EXHIBIT (8)
PARTICIPATION AGREEMENTS
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as of April 1, 1997
by and between GLENBROOK LIFE AND ANNUITY COMPANY (the "Company"), AMERICAN
CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM") and AMERICAN CENTURY INVESTMENT
SERVICES, INC. (the "Distributor").
WHEREAS, the Company offers to the public certain variable annuity
contracts and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to offer as investment options under the
Contracts, certain series of mutual fund shares registered under the Investment
Company Act of 1940, as amended, and issued by TCI Portfolios, Inc. ("Issuer"),
as set forth in Schedule A attached hereto (each, a "Fund"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds for the benefit of Contract owners;
NOW, THEREFORE, the Company, Distributor and ACIM agree as follows:
1. Transactions in the Funds.
Subject to the terms and conditions of this Agreement, Distributor will
cause the Issuer to make shares of the Funds available to be purchased,
exchanged, or redeemed, by the Company on behalf of the Accounts (defined in
Section 5(a) below) through a single account for each Account per Fund at the
net asset value applicable to each order. The Funds' shares shall be purchased
and redeemed on a net basis in such quantity and at such time as determined by
the Company to satisfy the requirements of the Contracts for which the Funds
serve as underlying investment media. Dividends and capital gains distributions
will be automatically reinvested in full and fractional shares of the Funds.
Issuance and transfer of shares of the Funds shall be by book entry only.
2. Administrative Services.
The Company shall be solely responsible for providing all administrative
services for the Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved, and will
otherwise comply in all material respects with all laws, rules and regulations
applicable to the marketing of the Contracts and the provision of administrative
services to the Contract owners.
3. Processing and Timing of Transactions
(a) Distributor hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption orders for Fund shares
from the Plans and/or Participants, as applicable. On each day the New York
Stock Exchange (the "Exchange") is open for business (each, a "Business
Day"), the Company may receive instructions from the Plans and/or
Participants for the purchase or redemption of shares of the Funds
("Orders"). Orders received and accepted by the Company prior to the close
of regular trading on the Exchange (the "Close of Trading") on any given
Business Day (currently, 3:00 p.m. Central time) and transmitted to the
Issuers by 9:00 a.m. Central time on the next following Business Day will
be executed by the Issuers at the net asset value determined as of the
Close of Trading on the previous Business Day ("Day I "). Any Orders
received by the Company on such Business Day after the Close of Trading,
and all Orders that are transmitted to the Issuers after 9:00 a.m. Central
time on the next following Business Day, will be executed by the Issuers at
the net asset value next determined following receipt of such Order. The
day as of which an Order is executed by the Issuers pursuant to the
provisions set forth above is referred to herein as the "Effective Trade
Date".
(b) By 5:30 p.m. Central time on each Business Day, Distributor (or
one of its affiliates) will provide to the Company, via facsimile or other
electronic transmission acceptable to the Company, the Funds' net asset
value, dividend and capital gain information and, in the case of income
funds, the daily accrual for interest rate factor (mil rate), determined at
the Close of Trading. In the event Distributor (or one of its affiliates)
is unable to meet the 5:30 p.m. time stated herein, it shall, to the extent
reasonably possible given its systems limitations and the Fund's custodial
relationship, provide a reasonable amount of additional time for the
Company to place Orders pursuant to Sections 3(a) and 3(c) and to pay for
net purchase transactions pursuant to Section 3(d). If Distributor (or one
of its affiliates) provides materially incorrect share net asset value,
dividend or capital gain information, or, in the case of income funds, the
daily accrual for interest rate, Distributor (or one of its affiliates)
shall make an adjustment to the number of shares purchased or redeemed for
each of the Accounts (defined in Section 5(a) below) to reflect the correct
net asset value, dividend or capital gain information, or the daily accrual
for interest rate. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information, or daily
accrual for interest rate shall be reported promptly upon discovery to the
Company.
(c) By 9:00 a.m. Central time on each Business Day, the Company will
provide to Distributor via facsimile or other electronic transmission
acceptable to Distributor a report stating whether the Orders received by
the Company from Contract owners by the Close of Trading on the preceding
Business Day resulted in each Account being a net purchaser or net seller
of shares of the Funds and stating the amount of the net purchase or
redemption of Fund shares for each Account. As used in this Agreement, the
phrase "other electronic transmission acceptable to Distributor" includes
the use of remote computer terminals located at the premises of the
Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of Distributor, its agents or
affiliates (hereinafter, "Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the report described
in (c) above, the Funds' transfer agent will execute the purchase or
redemption transactions (as the case may be) at the net asset value
computed as of the Close of Trading on Day 1. Payment for net purchase
transactions shall be made by wire transfer to the custodial account
designated by the Funds on the Business Day next following the Effective
Trade Date. Such wire transfers shall be initiated by the Company's bank
prior to 3:00 p.m. Central time and received by the Funds prior to 5.00
p.m. Central time on the Business Day next following the Effective Trade
Date. If payment for a purchase Order is not timely received, such Order
will be executed at the net asset value next computed following receipt of
payment. Payments for net redemption transactions shall be made by wire
transfer by the Issuer to the account designated by the appropriate
receiving party within the time period set forth in the applicable Fund's
then-current prospectus; provided, however, the Issuers will use all
reasonable efforts to settle all redemption on the Business Day following
the Effective Trade Date. On any Business Day when the Federal Reserve Wire
Transfer System is closed, all communication and processing rules will be
suspended for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System is open and
the original Effective Trade Date will apply.
4. Prospectus and Proxy Materials.
(a) Distributor shall provide to the shareholder of record copies of
the Issuer's proxy materials, periodic fund reports to shareholders and
other materials that are required by law to be sent to the Issuer's
shareholders. In addition, Distributor shall provide the Company with a
sufficient quantity of prospectuses (describing only those Funds set forth
in Schedule A to this Agreement) of the Funds to be used in conjunction
with the transactions contemplated by this Agreement, together with such
additional copies of the Issuer's prospectuses as may be reasonably
requested by Company. If the Company provides for pass-through voting by
the Contract owners, Distributor shall provide the Company with a
sufficient quantity of proxy materials for each Contract owner. Distributor
also shall provide the Company with a sufficient quantity of periodic Fund
reports for each Contract Owner.
(b) Except as otherwise specifically provided in Schedule B, attached
hereto and made a part hereof, each party will bear all expenses incident
to its performance under this Agreement.
5. Representations and Warranties.
(a) The Company represents and warrants that: (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed
and delivered, shall constitute the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms; (ii) it has
established the separate accounts set forth on Schedule A attached hereto
(the "Accounts"), each of which is a separate account under Illinois
Insurance law, and has registered each Account as a unit investment trust
under the Investment Company Act of 1940 (the " 1940 Act") to serve as an
investment vehicle for the Contracts; (iii) each Contract provides for the
allocation of net amounts received by the Company to an Account for
investment in the shares of one of more specified investment companies
selected among those companies available through the Account to act as
underlying investment media; (iv) selection of a particular investment
company is made by the Contract owner under a particular Contract, who may
change such selection from time to time in accordance with the terms of the
applicable Contract; and (v) the activities of the Company contemplated by
this Agreement comply with all material provisions of federal and state
insurance, securities, and tax laws applicable to such activities.
(b) Distributor represents and warrants that (i) the Issuer is
lawfully organized and validly existing under the laws of Maryland and that
the Issuer does and will comply in all material respects with the 1940 Act
and any applicable regulations thereunder; (ii) Fund shares sold pursuant
to this Agreement will be registered under the Securities Act of 1933 and
any applicable state securities laws and duly authorized for issuance under
the laws of Maryland, and will be issued and sold in compliance in all
material respects with applicable law and the Issuer's Articles of
Incorporation and that the Issuer is and will remain registered under the
1940 Act for so long as Fund shares are sold; (iii) each Fund currently
qualifies and will continue to qualify as a Regulated Investment Company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and will maintain such qualification (under Subchapter M or any
successor or similar provision), and that the Distributor will notify the
Company immediately upon having a reasonable basis for believing that any
Fund has ceased to so qualify or that the Fund might not so qualify in the
future; (iv) this Agreement has been duly authorized by all necessary
corporate action and, when executed and delivered, shall constitute the
legal, valid and binding obligation of Distributor and ACIM, enforceable in
accordance with its terms; (v) the investments of the Funds will at all
times be adequately diversified within the meaning of Section 817(h) of the
Code, and the regulations thereunder, and that at all times while this
Agreement is in effect, all beneficial interests in each of the Funds will
be owned by one or more insurance companies or by any other party permitted
under Section 1.817-5(f)(3) of the Regulations promulgated under the Code;
and (vi) that Distributor will notify the Company immediately upon having a
reasonable basis for believing that the Fund has ceased to so comply or
that the Fund might not so qualify in the future.
(c) Distributor and ACIM each represent and warrant that it is duly
registered under all applicable federal and state securities laws and that
it shall perform its obligations to the Issuer in compliance in all
material respects with any applicable federal and state securities laws.
(d) Distributor represents that the Issuer's investment policies,
fees, expenses and operations are and shall at all times remain in material
compliance with applicable state securities laws to the extent required to
perform this Agreement. The Company shall prepare and transmit to
Distributor a schedule setting forth the investment limitations with which
the Company reasonably believes each Fund should comply in order for the
Contracts to comply with applicable state insurance law requirements and
shall notify the Issuer of any change in such schedule. Distributor shall
notify the Company if the Issuer is not in material compliance with, or is
unable to comply with, any such investment limitations.
6. Additional Covenants and Agreements.
(a) In addition to complying with the specific provisions of this
Agreement, each party shall comply in all material respects with all
provisions of federal and state laws applicable to its respective
activities under this Agreement.
(b) Each party shall promptly notify the other parties in the event
that it is, for any reason, unable to perform any of its obligations under
this Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business
Day will be based upon instructions that it received from the Contract
owners in proper form prior to the Close of Trading of the Exchange on that
Business Day.
(d) The Company covenants and agrees that all Orders transmitted to
the Issuer's transfer agent, whether by telephone, telecopy, or other
electronic transmission acceptable to Issuer's transfer agent, shall be
sent by or under the authority and direction of a person designated by the
Company as being duly authorized to act on behalf of the owner of the
Accounts. Absent actual knowledge to the contrary, Distributor and Issuer's
transfer agent shall be entitled to rely on the existence of such authority
and to assume that any person transmitting Orders for the purchase,
redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding
Fund shares on behalf of the owner of such Fund shares. The Company shall
maintain the confidentiality of all passwords and security procedures
issued, installed or otherwise put in place with respect to the use of
Remote Computer Terminals and assumes full responsibility for the security
therefor. The Company further agrees to be solely responsible for the
accuracy, propriety and consequences of all data transmitted to Distributor
or the Funds' transfer agent by the Company by telephone, telecopy or other
electronic transmission acceptable to Distributor or the Funds' transfer
agent.
(e) The Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and
promotion to shares of the Funds as is given to other underlying
investments of the Accounts.
(f) (i) The Company shall not, without the written consent of
Distributor, make representations concerning the Issuer or the shares of
the Funds except those contained in the then-current prospectus and
Statement of Additional Information and in current printed sales literature
approved by Distributor, ACIM or the Issuer.
(ii) Distributor, ACIM the Issuer, and their agents shall not,
without the written consent of the Company, make written
representations concerning the Company, the Account, or the Contracts
except those contained in the then-current prospectus and Statement of
Additional Information for the Contracts and in current printed sales
literature for the Contracts approved by the Company.
(g) Advertising and sales literature with respect to the Issuer or the
Funds prepared by the Company or its agents, if any, for use in marketing
shares of the Funds to Contract owners as underlying investment media for
the Contracts shall be submitted to Distributor for review and approval
before such material is used. Distributor agrees to respond to requests for
review and approval of such material within a reasonable amount of time.
(h) (i) The Company shall provide to Distributor at least one complete
copy of all registration statements, prospectuses, statements of additional
information, annual and semi-annual reports, and all amendments or
supplements to any of the above that include a description of or
information regarding the Funds promptly after the filing of such document
with the SEC or other regulatory authority.
(ii) Distributor shall provide to the Company at least one
complete copy of all registration statements, prospectuses, Statements
of Additional Information, annual and semi-annual reports, proxy
statements, and all amendments or supplements to any of the above that
include a description of or information regarding the Company or the
Contracts promptly after the filing of such document with the SEC or
other regulatory authority.
(iii) Distributor shall provide Company with at least 60 days'
prior written notice of any change in the name of a Fund in order to
enable Company to control its inventory of marketing and other Fund
materials.
7. Use of Names.
Except as otherwise expressly provided for in this Agreement, neither
Distributor or any of its affiliates shall use any trademark, trade name,
service xxxx or logo of the Company, or any variation of any such trademark,
trade name, service xxxx or logo without the Company's provided for in this
Agreement, the Company shall not use any trademark, trade name, service xxxx or
logo of the Issuer, Distributor or any of Distributor's affiliates, or any
variation of any such trademarks, trade names, service marks, or logos, without
the prior written consent of either the Issuer or Distributor, as appropriate,
the granting of which shall be at the sole option of Distributor and/or the
Issuer.
8. Proxy Voting.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it calculates voting privileges in a consistent manner as required
by the Shared Funding Exemptive Order (as defined in Section 10(a) below).
Distributor hereby confirms that the manner in which the Company currently
calculates voting privileges is consistent with that required in the Shared
Funding Exemptive Order and the manner in which other Participating Companies
(as defined in Section 10(a) below) so calculate voting privileges. Distributor
will notify the Company if it becomes aware that another Participating Company
has changed the manner in which it so calculates voting privileges.
(b) So long as it is required to provide pass-through voting privileges,
the Company will distribute to Contract owners all proxy materials furnished by
Distributor and will vote shares in accordance with instructions received from
such Contract owners. The Company shall vote Fund shares for which no
instructions have been received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners.
9. Indemnity.
(a) Distributor agrees to indemnity and hold harmless the Company and each
of its officers, directors, employees, agents, affiliates and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act of 1933 (collectively, the "Indemnified Parties" for purposes of this
Section 9(a)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses (including
legal and other expenses) (collectively, "Losses"), to which the Indemnified
Parties may become subject, insofar as such Losses (or actions in respect
thereof) (i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement,
prospectuses, statement of additional information, or sales literature of any
Fund or the Issuer, 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; or (ii) result from
any breach by Distributor or ACIM of a material provision of this Agreement.
Distributor will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. Distributor shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of the Company in
performing its obligations under this Agreement.
(b) The Company agrees to indemnity and hold harmless Distributor, ACIM and
the Issuer and each of their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls Distributor or ACIM within the
meaning of the Securities Act of 1933 (collectively, the "Indemnified Parties"
for purposes of this Section 9(b)) against any Losses to which the Indemnified
Parties may become subject, insofar as such Losses (i) result from a breach by
the Company of a material provision of this Agreement; or (ii) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement, prospectus, statement of
additional information, or sales literature of the Company regarding the
Contracts, if any, or arise out of or are based upon 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; or (iii) result from
the use by any person of a Remote Computer Terminal. The Company will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of Distributor or ACIM in performing their
obligations under this Agreement; or in any such case to the extent that any
such Loss arises out of or is based upon an untrue statement or omission or
alleged omission made in such registration statement, prospectus, statement of
additional information in conformity with written materials furnished to the
Company by the Distributor or ACIM specifically for use therein.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof, but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 9. In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein. To the extent that the indemnifying party may wish to, it
may assume the defense thereof, with counsel satisfactory to the indemnified
party. After notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation. If the
indemnified party proceeds with the defense, 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 indemnity the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
10. Potential Conflicts.
(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by ACIM and the Issuer on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Board. The 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 the Company to
inform the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund and
reinvesting such assets in a different investment medium or submitting the
question of 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 Companies)
that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and/
(ii) or establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions
and said decision represents a minority position or would preclude a
majority vote by all of its contract owners having an interest in the
Issuer, the Company at its sole cost, may be required, at the Board's
election, to withdraw an Account's investment in the Issuer 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 disinterested
members of the Board.
(e) For the purpose of this Section 10, a majority of the
disinterested Board members shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Issuer be required to establish a new funding medium for any
Contract. The Company shall not be required by this Section 10 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.
(f) If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 1940 Act or the Rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Shared
Funding Exemptive Order, then (i) the Issuer and/or the Participating
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 (ii) the applicable sections
of this Agreement shall continue in effect only to the extent that they are
not inconsistent with such Rule(s) as so amended or adopted.
11. Termination.
This Agreement shall terminate with respect to the Accounts, or one,
some or all of the Funds:
(a) at the option of either the Company, Distributor or ACIM upon
six months' advance written notice to the other;
(b) at the option of the Company if the Funds' shares are not
available for any reason to meet the requirement of Contracts as
determined by the Company. Reasonable advance notice of election to
terminate shall be furnished by the Company;
(c) at the option of either the Company, Distributor or ACIM upon
institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Accounts, the Company, or
the Issuer by the National Association of Securities Dealers, Inc.
(the NASD), the SEC or any other regulatory body;
(d) upon termination of the Distribution Agreement between the
Issuer and Distributor. Notice of such termination shall be promptly
furnished to the Company. This subsection (d) shall not be deemed to
apply if contemporaneously with such termination a new contract of
substantially similar terms is entered into between the Issuer and
Distributor;
(e) upon (i) receipt by the Company of an order of substitution
issued by the Securities and Exchange Commission permitting the
substitution of shares of another investment company for the
corresponding Fund shares, and/or (ii) the requisite vote of Contract
owners having an interest in the Issuer to substitute for the Issuer's
shares the shares of another investment company in accordance with the
terms of Contracts for which the Issuer's shares had been selected to
serve as the underlying investment medium and any applicable SEC
approval. The Company will give 60 days' written notice to the Issuer
and Distributor of any substitution or proposed vote to replace the
Funds' shares;
(f) upon assignment of this Agreement unless made with the
written consent of all other parties hereto;
(g) if the Issuer's shares are not registered, issued or sold in
conformance with Federal law or state law, or such law precludes the
use of Fund shares as an underlying investment medium of Contracts
issued or to be issued by the Company. Prompt notice shall be given by
either party should such situation occur;
(h) at the option of the Issuer, if the Issuer reasonably
determines in good faith that the Company is not offering shares of
the Fund in conformity with the terms of this Agreement or applicable
law;
(i) at the option of any party hereto upon a determination that
continuing to perform under this Agreement would, in the reasonable
opinion of the terminating party's counsel, violate any applicable
federal or state law, rule, regulation or judicial order; or
(j) at the option of the Company by written notice to the Issuer
in the event that the Issuer fails to meet the Section 817(h)
diversification requirements or Subchapter M qualifications specified
in this Agreement or if the Company reasonably believes that the
Issuer may fail to meet either of those requirements.
12. Continuation of Agreement.
Termination as the result of any cause listed in Section 11 shall not
affect the Issuer's obligation to furnish its shares to Contracts then in
force for which its shares serve or may serve as the underlying medium
("Existing Contracts") (unless such further sale of Fund shares is
proscribed by law or the SEC or other regulatory body). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted
to reallocate investments in the Issuer, redeem investments in the Issuer
and/or invest in the Issuer upon the making of additional purchase payments
under the Existing Contracts. Each party's obligation under Section 9 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. Following termination,
Distributor shall not have any Administrative Services payment obligation
to the Company (except for payment obligations accrued but not yet paid as
of the termination date).
13. Non-Exclusivity.
Each of the parties acknowledges and agrees that this Agreement and
the arrangement described herein are intended to be non-exclusive and that
each of the parties is free to enter into similar agreements and
arrangements with other entities.
14. Survival.
The provisions of Section 7 (use of names) and Section 9 (indemnity)
of this Agreement shall survive termination of this Agreement.
15. Notices.
All notices and other communications hereunder shall be given or made
in writing and shall be delivered personally, or sent by telex, telecopier,
express delivery or registered or certified mail, postage prepaid, return
receipt requested, to the party or parties to whom they are directed at the
following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Glenbrook Life and Annuity Company
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
To the Issuer, Distributor or ACIM:
American Century Investments
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Ethefington, Esq
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed
in this Section 15 shall be deemed to have been delivered on receipt.
16. Successors and Assigns.
This Agreement may not be assigned without the written consent of all
parties to the Agreement at the time of such assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.
17. Counterparts.
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any party hereto
may execute this Agreement by signing any such counterpart.
18. Severability.
In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
19. Entire Agreement.
This Agreement, including the Attachments hereto, constitutes the
entire agreement between the parties with respect to the matters dealt with
herein, and supersedes all previous agreements, written or oral, with
respect to such matters. 20. Applicable Law.
(a) This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of Missouri.
(b) This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
AMERICAN CENTURY INVESTMENT GLENBROOK LIFE AND ANNUITY
SERVICES, INC. COMPANY
By: ____________________________ By: _____________________________
Xxxxxxx X. Xxxxx Name:____________________________
Executive Vice President Title: __________________________
AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC.
By: __________________________________
Xxxxxxx X Xxxxx
Executive Vice President
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 30th day of June, 1997, between
Glenbrook Life and Annuity Company, a life insurance company organized under the
laws of the State of Illinois ("Insurance Company"), and each of DREYFUS
VARIABLE INVESTMENT FUND, THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. and
DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK INDEX FUND) (each
a "Fund").
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may be,
of a Fund, which has the responsibility for management and control of the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract that
uses any Participating Fund (as defined below) as an underlying investment
medium. Individuals who participate under a group Contract are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract with a
Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of a
Fund that are not deemed to be "interested persons" of the Fund, as defined by
the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates, including
Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life insurance
contracts to the public and that has entered into an agreement with one or more
of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable, any
series thereof, specified in Exhibit A, as such Exhibit may be amended from time
to time by agreement of the parties hereto, the shares of which are available to
serve as the underlying investment medium for the aforesaid Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of additional
information of a Fund, as most recently filed with the Commission.
1.12 "Separate Account" shall mean each separate account established by
Insurance Company in accordance with the laws of the State of Illinois as
specified in Schedule A.
1.13 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset value per
share. Such Program may include the Lion System. In situations where the Lion
System or any other Software Program used by a Fund is not available, such
information may be provided by telephone. The Lion System shall be provided to
Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates that invest in a Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established each Separate Account pursuant to the Illinois
Insurance Code for the purpose of offering to the public certain individual and
group variable annuity and variable life insurance contracts; (c) it has
registered the Separate Account as a unit investment trust under the Act to
serve as the segregated investment account for the Contracts; and (d) the
Separate Account is eligible to invest in shares of each Participating Fund
without such investment disqualifying any Participating Fund as an investment
medium for insurance company separate accounts supporting variable annuity
contracts or variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the Securities Act of 1933, as
amended ("1933 Act"); (b) the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws; and (c) the
sale of the Contracts shall comply in all material respects with state insurance
law requirements. Insurance Company agrees to notify each Participating Fund
promptly of any investment restrictions imposed by state insurance law and
applicable to the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and losses,
whether or not realized, from assets allocated to the Separate Account are, in
accordance with the applicable Contracts, to be credited to or charged against
such Separate Account without regard to other income, gains or losses from
assets allocated to any other accounts of Insurance Company. Insurance Company
represents and warrants that the assets of the Separate Account are and will be
kept separate from Insurance Company's General Account and any other separate
accounts Insurance Company may have, and will not be charged with liabilities
from any business that Insurance Company may conduct or the liabilities of any
companies affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is registered with the Commission
under the Act as an open-end, management investment company and possesses, and
shall maintain, all legal and regulatory licenses, approvals, consents and/or
exemptions required for the Participating Fund to operate and offer its shares
as an underlying investment medium for Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code), and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance policies or
annuity contracts, whichever is appropriate, under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify each Participating Fund and Dreyfus 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. Insurance Company agrees
that any prospectus offering a Contract that is a "modified endowment contract,"
as that term is defined in Section 7702A of the Code, will identify such
Contract as a modified endowment contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be managed and invested
in a manner that complies with the requirements of Section 817(h) of the Code.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares available to
other Participating Companies and Contractholders
2.9 Each Participating Fund represents and warrants that any of its directors,
trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Participating
Fund in an amount not less than that required by Rule 17g-1 under the Act. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage in an amount not less than the coverage required to be
maintained by the Participating Fund. The aforesaid Bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights conferred by
virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for purchase at
the then applicable net asset value per share by Insurance Company and the
Separate Account on each Business Day pursuant to rules of the Commission.
Notwithstanding the foregoing, each Participating Fund may refuse to sell its
shares to any person, or suspend or terminate the offering of its shares, if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of its Board, acting in good faith and in light of
its fiduciary duties under federal and any applicable state laws, necessary and
in the best interests of the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund will be
sold only to (a) Participating Companies and their separate accounts or (b)
"qualified pension or retirement plans" as determined under Section 817(h)(4) of
the Code. Except as otherwise set forth in this Section 3.3, no shares of any
Participating Fund will be sold to the general public.
3.4 Each Participating Fund shall use its best efforts to provide closing net
asset value, dividend and capital gain information on a per-share basis to
Insurance Company by 6:00 p.m. Eastern time on each Business Day. Any material
errors in the calculation of net asset value, dividend and capital gain
information shall be reported immediately upon discovery to Insurance Company.
Non-material errors will be corrected in the next Business Day's net asset value
per share.
3.5 At the end of each Business Day, Insurance Company will use the information
described in Sections 3.2 and 3.4 to calculate the unit values of the Separate
Account for the day. Using this unit value, Insurance Company will process the
day's Separate Account transactions received by it by the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m. Eastern time) to
determine the net dollar amount of each Participating Fund's shares that will be
purchased or redeemed at that day's closing net asset value per share. The net
purchase or redemption orders will be transmitted to each Participating Fund by
Insurance Company by 11:00 a.m. Eastern time on the Business Day next following
Insurance Company's receipt of that information. Subject to Sections 3.6 and
3.8, all purchase and redemption orders for Insurance Company's General Accounts
shall be effected at the net asset value per share of each Participating Fund
next calculated after receipt of the order by the Participating Fund or its
Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating Fund will
execute orders at the applicable net asset value per share determined as of the
close of trading on the day of receipt of such orders by Insurance Company
acting as agent (,,effective trade date"), provided that the Participating Fund
receives notice of such orders by 11:00 a.m. Eastern time on the next following
Business Day and, if such orders request the purchase of Participating Fund
shares, the conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions specified
above and in Section 3.8, as applicable, will be effected at the net asset value
per share computed on the Business Day immediately preceding the next following
Business Day upon which such conditions have been satisfied in accordance with
the requirements of this Section and Section 3.8.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or redemption
orders.
3.8 If Insurance Company's order requests the purchase of a Participating Fund's
shares, Insurance Company will pay for such purchases by wiring Federal Funds to
the Participating Fund or its designated custodial account on the day the order
is transmitted. Insurance Company shall make all reasonable efforts to transmit
to the applicable Participating Fund payment in Federal Funds by 12:00 noon
Eastern time on the Business Day the Participating Fund receives the notice of
the order pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share determined as of
the close of trading on the effective trade date if the Participating Fund
receives payment in Federal Funds by 12:00 midnight Eastern time on the Business
Day the Participating Fund receives the notice of the order pursuant to Section
3.5. If payment in Federal Funds for any purchase is not received or is received
by a Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating Fund's
request, reimburse the respective Participating Fund for any charges, costs,
fees, interest or other expenses incurred by the Participating Fund in
connection with any advances to, or borrowings or overdrafts by, the
Participating Fund, or any similar expenses incurred by the Participating Fund,
as a result of portfolio transactions effected by the Participating Fund based
upon such purchase request. If Insurance Company's order requests the redemption
of any Participating Fund's shares valued at or greater than $1 million dollars,
the Participating Fund will wire such amount to Insurance Company within seven
days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares are
registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption order made
by Insurance Company. Transfer of Participating Fund shares will be by book
entry only. No share certificates will be issued to Insurance Company. Insurance
Company will record shares ordered from a Participating Fund in an appropriate
title for the corresponding account.
3.11 Each Participating Fund shall credit Insurance Company with the appropriate
number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business Day,
on the first Business Day thereafter, each Participating Fund shall communicate
to Insurance Company the amount of dividend and capital gain, if any, per share.
All dividends and capital gains shall be automatically reinvested in additional
shares of the applicable Participating Fund at the net asset value per share on
the ex-dividend date. Each Participating Fund shall, on the day after the
ex-dividend date or, if not a Business Day, on the first Business Day
thereafter, notify Insurance Company of the number of shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as of
the end of each month for all of Insurance Company's accounts by the fifteenth
(15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of the
Participating Fund's Prospectuses, proxy materials, notices, periodic reports
and other printed materials (which the Participating Fund customarily provides
to its shareholders) in quantities as Insurance Company may reasonably request
for distribution to each Contractholder and Participant.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Participating Fund or its shares, contemporaneously
with the filing of such document with the Commission or other regulatory
authorities.
4.4 Insurance Company will provide to each Participating Fund at least one copy
of all registration statements, Prospectuses, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or the Separate Account, contemporaneously with the
filing of such document with the Commission.
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees, administrative
expenses and legal and regulatory costs, will be made in the determination of
the Participating Fund's daily net asset value per share so as to accumulate to
an annual charge at the rate set forth in the Participating Fund's Prospectus.
Excluded from the expense limitation described herein shall be brokerage
commissions and transaction fees and extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any expenses
of any Participating Fund or expenses relating to the distribution of its
shares. Insurance Company and each Participating Fund shall pay expenses and
costs as set forth in Schedule B.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 23, 1987
of the Securities and Exchange Commission under Section 6(c) of the Act with
respect to Dreyfus Variable Investment Fund and a copy of the order dated August
23, 1989 of the Securities and Exchange Commission under Section 6(c) of the Act
with respect to Dreyfus Life and Annuity Index Fund, Inc. and, in particular,
has reviewed the conditions to the relief set forth in each related Notice. As
set forth therein, if Dreyfus Variable Investment Fund or Dreyfus Life and
Annuity Index Fund, Inc. is a Participating Fund, Insurance Company agrees, as
applicable, to report any potential or existing conflicts promptly to the
respective Board of Dreyfus Variable Investment Fund and/or Dreyfus Life and
Annuity Index Fund, Inc. and, in particular, whenever contract voting
instructions are disregarded, and recognizes that it will be responsible for
assisting each applicable Board in carrying out its responsibilities under such
application. Insurance Company agrees to carry out such responsibilities with a
view to the interests of existing Contractholders.
The Dreyfus Socially Responsible Growth Fund, Inc., if it is a Participating
Fund, shall furnish Insurance Company with a copy of its application for an
order of the Securities and Exchange Commission under Section 6(c) of the Act
for mixed and shared funding relief, and the notice of such application and
order when issued by the SEC. Insurance Company agrees to comply with the
conditions on which such order is issued, including reporting any potential or
existing conflicts promptly to the Board of The Dreyfus Socially Responsible
Growth Fund, Inc., and in particular whenever Contractholder voting instructions
are disregarded, to the extent such conditions are not materially different from
the conditions of the mixed and shared funding relief obtained by Dreyfus
Variable Investment Fund and Dreyfus Life and Annuity Index Fund, Inc.,
respectively; and recognizes that it shall be responsible for assisting the
Board of The Dreyfus Socially Responsible Growth Fund, Inc. in carrying out its
responsibilities in connection with such order. Insurance Company agrees to
carry out such responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Contractholder investments in a Participating Fund, the Board shall give prompt
notice to all Participating Companies and any other Participating Fund. If the
Board determines that Insurance Company is responsible for causing or creating
said conflict, Insurance Company shall at its sole cost and expense, and to the
extent reasonably practicable (as determined by a majority of the Disinterested
Board Members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include, but shall
not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvesting such assets in another Participating
Fund (if applicable) or a different investment medium, or submitting the
question of whether such segregation should be implemented to a vote of all
affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote by all
Contractholders having an interest in a Participating Fund, Insurance Company
may be required, at the Board's election, to withdraw the investments of the
Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict, but in no event will any Participating
Fund be required to bear the expense of establishing a new funding medium for
any Contract. Insurance Company shall not be required by this Article 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 Contractholders materially adversely
affected by the irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result of any
act or failure to act by Insurance Company pursuant to this Article VI, shall
relieve Insurance Company of its obligations under, or otherwise affect the
operation of, Article V.
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at no
cost to Insurance Company, of the Participating Fund's proxy material, reports
to shareholders and other communications to shareholders in such quantity as
Insurance Company shall reasonably require for distributing to Contractholders
or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants on a
timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions have been
received in the same proportion as Participating Fund shares for which
instructions have been received.
Insurance Company agrees at all times to vote its General Account shares in the
same proportion as the Participating Fund shares for which instructions have
been received from Contractholders or Participants. Insurance Company further
agrees to be responsible for assuring that voting the Participating Fund shares
for the Separate Account is conducted in a manner consistent with other
Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit, induce or
encourage Contractholders to (a) change or supplement the Participating Fund's
current investment adviser or (b) change, modify, substitute, add to or delete
from the current investment media for the Contracts.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by Insurance
Company in accordance with Schedule B.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of Contracts.
No representation is made as to the number or amount of Contracts that are to be
sold by Insurance Company. Insurance Company shall make reasonable efforts to
market the Contracts and shall comply with all applicable federal and state laws
in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to each
applicable Participating Fund or its designee, each piece of sales literature or
other promotional material in which the Participating Fund, its investment
adviser or the administrator is named, at least seven Business Days prior to its
use. No such material shall be used unless the Participating Fund or its
designee approves such material. Such approval (if given) must be in writing and
shall be presumed not given if not received within ten Business Days after
receipt of such material. Each applicable Participating Fund or its designee, as
the case may be, shall use all reasonable efforts to respond within ten days of
receipt.
8.4 Insurance Company shall not give any information or make any representations
or statements on behalf of a Participating Fund or concerning a Participating
Fund in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or Prospectus of, as may
be amended or supplemented from time to time, or in reports or proxy statements
for, the applicable Participating Fund, or in sales literature or other
promotional material approved by the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales literature or
other promotional material in which Insurance Company or the Separate Account is
named, at least seven Business Days prior to its use. No such material shall be
used unless Insurance Company approves such material. Such approval (if given)
must be in writing and shall be presumed not given if not received within ten
Business Days after receipt of such material. Insurance Company shall use all
reasonable efforts to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any representations on
behalf of Insurance Company or concerning Insurance Company, the Separate
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as may be
amended or supplemented from time to time, or in published reports for the
Separate Account that are in the public domain or approved by Insurance Company
for distribution to Contractholders or Participants, or in sales literature or
other promotional material approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or 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, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. rules, the
Act or the 1933 Act.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each Participating
Fund, Dreyfus, each respective Participating Fund's investment adviser and
sub-investment adviser (if applicable), each respective Participating Fund's
distributor, and their respective affiliates, and each of their directors,
trustees, officers, employees, agents and each person, if any, who controls or
is associated with any of the foregoing entities or persons within the meaning
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of Section
9.1), 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) for which the Indemnified Parties may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect to thereof) (i) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in information furnished by Insurance Company for use in the
registration statement or Prospectus or sales literature or advertisements of
the respective Participating Fund or with respect to the Separate Account or
Contracts, 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; (ii) arise out of or as
a result of conduct, statements or representations (other than statements or
representations contained in the Prospectus and sales literature or
advertisements of the respective Participating Fund) of Insurance Company or its
agents, with respect to the sale and distribution of Contracts for which the
respective Participating Fund's shares are an underlying investment; (iii) arise
out of the wrongful conduct of Insurance Company or persons under its control
with respect to the sale or distribution of the Contracts or the respective
Participating Fund's shares; (iv) arise out of Insurance Company's incorrect
calculation and/or untimely reporting of net purchase or redemption orders; or
(v) arise out of any breach by Insurance Company of a material term of this
Agreement or as a result of any failure by Insurance Company to provide the
services and furnish the materials or to make any payments provided for in this
Agreement. Insurance Company will reimburse any Indemnified Party in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that with respect to clauses (i) and (ii) above
Insurance Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in such registration statement,
prospectus, sales literature, or advertisement in conformity with written
information furnished to Insurance Company by the respective Participating Fund
specifically for use therein. This indemnity agreement will be in addition to
any liability which Insurance Company may otherwise have.
9.2 Each Participating Fund severally 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 the
1933 Act against any losses, claims, damages or liabilities to which Insurance
Company or any such director, officer, employee, agent or controlling person may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (1) 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 sales literature or
advertisements of the respective Participating Fund; (2) arise out of or are
based upon the omission to state in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating Fund any
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (3) 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 sales literature or advertisements with
respect to the Separate Account or the Contracts and such statements were based
on information provided to Insurance Company by the respective Participating
Fund; and the respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance Company or any such director, officer,
employee, agent or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the respective Participating Fund will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or omission or alleged omission made in such
registration statement, Prospectus, sales literature or advertisements in
conformity with written information furnished to the respective Participating
Fund by Insurance Company specifically for use therein. This indemnity agreement
will be in addition to any liability which the respective Participating Fund may
otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance Company
harmless against any and all liability, loss, damages, costs or expenses which
Insurance Company may incur, suffer or be required to pay due to the respective
Participating Fund's (1) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate; (2) incorrect reporting of the
daily net asset value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital gain
distribution rate; provided that the respective Participating Fund shall have no
obligation to indemnify and hold harmless Insurance Company if the incorrect
calculation or incorrect or untimely reporting was the result of incorrect
information furnished by Insurance Company or information furnished untimely by
Insurance Company or otherwise as a result of or relating to a breach of this
Agreement by Insurance Company.
9.4 Promptly after receipt by an indemnified party under this Article of notice
of the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this Article,
notify the indemnifying party of the commencement thereof. The omission to so
notify the indemnifying party will not relieve the indemnifying party 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. In case
any such action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such indemnified party, and to the
extent that the indemnifying party has given notice to such effect to the
indemnified party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation. Notwithstanding the
foregoing, 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.
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 provisions of
this Article IX shall survive termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective Participating
Fund, Dreyfus and sub-investment adviser of the Participating Fund harmless
against any tax liability incurred by the Participating Fund under Section 851
of the Code arising from purchases or redemptions by Insurance Company's General
Accounts or the account of its affiliates.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or the
Participating Fund at any time from the date hereof upon 180 days' notice,
unless a shorter time is agreed to by the respective Participating Fund and
Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company, if
shares of that Participating Fund are not reasonably available to meet the
requirements of the Contracts as determined by Insurance Company. Prompt
notice of election to terminate shall be furnished by Insurance Company,
said termination to be effective ten days after receipt of notice unless
the Participating Fund makes available a sufficient number of shares to
meet the requirements of the Contracts within said ten-day period;
c. As to a Participating Fund, at the option of Insurance Company, upon the
institution of formal proceedings against that Participating Fund by the
Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in Insurance Company's reasonable judgment, materially impair
that Participating Fund's ability to meet and perform the Participating
Fund's obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by Insurance Company with said termination to
be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating Fund,
upon the institution of formal proceedings against Insurance Company by the
Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in the Participating Fund's reasonable judgment, materially
impair Insurance Company's ability to meet and perform Insurance Company's
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by such Participating Fund with said termination to be
effective upon receipt of notice;
e. As to a Participating Fund, at the option of that Participating Fund, if
the Participating Fund shall determine, in its sole judgment 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 such material adverse change or material
adverse publicity is likely to have a material adverse impact upon the
business and operation of that Participating Fund or Dreyfus, such
Participating Fund shall notify Insurance Company in writing of such
determination and its intent to terminate this Agreement, and after
considering the actions taken by Insurance Company and any other changes in
circumstances since the giving of such notice, such determination of the
Participating Fund shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination;
f. As to a Participating Fund, upon termination of the Investment Advisory
Agreement between that Participating Fund and Dreyfus or its successors
unless Insurance Company specifically approves the selection of a new
Participating Fund investment adviser. Such Participating Fund shall
promptly furnish notice of such termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating Fund's
shares are not registered, issued or sold in accordance with applicable
federal law, or such law precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately as to that Participating Fund
only upon such occurrence without notice;
h. At the option of a Participating Fund upon a determination by its Board
in good faith that it is no longer advisable and in the best interests of
shareholders of that Participating Fund to continue to operate pursuant to
this Agreement. Termination pursuant to this Subsection (h) shall be
effective upon 60 days' notice by such Participating Fund to Insurance
Company of such termination unless a shorter time is agreed to by Insurance
Company;
i. At the option of a Participating Fund if the Contracts cease to qualify
as annuity contracts or life insurance policies, as applicable, under the
Code, or if such Participating Fund reasonably believes that the Contracts
may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
k. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written consent
of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or 10.2k
herein shall not affect the operation of Article V of this Agreement. Any
termination of this Agreement shall not affect the operation of Article IX of
this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof, each Participating Fund and Dreyfus may, at the option of the
Participating Fund, continue to make available additional shares of that
Participating Fund for as long as the Participating Fund desires pursuant to the
terms and conditions of this Agreement as provided below, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, if that
Participating Fund and Dreyfus so elect to make additional Participating Fund
shares available, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to reallocate
investments in that Participating Fund, redeem investments in that Participating
Fund and/or invest in that Participating Fund upon the making of additional
purchase payments under the Existing Contracts. In the event of a termination of
this Agreement pursuant to Section 10.2 hereof, such Participating Fund and
Dreyfus, as promptly as is practicable under the circumstances, shall notify
Insurance Company whether Dreyfus and that Participating Fund will continue to
make that Participating Fund's shares available after such termination. If such
Participating Fund shares continue to be made available after such termination,
the provisions of this Agreement shall remain in effect and thereafter either of
that Participating Fund or Insurance Company may terminate the Agreement as to
that Participating Fund, as so continued pursuant to this Section 10.3, upon
prior written notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Participating Fund, need
not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall not be
deemed a termination as to any other Participating Fund unless Insurance Company
or such other Participating Fund, as the case may be, terminates this Agreement
as to such other Participating Fund in accordance with this Article X.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the addition
or deletion of any Participating Fund as specified in Exhibit A, shall be made
by agreement in writing between Insurance Company and each respective
Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following addresses:
Insurance Company:Glenbrook Life and Annuity Company
0000 Xxxxxxx Xxxxx, X0X
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Associate Counsel
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxxx, Esq.
with copies to: [Name of Fund]
c/o The Dreyfus Corporation 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxxxx, Esq.
Stroock & Stroock & Xxxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Notice shall be deemed to be given on the date of receipt by the addresses as
evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any director, trustee, officer or shareholder of
the Fund individually. It is agreed that the obligations of the Funds are
several and not joint, that no Fund shall be liable for any amount owing by
another Fund and that the Funds have executed one instrument for convenience
only.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
GLENBROOK LIFE AND ANNUITY COMPANY
BY:
Its:
Attest:
DREYFUS LIFE AND ANNUITY INDEX FUND, INC.
(d/b/a DREYFUS STOCK INDEX FUND)
BY:
Its:
Attest:,
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC.
BY:
Its.
Attest:
DREYFUS VARIABLE INVESTMENT FUND
BY:
Its:
Attest:
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
GLENBROOK LIFE AND ANNUITY COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 10th day of September 1996, by
and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), GLENBROOK LIFE AND ANNUITY COMPANY, an Illinois corporation (the
"Company"), on its own behalf and on behalf of each of the segregated asset
accounts of the Company set forth in Schedule A hereto, as may be amended from
time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts invest, is specified
in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD");
WHEREAS, Allstate Life Financial Services, Inc. ("ALFS") the underwriter
for the individual variable annuity and the variable life policies, is
registered as a broker-dealer with the SEC under the 1934 Act and is a member in
good standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as
ARTICLE I. SALE OF TRUST SHARES
1.1 The Trust agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders on that Business Day, as
defined below) and which are available for purchase by such Accounts,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the Shares. For
purposes of this Section 1.1., the Company shall be the designee of the
Trust for receipt of such orders from Policy owners and receipt by such
designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such orders 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, Inc. (the "NYSE") is open for trading and on which the
Trust calculates its net asset value pursuant to the rules of the SEC.
1.2 The Trust agrees to make the Shares available indefinitely for purchase at
the applicable net asset value per share by the Company and the Accounts on
those days on which the Trust calculates its net asset value pursuant to
rules of the SEC and the Trust shall calculate such net asset value on each
day which the NYSE is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Trust (the "Board") may refuse to sell any Shares
to the Company and the Accounts, or suspend or terminate the offering of
the Shares if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Board acting in
good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interest of the Shareholders
of such Portfolio (it being understood that for this purpose the term
"Shareholders" means Policy owners). Notice of election to suspend or
terminate shall be furnished by the Trust, said termination to be effective
10 Business Days after receipt of such notice by the Company in order to
give the Company sufficient time to take appropriate steps in response to
such suspension or termination.
1.3 The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust
and MFS (the "Participating Insurance Companies") and their separate
accounts, qualified pension and retirement plans and MFS or its affiliates.
The Trust and MFS will not sell Trust shares to any insurance company or
separate account unless an agreement containing provisions substantially
the same as Articles Ill and VII of this Agreement is in effect to govern
such sales. The Company will not resell the Shares except to the Trust or
its agents.
1.4 The Trust agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy
owners on that Business Day, as defined below), executing such requests on
a daily basis at the net asset value next computed after receipt by the
Trust or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Trust for receipt of
requests for redemption from Policy owners and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust receives
notice of such request for redemption by 9:30 a.m. New York time on the
next following Business Day.
1.5 Each purchase, redemption and exchange order placed by the Company shall be
placed separately for each Portfolio and shall not be netted with respect
to any Portfolio. However, with respect to payment of the purchase price by
the Company and of redemption proceeds by the Trust, the Company and the
Trust shall net purchase and redemption orders with respect to each
Portfolio and shall transmit one net payment for all of the Portfolios in
accordance with Section 1.6 hereof.
1.6 In the event of net purchases, the Company shall pay for the Shares by 2:00
p.m. New York time on the next Business Day after an order to purchase the
Shares is deemed to be received in accordance with the provisions of
Section 1.1., hereof. In the event of net redemption the Trust shall pay
the redemption proceeds by 2:00 p.m. New York time on the next Business Day
after an order to redeem the shares is deemed to be received in accordance
with the provisions of Section 1.4. hereof. All such payments shall be in
federal funds transmitted by wire.
1.7 Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.8 The Trust shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions a-s are payable on a Portfolio's
Shares in additional Shares of that Portfolio. T-he Trust shall notify the
Company of the number of Shares so issued as payment of such dividends and
distributions.
1.9 The Trust or its custodian shall make the net asset value per share for
each Portfolio available to the Company on each Business Day 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. In the event that the Trust is unable to meet
the 6:30 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time which the Trust takes
to make the net asset value available to the Company. If the Trust provides
materially incorrect share net asset value information, the Trust shall
make an adjustment to the number of shares purchased or redeemed for the
Accounts 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 promptly upon
discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable
state and federal laws, including without limitation the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940
Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that
it has legally and validly established the Account as a segregated asset
account under applicable law and has registered or, prior to any issuance
or sale of the Policies, will register the Accounts as unit investment
trusts in accordance with the provisions of the 1940 Act (unless exempt
therefrom) to serve as segregated investment accounts for the Policies, and
that it will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements under the
1933 Act for the Policies and the registration statements under the 1940
Act for the Accounts from time to time as required in order to effect the
continuous offering of the Policies for so long as the Company desires to
offer the Policies (it being understood that the Company reserves the right
in its sole discretion, to suspend, terminate or resume the offering of the
Policies in any state at any time for any reason, or as may otherwise be
required by applicable law). The Company shall register and qualify the
Policies for sales in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are currently and at
the time of issuance will be treated as life insurance, endowment or
annuity contracts under applicable provisions of the Internal Revenue Code
of 1986, as amended (the "Code") subject to the Trust's compliance with
Article VI hereof, that it will maintain such treatment and that it will
notify the Trust or MFS immediately upon having a reasonable basis for
believing that the Policies have ceased to be so treated or that they might
not be so treated in the future.
2.3. The Company represents and warrants that ALFS the underwriter for the
variable annuity and the variable life policies, is a member in good
standing of the NASD and is a registered broker-dealer with the SEC. The
Company represents and warrants that the Company will require ALFS to sell
and distribute such policies in accordance in all material respects with
all applicable state and federal securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. The Trust and MFS represent and warrant that the Shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Trust is and shall remain registered under the 1940 Act. The Trust
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 Trust shall register and qualify the
Shares for sale in accordance with the laws of the various states only if
and to the extent deemed necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell and
distribute the Shares in compliance in all material respects with all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.6. The Trust represents that it is lawfully organized and validly existing
under the laws of The Commonwealth of Massachusetts and that it does and
will comply in all material respects with the 1940 Act and any applicable
regulations thereunder and SEC orders issued to the Trust.
2.7. MFS represents and warrants that it is and shall remain duly registered
under all applicable federal securities laws and that it shall perform its
obligations for the Trust in compliance in all material respects with any
applicable federal securities laws and with the securities laws of The
Commonwealth of Massachusetts. MFS represents and warrants that it is not
subject to state securities laws other than the securities laws of The
Commonwealth of Massachusetts and that it is exempt from registration as an
investment adviser under the securities laws of The Commonwealth of
Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the Board
such reports, material or data as the Board may reasonably request so that
it may carry out fully the obligations imposed upon it by the conditions
contained in the exemptive application pursuant to which the SEC has
granted exemptive relief to permit mixed and shared funding (the "Mixed and
Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS: VOTING
3.1. At least annually, or more frequently if the prospectus is supplemented or
amended, the Trust or its designee shall provide the Company, free of
charge, with as many copies of the current prospectus (describing only the
Portfolios listed in Schedule A hereto) for the Shares as the Company may
reasonably request for distribution to existing Policy owners whose
Policies are funded by such Shares. The Trust or its designee shall provide
the Company, at the Company's expense, with as many copies of the current
prospectus for the Shares as the Company may reasonably request for
distribution to prospective purchasers of Policies. If requested by the
Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set
in type or, at the request of the Company, as a diskette in the format,
sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to
have the prospectus for the Policies and the prospectus for the Shares
printed together in one document; the expenses of such printing to be
apportioned between (a) the Company and (b) the Trust or its designee in
proportion to the number of pages of the Policy and Shares' prospectuses,
taking account of other relevant factors affecting the expense of printing,
such as covers, columns, graphs and charts; the Trust or its designee to
bear the cost of printing the Shares' prospectus portion of such document
for distribution to owners of existing Policies funded by the Shares and
the Company to bear the expenses of printing the portion of such document
relating to the Accounts; provided, however, that the Company shall bear
all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Policies
not funded by the Shares. In the event that the Company requests that the
Trust or its designee provides the Trust's prospectus in a "camera ready"
or diskette format, the Trust shall be responsible for providing the
prospectus in the format in which it or MFS is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g., typesetting expenses), and the Company shall bear the expense
of adjusting or changing the format to conform with any of its
prospectuses.
3.2. The prospectus for the Shares shall state that the statement of additional
information for the Shares is available from the Trust or its designee. The
Trust or its designee, at its expense, shall print and provide such
statement of additional information to the Company (or a master of such
statement suitable for duplication by the Company) for distribution to any
owner of a Policy funded by the Shares. The Trust or its designee, at the
Company's expense, shall print and provide such statement to the Company
(or a master of such statement suitable for duplication by the Company) for
distribution to a prospective purchaser who requests such statement or to
an owner of a Policy not funded by the Shares. If applicable SEC rules
require that any of the Trust's proxy materials, reports to shareholders,
or other communications be filed with the SEC, the Trust or its designee
shall prepare and file with the SEC such proxy materials, reports to
shareholders, or other communications in such format as required by such
applicable rules.
3.3. The Trust or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution
to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or of
Article V below, the Company shall pay the expense of printing or providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not
limited to, the printing of the Shares' prospectus or prospectuses for
distribution to prospective purchasers or to owners of existing Policies
not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to include
in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding. The Trust shall
include disclosure in its prospectus in accordance with SEC guidelines with
regard to mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from
Policy owners; and
(c) vote the Shares for which no instructions have been received in
the same proportion as the Shares of such Portfolio for which
instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable contract owners.
The Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts holding Shares calculates voting privileges
in the manner required by the Mixed and Shared Funding Exemptive Order. The
Trust and MFS will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material
in which the Trust, MFS, any other investment adviser to the Trust, or any
affiliate of MFS are named, at least three (3) Business Days prior to its
use. No such material shall be used if the Trust, MFS, or their respective
designees reasonably objects to such use within three (3) Business Days
after receipt of such material. Notwithstanding the fact that the Trust or
its designee may not initially object, the Trust reserves the right to
object at a later date to the continued use of any such sales literature or
other promotional material in which the Trust, MFS any other investment
adviser to the Trust, or any affiliate of MFS, is named and no such
material shall be used thereafter if the Trust or its designee so objects.
4.2. The Company shall not give any information or make any representations or
statement on behalf of the Trust, MFS, any other investment adviser to the
Trust, or any affiliate of MFS or concerning the Trust or any other such
entity in connection with the sale of the Policies inconsistent with the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Shares, as such
registration statement, prospectus and statement of additional information
may be amended or supplemented from time to time, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust, MFS or their respective designees, except
with the permission of the Trust, MFS or their respective designees. The
Trust, MFS or their respective designees each agrees to respond to any,
request for approval on a prompt and timely basis. The Company shall adopt
and implement procedures reasonably designed to ensure that information
concerning the Trust, MFS or any of their affiliates which is intended for
use only by brokers or agents selling the Policies (i.e., information that
is not intended for distribution to Policy owners or prospective Policy
holders) is so used, and neither the Trust, MFS nor any of their affiliates
shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company, the Accounts and/or the Policies
is named, at least three (3) Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to
such use within three (3) Business Days after receipt of such material.
Notwithstanding the fact that the Company or its designee may not initially
object, the Company reserves the right to object at a later date to the
continued use of any such sales literature or other promotional material in
which the Company is named and no such material shall be used thereafter if
the Company or its designee so objects.
4.4. The Trust and MFS shall not give, and agree that the Underwriter shall not
give, any information or make any representations on behalf of the Company
or concerning the Company, the Accounts, or the Policies in connection with
the sale of the Policies other than the information or representations
contained in a registration statement, prospectus, or statement of
additional information for the Policies, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports for the Accounts, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company or its
designee agrees to respond to any request for approval on a prompt and
timely basis. The parties hereto agree that this Section 4.4. is neither
intended to designate nor otherwise imply that MFS is an underwriter or
distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or the
Trust, as appropriate) will each provide to the other at least one complete
copy of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the
Policies, or to the Trust or its Shares, prior to or contemporaneously with
the filing of such document with the SEC or other regulatory authorities.
The Company and the Trust shall also each promptly inform the other of the
results of any examination by the SEC (or other regulatory authorities)
that relates to the Policies, the Trust or its Shares, and the party that
was the subject of the examination shall provide the other party with a
copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.6. The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFS will
cooperate with the Company so as to enable the Company to solicit proxies
from Policy owners or to make changes to its prospectus, statement of
additional information or registration statement, in an orderly manner. The
Trust and MFS will make reasonable efforts to attempt to have changes
affecting Policy prospectuses become effective simultaneously with the
annual updates for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or 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 (or other routine listings), electronic or other
public media), and sales literature (any written or electronic
communication distributed or made generally available to customers or the
public, which communication does not meet the foregoing definition of
"advertisement" including, but not limited to, circulars, research reports,
market letters, performance reports or summaries, form letters,
telemarketing scripts, seminar texts, and reprints or excerpts of any other
advertisement, sales literature or published article), distributed or made
generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some
or all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the
Trust, except that if the Trust or any Portfolio adopts and implements a
plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution and
Shareholder servicing expenses, then, subject to obtaining any required
exemptive orders or regulatory approvals, the Trust may make payments to
the Company or to the underwriter for the Policies if and in amounts agreed
to by the Trust in writing. Each party, however, shall, in accordance with
the allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expenses initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust and/or
to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal
and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration fees;
preparation and filing of the Trust's proxy materials and reports to
Shareholders; setting in type and printing its prospectus and statement of
additional information (to the extent provided by and as determined in
accordance with Article III above); setting in type and printing the proxy
materials and reports to Shareholders (to the extent provided by and as
determined in accordance with Article III above); the preparation of all
statements and notices required of the Trust by any federal or state law
with respect to its Shares; all taxes on the issuance or transfer of the
Shares; and the costs of distributing the Trust's prospectuses and proxy
materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses
of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares' prospectus
or prospectuses in connection with new sales of the Policies and of
distributing the Trust's Shareholder reports to Policy owners. The Company
shall bear all expenses associated with the registration, qualification,
and filing of the Policies under applicable federal securities and state
insurance laws; the cost of preparing, printing and distributing the Policy
prospectus and statement of additional information; and the cost of
preparing, printing and distributing annual individual account statements
for Policy owners as required by state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATION
6.1. The Trust and MFS represent and warrant that each Portfolio will meet the
diversification requirements of Section 851 of the Code ("Section 851
Diversification Requirements") and Section 817(h)(1) of the Code and Treas.
Reg. 1.817-5 relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts ("Section 817(h)(1)
Diversification Requirements"), as they may be amended from time to time
(and any revenue rulings, revenue procedures, notices, and other published
announcements of the Internal Revenue Service interpreting these sections)
(collectively, "Diversification Requirements"). In the event that any
Portfolio is not so diversified at the end of any applicable quarter, the
Trust and MFS will make every effort to adequately diversify the Portfolio
so as to achieve compliance within the grace periods afforded by Treas.
Reg. 1.817-5 and Section 851(d) of the Code (the "Grace Periods"). In the
event that any Portfolio is not so diversified at the end of any applicable
Grace Period, the Trust or MFS will promptly notify the Company of such
non-diversification, such notification to be provided in no event later
than 20 days after the end of the applicable Grace Period.
6.2. The Trust and MFS represent that each Portfolio will elect to be qualified
as a Regulated Investment Company under Subchapter M of the Code and that
they will make every effort to ensure the maintenance of such qualification
(under Subchapter M or any successor or similar provision). In the event
that any Portfolio is not so qualified at the end of any applicable quarter
or grace period (if applicable), the Trust or MFS will promptly notify the
Company of such non-qualification, such notification to be provided in no
event later than 20 days after the end of the applicable quarter or grace
period (if applicable).
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of
the variable annuity contract owners and the variable life insurance policy
owners of the Company and/or affiliated companies ("contract owners")
investing in the Trust. The Board shall have the sole authority to
determine if a material irreconcilable conflict exists, and such
determination shall be binding on the Company only if approved in the form
of a resolution by a majority of the Board, or a majority of the
disinterested trustees of the Board. The Board will give prompt notice of
any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in
carrying out its responsibilities under the conditions set forth in the
Trust's exemptive application pursuant to which the SEC has granted the
Mixed and Shared Funding Exemptive Order by providing the Board, as it may
reasonably request, with all information necessary for the Board to
consider any issues raised and agrees that it will be responsible for
promptly reporting any potential or existing conflicts of which it is aware
to the Board including, but not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are
disregarded. The Company also agrees that, if a material irreconcilable
conflict arises, it will at its own cost remedy such conflict up to and
including (a) withdrawing the assets allocable to some or all of the
Accounts from the Trust or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another
Portfolio of the Trust, or submitting to a vote of all affected contract
owners whether to withdraw assets from the Trust or any Portfolio and
reinvesting such assets in a different investment medium and, as
appropriate, segregating the assets attributable to any appropriate group
of contract owners that votes in favor of such segregation, or offering to
any of the affected contract owners the option of segregating the assets
attributable to their contracts or policies, and (b) establishing a new
registered management investment company and segregating the assets
underlying the Policies, unless a majority of Policy owners materially
adversely affected by the conflict have voted to decline the offer to
establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of
the Accounts designated by the disinterested trustees and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required to
remedy any such material irreconcilable conflict as determined by a
majority of the disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those contained in the Mixed
and Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 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 VIII. INDEMNIFICATION
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls MFS within the meaning of
Section 15 of the 1933 Act, and any agents or employees of the foregoing
(each an "Indemnified Party," or collectively, the "Indemnified Parties"
for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or expenses (including reasonable counsel fees) to
which any Indemnified Party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement, prospectus or statement of additional information for the
Policies or contained in the Policies or sales literature or other
promotional material for the Policies (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 reasonable reliance
upon and in conformity with information furnished to the Company or
its designee by or on behalf of the Trust or MFS for use in the
registration statement, prospectus or statement of additional
information for the Policies or in the Policies or sales literature or
other promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Policies or
Shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, statement of additional information or sales
literature or other promotional material of the Trust not supplied by
the Company or its designee, or persons under its control and on which
the Company has reasonably relied) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution
of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement prospectus,
statement of additional information, or sales literature or other
promotional literature of the Trust, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company, ALFS, and each
of their respective directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act, and
any agents or employees of the foregoing (each an "Indemnified Party," or
collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or expenses
(including reasonable counsel fees) to which any Indemnified Party may
become subject under any statute, 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 Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement, prospectus, statement of additional information 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 or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reasonable reliance upon and in conformity with information
furnished to the Trust, MFS, the Underwriter or their respective
designees by or on behalf of the Company for use in the registration
statement, prospectus or statement of additional information for the
Trust or in sales literature or other promotional material for the
Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, statement of additional information or sales
literature or other promotional material for the Policies not supplied
by the Trust, MFS, the Underwriter or any of their respective
designees or persons under their respective control and on which any
such entity has reasonably relied) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or distribution of
the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus,
statement of additional information, or sales literature or other
promotional literature of the Accounts or relating to the Policies, or
any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of
the Trust, MFS or the Underwriter; or
(d) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus,
statement of additional information, or sales literature or other
promotional literature of the Accounts or relating to the Policies, or
any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of
the Trust, MFS or the Underwriter; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement) or arise out of or result from any other material
breach of this Agreement by the Trust; or
(f) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share or
dividend or capital gain distribution rate: or
(g) arise as a result of any failure by the Trust to provide the services
and furnish the materials under the terms of the Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, the Company, or any Participating Insurance Company or any
Policy holder, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any
representation, warranty, and/or covenant made by the Company hereunder or
by any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain
its segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state law
and as a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by the Company or
any Participating Insurance Company to maintain its variable annuity and/or
variable life insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance, endowment or
annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, willful misconduct, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
commencement of any action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this
section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnify party will not relieve it from any
liability which it may have to any Indemnified Party otherwise than under
this section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such indemnified Party. After notice from the indemnifying
party of its intention to assume the defense of an action, the Indemnified
Party shall bear the expenses of any additional counsel obtained by it, and
the indemnify party shall not be liable to such Indemnified Party under
this section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1.This Agreement shall terminate with respect to the Accounts, or one, some,
or all Portfolios:
(a) at the option of any party upon six (6) months' advance written notice
to the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements of
the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without limiting
the generality of the foregoing, the Shares of a Portfolio would not
be "appropriate funding vehicles" if, for example, such Shares did not
meet the diversification or other requirements referred to in Article
VI hereof, or if the Company would be permitted to disregard Policy
owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the
1940 Act. Prompt notice of the election to terminate for such cause
and an explanation of such cause shall be furnished to the Trust by
the Company; or
(c) at the option of the Trust or MFS upon institution of format
proceedings against the Company by the NASD, the SEC, or any insurance
department or any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares; or
(d) at the option of the Company upon institution of formal proceedings
against the Trust or MFS by the NASD, the SEC, or any state securities
or insurance department or any other regulatory body regarding the
Trust's or MFS' duties under this Agreement or related to the sale of
the Shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of any
necessary regulatory approvals and/or the vote of the Policy owners
having an interest in the Accounts (or any subaccounts) to substitute
the shares of another investment company for the corresponding
Portfolio Shares in accordance with the terms of the Policies for
which those Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30) days'
prior written notice to the Trust of the Date of any proposed vote or
other action taken to replace the Shares; or
(f) at the option of by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively, shall
determine, in their sole judgment exercised in good faith, that the
Company has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(g) at the option of the Company by written notice to the Trust and MFS,
if the Company shall determine, in its sole judgment exercised in good
faith, that the Trust or MFS has suffered a material adverse change in
this business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(h) at the option of the Company or the Trust by written notice to the
other party upon a determination by the majority of the Trust's Board
that a material irreconcilable conflict exists among the interest of
(i) all contract owners of all separate accounts or (ii) the interests
of the Participating Insurance Companies; 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.
11.2.The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
00.0.Xx is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11. 1(a) may be exercised for
cause or for no cause.
11.4.Except as necessary to implement Policy owner initiated transactions, or
as required by state insurance laws or regulations, or to resolve a
conflict as contemplated by Article VII hereof, the Company shall not
redeem the Shares attributable to the Policies (as opposed to the Shares
attributable to the Company's assets held in the Accounts), and the Company
shall not prevent Policy owners from allocating payments to a Portfolio
that was otherwise available under the Policies, until thirty (30) days
after the Company shall have notified the Trust of its intention to do so.
11.5.Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this
Agreement, for all Policies in effect on the effective date of termination
of this Agreement (the "Existing Policies"), except as otherwise provided
under Article VII of this Agreement. Specifically, without limitation, the
owners of the Existing Policies shall be permitted to transfer or
reallocate investment under the Policies, redeem investments in any
Portfolio and/or invest in the Trust upon the making of additional purchase
payments under the Existing Policies.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier or facsimile to the other party at the address of such
party set forth below or at such other address as such party may from time to
time specify, in writing to the other party.
If to the Trust:
MFS Variable Insurance Trust
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Secretary
If to the Company:
Glenbrook Life and Annuity Company
3 1 00 Xxxxxxx Xxxx, Xxx X0X
Xxxxxxxxxx. XX 00000
Facsimile No.: (000) 000-0000
Attn: G. Xxxxx Xxxxxxxxx, Senior Vice President
If to MFS:
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1.Subject to the requirement of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the
owners of the Policies and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted
by this Agreement or as otherwise required by applicable law or regulation,
shall not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of the
affected party until such Time as it may come into the public domain.
13.2.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 effect their construction or effect.
13.3.This Agreement may be executed simultaneously in one or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4.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.
13.5.The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference is part of this Agreement.
13.6.Each party hereto shall cooperate with each other party in connection with
inquiries by appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) relating to
this Agreement or the transactions contemplated hereby to the extent
practicable and except where a part),'s respective interests are adverse to
or in conflict with another party's interests.
13.7.The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.8.A copy of the Trust's Declaration of Trust is on file with the Secretary
of State of The Commonwealth of Massachusetts. The Company acknowledges
that the obligations of or arising out of this instrument are not binding
upon any of the Trust's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and liabilities
of each Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or
property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and the Company agrees not to proceed
against any Portfolio for the obligations of another Portfolio.
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 above.
GLENBROOK LIFE AND ANNUITY COMPANY
By its authorized officer,
By:
Title: Sr. Vice President
MFS VARIABLE INSURANCE TRUST, on behalf
of the Portfolios
By its authorized officer and not individually,
By:
Title: Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer
By:
Title: Senior Executive Vice President
