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EXHIBIT 1.A.(8)(f)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 8th day of October, 1999 (the
"Agreement") by and among Western Reserve Life Assurance Co. of Ohio, organized
under the laws of the State of Ohio (the "Company"), on behalf of itself and
each separate account of the Company named in Schedule A to this Agreement, as
may be amended from time to time (each account referred to as the "Account" and
collectively as the "Accounts"); INVESCO Variable Investment Funds, Inc., an
open-end management investment company organized under the laws of the State of
Maryland (the "Fund"); INVESCO Funds Group, Inc., a corporation organized under
the laws of the State of Delaware and investment adviser to the Fund (the
"Adviser"); and INVESCO Distributors, Inc., a corporation organized under the
laws of the State of Delaware and principal underwriter/distributor of the
Fund.
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment
vehicle for separate accounts established for variable life insurance contracts
and variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company, as depositor, has established the Accounts to serve as
investment vehicles for certain variable annuity contracts and variable life
insurance policies and funding agreements offered by the Company set forth on
Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of the State of Ohio, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B,
as such schedule may be amended from time to time (the "Designated Portfolios")
on behalf of the Accounts to fund the Contracts;
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NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such order by
11:00 a.m. Eastern Time on the next following business day. "Business
Day" will mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value
pursuant to the rules of the Securities and Exchange Commission (the
"Commission"). The Fund may net the notice of redemptions it receives
from the Company under Section 1.3 of this Agreement against the
notice of purchases it receives from the Company under this Section
1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon
receipt by the Fund of the payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request
for redemption. For purposes of this Section 1.3, the Company will be
the designee of the Fund for receipt of requests for redemption from
each Account and receipt by such designee will constitute receipt by
the Fund; provided the Fund receives notice of such requests for
redemption by 11:00 a.m. Eastern Time on the next following Business
Day. Payment will be made in federal funds transmitted by wire to the
Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the
redemption order from the Company. After consulting with the Company,
the Fund reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than the period
permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Fund will not bear any responsibility
whatsoever for the
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proper disbursement or crediting of redemption proceeds; the Company
alone will be responsible for such action. If notification of
redemption is received after 11:00 Eastern Time, payment for redeemed
shares will be made on the next following Business Day. The Fund may
net the notice of purchases it receives from the Company under Section
1.1 of this Agreement against the notice of redemptions it receives
from the Company under this Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Fund calculates its Designated Portfolio net
asset value pursuant to rules of the Commission; provided, however,
that the Board of Directors of the Fund (the "Fund Board") may refuse
to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Fund 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.
1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Code"), and regulations promulgated
thereunder, the sale to which will not impair the tax treatment
currently afforded the Contracts. No shares of any Portfolio will be
sold directly to the general public.
1.6 The Fund will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, and VI of this Agreement
are in effect to govern such sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any
Account. Purchase and redemption orders for Fund shares will be
recorded in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.9 The Fund will furnish same day notice (by facsimile) to the Company of
the declaration of any income, dividends or capital gain distributions
payable on each Designated Portfolio's shares. The Company hereby
elects to receive all such dividends and distributions as are payable
on the Portfolio shares in the form of additional shares of that
Portfolio at the ex-dividend date net asset values. The Company
reserves the right to revoke this election and to receive all such
dividends and distributions in cash.
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The Fund will notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10 The Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily
basis as soon as reasonably practical after the net asset value per
share is calculated and will use its best efforts to make such net
asset value per share available by 6:30 p.m., Eastern Time, each
business day. If the Fund provides the Company materially incorrect
net asset value per share information (as determined under SEC
guidelines), the Company shall be entitled to an adjustment to the
number of shares purchased or redeemed 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 gain
information shall be reported to the Company upon discovery by the
Fund.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable
law and that it has legally and validly established each Account as a
separate account under Ohio law and that each Account is or will be
registered as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account
for the Contracts, or is exempt from registration thereunder, and that
it will maintain such registration for so long as any Contracts are
outstanding, as applicable. The Company will amend the registration
statement under the 1933 Act for the Contracts and the registration
statement under the 1940 Act for the Account from time to time as
required in order to effect the continuous offering of the Contracts
or as may otherwise be required by applicable law. The Company will
register and qualify the Contracts for sale in accordance with the
securities laws of the various states only if and to the extent deemed
necessary by the Company.
2.2 The Company represents that the Contracts are currently and at the
time of issuance will be treated as annuity contracts and/or life
insurance policies (as applicable) under applicable provisions of the
Code, and that it will make every effort to maintain such treatment
and that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that the Contracts have ceased
to be so treated or that they might not be so treated in the future.
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2.3 The Company represents and warrants that it will not purchase shares
of the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Fund represents and warrants that shares of the Designated
Portfolio(s) sold pursuant to this Agreement will be registered under
the 1933 Act and duly authorized for issuance in accordance with
applicable law and that the Fund is and will remain registered as an
open-end management investment company under the 1940 Act for as long
as such shares of the Designated Portfolio(s) are sold. The Fund will
amend the registration statement for its shares under the 1933 Act and
the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund will register and qualify
the shares of the Designated Portfolio(s) for sale in accordance with
the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply
to the investment objectives, policies and restrictions of the
Portfolios, as they may apply to the Fund. If the Fund cannot comply
with such state insurance laws or regulations, it will so notify the
Company in writing. The Fund makes no other 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 any state. The Company represents
that it will use its best efforts to notify the Fund of any
restrictions imposed by state insurance laws that may become
applicable to the Fund as a result of the Accounts' investments
therein. The Fund and the Adviser agree that they will furnish the
information required by state insurance laws to assist the Company in
obtaining the authority needed to issue the Contracts in various
states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have the
directors of its Fund Board, a majority of whom are not "interested"
persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will
comply in all material respects with applicable provisions of the 0000
Xxx.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to
be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund in
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an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding
company.
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws and that it will perform its obligations for
the Fund in accordance in all material respects with the laws of the
State of Delaware and any applicable state and federal securities
laws.
2.10 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as
amended (the "1934 Act") and will remain duly registered under all
applicable federal and state securities laws, and is a member in good
standing of the National Association of Securities Dealers, Inc.
("NASD") and serves as principal underwriter/distributor of the Funds
and that it will perform its obligations for the Fund in accordance in
all material respects with the laws of the State of Delaware and any
applicable state and federal securities laws.
2.11 The Fund, the Adviser and the Distributor represents and warrants to
the Company that each has a Year 2000 compliance program in existence
and that each reasonably intends to be Year 2000 compliant so as to be
able perform all of the services and/or obligations contemplated by or
under this Agreement without interruption. The Fund, the Adviser, and
the Distributor shall immediately notify the Company if it determines
that it will be unable perform all of the services and/or obligations
contemplated by or under this Agreement in a manner that is Year 2000
compliant.
ARTICLE III - FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
requirements of Subchapter M of the Code or the diversification
requirements of Section 817(h) of the Code may result in the Contracts
not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract
owners and could also adversely affect the Company's corporate tax
liability. The Fund and the Adviser further acknowledge that any such
failure may result in costs and expenses being incurred by the Company
in obtaining whatever regulatory authorizations are required to
substitute shares of another investment company for those of the
failed Fund or as well as fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes, interest or tax
penalties incurred by the Company in connection with any such failure.
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3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
it will maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be
treated as variable contracts under the Code and the regulations
issued thereunder; including, but not limited to, that the Fund will
at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts, and with Section 817(d) of the Code, relating to
the definition of a variable contract, and any amendments or other
modifications to such Section or Regulation. The Fund will notify the
Company immediately upon having a reasonable basis for believing that
the Fund or a Portfolio thereunder has ceased to comply with the
diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the
event of a breach of this representation by the Fund, it will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation
1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or
statement indicating compliance by each Portfolio of the Fund with
Section 817(h) of the Code, such certificate or statement to be sent
to the Company no later than thirty (30) days following the end of
each calendar quarter.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current
Fund prospectus and any supplements thereto for the Designated
Portfolio(s) as the Company may reasonably request for distribution,
at the Fund's expense, to Contract owners at the time of Contract
fulfillment and confirmation. To the extent that the Designated
Portfolio(s) are one or more of several Portfolios of the Fund, the
Fund shall bear the cost of providing the Company only with disclosure
related to the Designated Portfolio(s). The Fund will provide, at the
Fund's expense, as many copies of said prospectus as necessary for
distribution, at the Fund's expense, to existing Contract owners. The
Fund will provide the copies of said prospectus to the Company or to
its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will xxxx the Fund for the reasonable
cost of
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such distribution. If requested by the Company, in lieu thereof, the
Fund will provide such documentation, including a final copy of a
current prospectus set in type at the Fund's expense, and other
assistance as is reasonably necessary in order for the Company at
least annually (or more frequently if the Fund prospectus is amended
more frequently) to have the new prospectus for the Contracts and the
Fund's new prospectus printed together, in which case the Fund agrees
to pay its proportionate share of reasonable expenses directly related
to the required disclosure of information concerning the Fund. The
Fund will, upon request, provide the Company with a copy of the Fund's
prospectus through electronic means to facilitate the Company's
efforts to provide Fund prospectuses via electronic delivery, in which
case the Fund agrees to pay its proportionate share of reasonable
expenses related to the required disclosure of information concerning
the Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company.
The Fund will provide the Company, at the Fund's expense, with as many
copies of the SAI and any supplements thereto as the Company may
reasonably request for distribution, at the Fund's expense, to
prospective Contract owners and applicants. To the extent that the
Designated Portfolio(s) are one or more of several Portfolios of the
Fund, the Fund shall bear the cost of providing the Company only with
disclosure related to the Designated Portfolio(s). The Fund will
provide, at the Fund's expense, as many copies of said SAI as
necessary for distribution, at the Fund's expense, to any existing
Contract owner who requests such statement or whenever state or
federal law requires that such statement be provided. The Fund will
provide the copies of said SAI to the Company or to its mailing agent.
The Company will distribute the SAI as requested or required and will
xxxx the Fund for the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing
agent with copies of its proxy material, if any, reports to
shareholders/Contract owners and other permissible communications to
shareholders/Contract owners in such quantity as the Company will
reasonably require. The Company will distribute this proxy material,
reports and other communications to existing Contract owners and will
xxxx the Fund for the reasonable cost of such distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in the
Account in accordance with instructions received from Contract
owners; and
(c) vote shares of the Designated Portfolios held in the Account
for which no timely instructions have been received, in the
same proportion as shares of such Designated Portfolio for
which instructions have been received from the Company's
Contract owners,
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so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges for
variable Contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the
extent permitted by law. The Company will be responsible for assuring
that the Accounts participating in the Fund calculates voting
privileges in a manner consistent with all legal requirements,
including the Proxy Voting Procedures set forth in Schedule C and the
Mixed and Shared Funding Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will
provide for annual meetings (except insofar as the Commission may
interpret Section 16 of the 1940 Act not to require such meetings) or,
as the Fund currently intends, to comply with Section 16(c) of the
1940 Act (although the Fund is not one of the trusts described in
Section 16(c) of the 0000 Xxx) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance
with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund
or the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
5.2 The Company will not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information
or representations contained in the registration statement, prospectus
or SAI for Fund shares, as such registration statement, prospectus and
SAI may be amended or supplemented from time to time, or in reports or
proxy statements for the Fund, or in published reports for the Fund
which are in the public domain or approved by the Fund or the Adviser
for distribution, or in sales literature or other material provided by
the Fund or by the Adviser, except with permission of the Fund or the
Adviser. The Fund and the Adviser agree to respond to any request for
approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished,
to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate
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account is named, at least ten (10) Business Days prior to its use.
No such material will be used if the Company reasonably objects to
such use within five (5) Business Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information
or representations contained in a registration statement, prospectus
or SAI for the Contracts, as such registration statement, prospectus
and SAI may be amended or supplemented from time to time, or in
published reports for each Account or the Contracts which are in the
public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other material provided by the
Company, except with permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, 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 Fund or its shares,
within a reasonable time after filing of each such document with the
Commission or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, 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 Contracts or each
Account, contemporaneously with the filing of each such document with
the Commission or the NASD (Except that with respect to post-effective
amendments to such prospectuses and SAIs and sales literature and
promotional material, only those prospectuses and SAIs and sales
literature and promotional material that relate to or refer to the
Fund will be provided.) In addition, the Company will provide to the
Fund at least one complete copy of (i) a registration statement that
relates to the Contracts or each Account, containing representative
and relevant disclosure concerning the Fund; and (ii) any
post-effective amendments to any registration statements relating to
the Contracts or such Account that refer to or relate to the Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or
other public media, (i.e., on-line networks such as the Internet or
other electronic messages)), 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
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published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the
1933 Act or the 0000 Xxx.
5.8 The Fund and the Adviser hereby consent to the Company's use of the
names INVESCO, AMVESCAP and INVESCO Funds Group, Inc., as well as the
names of the Designated Portfolios set forth in Schedule B of this
Agreement, in connection with marketing the Contracts, subject to the
terms of Sections 5.1 and 5.2 of this Agreement. The Fund and the
Adviser hereby consent to the use of any logo or xxxx used by the Fund
or Adviser, subject to the Fund's and/or the Adviser's approval of
such use and in accordance with reasonable requirements of the Fund or
the Adviser. Such consent will terminate with the termination of this
Agreement. The Company agrees and acknowledges that either of the
Fund, the Adviser or the Distributor are the owner of the name, logo
or xxxx and that all use of any designation comprised in whole or in
part of the name, logo or xxxx under this Agreement shall inure to the
benefit of the Fund, Adviser and/or the Distributor.
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt
and implement procedures reasonably designed to ensure that
information concerning the Company, the Fund, the Adviser or the
Distributor, respectively, and their respective affiliated companies,
that is intended for use only by brokers or agents selling the
Contracts is properly marked as "Not For Use With The Public" and that
such information is only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under
this Agreement, except as provided below: (a) if the Fund or any
Designated Portfolio adopts and implements a plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses, then,
subject to obtaining any required exemptive orders or other regulatory
approvals, the Fund may make payments to the Company or to the
underwriter for the Contracts if and in such amounts agreed to by the
Fund in writing; (b) the Fund may pay fees to the Company for
administrative services provided to Contract owners that are not
primarily intended to result in the sale of shares of the Designated
Portfolio or of underlying Contracts.
6.2 All expenses incident to performance by the Fund of this Agreement
will be paid by the Fund to the extent permitted by law. All shares
of the Designated Portfolios will be duly authorized for issuance and
registered in accordance with applicable federal law and, to the
extent deemed advisable by the Fund, in accordance with applicable
state law, prior to sale. The Fund will bear the expenses for the
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cost of registration and qualification of the Fund's shares, including
without limitation, the preparation of and filing with the SEC of
Forms N-SAR and Rule 24f-2 Notices and payment of all applicable
registration or filing fees with respect to shares of the Fund;
preparation and filing of the Fund's prospectus, SAI and registration
statement, proxy materials and reports; typesetting the Fund's
prospectus; typesetting and printing proxy materials and reports to
Contract owners (including the costs of printing a Fund prospectus
that constitutes an annual report); the preparation of all statements
and notices required by any federal or state law; all taxes on the
issuance or transfer of the Fund's shares; any expenses permitted to
be paid or assumed by the Fund pursuant to a plan, if any, under Rule
12b-1 under the 1940 Act; and other costs associated with preparation
of prospectuses and SAIs for the Designated Portfolios in electronic
or typeset format, as well as any distribution expenses as set forth
in Article IV of this Agreement.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from
the Commission granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate
accounts relief from the provisions of Sections 9(a), 13(a), 15(a),
and 15(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 Fund to be
sold to and held by variable annuity separate accounts and variable
life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and qualified pension and retirement
plans outside of the separate account context (the "Mixed and Shared
Funding Exemptive Order"). The parties to this Agreement agree that
the conditions or undertakings specified in the Mixed and Shared
Funding Exemptive Order and that may be imposed on the Company, the
Fund and/or the Adviser by virtue of the receipt of such order by the
Commission, will be incorporated herein by reference, and such parties
agree to comply with such conditions and undertakings to the extent
applicable to each such party.
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the Contract
owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons,
including, but not limited to: (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
Portfolio
Page 12 of 32
13
are being managed; (e) a difference in voting instructions given by
Participating Insurance Companies or by variable annuity and variable
life insurance Contract owners; or (f) a decision by an insurer to
disregard the voting instructions of Contract owners. The Fund Board
will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
A majority of the Fund Board will consist of persons who are not
"interested" persons of the Fund.
7.3 The Company will report any potential or existing conflicts of which
it is aware to the Fund Board. The Company agrees to assist the Fund
Board in carrying out its responsibilities, as delineated in the Mixed
and Shared Funding Exemptive Order, by providing the Fund Board with
all information reasonably necessary for the Fund Board to consider
any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Fund Board whenever Contract
owner voting instructions are to be disregarded. The Fund Board will
record in its minutes, or other appropriate records, all reports
received by it and all action with regard to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, up to and including: (a) withdrawing the assets
allocable to some or all of the Accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be
submitted to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity Contract owners or variable life insurance Contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the
affected sub-account of the Account's investment in the Fund and
terminate this Agreement with respect to such sub-account; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place
within six (6) months after the Fund
Page 13 of 32
14
gives written notice to the Company that this provision is being
implemented. Until the end of such six-month period the Adviser and
Fund will, to the extent permitted by law and any exemptive relief
previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.6 If an irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts
with the majority of other state insurance regulators, then the
Company will withdraw the affected sub-account of the Account's
investment in the Fund and terminate this Agreement with respect to
such sub-account; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being
implemented. Until the end of such six-month period the Advisor and
Fund will, to the extent permitted by law and any exemptive relief
previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority
of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event, other than as specified in Section 7.4,
will the Fund be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.4 to
establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract owners affected by
the irreconcilable material conflict.
7.8 The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said
reports, materials and data will be submitted more frequently if
deemed appropriate by the Fund Board.
7.9 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 Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then:
(a) the Fund and/or the Participating Insurance Companies, as
appropriate, will 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; and (b) Sections 4.4, 4.5, 7.1, 7.2,
7.3, 7.4, and 7.5
Page 14 of 32
15
of this Agreement will 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.
ARTICLE VIII - INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the Fund,
the Adviser, the Distributor, and each person, if any, who
controls or is associated with the Fund, the Adviser, or the
Distributor within the meaning of such terms under the federal
securities laws and any director, trustee, officer, employee
or agent of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the
Company) or actions in respect thereof (including reasonable
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:
(1) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
or SAI for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Company by or on behalf of the Fund, the Adviser, of
the Distributor for use in the registration
statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund,
or any amendment or supplement to the foregoing, not
supplied by the Company
Page 15 of 32
16
or persons under its control) or wrongful conduct of
the Company or persons under its control, with
respect to the sale or distribution of the Contracts
or Fund shares; or
(3) arise out of untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund
(or amendment or supplement) or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
such statements not misleading in light of the
circumstances in which they were made, if such a
statement or omission was made in reliance upon and
in conformity with information furnished to the Fund
by or on behalf of the Company or persons under its
control; or
(4) arise as a result of any failure by the Company to
provide the services and furnish the materials under
the terms of this Agreement; or
(5) arise out of any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any
other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2 INDEMNIFICATION BY THE ADVISER & DISTRIBUTOR
(a) The Adviser and Distributor agree to indemnify and hold
harmless the Company and each person, if any, who controls or
is associated with the Company within the meaning of such
terms under the federal securities laws and any director,
officer, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with
Page 16 of 32
17
the written consent of the Adviser and Distributor) or actions
in respect thereof (including reasonable 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:
(1) 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 SAI for the Fund or sales literature or other
promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Adviser or Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI
for the Fund or in sales literature of the Fund (or
any amendment or supplement thereto) or otherwise for
use in connection with the sale of the Contracts or
Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statements,
prospectuses or statements of additional information
or sales literature or other promotional material for
the Contracts or of the Fund, or any amendment or
supplement to the foregoing, not supplied by the
Adviser or the Fund or persons under the control of
the Adviser or the Fund respectively) or wrongful
conduct of the Adviser or the Fund or persons under
the control of the Adviser or the Fund respectively,
with respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature or other promotional material covering the
Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein
a material fact required to be stated or necessary to
make such statement or statements not misleading in
light of the circumstances in which they were made,
if such statement or omission was made in reliance
upon and in conformity with information furnished to
the Company by or on
Page 17 of 32
18
behalf of the Adviser or the Fund or persons under
the control of the Adviser or the Fund; or
(4) arise as a result of any failure by the Fund or the
Adviser to provide the services and furnish the
materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser or the Fund in this Agreement, or arise out
of or result from any other material breach of this
Agreement by the Adviser or the Fund (including a
failure, whether intentional or in good faith or
otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement, as described more fully in Section
8.5 below);
except to the extent provided in Sections 8.2(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Adviser or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section
8.2(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard or its
obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser and
the Fund of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them
in connection with the issuance or sale of the Contracts or
the operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
(a) The Fund agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses,
claims, expenses, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or action
in respect thereof (including reasonable 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 Fund and:
Page 18 of 32
19
(1) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement; or
(2) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund
(including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements
of Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement as described more fully in Section 8.5
below); or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Sections 8.3(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section
8.3(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations and duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
8.4 INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article
VIII ("Indemnifying Party" for the purpose of this Section 8.4) will
not be liable under the indemnification provisions of this Article
VIII with respect to any claim made against a party entitled to
indemnification under this Article VIII ("Indemnified Party" for the
purpose of this Section 8.4) unless such Indemnified Party will have
notified the Indemnifying Party in writing within a reasonable time
after the summons or other first legal process giving information of
the nature of the claim will have been served upon such Indemnified
Party (or after such party will have received notice of such service
on any designated agent), but failure to notify the Indemnifying Party
of any such claim will not relieve the Indemnifying Party from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of the indemnification
provision of this Article VIII, except to the
Page 19 of 32
20
extent that the failure to notify results in the failure of actual
notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case
any such action is brought against the Indemnified Party, the
Indemnifying Party will be entitled to participate, at its own
expense, in the defense thereof. The Indemnifying Party also will be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Indemnifying
Party to the Indemnified Party of the Indemnifying Party's election to
assume the defense thereof, the Indemnified Party will bear the fees
and expenses of any additional counsel retained by it, and the
Indemnifying Party will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other
than reasonable costs of investigation, unless: (a) the Indemnifying
Party and the Indemnified Party will have mutually agreed to the
retention of such counsel; or (b) the named parties to any such
proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. The Indemnifying Party
will not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or if
there is a final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. A successor by
law of the parties to this Agreement will be entitled to the benefits
of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
8.5 INDEMNIFICATION FOR FAILURE TO COMPLY WITH DIVERSIFICATION
REQUIREMENTS
The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of
this Agreement may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies
available to the Company, the Fund, the Adviser and the Distributor
will pay on a joint and several basis all costs associated with or
arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Portfolio to comply with
Section 3.3 of this Agreement, including all costs associated with
correcting or responding to any such failure; such costs may include,
but are not limited to, the costs involved in creating, organizing,
and registering a new investment company as a funding medium for the
Contracts and/or the costs of obtaining whatever regulatory
authorizations are
Page 20 of 32
21
required to substitute shares of another investment company for those
of the failed Fund or Portfolio (including but not limited to an order
pursuant to Section 26(b) of the 1940 Act); fees and expenses of legal
counsel and other advisors to the Company and any federal income taxes
or tax penalties (or "toll charges" or exactments or amounts paid in
settlement) incurred by the Company in connection with any such
failure or anticipated or reasonably foreseeable failure. Such
indemnification and reimbursement obligation shall be in addition to
any other indemnification and reimbursement obligations of the Fund,
the Adviser and/or the Distributor under this Agreement.
ARTICLE IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including, but not limited
to, the Mixed and Shared Funding Exemptive Order) and the terms hereof
will be interpreted and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Portfolios, upon six (6)
month's advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by
the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
Page 21 of 32
22
(d) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund or the Adviser by the NASD, the Commission or any state
securities or insurance department or any other regulatory
body, provided that the Company determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Fund's or the
Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under
any successor or similar provision, or if the Company
reasonably and in good faith believes that the Fund may fail
to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to
meet the diversification requirements specified in Section 3.3
hereof or if the Company reasonably and in good faith believes
the Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, determines in its sole judgment
exercised in good faith that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
Page 22 of 32
23
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account)
to substitute the shares of another investment company for the
corresponding Portfolio's shares of the Fund in accordance
with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying portfolio.
The Company will give sixty (60) days' prior written notice to
the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares or of the filing of any
required regulatory approval(s); or
(1) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
Contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2 NOTICE REQUIREMENT
(a) No termination of this Agreement, except a termination under
Section 10.1 (m) of this Agreement, will be effective unless
and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the
termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3 EFFECT OF TERMINATION
Notwithstanding any termination of this Agreement, the Fund, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts will be
permitted to reallocate investments in the Designated Portfolios (as
in effect on such date), redeem investments in the Designated
Portfolios and/or invest in
Page 23 of 32
24
the Designated Portfolios upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this
Section 10.3 will not apply to any terminations under Article VII and
the effect of such Article VII terminations will be governed by
Article VII of this Agreement.
10.4 SURVIVING PROVISIONS
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In
addition, with respect to Existing Contracts, all provisions of this
Agreement also will survive and not be affected by any termination of
this Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly 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 parties.
If to the Company:
Western Reserve Life Assurance Co. of Ohio
c/o Extraordinary Markets Divisions
0000 Xxxxxxxx Xxxx XX
Xxxxx Xxxxxx XX 00000
If to the Fund:
INVESCO Variable Investment Funds, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx - Senior Vice President
If to the Adviser:
INVESCO Funds Group, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx - Senior Vice President
If to the Distributor:
INVESCO Distributors, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx - Senior Vice President
ARTICLE XII - MISCELLANEOUS
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25
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their
employees or agents in connection with the Company's performance of
its duties under this Agreement are the valuable property of the
Protected Parties. The Fund and the Adviser agree that if they come
into possession of any list or compilation of the identities of or
other information about the Protected Parties' customers, or any other
property of the Protected Parties, other than such information as may
be independently developed or compiled by the Fund or the Adviser from
information supplied to them by the Protected Parties' customers who
also maintain accounts directly with the Fund or the Adviser, the Fund
and the Adviser will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Company' s prior
written consent; or (b) as required by law or judicial process. The
Fund and the Adviser acknowledge that any breach of the agreements in
this Section 12.2 would result in immediate and irreparable harm to
the Protected Parties for which there would be no adequate remedy at
law and agree that in the event of such a breach, the Protected
Parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate.
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 will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
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, which the parties hereto are
entitled to under state and federal law.
12.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
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12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, the NASD and state insurance regulators) and will
permit each other and 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.
12.10 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate or board action,
as applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.11 The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund or other
applicable terms of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
WESTERN RESERVE LIFE ASSURANCE COMPANY OF OHIO
By: _s/ Xxxx Xxxxxxx
------------------------------
Xxxx Xxxxxxx
Vice President
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By: _s/ Xxxx X. Xxxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxxx
President
INVESCO FUNDS GROUP, INC.
By: _s/ Xxxx X. Xxxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxxx
Chairman and Chief Executive Officer
INVESCO DISTRIBUTORS, INC.
By: _s/ Xxxx X. Xxxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxxx
Chairman and Chief Executive Officer
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PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of Western Reserve
Life Assurance Company of Ohio are permitted in accordance with the provisions
of this Agreement to invest in Portfolios of the Fund shown in Schedule B:
CONTRACTS FUNDED BY SEPARATE ACCOUNT NAME OF SEPARATE ACCOUNT
------------------------------------ ------------------------
Advantage IV WRL Series Life Corporate Account
WL 694 136 82 598 (may vary by state)
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PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
INVESCO VIF - Blue Chip Growth Fund
INVESCO VIF - Dynamics Fund
INVESCO VIF - Equity Income Fund
INVESCO VIF - Financial Services Fund
INVESCO VIF - Health Sciences Fund
INVESCO VIF - High Yield Fund
INVESCO VIF - Market Neutral Fund
INVESCO VIF - Realty Fund
INVESCO VIF - Small Company Growth Fund
INVESCO VIF - Technology Fund
INVESCO VIF - Telecommunications Fund
INVESCO VIF - Total Return Fund
INVESCO VIF - Utilities Fund
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PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
NOTE: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the Agreement
to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
- name (legal name as found on account registration)
- address
- Fund or account number
- coding to state number of units
- individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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5. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
- Voting Instruction Card(s)
- one proxy notice and statement (one document)
- return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
- "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important. One
copy will be supplied by the Fund.)
- cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including,) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
NOTE: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
NOTE: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
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13. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Fund may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
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