Exhibit 27(h)xiiia
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 20th day of May, 2002, by and between the
PBHG INSURANCE SERIES FUND ("FUND"), a Delaware business trust, PILGRIM XXXXXX &
ASSOCIATES, LTD. ("Adviser"), a Delaware corporation, and TRANSAMERICA LIFE
INSURANCE COMPANY ("LIFE COMPANY"), a life insurance company organized under the
laws of the State of Iowa.
WHEREAS, FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "`40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, FUND is organized as a series fund comprised of several
Portfolios ("Portfolios"), with those currently available being listed on
Appendix A hereto; and
WHEREAS, FUND was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, FUND may also offer its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, FUND has received an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the `40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Portfolios of the FUND to be sold to and held by Variable
Contract separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and Qualified Plans ("Exemptive Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having FUND as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, ADVISER is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended and acts as the FUND's
investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of FUND to fund the
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aforementioned Variable Contracts and FUND is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE
COMPANY, FUND, and ADVISER agree as follows:
Article I. SALE OF FUND SHARES
1.1 FUND agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed on Appendix B for investment
of purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in FUND's Registration Statement.
1.2 FUND agrees to sell to LIFE COMPANY those shares of the
selected Portfolios of FUND which LIFE COMPANY orders, executing such orders on
a daily basis at the net asset value next computed after receipt by FUND or its
designee of the order for the shares of FUND. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of FUND for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by FUND; provided that LIFE COMPANY receives the order by the earlier of
(i) 4:00 p.m. New York time or (ii) the close of trading on the floor of the New
York Stock Exchange and FUND receives notice from LIFE COMPANY by telephone or
facsimile (or by such other means as FUND and LIFE COMPANY may agree in writing)
of such order by 9:00 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which FUND calculates its net asset value pursuant to the
rules of the SEC.
1.3 FUND agrees to redeem on LIFE COMPANY's request, any full or
fractional shares of FUND held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by FUND or its
designee of the request for redemption, in accordance with the provisions of
this agreement and FUND's Registration Statement. For purposes of this Section
1.3, LIFE COMPANY shall be the designee of FUND for receipt of requests for
redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by FUND; provided that LIFE COMPANY receives the
request for redemption by the earlier of (i) 4:00 p.m. New York time or (ii) the
close of trading on the floor of the New York Stock Exchange and FUND receives
notice from LIFE COMPANY by telephone or facsimile (or by such other means as
FUND and LIFE COMPANY may agree in writing) of such request for redemption by
9:00 a.m. New York time on the next following Business Day.
1.4 FUND shall furnish, on or before the ex-dividend date, notice
to LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of FUND. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in
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additional shares of the Portfolio. FUND shall notify LIFE COMPANY or its
designee of the number of shares so issued as payment of such dividends and
distributions.
1.5 FUND shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:00 p.m. New York time,
but in no event later than 7:00 p.m. New York time. If FUND provides LIFE
COMPANY with materially incorrect share net asset value information through no
fault of LIFE COMPANY, LIFE COMPANY on behalf of the Separate Accounts, shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of net asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of FUND shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to FUND by LIFE COMPANY by 9:00 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the purchase of FUND shares,
LIFE COMPANY shall pay for such purchase by wiring federal funds to FUND or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, FUND shall use its best efforts
to wire the redemption proceeds to LIFE COMPANY by the close of the Business Day
on which the order is transmitted to the FUND or its designee, unless doing so
would require FUND to dispose of Portfolio securities or otherwise incur
additional costs. In any event, proceeds shall be wired to LIFE COMPANY within
three Business Days or such longer period permitted by the '40 Act or the rules,
orders or regulations thereunder and FUND shall notify the person designated in
writing by LIFE COMPANY as the recipient for such notice of such delay by 3:00
p.m. New York Time the same Business Day that LIFE COMPANY transmits the
redemption order to FUND.
1.8 FUND agrees that all shares of the Portfolios of FUND will be
sold only to Participating Insurance Companies which have agreed to participate
in FUND to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue Code
of 1986, as amended
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("Code") and Treasury Regulation 1.817-5. Shares of the Portfolios of FUND will
not be sold directly to the general public.
1.9 FUND may refuse to sell shares of any Portfolio to any person,
or suspend or terminate the offering of the shares of or liquidate any Portfolio
of FUND if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Directors of the FUND
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book
entry only. Stock certificates will not be issued to LIFE COMPANY or the
Separate Accounts. Shares ordered from Portfolio will be recorded in appropriate
book entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of Iowa
and that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that AFSG Securities Corporation,
the principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act").
2.2 LIFE COMPANY represents and warrants that it has registered
or, prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the `40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable
Contracts will be registered under the Securities Act of 1933 (the "`33 Act")
unless an exemption from registration is available prior to any issuance or sale
of the Variable Contracts and that the Variable Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and further that the sale of the Variable Contracts shall comply in
all material respects with applicable state insurance law suitability
requirements.
2.4 LIFE COMPANY represents and warrants that the Variable
Contracts are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of the
Code, that it will maintain such treatment and that it will notify FUND
immediately upon having a reasonable basis for believing that the Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
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2.5 FUND represents and warrants that the Fund shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and FUND shall be
registered under the `40 Act prior to and at the time of any issuance or sale of
such shares. FUND, subject to Section 1.9 above, shall amend its registration
statement under the `33 Act and the x00 Xxx from time to time as required in
order to effect the continuous offering of its shares. FUND shall register and
qualify its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by FUND.
2.6 FUND represents and warrants that each Portfolio will comply
with the diversification requirements set forth in Section 817(h) of the Code,
and the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance.
2.7 FUND represents and warrants that each Portfolio invested in
by the Separate Account intends to elect to be treated as a "regulated
investment company" under Subchapter M of the Code, and to qualify for such
treatment for each taxable year and will notify LIFE COMPANY immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
2.8. ADVISER represents and warrants that it is and will remain
duly registered and licensed in all material respects under all applicable
federal and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
2.9. FUND represents and warrants that all of its directors,
officers, employees, and other individuals/entities dealing with the money
and/or securities of FUND are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of FUND in an amount
not less than the minimum coverage as currently required by Rule 17g-1 of the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 FUND shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of FUND. FUND
shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the
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issuance and transfer of its shares. FUND, at its expense, shall provide LIFE
COMPANY with copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.2) in such quantity as the LIFE
COMPANY shall reasonably require for distributing to existing Variable Contract
owners whose Variable Contracts are funded by such shares.
3.2 At least annually, FUND or its designee shall provide LIFE
COMPANY, free of charge, with as many copies of the current prospectus for the
shares of the Portfolios and Statements of Additional Information as LIFE
COMPANY may reasonably request for distribution to existing Variable Contract
owners whose Variable Contracts are funded by such shares. FUND or its designee
shall provide LIFE COMPANY, at LIFE COMPANY's expense, with as many copies of
the current prospectus for the shares as LIFE COMPANY may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
LIFE COMPANY in lieu thereof, FUND or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set in
type or, at the request of LIFE COMPANY, as a diskette in the form sent to the
financial printer) and other assistance as is reasonably necessary in order for
the parties hereto once a year (or more frequently if the prospectus for the
shares is supplemented or amended) to have the prospectus for the Variable
Contracts and the prospectus for the FUND shares printed together in one
document. The expenses of such printing will be apportioned between (a) LIFE
COMPANY and (b) FUND in proportion to the number of pages of the Variable
Contract and FUND's prospectus, taking account of other relevant factors
affecting the expense of printing, such as covers, columns, graphs and charts;
FUND to bear the cost of printing the FUND's prospectus portion of such document
for distribution only to owners of existing Variable Contracts funded by the
FUND's shares and LIFE COMPANY to bear the expense of printing the portion of
such documents relating to the Separate Account; provided, however, LIFE COMPANY
shall bear all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Variable
Contracts not funded by the FUND's shares. In the event that LIFE COMPANY
requests that FUND or its designee provide FUND's prospectus in a "camera ready"
or diskette format, FUND shall be responsible for providing the prospectus in
the format in which it is accustomed to formatting prospectuses and shall bear
the expense of providing the prospectus in such format (e.g. typesetting
expenses), and LIFE COMPANY shall bear the expense of adjusting or changing the
format to conform with any of its prospectuses.
3.3 FUND will provide LIFE COMPANY with at least one complete copy
of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, exemptive applications and all amendments
or supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority.
LIFE COMPANY will provide FUND with at least one complete copy of all
prospectuses, statements of additional information,
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annual and semi-annual reports, proxy statements, exemptive applications and all
amendments or supplements to any of the above that relate to a Separate Account
promptly after the filing of each such document with the SEC or other regulatory
authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to
FUND and ADVISER, each piece of sales literature or other promotional material
in which FUND or ADVISER is named, at least fifteen (15) Business Days prior to
its intended use. No such material will be used if FUND or ADVISER objects to
its use in writing within ten (10) Business Days after receipt of such material.
4.2 FUND and ADVISER will furnish, or will cause to be furnished,
to LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 FUND and its affiliates and agents shall not give any
information or make any representations on behalf of LIFE COMPANY or concerning
LIFE COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or concerning FUND
other than the information or representations contained in a registration
statement or prospectus for FUND, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by FUND or its designee, except with the
written permission of FUND.
4.5 For purposes of this Agreement, the phrase "sales literature
or other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters,
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seminar texts, or reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of additional
information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under National Association of
Securities Dealers, Inc. ("NASD") rules, the `40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that FUND has obtained from the SEC an
order granting relief from various provisions of the '40 Act and the rules
thereunder to the extent necessary to permit FUND shares to be sold to and held
by Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires FUND and each Participating Insurance Company to comply with conditions
and undertakings substantially as provided in this Section 5. The Fund will not
enter into a participation agreement with any other Participating Insurance
Company unless it imposes the same conditions and undertakings as are imposed on
LIFE COMPANY hereby.
5.2 The Board will monitor FUND for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts investing in FUND. An irreconcilable material conflict may
arise for a variety of reasons, which may include: (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 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 FUND are being managed;
(e) a difference in voting instructions given by Variable Contract owners; (f) a
decision by a Participating Insurance Company to disregard the voting
instructions of Variable Contract owners and (g) if applicable, a decision by a
Qualified Plan to disregard the voting instructions of plan participants.
5.3 LIFE COMPANY will report any potential or existing conflicts
to the Board. LIFE COMPANY will be responsible for assisting the Board in
carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
The responsibility includes, but is not limited to, an obligation by the LIFE
COMPANY to inform the Board whenever it has determined to disregard Variable
Contract owner voting instructions. These responsibilities of LIFE COMPANY will
be carried out with a view only to the interests of the Variable Contract
owners.
5.4 If a majority of the Board or majority of its disinterested
Directors, determines that a material irreconcilable conflict exists affecting
LIFE COMPANY, LIFE
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COMPANY, at its expense and to the extent reasonably practicable (as determined
by a majority of the Board's disinterested Directors), will take any steps
necessary to remedy or eliminate the irreconcilable material conflict,
including; (a) withdrawing the assets allocable to some or all of the Separate
Accounts from FUND or any Portfolio thereof and reinvesting those assets in a
different investment medium, which may include another Portfolio of FUND, or
another investment company; (b) submitting the question as to 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 (i.e
variable annuity 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 Variable Contract owners the option of making such a
change; and (c) establishing a new registered management investment company (or
series thereof) or managed separate account. If a material irreconcilable
conflict arises because of LIFE COMPANY's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, LIFE COMPANY may be required, at the
election of FUND, to withdraw the Separate Account's investment in FUND, and no
charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take such remedial action shall be carried out with a view
only to the interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
FUND or ADVISER (or any other investment adviser of FUND) be required to
establish a new funding medium for any Variable Contract. Further, LIFE COMPANY
shall not be required by this Section 5.4 to establish a new funding medium for
any Variable Contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.
5.5 The Board's determination of the existence of an
irreconcilable material conflict and its implications shall be made known
promptly and in writing to LIFE COMPANY.
5.6 No less than annually, LIFE COMPANY shall submit to the Board
such reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 LIFE COMPANY, to the extent required by law, will provide
pass-through voting privileges to all Variable Contract owners so long as the
SEC continues to interpret the `40 Act as requiring pass-through voting
privileges for Variable Contract owners. Accordingly, LIFE COMPANY, where
applicable, will vote shares of the
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Portfolio held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. LIFE COMPANY
will be responsible for assuring that each of its Separate Accounts that
participates in FUND calculates voting privileges in a manner consistent with
other Participating Insurance Companies. LIFE COMPANY will vote shares for which
it has not received timely voting instructions, as well as shares it owns, in
the same proportion as its votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended,
or if Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the `40 Act or the rules thereunder with respect to mixed and shared funding on
terms and conditions materially different from any exemptions granted in the
Exemptive Order, then FUND, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule 6e-2
and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
Rules are applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to
indemnify and hold harmless FUND, ADVISER and each of their directors,
principals, officers, employees and agents and each person, if any, who controls
FUND or ADVISER within the meaning of Section 15 of the `33 Act (collectively,
the "Indemnified Parties" for purposes of this Article VII) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY, which consent shall not be unreasonably
withheld) or litigation (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
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of FUND's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Variable
Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not 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 LIFE COMPANY by or on
behalf of FUND for use in the registration statement or
prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Variable Contracts or FUND shares; or
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(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of FUND
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons under its control,
with respect to the sale or distribution of the Variable
Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of FUND or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to FUND by or on behalf
of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to
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assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from LIFE COMPANY to such party of LIFE COMPANY's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and LIFE COMPANY will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.4 Indemnification by ADVISER. ADVISER agrees to indemnify and
hold harmless LIFE COMPANY and each of its directors, officers, employees, and
agents and each person, if any, who controls LIFE COMPANY within the meaning of
Section 15 of the `33 Act (collectively, the "Indemnified Parties" for the
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
ADVISER which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of FUND's shares
or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
FUND (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
ADVISER or FUND by or on behalf of LIFE COMPANY for use in the
registration statement or prospectus for FUND or in sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Variable Contracts or
FUND shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by ADVISER or persons under
its control) or wrongful conduct of FUND or ADVISER or persons
under their control, with respect to the sale or distribution
of the Variable Contracts or FUND shares; or
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(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable
Contracts, or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
LIFE COMPANY for inclusion therein by or on behalf of ADVISER;
or
(d) arise as a result of (i) a failure by ADVISER to provide
substantially the services and furnish the materials under the
terms of this Agreement; or (ii) a failure by a Portfolio(s)
invested in by the Separate Account to comply with the
diversification requirements of Section 817(h) of the Code; or
(iii) a failure by a Portfolio(s) invested in by the Separate
Account to qualify as a "regulated investment company" under
Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by ADVISER in this
Agreement or arise out of or result from any other material
breach of this Agreement by ADVISER.
7.5 ADVISER shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
7.6 ADVISER shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified ADVISER in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify ADVISER of any such
claim shall not relieve ADVISER from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, ADVISER shall be entitled to participate at its own
expense in the defense of such action. ADVISER also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from ADVISER
13
to such party of ADVISER's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and ADVISER will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.7 Indemnification By FUND. FUND agrees to indemnify and hold
harmless the LIFE COMPANY, and each of its directors, officers, employees, and
agents and each person, if any, who controls the LIFE COMPANY within the meaning
of Section 15 of the '33 Act (collectively, the "Indemnified Parties" for
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
FUND which consent shall not be unreasonably withheld) or litigation (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 expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of FUND and:
(a) arise as a result of (i) a failure by FUND to provide
substantially the services and furnish the materials under the
terms of this Agreement; or (ii) a failure by a Portfolio(s)
invested in by the Separate Account to comply with the
diversification requirements of Section 817(h) of the Code; or
(iii) a failure by a Portfolio(s) invested in by the Separate
Account to qualify as a "regulated investment company" under
Subchapter M of the Code; or
(b) arise out of or result from any material breach of any
representation and/or warranty made by FUND in this Agreement
or arise out of or result from any other material breach of
this Agreement by FUND;
7.8 FUND shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.9 FUND shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FUND in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such
14
service on any designated agent), but failure to notify FUND of any such claim
shall not relieve FUND from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, FUND shall be entitled to participate at its own expense in
the defense of such action. FUND also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from FUND to such party of FUND's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FUND 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.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
8.2 This Agreement shall terminate in accordance with the
following provisions:
(a) At the option of LIFE COMPANY or FUND at any time
from the date hereof upon 60 days' notice, unless a
shorter time is agreed to by the parties;
(b) At the option of LIFE COMPANY, if FUND shares are not
reasonably available to meet the requirements of the
Variable Contracts as determined by LIFE COMPANY.
Prompt notice of election to terminate shall be
furnished by LIFE COMPANY, said termination to be
effective ten days after receipt of notice unless
FUND makes available a sufficient number of shares to
reasonably meet the requirements of the Variable
Contracts within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution
of formal proceedings against FUND by the SEC, the
NASD, or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which
would, in LIFE COMPANY's reasonable judgment,
materially impair FUND's ability to meet and perform
FUND's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by
LIFE COMPANY with said termination to be effective
upon receipt of notice;
(d) At the option of FUND, upon the institution of formal
proceedings
15
against LIFE COMPANY by the SEC, the NASD, or any
other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in FUND's
reasonable judgment, materially impair LIFE COMPANY's
ability to meet and perform its obligations and
duties hereunder. Prompt notice of election to
terminate shall be furnished by FUND with said
termination to be effective upon receipt of notice;
(e) In the event FUND's shares are not registered, issued
or sold in accordance with applicable state or
federal law, or such law precludes the use of such
shares as the underlying investment medium of
Variable Contracts issued or to be issued by LIFE
COMPANY. Termination shall be effective upon such
occurrence without notice;
(f) At the option of FUND if the Variable Contracts cease
to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code, or if FUND
reasonably believes that the Variable Contracts may
fail to so qualify. Termination shall be effective
upon receipt of notice by LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon FUND's breach of
any material provision of this Agreement, which
breach has not been cured to the satisfaction of LIFE
COMPANY within ten days after written notice of such
breach is delivered to FUND;
(h) At the option of FUND, upon LIFE COMPANY's breach of
any material provision of this Agreement, which
breach has not been cured to the satisfaction of FUND
within ten days after written notice of such breach
is delivered to LIFE COMPANY;
(i) At the option of FUND, if the Variable Contracts are
not registered, issued or sold in accordance with
applicable federal and/or state law. Termination
shall be effective immediately upon such occurrence
without notice;
(j) In the event this Agreement is assigned without the
prior written consent of LIFE COMPANY, FUND, and
ADVISER, termination shall be effective immediately
upon such occurrence without notice;
(k) At the option of the LIFE COMPANY by written notice
to the FUND and ADVISER with respect to any Portfolio
in the event that such Portfolio ceases to qualify as
a Regulated Investment Company under
16
Subchapter M of the Code or under any successor or
similar provision, or if the LIFE COMPANY reasonably
believes that the FUND may fail to so qualify.
Termination shall be effective upon such occurrence
without notice;
(l) At the option of the LIFE COMPANY by written notice
to the FUND and ADVISER with respect to any Portfolio
in the event that such Portfolio fails to meet the
diversification requirements specified in Section
2.6. Termination shall be effective upon such
occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, FUND at its option may elect to continue to make available
additional FUND shares, as provided below, for so long as FUND desires 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, if FUND
so elects to make additional FUND shares available, the owners of the Existing
Contracts or LIFE COMPANY, whichever shall have legal authority to do so, shall
be permitted to reallocate investments in FUND, redeem investments in FUND
and/or invest in FUND upon the payment of additional premiums under the Existing
Contracts. In the event of a termination of this Agreement pursuant to Section
8.2 hereof, FUND and ADVISER, as promptly as is practicable under the
circumstances, shall notify LIFE COMPANY whether FUND elects to continue to make
FUND shares available after such termination. If FUND shares continue to be made
available after such termination, the provisions of this Agreement shall remain
in effect and thereafter either FUND or LIFE COMPANY may terminate the
Agreement, as so continued pursuant to this Section 8.3, upon sixty (60) days
prior written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner
initiated transactions, or as required by state insurance laws or regulations,
LIFE COMPANY shall not redeem the shares attributable to the Variable Contracts
(as opposed to the shares attributable to LIFE COMPANY's assets held in the
Separate Accounts), and LIFE COMPANY shall not prevent Variable Contract owners
from allocating payments to a Portfolio that was otherwise available under the
Variable Contracts until thirty (30) days after the LIFE COMPANY shall have
notified FUND of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested 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 FUND:
PBHG Insurance Series Fund
17
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
With a copy to:
PBHG Insurance Series Fund
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxx X. Zerrr, Esq.
If to the ADVISER:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
With a copy to:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxx X. Zerrr, Esq.
If to LIFE COMPANY:
Transamerica Life Insurance Company
c/o Extraordinary Markets
0000 Xxxxxxxx Xxxx XX
Xxxxx Xxxxxx, XX 00000
Attention: Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
18
10.3 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Pennsylvania. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders of
the SEC granting exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Directors or officers of FUND or
any Portfolio shall be personally liable hereunder. No Portfolio shall be liable
for the liabilities of any other Portfolio. All persons dealing with FUND or a
Portfolio must look solely to the property of FUND or that Portfolio,
respectively, for enforcement of any claims against FUND or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with LIFE COMPANY so that it is as if each of the
Portfolios had signed a separate Agreement with LIFE COMPANY and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8 No provision of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
FUND, ADVISER and the LIFE COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
PBHG INSURANCE SERIES FUND
By:_____________________________
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Name: Xxx X. Xxxxxxxx
Title: Chief Financial Officer
PILGRIM XXXXXX & ASSOCIATES, LTD.
By:_____________________________
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
TRANSAMERICA LIFE INSURANCE COMPANY
By:______________________________
Name:
Title:
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APPENDIX A
PBHG Insurance Series Fund, Inc. - Portfolios
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
PBHG Technology & Communications Portfolio
PBHG Select 20 Portfolio
PBHG Select Value Portfolio*
PBHG Mid-Cap Value Portfolio
PBHG Small Cap Value Portfolio
PBHG Small Cap Growth Portfolio
* The name of this portfolio was changed on May 1, 2000, from PBHG Large Cap
Value Portfolio to PBHG Select Value Portfolio.
APPENDIX B
Separate Accounts Selected Portfolios
------------------------- ------------------------------------------
PFL Corporate Account One PBHG Large Cap Growth Portfolio
PBHG Growth II Portfolio
PBHG Technology & Communications Portfolio
PBHG Select 20 Portfolio
PBHG Select Value Portfolio*
PBHG Mid-Cap Value Portfolio
PBHG Small Cap Value Portfolio
PBHG Small Cap Growth Portfolio
