AMENDMENT TO PARTICIPATION AGREEMENT
This AMENDMENT is made and entered into this 12th day of April 2011
by and between XXXXXXX XXXXX TRUST, a statutory trust formed under the laws
of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a New York limited
partnership (the "Distributor"), and Commonwealth Annuity and Life Insurance
Company, a Massachusetts life insurance company (the "Company"), on its own
behalf and on behalf of each separate account of the Company identified in
the Participation Agreement (as defined below).
WHEREAS, the Company, pursuant to a Participation Agreement (as defined
below), purchases shares of certain Funds of the Trust on behalf of its
separate Accounts to fund certain variable life insurance and/or variable
annuity contracts issued by the Company ("Contracts"); and
WHEREAS, the Distributor, the Trust, and the Company seek to enter into
this Amendment to make changes to the Participation Agreement in order to
update certain sections of the Participation Agreement and to permit the
Parties to deliver the Trust's Summary Prospectuses (as defined below)
pursuant to the requirements of Rule 498 ("Rule 498") under the Securities
Act of 1933, as amended (the "1933 Act").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, which consideration is full and complete, the Distributor, the
Trust, and the Company hereby agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
Unless otherwise noted, terms used in this Amendment shall have the same
meaning as in the Participation Agreement. For purposes of this Amendment:
1.1 "Applicable Law" -- the "federal securities laws" as defined in Rule
38a-1(e)(1) under the Investment Company Act of 1940 (the "1940 Act"), any
rules promulgated under the federal securities laws, FINRA regulations and
any Applicable SEC Guidance (as defined below). The term "Applicable Law"
also includes any state laws, rules and regulations that may apply to this
Amendment.
1.2 "Applicable SEC Guidance" - Any applicable: (a) SEC release,
opinion, or order, as well as any published no-action position, written
interpretative guidance by the SEC staff; and (b) FINRA interpretive
memoranda or notices to members, as well as any written interpretive guidance
from the FINRA staff. "Applicable SEC Guidance" does not include oral
statements, speeches or informal guidance by the SEC or its staff.
1.3 "FINRA" -- The Financial Industry Regulatory Authority, Inc. All
references to the NASD in the Participation Agreement are replaced with
references to FINRA.
1.4 "Fund Documents" -- those documents prepared by the Fund that,
pursuant to Rule 498(e)(1), must be publicly accessible, free of charge, at
the Web site address specified on the cover page or at the beginning of the
Summary Prospectus.
1.5 "Fund Documents Web Site" -- the Web site maintained by the Trust or
its agent where Contract Owners and prospective Contract Owners may access
the Fund Documents in compliance with Rule 498.
1.6 "Participation Agreement" -- the agreement entered into by and among
the Trust, Distributor, and Company on August 1, 2007 and any amendments
thereto.
1.7 "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Schedule 1 Contracts, each version of the Statutory
Prospectus or Summary Prospectus, or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of
this Agreement requiring a party to take action in accordance with a
Prospectus, such reference thereto shall be deemed to be to the version for
the applicable Series, Class or Contracts last so filed prior to the taking
of such action. For purposes of Article IX, the term "Prospectus" shall
include any statement of additional information incorporated therein.
1.8 "Statutory Prospectus" -- a prospectus that satisfies the
requirements of section 10(a) of the 0000 Xxx.
1.9 "Summary Prospectus" -- a prospectus described in paragraph (b) of
Rule 498.
1.10 "Trust" -- as used in this Amendment includes any affiliated and
unaffiliated parties that perform services on behalf of the Trust that are
required by this Amendment.
ARTICLE II
SALE OF TRUST SHARES
2.1 Confirmations required by Section 2.3(a) of the Participation
Agreement may be sent by electronic mail.
2.2 Section 2.3(d) of the Participation Agreement is replaced with the
following language: Any purchase or redemption request for Trust shares held
or to be held in the Company's general account, shall be effected at the net
asset value per share next determined after the Trust's actual receipt of
such request, provided that payment for Trust shares purchased is received by
the Trust in federal funds prior to the Trust's close of business, as defined
from time to time in the Prospectus for such Series or Class.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 COMPANY. In addition to the representations and warranties set
forth in Section 3.1 of the Participation Agreement, the Company represents
and warrants that: (a) it complies with the requirements of Rule 498 and
Applicable SEC Guidance thereunder in connection with
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the delivery of the Summary Prospectuses for the Funds; and (b) it maintains
reasonable policies and procedures to ensure that it can appropriately meet
its obligations under this Amendment.
3.2 TRUST. In addition to the representations and warranties set forth
in Section 3.2 of the Participation Agreement, the Trust represents and
warrants that: (a) it complies with the requirements of Rule 498 and
Applicable SEC Guidance regarding the Rule in connection with the offer and
sale of Fund Shares as specified in this Amendment, (b) it maintains policies
and procedures reasonably designed to ensure that the Fund Documents are
available on the Fund Documents Web Site and in the manner required by Rule
498(e)(1), (e)(2),and (e)(3) and Applicable SEC Guidance related thereto, and
(c) as provided by Rule 498(e)(4)(ii), it shall take prompt action to ensure
that the Fund Documents become available in the manner required by Rule
498(e)(1), (e)(2),and (e)(3) and Applicable SEC Guidance as soon as
practicable following the earlier of the time at which it knows or reasonably
should have known that the Fund Documents are not available in the required
manner.
3.3 DISTRIBUTOR. Section 3.3 of the Participation Agreement is replaced
with the following: The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing
under New York law; (ii) the Distributor is registered as a broker-dealer
under federal and applicable state securities laws and is a member in good
standing of FINRA; (iii) the Distributor is registered as an investment
adviser under federal securities laws; and (iv) it complies with the
requirements of Rule 498 and Applicable SEC Guidance in connection with the
offer and sale of Fund Shares as specified in this Amendment.
3.4 Section 3.5 of the Participation Agreement is deleted.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1 DELIVERY OF THE PROSPECTUSES BY THE COMPANY. The following Sections
4.3A through 4.3H are hereby added to the Participation Agreement:
4.3A DELIVERY OF THE PROSPECTUSES BY THE COMPANY. The Company shall
deliver (or arrange for delivery of) an appropriate Prospectus to each
prospective Contract Owner describing in all material respects the terms and
features of the Contract being offered. Except as provided below, the
Company shall also deliver (or arrange for delivery of) a Summary Prospectus
for each Fund that a prospective Contract Owner identifies on his or her
application as an intended investment option under a Contract or to which a
Contract Owner currently allocates premium payments or transfers Contract
value. In addition, the Company reserves the right to deliver the Statutory
Prospectus in place of the Summary Prospectus. The Company shall deliver (or
arrange for delivery of) such Summary or Statutory Prospectuses at the times
required by applicable provisions of the 1933 Act and 1940 Act, the rules or
regulations thereunder, and any Applicable SEC Guidance.
4.3B SPECIFIC REQUIREMENTS FOR SUMMARY PROSPECTUSES. The Company may
bind together the Summary Prospectuses or Statutory Prospectuses for the
Funds with Summary
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Prospectuses and Statutory Prospectuses for shares of other investment
companies available as investment options under the Contract and the
Prospectus(es) describing the Contract(s) provided that such binding is done
in compliance with Rule 498(c)(2) and any Applicable SEC Guidance. The
Company shall deliver all Summary Prospectuses and all Statutory Prospectuses
in compliance with the Greater Prominence requirements of Rule 498(f)(2) and
any Applicable SEC Guidance.
4.3C WEB SITE POSTING. The Trust shall maintain the Fund Documents Web
Site. The Company shall be permitted, but not required to post a copy of the
Trust's Statutory Prospectuses and/or Summary Prospectuses on the Company's
Web site. The Trust agrees to use commercially reasonable efforts to employ
procedures consistent with industry practices designed to reduce exposure to
viruses.
4.3D RESPONSE TO REQUESTS FOR ADDITIONAL FUND DOCUMENTS. Within three
(3) Business Days of receiving a request for a paper copy of a Fund Document,
the Trust shall promptly send the same to the person requesting it free of
charge. Within three (3) Business Days of receiving a request for an
electronic copy of a Fund Document, the Trust shall send, by e-mail to the
requestor, either a PDF copy of, or an electronic link to, the same free of
charge.
4.3E CESSATION OF USE OF SUMMARY PROSPECTUS. The Trust shall provide
the Company with at least sixty (60) days advance written notice of its
intent to cease using the Summary Prospectus delivery option so that the
Company can arrange to deliver a Statutory Prospectus in place of a Summary
Prospectus in compliance with Section 4.1 of this Amendment. In order to
comply with Rule 498(e)(1), the Trust shall continue to maintain the Fund
Documents Web Site in compliance with the requirements of this Amendment and
Rule 498 for a minimum of 90 days after the termination of any notice period.
4.3F VOTING OF TRUST SHARES. In addition to the requirements set forth
in Section 4.3 of the Participation Agreement, the Company shall vote Trust
shares held in its general account in the same proportion as it votes the
applicable Series or Class of Trust shares held by the Accounts for which it
has received timely instructions.
4.3G INTERPRETATION OF LAW. The Trust, the Distributor and their
affiliates are not responsible or liable for acts or omissions by the Company
or the Company's affiliates taken (or not taken) in reliance upon any
statements or representations made by the Trust, the Distributor or any of
their affiliates or their legal advisers to the Company or the Company's
affiliates concerning the applicability of any federal or state laws,
regulations or other authorities to the activities contemplated by this
Agreement.
The Company and its affiliates are not responsible or liable for acts or
omissions by the Trust, the Distributor and their affiliates taken (or not
taken) in reliance upon any statements or representations made by the Company
or it affiliates or their legal advisers to the Trust, the Distributor and
their affiliates concerning the applicability of any federal or state laws,
regulations or other authorities to the activities contemplated by this
Agreement.
4.3H COPIES OF FILINGS AND REGULATORY RESPONSES. In connection with
Sections 4.9 and 4.10 of the Participation Agreement, the Company shall
provide the Trust with prompt
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notice of a filing by the Company of an application for an order pursuant to
Section 26(c) of the 1940 Act involving a Fund and, upon request, shall
provide the Trust with a copy of such an application for exemption.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1 SALE OF CONTRACTS. The following sentence is added to Section 5.1
of the Participation Agreement: The Company shall deliver the documents
listed in this Section 5.1 and any Amendments thereto and as required by
Applicable Law, including Applicable SEC Guidance.
5.2 TRUST ADVERTISING MATERIAL. With respect to any piece of marketing,
advertising, sales literature or other promotional material required to be
furnished to the Trust or the Distributor pursuant to Section 5.5 of the
Participation Agreement, the Company shall furnish to the Trust or the
Distributor each such piece of advertising, sales literature or other
promotional material at least ten (10) days prior to its use.
ARTICLE VI
COMPLIANCE WITH CODE
There are no amendments to this Article.
ARTICLE VII
EXPENSES
7.1 TRUST EXPENSES. Provision and maintenance of the Fund Documents Web
Site shall be added to the list of the Trust's Expenses as set forth in
Section 7.2 of the Participation Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY. The following items are added to
Section 8.1 of the Participation Agreement:
(g) arise as a result of any material failure by the Company or persons
under its control (or subject to its authorization) to provide services or
furnish materials as required under the terms of this Amendment; or
(h) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Amendment.
8.2 INDEMNIFICATION BY THE TRUST. The following items are added to
Section 8.2 of the Participation Agreement:
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(f) arise as a result of any material failure by the Trust to provide
services or furnish materials as required under the terms of the Amendment; or
(g) arise out of any material breach by the Trust or persons under its
control (or subject to its authorization) of the Amendment.
8.3 INDEMNIFICATION BY THE DISTRIBUTOR. The following items are added
to Section 8.3 of the Participation Agreement:
(f) arise as a result of any material failure by the Distributor to
provide services or furnish materials as required under the terms of the
Amendment; or
(g) arise out of any material breach by the Distributor or persons under
its control (or subject to its authorization) of the Amendment.
ARTICLE IX
RELATIONSHIP OF THE PARTIES; TERMINATION
9.1. RELATIONSHIP OF PARTIES. Section9.1 of the Participation Agreement
is replaced with the following: The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates
for all purposes hereunder and will have no authority to act for or represent
any of them (except to the limited extent the Company acts as agent of the
Trust pursuant to Section 2.3(a) of this Agreement). The Company will not
act as an "underwriter" or "distributor" of Trust shares, as those terms
variously are used in the 1940 Act, the 1933 Act, and rules and regulations
thereunder. Likewise, the Company will not be a "transfer agent" of the
Trust as that term is used in the 1934 Act and rules thereunder. Consistent
with the foregoing, the Company will not be a "transfer agent" or
"administrator" to the Trust as those terms are referenced in Rule 38a-1
under the 1940 Act.
9.2 NON-EXCLUSIVITY AND NON-INTERFERENCE. Notices required to be
provided by the Company to the Distributor pursuant to Section .2(d) of the
Participation Agreement shall be given 90 days (rather than 60 days) in
advance of effecting any such substitution.
9.3 NON-EXCLUSIVITY AND NON-INTERFERENCE. The following is added to
Section 9.2 of the Participation Agreement:
(f) The Company will use its best efforts to provide the Distributor
with immediate notice if it becomes aware of any transactions in Account
units that would result in the Company making a redemption request for more
than $25 million.
9.4 TERM AND TERMINATION. This Amendment shall become effective as of
the date written above and shall remain in effect unless specifically
terminated as provided in this Section 9.4 This Amendment may be terminated
at any time, without the payment of any penalty, by mutual agreement of the
parties in writing. This Amendment will terminate automatically upon the
termination of the Participation Agreement.
9.5 CONFIDENTIALITY. Section 9.7 of the Participation Agreement is
replaced with the following: All "Confidential Information" (as defined in
this section) supplied by one party to
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another party in connection with the negotiation or carrying out of this
Agreement shall remain the property of the party providing such information
and shall be kept confidential by the receiving party or parties except: (a)
as may be required by law, (b) as authorized in writing by the party
providing the information, or (c) in the event that such information is
otherwise made public. Each party agrees to take all reasonable precautions
to prevent any unauthorized disclosure of Confidential Information.
Confidential Information means (individually or collectively) proprietary
information of the parties to this Agreement, including but not limited to,
their inventions, "know-how", trade secrets, business affairs, prospect
lists, product designs, product plans, business strategies, finances, fee
structures, etc. Without limiting the generality of the foregoing,
Confidential Information includes: (a) information that the disclosing party
designates in writing is confidential or proprietary, (b) any non-public
personal information or personally identifiable financial information about
any Contract Owner or prospective Contract Owner, and (c) information that a
reasonable business-person would assume to be confidential or proprietary.
ARTICLE X
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
There are no amendments to this Article.
ARTICLE XI
NOTICE, REQUEST OR CONSENT
The contact information for the Trust, Distributor, and Company is
replaced with the following:
If to the Trust:
Xxxxx X. XxXxxxxx
President
Xxxxxxx Sachs Variable Insurance Trust
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Distributor:
Xxxxx X. XxXxxxxx
Managing Director
Xxxxxxx, Sachs & Co.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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If to the Company:
Xxxxxxxx xxx Xxxxxx
President and CEO
Commonwealth Annuity and Life Insurance Company
000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
ARTICLE XII
MISCELLANEOUS
12.1 RULES OF CONSTRUCTION. To the extent the terms of this
Amendment conflict with the terms of the Participation Agreement, the terms
of this Amendment shall control.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed in its name and behalf by its duly authorized officer on the
date specified below.
XXXXXXX SACHS VARIABLE INSURANCE TRUST
(Trust)
Date: By:
----------- ------------------------------------
Name:
Title:
XXXXXXX, XXXXX & CO.
(Distributor)
Date: By:
----------- ------------------------------------
Name:
Title:
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
(Company)
Date: By:
----------- ------------------------------------
Name:
Title:
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