EXHIBIT (8)(f)(1)
FORM OF PARTICIPATION AGREEMENT (TRANSAMERICA)
PARTICIPATION AGREEMENT
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Among
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THIS AGREEMENT, effective of this 1/st/ day of January 2000 by and
among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (hereinafter "Insurance
Company"), a California life insurance company, on its own behalf and on behalf
of its SEPARATE ACCOUNT(S) (the "Account"); TRANSAMERICA VARIABLE INSURANCE
FUND, INC., a corporation organized under the laws of Maryland (hereinafter the
"Fund"); and TRANSAMERICA INVESTMENT MANAGEMENT, LLC, (hereinafter the
"Adviser"), a Delaware limited liability corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements similar to this Agreement (hereinafter "Participating Insurance
Companies"), as well as qualified pension and retirement plans; and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, each designated a "Portfolio" and representing interests in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940 as amended, and
WHEREAS, Insurance Company has registered the Account as a unit
investment trust under the 1940 Act, and certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act, and said Account(s) are listed on Schedule A hereto, as it may be amended
from time to time by mutual written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of Insurance
Company to set aside and invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Insurance Company intends to purchase shares in the Portfolios
listed in Schedule A hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolios"),
on behalf of the Account to fund the aforesaid Contracts, and the Fund intends
to sell such shares to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, Insurance
Company, the Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Fund agrees to sell to Insurance Company those shares of the
Designated Portfolios which Insurance Company orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund, or
its designee, of the order for the shares of the Designated Portfolios. For
purposes of this Section 1.1, Insurance Company shall be the agent of the Fund
for receipt of such orders and receipt by Insurance Company shall constitute
receipt by the Fund; provided that the Fund receives notice of such order by
9:30 a.m. New York time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value.
1.2. The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per share by Insurance
Company on those days on which the Fund calculates its net asset value, and the
Fund shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Directors of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if , in the sole discretion of the
Board acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
1.3 The Fund agrees that shares of the Designated Portfolios will be
sold only to Participating Insurance Companies and their separate accounts and
to qualified pension and retirement plans. No shares of any Designated Portfolio
will be sold to the general public.
1.4. The Fund agrees to redeem for cash, on Insurance Companies request,
any full or fractional shares of the Fund held by Insurance Companies, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 0000 Xxx. For purposes of this Section 1.5, Insurance Companies shall be the
agent of the Fund for receipt of requests for redemption and receipt by
Insurance Company shall constitute receipt by the Fund; provided that the Fund
receives notice of such request for redemption by 9:30 a.m. New York time on the
next following Business Day.
1.5. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies and to qualified pension and retirement plans and the cash
value of the Contracts may be invested in other investment companies.
1.6. Insurance Company shall pay for Fund shares by 12:00 noon New York
Time the next Business Day after an order to purchase Fund shares is made in
accordance with the
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provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire and/or by a credit for any shares redeemed the same day as the purchase.
Upon receipt by the Fund of the federal funds so wired, such funds shall cease
to be the responsibility of Insurance Company and shall become the
responsibility of the Fund.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 3:00 p.m. New York time the next Business Day after a redemption order
is received, subject to Section 1.5 hereof. Payment shall be in federal funds
transmitted by wire and/or a credit for any shares purchased the same day as the
redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Insurance Company or the Account.
Shares ordered from the Fund will be recorded in an appropriate title for the
Account or the appropriate sub-account of the Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to Insurance Company of any income, dividends,
or capital gain distributions payable on the Designated Portfolios' shares.
Insurance Company hereby elects to receive all such income dividends and capital
gain distributions in additional shares of that Portfolio. Insurance Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Fund shall notify
Insurance Company by the end of the next following Business Day of the number of
shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Designated
Portfolio available to Insurance Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6:30 p.m. New
York time. If the Fund provides incorrect per share net asset value information,
Insurance Company shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share. Any
material error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported immediately upon
discovery to Insurance Company. Any error of a lesser amount shall be corrected
in the next Business Day's net asset value per share.
In the event adjustments are required to correct any error in the
computation of a Designated Portfolio's net asset value per share, or dividend
or capital gain distribution, the Fund shall notify Insurance Company as soon as
possible after discovering the need for such adjustments. Notification can be
made orally, but must be confirmed in writing. If an adjustment is necessary to
correct an error which caused Contract owners to receive less than the amount to
which they are entitled, the Fund shall make all necessary adjustments to the
number of shares owned by the Account and distribute to the Account the amount
of the underpayment. In no event shall Insurance Company be liable to the Fund
for any such adjustments or overpayment amounts.
ARTICLE II. Representations and Warranties
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2.1. Insurance Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws. Insurance Company further repre-
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sents and warrants that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and validly established
the Account as a segregated asset account under insurance law and has registered
the Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund and Adviser represent and warrants that Designated
Portfolio shares sold pursuant to this Agreement shall be registered under the
1933 Act, duly authorized for issuance and sold in compliance with all
applicable federal and state securities laws including without limitation the
1933 Act, the 1934 Act, and the 1940 Act and that the Fund is and shall remain
registered under the 0000 Xxx. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states if and to the extent required by applicable law.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule
12b-1 under the 1940 Act or impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. To the
extent that the Fund decides to finance distribution expenses pursuant to Rule
12b-1, the Fund undertakes to have a Board, a majority of whom are not
interested persons of the Fund, formulate and approve any plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund and Adviser represent and warrant that the Fund is
lawfully organized and validly existing under the laws of the State of Maryland
and that it does and shall comply in all material respects with the 0000 Xxx.
2.5 The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the fund in compliance with all applicable
state and federal securities laws.
2.6. The Fund and Adviser each represent and warrant that all of its
directors, officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage required by Section 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding company.
2.7. The Fund will provide Insurance Company with as much advance
notice as is reasonably practicable of any material change affecting the
Designated Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Designated Portfolios and any
proxy solicitation affecting the Designated Portfolios) and consult with
Insurance Company in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectuses
for the Contracts.
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2.8. Insurance Company represents and warrants, that, if the Fund
complies with Sections 2.9 and 2.10 of this Agreement, the Contracts are
currently treated as annuity contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended, and that it shall make every effort
necessary to maintain such treatment and that it will notify the Underwriter
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.9. The Fund and the Adviser represent and warrant that: (a) each
Designated Portfolio currently has elected to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code"); (b) the Fund
and Adviser shall make every effort necessary that each Portfolio shall maintain
such qualification (under Subchapter M or any successor or similar provision);
(c) the fund or the Adviser will notify Insurance Company immediately upon
having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that it might not so qualify in the future; and (d) the Fund and the
Adviser will seek to minimize any damages and to rectify any Portfolio's failure
to so qualify promptly. The Fund and the Adviser acknowledge that any failure
by a Portfolio to qualify as a regulated investment company will eliminate the
ability of the Account to avail itself of the "look through" provisions of
Section 817(h) of the Code and that, as a result, the Contracts will almost
certainly fail to qualify as life insurance contracts under Section 817(h) of
the Code.
2.10. The Fund and the Adviser further represent and warrant that the
assets of each Designated Portfolio will at all times be invested in such a
manner to assure that the Contracts will be treated as life insurance contracts
under the Code and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Fund and the Adviser represent that the each
Designated Portfolio will at all times comply with Section 817(h) of the Code
and Treasury Regulation 1.817.5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulation. In the event of a breach of this Section 2.10, the Fund and the
Adviser warrant that they will take all reasonable steps: (a) to immediately
notify the Insurance Company of such breach; and (b) to adequately diversify the
Fund's assets so as to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.11. The Fund and Underwriter acknowledge that full compliance with
the requirements referred to in Sections 2.9 and 2.10 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as annuity contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect the Insurance Company corporate tax liability.
ARTICLE III. Prospectuses, Reports, Proxy Statements and Voting
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3.1. The Fund or Adviser, at their expense, shall provide Insurance
Company or its designee with current a prospectus, Statement of Additional
Information, and supplements thereto, and annual and semi-annual reports for the
Designated Portfolios in final "camera ready" copy form or on a diskette or such
other form as is required by a financial printer. The Fund and Adviser agrees
that the prospectuses, and supplements thereto, and the annual and semi-annual
reports for the Designated Portfolios will describe only the Designated
Portfolios and will not describe other Portfolios of the Fund. The Statement of
Additional Information may include information on other Portfolios of the Fund.
It is anticipated that the prospectuses and annual
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and semi-annual reports for the Contracts (if applicable), for the Designated
Portfolio(s) and for other portfolios available under the Contracts will be
printed together in one booklet. The Fund or Adviser shall pay a portion of the
printing expenses for prospectus and fund reports booklets distributed to
current Contract Owners. Such portion shall be the percentage, which is the
number of pages of the Fund prospectus or report as compared to the total number
of pages of the booklet. The Fund shall not pay any expenses for printing or
distribution of prospectuses or fund reports to prospective Contract Owners.
3.2. It is understood and agreed that, except with respect to
information regarding Insurance Company provided in writing by Insurance
Company, Insurance Company shall not be responsible for the content of the
prospectus, SAI or annual and semi-annual reports for the Designated Portfolios.
It is also understood and agreed that, except with respect to information
regarding the Fund and provided in writing by the Fund, the Fund shall not be
responsible for the content of the prospectus or SAI for the Contracts.
3.3. The Fund or Adviser at their expense shall provide Insurance
Company with as many copies of its Fund proxy material as Insurance Company
shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, Insurance Company shall,
at its expense:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio shares in accordance with
instructions received from Contract owners: and
(iii) vote Designated Portfolio shares for which no instructions
have been received in the same proportion as Designated
Portfolio shares for which instructions have been received
from Contract owners in the same Account.
So long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for variable contract
owners. Insurance Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
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4.1. Insurance Company shall furnish, or shall cause to be furnished,
to the Fund, or its designee, each prospectus, Statement of Additional
Information and each piece of sales literature and other promotional material
that Insurance Company develops or uses and in which the Fund (or a Portfolio
thereof), its investment adviser or one of its sub-advisers is named in
connection with the Contracts, at least 10 (ten) Business Days prior to its use.
No such material shall be used if the Fund, or its designee, objects to such use
within 10 (ten) Business Days after receipt of such material.
4.2. Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts inconsistent with the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the
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permission of the Fund.
4.3. The Fund shall furnish, or shall cause to be furnished, to Insurance
Company, each piece of sales literature and other promotional material developed
by the Fund or its designee in which Insurance Company and/or the Account is
named at least 10 (ten) Business Days prior to its use. No such material shall
be used if Insurance Company objects to such use within 10 (ten) Business Days
after receipt of such material. Notwithstanding the fact that Insurance Company
or its designee may not initially object to a piece of sales literature or other
promotional material, Insurance Company reserves the right to object at a later
date to the continued use of any such sales literature or promotional material
in which Insurance Company is named, and no such material shall be used
thereafter if Insurance Company or its designee so objects.
4.4. The Fund and Adviser shall not give any information or make any
representations on behalf of Insurance Company or concerning Insurance Company,
the Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Account, or in sales literature or other
promotional material approved by Insurance Company or its designee, except with
the permission of Insurance Company.
4.5. For purposes of this Article IV, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(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, telephone directories (other than routine
listings), electronic or other public media), sales literature (i.e., any
----
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, Statements of Additional
Information, supplements thereto, shareholder reports, and proxy materials.
4.6. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representative
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
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5.1. The Fund shall pay no fee or other compensation to Insurance Company
under this Agreement, except that if the Fund or any Designated Portfolio adopts
and implements a plan pursuant to Rule 12b-1 of the 1940 Act to finance
distribution and shareholder servicing expenses, then the Fund's underwriter may
make payments to Insurance Company or to the
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distributor of the Contracts if and in amounts agreed to by the Fund's
underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Fund's underwriter, past profits of the underwriter or
other resources available to the underwriter. No such payments shall be made
directly by the Fund. Nothing herein shall prevent the parties hereto from
otherwise agreeing to perform, and arrange for appropriate compensation for,
other services relating to the Fund and/or the Account. Insurance Company shall
pay no fee or other compensation to the Fund under this Agreement, although the
parties hereto will bear certain expenses.
5.2. All expenses incident to performance by the Fund or the Adviser under
this Agreement shall be paid by the Fund or Adviser. The Fund shall see to it
that all shares of the Designated Portfolios are registered and authorized for
issuance in accordance with applicable federal law and, if and to the extent
required, in accordance with applicable state laws prior to their sale. The
Fund shall bear the expenses for the cost of registration and qualification of
the Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, supplements thereto and its proxy materials and reports.
The Fund or Adviser will bear the expenses of fulfilling their obligations under
(S) 3.1.
5.3. Insurance Company shall bear the expenses of routine annual
distribution of the Fund's prospectus to owners of Contracts issued by Insurance
Company and of distributing the Fund's proxy materials and reports to such
Contract owners; Insurance Company shall bear all expenses associated with the
registration, qualification, and filing of the Contracts under applicable
federal securities and state insurance laws; the cost of preparing, printing,
and distributing the Contract prospectus and SAI; and the cost of preparing,
printing and distributing annual individual account statement to Contract owners
as required by state insurance laws.
5.4. The Fund acknowledges that a principal feature of the Contracts is
the Contract owner's ability to choose from a number of unaffiliated mutual
funds (and portfolios or series thereof), including the Designated Portfolios
("Unaffiliated Funds"), and to transfer the Contract's cash value between funds
and portfolios. The Fund and Underwriter agree to cooperate with Insurance
Company in facilitating the operation of the Account and the Contracts as
intended, including but not limited to cooperation in facilitating transfers
between Unaffiliated Funds.
ARTICLE VI. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
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6.1 In the event that Fund determines that it is appropriate for the Fund
to seek an order from the SEC granting insurance companies and their separate
accounts exemptions which purchase Fund shares from the provisions of Sections
9(a), 13(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Shared Funding Exemptive"), this article
shall apply.
6.2. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
in-
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surance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a participating insurance company to
disregard the voting instructions of contract owners. The Board shall promptly
inform Insurance Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
6.3. Insurance Company will report any potential or existing conflicts of
which it is aware to the Board. Insurance Company will assist the Board in
carrying out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by Insurance Company to inform the Board whenever contract owner voting
instructions are disregarded. Such responsibilities shall be carried out by
Insurance Company with a view only to the interests of its Contract Owners.
6.4. If it is determined by a majority of the Board, or a majority of its
directors who are not interested persons of the Fund, its adviser or any sub-
adviser to any of the Portfolios (the "Independent Directors"), that a material
irreconcilable conflict exists, Insurance Company and other participating
insurance companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
----
contract owners, life insurance contract owners, or variable contract owners of
one or more participating insurance companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account. Insurance Company shall not be required by
this Section 6.4 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.
6.5. If a material irreconcilable conflict arises because of a decision by
Insurance Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Insurance Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement; provided, however
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision is
being implemented, and until the end of that six month period the Fund shall
continue to accept and implement orders by Insurance Company for the purchase
(and redemption) of shares of the Fund.
6.6. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurance Company conflicts
with the majority of other state
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regulators, then Insurance Company will withdraw the Account's investment in the
Fund and terminate this Agreement within six months after the Board informs
Insurance Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and the Fund shall continue to accept and implement
orders by Insurance Company for the purchase (and redemption) of shares of the
Fund.
6.7. For purposes of Sections 6.4 through 6.6 of this Agreement, a majority
of the Independent Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts.
6.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable:
and (b) Sections 6.2, 6.3, 6.4, 6.5 and 6.6 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VII. Indemnification
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7.1. Indemnification By Insurance Company
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8.1(a). Insurance Company agrees to indemnify and hold harmless the
Fund and the Adviser and their officers, directors, employees, and agents and
each person who controls the Fund within meaning of (S) 15 of the 1933 Act.
(collectively, the "Indemnified Parties" for purposes of this Section 7.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Insurance Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus or SAI for the Contracts or
contained in the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this Agreement to indemnify shall not
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apply as to any Indemnified Party if such statement or omission or
such alleged
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statement or omission was made in reliance upon and in
conformity with information furnished in writing to Insurance
Company by or on behalf of the Underwriter or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature of the Fund not supplied
by Insurance Company or persons under its control) or wrongful
conduct of Insurance Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished in writing
to the Fund by or on behalf of Insurance Company; or
(iv) arise as a result of any failure by Insurance Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Insurance Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by Insurance Company, as limited by and in
accordance with the provisions of Sections 7.1(b) and 7.1(c)
hereof.
7.1(b). Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject if caused by such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
7.1(c). Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Insurance Company in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Insurance Company
of any such claim shall not relieve Insurance Company from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, Insurance Company shall be
entitled to participate, at its own expense, in the defense of such action.
Insurance Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from
Insurance Company to such party
-12-
of Insurance Company's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and Insurance Company will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.1(d). The Indemnified Parties will promptly notify Insurance Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
7.2. Indemnification by the Adviser
------------------------------
7.2(a). The Adviser agrees to indemnify and hold harmless Insurance
Company and each of its directors, officers, employees, agents and each person,
if any, who controls Insurance Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
7.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature of the Fund (or
any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
--------
Agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished in writing to the Adviser or Fund by or on behalf of
Insurance Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature for the Contracts not
supplied by the Adviser or persons under its control) or wrongful
conduct of the Fund or Adviser or persons under their control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus or
sales literature covering the Contracts, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished in writing to Insurance Company by or on behalf of the
Adviser or Fund; or
-13-
(iv) arise as a result of any failure by the Fund or Adviser to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified (S) 2.9 and 2.10 in of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or Adviser in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Fund or Adviser; as limited by and in
accordance with the provisions of Sections 7.2(b) and 7.2(c)
hereof.
7.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
7.2(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.2(d). Insurance Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE VIII. Applicable Law
--------------
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of California,
without regard to that state's principles of conflicts of law, except that any
terms shall be defined and interpreted in accordance with, and the Agreement
subject to, the federal securities laws.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those stat-
-14-
utes, rules and regulations as the Securities and Exchange Commission may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
-----------
9.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to
some or all Portfolios, upon one (1) year advance written notice
delivered to the other parties; provided, however, that such notice
shall not be given earlier than one year following the date of this
Agreement; or
(b) at the option of Insurance Company by written notice to the other
parties with respect to any Portfolio based upon Insurance Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) at the option of Insurance Company by written notice to the other
parties with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/ or federal law or such law precludes the
use of such shares as the underlying investment media of the Contracts
issued or to be issued by Insurance Company; or
(d) at the option of the Fund in the event that formal administrative
proceedings are instituted against Insurance Company by the National
Association of Securities Dealers, Inc. ("NASD"), the Securities and
Exchange Commission, the Insurance Commissioner or like official of
any state or any other regulatory body regarding Insurance Company's
duties under this Agreement or related to the sale of the Contracts,
the operation of any Account, or the purchase of the Fund shares,
provided, however, that the Fund determines in its sole judgment
exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of Insurance Company
to perform its obligations under this Agreement; or
(e) at the option of Insurance Company in the event that formal
administrative proceedings are instituted against the Fund or Adviser
by the NASD, the Securities and Exchange Commission, or any state
securities or insurance department or any other regulatory body,
provided, however, that Insurance Company determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Fund or Adviser to perform its obligations under this Agreement;
or
(f) at the option of Insurance Company by written notice to the Fund
and the Adviser with respect to any Portfolio if Insurance Company
reasonably believes that the Portfolio may fail to meet the Section
817(h) diversification requirements or Subchapter M qualifications
specified in Section 2.9 and 2.10 of this Agreement; or
(g) at the option of either the Fund or the Adviser, if (i) the Fund
or Adviser,
-15-
respectively, shall determine, in their sole judgement reasonably
exercised in good faith, that Insurance Company has suffered a
material adverse change in its business or financial condition or is
the subject of material adverse publicity and that material adverse
change or publicity will have a material adverse impact on Insurance
Company's ability to perform its obligations under this Agreement,
(ii) the Fund or Adviser notifies Insurance Company of that
determination and its intent to terminate this Agreement, and (iii)
---
after considering the actions taken by Insurance Company and any other
changes in circumstances since the giving of such a notice, the
determination of the Fund or Adviser shall continue on the sixtieth
(60th) day following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(h) at the option of Insurance Company, if (i) Insurance Company
shall determine, in its sole judgement reasonably exercised in good
faith, that either the Fund or the Adviser have suffered a material
adverse change in their business or financial condition or is the
subject of material adverse publicity and that material adverse change
or publicity will have a material adverse impact on the Fund's or
Adviser's ability to perform its obligations under this Agreement,
(ii) Insurance Company notifies the Fund or Adviser, as appropriate,
of that determination and its intent to terminate this Agreement, and
---
(iii) after considering the actions taken by the Fund or Adviser and
any other changes in circumstances since the giving of such a notice,
the determination of Insurance Company shall continue on the sixtieth
(60th) day following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(i) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(j) upon assignment of this Agreement, unless made with the written
consent of the parties hereto, except that the Adviser may assign this
Agreement, or any of its rights or obligations hereunder, to any
affiliate of, or company under common control with, the Adviser (but
in such event the Adviser shall continue to be liable for any
indemnification due to Insurance Company and the assignee shall also
be liable), if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement; or
(k) at the option of Insurance Company or the Fund by written notice
to the other party upon a determination by the Fund's Board that a
material irreconcilable conflict exists among the interests of (i) all
contract owners of all separate accounts investing in the Fund or (ii)
the interests of the Participating Insurance Companies; or
(l) at the option of Insurance Company by written notice to the Fund
or the Adviser upon the sale, acquisition or change of control of the
Adviser.
9.2. Notice Requirement. No termination of this Agreement shall be
------------------
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination.
9.3. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Adviser shall, at the option of Insurance Company,
continue to make available
-16-
additional shares of the Fund for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts") pursuant to the terms and conditions of this Agreement.
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments under
the Existing Contracts. The parties agree that this Section 9.3 shall not apply
to any terminations under Article VI and the effect of such Article VI
terminations shall be governed by Article VI of this Agreement.
9.4. Surviving Provisions. Notwithstanding any termination of this
--------------------
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
ARTICLE X. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail or by overnight mail sent through a nationally-recognized delivery service
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to Insurance Company:
Transamerica Occidental Life Insurance Company
0000 Xxxxx Xxxxx Xxxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
If to the Fund:
Transamerica Variable Insurance Fund, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Secretary
If to the Adviser:
Transamerica Investment Management, LLC
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: President
ARTICLE XI. Miscellaneous
-------------
10.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
-17-
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party reasonably considers to be proprietary.
10.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.4. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
10.6. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
10.8. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY:
By its authorized officer
By: ______________________________
Title: ______________________________
TRANSAMERICA VARIABLE INSURANCE FUND, INC.:
By its authorized officer,
By: ______________________________
Title: ______________________________
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
By its authorized officer,
By: ______________________________
Title: ______________________________
-19-
Effective January 1, 2000
SCHEDULE A
----------
To January 1, 2000, Participation Agreement
Between Transamerica Variable Insurance Fund, Inc.,
Transamerica Investment Management, LLC, and
Transamerica Occidental Life Insurance Company
Accounts and Designated Portfolios
----------------------------------
Separate Account C - Growth Portfolio
Separate Account VA-2L - Growth Portfolio
Separate Account VUL-1 - Growth Portfolio and Money Market Portfolio
Separate Account VUL-2 - Growth Portfolio and Money Market Portfolio
