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EXHIBIT 99.9.4
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 11th day of March, 1997, by and between
Pacific Mutual Life Insurance Company, a mutual life insurance company domiciled
in California (the "Company"), on its behalf and on behalf of the segregated
asset accounts of the Company listed on Exhibit "A" to this Agreement (the
"Separate Accounts"); Pacific Innovations Trust, a Delaware business trust
("Fund"); Provident Distributors, Inc., a Delaware corporation ("Distributor");
and Bank of America National Trust and Savings Association, a national banking
association ("Manager").
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended ("1940 Act") and the Fund is
authorized to issue separate classes of shares of beneficial interests
("shares"), each representing an interest in a separate portfolio of assets
known as a fund ("portfolio") and each portfolio has its own investment
objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
portfolios to the Separate Accounts that fund variable annuity contracts and
variable life insurance contracts ("Variable Contracts") and to serve as an
investment medium for Variable Contracts of the Company and other portfolios
which may be established in the future; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a
member in good
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standing of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Manager is a national banking association; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company wishes to purchase shares of one or more of the Fund
portfolios on behalf of its Separate Accounts to serve as an investment medium
for Variable Contracts funded by the Separate Accounts, and the Distributor is
authorized to sell shares of the Fund's portfolios;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I. - SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
portfolios offered and made available by the Fund and identified on Exhibit "B"
("Portfolios") that the Company orders on behalf of its Separate Accounts, and
agrees to execute such orders on each day on which the Fund calculates its net
asset value pursuant to rules of the SEC ("business day") at the net asset value
next computed after receipt and acceptance by the Fund or its designee of the
order for the shares of the Fund.
1.2 The Fund agrees to make available on each business day shares of
the Portfolio for purchase at the applicable net asset value per share by the
Company on behalf of its Separate Accounts; provided, however, that the Trustees
of the Fund 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 over it, in the sole
discretion of the Trustees, acting in good faith and in light of the Trustees'
fiduciary duties under applicable law, necessary in the best interests of the
shareholders of any Portfolios.
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1.3 The Fund and the Distributor agree that shares of the Portfolios of
the Fund will be sold only to the Company, its Separate Accounts, and other
persons affiliated with the Company, consistent with each Portfolio being
adequately diversified pursuant to Section 817(h) of the Internal Revenue Code
of 1986, as amended ("Code") and the regulations thereunder. No shares of any
Portfolio will be sold directly to the general public. No shares of any
Portfolio will be sold directly to any other insurance company or its separate
account(s) or to any person without the mutual consent of the Fund, the Manager
and the Company.
1.4 The Fund and Distributor will not sell shares of the Fund to any
separate account to serve as an investment vehicle for variable life insurance
contracts unless the Fund has first obtained an appropriate exemptive order from
the SEC if required by the 1940 Act and the rules thereunder, to the extent
necessary to permit "mixed funding" if the Fund offers its shares to a variable
life insurance Separate Account of the Company, and, if applicable, to permit
"shared funding" if the Fund offers its shares to separate accounts funding
variable annuity or variable life insurance contracts of unaffiliated insurance
companies or to any other person. In such event, all parties to this Agreement
agree to comply with any applicable conditions imposed under any exemptive order
issued by the SEC, or any applicable conditions specified in Rule 6e-2 or Rule
6e-3(T) under the 1940 Act (or, if permanently adopted, Rule 6e-3), whichever is
applicable. The Fund and Distributor will not sell shares of the Fund to any
Separate Account funding variable life insurance contracts unless there is in
effect an agreement containing provisions necessary to comply with any
applicable conditions of an SEC exemptive order, Rule 6e-2 or 6e-3(T) (or, if
permanently adopted, Rule 6e-3), whichever is applicable.
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1.5 Upon receipt of a request for redemption in proper form from the
Company, the Fund agrees to redeem in cash any full or fractional shares of the
Portfolio held by the Company, its Separate Accounts, and other persons
affiliated with the Company, ordinarily executing such requests on each business
day at the net asset value next computed after receipt and acceptance by the
Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemptions shall be paid
in federal funds ordinarily on the next business day following receipt by the
Fund or its designee of the order for redemption; however the Fund reserves the
right to postpone payment upon redemption consistent with Section 22(e) of the
Act and any Rules thereunder.
1.6 For purposes of Sections 1.1 and 1.5, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Separate Account, and receipt by such designee shall constitute receipt by the
Fund; provided that the Company receives the order by 4:00 p.m. New York City
time, or the close of the New York Stock Exchange if earlier, and the Fund
receives notice of such order by 10:00 a.m., New York City time on the following
business day.
1.7 The Company shall pay for shares of the Portfolio on the business
day next following the day the Company places an order to purchase shares of the
Portfolios, except with respect to shares of any Portfolio of the Fund
("Acquired Portfolio") ordered by the Company for a Separate Account or any
subaccount thereof in connection with an exchange or transfer from another
Separate Account or another subdivision of a Separate Account under the Variable
Contracts, the Company shall pay for shares of the Acquired Portfolio on the
latter of (1) the next business day after an order to purchase the shares is
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made in accordance with Section 1.1 hereof, or (2) on the same business day that
the Separate Account or subdivision from which the exchange or transfer is being
made receives payment from the investment company portfolio in which it invests.
Payment shall be in federal funds transmitted by wire or by any other method
mutually agreed upon by the parties hereto.
1.8 Issuance and transfer of shares of the Portfolios will be by book
entry only, unless otherwise required by state insurance authorities. Fund and
Distributor agree that shares ordered from the Fund will be recorded properly in
an appropriate title for the Separate Accounts or the appropriate subaccounts of
the Separate Accounts.
1.9 The Fund shall promptly furnish same-day notice (by wire or
telephone or facsimile, followed by written confirmation) to the Company of any
income dividends or capital gain distributions payable on the shares of the
Portfolios. The Company hereby elects to reinvest in the Portfolios all such
dividends and distributions as are payable on a Portfolio's shares and to
receive such dividends and distributions in additional shares of that Portfolio.
The Company reserves the right to revoke this election in writing and to receive
all such dividends and distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall instruct its recordkeeping agent to advise the
Company on each business day of the net asset value per share for each Portfolio
as soon as reasonably practical after the net asset value per share is
calculated, (normally by 6:00 p.m., New York City time), and shall use its best
efforts to make such net asset value per share available by 6:30 p.m., New York
City time.
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ARTICLE II. - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under California law and that it is taxed as
an insurance company under Subchapter L of the Code.
2.2 The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the California Insurance Code, and that each of the Separate Accounts is a
validly existing segregated asset account under California law.
2.3 The Company represents and warrants that the Variable Contracts
issued by the Company or interests in the Separate Accounts under such Variable
Contracts (1) and or, prior to issuance, will be registered as securities under
the Securities Act of 1933 ("1933 Act") or, alternatively (2) are not registered
because they are properly exempt from registration under the 0000 Xxx.
2.4 The Company represents and warrants that each of the Separate
Accounts (1) has been registered as a unit investment trust in accordance with
the provisions of the 1940 Act or, alternatively (2) has not been registered in
proper reliance upon an exclusion from registration under the 0000 Xxx.
2.5 The Company represents that it believes, in good faith, that the
Variable Contracts issued by the Company are currently treated as annuity
contracts or life insurance contracts (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6 The Company represents and warrants that any of its Separate
Accounts that fund variable life insurance contracts and that are registered
with the SEC as
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investment companies, rely on the exemptions provided by Rule 6e-2 or Rule
6e-3(T), or any successor thereto, under the 0000 Xxx.
2.7 The Fund represents and warrants that it is duly organized as a
business trust under the laws of the state of Delaware, and is in good standing
under applicable law.
2.8 The Fund represents and warrants that the shares of the Portfolios
are duly authorized for issuance in accordance with applicable law and that the
Fund is registered as an open-end management investment company under the 0000
Xxx.
2.9 The Fund represents that it believes, in good faith, that the
Portfolios currently comply with the diversification provisions of Section
817(h) of the Code and the regulations issued thereunder relating to the
diversification requirements for variable life insurance contracts and variable
annuity contracts, and that each Portfolio has complied with such provisions
since its commencement of operations.
2.10 The Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. - GENERAL DUTIES
3.1 The Fund shall take all such actions as are necessary to permit the
sale of the shares of each Portfolio to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act, and
registering the shares of the Portfolios sold to the Separate Accounts under the
1933 Act for so long as required by applicable law. The Fund shall amend its
Registration Statement filed with the SEC under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of the
shares of the Portfolios. The Fund shall register and qualify its shares for
sale in accordance with the laws of the various states to the extent deemed
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necessary by the Fund or the Distributor. The Fund and Distributor shall take
all steps necessary to sell shares of the Fund in compliance with all applicable
federal and state securities laws.
3.2 The Fund shall make every effort to maintain qualification of each
Portfolio as a Regulated Investment Company under Subchapter M of the Code (or
any successor or similar provision) and shall notify the Company immediately
upon having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that it might not so qualify in the future; and to meet the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code.
3.3 The Fund and Manager or a sub-manager as appropriate will invest
the assets of the Portfolios in such a manner as to ensure that the Variable
Contracts will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations thereunder (or any successor
provisions). Without limiting the scope of the foregoing, the Manager on behalf
of the Fund shall make every effort to enable each Portfolio to comply with the
diversification provisions of Section 817(h) of the Code and the regulations
issued thereunder relating to the diversification requirements for variable life
insurance contracts and variable annuity contracts and any prospective
amendments or other modifications to Section 817 or regulations thereunder, and
shall notify the Company immediately upon having a reasonable basis for
believing that any Portfolio has ceased or might cease to comply.
3.4 The Fund and Manager agree that each Portfolio of the Fund shall be
managed consistent with its investment objective or objectives, investment
policies, and investment restrictions as described in the Fund's prospectus and
registration statement, as amended or modified from time to time.
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3.5 The Company shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Company, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the Variable
Contracts to the extent required under the 1933 Act, and obtaining all necessary
approvals to offer the Variable Contracts from the applicable state insurance
commissioners.
3.6 The Company shall make every reasonable effort to maintain the
treatment of the Variable Contracts issued by the Company as annuity contracts
or life insurance contracts, whichever is appropriate, under applicable
provisions of the Code, and shall notify the Fund and the Distributor
immediately upon having a reasonable basis for believing that such Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
3.7 The Company shall require that any person who offers and sells the
Variable Contracts issued by the Company do so in accordance with applicable
provisions of the 1933 Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair
Practice, banking and state law respecting the offering of variable life
insurance contracts and variable annuity contracts.
3.8 The Distributor shall sell and distribute the shares of the
Portfolios of the Fund in accordance with the applicable provisions of the 1933
Act, the 1934 Act, the NASD Rules of Fair Practice, and state law.
3.9 A majority of the Board of Trustees of the Fund shall consist of
persons who are not "interested persons" of the Fund ("disinterested Trustees"),
as defined by Section 2(a)(19) of the 1940 Act, except that if this provision of
this Section 3.9 is not
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met by reason of the death, disqualification, or bona fide resignation of any
Trustee, then the operation of this provision shall be suspended (a) for a
period of 45 days if the vacancy or vacancies may be filled by the Fund's Board;
(b) for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the SEC may prescribe by
order upon application.
3.10 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and banking and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
3.11 The Company shall, at least annually, submit to the Board of
Trustees of the Fund such reports, materials or data as the Trustees may
reasonably request so that the Trustees may carry out the obligations imposed
upon them by said reports, materials and data; said reports, materials and data
shall be submitted more frequently if deemed appropriate by the Board of
Trustees.
3.12 Fund and Manager agree to notify the Company immediately upon
gaining knowledge of any change(s) or proposed change(s) in a Portfolio's
investment objective(s), investment policies, or investment restrictions, in any
material services provided to the Fund or Portfolio, or in any service agreement
with respect to any services provided to the Fund or Portfolio, and to cooperate
with the Company in obtaining any necessary approvals from state insurance
authorities before implementing any such change(s).
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ARTICLE IV. - POTENTIAL CONFLICTS
4.1 The Fund's Board of Trustees shall monitor the Fund for the
existence of any material irreconcilable conflicts between the interests of
owners of variable annuity contracts and variable life insurance contracts. An
irreconcilable material conflict may arise for a variety of reasons, including
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretive 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 the Fund or any Portfolio are being managed;
or (e) a decision by the Company to disregard the voting instructions of
Variable Contract Owners.
4.2 The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The Company
will be responsible for assisting the Board of Trustees of the Fund in carrying
out its responsibilities under this Agreement, 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 Variable Contract Owner voting instructions are disregarded. The
Company shall carry out its responsibility under this Section 4.2 with a view
only to the interests of the Variable Contract Owners.
4.3 The Company agrees that in the event that it is determined by a
majority of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Company shall, at its own expense and to the extent reasonably practical (as
determined by a majority of the disinterested Trustees of the Board of the
Fund), take whatever steps are necessary to eliminate the
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irreconcilable material conflict, including: (1) withdrawing the assets
allocable to some or all of the Separate Accounts from the Fund or any Portfolio
and reinvesting such assets in a different investment medium, which may include
another Portfolio of the Fund, or submitting the question of whether such
segregation should be implemented to a vote of all affected Variable Contract
Owners and, as appropriate, segregating the assets of any appropriate group that
votes in favor of such segregation, or offering to the affected Variable
Contract Owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. If a
material irreconcilable conflict arises because of the Company's decision to
disregard Variable Contract Owners' voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
shall be required, at the Fund's election, to withdraw the Separate Accounts'
investment in the Fund, and no charge or penalty will be imposed as a result of
such withdrawal. The Fund shall neither be required to bear the costs of
remedial actions taken to remedy a material irreconcilable conflict nor shall it
be requested to pay a higher investment advisory fee for the sole purpose of
covering such costs. In addition, no Variable Contract Owner shall be required
directly or indirectly to bear the direct or indirect costs of remedial actions
taken to remedy a material irreconcilable conflict. A majority of the
disinterested members of the Board of Trustees of the Fund shall determine
whether any proposed action adequately remedies any material irreconcilable
conflict, but in no event will the Fund be required to establish a new funding
medium for any Variable Contract. A new funding medium for any Variable Contract
need not be established by the Company pursuant to this Section 4.3, if an offer
to do so has been declined by vote of a majority of Variable Contract Owners who
would be materially and adversely affected by the irreconcilable material
conflict.
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All reports received by the Fund's Board of Trustees of potential or existing
conflicts, and all Board action with regard to determining the existence of a
conflict, notifying the Company and the Fund's investment Manager of a conflict,
shall be properly recorded in the minutes of the Board of Trustees of the Fund
or other appropriate records, and such minutes or other records shall be made
available to the SEC upon request. The Company and the Fund shall carry out
their responsibilities under this Section 4.3 with a view only to the interests
of the Variable Contract Owners.
4.4 The Board of Trustees of the Fund shall promptly notify the Company
in writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. - PROSPECTUSES AND PROXY STATEMENTS, VOTING
5.1 The Company shall distribute such prospectuses, proxy statements
and periodic reports of the Fund to the owners of Variable Contracts issued by
the Company as required to be distributed to such Variable Contract Owners under
applicable federal or state laws.
5.2 The Distributor shall provide the Company with as many copies of
the current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Company to print together in one document the current prospectus for the
Variable Contracts issued by the Company and the current prospectus for the
Fund. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners, and
the Company shall bear the expense of printing copies of the Fund's prospectus
that
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are used in connection with offering the Variable Contracts issued by the
Company.
5.3 The Distributor shall provide the Company with as many copies of
the current Statement of Additional Information ("SAI") of the Fund as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Fund shall provide such documentation (including a final copy of the Fund's SAI
as set in type or in camera-ready copy) and other assistance as is reasonably
necessary in order for the Company to print together in one document the current
SAI for the Variable Contracts issued by the Company and the current SAI for the
Fund. The Fund shall bear the expense of printing copies of its current SAI that
may be distributed to existing Variable Contract Owners, and the Company shall
bear the expense of printing copies of the Fund's SAI that are used in
connection with offering the Variable Contracts issued by the Company.
5.4 The Fund, at its expense, shall provide the Company with copies of
its proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company
and to state insurance authorities. The Fund, at the Company's expense, shall
provide the Company with copies of its periodic reports to shareholders and
other communications to shareholders in such quantity as the Company shall
reasonably request for use in connection with offering the Variable Contracts
issued by the Company. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the Fund's proxy
materials, periodic reports to shareholders and other communications to
shareholders, as set in type or in camera-ready copy) and other assistance as is
reasonably necessary in order for the Company to print such shareholder
communications for distribution to owners of Variable Contracts issued by the
Company.
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5.5 For so long as the SEC interprets the 1940 Act to require
pass-through voting by the Company whose Separate Accounts are registered as
investment companies under the 1940 Act ("Registered Separate Accounts"), the
Company shall vote shares of each Portfolio of the Fund held in Registered
Separate Accounts or subaccounts thereof, at regular and special meetings of the
Fund in accordance with instructions timely received by the Company (or a
designated agent) from owners of Variable Contracts funded by such Registered
Separate Accounts or subaccounts thereof having a voting interest in the
Portfolio. The Company shall vote shares of a Portfolio of the Fund held in
Registered Separate Accounts or subaccounts thereof that are attributable to the
Variable Contracts as to which no timely instructions are received, as well as
shares held in such Registered Separate Accounts or subaccounts thereof that are
not attributable to the Variable Contracts and owned beneficially by the Company
(resulting from charges against the Variable Contracts or otherwise), in the
same proportion as the votes cast by owners of the Variable Contracts funded by
that Separate Account or subaccount thereof having a voting interest in the
Portfolio from whom instructions have been timely received. The Company shall
vote shares of each Portfolio of the Fund held in its general account or in any
Separate Account that is not registered under the 1940 Act, if any, and any
affiliate of the Company shall vote shares of a Portfolio of the Fund that it
holds, in its discretion or in the same proportion as the votes cast with
respect to shares of the Portfolios held in all Registered Separate Accounts of
the Company or subaccounts thereof, in the aggregate. In the event that the
Shared Funding Exemptive Order requires all Participating Insurance Companies to
calculate voting privileges in substantially the same manner, the Company agrees
to take steps so that each Registered Separate Account or subaccount thereof
investing in the Fund calculates voting privileges substantially in
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the manner established by the Fund, provided that such manner is reasonable and
communicated to the Company by the Fund.
5.6 To the extent applicable, the Fund shall disclose in its
prospectus, in substance, that: (1) shares of the Portfolios of the Fund are
offered to affiliated or unaffiliated insurance company separate accounts which
fund both annuity and life insurance contracts, (2) due to differences in tax
treatment or other considerations, the interests of various Variable Contract
Owners participating in the Fund or a Portfolio might at some time be in
irreconcilable conflict, and (3) the Board of Trustees of the Fund will monitor
for any material irreconcilable conflicts and determine what action, if any,
should be taken.
ARTICLE VI. - SALES MATERIAL AND INFORMATION
6.1 The Company agrees that neither it nor any of its affiliates shall
give any information or make any representations or statements on behalf of the
Fund or concerning the Fund other than the information or representation
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund, or its designee
(the Manager), and/or by the Distributor or its designee, except with the prior
permission of the Fund or its designee and/or the Distributor or its designee.
The Parties agree that total return information of the Fund and its Portfolios
derived from the prospectus or Registration Statement of the Fund or from
reports provided by the Fund, the Manager, or Distributor to the Company may be
used by the Company in connection with the sale of the Variable Contracts
without prior approval of the Fund or the Distributor, or their designees, and
the Company shall be
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responsible for using such information in conformity with the information it is
provided.
6.2 The Fund or the Distributor or the designee of either shall furnish
to the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its Separate Accounts are named,
and no such material shall be used without the prior approval of the Company or
its designee.
6.3 The Fund and the Distributor agree that each and the affiliates of
each shall not give any information or make any representations on behalf of the
Company or concerning the Company, the Separate Accounts, or the Variable
Contracts issued by the Company, other than the information or representations
contained in a registration statement, prospectus or SAI for such Variable
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports for the Separate Accounts or
prepared for distribution to owners of such Variable Contracts, or in sales
literature or other promotional material approved by the Company or its
designee, except with the prior permission of the Company.
6.4 The Fund will provide to the Company at least one complete copy of
all prospectuses, SAI's, reports, proxy statements and other voting solicitation
materials, and all amendments and supplements to any of the above, that relate
to the Fund or its shares, promptly after the filing of such document with the
SEC and other regulatory authorities.
6.5 The Company will provide to the Fund at least one complete copy of
all prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), SAI's, reports, solicitations for voting instructions, and all
amendments or supplements to any of the above, that relate to the Variable
Contracts issued by the Company or the Separate
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Accounts promptly after the filing of such document with the SEC or other
regulatory authority.
6.6 For purposes of this Article VI, 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, computerized media, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees.
ARTICLE VII - INDEMNIFICATION
7.1 Indemnification By the Company
The Company agrees to indemnify and hold harmless the Fund, the Manager
and the Distributor, each of their Trustees/Directors and officers, and each
person, if any, who controls the Manager or Distributor within the meaning of
Section 15 of the 1933 Act, (collectively, the "Indemnified Parties" for
purposes of this Section 7.1), against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation expenses (including 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 litigation expenses are related to the sale or acquisition of the Fund's
shares
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or the Variable Contracts or to the operation of the Separate Accounts or the
Fund, and in any such case:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement, prospectus (which shall include an offering
memorandum) or SAI for the Separate Accounts or sales literature for
the Variable Contracts issued by the Company (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company, directly or
indirectly, by or on behalf of any Indemnified Party for use in the
registration statement, prospectus or SAI for the Separate Account or
in sales literature issued by the Company (or any amendment or
supplement to any of the foregoing) or otherwise, for use in connection
with the sale of the Variable Contracts or Fund shares or acceptance of
applications for the Variable Contracts; or
(ii) arise out of or as a result of any statement or
representation (other than statements or representations (1) contained
in the registration statement, prospectus, SAI, or sales literature of
the Fund or any amendment or supplement to any of the foregoing not
supplied by the Company or persons under its control, or (2) contained
in the registration statement, prospectus, or SAI for the Separate
Account, or sales literature for the Variable Contracts made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund, the Manager or the Distributor) or
wrongful conduct of the Company or any of its affiliates, employees or
agents (but not including agents that are Indemnified Parties or
employees or agents of Indemnified Parties) thereof with respect to the
sale or distribution of the Variable Contracts issued by the Company or
the Fund shares or the acceptance of applications for the Variable
Contracts; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI or sales literature of the Fund (or any amendment
thereof or supplement to the foregoing) or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such a
statement or omission was made in reliance upon information furnished
to an Indemnified Party by or on behalf of the Company; or
(iv) arise out of or result from the material breach of any
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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;
except to the extent provided in Sections 7.4 and 7.5 hereof.
7.2 Indemnification By the Manager
The Manager agrees to indemnify and hold harmless the Fund, the
Distributor and the Company and its Separate Accounts, each of their
Trustees/Directors and officers, and each person, if any, who controls the
Distributor or Company within the meaning of Section 15 of the 1933 Act,
(collectively, the "Indemnified Parties" for purposes of this Section 7.2),
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor and or the Company) or
litigation expenses (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or litigation
expenses:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus of the Fund or sales literature of the Variable
Contracts or the Fund generated by the Manager or an affiliate thereof
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Manager or the Fund or the designee of either by or on behalf of
any Indemnified Party for use in the registration statement,
prospectus, or SAI for the Fund or in sales literature for the Fund or
the Variable Contracts or otherwise, for use in connection with the
sale of the Variable Contracts issued by the Company or Fund shares or
the acceptance of applications for the Variable Contracts; or
(ii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or SAI
for the Separate Account or sales literature for the Variable
Contracts, (or any
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amendment or supplement to any of the foregoing), or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information
furnished to the Indemnified Party by or on behalf of the Manager; or
(iii) arise out of or result from the material breach of any
representation and/or warranty made by the Manager in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Manager, including but not limited to, compliance with the
diversification requirements of Section 817(h) of the Code and
qualification of each Portfolio of the Fund as a Regulated Investment
Company under Subchapter M of the Code;
except to the extent provided in Section 7.4 and 7.5 hereof.
7.3 Indemnification By the Distributor
The Distributor agrees to indemnify and hold harmless the Fund, the
Manager and the Company and its Separate Accounts, each of their Trustees and
officers, and each person, if any, who controls the Fund, the Manager or Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Distributor) or litigation expenses (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or litigation expenses are related to the sale or acquisition of the Fund's
shares or the Variable Contracts or to the operation of the Fund, in any such
case:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Fund generated by
the Distributor (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon
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and in conformity with information furnished to the Distributor
directly or indirectly or its designee by or on behalf of any
Indemnified Party; for use in sales literature for the Fund or
otherwise in connection with the sale of Fund shares; or
(ii) arise out of as a result of any unauthorized use of any sales
materials related to the Fund by the Distributor, or wrongful conduct
of Distributor, or the affiliates, employees, or agents of Distributor
with respect to the sale or distribution of the Fund shares, including
but not limited to any verbal or written misrepresentations, or
unlawful sales practices.
except to the extent provided in Section 7.4 and 7.5 hereof.
7.4 No person required to provide indemnification under the terms of
Sections 7.1, 7.2, or 7.3 of this Agreement shall be liable under any such
section with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party under any such section would otherwise be
subject by reason of willful misfeasance, or bad faith on the part of such
Indemnified Party, or gross negligence (negligence if the Manager), in the
performance of his or her duties or by reason of his or her reckless disregard
of obligations or duties under this Agreement or to the Fund or the Separate
Account, as applicable.
7.5 No person required to provide indemnification under the terms of
Sections 7.1, 7.2 or 7.3 of this Agreement ("Indemnifying Party") shall be
liable under the terms of any such section with respect to any claim made
against an Indemnified Party under any such section unless such Indemnified
Party shall 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 shall have been served upon such Indemnified Party (or after
such Party shall have received notice of such service on any designated agent),
but failure to notify the Indemnifying Party of any such claim shall not relieve
the Indemnifying Party from any liability which it may have to the Indemnified
Party against
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whom such action is brought otherwise than on account of the above designated
indemnification provisions. In case any such action is brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate, at
its own expense, in the defense of such action. The Indemnifying Party also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Indemnified Party named in the action. After notice from the Company to such
Indemnified Party of the Indemnifying Party's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the 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.
7.6 Each party to this Agreement shall promptly notify the other
parties to the Agreement of the commencement of any litigation or proceedings
against it or any of its officers or Trustees or affiliated persons in
connection with the issuance or sale of the Fund shares, or the acceptance of
applications for the Variable Contracts or the operation of the Fund the
Variable Contracts, or the Separate Account.
ARTICLE VIII. - APPLICABLE LAW
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
8.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including but not limited to, any mixed funding exemptive order) and the terms
hereof shall be
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interpreted and construed in accordance therewith. The word "affiliate" or
"affiliated" shall have the meaning as defined in Section 2(a)(3) of the 1940
Act.
ARTICLE IX. - TERMINATION
9.1 This Agreement shall terminate:
(a) at the option of any party to this Agreement upon 90 days
advance written notice to the other parties, unless a shorter time is agreed to
by the parties to this Agreement; or
(b) at the option of the Company if shares of the Portfolios are
not reasonably available to meet the requirements of the Variable Contracts
issued by the Company, as determined by the Company, and upon written notice by
the Company to the other parties to this Agreement; or,
(c) at the option of the Fund, the Manager or the Distributor upon
institution of formal proceedings against the Company by the NASD, the SEC, or
any banking, state securities, insurance authorities or any other regulatory
body if the Fund, the Manager or the Distributor 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
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the Manager, or Distributor by the NASD, the SEC,
or any state securities or insurance department or any other regulatory body if
the Company shall determine, in its sole judgment exercised in good faith, that
the Fund, Manager or Distributor has suffered a material adverse change in its
business, operations, financial
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condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(e) upon requisite vote of the Variable Contract Owners having an
interest in the Separate Accounts (or any subaccounts thereof) to substitute the
shares of another investment company or portfolio thereof for the corresponding
shares of the Fund or a Portfolio in accordance with the terms of the Variable
Contracts for which those shares had been selected to serve as the underlying
investment media; or
(f) in the event any of the shares of a Portfolio 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 Variable Contracts issued or to be issued by the Company; or
(g) by any party to this Agreement upon a determination by a
majority of the Trustees of the Fund, or a majority of its disinterested
Trustees, that an irreconcilable material conflict exists; or
(h) at the option of the Company if the Fund or a Portfolio fails
to meet the diversification requirements specified in Section 3.2 or 3.3 hereof;
or
(i) at the option of the Fund or the Distributor if the Variable
Contracts issued by the Company cease to qualify as annuity contracts or life
insurance contracts, as applicable, under the Code or if the Variable Contracts
are not registered, issued or sold in accordance with applicable state and/or
federal law; or
(j) at the option of the Company upon any substitution of the
shares of another investment company or portfolio thereof for shares of the Fund
or a Portfolio of the Fund in accordance with the terms of the Contracts,
provided that the Company has
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given at least 30 days prior written notice to the Fund or Distributor of the
date of the substitution; or
(k) at the option of any party to this Agreement upon a material
breach of this Agreement or of any representation or warranty herein by any
other party to this Agreement.
9.2 Each party to this Agreement shall promptly notify the other
parties to the Agreement of the institution against such party of any such
formal proceedings as described in Sections 9.1(c) and (d) hereof. The Company
shall give 30 days prior written notice to the Fund of the date of any proposed
vote of Variable Contract Owners to replace the Fund's shares as described in
Section 9.1(e) hereof.
9.3 Under the terms of the Variable Contracts, the Company reserves the
right, subject to compliance with the law as then in effect, to make
substitutions for the securities that are held by a Separate Account of the
Company under certain circumstances. The parties acknowledge that the Company
has the right to substitute other securities for the shares of the Fund or a
Portfolio thereof already purchased or to be purchased in the future if the
shares of the Fund or any or all of the Portfolios of the Fund should no longer
be available for investment, or if, in the judgment of Company management,
further investment in shares of the Fund or any or all of the Portfolios thereof
should become inappropriate in view of the purposes of the Contracts. The
Company will provide 30 days written notice to the Fund or to the Distributor
prior to effecting any such substitution.
9.4 If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
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9.5 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund, the Manager, and Distributor (assuming the Manager and/or
the Distributor is still acting pursuant to an agreement with the Fund), shall
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
Variable Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, based upon instructions from the owners of the Existing
Contracts, the Separate Account shall be permitted to reallocate investments in
the Portfolios of the Fund and redeem investments in the Portfolios, and shall
be permitted to invest in the Portfolios in the event that owners of the
Existing Contracts make additional purchase payments under the Existing
Contracts. If this Agreement terminates, the parties agree that Article VII, and
Sections 3.9, 11.1, 11.3, 11.4, 11.5 and 11.6, and, to the extent that all or a
portion of the assets of the Separate Account continue to be invested in the
Fund or any Portfolios of the Fund, Article I, IV and V and Sections 3.1, 3.2,
3.3, 3.4, 3.5, 3.6, 3.8, 3.9, 3.10 and 3.11 will remain in effect after
termination.
ARTICLE X - NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund: Pacific Innovations Trust
c/o PFPC Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
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If to the Manager: Bank of America National Trust
and Saving Association
000 X. Xxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Att.: Xxxxxx X. Xxxxx
If to the Distributor: Provident Distributors, Inc.
Four Falls Corporate Center, 0xx Xxxxx
Xxxx Xxxxxxxxxxxx, XX 00000-0000
Att.: Xxxxxx Xxxxxxx
If to the Company: Pacific Mutual Life Insurance Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Att.: General Counsel
ARTICLE XI - MISCELLANEOUS
11.1 The Fund and the Company agree that if and to the extent Rule 6e-2
or 6e-3(T) under the 1940 Act is amended or if Rule 6e-3 is adopted in final
form or amended, to the extent applicable, the Fund and the Company shall each
take such steps as may be necessary to comply with such Rule as amended or
adopted in final form.
11.2 A copy of the Fund's Agreement and Declaration of Trust is on file
with the Secretary of the state of Delaware and notice is hereby given that the
Agreement has been executed on behalf of the Fund by a trustee of the Fund in
his or her capacity as Trustee and not individually. The obligations of this
Agreement shall only be binding upon the assets and property of the Fund and
shall not be binding upon any trustee, officer or shareholder of the Fund
individually.
11.3 Rights of Trustees and Shareholders. Nothing in this Agreement
shall impede the Fund's Trustees or shareholders of the shares of the Fund's
Portfolios from exercising any of the rights provided to such Trustees or
shareholders in the Fund's Declaration of Trust, as amended, a copy of which
will be provided to the Company upon request.
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11.4 It is understood that the name "Pacific Mutual Life Insurance
Company" or any derivative thereof or logo associated with that name is the
valuable property of the Company and that the Fund, Manager, or Distributor has
the right to use such name (or derivative or logo), with the prior consent of
the Company for use in required regulatory filings, such consent not to be
unreasonably withheld, only so long as this Agreement is in effect. Upon
termination of this Agreement the Fund, Manager or Distributor shall forthwith
cease to use such name (or derivative or logo).
11.5 It is understood that the name "Bank of America National Trust and
Savings Association" or any derivative thereof or logo associated with that name
is the valuable property of the Manager and its affiliates, and that the Company
and Distributor has the right to use such name (or derivative or logo), with the
prior consent of B of A for use in required regulatory filings, such consent not
to be unreasonably withheld, only so long as this Agreement is in effect. Upon
termination of this Agreement the Company and Distributor shall forthwith cease
to use such name (or derivative or logo).
11.6 It is understood that the name "Provident Distributors, Inc." or
any derivative thereof or logo associated with that name is the valuable
property of the Distributor and its affiliates, and that the Fund, Manager and
Company, has the right to use such name (or derivative or logo) only so long as
this Agreement is in effect. Upon termination of this Agreement the Fund,
Manager and Company shall forthwith cease to use such name (or derivative or
logo).
11.7 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.
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11.8 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.9 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.10 This Agreement may not be assigned by any party to this Agreement
except with the written consent of the other parties to this Agreement. For
purposes of this provision, assignment shall be as defined in the Investment
Company Act of 1940 and the rules thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PACIFIC INNOVATIONS TRUST
ATTEST: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxxxx
---------------------------- ---------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxx X. Xxxxxxxx
Title: Assistant Treasurer Title: Treasurer
BANK OF AMERICA
NATIONAL TRUST & SAVINGS
ASSOCIATION
ATTEST: /s/ Xxxxxxx X'Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------- ---------------------------------
Name: Xxxxxxx X'Xxxxx Name: Xxxxxx X. Xxxxx
Title: Vice President Title: Vice President
PROVIDENT DISTRIBUTORS, INC.
ATTEST: /s/ Xxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
---------------------------- ---------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title: Managing Director Title: Chief Executive Officer
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
ATTEST: /s/ Xxxx Xxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------- ---------------------------------
Name: Xxxx Xxxx Name: Xxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Chairman and CEO
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: Sr. Vice President and CFO
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EXHIBIT A
Separate Accounts
Separate Account B
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EXHIBIT B
Portfolios
Money Market Fund
Managed Bond Fund
Capital Income Fund
Mid-Cap Fund
Blue Chip Fund
Aggressive Growth Fund
International Fund
33
