Exhibit (h)(3)(C)
1
SETTLEMENT AGREEMENT
AMONG
THE SPECIALTY MANAGERS TRUST,
WESTERN CAPITAL FINANCIAL GROUP
AND
THE MUTUAL BENEFIT LIFE INSURANCE COMPANY
This Agreement is dated as of May 21, 1990, by and between The
Specialty Managers Trust, a Massachusetts business trust (the
"Trust"), Western Capital Financial Group ("Western Capital"), a
California corporation, and The Mutual Benefit Life Insurance Company
("MBL") on its own behalf and on behalf of Mutual Benefit Contract
Account - 11 (the "Account").
WHEREAS, MBL is a mutual life insurance company incorporated
under the laws of the State of New Jersey; and
WHEREAS, the Account is a segregated asset account established
by resolution of the Board of Directors of MBL to set aside and
invest assets attributable to annuity contracts ("Policies") to be
issued by MBL; and
WHEREAS, the Account is registered as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"), as amended and
interests in the Policies, as hereinafter defined, are registered
under the Securities Act of 1933 ("1933 Act"), as amended; and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and its shares will be
registered under the 1933 Act; and
WHEREAS, Western Capital, pursuant to a written agreement, is
the distributor for shares of the portfolios of the Trust and is
registered as a broker-dealer with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 ("1934
Act"), as amended, 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, MBL intends to purchase shares in the portfolios of
the Trust shown on Exhibit A (hereinafter "Series") on behalf of the
Account to serve as an investment medium for the Policies, and
Western Capital is authorized to sell such shares and agrees to make
shares of the Series available to the Account.
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NOW, THEREFORE, Western Capital, MBL and the Trust, in
consideration of the premises and the mutual covenants and
promises hereinafter set forth, hereby agree as follows:
1. Subject to paragraph 3, Western Capital will sell shares of the
Series to the Accounts and will execute such orders on days that
the Trust values its shares as described in its prospectus in such
amounts as shall be requested. Such sales will be made at the "net
asset value" next computed after an order to purchase shares is
received by the Trust, its transfer agent or its designee, and no
commission on such sales shall be due or payable to Western Capital.
The Accounts shall not be under any obligation to purchase shares of
the Series at any time or in any amount other than for which its has
a bona fide order.
2. Solely for the purposes of paragraph 1, the Trust agrees that
MBL shall be the designee of the Trust's transfer agent for receipt
of such orders from the Accounts (but not the General Account of
MBL), and receipt by such agent shall constitute receipt by the
Trust, provided that the Trust receives notice of such order by 12:00
noon on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading or
any day on which the Trust is required to calculate its net asset
value pursuant to the rules promulgated by the Commission. The
provisions of this paragraph 2 shall apply solely to orders based
upon purchases of interests under the Policies, and shall not apply
to any other orders, including those orders based upon investment by
MBL for its own account.
3. Western Capital and the Trust agree to make shares of each
Series available for purchase by MBL on behalf of the Accounts at
the applicable net asset value per share on those days on which the
Trust calculates such net asset value per share, pursuant to the
rules promulgated by the Commission, and the Trust shall use its
reasonable efforts to calculate such net asset value on each day the
New York Stock Exchange is open for trading or any day on which the
Trust is required to calculate its net asset value pursuant to the
rules promulgated by the Commission; provided, however, that the
Board of Trustees of the Trust may refuse to sell shares of the
Series of the Trust to any person or suspend or terminate the
offering of shares of any Series if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of such Trustees acting in good faith and in light of
their fiduciary duties under applicable law, necessary in the best
interests of the shareholders of the Trust. The Trust shall take
such steps as may be necessary to provide a sufficient number of
shares to meet the orders of the Account.
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4. The parties agree that no shares of the Series will be sold
directly to the general public. Shares of the Trust Series
will be available only to general and separate accounts of life
insurance companies issuing variable life insurance policies
and variable annuity contracts for which the Trust serves as an
investment vehicle.
It is further agreed among the parties that the Policies
will be distributed to the public only by broker-dealers
that are registered under the 1934 Act as broker-dealers
and are members of the NASD ("retail broker-dealers") and
that enter into a written agreement ("Sales Agreement")
with Directed Services, Inc., two forms of which are
attached hereto as Exhibits B & C. The parties further
agree that all Sales Agreements will be in one of these two
such forms.
5. The Trust will, at MBL's request, (a) redeem any full or
fractional shares tendered for redemption by the Account, or (b)
exchange shares of one Series for shares of another Series, at the
net asset value next computed after such request is received in good
order by the Trust, its transfer agent or its designee. No Series
shall change the terms and conditions for the redemption of its
shares as set forth in the most recent effective Registration
Statement for the Trust without the prior approval of the parties
hereto.
6. For purposes of paragraph 5, and solely for transactions caused
by redemptions of Policies underlying the Trust, the Trust agrees
that MBL shall be the designee of the Trust's transfer agent for
receipt of such orders from the Accounts and receipt by such agent
shall constitute receipt by the Trust, provided that the Trust
receives notice of such order by 12:00 noon New York time on the
next following Business Day. The provisions of this paragraph 6
shall apply solely to tenders for redemptions based upon redemptions
of interests under the Policies, and shall not apply to any other
tenders or requests for redemptions, including those based upon
investment by MBL for its own account.
7. All transactions involving the purchase of shares of the Series
shall be settled the same day the Trust executes an order for the
purchase of shares of the Series, as provided in Paragraph 1 of this
Agreement. Transactions involving the redemption of shares of the
Series shall ordinarily be settled the same day that the Trust
effects the redemption as provided in Paragraph 5 of this Agreement,
except that the Trust reserves the right to delay settlement upon
redemption, but in not event may such settlement be delayed longer
than the period as permitted under Section 22(e) of the 0000 Xxx.
All funds used for purchase of redemption transactions shall be in
Federal Funds
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transmitted by wire transfer. Issuance and transfer of shares of
the Series will be by book entry only, unless otherwise agreed by
all parties. Stock certificates will not be issued to MBL or the
Accounts. Shares of the Series ordered from the Trust will be
recorded in appropriate ledgers for the Account.
8. The Trust shall instruct its recordkeeping agent that on each
day the net asset value of the shares of any Series is required to
be calculated pursuant to the requirements of the Investment Company
Act, the Trust shall provide The Golden Financial Group, Inc. (a New
York corporation acting on behalf of MBL pursuant to an
Administrative Services Agreement) with the net asset value of such
shares of the Series by 5:30 p.m. New York time, or as soon
thereafter as practicable. The Trust shall also provide Directed
Services, Inc., a subsidiary of The Golden Financial Group, Inc. that
is also distributor for the Policies, daily with any and all
financial information that is deemed reasonably necessary for
Directed Services to comply with its responsibilities as distributor
for the Policies. This financial information shall also be provided
to MBL or its designated agent, The Golden Financial Group, Inc. by
5:30 p.m. New York time or as soon thereafter as practicable on each
day on which such net asset value is calculated, unless circumstances
make compliance with such schedule impracticable, in which event the
Trust or its agent will provide the information as soon as
reasonably practicable.
9. It is understood by the parties that this Agreement shall apply
to additional series created for the Trust unless agreed to by all
parties hereto.
10. (a) MBL agrees to indemnify and hold harmless Western Capital
and the Trust and each of their Trustees, officers, employees, and
each person, if any, who controls Western Capital or the Trust within
the meaning of Section 15 of the Securities Act and each person who
is an affiliated person of Western Capital or the Trust within the
meaning of Section 2(a)(3) of the Investment Company Act of 1940
(collectively, the "Indemnified Parties" for purposes of this
paragraph 10) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of MBL), or litigation expenses (including legal and other
expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof), or settlements are related to the sale or
acquisition of the Policies or the Trusts' shares 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 or prospectus for the Account or
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the Policies or contained in the Policies or sales literature for
the Policies (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to MBL or its
affiliates by or on behalf of Western Capital, the Trust or an
affiliate of either, for use in the registration statement or
prospectus for the Policies or in the Policies or sales literature
(or any amendment or supplement thereto) or otherwise for use in
connection with the sale of the Policies or the 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, or sales literature of the Trust
not supplied by MBL or persons under its control) or wrongful conduct
of MBL, its officers, directors, employees or persons under its
control, with respect to the sale or distribution of the Policies or
Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature for 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 information furnished
to the Trust by or on behalf of MBL, its officers, directors,
employees, or affiliated persons thereof; or
(iv) arise as a result of any failure by MBL to provide the services
and to furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty
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made by MBL in this Agreement or arise out of or result from any
other material breach of this Agreement by MBL, as limited by
and in accordance with the provisions of subparagraphs (b) and
(c) of this paragraph 10.
(b) MBL shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities, or
litigation expenses 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 or duties under this Agreement or to the
Trust, whichever is applicable.
(c) MBL 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 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 MBL of any such claim shall not relieve MBL 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, MBL shall be entitled to
participate, at its own expense, in the defense of such action. MBL
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the Action. After notice from MBL
to such party of MBL's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and MBL 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.
(d) The Indemnified Parties will promptly notify MBL of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of Trust shares or the Policies
or the operation of the Trust.
11. (a) The Trust, and Western Capital, or both of them, as
appropriate, agree to indemnify and hold harmless MBL and each of its
directors, officers, employees, and each person, if any, who controls
MBL within the meaning of Section 15 of the Securities Act and each
person who is an affiliated person of MBL within the meaning of
Section 2(a)(3) of the Investment Company Act of 1940 (collectively,
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the "Indemnified Parties" for purposes of this Paragraph 11) against
any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or
litigation expenses (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's
shares and:
(i) arise out of or are based upon an untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus for the Trust or sales literature for 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 or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to
Western Capital or the Trust by or on behalf of MBL or an affiliate
thereof for use in the registration statement or prospectus for the
Trust or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Policies or the
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, or sales literature for the
Policies not supplied by the Trust, Western Capital or persons under
their control) or wrongful conduct of the Trust or Western Capital,
their officers, directors, employees or persons under their control,
with respect to the sale of the Policies or Trust shares: or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature for the Policies, or any amendment
thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated
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therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to MBL by or on behalf of the Trust or
Western Capital; or
(iv) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or Western Capital
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Trust or Western Capital, as limited
by and in accordance with the provisions of subparagraphs (b) and (c)
of this Paragraph 11.
(b) Neither the Trust nor Western Capital shall be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities, or litigation expenses 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 MBL or the Accounts, whichever is
applicable.
(c) Neither the Trust nor Western Capital shall be liable under this
indemnification provision with respect to any claim made against any
Indemnified Party unless such Indemnified Party shall have notified
Western Capital and/or the Trust, as appropriate, 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 or Western Capital of any such claim shall not
relieve the Trust or Western Capital from any liability which either
of them 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 and Western Capital will be entitled to participate, at
their expense,
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in the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust and/or
Western Capital to such party of the Trust's and/or Western Capital's
election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it,
and Trust and Western Capital 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.
(d) MBL agrees to promptly notify the Trust and Western Capital of
the commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or sale
of the Policies or the operation of the Account.
12. MBL shall provide the Trust and Western Capital with copies of
all written complaints received and responses thereto sent by MBL or
its affiliates or agents that pertain to the purchase or sale of the
Policies or to the operation of the Trust. Such copies shall be sent
to the Trust and Western Capital concurrently with the mailing of the
response to any such complaint.
The Trust and Western Capital shall provide MBL with copies
of all written complaints received by either of them that
pertain to the purchase or sale of the Policies or to the
operation of the Account.
13. This Agreement may be terminated at any time by mutual consent
of the parties, or without cause by any of the parties upon giving
one hundred twenty (120) days written notice to the other parties
provided, however, that if any party fails to carry out its
responsibilities enumerated under this Agreement in any material
respect, the other parties shall have the right to terminate this
Agreement within sixty days of notification to the party so failing
to carry out its responsibilities, and if for any reason shares of
the Series are not available MBL shall have the right to terminate
this Agreement immediately. This Agreement shall terminate upon the
termination of the "Variable Life and Annuity Agreement" between MBL
and GFG dated May 31, 1989, whereby GFG is to provide certain
services to MBL with regard to the design, regulatory approval and
administration of the Policies.
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This Agreement shall also terminate:
(i) at the option of MBL upon the institution of formal proceedings
against the Trust, Western Capital or an affiliate by the NASD, the
SEC, or any state securities or insurance department or any other
regulatory body provided that MBL determines in good faith, in MBL's
sole judgment, that such institution will have a material adverse
impact on the Trust's, Western Capital's or the affiliate's ability
to perform its obligations under this Agreement; or
(ii) at the option of the Trust or Western Capital upon the
institution of formal proceedings against MBL brought by the NASD,
the SEC, or any formal proceedings involving a material matter
brought by any state securities or state insurance department or any
other regulatory body regarding MBL provided that the Trust or
Western Capital determines in good faith, in its sole judgment, that
such institution will have a material adverse impact on MBL's ability
to perform its obligations under this Agreement; or
(iii) at the option of either the Trust, Western Capital or MBL,
upon the filing of a voluntary or involuntary petition in bankruptcy,
or in any equivalent state court proceeding, concerning any party, or
upon appointment of a receiver by a regulatory body having
appropriate jurisdiction over any other party, or upon the occurrence
of any party's failing to meet the minimum net capital requirements,
if any, applicable to it under appropriate insurance or securities
laws; or
(iv) at the option of the Trust, Western Capital or MBL if the
Management Agreement between the Fund and its Manager is terminated,
or the Organizational Agreement among MBL, the Fund and the Fund's
Manager terminates.
14. Unless earlier terminated pursuant to Paragraph 13 hereof, this
Agreement shall remain in effect for a one year period beginning on
the effective date of this Agreement and will continue thereafter in
effect from year to year. Upon termination of this Agreement, all
authorizations, rights and obligations imposed on the parties under
this Agreement except for the indemnification provisions contained
in Paragraphs 10 and 11 above shall cease. Notwithstanding the
foregoing, in the event of termination and unless otherwise
agreed to by the parties, transactions for
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existing policyowners will continue to be executed under the terms
of this Agreement.
15. Any notice shall be sufficiently given when sent by registered
or certified mail to the other parties at the address of such parties
as set forth below or at such other address as such party may from
time to time specify in writing to the other parties:
To: The Specialty Managers Trust
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx X. Xxxxxx, Dechert Price & Xxxxxx
0000 X Xxxxxx, Xxxxxxxxxx, X.X. 00000
To: Western Capital Financial Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
To: The Mutual Benefit Life Insurance Company
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Senior Vice President
With a copy to:
Xxxxx X. Xxxxxxxx
Vice President and Deputy General Counsel
16. This Agreement shall be construed with and the provisions hereof
interpreted under an in accordance with the laws of the State of New
York.
17. This Agreement shall be subject to the provisions of the 1940
Act, the 1933 Act and the 1934 Act and the rules, regulations and
rulings thereunder, including such exemptions from those statutes,
rules and regulations as the SEC may grant and the terms hereof shall
be interpreted and construed in accordance therewith.
18. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
19. A copy of the Trust's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. The Declaration of
Trust has been executed on behalf of the Trust by the Trustees in
their capacity as Trustees of the Trust and not
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individually. The obligations upon the Trust under this Agreement
shall be binding upon the assets and property of the Trust and
shall not be binding upon any Trustee, officer, employee or
shareholder of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
THE SPECIALTY MANAGERS TRUST
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
President
Attest: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title:
WESTERN CAPITAL FINANCIAL GROUP
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxxx
President
Attest: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title:
THE MUTUAL BENEFIT LIFE INSURANCE COMPANY
By: The Mutual Benefit Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
Attest: /s/ Xxxxx X. Xxxxxxxx
-----------------------
Xxxxx X. Xxxxxxxx
Vice President and
Deputy General Counsel
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EXHIBIT A TO
SETTLEMENT AGREEMENT AMONG
THE SPECIALTY MANAGERS TRUST, WESTERN CAPITAL FINANCIAL GROUP,
and
THE MUTUAL BENEFIT LIFE INSURANCE COMPANY
Multiple Allocation Series
Fully Manager Series
Limited Maturity Bond Series
Natural Resources Series
Real Estate Series
All-Growth Series
Liquid Asset Series
