PARTICIPATION AGREEMENT
AMONG
XXXXXX INVESTORS FUND
ZURICH XXXXXX INVESTMENTS, INC.
XXXXXX DISTRIBUTORS, INC.
and
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
THIS AGREEMENT, made and entered into as of this 5th day of November,
1996 by and among Allmerica Financial Life Insurance and Annuity Company
(hereinafter, the "Company"), a Delaware insurance company, on its own behalf
and on behalf of each separate account of the Company set forth on Schedule A
hereto as may be amended from time to time (each account hereinafter referred
to as an "Account"), Xxxxxx Investors Fund, a business trust organized under
the laws of the Commonwealth of Massachusetts (hereinafter the "Fund"),
Zurich Xxxxxx Investments, Inc. (hereinafter the "Adviser"), a Delaware
corporation, and Xxxxxx Distributors, Inc. (hereinafter the "Underwriter"), a
Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance and variable annuity
contracts (hereinafter the "Variable Insurance Products") offered by
insurance companies that have entered into participation agreements with the
Fund (hereinafter "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemption Order");
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities laws;
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts supported wholly or partially by the
Accounts (the "Contracts") under the 1933 Act, and said Contracts are listed
in Schedule A hereto, as it may be amended from time to time by mutual
written agreement;
WHEREAS, each Account is duly established and maintained as a separate
account, established by resolution of the Board of Directors of the Company,
on the date shown for such Account on Schedule A hereto, to set aside and
invest assets attributable to the aforesaid Contracts;
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act;
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios listed
in Schedule A hereto, as it may be amended from time to time at the request
of the Fund, Underwriter and Adviser and with the consent of the Company,
which consent will not be unreasonably withheld ("Designated Portfolios"), on
behalf of the Accounts to fund the aforesaid Contracts, and the Underwriter
is authorized to sell such shares to unit investment trusts such as the
Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund
("Unaffiliated Funds") on behalf of the Accounts to fund the Contracts if and
to the extent that the Underwriter and the Adviser so agree, in their sole
discretion;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Underwriter agree as follows:
ARTICLE I
SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios that the Accounts order, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Designated Portfolios.
2
1.2 The Fund agrees to make shares of each Designated Portfolio available
for purchase at the applicable net asset value per share by the Company and
the Accounts on those days on which the Fund calculates such Designated
Portfolio's net asset value pursuant to rules of the SEC, and the Fund shall
use reasonable efforts to calculate such net asset value on each day when the
New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Fund ("Board") may refuse to sell shares of any
Designated Portfolio to any person, or suspend or terminate the offering of
shares of any Designated Portfolio if such action is required by law or by
regulatory authorities having jurisdiction, or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of the
shareholders of such Designated Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies or their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The
Fund and the Underwriter will not sell shares of any Designated Portfolio to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Sections 2.1, 3.4, 3.5 and 3.6 and
Article VII of this Agreement is in effect to govern such sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except
that the Fund reserves the right to suspend the right of redemption or
postpone the date of payment or satisfaction upon redemption consistent with
Section 22(e) of the 1940 Act and any rules thereunder, and in accordance
with the procedures and policies of the Fund as described in the Fund's then
current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the designee
of the Fund for receipt of purchase and redemption orders from the Accounts,
and receipt by such designee shall constitute receipt by the Fund; provided
that the Company receives the order prior to the determination of net asset
value as set forth in the Fund's then current prospectus and the Fund
receives notice of such order by 9:30 a.m. New York time on the next
following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each Designated
Portfolio offered by the Fund's then current prospectus in accordance with
the provisions of such prospectus.
1.7 The Company shall pay for shares of a Designated Portfolio on the next
Business Day after receipt of an order to purchase shares of such Designated
Portfolio. Payment shall be in federal funds transmitted by wire by 11:00
a.m. New York time. If payment in federal funds for any purchase is not
received or is received by the Fund after 11:00 a.m. New York time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse
the Fund for any
3
charges, costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by, the Fund, or
any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. For
purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the shares of a Designated Portfolio will be by
book entry only. Stock certificates will not be issued to the Company or any
Account. Shares of a Designated Portfolio ordered from the Fund will be
recorded in an appropriate title for each Account or the appropriate
subaccount of each Account.
1.9 The Fund shall furnish same-day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital
gain distributions payable on shares of the Designated Portfolios. The
Company hereby elects to receive all such income, dividends, and capital gain
distributions as are payable on shares of a Designated Portfolio in
additional shares of that Designated Portfolio. The Company reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
The Fund shall use its best efforts to furnish advance notice of the day such
dividends and distributions are expected to be paid.
1.10 The Fund shall make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. New York time) and shall use its best efforts to make such net asset
value per share available by 7:00 p.m. New York time.
1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the shares of the Designated Portfolios (and
other Portfolios of the Fund) may be sold to other insurance companies
(subject to Section 1.3 and Article VII hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however,
that the Adviser and Underwriter consent to the use of such other investment
company in their sole discretion.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be continually issued,
offered for sale and sold in compliance in all material respects with all
applicable federal and state laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability
requirements. 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 prior
4
to any issuance or sale thereof as a separate account under the Delaware
insurance laws and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a separate account
for the Contracts.
2.2 The Fund represents and warrants that shares of the Designated
Portfolios sold pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sold in compliance with all applicable
federal securities laws and that the Fund is and shall remain registered
under the 0000 Xxx. The Fund shall 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 shall
register and qualify the shares of the Designated Portfolios for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
may make such payments in the future subject to applicable law.
2.4 The Fund makes no representations as to whether any aspect of its
operation, including but not limited to, investments policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states, except that the Fund represents that the investment policies,
fees and expenses of the Designated Portfolios are and shall at all times
remain in compliance with the insurance laws of the State of Delaware to the
extent required to perform this Agreement. The Company will advise the Fund
in writing as to any requirements of Delaware insurance law that affect the
Designated Portfolios, and the Fund will be deemed to be in compliance with
this Section 2.4 so long as the Fund complies with such advice of the Company.
2.5 The Fund represents that it is lawfully organized and validly existing
as a business trust under the laws of the Commonwealth of Massachusetts and
that it does and will comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the shares of
the Designated Portfolios in accordance with any applicable state and federal
securities laws.
2.7 The Adviser represents and warrants that it is and shall remain duly
registered as an investment adviser under all applicable federal and state
securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with any applicable state and
federal securities laws.
2.8 The Fund, the Adviser and the Underwriter represent and warrant that all
their directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money
5
and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimum coverage required currently by
Rule 17g-1 of the 1940 Act or such related provisions as may be promulgated
from time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.9 The Company represents and warrants that all its directors, officers,
employees, investment advisers, and other individuals or entities employed or
controlled by the Company dealing with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage in an amount
not less than $20 million. The aforesaid bond includes coverage for larceny
and embezzlement and is issued by a reputable bonding company. The Company
agrees that this bond or another bond containing these provisions will always
be in effect, and agrees to notify the Fund, the Adviser and the Underwriter
in the event that such coverage no longer applies.
2.10 The Company represents and warrants that all shares of the Designated
Portfolios purchased by the Company will be purchased on behalf of one or
more unmanaged separate accounts that offer interests therein that are
registered under the 1933 Act and upon which a registration fee has been or
will be paid; and the Company acknowledges that the Fund intends to rely upon
this representation and warranty for purposes of calculating SEC registration
fees payable with respect to such shares of the Designated Portfolios
pursuant to Instruction B.5 to Form 24F-2 or any similar form or SEC
registration fee calculation procedure that allows the Fund to exclude shares
so sold for purposes of calculating its SEC registration fee. The Company
agrees to cooperate with the Fund on no less than an annual basis to certify
as to its continuing compliance with this representation and warranty.
ARTICLE III
PROSPECTUSES, STATEMENTS OF ADDITIONAL
INFORMATION, AND PROXY STATEMENTS; VOTING
3.1 The Fund shall provide the Company with as many copies of the Fund's
current prospectus for the Designated Portfolios as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for a Designated
Portfolio is amended) to have the prospectus for the Contracts and the
prospectus for the Designated Portfolios printed together in one document.
Expenses with respect to the foregoing shall be borne as provided under
Article V.
3.2 The Fund's prospectus shall disclose that (a) the Fund is intended to be
a funding vehicle for all types of variable annuity and variable life
insurance contracts offered by Participating Insurance Companies, (b)
material irreconcilable conflicts of interest may arise, and (c) the Fund's
Board will monitor events in order to identify the existence of any material
irreconcilable conflicts
6
and determine what action, if any, should be taken in response to such
conflicts. The Fund hereby notifies the Company that disclosure in the
prospectus for the Contracts regarding the potential risks of mixed and
shared funding may be appropriate. Further, the Fund's prospectus shall
state that the current Statement of Additional Information ("SAI") for the
Fund is available from the Company (or, in the Fund's discretion, from the
Fund), and the Fund shall provide a copy of such SAI to any owner of a
Contract who requests such SAI and to the Company in such quantities as the
Company may reasonably request. Expenses with respect to the foregoing shall
be borne as provided under Article V.
3.3 The Fund shall provide the Company with copies of its proxy material,
reports to shareholders, and other communications to shareholders for the
Designated Portfolios in such quantity as the Company shall reasonably require
for distributing to Contract owners. Expenses with respect to the foregoing
shall be borne as provided under Article V.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the shares of each Designated Portfolio in accordance with
instructions received from Contract owners; and
(iii) vote shares of each Designated Portfolio for which no instructions
have been received in the same proportion as shares of such
Designated Portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners or to
the extent otherwise required by law. The Company reserves the right to vote
shares of each Designated Portfolio held in any separate account in its own
right, to the extent permitted by law.
3.5 The Company shall be responsible for assuring that each of its separate
accounts participating in a Designated Portfolio calculates voting privileges
as required by the Shared Funding Exemption Order and consistent with any
reasonable standards that the Fund has adopted or may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well
as with Sections 16(a) and, if and when applicable, Section 16(b). Further,
the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
or trustees and with whatever rules the SEC may promulgate from time to time
with respect thereto. The Fund reserves the right, upon prior written notice
to the Company, to take all actions, including but not limited to, the
dissolution,
7
termination, merger and sale of all assets of the Fund or any Designated
Portfolio upon the sole authorization of the Board, to the extent permitted
by the laws of the Commonwealth of Massachusetts and the 0000 Xxx.
3.7 It is understood and agreed that, except with respect to information
regarding the Fund, the Underwriter, the Adviser or Designated Portfolios
provided in writing by the Fund, the Underwriter or the Adviser, none of the
Fund, the Underwriter or the Adviser is responsible for the content of the
prospectus or statement of additional information for the Contracts.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund
or the Underwriter, each piece of sales literature or other promotional
material ("sales literature") that the Company develops or uses and in which
the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named, at least fifteen calendar days prior to its use. No
such material shall be used if the Fund or its designee reasonably objects to
such use within fifteen calendar days after receipt of such material. The
Fund or its designee reserves the right to reasonably object to the continued
use of such material, and no such material shall be used if the Fund or its
designee so object.
4.2 The Company shall not give any information or make any representation or
statement 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 the shares of the
Designated Portfolios, as such registration statement, prospectus or SAI may
be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company, each piece of sales literature that the Fund or
Underwriter develops or uses in which the Company and/or its Account is
named, at least fifteen calendar days prior to its use. No such material
shall be used if the Company reasonably objects to such use within fifteen
calendar days after receipt of such material. The Company reserves the right
to reasonably object to the continued use of such material and no such
material shall be used if the Company so objects.
4.4 The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus, or statement of additional
information for the Contracts, as such registration statement, prospectus or
statement of additional information may be amended or supplemented from time
to time, or in published reports for the Accounts which are the public domain
or approved by the Company for
8
distribution to Contract owners, or in sales literature approved by
the Company or its designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the Designated Portfolios,
contemporaneously with the filing of such document(s) with the SEC or other
regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
shareholder reports, solicitations for voting instructions, sales literature,
applications for exemptions, request for no-action letters, and all
amendments to any of the above, that relate to the Contracts or the Accounts,
contemporaneously with the filing of such document(s) with the SEC or other
regulatory authorities.
4.7 For purposes of this Agreement, the phrase "sales literature" includes,
but is not limited to, any of the following: advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article) and
educational or training materials or other communications distributed or made
generally available to some or all agents or employees.
4.8 At the request of any party to this Agreement, any other party will make
available to the requesting party's independent auditors all records, data
and access to operating procedures that may reasonably be requested in
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
4.9 Without the written consent of the Fund and the Underwriter, the Company
shall not, and shall not permit any affiliate of the Company to, directly or
indirectly solicit, encourage or induce: (i) Contract owner transactions
that will result in the redemption of shares of a Designated Portfolio; (ii)
Contract owners to change the investment manager or sub-adviser of a
Designated Portfolio; or (iii) Contract owners to change, modify, substitute,
add or delete any investment option.
9
ARTICLE V
FEES AND EXPENSES
5.1 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, except and as further provided in Schedule B. The
Fund shall see to it that all shares of the Designated Portfolios are
registered, duly authorized for issuance and sold in compliance with
applicable federal securities laws and, if and to the extent deemed advisable
by the Fund, in accordance with applicable state securities laws prior to
their sale.
5.2 The parties hereto shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, SAI, proxy materials and reports as
provided in Schedule B.
5.3 Administrative services to variable Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the
Fund, Underwriter or Adviser. The Fund recognizes the Company as the sole
shareholder of shares of the Designated Portfolios issued under the Agreement.
5.4 The Fund shall not pay and neither the Adviser nor the Underwriter shall
pay any fee or other compensation to the Company under this Agreement,
although the parties will bear certain expenses in accordance with Schedule B
and other provisions of this Agreement.
ARTICLE VI
DIVERSIFICATION AND QUALIFICATION
6.1 The Fund will invest the assets of each Designated Portfolio in such a
manner as to ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Internal Revenue
Code of 1986, as amended ("Code") and the regulations issued thereunder (or
any successor provisions). Without limiting the scope of the foregoing, the
Fund will, with respect to each Designated Portfolio, comply with Section
817(h) of the Code and Treasury Regulation Section 1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments
or other modifications or successor provisions to such Section or
Regulations. In the event of a breach of this Article VI, the Fund will take
all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the affected Designated Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation Section
1.817-5.
6.2 The Fund represents that each Designated Portfolio is currently
qualified (and for new Designated Portfolios, intends to qualify) as a
Regulated Investment Company under Subchapter M of the Code, and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that a Designated
Portfolio has ceased to so qualify or that a Designated Portfolio might not
so qualify in the future.
10
6.3 The Company represents that the Contracts are currently, and at the time
of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make
every effort to maintain such treatment, and that it will notify the Fund,
the Adviser and the Underwriter immediately upon having a reasonable basis
for believing the Contracts have ceased to be so treated or that they might
not be so treated in the future. The Company agrees that any prospectus
offering a contract that is a "modified endowment contract" as that term is
defined in Section 7702A of the Code (or any successor or similar provision),
shall identify such contract as a modified endowment contract.
ARTICLE VII
POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between 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: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Designated Portfolio are being
managed; (e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract owners; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of
contract owners. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company and the Adviser will report any potential or existing
conflicts of which each is aware to the Board. The Company will assist the
Board in carrying out its responsibilities under the Shared Funding Exemption
Order, by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded. At least annually, and more frequently
if deemed appropriate by the Board, the Company shall submit to the Adviser,
and the Adviser shall at least annually submit to the Board, such reports,
materials and data as the Board may reasonably request so that the Board may
fully carry out the obligations imposed upon it by the conditions contained
in the Shared Funding Exemption Order; and said reports, materials and data
shall be submitted more frequently if deemed appropriate by the Board. The
responsibility to report such information and conflicts to the Board will be
carried out with a view only to the interests of the contract owners.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and any other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested Board members), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and
including: (a), withdrawing the assets
11
allocable to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different investment
medium, which may include another Designated Portfolio of the Fund, or
submitting to a vote of all affected contract owners the question whether
such segregation should be implemented and, as appropriate, segregating the
assets of any appropriate group (I.E. annuity contract owners, life insurance
contract owners, or variable 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.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in any Designated Portfolio and terminate this Agreement with
respect to such Account provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
members of the Board. The Company will bear the cost of any remedial action,
including such withdrawal and termination. No penalty will be imposed by the
Fund upon the affected Account for withdrawing assets from the Fund in the
event of a material irreconcilable conflict. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented, and until the
effective date of such termination the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of such Designated Portfolio.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the
affected Account's investment in the affected Designated Portfolio and
terminate this Agreement with respect to such Account within six months after
the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested members of the Board. Until the effective date of such
termination the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of such Designated
Portfolios.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict; but
in no event will the Fund be required to establish a new funding medium for
the Contracts. The Company shall not be required by Section 7.3 to establish
a new funding medium for the Contract if an offer to do so has been declined
by vote of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable
material conflict, then the Company will withdraw an Account's investment in
any Designated Portfolio and terminate this Agreement within six (6) months
after the Board informs
12
the Company in writing of the foregoing determination; provided, however,
that such withdrawal and termination shall be limited to the extent required
by any such material irreconcilable conflict as determined by a majority of
the disinterested members of the Board.
7.7 If and to the extent the Shared Funding Exemption Order contains terms
and conditions different from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and
7.5 of this Agreement, then the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with the Shared Funding Exemption Order, and Sections 3.4, 3.5, 3.6,
7.1, 7.2, 7.3, 7.4 and 7.5 of the Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in the Shared Funding Exemption Order or any amendment thereto.
If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemption Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemption Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1,
7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Underwriter and each of their officers, trustees and directors
and each person, if any, who controls the Fund, the Adviser or the
Underwriter within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.1) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar
as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
shares of the Designated Portfolios or the Contracts and;
(i) 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 statement of additional
information for the Contracts or contained in the Contracts or sales
literature 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
therein or necessary to make the statements therein
13
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 in writing to the Company by or on
behalf of the Fund for use in the Registration Statement, prospectus or
statement of additional information for the Contracts or in the
Contracts or sales literature for the Contracts (for any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or shares of the Designated Portfolios; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus, SAI or sales literature of the Fund not supplied
by the Company or persons under its control) or wrongful conduct of the
Company or persons under its authorization or control, with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
prospectus, SAI or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund by
or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in any
Registration Statement, prospectus, statement of additional information
or sales literature for any Unaffiliated Fund, or arise out of or are
based upon 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, or otherwise pertain to or arise in connection
with the availability of any Unaffiliated Fund as an underlying funding
vehicle in respect of the Contracts; or
(vi) arise out of or result from 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 of this Agreement
by the Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c).
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would
14
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 its obligations or duties under this Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company
of any such claim shall not relieve the Company from any liability that it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision, except to the
extent that the Company has been prejudiced by such failure to give notice.
In case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action and to settle the
claim at its own expense provided, however, that no such settlement shall,
without the Indemnified Parties' written consent, include any factual
stipulation referring to the Indemnified Parties or their conduct. After
notice from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Company will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the shares of the Designated Portfolios or the
Contracts or the operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
(a) The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
shares of the Designated Portfolios or the Contracts; and
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, prospectus or SAI of the Fund or sales literature of the Fund
developed by the Underwriter (or any
15
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 the Underwriter or
Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or its sales literature (or any
amendment or supplement thereto) or otherwise for use in connection with
the sale of the Contracts or shares of the Designated Portfolios; 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 Contracts not supplied
by the Underwriter or persons under its control) or wrongful conduct of
the Fund or Underwriter or person under their control with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; 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 Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company
by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance or such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Accounts, whichever is
applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have
16
notified the Underwriter 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 Underwriter of any such claim
shall not relieve the Underwriter 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, except to the extent that the
Underwriter has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Party, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action and to settle the claim
at is own expense; provided, however, that no such settlement shall, without
the Indemnified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter 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 Company agrees promptly to notify the Underwriter 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
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
of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund); or litigation (including
legal and other expenses) to which the Indemnified Parties may be required to
pay or may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages, liabilities or
expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and qualification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Fund;
17
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
(b) The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Underwriter, the Adviser or the
Accounts, whichever is applicable.
(c) The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify the Fund of any such claim shall
not relieve the Fund from any liability that it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action and to settle the claim at its own expense;
provided, however, that no such settlement shall, without the Indemnified
Parties' written consent, include any factual stipulation referring to the
Indemnified Parties or their conduct. After notice from the Fund to such
party of the Fund's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it, and the Fund will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation.
(d) The Company, the Adviser and the Underwriter agree to notify the
Fund promptly of the commencement of any litigation or proceeding against it
or any of its respective officers or directors in connection with the
Agreement, the issuance or sale of the Contracts, the operation of any
Account, or the sale or acquisition of shares of the Designated Portfolios.
ARTICLE IX
APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from the statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding
18
Exemption Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X
TERMINATION
10.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to any
Designated Portfolio, by twelve (12) months' advance written notice delivered
to the other parties; provided, however, that such notice shall not be given
earlier than six (6) years following the date of this Agreement; or
(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio based
upon the Company's reasonable and good faith determination that shares of
such Designated Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio if the
shares of such Designated Portfolio are not registered, issued or sold in
accordance with applicable state and/or federal securities laws or such law
precludes the use of such shares to fund the Contracts issued or to be issued
by the Company; or
(d) termination by the Fund, the Adviser or Underwriter in the event
that formal administrative proceedings are instituted against the Company or
any affiliate by the NASD, the SEC, or the Insurance Commissioner or like
official 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
operation of any Account, or the purchase of the shares of a Designated
Portfolio or the shares of any Unaffiliated Fund, provided, however, that the
Fund, the Adviser or Underwriter determines in its sole judgement exercised
in good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund, the Adviser or Underwriter by
the NASD, the SEC, or any state securities or insurance department or any
other regulatory body, provided, however, that the Company determines in its
sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Fund
or Underwriter to perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio in the
event that such Designated Portfolio
19
ceases to qualify as a Regulated Investment Company under Subchapter M or
fails to comply with the Section 817(h) diversification requirements
specified in Article VI hereof, or if the Company reasonably believes that
such Designated Portfolio may fail to so qualify or comply; or
(g) termination by the Fund, the Adviser or Underwriter by written
notice to the Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by any of the Fund, the Adviser or the Underwriter by
written notice to the Company, if any of the Fund, the Adviser or the
Underwriter, respectively, shall determine, in their sole judgement exercised
in good faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, insurance company rating or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(i) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund, the Adviser or the
Underwriter has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity and that material adverse
change or publicity will have a material adverse effect on the Fund's or the
Underwriter's ability to perform its obligations under this Agreement; or
(j) at the option of Company, as one party, or the Fund, the Adviser
and the Underwriter, as one party, upon the other party's material breach of
any provision of this Agreement upon 30 days' notice and opportunity to cure.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter may, at their sole option, continue
to make available additional shares of a Designated Portfolio 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, the owners of the Existing Contracts
may in such event be permitted to reallocate investments in the Designated
Portfolios, redeem investments in the Designated Portfolios and/or invest in
the Designated Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.2 shall
not apply to any termination under Article VII and the effect of such Article
VII termination shall be governed by Article VII of this Agreement. The
parties further agree that this Section 10.2 shall not apply to any
termination under Section 10.1(g) of this Agreement.
10.3 Notwithstanding termination of this Agreement, the Company shall not
redeem shares of a Designated Portfolio attributable to the Contracts (as
opposed to shares of a Designated Portfolio attributable to the Company's
assets held in an Account) except (i) as necessary to implement Contract
owner initiated or approved transactions provided the Company shall not, and
shall not permit any affiliate of the Company to, directly or indirectly
solicit, encourage or induce any such
20
Contract owner initiated or approved transaction so long as the Fund and the
Underwriter continue to make additional shares of the Designated Portfolio
available pursuant to Section 10.2 above, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption").
Upon request, the Company will promptly furnish to the Fund, the Adviser and
the Underwriter the opinion of counsel for the Company (which counsel shall
be reasonably satisfactory to the Fund, the Adviser and the Underwriter) to
the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, the Company shall not prevent Contract
owners from allocating payments to a Designated Portfolio that was otherwise
available under the Contracts.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
Xxxxxx Investors Fund
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
If to the Company:
Allmerica Financial Life Insurance and Annuity Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Secretary
If to the Adviser:
Zurich Xxxxxx Investments, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
21
If to the Underwriter:
Xxxxxx Distributors, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
ARTICLE XII
MISCELLANEOUS
12.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.4 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the Delaware Insurance Commissioner
with any information or reports in connection with services provided under
this Agreement that such Commissioner may request in order to ascertain
whether the variable annuity operations of the Company are being conducted in
a manner consistent with the Delaware variable annuity laws and regulations
and any other applicable law or regulations.
12.5 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.6 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.7 All persons are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which on file with
the Secretary of the Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund with
respect to a Designated Portfolio hereunder are not binding upon any of the
trustees, officers or shareholders of the Fund
22
individually, but are binding upon only the assets and property of such
Designated Portfolio. All parties dealing with the Fund with respect to a
Designated Portfolio shall look solely to the assets of such Designated
Portfolio for the enforcement of any claims against the Fund hereunder.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
COMPANY: Allmerica Financial Life Insurance and Annuity Company
By: /s/ Xxxxxxx X. Xxxxxx
_______________________________________
Title: President
_______________________________________
Date: November 6, 1996
_______________________________________
FUND: Xxxxxx Investors Fund
By: /s/ Xxxx X. Xxxx
_______________________________________
Title: Vice President
_______________________________________
Date: November 5, 1996
_______________________________________
ADVISER Zurich Xxxxxx Investments, Inc.
By: /s/ Xxxx X. Xxxx
_______________________________________
Title: President
_______________________________________
Date: November 5, 1996
_______________________________________
UNDERWRITER Xxxxxx Distributors, Inc.
By: /s/ Xxxxx X. Xxxxxxxxxx
_______________________________________
Title: President
_______________________________________
Date: November 5, 1996
_______________________________________
23
SCHEDULE A
NAME OF SEPARATE ACCOUNT AND DATE
ESTABLISHED BY BOARD OF DIRECTORS
Separate Account KG (6/13/96)
Separate Account KGC (6/13/96)
CONTRACTS FUNDED
BY SEPARATE ACCOUNT
Xxxxxx Gateway Elite
Xxxxxx Gateway Custom
DESIGNATED PORTFOLIOS*
Money Market Portfolio
Total Return Portfolio
High Yield Portfolio
Growth Portfolio
Government Securities Portfolio
International Portfolio
Small Cap Growth Portfolio
Investment Grade Bond Portfolio
Value Portfolio
Small Cap Value Portfolio
Value+Growth Portfolio
Horizon 20+ Portfolio
Horizon 10+ Portfolio
Horizon 5 Portfolio
________
* Additional Designated Portfolios may be added at the request of the
Fund, Adviser and Underwriter and with the consent of the Company, which
consent will not be unreasonably withheld.
A-1
SCHEDULE B
EXPENSES
1. In the event the prospectus, SAI, annual report or other communication
of the Fund is combined with a document of another party, the Fund will
pay the costs based upon the relative number of pages attributable to
the Fund.
2. Expenses allocated to the Company on this Schedule may be subject to
further allocation between the Company and Xxxxxx Distributors, Inc.
("KDI") pursuant to a Wholesaling Agreement between the Company and KDI
related to the Contracts.
RESPONSIBLE
ITEM FUNCTION PARTY
================================================================================
PROSPECTUS
--------------------------------------------------------------------------------
Update Typesetting Fund (1)
--------------------------------------------------------------------------------
New Sales: Printing KDI/Company (2)
Distribution KDI/Company (2)
--------------------------------------------------------------------------------
Existing Printing Fund (1)
Owners: Distribution Fund (1)
--------------------------------------------------------------------------------
STATEMENTS OF Same as Prospectus Same
ADDITIONAL
INFORMATION
--------------------------------------------------------------------------------
PROXY MATERIALS OF THE Typesetting Fund
FUND Printing Fund
Distribution Fund
--------------------------------------------------------------------------------
ANNUAL REPORTS &
OTHER COMMUNICATIONS
WITH SHAREHOLDERS
OF THE FUND
--------------------------------------------------------------------------------
All Typesetting Fund (1)
--------------------------------------------------------------------------------
Marketing: Printing KDI/Company (2)
Distribution KDI/Company (2)
--------------------------------------------------------------------------------
Existing Owners: Printing Fund (1)
Distribution Fund (1)
--------------------------------------------------------------------------------
B-1
--------------------------------------------------------------------------------
OPERATIONS OF FUND All operations and related expenses, Fund
including the cost of registration
and qualification of the Fund's
shares, preparation and filing of the
Fund's prospectus and registration
statement, proxy materials and
reports, the preparation of all
statements and notices required by
any federal or state law and all
taxes on the issuance of the Fund's
shares, and all costs of management
of the business affairs of the Fund.
================================================================================
B-2
