Exhibit 1(n)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this day ___________________ of 2001 (the
"Agreement") by and among __________________________________, organized under
the laws of the State of ___________________ (the "Company"), on behalf of
itself and each separate account of the Company named in Schedule A to this
Agreement, as may be amended from time to time (each account referred to as the
"Account" and collectively as the "Accounts"); INVESCO Variable Investment
Funds, Inc., an open-end management investment company organized under the laws
of the State of Maryland (the "Fund"); INVESCO Funds Group, Inc., a corporation
organized under the laws of the State of Delaware and investment adviser to the
Fund (the "Adviser"); and INVESCO Distributors, Inc., a corporation organized
under the laws of the State of Delaware and principal underwriter/distributor of
the Fund (the "Distributor")..
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company, as depositor, has established the Accounts to serve as
investment vehicles for certain variable annuity contracts and variable life
insurance policies and funding agreements offered by the Company set forth on
Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of the State of ________________, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order for
the shares of the Fund. For purposes of this Section 1.1, the Company will
be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee will constitute receipt by the Fund; provided
that the Fund receives notice of such order by 11:00 a.m. Eastern Time on
the next following business day. "Business Day" will mean any day on which
the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission (the "Commission"). The Fund may net the notice of
redemptions it receives
from the Company under Section 1.3 of this Agreement against the notice of
purchases it receives from the Company under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt by
the Fund of the payment, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.3, the Company will be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by
such designee will constitute receipt by the Fund; provided the Fund
receives notice of such requests for redemption by 11:00 a.m. Eastern Time
on the next following Business Day. Payment will be made in federal funds
transmitted by wire to the Company's account as designated by the Company
in writing from time to time, on the same Business Day the Fund receives
notice of the redemption order from the Company. After consulting with the
Company, the Fund reserves the right to delay payment of redemption
proceeds, but in no event may such payment be delayed longer than the
period permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Fund will not bear any responsibility whatsoever for
the proper disbursement or crediting of redemption proceeds; the Company
alone will be responsible for such action. If notification of redemption is
received after 11:00 Eastern Time, payment for redeemed shares will be made
on the next following Business Day. The Fund may net the notice of
purchases it receives from the Company under Section 1.1 of this Agreement
against the notice of redemptions it receives from the Company under this
Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days
on which the Fund calculates its Designated Portfolio net asset value
pursuant to rules of the Commission; provided, however, that the Board of
Directors of the Fund (the "Fund Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Fund
Board, acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests of
the shareholders of such Portfolio.
1.5 The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, qualified pension and
retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended, (the "Code"),
and regulations promulgated thereunder, the sale to which will not impair
the tax treatment currently afforded the Contracts. No shares of any
Portfolio will be sold directly to the general public.
1.6 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, and VI of this Agreement are in effect to govern such
sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate sub-account of each
Account.
1.9 The Fund will furnish same day notice (by facsimile) to the Company of the
declaration of any income, dividends or capital gain distributions payable
on each Designated Portfolio's shares. The Company hereby elects to receive
all such dividends and distributions as are payable on the Portfolio shares
in the form of additional shares of that Portfolio at the ex-dividend date
net asset values. The Company reserves the right to revoke this election
and to receive all such dividends and distributions in cash. The Fund will
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10 The Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily basis as
soon as reasonably practical after the net asset value per share is
calculated and will use its best efforts to make such net asset value per
share available by 7:00 p.m., Eastern Time, each business day. If the Fund
provides the Company materially incorrect net asset value per share
information (as determined under SEC guidelines), the Company shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gain information shall be reported to the Company upon discovery by the
Fund.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are exempt
from registration thereunder, and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. 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 each Account as a separate account under Section
_________________ of the General Statutes of _________________________ and
that each Account is or will be registered as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts, or is exempt from registration
thereunder, and that it will maintain such registration for so long as any
Contracts are outstanding, as applicable. The Company will amend the
registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account from time to time
as required in order to effect the continuous offering of the Contracts or
as may otherwise be required by applicable law. The Company will register
and qualify the Contracts for sale 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 that the Contracts are currently and at the time of
issuance will be treated as annuity contracts and/or life insurance
policies (as applicable) under applicable provisions of the Code, and that
it will make every effort to maintain such treatment and that it will
notify the Fund and the Adviser immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of the
Designated Portfolio(s) with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with
such plans.
2.4 The Fund represents and warrants that shares of the Designated Portfolio(s)
sold pursuant to this Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with applicable law and that the
Fund is and will remain registered as an open-end management investment
company under the 1940 Act for as long as such shares of the Designated
Portfolio(s) are sold. The Fund will amend the registration statement for
its shares under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its shares. The Fund
will register and
qualify the shares of the Designated Portfolio(s) for sale in accordance
with the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with any
applicable state insurance laws or regulations as they may apply to the
investment objectives, policies and restrictions of the Portfolios, as they
may apply to the Fund, to the extent specifically requested in writing by
the Company. If the Fund cannot comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Fund makes no
other representation as to whether any aspect of its operations (including,
but not limited to, fees and expenses, and investment policies) complies
with the insurance laws or regulations of any state. The Company represents
that it will use its best efforts to notify the Fund of any restrictions
imposed by state insurance laws that may become applicable to the Fund as a
result of the Accounts' investments therein. The Fund and the Adviser agree
that they will furnish the information required by state insurance laws to
assist the Company in obtaining the authority needed to issue the Contracts
in various states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the directors of its
Fund Board, a majority of whom are not "interested" persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in
all material respects with applicable provisions of the 0000 Xxx.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at
all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended,
and will remain duly registered under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
2.10 The Distributor represents and warrants that it is registered as a broker-
dealer under the Securities and Exchange Act of 1934, as amended (the "1934
Act") and will remain duly registered under all applicable federal and
state securities laws, and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and serves as principal
underwriter/distributor of the Funds and that it will perform its
obligations for the Fund in accordance in all material respects with the
laws of the State of Delaware and any applicable state and federal
securities laws.
2.11 The Fund, the Adviser and the Distributor represents and warrants to the
Company that each has a Year 2000 compliance program in existence and that
each reasonably intends to be Year 2000 compliant so as to be able perform
all of the services and/or obligations contemplated by or under this
Agreement without interruption. The Fund, the Adviser, and the Distributor
shall immediately notify the Company if it determines that it will be
unable perform all of the services and/or obligations contemplated by or
under this Agreement in a manner that is Year 2000 compliant.
ARTICLE III - FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether intentional
or in good faith or otherwise) to comply with the requirements of
Subchapter M of the Code or the diversification requirements of Section
817(h) of the Code may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. The Fund and the Adviser
further acknowledge that any such failure may result in costs and expenses
being incurred by the Company in obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Fund or as well as fees and expenses of
legal counsel and other advisors to the Company and any federal income
taxes, interest or tax penalties incurred by the Company in connection with
any such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it
will maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the 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.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts under the Code and the regulations issued thereunder;
including, but not limited to, that the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended from
time to time, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and with Section 817(d) of
the Code, relating to the definition of a variable contract, and any
amendments or other modifications to such Section or Regulation. The Fund
will notify the Company immediately upon having a reasonable basis for
believing that the Fund or a Portfolio thereunder has ceased to comply with
the diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the event of
a breach of this representation by the Fund, it will take all reasonable
steps to adequately diversify the Fund so as to achieve compliance within
the grace period afforded by Treasury Regulation 1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or statement
indicating compliance by each Portfolio of the Fund with Section 817(h) of
the Code, such certificate or statement to be sent to the Company no later
than thirty (30) days following the end of each calendar quarter.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current Fund
prospectus and any supplements thereto for the Designated Portfolio(s) as
the Company may reasonably request for distribution, at the Fund's expense,
to Contract owners at the time of Contract fulfillment and confirmation. To
the extent that the Designated Portfolio(s) are one or more of several
Portfolios of the Fund, the Fund shall bear the cost of providing the
Company only with disclosure related to the Designated Portfolio(s). The
Fund will provide, at the Fund's expense, as many copies of said prospectus
as necessary for distribution, at the Fund's expense, to existing Contract
owners. The Fund will provide the copies of said prospectus to the Company
or to its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will xxxx the Fund for the reasonable cost of
such distribution. If requested by the Company, in lieu thereof, the Fund
will provide such documentation, including a final copy of a current
prospectus set in type at the Fund's expense, and other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Fund prospectus is amended more frequently) to have the
new prospectus for the Contracts and the Fund's new prospectus printed
together, in which case the Fund agrees to pay its proportionate share of
reasonable expenses directly related to the required disclosure of
information
concerning the Fund. The Fund will, upon request, provide the Company with
a copy of the Fund's prospectus through electronic means to facilitate the
Company's efforts to provide Fund prospectuses via electronic delivery, in
which case the Fund agrees to pay its proportionate share of reasonable
expenses related to the required disclosure of information concerning the
Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide the Company, at the Fund's expense, with as many copies
of the SAI and any supplements thereto as the Company may reasonably
request for distribution, at the Fund's expense, to prospective Contract
owners and applicants. To the extent that the Designated Portfolio(s) are
one or more of several Portfolios of the Fund, the Fund shall bear the cost
of providing the Company only with disclosure related to the Designated
Portfolio(s). The Fund will provide, at the Fund's expense, as many copies
of said SAI as necessary for distribution, at the Fund's expense, to any
existing Contract owner who requests such statement or whenever state or
federal law requires that such statement be provided. The Fund will provide
the copies of said SAI to the Company or to its mailing agent. The Company
will distribute the SAI as requested or required and will xxxx the Fund for
the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to shareholders/Contract
owners and other permissible communications to shareholders/Contract owners
in such quantity as the Company will reasonably require. The Company will
distribute this proxy material, reports and other communications to
existing Contract owners and will xxxx the Fund for the reasonable cost of
such distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in the Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Designated Portfolios held in the Account for which
no timely instructions have been received, in the same proportion as
shares of such Designated Portfolio for which instructions have been
received from the Company's Contract owners,
so long as and to the extent that the Commission continues to interpret the
1940 Act to require pass-through voting privileges for variable Contract
owners. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
The Company will be responsible for assuring that the Accounts
participating in the Fund calculates voting privileges in a manner
consistent with all legal requirements, including the Proxy Voting
Procedures set forth in Schedule C and the Mixed and Shared Funding
Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the Commission may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Fund currently intends,
to comply with Section 16(c) of the 1940 Act (although the Fund is not one
of the trusts described in Section 16(c) of the 0000 Xxx) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Commission's interpretation of the requirements
of Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or the
Adviser, each piece of sales literature or other promotional material in
which the Fund or the Adviser is named, at least ten (10) Business Days
prior to its use. No such material will be used if the Fund or the Adviser
reasonably objects to such use within five (5) Business Days after receipt
of such material.
5.2 The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or SAI for Fund shares,
as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in published reports for the Fund which are in the public domain
or approved by the Fund or the Adviser for distribution, or in sales
literature or other material provided by the Fund or by the Adviser, except
with permission of the Fund or the Adviser. The Fund and the Adviser agree
to respond to any request for approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to the
Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is named,
at least ten (10) Business Days prior to its use. No such material will be
used if the Company reasonably objects to such use within five (5) Business
Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI
for the Contracts, as such registration statement, prospectus and SAI may
be amended or supplemented from time to time, or in published reports for
each Account or the Contracts which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or
other material provided by the Company, except with permission of the
Company. The Company agrees to respond to any request for approval on a
prompt and timely basis.
5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Fund or its shares, within a reasonable time
after filing of each such document with the Commission or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for voting
instructions, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all
amendments to any of the above, that relate to the Contracts or each
Account, contemporaneously with the filing of each such document with the
Commission or the NASD (except that with respect to post-effective
amendments to such prospectuses and SAIs and sales literature and
promotional material, only those prospectuses and SAIs and sales literature
and promotional material that relate to or refer to the Fund will be
provided.) In addition, the Company will provide to the Fund at least one
complete copy of (i) a registration statement that relates to the Contracts
or each Account, containing representative and relevant disclosure
concerning the Fund; and (ii) any post-effective amendments to any
registration statements relating to the Contracts or such Account that
refer to or relate to the Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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,
(i.e., on-line networks such as the Internet or other electronic
----
messages)), sales literature (i.e., any written communication distributed
----
or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, 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, SAIs,
shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933
Act or the 1940 Act.
5.8 The Investment Company, the Adviser and the Distributor hereby consent to
the Company's use of the names of the INVESCO, AMVESCAP and INVESCO Funds
Group, Inc. as well as the names of the Designated Funds set forth in
Schedule B of this Agreement, in connection with marketing the Contracts,
subject to the terms of Sections 5.1 of this Agreement. The Company
acknowledges and agrees that Adviser and Distributor and/or their
affiliates own all right, title and interest in and to the name INVESCO and
the INVESCO open circle design, and covenants not, at any time, to
challenge the rights of Adviser and Distributor and/or their affiliates to
such name or design, or the validity or distinctiveness thereof. The
Investment Company, the Adviser and the Distributor hereby consent to the
use of any trademark, trade name, service xxxx or logo used by the
Investment Company, the Adviser and the Distributor, subject to the
Investment Company's, the Adviser's and/or the Distributor's approval of
such use and in accordance with reasonable requirements of the Investment
Company, the Adviser or the Distributor. Such consent will terminate with
the termination of this Agreement. Adviser or Distributor may withdraw this
consent as to any particular use of any such name or identifying marks at
any time (i) upon Adviser's or Distributor's reasonable determination that
such use would have a material adverse effect on the reputation or
marketing efforts of Adviser, Distributor or such Funds or (ii) if no
investment company, or series or class of shares of any investment company
advised by Adviser or distributed by Distributor continues to be offered
through variable insurance contracts issued by Insurance Company; provided
however, that Adviser or Distributor may, in either's individual
discretion, continue to use materials prepared or printed prior to the
withdrawal of such authorization. The Company agrees and acknowledges that
all use of any designation comprised in whole or in part of the name,
trademark, trade name, service xxxx and logo under this Agreement shall
inure to the benefit of the Investment Company, Adviser and/or the
Distributor.
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is intended
for use only by brokers or agents selling the Contracts is properly marked
as "Not For Use With The Public" and that such information is only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under this
Agreement, except as provided below: (a) if the Fund or any Designated
Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then, subject to obtaining any
required exemptive orders or other regulatory approvals, the Fund may make
payments to the Company or to the underwriter for the Contracts if and in
such amounts agreed to by the Fund in writing; (b) the Fund may pay fees to
the Company for administrative services provided to Contract owners that
are not primarily intended to result in the sale of shares of the
Designated Portfolio or of underlying Contracts.
6.2 All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and registered
in accordance with applicable federal law and, to the extent deemed
advisable by the Fund, in accordance with applicable state law, prior to
sale. The Fund will bear the expenses for the cost of registration and
qualification of the Fund's shares, including without limitation, the
preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2
Notices and payment of all applicable registration or filing fees with
respect to shares of the Fund; preparation and filing of the Fund's
prospectus, SAI and registration statement, proxy materials and reports;
typesetting the Fund's prospectus; typesetting and printing proxy materials
and reports to Contract owners (including the costs of printing a Fund
prospectus that constitutes an annual report); the preparation of all
statements and notices required by any federal or state law; all taxes on
the issuance or transfer of the Fund's shares; any expenses permitted to be
paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1
under the 1940 Act; and other costs associated with preparation of
prospectuses and SAIs for the Designated Portfolios in electronic or
typeset format, as well as any distribution expenses as set forth in
Article III of this Agreement.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief from
the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act
and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity separate accounts and variable life insurance separate accounts of
both affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate account
context (the "Mixed and Shared Funding Exemptive Order"). The parties to
this Agreement agree that the conditions or undertakings specified in the
Mixed and Shared Funding Exemptive Order and that may be imposed on the
Company, the Fund and/or the Adviser by virtue of the receipt of such order
by the Commission, will be incorporated herein by reference, and such
parties agree to comply with such conditions and undertakings to the extent
applicable to each such party.
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the Contract owners
of all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including, but not limited to:
(a) an action by any state insurance regulatory authority; (b) 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 action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by Participating Insurance Companies or by variable
annuity and variable life insurance Contract owners; or (f) a decision by
an insurer to disregard the voting instructions of Contract owners. The
Fund Board will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof. A
majority of the Fund Board will consist of persons who are not "interested"
persons of the Fund.
7.3 The Company will report any potential or existing conflicts of which it is
aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Fund Board whenever Contract owner voting instructions are to be
disregarded. The Fund Board will record in its minutes, or other
appropriate records, all reports received by it and all action with regard
to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of its
disinterested directors, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies will, at their
expense and to the extent reasonably practicable (as determined by a
majority of the disinterested directors), take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be submitted to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
----
variable annuity Contract owners or variable life insurance Contract owners
of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such disregard
of voting instructions could conflict with the majority of Contract owner
voting instructions, and the Company's judgment represents a minority
position or would preclude a majority vote, the Company may be required, at
the Fund's election, to withdraw the affected sub-account of the Account's
investment in the Fund and terminate this Agreement with respect to such
sub-account; provided, however, that such withdrawal and termination will
be limited to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of the
Fund Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within six
(6) months after the Fund gives written notice to the Company that this
provision is being implemented. Until the end of such six-month period the
Adviser and Fund will, to the extent permitted by law and any exemptive
relief previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the
Fund.
7.6 If an irreconcilable conflict arises because a particular state insurance
regulator's decision applicable to the Company conflicts with the majority
of other state insurance regulators, then the Company will withdraw the
affected sub-account of the Account's investment in the Fund and terminate
this Agreement with respect to such sub-account; provided, however, that
such withdrawal and termination will be limited to the extent required by
the foregoing irreconcilable material conflict as determined by a majority
of the disinterested directors of the Fund Board. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Advisor and Fund will, to the
extent permitted by law and any exemptive relief previously granted to the
Fund, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of
the disinterested members of the Fund Board will determine whether any
proposed action adequately remedies any irreconcilable material conflict,
but in no event, other than as specified in Section 7.4, will the Fund be
required to establish a new funding medium for the Contracts. The Company
will not be required by Section 7.4 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict.
7.7 The Company will at least annually submit to the Fund Board such reports,
materials or data as the Fund Board may reasonably request so that the Fund
Board may fully carry out the duties imposed upon it as delineated in the
Mixed and Shared Funding Exemptive Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the Fund
Board.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 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 Fund and/or the Participating Insurance Companies, as appropriate,
will take such steps as may be necessary to comply with Rules 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 4.4, 4.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will 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
(a) The Company agrees to indemnify and hold harmless the Fund,
the Adviser, the Distributor, and each person, if any, who
controls or is associated with the Fund, the Adviser, or the
Distributor within the meaning of such terms under the federal
securities laws and any director, trustee, officer, employee
or agent of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the
Company) or actions in respect thereof (including reasonable
legal and other expenses), to which the Indemnified Parties
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:
(1) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
or SAI for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Company by or on behalf of the Fund, the Adviser, of
the Distributor for use in the registration
statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund,
or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control)
or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(3) arise out of untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund
(or amendment or supplement) or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
such statements not misleading in light of the
circumstances in which they were made, if such a
statement or omission was made in reliance upon and
in conformity with
information furnished to the Fund by or on behalf of
the Company or persons under its control; or
(4) arise as a result of any failure by the Company to
provide the services and furnish the materials under
the terms of this Agreement; or
(5) arise out of 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 by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold
harmless the Company and each person, if any, who controls or
is associated with the Company within the meaning of such
terms under the federal securities laws and any director,
officer, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the
written consent of the Adviser and Distributor) or actions in
respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties 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:
(1) 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 SAI for the Fund or sales literature or other
promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Adviser or Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI
for the Fund or in sales literature of the Fund (or
any amendment or supplement thereto) or otherwise for
use in connection with the sale of the Contracts or
Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statements,
prospectuses or statements of additional information
or sales literature or other promotional material for
the Contracts or of the Fund, or any amendment or
supplement to the foregoing, not supplied by the
Adviser or the Fund or persons under the control of
the Adviser or the Fund respectively) or wrongful
conduct of the Adviser or the Fund or persons under
the control of the Adviser or the Fund respectively,
with respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature or other promotional material covering the
Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein
a material fact required to be stated or necessary to
make such statement or statements not misleading in
light of the circumstances in which they were made,
if such statement or omission was made in reliance
upon and in conformity with information furnished to
the Company by or on behalf of the Adviser or the
Fund or persons under the control of the Adviser or
the Fund; or
(4) arise as a result of any failure by the Fund or the
Adviser to provide the services and furnish the
materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser or the Fund in this Agreement, or arise out
of or result from any other material breach of this
Agreement by the Adviser or the Fund (including a
failure, whether intentional or in good faith or
otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement, as described more fully in Section
8.5 below);
except to the extent provided in Sections 8.2(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Adviser or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section
8.2(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard or its
obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser, the
Fund, and the Distributor of the commencement of any
litigation, proceedings, complaints or actions by regulatory
authorities against them in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.3 Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses,
claims, expenses, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or action
in respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties 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 operations of the Fund and:
(1) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement; or
(2) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund
(including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements
of Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement as described more fully in Section 8.5
below); or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Sections 8.3(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section
8.3(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations and duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim upon such Indemnified Party (or after such party will have
received notice of such service on any designated agent), but failure
to notify the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of the indemnification provision of this Article VIII, except
to the extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case any
such action is brought against the Indemnified Party, the Indemnifying
Party will be entitled to participate, at its own expense, in the
defense thereof. The Indemnifying Party also will be entitled to assume
the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense
thereof, the Indemnified Party will bear the fees and expenses of any
additional counsel retained by it, and the Indemnifying Party will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified
Party will have mutually agreed to the retention of such counsel; or
(b) 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 will not be liable for any settlement of any
proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of
this Agreement may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Fund, the Adviser and the Distributor will pay on a
joint and several basis all costs associated with or arising out of any
failure, or any anticipated or reasonably foreseeable failure, of the
Fund or any Portfolio to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding to any
such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Fund or
Portfolio (including but not limited to an order pursuant to Section
26(b) of the 1940 Act); fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes or tax penalties
(or "toll charges" or exactments or amounts paid in settlement)
incurred by the Company in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other
indemnification and reimbursement obligations of the Fund, the Adviser
and/or the Distributor under this Agreement.
ARTICLE IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof will
be interpreted and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Portfolios, upon six (6)
month's advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by
the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
(d) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund or the Adviser by the NASD, the Commission or any state
securities or insurance department or any other regulatory
body, provided that the Company determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Fund's or the
Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under
any successor or similar provision, or if the Company
reasonably and in good faith believes that the Fund may fail
to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to
meet the diversification requirements specified in Section 3.3
hereof or if the Company reasonably and in good faith believes
the Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, determines in its sole judgment
exercised in good faith that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account)
to
substitute the shares of another investment company for the
corresponding Portfolio's shares of the Fund in accordance
with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying portfolio.
The Company will give sixty (60) days' prior written notice to
the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares or of the filing of any
required regulatory approval(s); or
(1) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
Contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2 Notice Requirement
(a) No termination of this Agreement, except a termination under
Section 10.1 (m) of this Agreement, will be effective unless
and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the
termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts will be permitted to reallocate
investments in the Designated Portfolios (as in effect on such date),
redeem investments in the Designated Portfolios and/or invest in the
Designated Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3
will not apply to any terminations under Article VII and the effect of
such Article VII terminations will be governed by Article VII of this
Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
parties.
If to the Company:
-----------------
If to the Fund:
--------------
INVESCO Variable Investment Funds, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn:
If to the Adviser:
-----------------
INVESCO Funds Group, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn:
If to the Distributor:
---------------------
INVESCO Distributors, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn:
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees
or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Protected
Parties. The Fund and the Adviser agree that if they come into
possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other
property of the Protected Parties, other than such information as may
be independently developed or compiled by the Fund or the Adviser from
information supplied to them by the Protected Parties' customers who
also maintain accounts directly with the Fund or the Adviser, the Fund
and the Adviser will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Company' s prior
written consent; or (b) as required by law or judicial process. The
Fund and the Adviser acknowledge that any breach of the agreements in
this Section 12.2 would result in immediate and irreparable harm to the
Protected Parties for which there would be no adequate remedy at law
and agree that in the event of such a breach, the Protected Parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7 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 law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, the NASD and state insurance regulators) and will
permit each other and such authorities reasonable access to its books
and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.11 The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund or other applicable terms of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
COMPANY
By: ____________________________
Name: ____________________________
Title: ____________________________
INVESCO VARIABLE INVESTMENT FUNDS,
INC.
By: ____________________________
Xxxxxx X. Xxxxxx
Treasurer
INVESCO FUNDS GROUP, INC.
By: ____________________________
Xxxxxx X. Xxxxxx
Senior Vice President &
Treasurer
INVESCO DISTRIBUTORS, INC.
By: ____________________________
Xxxxxx X. Xxxxxx
Senior Vice President &
Treasurer
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of __________________
are permitted in accordance with the provisions of this Agreement to invest in
Portfolios of the Fund shown in Schedule B:
Contracts Funded by Separate Account Name of Separate Account
-------------------------------------------------------------
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
INVESCO VIF -
[LIST FUNDS HERE]
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the Agreement
to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
. name (legal name as found on account registration)
. address
. Fund or account number
. coding to state number of units
. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
. Voting Instruction Card(s)
. one proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including,) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card. Note: For Example, if the account registration is
under "Xxxx X. Xxxxx, Trustee," then that is the exact legal name to be
printed on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund
may request an earlier deadline if reasonable and if required to calculate
the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
