"--Accounts excluded from the definition of an
investment company as provided for by Section 3(c)(1) or Section 3(c)(7) of the
1940 Act and listed on Schedule 3A.
1.19. "Schedule 1 Contracts"--Contracts through which interests in Schedule
1 Accounts are offered and issued, which interests are registered as securities
under the 0000 Xxx.
1.20. "Schedule 2 Contracts"--Contracts through which interests in Schedule
2 Accounts are offered and issued to trustees of qualified pension and
profit-sharing plans and certain government plans identified in Section 3(a)(2)
of the 1933 Act (which interests are not registered as securities in reliance
upon Section 3(a)(2) of the 1933 Act).
1.21. "Schedule 3 Contracts"--Contracts through which interests in Schedule
3 Accounts are offered and issued to "accredited investors", as that term is
defined in Regulation D under the 1933 Act, or other investors permitted by
Regulation D (which interests are not registered as securities in reliance upon
Regulation D).
1.22. "Statement of Additional Information"--with respect to the shares of
the Trust or a class of Contracts, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to
Rule 497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement
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of Additional Information, such reference thereto shall be deemed to be the
last version so filed prior to the taking of such action.
1.23. "SEC"--the Securities and Exchange Commission.
1.24. "NASD"--The National Association of Securities Dealers, Inc.
1.25. "1933 Act"--the Securities Exchange Act of 1933, as amended.
1.26. "1940 Act"--the Investment Company Act of 1940, as amended.
ARTICLE II
SALE OF TRUST SHARES
2.1.AVAILABILITY OF SHARES
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Company for purchase on behalf of the Accounts, shares of
the Series and Classes listed on Schedules 1B, 2B, and 3B to this Agreement,
such purchases to be effected at net asset value in accordance with
Section 2.3 of this Agreement. The Distributor shall make such Series and
Classes available to the Company in accordance with the terms and provisions
of this Agreement until: (i) this Agreement is terminated pursuant to
Article X, or (ii) the Distributor suspends or terminates the offering of
shares of such Series or Classes in the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes of
Trust shares in existence now or in the future will be made available to the
Company only as the Distributor may so provide, subject to the Distributor's
rights set forth in Article X to suspend or terminate the offering of shares
of any Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke the
Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor, and (ii) the Trust reserves the
right in its sole discretion to refuse to accept a request for the purchase
of Trust shares.
2.2. REDEMPTIONS. The Trust shall redeem, at the Company's request, any full
or fractional Trust shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 2.3 of
this Agreement. Notwithstanding the foregoing: (a) the Company shall not redeem
Trust shares attributable to Contract Owners except in the circumstances
permitted in Article X of this Agreement, and (b) the Trust may
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delay redemption of Trust shares of any Series or Class to the extent permitted
by the 1940 Act, any rules, regulations or orders thereunder, or the Prospectus
for such Series or Class.
2.3.PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as an agent of the Trust for
the limited purpose of receiving purchase and redemption requests on behalf
of the Schedule 1 Accounts (but not on behalf of the Schedule 2 Accounts,
Schedule 3 Accounts, or the Company's general account) for shares of those
Series or Classes made available hereunder, based on transactions in Account
Units of the Schedule 1 Accounts under the Schedule 1 Contracts. Receipt of
any such requests (or effectuation of such transaction or processing) on any
Business Day by the Company as such limited agent of the Trust prior to the
Trust's close of business as defined from time to time in the applicable
Prospectus for such Series or Class (which as of the date of execution of
this Agreement is the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. New York Time)) shall constitute receipt by the
Trust on that Business Day, provided that the Trust receives actual and
sufficient notice of such request by 9:00 a.m. New York Time on the next
following Business Day. Such notice may be communicated by telephone to the
office or person designated for such notice by the Trust and shall be
confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class on the same
day that it provides actual notice to the Trust of a purchase request for
such shares. Payment for Series or Class shares shall be made in federal
funds transmitted to the Trust by wire by 12:00 p.m. New York Time on the
day the Trust receives actual notice of the purchase request for Series or
Class shares (unless the Trust determines and so advises the Company that
sufficient proceeds are available from redemption of shares of other Series
or Classes effected pursuant to redemption requests tendered by the Company
on behalf of the Account). In no event may proceeds from the redemption of
shares requested pursuant to an order received by the Company after the
Trust's close of business on any Business Day be applied to the payment for
shares for which a purchase order was received prior to the Trust's close of
business on the same day. If the issuance of Trust shares is canceled
because federal funds are not timely received, the Company shall indemnify
the respective Fund and Distributor with respect to all costs, expenses and
losses relating thereto. Upon the Trust's receipt of federal funds so wired,
such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Trust. If federal funds are not received on
time, such funds will be invested, and Trust shares purchased thereby will
be issued, as soon as practicable after actual receipt of such funds but in
any event not on the same day that the purchase order was received.
(c) Payment for Trust shares redeemed by the Accounts or the Company
shall be made in federal funds transmitted by wire to the Company or any
other person properly designated in writing by the Company, such funds
normally to be transmitted by 6:00 p.m. New York Time on the next Business
Day after the Trust receives actual notice
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of the redemption order for such shares (unless redemption proceeds are to
be applied to the purchase of Trust shares of other Series or Classes in
accordance with Section 2.3(b) of this Agreement), except that the Trust
reserves the right to redeem trust shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the applicable
Prospectus. The Trust shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Company or
the Accounts; the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Trust shares held or to be
held by Schedule 2 Accounts, Schedule 3 Accounts, or in the Company's
general account, shall be effected at the net asset value per share next
determined after the Trust's actual receipt of such request, provided that,
in the case of a purchase request, payment for Trust shares so requested is
received by the Trust in federal funds prior to close of business for
determination of such value, as defined from time to time in the Prospectus
for such Series or Class.
(e) Prior to the first purchase of any Trust shares hereunder, the
Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of federal funds to the other party
and all other designated persons pursuant to such protocols and security
procedures as the parties may agree upon. Should such information change
thereafter, the Trust and the Company, as applicable, shall notify the other
in writing of such changes, observing the same protocols and security
procedures, at least three Business Days in advance of when such change is
to take effect. The Company and the Trust shall observe customary procedures
to protect the confidentiality and security of such information, but the
Trust shall not be liable to the Company for any breach of security.
(f) The procedures set forth herein are subject to any additional terms
set forth in the applicable Prospectus for the Series or Class or by the
requirements of applicable law.
2.4. NET ASSET VALUE. The Trust shall use its best efforts to inform the
Company of the net asset value per share for each Series or Class available to
the Company as soon as reasonably practicable after the net asset value per
share for such Series or Class is calculated. The Trust shall calculate such
net asset values in accordance with the Prospectus for such Series or Class.
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Accounts, hereby elects to receive all such
dividends and distributions as are payable on any Series or Class shares in the
form of additional shares of that Series or Class. The Company reserves the
right, on its behalf and on behalf of the Accounts, to revoke this election and
to receive all such dividends
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and capital gain distributions in cash; to be effective, such revocation must
be made in writing and received by the Trust at least ten Business Days prior
to a dividend or distribution date. The Trust shall notify the Company promptly
of the number of Series or Class shares so issued as payment of such dividends
and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Purchase and redemption orders for Trust shares shall be recorded in
an appropriate ledger for each Account.
2.7. PRICING ERRORS. Any material errors in the calculation of the net asset
value of a Fund, the net asset value per share of any Series or Class of Trust
shares, dividends or capital gain information shall be reported to the Company
immediately upon discovery. An error shall be deemed "material" based on our
interpretation of the SEC's position and policy with regard to materiality, as
it may be modified from time to time. Neither the Trust, any Fund, the
Distributor, 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 or on behalf of the Company or any other
Participating Company to the Trust or the Distributor.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons
or plans ("Qualified Persons") that qualify to purchase shares of the Trust
under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Accounts to consider the portfolio investments of
the Trust as constituting investments of the Accounts for the purpose of
satisfying the diversification requirements of Section 817(h). The Company
hereby represents and warrants that it and the Accounts are Qualified Persons.
The Distributor and the Trust shall not sell Trust shares to any insurance
company or separate account unless an agreement complying with Article VIII of
this Agreement is in effect to govern such sales. The Distributor and the Trust
shall not sell more than 10% of any Series of Trust shares to any Participating
Plan unless an agreement is in effect between the Distributor, the Trust and
the trustee (or other fiduciary) of the Plan containing provisions
substantially the same as those in Article VIII of this Agreement. The
Distributor and the Trust shall not sell Trust shares to any Participating Plan
unless a written acknowledgment of the foregoing condition is received from the
trustee (or other fiduciary) of the Plan.
2.9.DISRUPTIVE TRADING.
(a) The Trust has adopted policies designed to prevent frequent purchases
and redemptions of any Series of Trust shares in quantities great enough to:
(i) disrupt orderly management of the corresponding Fund's investment
portfolio, or (ii) dilute the value of the outstanding Trust shares of that
Series ("Disruptive Trading Policies"). These policies are disclosed in the
Trust's prospectus. From time to time, the Trust and the Distributor
implement procedures reasonably designed to enforce the Trust's Disruptive
Trading Policies and shall provide a written description of such procedures
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(and revisions thereto) to the Company. As a procedure in furtherance of its
Disruptive Trading Policies, the Trust may assess fees, to be paid by one or
more Accounts or by the Company, upon redemption one or more Series or
Classes of Trust shares within certain stated time periods after such shares
have been purchased.
(b) The Company agrees to develop, adopt and maintain policies regarding
transactions in Account units reasonably designed to complement the Trust's
Disruptive Trading Policies and, from time to time, to implement procedures
regarding transactions in Account units reasonably designed to effectuate
the Trust's procedures for preventing disruptive trading in Trust shares. In
particular, in the event that the Trust or the Distributor has identified a
particular Contract Owner as having engaged in transactions in Account units
that directly or indirectly violate the Trust's Disruptive Trading Policies,
the Company agrees, at the written request of the Trust or the Distributor,
to restrict or prohibit further transactions in Account units by that
Contract Owner which could result in additional purchases and redemptions of
a specified Series and/or Class of Trust shares in violation of the Trust's
Disruptive Trading Policies.
(c) In furtherance of Section 2.9(b), the Trust and the Distributor may,
from time to time, investigate purchases and redemptions of any Series or
Class of Trust shares by the Company on behalf of the Accounts that appears
to violate, or has the potential to violate, the Trust's Disruptive Trading
Policies. When requested by the Trust or the Distributor in writing, the
Company agrees to provide the following with respect to purchases and
redemptions of a specific Series and/or Class of Trust shares over a
designated period.
. the identity of the Contract Owner or Contract Owners whose
transactions in Account units underlies the Trust share purchases
and redemptions being investigated,
. the amounts and dates of transactions in Account units during the
designated period representing an indirect investment in the
Series and/or Class of Trust shares being investigated, and
. the identity of any investment professional known by the Company
to be associated with the Contract Owner or Contract Owners.
The Company agrees to provide the foregoing information that is on its books
and records promptly. If the requested information is not on its books and
records, it agrees to make reasonable efforts to:
. promptly obtain the requested information, or
. if requested by the Trust or the Distributor restrict or prohibit
further transactions in Account units by that Contract Owner
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which could result in additional purchases and redemptions of a
specified Series and/or Class of Trust shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. COMPANY. The Company represents and warrants that: (a) it is an
insurance company duly organized and in good standing under the laws of the
jurisdiction of its organization, (b) it has legally and validly established
each Account as a segregated asset account under applicable state law to serve
as segregated investment accounts for the Contracts, (c) each Schedule 1
Account is duly registered as a unit investment trust under the 1940 Act and
each such Account's 1940 Act Registration Statement has been filed with the SEC
in accordance with the 1940 Act, (d) the Schedule 2 Accounts and Schedule 3
Accounts each qualify for the exclusions on which they rely for not registering
as investment companies under the 1940 Act, (e) it has registered, or will
register, all Schedule 1 Contracts offered and sold pursuant to this Agreement
under the 1933 Act and has effective Registration Statements for that purpose,
(f) it will offer and sell the Contracts in compliance in all material respects
with all applicable federal and state laws and regulations, including, but not
limited to, state insurance law and federal securities law suitability
requirements, (g) the Contracts have been filed, qualified and/or approved for
sale, as applicable, under the insurance laws and regulations of the states in
which the Contracts will be offered, (h) sales of the Schedule 2 Contracts and
Schedule 3 Contracts properly qualify for exemptions on which the Company
relies in not registering such Contracts, or interests in the Account through
which each is issued, under the 1933 Act, (i) its activities and those of its
employees in promoting the sale and distribution of the Contracts and effecting
Contract Owner transactions in Account units have not caused, and will not
cause, the Company to be deemed a broker-dealer, (j) orders it places for the
purchase and redemption of Trust shares pursuant to Article 2.3 of this
Agreement are the net result of transactions in units issued by an Account,
instructions for which are received by the Company prior to the Trust's close
of business as defined from time to time in the applicable Prospectus for such
Series or Class (which as of the date of execution of this Agreement is the
close of regular trading on the New York Stock Exchange (normally 4:00 p.m. New
York Time)), (k) as long as this Agreement remains in effect, it shall remain
in continuous compliance with Article 6.3, Article 6.4 and Article 6.5 of this
Agreement and (l) it will notify the Distributor and the Trust promptly if for
any reason it is unable to perform its obligations under this Agreement.
3.2. TRUST. The Trust represents and warrants that: (a) it is a statutory
trust duly organized and validly existing under Delaware law, (b) it is duly
registered under the 1940 Act as an open-end management investment company and
has filed a 1940 Act Registration Statement with the SEC in accordance with the
provisions of the 1940 Act, (c) Trust shares issued pursuant to this Agreement
have been, or will be, duly authorized and validly issued in accordance with
applicable law, (d) it will offer and sell Trust shares pursuant to this
Agreement in compliance in all material respects with all applicable federal
and state laws and regulations, (e) it has registered, or will register, all
Trust shares offered and sold pursuant to this Agreement under the 1933 Act and
has an effective Registration Statement for that purpose, (f) as long as
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this Agreement remains in effect, it shall remain in continuous compliance with
Article 6.1 and Article 6.2 of this Agreement, and (g) the Trust's Board, a
majority of whom are not interested persons of the Trust, have formulated and
approved the plan under Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution
expenses.
3.3. DISTRIBUTOR. The Distributor represents and warrants that: (a) it is a
limited partnership duly organized and in good standing under New York law, and
(b) it is registered as a broker-dealer under federal and applicable state
securities laws and is a member of the NASD.
3.4. LEGAL AUTHORITY. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so
executed and delivered, this Agreement will be the valid and binding obligation
of such party enforceable in accordance with its terms.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all of its
directors, officers, partners and employees dealing with the money and/or
securities of the Trust are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the amount required by the applicable rules of the NASD
and the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
All parties shall make all reasonable efforts to see that this bond or another
bond containing these provisions is always in effect, shall provide evidence
thereof promptly to any other party upon written request therefor, and shall
notify the other parties promptly in the event that such coverage no longer
applies.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration Statement
from time to time and maintain its effectiveness as required in order to effect
the continuous offering of Trust shares in compliance with applicable law.
Notwithstanding the foregoing, the Trust shall register and qualify Trust
shares for sale in accordance with the laws of various states if, and to the
extent, deemed advisable by the Trust or the Distributor. The Trust shall amend
its 1940 Act Registration Statement as required by the 1940 Act to maintain its
registration under the 1940 Act for as long as Trust shares are outstanding.
The Trust shall file Form 24F-2 and pay 1933 Act registration fees for all
Series and Classes of Trust shares as required by Rule 24f-2 under the 1940
Act. The Trust shall comply in all material respects with the 1940 Act.
4.2. ACCOUNT FILINGS. The Company shall amend the Registration Statement for
each Schedule 1 Contract from time to time and maintain its effectiveness as
required in order to effect the continuous offering of such Contracts in
compliance with applicable law for as long as purchase payments are made under
such Contracts. Notwithstanding the foregoing, the Company: (a) may permit the
effectiveness of a Schedule 1 Contract's Registration Statement
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expire if the Company has supplied the Trust with an SEC "no-action" letter or
opinion of counsel satisfactory to the Trust's counsel to the effect that
maintaining such Registration Statement on a current basis is no longer
required, and (b) shall register and qualify the Contracts for sale in
accordance with the securities laws of the various states only if, and to the
extent, it considers such registration and qualification necessary. The Company
shall amend each Schedule 1 Account's 1940 Act Registration Statement as
required by the 1940 Act to maintain the Account's registration under the 1940
Act for as long as the Schedule 1 Contracts issued through that Account are in
force. With regard to each Schedule 1 Account, the Company shall comply in all
material respects with the 1940 Act.
The Company shall be responsible for filing all Contract forms,
applications, marketing materials and other documents relating to the Contracts
and/or the Accounts with state insurance commissions, as required or customary,
and shall use its best efforts: (a) to obtain any and all approvals thereof,
under applicable state insurance law, of each state or other jurisdiction in
which Contracts are or may be offered for sale, and (b) to keep such approvals
in effect for so long as the Contracts are outstanding.
4.3 DELIVERY OF PROSPECTUSES BY THE COMPANY. The Company shall deliver (or
arrange for delivery of) an appropriate Prospectus to each prospective Contract
Owner describing in all material respects the terms and features of the
Contract being offered. The Company also shall deliver (or arrange for delivery
of) a Prospectus for each Fund that a prospective Contract Owner identifies on
his or her application as an intended investment option under a Contract or to
which a Contract Owner allocates premium payments to or transfers Contract
value. The Company shall deliver (or arrange for delivery of) such Prospectuses
at the times required by applicable provisions of the 1933 Act and rules or
regulations thereunder.
4.4. VOTING OF TRUST SHARES. The extent required by applicable law, whenever
the Trust shall have a meeting of holders of any Series or Class of Trust
shares, the Company shall:
. solicit voting instructions from Contract Owners
. vote Trust shares held in each Account at such shareholder meetings in
accordance with instructions received from Contract Owners, and
. vote Trust shares held in each Account for which it has not received
timely instructions in the same proportion as it votes the applicable
Series or Class of Trust shares for which it has received timely
instructions.
Except with respect to matters as to which the Company has the right in
connection with Schedule 1 Contracts under Rule 6e-2 or Rule 6e-3(T) under the
1940 Act, to vote Trust shares without regard to voting instructions from
Contract Owners, neither the Company nor any of its affiliates will recommend
action in connection with, or oppose or interfere with, the actions of the
Trust Board to hold shareholder meetings for the purpose of obtaining approval
or
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disapproval from shareholders (and, indirectly, from Contract Owners) of
matters put before the shareholders.
As required by the conditions attaching to the SEC Order, the Company shall
remain responsible for ensuring that it calculates voting instructions and
votes Trust shares at shareholder meetings in a manner consistent with other
Participating Investors. The Trust will notify the Company of any changes to
the SEC Order, the conditions attaching thereto, or to any interpretation of
the Order or conditions.
4.5. STATE INSURANCE LAW RESTRICTIONS. In the event the Trust becomes aware
of a state insurance law restriction that applies to any Fund or the Trust, the
Trust shall determine whether it is in the best interests of shareholders to
comply with any such restrictions. If the Trust determines that it is not in
the best interests of shareholders (which, for this purpose, shall mean Product
Owners) to comply with a restriction determined to be applicable, the Trust
shall so inform the Company, and the Trust and the Company shall discuss
alternative accommodations in the circumstances. If the Trust determines that
it is in the best interests of shareholders to comply with such restrictions,
the Trust and the Company shall amend Schedule 4 to this Agreement to reflect
such restrictions, subject to obtaining any required shareholder approval
thereof.
4.6. INTERPRETATION OF LAW. Under no circumstances will the Trust, the
Distributor or any of their affiliates (excluding Participating Investors) be
held responsible or liable in any respect for any statements or representations
made by them or their legal advisers to the Company or any Contract Owner
concerning the applicability of any federal or state laws, regulations or other
authorities to the activities contemplated by this Agreement.
4.7. DISCLOSURE. The Trust's prospectus shall state that the statement of
additional information for the Trust is available from either the Distributor
or the Trust. The Trust hereby notifies the Company that it is appropriate to
include in Contract Prospectuses, disclosure of the potential risks of mixed
and shared funding.
4.8. DRAFTS OF FILINGS. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or
Contract Owner reports, proxy statements, solicitations for voting
instructions, applications for exemptions, requests for no-action letters, and
all amendments or supplements to any of the above, prepared by or on behalf of
either of them and that mentions the other party by name. Such drafts shall be
provided to the other party sufficiently in advance of filing such materials
with regulatory authorities in order to allow such other party a reasonable
opportunity to review the materials.
4.9. COPIES OF FILINGS. The Trust and the Company shall provide to each
other upon request at least one complete copy of all Registration Statements,
Prospectuses, Statements of Additional Information, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations of
voting instructions, applications for exemptions, requests for "no-
12
action" letters, and all amendments or supplements to any of the above, that
relate to the Trust, the Contracts or the Accounts, as the case may be,
promptly after the filing by or on behalf of each such party of such document
with the SEC or other regulatory authorities (it being understood that this
provision is not intended to require the Trust to provide to the Company copies
of any such documents prepared, filed or used by Participating Investors other
than the Company and the Accounts).
4.10. REGULATORY RESPONSES. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and other
rulings received by such party with respect to any filing covered by
Section 4.9 of this Agreement.
4.11.COMPLAINTS AND PROCEEDINGS
(a) The Trust and/or the Distributor shall immediately notify the Company
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class, (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of any
Series or Class, (iii) the initiation of any proceedings for that purpose or
for any other purposes relating to the registration or offering of the Trust
shares, or (iv) any other action or circumstances that may prevent the
lawful offer or sale of Trust shares or any Class or Series in any state or
jurisdiction, including, without limitation, any circumstance in which
(A) such shares are not registered and, in all material respects, issued and
sold in accordance with applicable state and federal law or (B) such law
precludes the use of such shares as an underlying investment medium for the
Contracts. The Trust will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Contracts' Registration Statement or the
Contracts' Prospectus, (ii) any request by the SEC for any amendment to the
Contracts' Registration Statement or Prospectus, (iii) the initiation of any
proceedings for that purpose or for any other purposes relating to the
registration or offering of the Contracts, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or
13
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated therewith
in connection with the issuance or sale of Trust shares or the Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or a
Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts.
4.12. COOPERATION. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry by any such authority relating to this Agreement
or the transactions contemplated hereby. However, such access shall not extend
to attorney-client privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be fully responsible as to the
Trust and the Distributor for the sale and marketing of the Contracts. The
Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. Without
limiting the generality of the foregoing, the Company shall: (1) enter into and
enforce agreements with affiliated and unaffiliated parties to, and (2) adopt
and implement written compliance policies and procedures reasonably designed
to, ensure that:
. all persons offering or selling the Contracts are duly licensed
and registered under applicable insurance and securities laws,
. all individuals offering or selling the Contracts are duly
appointed agents of the Company and are registered
representatives of a NASD member broker-dealer,
. each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations,
including without limitation the rules of the NASD,
14
. persons offering or selling the Contracts disclose to prospective
Contract Owners remuneration each expects to receive in
connection with sales of the Contracts and any conflicts of
interest arising therefrom as required by applicable law, and
. persons offering or selling the Contracts do not intend to engage
in Account unit transactions that would violate the Company's or
the Trust's Disruptive Trading Policies.
5.2. ANTI-MONEY LAUNDERING. The Company shall comply with all applicable
laws and regulations designed to prevent money "laundering", and if required by
such laws or regulations, to share with the Trust information about
individuals, entities, organizations and countries suspected of possible
terrorist or money "laundering" activities in accordance with Section 314(b) of
the USA Patriot Act. In particular, the Company agrees that:
. as part of processing an application for a Contract, it will
verify the identity of applicants and, if an applicant is not a
natural person, will verify the identity of prospective principal
and beneficial owners submitting an application for a Contract,
. as part of its ongoing compliance with the USA Patriot Act, it
will, from time to time, reverify the identity of Contract
Owners, including the identity of principal and beneficial owners
of Contracts held by non-natural persons,
. as part of processing an application for a Contract, it will
verify that no applicant, including prospective principal or
beneficial Contract Owners, is a "specially designated national"
or a person from an embargoed or "blocked" country as indicated
by the Office of Foreign Asset Control ("OFAC") list of such
persons,
. as part of its ongoing compliance with the USA Patriot Act, it
will, from time to time, reverify that no Contract Owner,
including a principal or beneficial Contract Owners, is a
"specially designated national" or a person from an embargoed or
"blocked" country as indicated by the OFAC list of such persons,
. it will ensure that money tendered to the Trust as payment for
Trust shares did not originate with a bank lacking a physical
place of business (i.e., a "shell" bank) or from a country or
territory named on the list of high-risk or non-cooperating
countries or jurisdictions published by the Financial Action Task
Force, and
15
. if any of the foregoing cease to be true, the Trust or its
agents, in compliance with the USA Patriot Act or Bank Secrecy
Act, may seek authority to block transactions in Account units
arising from accounts of one or more such Contract Owners with
the Company or of one or more of the Company's accounts with the
Trust.
The Trust and the Distributor shall comply with all applicable laws and
regulations designed to prevent money "laundering", and if required by such
laws or regulations, to share with the Company information about individuals,
entities, organizations and countries suspected of possible terrorist or money
"laundering" activities in accordance with Section 314(b) of the USA Patriot
Act.
5.3. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall be
fully responsible for the underwriting, issuance, service and administration of
the Contracts and for the administration of the Account, including, without
limitation, the calculation of performance information for the Contracts, the
timely payment of Contract Owner redemption requests and processing of Contract
transactions, and the maintenance of a service center, such functions to be
performed in all respects at a level commensurate with those standards
prevailing in the variable insurance industry. The Company shall provide to
Contract Owners all Trust reports, solicitations for voting instructions
including any related Trust proxy solicitation materials, and updated Trust
Prospectuses as required under the federal securities laws.
5.4. CUSTOMER COMPLAINTS. The Company shall promptly address all complaints
from Contract Owners and resolve such complaints consistent with high ethical
standards and principles of ethical conduct.
5.5. TRUST PROSPECTUSES AND REPORTS. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (a) the Trust's Prospectus
for the Series and Classes listed on Schedules 1B, 2B, and 3B and any
supplement thereto; (b) any Trust proxy soliciting material for such Series or
Classes; and (c) any Trust periodic shareholder reports. The Trust and the
Company may agree upon alternate arrangements, but in all cases, the Trust
reserves the right to approve the printing of any such material. The Trust
shall make available to the Company on the Trust's website each Statement of
Additional Information and supplement thereto. The Trust shall provide the
Company at least 10 days advance written notice when any such material shall
become available, provided, however, that in the case of a supplement, the
Trust shall provide the Company notice reasonable in the circumstances, it
being understood that circumstances surrounding such supplement may not allow
for advance notice. The Company may not alter any material so provided by the
Trust or the Distributor (including, without limitation, presenting or
delivering such material in a different medium such as electronic mail or
attachments thereto) without the prior written consent of the Distributor.
16
5.6. TRUST ADVERTISING MATERIAL. Neither the Company or any person directly
or indirectly authorized by the Company (including, without limitation,
underwriters, distributors, and sellers of the Contracts) shall use any piece
of advertising, sales literature or other promotional material in which the
Trust, the Distributor, or an affiliate of either is named, except with the
prior written consent of the Trust or the Distributor. The Company shall
furnish to the Trust or the Distributor each such piece of advertising, sales
literature or other promotional material at least ten (10) days prior to its
use. The Trust or the Distributor shall respond to any request for written
consent on a prompt and timely basis, but failure to respond shall not relieve
the Company of the obligation to obtain the prior written consent of the Trust
or the Distributor. After receiving the Trust's or Distributor's consent to the
use of any such material, no further changes may be made without obtaining the
Trust's or Distributor's consent to such changes. The Trust or Distributor may
at any time in its sole discretion revoke such written consent, and upon
notification of such revocation, the Company shall no longer use the material
subject to such revocation. The Company shall not be responsible for filing any
materials with the NASD as applicable.
5.7. CONTRACTS ADVERTISING MATERIAL. The Trust and the Distributor shall not
use any piece of advertising or sales literature or other promotional material
in which the Company, an Account or a Contract is named, except with the prior
written consent of the Company. The Trust or the Distributor shall furnish to
the Company each such piece of advertising, sales literature or other
promotional material at least ten (10) days prior to its use. The Company shall
respond to any request for written consent on a prompt and timely basis, but
failure to respond shall not relieve the Trust or the Distributor of the
obligation to obtain the prior written consent of the Company. After receiving
the Company's consent to the use of any such material, no further changes may
be made by the Trust or Distributor without obtaining the Company's consent to
such changes. The Company may at any time in its sole discretion revoke any
written consent, and upon notification of such revocation, neither the Trust
nor the Distributor shall use the material subject to such revocation. The
Trust and the Distributor shall not be responsible for filing any such
materials with the NASD as applicable.
5.8. TRADE NAMES. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor
has been revoked. The Company shall not use in advertising, publicity or
otherwise the name of the Trust, Distributor, or any of their affiliates nor
any trade name, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof of the Trust, Distributor, or
their affiliates without the prior written consent of the Trust or the
Distributor in each instance.
5.9. REPRESENTATIONS BY COMPANY. Except with the prior written consent of
the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in
advertisements, sales literature
17
or other promotional material approved in writing by the Trust or its designee
in accordance with this Article V, or in published reports or statements of the
Trust in the public domain.
The Company agrees to ensure that advertisements, sales literature or other
promotional material for the Contracts prepared by the Company or its
affiliates will be consistent with every law, rule, and regulation of any
regulatory agency or self-regulatory agency that applies to the Contracts or to
the sale of the Contracts, including, but not limited to, NASD Conduct Rule
2210 and XX-0000-0, XX-0000-0 and IM-2210-3 thereunder.
The Company has adopted and implemented, or shall adopt and implement,
written compliance procedures reasonably designed to ensure that information
concerning the Trust, the Distributor, or any of their affiliates which is
intended for use by brokers or agents selling the Contracts (i.e., information
that is not intended for distribution to Contract Owners or prospective
Contract Owners) is so used. Neither the Trust, the Distributor, nor any of
their affiliates shall be liable for any losses, damages, or expenses relating
to the improper use of such "broker only" materials by agents of the Company or
its affiliates who are unaffiliated with the Trust or the Distributor. The
parties agree that this Section 5.9 is not intended to designate nor otherwise
imply that the Company is an underwriter or distributor of the Trust's shares.
5.10. REPRESENTATIONS BY TRUST. Except with the prior written consent of the
Company, the Trust shall not give any information or make any representations
on behalf of the Company or concerning the Company, the Accounts or the
Contracts other than the information or representations contained in the
appropriate Contract Registration Statement or Contract Prospectus or in
published reports of the Company or the Accounts which are in the public domain
or in advertisements, sales literature or other promotional material approved
in writing by the Company in accordance with this Article V.
The Trust agrees to ensure that advertisements, sales literature or other
promotional material for the Trust prepared by the Distributor or its
affiliates in connection with the sale of the Contracts will be consistent with
every law, rule, and Regulation of any regulatory agency or self regulatory
agency that applies to the Trust or to the sale of Trust shares, including, but
not limited to, NASD Conduct Rule 2210 and XX-0000-0, XX-0000-0 and IM-2210-3
thereunder.
The Trust or the Distributor shall xxxx information produced by or on behalf
of the Trust which is intended for use by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to Contract
Owners or prospective Contract Owners) "FOR BROKER USE ONLY," and neither the
Company nor any of its affiliates shall be liable for any losses, damages, or
expenses arising on account of the use by brokers of such information with
third parties in the event that it is not so marked.
5.11. ADVERTISING. For purposes of this Article V, the phrase "advertising,
sales literature or other promotional material" includes, but is not limited
to, any material constituting sales literature or advertising under the NASD
Conduct rules, the 1940 Act or the 1933 Act. Such material includes, without
limitation, the following materials for prospective Contract
18
Owners, existing Contract Owners, wholesalers and other broker-dealers, rating
or ranking agencies, or the press:
. 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, websites, or other public media),
. sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, electronic mail, or published article),
. educational or training materials or other communications distributed or
made generally available to some or all agents or employees, and
. registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(H). The Trust will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts the Code and regulations thereunder. Without limiting the
scope of the foregoing, the Trust shall ensure that each Fund will comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5 thereunder, relating
to the diversification requirements for variable annuity, endowment, or life
insurance contracts, and any amendments or other modifications to such Section
and Regulation or successors thereto. The Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has failed
to so comply or that it might not comply in the future.
6.2. SUBCHAPTER M. The Trust shall maintain the qualification of each Fund
as a regulated investment company (under Subchapter M or any successor or
similar provision), and the Trust shall notify the Company immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall ensure that at the time each Contract is
issued it is treated as a life insurance, endowment, or annuity contract under
applicable provisions of the Code, and that as long as the Accounts hold shares
of the Trust the Company shall maintain such treatment for each outstanding
Contract. The Company shall notify the Trust and the Distributor immediately
upon having any basis for believing that the Contracts will not be treated as
life insurance, endowment, or annuity contracts under applicable provisions of
the Code.
19
6.4 REGULATION 1.817-5(F). The Company shall ensure that no Fund fails to
remain eligible for "look-through" treatment under Treasury Regulation
1.817-5(f) by reason of a current or future failure of the Company, the
Accounts or the Contracts to comply with any applicable requirements of the
Code or Treasury Regulations. The Company shall notify the Trust and the
Distributor immediately upon having any basis for believing that the failure of
the Company, the Accounts or the Contracts to comply with any applicable
requirements of the Code or Treasury Regulations could render a Fund
ineligible, or jeopardize a Fund's eligibility, for "look-through" treatment
under Treasury Regulation 1.817-5(f). In the event of such a failure, the
Company shall take all necessary steps to cure any such failure, including, if
necessary, obtaining a waiver or closing agreement with respect to such failure
from the U.S. Internal Revenue Service at the Company's expense.
6.5 MODIFIED ENDOWMENT CONTRACTS. The Company shall ensure that any
Prospectus offering a variable life insurance Contract in circumstances where
it is reasonably probable that such Contract would be a "modified endowment
contract," as that term is defined in Section 7702A of the Internal Revenue
Code, will identify such Contract as a modified endowment contract.
ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under the federal
securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration Statement,
Trust proxy materials and shareholder reports, and preparation of a
"camera-ready" copy of the foregoing;
(c) preparation of all statements and notices required by any federal or
state securities law;
(d) printing of all proxy materials, shareholder reports, prospectuses
and other documents required to be provided by the Trust to its existing
shareholders, and providing sufficient copies of the same to the Company for
distribution to Contract Owners currently invested in the Trust; provided,
however, that if the Company prints copies of the Trust's prospectus (or
portions thereof) as part of a larger document
20
containing prospectuses of other investment companies, the Trust shall bear
the expense only of its share of the cost of printing the document (for this
purpose, the Trust's share shall be the percentage of the total cost of the
document represented by the ratio that the number of pages of the Trust's
prospectus bears to the total number of pages);
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with sales
of Trust shares to qualified retirement plans, custodial, auditing, transfer
agent and advisory fees, fees for insurance coverage and Trustees' fees; and
(g) any expenses permitted to be paid or assumed by the Trust pursuant to
a Rule 12b-1 under the 1940 Act.
7.3. COMPANY EXPENSES. Expenses incident to the Company's performance of its
duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Schedule 1 Contracts under the
federal securities laws;
(b) preparation Contract Prospectuses, and filing with the SEC of the
Prospectuses and Registration Statements for Schedule 1 Contracts;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contract Prospectuses to current and
prospective Contract owners and of the Trust's Prospectuses to prospective
Contract Owners as well as compensation for Contract sales;
(d) administration of the Contracts;
(e) solicitation of voting instructions, including distribution of Trust
proxy materials to Contract Owners;
(f) payment of all applicable fees relating to Accounts and the Contracts;
(g) preparation, printing and dissemination of all statements and notices
to Contract Owners required by any federal or state insurance law other than
those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing materials
for the Contracts and Trust except where other arrangements are made in
advance.
21
7.4. OTHER EXPENSES AND PAYMENTS. The Trust and the Distributor shall pay no
fee or other compensation to the Company under this Agreement. Each party,
however, shall, in accordance with the allocation of expenses specified in this
Agreement, reimburse other parties for expenses paid by such other parties, but
allocated to it. In addition, nothing herein shall prevent the parties from
otherwise agreeing to perform, and arranging for appropriate compensation for,
other services relating to the Trust, the Distributor, the Company or the
Accounts. Notwithstanding the foregoing, pursuant to the distribution plan
adopted by the Trust under Rule 12b-1 under the 1940 Act, and as contemplated
by Article 3.2(g) of this Agreement, the Trust or any Series or Class thereof
may pay the Distributor, and the Distributor may pay the principal underwriter
or distributor of one or more classes of Contracts, for activities primarily
intended to result in the sale of Trust shares to the Accounts through which
such Contracts are issued. Likewise, if the Trust or any Series or Class adopts
and implements a shareholder service plan pursuant to Rule 12b-1 under the 1940
Act, or otherwise, then the Trust or the appropriate Series or Class may pay
the Distributor and the Distributor may pay the principal underwriter or
distributor of one or more classes of Contracts, or the Company, for activities
related to personal service and/or maintenance of Contract Owner accounts, as
permitted by such plan.
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. SEC ORDER. The parties to this Agreement acknowledge that the Trust has
obtained the SEC Order granting exemptions from various provisions of the 1940
Act and the rules thereunder to Participant Accounts supporting variable life
insurance policies to the extent necessary to permit them to hold Trust shares
when Trust share also are sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The SEC Order is conditioned upon the Trust and each
Participating Insurance Company complying with conditions and undertakings
substantially as provided in this Article VIII. The Trust will not enter into a
participation agreement with any other Participating Insurance Company unless
it imposes the same conditions and undertakings on that company as are imposed
on the Company pursuant to this Article VIII.
8.2. COMPANY MONITORING REQUIREMENTS. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. COMPANY REPORTING REQUIREMENTS. The Company shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board
to consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Company also
shall assist the Trust Board in carrying out its obligations including, but not
limited to: (a) informing the Trust Board whenever it disregards Contract Owner
voting instructions with respect to variable life insurance policies, and
(b) providing such other
22
information and reports as the Trust Board may reasonably request. The Company
will carry out these obligations with a view only to the interests of Contract
Owners.
8.4. TRUST BOARD MONITORING AND DETERMINATION. The Trust Board shall monitor
the Trust for the existence of any material irreconcilable conflicts between or
among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts and
determine what action, if any, should be taken in response to those conflicts.
A majority vote of Trustees who are not interested persons of the Trust as
defined in the 1940 Act (the "disinterested trustees") shall represent a
conclusive determination as to the existence of a material irreconcilable
conflict between or among the interests of Product Owners and Participating
Plans and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to
the Company and Participating Plan of any such determination. Minutes of the
meetings of the Trust Board, or other appropriate records of the Trust, shall
record all reports received by the Board regarding such conflicts and all
actions taken by the Board in response.
8.5. UNDERTAKING TO RESOLVE CONFLICT. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including: (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a
different investment medium (including another Fund) or submitting the question
of whether such withdrawal should be implemented to a vote of all affected
Contract Owners, and, as appropriate, segregating the assets supporting the
Contracts of any group of such owners that votes in favor of such withdrawal,
or offering to such owners the option of making such a change. The Company will
carry out the responsibility to take the foregoing action with a view only to
the interests of Contract Owners.
8.6. WITHDRAWAL. If a material irreconcilable conflict arises because of the
Company's decision to disregard the voting instructions of Contract Owners of
variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, if Trust Board so requests, the Company will redeem the shares of the
Trust to which the disregarded voting instructions relate and terminate this
Agreement with respect to the Account through which such Contracts were issued.
No charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. EXPENSES ASSOCIATED WITH REMEDIAL ACTION. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article VIII to establish a
new funding medium for any Contract if an offer to do so has been declined by
vote of a majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict.
23
8.8. SUCCESSOR RULES. 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
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from
those contained in the SEC Order, then: (a) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the
extent such rules are applicable, and (b) Sections 8.2 through 8.7 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 IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any
amounts paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact or alleged untrue statement of material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts themselves (or any
amendment or supplement to any of the foregoing), or arise out of or are
based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission was
made in reliance upon and in conformity with information furnished in
writing to the Company by the Trust or the Distributor for use in the
Contracts Registration Statement, Contracts Prospectus or in the Contracts
or sales literature or promotional material for the Contracts (or any
amendment or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, if such statement or omission was
24
made in reliance upon and in conformity with information furnished to the
Trust or Distributor in writing by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of, or violation
of federal or state law by, the Company or persons under its control or
subject to its authorization, including without limitation, any
broker-dealers or agents authorized to sell the Contracts, with respect to
the sale, marketing or distribution of the Contracts or Trust shares,
including, without limitation, any impermissible use of broker-only
material, unsuitable or improper sales of the Contracts or unauthorized
representations about the Contracts or the Trust; or
(d) arise as a result of any failure by the Company or persons under its
control (or subject to its authorization) to provide services, furnish
materials or make payments as required under this Agreement; or
(e) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust shares or
payment therefor on a timely basis in accordance with the procedures set
forth in Article II, or any unauthorized use of the names or trade names of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage, expense or liability is caused by
the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, expenses or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact or alleged untrue statement of material fact contained in the Trust
Registration Statement, any Prospectus for Series or Classes or sales
literature or other promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in
25
which they were made; provided that this obligation to indemnify shall not
apply if such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the Company to the Trust
or the Distributor for use in the Trust Registration Statement, Trust
Prospectus or sales literature or promotional material for the Trust (or any
amendment or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact or alleged
untrue statement of material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other promotional
material for the Contracts (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by the
Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or its
Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any warranties
contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Company
with respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.5 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
wilful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor hereby agrees to,
and shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, expenses or liabilities:
26
(a) arise out of or are based upon any untrue statement of any material
fact or alleged untrue statement of material fact contained in the Trust
Registration Statement, any Prospectus for Series or Classes or sales
literature or other promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in reliance
upon and in conformity with information furnished in writing by the Company
to the Trust or Distributor for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the Trust
(or any amendment or supplement to any of the foregoing) or otherwise for
use in connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact or alleged
untrue statement of material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other promotional
material for the Contracts (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by the
Distributor to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust, its
Trustees or officers, or the Distributor or persons under its control with
respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust or Distributor or
persons under its control to provide services, furnish materials or make
payments as required under the terms of this Agreement; or
(e) arise out of any material breach by the Distributor or persons under
its control of this Agreement (including any breach of Section 6.1 of this
Agreement and any warranties contained in Article III hereof);
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which
is a responsibility of the Company under this Agreement or otherwise or as to
which the Company failed to inform the Distributor in accordance with
Section 4.5 hereof. This indemnification is in addition to any liability that
the Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.4. RULE OF CONSTRUCTION. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Company, the
Company shall seek
27
indemnification from the Trust only in circumstances in which the Trust is
entitled to seek indemnification from a third party with respect to the same
event or cause thereof.
9.5. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the
indemnifying party will not relieve it from any liability under this Article
IX, except to the extent that the omission results in a failure of actual
notice to the indemnifying party and such indemnifying party is damaged solely
as a result of the failure to give such notice. The indemnifying party, upon
the request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. RELATIONSHIP OF PARTIES. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any
of them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of the Trust, 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 Trust as
that term is used in the 1934 Act and rules and regulations thereunder.
Consistent with the foregoing, the Company is not a "service provider" to the
Trust as that term is defined in Rule 38a-1 under the 1940 Act.
28
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 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 this Article X:
(a) the Company shall promote the Trust and the Funds made available
hereunder on the same basis as other funding vehicles available under the
Contracts;
(b) the Company shall not, without prior notice to the Distributor
(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 the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit, induce
or encourage Contract Owners to change or modify the Trust to change the
Trust's distributor or investment adviser, to transfer or withdraw Contract
Values allocated to a Fund, or to exchange their Contracts for contracts not
allowing for investment in the Trust;
(d) the Company shall not substitute another investment company for one
or more Funds without providing written notice to the Distributor at least
60 days in advance of effecting any such substitution; and
(e) the Company shall not withdraw the Account's investment in the Trust
or a Fund of the Trust except as necessary to facilitate Contract Owner
requests and routine Contract processing.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate until:
(a) the Trust is dissolved, liquidated, or merged into another entity, or
(b) as to any Fund that has been made available hereunder, the Account no
longer invests in that Fund and the Company has confirmed in writing to the
Distributor, if so requested by the Distributor, that it no longer intends to
invest in such Fund. However, certain obligations of, or restrictions on, the
parties to this Agreement may terminate as provided in Sections 10.4 through
10.6 and the Company may be required to redeem Trust shares pursuant to
Section 10.7 or in the circumstances contemplated by Article VIII. Article IX
and Sections 5.7 and 10.8 shall survive any termination of this Agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the Trust
and the Distributor to make Trust shares available to the Company for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Distributor upon written notice to the Company as provided below:
29
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that institution of such proceedings
is being considered by the NASD, the SEC, the insurance commission 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 the
Account, the administration of the Contracts or the purchase of Trust
shares, or an expected or anticipated ruling, judgment or outcome which
would, in the Distributor's reasonable judgment exercised in good faith,
materially impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event any of the Contracts are not registered, issued or sold
in accordance with applicable federal and/or state law, such termination
effective immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised in
good faith, that either (1) the Company shall have suffered a material
adverse change in its business or financial condition or (2) the Company
shall have been the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of either
the Trust or the Distributor, such termination effective upon 30 days prior
written notice;
(d) if the Distributor suspends or terminates the offering of Trust
shares of any Series or Class to all Participating Investors or only
designated Participating Investors, if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Distributor acting in good faith, suspension or termination is necessary
in the best interests of the shareholders of any Series or Class (it being
understood that "shareholders" for this purpose shall mean Product Owners),
such notice effective immediately upon receipt of written notice, it being
understood that a lack of Participating Investor interest in a Series or
Class may be grounds for a suspension or termination as to such Series or
Class and that a suspension or termination shall apply only to the specified
Series or Class;
(e) upon the Company's assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement) unless
the Trust consents thereto, such termination effective upon 30 days prior
written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to the
Company, such termination effective upon expiration of such 10-day period; or
30
(g) upon the determination of the Trust's Board to dissolve, liquidate or
merge the Trust as contemplated by Section 10.3(a), upon termination of the
Agreement pursuant to Section 10.3(b), or upon notice from the Company
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit
owners of Contracts in effect on the effective date of such termination
(hereinafter referred to as "Existing Contracts") to reallocate investments in
the Trust, redeem investments in the Trust and/or invest in the Trust upon the
making of additional purchase payments under the Existing Contracts.
10.5. TERMINATION OF INVESTMENT IN A FUND. The Company may elect to cease
investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless
provided otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that it will
not cause such Fund to comply with investment restrictions as requested by
the Company and the Trust and the Company are unable to agree upon any
reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(d)), and the Distributor, after receiving written notice from
the Company of such non-availability, fails to make available, within 10
days after receipt of such notice, a sufficient number of shares in such
Fund or an alternate Fund to meet the requirements of the Contracts; or
(c) if such Fund fails to meet the diversification requirements specified
in Section 817(h) of the Code and any regulations thereunder and the Trust,
upon written request, fails to provide reasonable assurance that it will
take action to cure or correct such failure;
Such termination shall apply only as to the affected Fund and shall not apply
to any other Fund in which the Company or the Account invests.
10.6. TERMINATION OF INVESTMENT BY THE COMPANY. The Company may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or withdraw
its investment or the Accounts' investment in the Trust, subject to compliance
with applicable law, upon written notice to the
31
Trust within 15 days of the occurrence of any of the following events (unless
provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund ceases
to qualify as a regulated investment company under Subchapter M of the Code,
as defined therein, or any successor or similar provision, or if the Company
reasonably believes that the Trust may fail to so qualify, and the Trust,
upon written request, fails to provide reasonable assurance that it will
take action to cure or correct such failure within 30 days; or
(c) if the Trust or Distributor is in material breach of a provision of
this Agreement, which breach has not been cured to the satisfaction of the
Company within 10 days after written notice of such breach has been
delivered to the Trust or the Distributor, as the case may be.
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the Exemptive Order
described in Article VIII or any conditions or undertakings set forth or
referenced therein, or other SEC rule, regulation or order that may be adopted
after the date hereof. The Company agrees to redeem shares in the circumstances
described herein and to comply with applicable terms and provisions. Also, in
the event that the Distributor suspends or terminates the offering of a Series
or Class pursuant to Section 10.4(d) of this Agreement, the Company, upon
request by the Distributor, will cooperate in taking appropriate action to
withdraw the Account's investment in the respective Fund.
10.8. CONFIDENTIALITY. The Company will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of
the Trust, the Distributor, and their affiliates.
32
ARTICLE XI
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement from
time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and Accounts therefor investing in the Trust. Such
amendments may be made effective by executing the form of amendment included on
each schedule attached hereto. The provisions of this Agreement shall be
equally applicable to each such class of Contracts, Series, Class or separate
account, as applicable, effective as of the date of amendment of such Schedule,
unless the context otherwise requires. The parties to this Agreement may amend
this Agreement from time to time by written agreement signed by all of the
parties.
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
---------------------------------------
President
Xxxxxxx Xxxxx Variable Insurance Trust
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
---------------------------------------
Vice President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
Minnesota Life Insurance Company
Attn: General Counsel
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, XX 00000-0000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt
requested or by overnight delivery with a nationally recognized
33
courier, and shall be effective upon receipt. Notices pursuant to the
provisions of Article II may be sent by facsimile to the person designated in
writing for such notices.
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the principles of conflicts of laws, subject
to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the rules,
regulations and rulings thereunder, including such exemptions from those
statutes, rules, and regulations as the SEC may grant, and the terms hereof
shall be limited, interpreted and construed in accordance therewith.
(b) 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.
(c) 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.
(d) 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.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the state of Delaware, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
34
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: April 20, 2010 By: /s/ Xxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Managing Director
XXXXXXX, SACHS & CO.
(Distributor)
Date: April 20, 2010 By: /s/ Xxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Managing Director
MINNESOTA LIFE INSURANCE COMPANY
(Company)
Date: April 1, 2010 By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President
35
SCHEDULE 1
SCHEDULE 1A
SEPARATE ACCOUNTS OF THE COMPANY REGISTERED UNDER THE 1940 ACT AS UNIT
INVESTMENT TRUSTS
The following separate accounts of the Company are subject to the Agreement:
Date Established by
Board of Directors of SEC 1940 Act Type of Product
Name of Account the Company Registration Number Supported by Account
--------------- --------------------- ------------------- -------------------------
Variable Annuity Account September 10, 1984 811-04294 Variable Annuities
Minnesota Life Variable Life October 21, 1985 811-4585 Variable Adjustable Life
Account Insurance
SCHEDULE 1B
VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE CONTRACTS REGISTERED
UNDER THE SECURITIES ACT OF 1933
The following Contracts are subject to the Agreement:
1933 Act Type of Product
Name of Contract Available Funds Registration Number Supported by Account
---------------- ----------------------------- ------------------- --------------------
MultiOption Legend Xxxxxxx Xxxxx Government 333-136242 Variable Annuity
Income Fund - Service Shares
MultiOption Extra Xxxxxxx Sachs Government 333-140230 Variable Annuity
Income Fund - Service Shares
36
MultiOption Advisor Xxxxxxx Xxxxx 333-91784 Variable Annuity
Government Income
Fund - Service
Shares
Variable Adjustable Xxxxxxx Sachs 33-3233 Variable Adjustable
Life Government Income Life Insurance
Fund - Service
Shares
Variable Adjustable Xxxxxxx Xxxxx 333-109853 Variable Adjustable
Life Summit Government Income Life Insurance
Fund - Service
Shares
Variable Adjustable Xxxxxxx Sachs 333-96383 Variable Adjustable
Life Horizon Government Income Life Insurance
Fund - Service
Shares
Variable Adjustable Xxxxxxx Xxxxx 33-64395 Variable Adjustable
Life Second Death Government Income Life Insurance
Fund - Service
Shares
Variable Adjustable Xxxxxxx Sachs 333-120704 Variable Adjustable
Life Survivor Government Income Life Insurance
Fund - Service
Shares
37
SCHEDULE 2
SCHEDULE 2A
SEPARATE ACCOUNTS OF THE COMPANY EXCLUDED FROM THE DEFINITION OF AN INVESTMENT
COMPANY AS PROVIDED FOR BY SECTION 3(C)(11) OF THE 1940 ACT
The following separate accounts of the Company are subject to the Agreement:
Date Established by
Board of Directors of Type of Product
Name of Account the Company Supported by Account
--------------- --------------------- - --------------------
SCHEDULE 2B
VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE CONTRACTS NOT REGISTERED
UNDER
THE SECURITIES ACT OF 1933 IN RELIANCE UPON SECTION 3(A)(2) OF THE ACT
The following Contracts are subject to the Agreement:
Type of Product
Name of Contract Available Funds Group or Individual Supported by Account
---------------- --------------- ------------------- --------------------
38
SCHEDULE 3
SCHEDULE 3A
SEPARATE ACCOUNTS OF THE COMPANY EXCLUDED FROM THE DEFINITION OF AN INVESTMENT
COMPANY AS PROVIDED FOR BY SECTION 3(C)(1) OR 3(C)(7) OF THE 1940 ACT
The following separate accounts of the Company are subject to the Agreement:
Date Established by
Board of Directors of Type of Product
Name of Account the Company Supported by Account
--------------- --------------------- - --------------------
SCHEDULE 3B
VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE CONTRACTS NOT REGISTERED
UNDER
THE SECURITIES ACT OF 1933 IN RELIANCE UPON SECTION 4(2) OF THE ACT AND
REGULATION D
THEREUNDER
The following Contracts are subject to the Agreement:
Type of Product
Name of Contract Available Funds Group or Individual Supported by Account
---------------- --------------- ------------------- --------------------
39
SCHEDULE 4
STATE INSURANCE LAW RESTRICTIONS
40
