PARTICIPATION AGREEMENT
Among
EQ ADVISORS TRUST,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY,
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
EOUITABLE DISTRIBUTORS, INC.,
and
EQ FINANCIAL CONSULTANTS. INC.
THIS AGREEMENT, made and entered into as of the 18th day of October, 1999 by and
among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, a California stock life
insurance company ("Transamerica Occidental"), on its own behalf and on behalf
of Separate Account VL of Transamerica Occidental Life Insurance Company
("Account"), EQ ADVISORS TRUST, a business trust organized under the laws of the
State of Delaware ("Trust"), THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES, a New York stock life insurance corporation ("Manager"), and EQUITABLE
DISTRIBUTORS, INC., a Delaware corporation, and EQ FINANCIAL CONSULTANTS, INC.,
a Delaware corporation (collectively, "Distributors").
WHEREAS, the Trust engages in business as an open-end management investment
company and is available to act as the investment vehicle for the separate
accounts ("Separate Accounts") of both affiliated and unaffiliated life
insurance companies ("Participating Insurance Companies") in connection with the
sale of variable life insurance policies, variable annuity contracts and
certificates relating to such policies or contracts ("Variable Contracts") and
for tax qualified retirement plans ("Qualified Plans") each of whom has entered
into a participation agreement with the Trust and its Distributors; and
WHEREAS, the beneficial interests in the Trust are divided into series of shares
(each a "Portfolio"), each representing the interest in a particular managed
portfolio of securities and other assets, and each Portfolio is divided or may
be divided into one or more classes of shares, i.e., currently the Class IA
shares and the Class 113 shares, and such other classes of shares as may be
created in the future (the "Classes"); and
WHEREAS, one or more Portfolios or Classes thereof may be made available by the
Trust to serve as funding vehicles for Participating Insurance Companies and
their Separate Accounts funding Variable Contracts; and
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended ("1940 Act"), and shares of
its Portfolios are registered under the Securities Act of 1933, as amended
("1933 Act"); and
WHEREAS, the Securities and Exchange Commission ("SEC") has granted exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 1 5(b) of the 1940 Act
and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust and each of its Portfolios and Classes to be sold to
and held by Separate Accounts funding Variable Contracts of Participating
Insurance Companies and to Qualified Plans ("Shared Funding Exemptive Order");
and
WHEREAS, the Manager is the investment manager to the Trust and is duly
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940, as amended and is registered or exempt from registration under all
applicable state securities laws; and
WHEREAS, Transamerica Occidental has registered the Account as a unit investment
trust under the 1940 Act, and has registered interests in the Account under the
1933 Act; and
WHEREAS, in reliance on the relief provided in Great-West Life Insurance Company
(pub. avail. Oct. 23, 1990) ("Great-West"), Transamerica Occidental provides
certain information to owners of Variable Contracts issued by Transamerica
Occidental through the Account (the "Transamerica Occidental Contracts") about
their Transamerica Occidental Contracts, Transamerica Occidental, and the
Account's underlying fund in lieu of filing post-effective amendments to the
registration statements relating to the Transamerica Occidental Contracts or
delivering updated prospectuses to those owners of Transamerica Occidental
Contracts ("Contractowners"); and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of Transamerica
Occidental or through properly delegated authority, and divided into
subaccounts, to set aside and invest assets attributable to the Transamerica
Occidental Contracts; and
WHEREAS, each of the Distributors 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 standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
Transamerica Occidental intends to purchase Class IA shares in the Portfolios
listed on Schedule A hereto as amended from time to time (the "Designated
Portfolios") on behalf of the Account, in order to fund certain Transamerica
Occidental Contracts currently outstanding and each Distributor is authorized to
sell such shares to the Account at the net asset value applicable to such
Portfolios and Class IA thereof
NOW, THEREFORE, in consideration of their mutual promises, Transamerica
Occidental, the Trust, the Manager and each of the Distributors agree as
follows:
ARTICLE I. Sale of Trust Shares
1.1. Each of the Distributors agrees to sell to the Account those shares of the
Designated Portfolios and Class IA thereof for which it serves as the Trust's
principal underwriter and which the Account orders, executing such orders on a
daily basis at the net asset value per share next computed after receipt by the
Trust or its designee of the order for the shares of the Designated Portfolios
and Class IA thereof. For purposes of this Section 1.1, Transamerica Occidental
(but not the Account) shall be considered to be the designee of the Trust for
receipt of such purchase orders and, in this regard only, receipt by
Transamerica Occidental shall constitute receipt by the Trust for purposes of
calculating each Portfolio's net asset value per share, provided that: (i)
Transamerica Occidental shall use its best efforts to notify the Trust of such
purchase orders by no later than 8:00 a.m. Eastern time on the next Business
Day, as defined in this Section 1.1, following the receipt by Transamerica
Occidental of the purchase orders; and (ii) the purchase orders received by
Transamerica Occidental are in good order prior to the time the net asset value
of each Portfolio is calculated. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the SEC.
1.2. The Trust agrees to make its shares of the Designated Portfolios and Class
IA thereof available for purchase by the Account at the applicable net asset
value per share on those days on which the Trust calculates the net asset value
per share of the Designated Portfolios and Class IA thereof pursuant to rules of
the SEC. The Trust shall calculate the net asset value per share of the
Designated Portfolios and Class IA thereof on each day on which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Trust ("Board") may refuse to sell shares of any Designated
Portfolio or Class IA thereof to any person, or suspend or terminate the
offering of shares of any Portfolio or Class IA thereof, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio or Class IA thereof.
1.3. The Trust and each of the Distributors agree that shares of the Designated
Portfolios and Class IA thereof will be sold only to Participating Insurance
Companies and/or their separate accounts funding Variable Contracts or to other
persons or entities permitted under Section 817 of the Internal Revenue Code of
1986, as amended ("Code"), or regulations promulgated thereunder. No shares of
any Portfolio will be sold to the general public, except to the extent permitted
under the Code and regulations promulgated thereunder.
1.4. The Trust and each of the Distributors will not sell Trust shares to any
Participating Insurance Company or Separate Account funding Variable Contracts
unless a Participation Agreement containing provisions substantially the same as
Articles I, ifi, V, and VII and Section 2.5 of Article II of this Agreement is
in effect to govern such sales. The Trust and each of the Distributors will not
sell Trust shares in excess of 10% of the assets of the Trust to a Qualified
Plan unless a Participation Agreement containing provisions substantially the
same as Articles I, III, V and VII of this agreement are in effect to govern
such sales.
1.5. The Trust agrees to redeem for cash, at the request of the Account or
Transamerica Occidental or its designee, any full or fractional shares of the
Trust held by the Account or Transamerica Occidental. The Trust will execute
such requests on a daily basis at the net asset value per share of the
Designated Portfolios and Class IA thereof next computed after receipt by the
Trust or its designee of the request for redemption, without charge. For
purposes of this Section 1.5, Transamerica Occidental or its designee (but not
the Account) shall be considered the designee of the Trust for receipt of
requests for redemption, and, in this regard only, receipt of such requests by
Transamerica Occidental or its designee shall constitute receipt by the Trust
for purposes of calculating each Portfolio's net asset value per share, provided
that: (i) Transamerica Occidental shall use its best efforts to notify the Trust
of such redemption requests by no later than 8:00 a.m. Eastern time on the next
Business Day, as defined in Section 1.1, following the receipt by Transamerica
Occidental of the redemption requests; and (ii) such redemption requests
received by Transamerica Occidental are in good order prior to the time the net
asset value of each Portfolio is calculated.
1.6. Transamerica Occidental agrees that purchases and redemptions of shares of
the Designated Portfolios and Class IA thereof offered by a then-current
prospectus of the Trust shall be made in accordance with the provisions of such
prospectus.
1.7. Transamerica Occidental shall pay for shares of Designated Portfolios and
Class IA thereof that are purchased for the Account in accordance with Section
1.1 hereof by no later than 12:00 noon Eastern time on the same Business Day on
which notice of the purchase order for Trust shares is given to the Trust in
accordance with the provisions of Section 1.1 hereof. The Trust shall pay
redemption proceeds for shares that are redeemed in accordance with Section 1.5
hereof by no later than 12:00 noon Eastern time on the same Business Day on
which notice of the redemption request is given to the Trust in accordance with
the provisions of Section 1.5 hereof. Payment shall be in federal funds
transmitted by wire. For purposes of Section 2.10, upon receipt by the Trust of
the federal funds so wired, such funds shall cease to be the responsibility of
Transamerica Occidental and shall become the responsibility of the Trust; and
upon receipt by Transamerica Occidental of federal funds so wired such funds
shall cease to be the responsibility of the Trust and shall become the
responsibility of Transamerica Occidental.
1.8. Issuance and transfer of the shares of the Designated Portfolios thereof
will be by book entry only. Stock certificates will not be issued to
Transamerica Occidental or the Account. Shares ordered from the Trust will be
recorded in an appropriate title for the Account or the appropriate subaccount
of the Account.
1.9. The Trust shall furnish same day notice to Transamerica Occidental or its
designee (by wire or telephone, followed by written confirmation) of any income,
dividends or capital gain distributions payable on the shares of the Designated
Portfolios and Class IA thereof Transamerica Occidental and the Account hereby
elect to receive all such income, dividends and capital gain distributions as
are payable on the shares of the Designated Portfolios and Class IA thereof in
additional shares of the relevant Designated Portfolios and Class IA thereof
(Transamerica Occidental and the Account reserve the right to revoke this
election and to receive all such income, dividends and capital gain
distributions in cash.) The Trust shall provide notification by the end of the
next Business Day of the number of shares so issued as payment of such dividends
and distributions. The Trust shall provide advance notice to Transamerica
Occidental and the Account of any date on which the Trust reasonably expects to
make a dividend distribution; normally this notice will be given at least ten
(10) days in advance of the ex-dividend date.
1.10. The Trust shall make the net asset value per share for each Designated
Portfolio and Class IA thereof available to Transamerica Occidental and the
Account or their designee on each Business Day as soon as reasonably practicable
after the net asset value per share is calculated and shall use its best efforts
to make such net asset value per share available by 7:00 p.m. Eastern time each
Business Day. In the event that the Trust is unable to meet the 7:00 p.m. time
stated herein, it shall provide additional time for Transamerica Occidental to
place orders for the purchase and redemption of shares. Such additional time
shall be equal to the additional time which the Trust takes to make the net
asset value available to Transamerica Occidental. If the Trust provides
materially incorrect share net asset value information, the Trust shall make an
adjustment to the number of shares purchased or redeemed for the Account to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital gains
information shall be reported promptly upon discovery to Transamerica Occidental
or its designee.
1.11. The Trust shall furnish written confirmation to Transamerica Occidental or
its designee of the amount of shares traded and the associated cost per share
(NAV), total trade amount and the outstanding share balances held by the Account
or Transamerica Occidental's general account in each Designated Portfolio as of
the end of each Business Day. Such confirmation will be furnished by 1:00 p.m.
Eastern time on the next Business Day.
1.12. Each party to this Agreement shall have the right to rely on information
or confirmations provided by any other party and shall not be liable in the
event that an error results from incorrect information or confirmations supplied
by any other party.
ARTICLE II. Representations and Warranties
2.1. Transamerica Occidental represents and warrants that: (a) it is an
insurance company duly organized and in good standing under applicable law; (b)
it has legally and validly established the Account, prior to any issuance or
sale of interests therein, as a segregated asset account under applicable
insurance laws; (c) it has registered the Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Transamerica Occidental Contracts; and (d) it has
registered interests in the Account under the 1933 Act.
2.2. The Trust represents and warrants that Trust shares sold pursuant to this
Agreement shall be: (a) registered under the 1933 Act; and (b) duly authorized
for issuance; and (c) sold in compliance, in all material respects, with all
applicable federal securities laws. The Trust further represents and warrants
that it is and shall remain registered under the 1940 Act. The Trust shall amend
its registration statement under the 1933 Act and the 1940 Act (the
"Registration Statement") from time to time as required in order to effect the
continuous offering of shares of the Designated Portfolios and Class IA thereof.
This requirement shall not, however, in any manner limit the Trust's ability to
cease offering shares in one or more of the Designated Portfolios or Class IA
thereof provided such action complies with applicable laws and regulations.
2.3 Transamerica Occidental represents and warrants that it is in compliance, in
all material respects, with the terms and conditions of Great-West, and that it
will notify the Trust and the Distributor immediately upon having a reasonable
basis for believing that it or the Account has ceased to comply with the terms
and conditions of Great-West.
2.4. Subject to Article VI hereof; Transamerica Occidental represents that the
Transamerica Occidental Contracts are currently treated as life insurance
contracts under applicable provisions of the Code and that it will make every
effort to maintain such treatment and that it will notify the Trust and each of
the Distributors immediately upon having a reasonable basis for believing that
the Transamerica Occidental Contracts have ceased to be so treated or that they
might not be so treated in the future,
2.5. The Trust currently intends for one or more Classes, particularly Class TB,
to make payments to finance its distribution expenses pursuant to a Plan adopted
under Rule 12b-l under the 1940 Act, although it may determine to discontinue
such practice in the future. To the extent that any Class of the Trust finances
its distribution expenses pursuant to a Plan adopted under Rule 12b-l, the Trust
undertakes to have a Board, a majority of whose members are not interested
persons of the Trust or each of the Distributors (or the then-current principal
underwriters) or the Manager, and to otherwise comply with any then current SEC
and SEC staff interpretations concerning Rule 1 2b- I or any successor
provision.
2.6. The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states,
except that the Trust represents that the investment objectives, policies, fees
and expenses of each of the Designated Portfolios and Class IA thereof are and
shall at all times remain in compliance with the insurance laws of the State of
California, and the Trust and each of the Distributors severally represent that
their respective operations are and shall at all times remain in compliance, in
all material respects, with the insurance laws of the State of California to the
extent required to perform their respective obligations under this Agreement.
2.7. Each of the Distributors represents and warrants that: (a) it is a member
in good standing of the NASD; and (b) it is registered as a broker-dealer with
the SEC and all necessary states. Each Distributor further represents that it
will sell and distribute the Trust's shares in accordance with the laws of the
State of California and all applicable federal and state securities laws,
including without limitation the 1933 Act, the 1934 Act, the 1940 Act, and all
applicable Rules of the NASD.
2.8. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply, in all
material respects, with the 1940 Act.
2.9. The Manager represents that it is and shall remain duly registered under
all applicable state and federal securities laws and that it shall perform its
obligations for the Trust in compliance, in all material respects, with any and
all applicable federal and state securities laws.
2.10. The Trust and each of the Distributors severally represent and warrant
that all of their trustees, directors, officers, employees, investment managers
and investment advisers, and other individuals/entities dealing with the money
and/or securities of the Trust are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Trust in
an amount not less than the minimal coverage required by Rule 17g-1 under the
1940 Act or such related provisions as may be promulgated from time to time. The
aforesaid fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements Voting
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3.1. The Trust or the Distributors shall provide Transamerica Occidental with as
many printed copies of the Trust's current prospectus and Statement of
Additional Information and any supplements thereto for the Designated Portfolios
and Class IA thereof as Transamerica Occidental may reasonably request. In
addition, with respect to prospectuses, supplements and Statements of Additional
Information for the Designated Portfolios thereof provided by Transamerica
Occidental to existing Contractowners in order to update information provided to
existing Contractowners as required under the terms and conditions of
Great-West, the cost of preparing, printing, mailing and otherwise distributing
such prospectuses and Statements of Additional Information and any supplements
thereto to Transamerica Occidental for its distribution to existing
Contractowners shall be borne by the Trust. If requested by Transamerica
Occidental, in lieu of providing Transamerica Occidental with printed copies of
the Trust's prospectus and Statement of Additional Information and any
supplement thereto, the Trust shall provide Transamerica Occidental with a final
copy of the Trust's current prospectus or Statement of Additional Information or
supplement in a form suitable for duplication either in paper form (a camera
ready copy) or on diskette. The Trust and the Distributors shall also provide
such other assistance as is reasonably necessary in order for Transamerica
Occidental to have the Trust's prospectus and Statement of Additional
Information or supplement printed for distribution to existing Contractowners.
Transamerica Occidental agrees to provide the Trust or its designee with such
information as may be reasonably requested by the Trust to assure that the
Trust's expenses or the expenses of its Class IA shares do not include the cost
of printing, mailing and otherwise distributing any prospectuses, Statements of
Additional Information or supplements thereto for the Designated Portfolios
thereof other than those actually distributed to Transamerica Occidental for its
distribution to existing Contractowners.
3.2. The Trust's prospectus for the Designated Portfolios and Class IA
thereof shall state that the Statement of Additional Information for
the Designated Portfolios and Class IA thereof is available from the
Distributors or Transamerica Occidental (or in the Trust's discretion,
the prospectus shall state that such Statement of Additional
Information is available from the Trust).
3.3. The Trust, at its expense, shall provide Transamerica Occidental with
copies of its proxy statements, Annual and Semi-Annual Reports to
shareholders, and other communications to shareholders in such
quantities as Transamerica Occidental shall reasonably require for its
mailing or otherwise distributing such materials to existing
Contractowners and the Trust shall assume all expenses associated with
mailing or otherwise distributing those materials.
3.4. If and to the extent required by law, Transamerica Occidental shall:
(a) solicit voting instructions from Contractowners;
(b) vote the Trust shares for the Designated Portfolios and Class IA
thereof in accordance with instructions received from Contractowners;
and
(c) vote Trust shares for the Designated Portfolios and Class IA
thereof for which no instructions have been received in the Account in
the same proportion as Trust shares for the Designated Portfolios and
Class IA thereof for which instructions have been received so long as
and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for Contractowners. Transamerica
Occidental reserves the right to vote Trust shares held in the Account
in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of
their Separate Accounts participating in the Trust calculates voting
privileges in a manner consistent with the standards adopted by the
Board, which standards will be provided to all other Participating
Insurance Companies.
3.5. The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular the Trust will comply with Section 16(c) of
the 1940 Act as well as with Section 16(a) and, if and when applicable, Section
16(b). Further, the Trust will act in accordance with the SEC or SEC staff's
written interpretation concerning the requirements of Section 16(a) with respect
to periodic elections of Trustees and with whatever rules the SEC may promulgate
with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. Transamerica Occidental shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with its receipt of net premiums in connection with the Transamerica
Occidental Contracts other than the information or representations contained in
or accurately derived from the Registration Statement, prospectus or Statement
of Additional Information for the Trust, as such Registration Statement,
prospectus or Statement of Additional Information may be amended or supplemented
from time to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its designee,
except with the permission of the Trust or its designees. 4.2. The Trust or the
Distributors, or their respective designees, shall furnish, or shall cause to be
furnished, to Transamerica Occidental or its designees, the form of each piece
of sales literature or other promotional material in which Transamerica
Occidental is named prior to its use. No such material shall be used if
Transamerica Occidental or its designees reasonably object to its use after
receipt of such material.
4.3. The Trust and the Distributors shall not give any information or make any
representations on behalf of Transamerica Occidental or concerning Transamerica
Occidental, the Account, or the Transamerica Occidental Contracts other than the
information or representations contained in or accurately derived from published
reports for the Account which are in the public domain or approved by
Transamerica Occidental for distribution to Contractowners, except with the
permission of Transamerica Occidental.
4.4. The Trust shall provide to Transamerica Occidental at least one complete
copy of all Registration Statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Trust or its shares,
contemporaneously with the filing of such document with the SEC, the NASD, or
other regulatory authorities.
4.5. Transamerica Occidental shall provide to the Trust at least one complete
copy of all reports, solicitations for voting instructions, sales literature and
other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Transamerica
Occidental Contracts or the Account if such document also relates to the Trust,
contemporaneously with the filing of such document with the SEC, the NASD, or
other regulatory authorities.
4.6. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Trust or any affiliate of the Trust: advertisements (including
materials published or designed for use in a newspaper, magazine, or other
periodical, radio, television, telephone or tape or electronic recording,
videotape display, signs or billboards, motion pictures, electronic messages or
communications or other public media, including a publicly available internet
address or website), 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 or internet site or website), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy materials.
However, it is anticipated that materials provided solely: (a) internally to
Transamerica Occidental's or a Distributor's own employees or counsel; or (b) to
certain designated third parties and that are not designed to be provided or
communicated in any manner to the general public (e.g., training materials
provided to distributors or agents) will not be filed with the SEC, the NASD, or
any state securities or insurance regulatory authorities, although such
materials will be prepared in accordance with applicable laws.
ARTICLE V. Fees and Expenses
5.1. The Trust and each of the Distributors shall pay no fee or other
compensation to Transamerica Occidental under this Agreement except for items
covered in Article III. Nevertheless, a Distributor may make payments to
Transamerica Occidental or to any principal underwriter for the Transamerica
Occidental Contracts in amounts agreed to by that Distributor in any writing,
and such payments by that Distributor may be made out of existing fees otherwise
payable to that Distributor, past profits of that Distributor, or other
resources available to that Distributor.
5.2. All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. Without limiting the foregoing, the Trust shall see
to it that all shares are registered and authorized for issuance prior to their
sale in accordance with applicable federal law, and shall bear all expenses with
respect to: registration and qualification of the Trust's shares; preparation
and filing of the Trust's Registration Statement, prospectus, Statement of
Additional Information, proxy materials, and reports; setting the prospectus and
Statement of Additional Information in type; setting in type, printing, mailing
or otherwise distributing prospectuses, proxy materials and Semi-Annual and
Annual Reports sent by Transamerica Occidental to Contractowners (including the
costs of setting in type, printing, mailing or otherwise distributing a
prospectus that constitutes an Annual Report); the preparation of all statements
and notices required by any federal or state law; and all taxes on the issuance
or transfer of the Trust's shares.
ARTICLE VI. Diversification
6.1. The Trust and the Manager represent that: (a) the Trust currently has
elected to qualify as a regulated investment company under Subchapter M of the
Code; (b) the Trust will maintain such qualification (under Subchapter M or any
successor or similar provision); (c) the Trust or the Manager will notify
Transamerica Occidental immediately upon having a reasonable basis for believing
that the Trust has ceased to so qualify or that it might not so qualify in the
future; and (d) the Trust and the Manager will seek to minimize any damages and
to rectify the Trust's failure to so qualify promptly. The Trust and the Manager
acknowledge that any failure by the Trust to qualify as a regulated investment
company will eliminate the ability of the Account to avail itself of the "look
through" provisions of Section 817(h) of the Code and that, as a result, the
Transamerica Occidental Contracts will almost certainly fail to qualify as life
insurance contracts under Section 8 17(h) of the Code.
6.2. The Trust and the Manager further represent that the Trust will at all
times invest money from the Account in such a manner as to assure that the
Transamerica Occidental Contracts will be treated as variable life insurance
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Trust and the Manager represent that the Trust
will at all times comply with Section 8 17(h) of the Code and Treasury
Regulation 1.8 17-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and any amendments or other
modifications to such Section or Regulations. In the event of a breach of this
Article VI by the Trust, the Trust and the Manager warrant that they will take
all reasonable steps: (a) to immediately notify Transamerica Occidental of such
breach; and (b) to adequately diversify the Trust's assets so as to achieve
compliance within the grace period afforded by Regulation 1.8 17-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contractowners of all
variable annuity and variable life insurance separate accounts and Qualified
Plan participants investing in the Trust. A material irreconcilable 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 interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Designated Portfolio are being managed; (e) a difference in voting
instructions given by owners of Variable Contracts; or (f) a decision by an
insurer to disregard the voting instructions of owners of Variable Contracts.
The Board shall promptly inform Transamerica Occidental if it determines that a
material irreconcilable conflict exists and the implications thereof
7.2. Transamerica Occidental will report any potential or existing conflicts of
which it is aware to the Board. Transamerica Occidental will assist the Board in
carrying out its responsibilities under any Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by Transamerica Occidental to inform the Board whenever the voting instructions
of owners of Variable Contracts are disregarded. Upon the written request of the
Trust, Transamerica Occidental will also provide to the Board, not less
frequently than annually, a written certification in a format to be determined
by mutual agreement of the Trust and Transamerica Occidental, as to its best
knowledge of any events that may result in a material irreconcilable conflict.
Transamerica Occidental's responsibilities under this Section 7.2 will be
carried out with a view only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists,
Transamerica Occidental and other Participating Insurance Companies and
Qualified Plans shall, at their expense and to the extent reasonably practicable
(as determined by a majority of the disinterested Trustees), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, up to
and including: (a) withdrawing the assets allocable to some or all of the
variable annuity and variable life insurance separate accounts from the Trust or
any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected owners of Variable Contracts and, as appropriate, withdrawing the
assets of any appropriate group (i.e., owners of variable annuity contracts or
owners of variable life insurance contracts of one or more Participating
Insurance Companies) that votes in favor of such withdrawal, or offering to the
affected owners of Variable Contracts the option of making such a change; and
(b) establishing a new registered management investment company or managed
separate account. Transamerica Occidental's responsibilities under this Section
7.3 will be carried out with a view only to the interests of Contractowners.
7.4. If a material irreconcilable conflict ever were to arise because of a
decision by Transamerica Occidental to disregard Contractowner voting
instructions and that decision represents a minority position or would preclude
a majority vote, Transamerica Occidental may be required, at the Trust's
election, to withdraw the affected Account's (or subaccount's) investment in the
Trust and terminate this Agreement with respect to such Account (or subaccount);
provided however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. No charge or penalty
shall be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented and, until the end of that six
(6) month period, the Distributors and Trust shall continue to accept and
implement orders by Transamerica Occidental for the purchase (and redemption) of
shares of the Trust.
7.5. If a material irreconcilable conflict were ever to arise because a
particular state insurance regulator's decision applicable to Transamerica
Occidental conflicts with the majority of other state regulators, then
Transamerica Occidental shall withdraw the affected Account's (or subaccount's)
investment in the Trust and terminate this Agreement with respect to such
Account (or subaccount) within six (6) months after the Board informs
Transamerica Occidental in writing that it has determined that such decision has
created a material irreconcilable conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six (6) month
period, the Distributors and Trust shall continue to accept and implement orders
by Transamerica Occidental for the purchase (and redemption) of shares of the
Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the Trust be required to establish a new funding medium for the
Transamerica Occidental Contracts. Transamerica Occidental shall not be required
by Section 7.3 to establish a new funding medium for the Transamerica Occidental
Contracts if an offer to do so has been declined by vote of a majority of
Contractowners materially adversely affected by the material irreconcilable
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any material irreconcilable conflict, then Transamerica
Occidental will withdraw the Account's (or subaccount's) investment in the Trust
and terminate this Agreement within six (6) months after the Board informs
Transamerica Occidental in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then: (a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e.3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; (b) Sections 3.4, 3 5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted; and (c) this Agreement shall be otherwise amended by the
Trust, without the need for any consent of the other parties, as required by
such change in law.
ARTICLE VIII. Indemnification
8.1. Indemnification By Transamerica Occidental
8.1(a). Transamerica Occidental agrees to indemnify and hold harmless the Trust,
each member of the Board of the Trust, each of the Distributors, and the
directors and officers and each person, if any, who controls any such person
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including, without limitation thereto, amounts paid in
settlement with the written consent of Transamerica Occidental), investigation
of claims or litigation (including, without limitation thereto, 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 the Trust's shares or the Transamerica
Occidental Contracts or interests in the Account and:
(i) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or Statement of Additional Information, or sales
literature of the Trust not supplied by Transamerica Occidental or
persons under its control) or wrongful conduct of Transamerica
Occidental or persons under its control, with respect to the sale or
distribution of Trust shares; or
(ii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
Statement of Additional Information, or sales literature of the Trust
or any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon written
information furnished to the Trust by or on behalf of Transamerica
Occidental; or
(iii) arise as a result of any failure by Transamerica Occidental to
provide the services and furnish the materials required to be provided
or furnished by it under the terms of this Agreement; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by Transamerica Occidental in this
Agreement or arise out of or result from any other material breach of
this Agreement by Transamerica Occidental;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). Transamerica Occidental 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 or to the Trust, whichever is applicable.
8.1(c). Transamerica Occidental 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 Transamerica Occidental 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 Transamerica
Occidental of any such claim shall not relieve Transamerica Occidental 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, Transamerica Occidental
shall be entitled to participate, at its own expense, in the defense of such
action. Transamerica Occidental also shall be entitled to assume the defense
thereof; with counsel reasonably satisfactory to the party named in the action
and to settle the claim at its own expense provided that, unless the Indemnified
Parties' written consent is obtained, (1) no such settlement shall include any
factual stipulations referring to the Indemnified Parties or their conduct and
(2) any such settlement must involve a complete and unconditional release of all
claims against such Indemnified Parties. After notice from Transamerica
Occidental to such party of Transamerica Occidental's election to assume the
defense thereof; the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Transamerica Occidental 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.
8.1(d). The Indemnified Parties shall promptly notify Transamerica Occidental of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Trust's shares or the operation of the Trust.
8.2. Indemnification by the Distributors
8.2(a). Each of the Distributors agrees to indemnify and hold harmless
Transamerica Occidental, and the Trust and each of their directors and officers
and each person, if any, who controls Transamerica Occidental within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including, without limitation thereto, amounts paid in settlement
with the written consent of the Distributors), investigation of claims or
litigation (including, without limitation thereto, 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 the Trust's shares or the Transamerica Occidental
Contracts or interests in the Account and
(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 or Statement of Additional Information, or sales
literature of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the 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
written information furnished to the Distributors or Trust by or on
behalf of Transamerica Occidental for use in the Registration
Statement, prospectus, or Statement of Additional Information for the
Trust, or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Transamerica
Occidental Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus, Statement of Additional Information or sales
literature for the Transamerica Occidental Contracts not supplied by
the Trust, the Distributors or persons under their control) or wrongful
conduct of the Trust or the Distributors or persons under their
control, with respect to the sale or distribution of the Trust shares;
or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any above written communication prepared
by the Trust or its Distributors, which are not otherwise covered by
subsections (i) and (ii), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
in writing to Transamerica Occidental by or on behalf of the Trust or
the Distributors; or
(iv) arise as a result of any failure by the Distributors or the Trust
to provide the services and furnish the materials required to be
provided or furnished by the Distributors or the Trust under the terms
of this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification or other
qualification requirements specified in Article VI of this Agreement);
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Distributors in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Distributors;
as limited by and in accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof
8.2(b). Each of the Distributors shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation to which an Indemnified Party would otherwise be subject by reason of
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 or to Transamerica Occidental or the Account, whichever is applicable.
8.2(c). Each of the Distributors 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 each of the Distributors 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 the Distributors of
any such claim shall not relieve the Distributors from any liability which
either of them or both 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, each
Distributor will be entitled to participate, at its own expense, in the defense
thereof. Each Distributor also shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the party named in the action, and to
settle the claim at its own expense provided that, unless the Indemnified
Parties' written consent is obtained, (1) no such settlement shall include any
factual stipulations referring to the Indemnified Parties or their conduct and
(2) any such settlement must involve a complete and unconditional release of all
claims against such Indemnified Parties. After notice from a Distributor to such
party of that Distributor's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and that Distributor 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.
8,2(d). Transamerica Occidental agrees promptly to notify each of the
Distributors of the commencement of any material litigation or proceedings
against it or any of its officers or directors in connection with the issuance
or sale of the Transamerica Occidental Contracts or the operation of the
Account.
8.3. Indemnification by the Manager
8.3(a). The Manager agrees to indemnify and hold harmless Transamerica
Occidental, and the Trust and each of their directors and officers and each
person, if any, who controls Transamerica Occidental within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.3) against any and all losses, claims, damages, liabilities
(including, without limitation thereto, amounts paid in settlement with the
written consent of the Distributors), investigation of claims or litigation
(including, without limitation thereto, 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 the Trust's shares or the Transamerica Occidental Contracts or
interests in the Account and:
(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 or Statement of Additional Information, or sales
literature of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the 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
written information furnished to the Manager or Trust by or on behalf
of Transamerica Occidental for use in the Registration Statement,
prospectus, or Statement of Additional Information for the Trust, or in
sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Transamerica Occidental Contracts or
Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus, Statement of Additional Information or sales
literature for the Transamerica Occidental Contracts not supplied by
the Trust, the Manager or persons under their control) or wrongful
conduct of the Trust or the Manager or persons under their control,
with respect to the sale or distribution of the Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any above written communication prepared
by the Trust or the Manager, which are not otherwise covered by
subsections (i) and (ii), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
in writing to Transamerica Occidental by or on behalf of the Trust or
the Manager; or
(iv) arise as a result of any failure by the Manager or the Trust to
provide the services and furnish the materials required to be provided
or furnished by the Manager or the Trust under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification or other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any 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 or the Trust;
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3(c) hereof.
8.3(b). The Manager shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities, or litigation to which
an Indemnified Party would otherwise be subject by reason of 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 or to
Transamerica Occidental or the Account, whichever is applicable.
8.3(c). The Manager 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 the Manager 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 the Manager of any such claim shall not
relieve the Manager 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, the Manager will be entitled to participate, at its own
expense, in the defense thereof The Manager also shall be entitled to assume the
defense thereof with counsel reasonably satisfactory to the party named in the
action, and to settle the claim at its own expense provided that, unless the
Indemnified Parties' written consent is obtained, (1) no such settlement shall
include any factual stipulations referring to the Indemnified Parties or their
conduct and (2) any such settlement must involve a complete and unconditional
release of all claims against such Indemnified Parties. After notice from the
Manager to such party of the Manager'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 Manager 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.
8.3(d). Transamerica Occidental agrees promptly to notify the Manager of the
commencement of any material litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Transamerica Occidental Contracts or the operation of the Account.
8.4. Indemnification By the Trust
8.4(a). The Trust agrees to indemnify and hold harmless Transamerica Occidental
and each of its directors and officers and each person, if any, who controls
Transamerica Occidental within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.4)
against any and all losses, claims, damages, liabilities (including, without
limitation thereto, amounts paid in settlement with the written consent of the
Trust), investigation of claims or litigation (inc1uding, without limitation
thereto, legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the operations of the Trust and:
(i) arise as a result of any failure by the Trust to provide the
services and furnish the materials required to be provided or furnished
by it under the terms of this Agreement (including a failure to comply
with the diversification and other qualification requirements specified
in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust;
as limited by and in accordance with the provisions of Sections 8.4(b)
and 8.4(c) hereof.
8.4(b). The Trust 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 or to
Transamerica Occidental, the Trust, the Distributors, or the Account, whichever
is applicable.
8.4(c). The Trust 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 the Trust 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 the Trust of any such claim shall not relieve the
Trust 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,
the Trust will be entitled to participate, at its own expense, in the defense
thereof The Trust also shall be entitled to assume the defense thereof; with
counsel reasonably satisfactory to the party named in the action. After notice
from the Trust to such party of the Trust'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 Trust 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.
8.4(d). Transamerica Occidental, the Manager and each of the Distributors agree
promptly to notify the Trust of the commencement of any material litigation or
proceedings against it or any of its respective officers or directors in
connection with this Agreement, with respect to the operation of the Account, or
the sale or acquisition of shares of the Trust.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York, except to the
extent that California insurance law may otherwise require.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules, and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in fill force and effect until the first to
occur of:
(a) termination by any party, with or without cause, upon six (6)
months' advance written notice delivered to the other parties;
provided, that the Trust, the Manager and the Distributors shall not
give such notice of termination without cause earlier than one year
following the date of this Agreement; or
(b) termination by Transamerica Occidental upon thirty (30) days
written notice to the Trust, the Manager and each of the Distributors
with respect to any Designated Portfolio and Class IA based upon
Transamerica Occidental's determination that Class IA shares of such
Designated Portfolio are not reasonably available to meet the
requirements of the Transamerica Occidental Contracts or are not
consistent with Transamerica Occidental's obligations to
Contractowners; or
(c) termination by Transamerica Occidental upon thirty (30) days
written notice to the Trust, the Manager and each of the Distributors
with respect to any Designated Portfolio in the event any of the
Designated Portfolio's shares are not registered, issued or sold in
accordance with applicable federal and/or state law or such law
precludes the use of such shares as the underlying investment media of
the Transamerica Occidental Contracts issued or to be issued by
Transamerica Occidental; or
(d) termination by Transamerica Occidental by written notice to the
Trust, the Manager and each of the Distributors with respect to any
Designated Portfolio thereof in the event that such Designated
Portfolio thereof ceases to qualify as a regulated investment company
under Subchapter M of the Code or any other failure under Section 817
of the Code, or under any successor or similar provision of either, or
if Transamerica Occidental reasonably believes that the Trust may fail
to so qualify; or
(e) termination by any of the Trust, the Manager or the Distributors by
written notice to Transamerica Occidental, if the Trust, the Manager or
the Distributors shall determine, in their sole judgment, exercised in
good faith, that Transamerica Occidental and/or its affiliated
companies have suffered a material adverse change in their business,
operations, financial condition, or prospects since the date of this
Agreement or are the subject of material adverse publicity; but no
termination shall be effective under this subsection (e) until
Transamerica Occidental has been afforded a reasonable opportunity to
respond to a statement by the Trust or the Distributors concerning the
reason for notice of termination hereunder; or
(f) termination by Transamerica Occidental by written notice to the
Trust and each of the Distributors, if Transamerica Occidental shall
determine, in its sole judgment exercised in good faith, that any of
the Trust, the Manager or the Distributors have suffered a material
adverse change in its or their business, operations, financial
condition, or prospects since the date of this Agreement or is the
subject of material adverse publicity; but no termination shall be
effective under this subsection (f) until the Trust, the Manager or the
Distributors have been afforded a reasonable opportunity to respond to
a statement by Transamerica Occidental concerning the reason for notice
of termination hereunder; or
(g) termination by Transamerica Occidental upon receipt of any
necessary regulatory authority approvals and/or the vote of the
Contractowners having an interest in the Account (or any subaccounts)
to substitute the shares of another investment company for the
corresponding shares of a Designated Portfolio in accordance with the
terms of the Transamerica Occidental Contracts for which those
Designated Portfolio shares had been selected to serve as the
underlying investment media. Transamerica Occidental shall give thirty
(30) days' prior written notice to the Trust, the Manager and the
Distributors of the date of any proposed vote or other action taken to
replace the Designated Portfolio shares.
10.2 Notwithstanding any termination of this Agreement, the Trust, the Manager
and the Distributors shall, at the option of Transamerica Occidental, continue
to make available additional shares of the Trust pursuant to the terms and
conditions of this Agreement, for all Transamerica Occidental Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Transamerica Occidental Contracts"). Specifically,
without limitation, the owners of the Existing Transamerica Occidental Contracts
shall be permitted to reallocate investments in the Trust, redeem investments in
the Trust, and/or invest in the Trust upon the making of additional purchase
payments under the Existing Transamerica Occidental Contracts. The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
10.3. Transamerica Occidental shall not redeem Trust shares attributable to the
Transamerica Occidental Contracts (as opposed to Trust shares attributable to
Transamerica Occidental's assets held in the Account) except: (a) as necessary
to implement Contractowner initiated or approved transactions; or (b) as
required by federal and/or state laws or regulations or judicial or other legal
precedent of general application (hereinafter referred to as a "Legally Required
Redemption"); or (c) as permitted pursuant to contractowner vote or Section
26(b) of the 1940 Act or otherwise pursuant to an order of the SEC that permits
Transamerica Occidental to redeem Trust shares attributable to Transamerica
Occidental Contracts. Upon request, Transamerica Occidental shall promptly
furnish to the Trust, the Manager and the Distributors the opinion of counsel
for Transamerica Occidental (which counsel shall be reasonably satisfactory to
the Trust, the Manager and the Distributors) to the effect that any redemption
pursuant to clause (b) above is a Legally Required Redemption or any redemption
pursuant to clause (b) is permitted without first obtaining an order of the SEC
pursuant to Section 26(b) or any other provision of the 1940Act. Futhermore,
except in cases where permitted under the terms of the Transamerica Occidental
Contracts, and as may be in the best interests of Contractowners, as determined
by Transamerica Occidental, Transamerica Occidental shall not prevent
Contractowners from allocating payments to a Designated Portfolio that was
otherwise available under the Transamerica Occidental Contracts without first
giving the Trust, the Manager or the Distributors ninety (90) days' notice of
its intention to do so.
10.4. Notwithstanding any termination of this Agreement for any reason, the
terms and conditions of the following provisions of this Agreement shall remain
in effect with respect to any Existing Transamerica Occidental Contract, for so
long as any assets invested in the Trust are attributable to such Existing
Transamerica Occidental Contract: Sections 1.3 to 1.10 of Article I (governing
the pricing and redemption of shares); Article II (Representations and
Warranties); Sections 3.1 through 3.3 and 3.5 of Article III (Prospectuses and
Proxy Statements, and Voting); Articles IV through IX (Sales Material and
Information; Fees and Expenses; Diversification; Potential Conflicts;
Indemnification; and Applicable Law); Article XI (Notices); and Sections 12.1,
12.2, and 12.5 through 12.8 of Article XII (Miscellaneous). Further,
notwithstanding any termination of this Agreement for any reason, the terms and
conditions of the following provisions of this Agreement shall remain in effect
with regard to Transamerica Occidental Contracts whose assets were previously
invested in the Trust: Article II (Representations and Warranties), Article VI
(Diversification) and Article VII (Indemnification).
10.5. If for any reason the shares of any Designated Portfolio are no longer to
be made available, then, at the request of Transamerica Occidental, the Trust,
the Manager and the Distributors shall cooperate with Transamerica Occidental so
that the provisions of Section 26(b) of the 1940 Act will be complied with as
soon as reasonably practicable and substitution of an underlying funding medium
accomplished without disruption of sales of securities to the Account or a
division thereof, as the case may be, in connection with the Transamerica
Occidental Contracts.
ARTICLE XI. 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 Trust:
EQ Advisors Trust
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
If to Transamerica Occidental:
Transamerica Occidental Life Insurance Company
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
If to the Manager:
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
If to the Distributors:
Equitable Distributors, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
EQ Financial Consultants, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Trust must look solely to the property of the
Trust for the enforcement of any claims against the Trust as neither the Board
(or its members), officers, agents, or shareholders shall assume any personal
liability for obligations entered into on behalf of the Trust.
12.2. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
Contractowners and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement,
shall not disclose, disseminate, or utilize such names and addresses and other
confidential information until such time as it may come into the public domain
without the express written consent of the affected party. Without limiting the
foregoing, no party hereto shall disclose any information that such party has
been advised is proprietary, except such information that such party is required
to disclose by any appropriate governmental authority (including without
limitation the SEC, the NASD, and state securities or insurance regulators).
12.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5. 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.
12.6. Each party hereto 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.
12.7, The rights, remedies, and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, to which the parties hereto are entitled under federal and
state laws.
12.8. This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that:
(a) each Distributor may assign this Agreement or any of its rights or
obligations hereunder to any affiliate of or company under common control with
that Distributor (but in such event that Distributor shall continue to be liable
under Article VIII of this Agreement for any indemnification due to Transamerica
Occidental, and the assignee shall also be liable), if such assignee is duly
licensed and registered to perform the obligations of that Distributor under
this Agreement, upon thirty (30) days advance written notice to Transamerica
Occidental; and
(b) the Manager may assign this Agreement or any of its rights or obligations
hereunder to any affiliate of or company under common control with the Manager
(but in such event the Manager shall continue to be liable under Article VIII of
this Agreement for any indemnification due to Transamerica Occidental, and the
assignee shall also be liable), if such assignee is duly licensed and registered
to perform the obligations of the Manager under this Agreement, upon thirty (30)
days advance written notice to Transamerica Occidental.
12.9. Upon reasonable request, Transamerica Occidental shall furnish, or shall
cause to be furnished, to the Trust or its designee, copies of the following
reports:
(a) Transamerica Occidental's annual statements (prepared under
statutory accounting principles) and annual reports (prepared under
generally accepted accounting principles, if any), as soon as
practicable and in any event within ninety (90) days after the end of
each fiscal year;
(b) any material financial statement, proxy statement, notice, or
report of Transamerica Occidental sent to Contractowners, as soon as
practicable after the delivery thereof to stockholders;
(c) any registration statement (without exhibits) and financial reports
of Transamerica Occidental filed with the SEC or any state insurance
regulator, as soon as practicable after the filing thereof; and
(d) any other report submitted to Transamerica Occidental by
independent accountants in connection with any annual, interim, or
special audit made by them of the books of Transamerica Occidental, as
soon as practicable after the receipt thereof, but nothing in this
subsection shall require Transamerica Occidental to disclose any
information that is privileged or which, if disclosed, would put
Transamerica Occidental at a competitive disadvantage or is both: (a)
confidential; and (b) not material to Transamerica Occidental's
financial condition.
12.10. At the request of any party to this Agreement, each other party will make
available to the requesting party's independent auditors and/or representatives
of the appropriate regulatory agencies, all records, data, and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
12.11. Any controversy or claim arising out of or relating to this Agreement, or
breach thereof, shall be settled by arbitration in a forum jointly selected by
the relevant parties (but if applicable law requires some other `forum, then
such other forum) in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
12.12. Except as otherwise expressly provided in this Agreement, neither the
Trust, the Manager, the Distributors or any affiliates thereof shall use any
trademark, trade name, service xxxx or logo of Transamerica Occidental or any of
its affiliates, or any variation of any such trademark, trade name, service xxxx
or logo, without Transamerica Occidental's prior written consent, the granting
of which shall be at Transamerica Occidental's sole option.
12.13. Except as otherwise expressly provided in this Agreement, neither
Transamerica Occidental nor any of its affiliates shall use any trademark, trade
name, service xxxx or logo of the Trust or any affiliates thereof, or any
variation of any such trademark, trade name, service xxxx or logo, without the
Trust's prior written consent, the granting of which shall be at the Trust's
sole option.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative as
of the date specified below.
EQ ADVISORS TRUST
By:
Name: Xxxxx X. Xxxxx
Title: President and Trustee
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By:
Name: _________________________________
Title: _________________________________
EQUITABLE DISTRIBUTORS, INC.
By:
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
and Chief Executive Officer
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
By:
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
EQ FINANCIAL CONSULTANTS, INC.
By:
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
and Chief Executive Officer
SCHEDULE A
DESIGNATED PORTFOLIOS AND CLASSES
Portfolios of
EQ Advisors Trust
Portfolios Classes
Alliance Aggressive Stock Portfolio Class IA
Alliance Balanced Portfolio Class IA
