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FORM N-6, ITEM 26(h)
PARTICIPATION AGREEMENTS
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Form of Agreement
Participation Agreement
as of May 1, 2008
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx Distributors, Inc.
American United Life Insurance Company
OneAmerica Securities, Inc.
CONTENTS
Section Subject Matter
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules to this Agreement
A. The Company and its Distributor
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust
D. Contracts of the Company
E. [this schedule is not used]
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. Parties and Purpose
This agreement (the "Agreement") is entered by and between certain portfolios
and classes thereof, specified below and in Schedule C, of Franklin Xxxxxxxxx
Variable Insurance Products Trust, an open-end management investment company
organized as a statutory trust under Delaware law (the "Trust"),
Franklin/Xxxxxxxxx Distributors, Inc., a California corporation which is the
principal underwriter for the Trust (the "Underwriter," and together with the
Trust, "we" or "us"), the insurance company identified on Schedule A (together
"you") and your distributor, on your own behalf and on behalf of each segregated
asset
account maintained by you that is listed on Schedule B, as that schedule may be
amended from time to time ("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the Accounts, to
purchase the shares, and classes of shares, of portfolios of the Trust
("Portfolios") that are identified on Schedule C, consistent with the terms of
the prospectuses of the Portfolios, solely for the purpose of funding benefits
of your variable life insurance policies or variable annuity contracts
("Contracts") that are identified on Schedule D. This Agreement does not
authorize any other purchases or redemptions of shares of the Trust.
2. Representations and Warranties
2.1 Representations and Warranties by You
You represent and warrant that:
2.1.1 You are an insurance company duly organized and in good standing under the
laws of your state of incorporation.
2.1.2 All of your directors, officers, employees, and other individuals or
entities dealing with the money and/or securities of the Trust are and shall be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust, in an amount not less than $5 million. Such bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. You agree to make all reasonable efforts to see that this bond
or another bond containing such provisions is always in effect, and you agree to
notify us in the event that such coverage no longer applies.
2.1.3 Each Account is a duly organized, validly existing segregated asset
account under applicable insurance law and interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract"
within the meaning of such terms under Section 817 of the Internal Revenue Code
of 1986, as amended ("Code") and the regulations thereunder. You will use your
best efforts to continue to meet such definitional requirements, and will notify
us immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.
2.1.4 Each Account either: (i) has been registered or, prior to any issuance or
sale of the Contracts, will be registered as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act"); or (ii) has not been so registered
in proper reliance upon an exemption from registration under Section 3(c) of the
1940 Act; if the Account is exempt from registration as an investment company
under Section 3(c) of the 1940 Act, you will use your best efforts to maintain
such exemption and will notify us immediately upon having a reasonable basis for
believing that such exemption no longer applies or might not apply in the
future.
2.1.5 The Contracts or interests in the Accounts: (i) are or, prior to any
issuance or sale will be, registered as securities under the Securities Act of
1933, as amended (the "1933 Act"); or (ii) are not registered because they are
properly exempt from registration
under Section3 (a)(2) of the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under Section 4(2) or
Regulation D of the 1933 Act, in which case you will make every effort to
maintain such exemption and will notify us immediately upon having a reasonable
basis for believing that such exemption no longer applies or might not apply in
the future.
2.1.6 The Contracts: (i) will be sold by broker-dealers, or their registered
representatives, who are registered with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act")
and who are members in good standing of the Financial Industry Regulatory
Authority ("FINRA"); (ii) will be issued and sold in compliance in all material
respects with all applicable federal and state laws; and (iii) will be sold in
compliance in all material respects with state insurance suitability
requirements and FINRA suitability guidelines. Without limiting the foregoing,
you agree that in recommending to a Contract owner the purchase, sale or
exchange of any subaccount units under the Contracts, you shall have reasonable
grounds for believing that the recommendation is suitable for such Contract
owner and, to the extent such recommendations are made by broker-dealers not
affiliated with you, you shall require in written agreements with such
broker-dealers that they have reasonable grounds for believing that such
recommendation is suitable for such Contract owner.
2.1.7 The Contracts currently are and will be treated as annuity contracts or
life insurance contracts under applicable provisions of the Code and you will
use your best efforts to maintain such treatment; you will notify us immediately
upon having a reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.1.8 The fees and charges deducted under each Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by you.
2.1.9 You will use shares of the Trust only for the purpose of funding benefits
of the Contracts through the Accounts.
2.1.10 Contracts will not be sold outside of the United States.
2.1.11 With respect to any Accounts which are exempt from registration under the
1940 Act in reliance on 3(c)(1) or Section 3(c)(7) thereof:
2.1.11.1 the principal underwriter for each such Account and any
subaccounts thereof is a registered broker-dealer with the SEC under the
1934 Act;
2.1.11.2 the shares of the Portfolios of the Trust are and will continue to
be the only investment securities held by the corresponding subaccounts;
and
2.1.11.3 with regard to each Portfolio, you, on behalf of the corresponding
subaccount, will:
(a) vote such shares held by it in the same proportion as the vote of
all other holders of such shares; and
(b) refrain from substituting shares of another security for such
shares unless the SEC has approved such substitution in the manner
provided in Section 26 of the 1940 Act.
2.2 Representations and Warranties by the Trust
The Trust represents and warrants that:
2.2.1 It is duly organized and in good standing under the laws of the State of
Delaware.
2.2.2 All of its directors, officers, employees and others dealing with the
money and/or securities of a Portfolio are and shall be at all times covered by
a blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimum coverage required by Rule 17g-1 or other
regulations under the 1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
2.2.3 It is registered as an open-end management investment company under the
0000 Xxx.
2.2.4 Each class of shares of the Portfolios of the Trust is registered under
the 0000 Xxx.
2.2.5 It will amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares.
2.2.6 It will comply, in all material respects, with the 1933 and 1940 Acts and
the rules and regulations thereunder.
2.2.7 It is currently qualified as a "regulated investment company" under
Subchapter M of the Code, it will make every effort to maintain such
qualification, and will notify you 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.
2.2.8 The Trust will use its best efforts to comply with the diversification
requirements for variable annuity, endowment or life insurance contracts set
forth in Section 817(h) of the Code, and the rules and regulations thereunder,
including without limitation Treasury Regulation 1.817-5. Upon having a
reasonable basis for believing any Portfolio has ceased to comply and will not
be able to comply within the grace period
afforded by Regulation 1.817-5, the Trust will notify you immediately and will
take all reasonable steps to adequately diversify the Portfolio to achieve
compliance.
2.2.9 It currently intends for one or more classes of shares (each, a "Class")
to make payments to finance its distribution expenses, including service fees,
pursuant to a plan ("Plan") adopted under rule 12b-1 under the 1940 Act ("Rule
12b-1"), although it may determine to discontinue such practice in the future.
To the extent that any Class of the Trust finances its distribution expenses
pursuant to a Plan adopted under rule 12b-1, the Trust undertakes to comply with
any then current SEC interpretations concerning rule 12b-1 or any successor
provisions.
2.3 Representations and Warranties by the Underwriter
The Underwriter represents and warrants that:
2.3.1 It is registered as a broker dealer with the SEC under the 1934 Act, and
is a member in good standing of the FINRA.
2.3.2 Each investment adviser (each, an "Adviser") of a Portfolio, as indicated
in the current prospectus of the Portfolio, is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended or exempt from
such registration.
2.4 Warranty and Agreement by Both You and Us
We received an order from the SEC dated November 16, 1993 (file no. 812-8546),
which was amended by a notice and an order we received on September 17, 1999 and
October 13, 1999, respectively (file no. 812-11698) (collectively, the "Shared
Funding Order,: attached to this Agreement as Schedule H). The Shared Funding
Order grants exemptions from certain provisions of the 1940 Act and the
regulations thereunder to the extent necessary to permit shares of the Trust to
be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
qualified pension and retirement plans outside the separate account context.
2.4.1 You and we both warrant and agree that both you and we will comply with
the "Applicants' Conditions" prescribed in the Shared Funding Order as though
such conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges. In order for the Trust's Board of Trustees to perform its duty to
monitor for conflicts of interest, you agree to inform us of the occurrence of
any of the events specified in condition 2 of the Shared Funding Order to the
extent that such event may or does result in a material conflict of interest as
defined in that order.
2.4.2 As covered financial institutions we, only with respect to Portfolio
shareholders, and you each undertake and agree to comply, and to take full
responsibility in complying with any and all applicable laws, regulations,
protocols and other requirements relating to money laundering including, without
limitation, the International Money
Laundering Abatement and Anti-Terrorist
Financing Act of 2001 (Title III of the USA PATRIOT Act).
3. Purchase and Redemption of Trust Portfolio Shares
3.1 Availability of Trust Portfolio Shares
3.1.1 We will make shares of the Portfolios available to the Accounts for the
benefit of the Contracts. The shares will be available for purchase by the
Accounts at the net asset value per share next computed after we (or our agent,
or you as our designee) receive a purchase order, as established in accordance
with the provisions of the then current prospectus of the Trust. All such orders
are subject to acceptance by us and by the Portfolio or its transfer agent, and
become effective only upon confirmation by us. Notwithstanding the foregoing,
the Trust's Board of Trustees ("Trustees") may refuse to sell shares of any
Portfolio to any person, or may suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the Trustees, they deem
such action to be in the best interests of the shareholders of such Portfolio.
3.1.2 Without limiting the other provisions of this Section 3.1, among other
delegations by the Trustees, the Trustees have determined that there is a
significant risk that the Trust and its shareholders may be adversely affected
by investors with short term trading activity and/or whose purchase and
redemption activity follows a market timing pattern as defined in the prospectus
for the Trust, and have authorized the Trust, the Underwriter and the Trust's
transfer agent to adopt procedures and take other action (including, without
limitation, rejecting specific purchase orders in whole or in part) as they deem
necessary to reduce, discourage, restrict or eliminate such trading and/or
market timing activity. You agree that your purchases and redemptions of
Portfolio shares are subject to, and that you will assist us in implementing,
the Market Timing Trading Policy and Additional Policies (as described in the
Trust's prospectus) and the Trust's restrictions on excessive and/or short term
trading activity and/or purchase and redemption activity that follows a market
timing pattern.
3.1.3 We agree that shares of the Trust will be sold only to: (i) life insurance
companies which have entered into fund participation agreements with the Trust
("Participating Insurance Companies") and their separate accounts or to
qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order; and (ii) investment companies in the form of funds of
funds. No shares of any Portfolio will be sold to the general public.
3.2 Manual or Automated Portfolio Share Transactions
3.2.1 Section 3.3 of this Agreement shall govern and Section 3.4 shall not be
operative, unless we receive from you at the address provided in the next
sentence, written notice that you wish to communicate, process and settle
purchase and redemptions for shares (collectively, "share transactions") via the
Fund/SERV and Networking systems of the National Securities Clearing Corporation
("NSCC"). The address for you to send such written
notice shall be: Retirement Services, Franklin Xxxxxxxxx Investments, 000 Xxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000. After giving ten (10) days'
advance written notice at the address provided in the previous sentence of your
desire to use NSCC processing, Section 3.4 of this Agreement shall govern and
Section 3.3 shall not be operative.
3.2.2 At any time when, pursuant to the preceding paragraph, Section 3.4 of this
Agreement governs, any party to this Agreement may send written notice to the
other parties that it chooses to end the use of the NSCC Fund/SERV and
Networking systems and return to manual handling of share transactions. Such
written notice shall be sent: (i) if from you to us, to the address provided in
the preceding paragraph; (ii) if from us to you, to your address in Schedule G
of this Agreement. After giving ten (10) days' advance written notice at the
address as provided in the previous sentence, Section 3.3 of this Agreement
shall govern and Section 3.4 shall not be operative.
3.3 Manual Purchase and Redemption
3.3.1 You are hereby appointed as our designee for the sole purpose of receiving
from Contract owners purchase and exchange orders and requests for redemption
resulting from investment in and payments under the Contracts that pertain to
subaccounts that invest in Portfolios ("Instructions"). "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the SEC
and its current prospectus. "Close of Trading" shall mean the close of trading
on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. You represent
and warrant that all Instructions transmitted to us for processing on or as of a
given Business Day ("Day 1") shall have been received in proper form and time
stamped by you prior to the Close of Trading on Day 1. Such Instructions shall
receive the share price next calculated following the Close of Trading on Day 1,
provided that we receive such Instructions from you before 9:00 a.m. Eastern
Time on the next Business Day ("Day 2"). You represent and warrant that
Instructions received in proper form and time stamped by you after the Close of
Trading on Day 1 shall be treated by you and transmitted to us as if received on
Day 2. Such Instructions shall receive the share price next calculated following
the Close of Trading on Day 2. You represent and warrant that you have, maintain
and periodically test, procedures and systems in place reasonably designed to
prevent Instructions received after the Close of Trading on Day 1 from being
executed with Instructions received before the Close of Trading on Day 1. All
Instructions we receive from you after 9:00 a.m. Eastern Time on Day 2 shall be
processed by us on the following Business Day and shall receive the share price
next calculated following the Close of Trading on Day 2.
3.3.2 We shall calculate the net asset value per share of each Portfolio on each
Business Day, and shall communicate these net asset values to you or your
designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern Time).
3.3.3 You shall submit payment for the purchase of shares of a Portfolio on
behalf of an Account in federal funds transmitted by wire to the Trust or to its
designated custodian, which must receive such wires no later than the close of
the Reserve Bank, which
is 6:00 p.m. Eastern Time, on the same Business Day on which such purchase
orders are transmitted to us for processing on that Business Day in conformance
with section 3.3.1.
3.3.4 We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent or you as our designee) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. We shall make payment for such shares in the manner we
establish from time to time, but in no event shall payment be delayed for a
greater period than is permitted by the 0000 Xxx.
3.3.5 Issuance and transfer of the Portfolio shares will be by book entry only.
Stock certificates will not be issued to you or the Accounts. Portfolio shares
purchased from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
3.3.6 We shall furnish, on or before the ex-dividend date, notice to you of any
income dividends or capital gain distributions payable to the Accounts on the
shares of any Portfolio. You hereby elect to receive all such income dividends
and capital gain distributions as are payable on shares of a Portfolio in
additional shares of that Portfolio, and you reserve the right to change this
election in the future. We will notify you of the number of shares so issued as
payment of such dividends and distributions.
3.3.7 Each party to this Agreement agrees that, in the event of a material error
resulting from incorrect information or confirmations, the parties will seek to
comply in all material respects with the provisions of applicable federal
securities laws.
3.4 Automated Purchase and Redemption
3.4.1 "Fund/SERV" shall mean NSCC's Mutual Fund Settlement, Entry and
Registration Verification System, a system for automated, centralized processing
of mutual fund purchase and redemption orders, settlement, and account
registration; "Networking" shall mean NSCC's system that allows mutual funds and
life insurance companies to exchange account level information electronically;
and "Settling Bank" shall mean the entity appointed by the Trust or you, as
applicable, to perform such settlement services on behalf of the Trust and you,
as applicable, which entity agrees to abide by NSCC's then current rules and
procedures insofar as they relate to same day funds settlement. In all cases,
processing and settlement of share transactions shall be done in a manner
consistent with applicable law.
3.4.2 You are hereby appointed as our designee for the sole purpose of receiving
from Contract owners purchase and exchange orders and requests for redemption
resulting from investment in and payments under the Contracts that pertain to
subaccounts that invest in Portfolios ("Instructions"). "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the SEC
and its current prospectus. "Close of Trading" shall mean the close of trading
on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. Upon receipt
of Instructions, and upon your determination that there are good funds
with respect to Instructions involving the purchase of shares, you will
calculate the net purchase or redemption order for each Portfolio.
3.4.3 On each Business Day, you shall aggregate all purchase and redemption
orders for shares of a Portfolio that you received prior to the Close of
Trading. You represent and warrant that all orders for net purchases or net
redemptions derived from Instructions received by you and transmitted to
Fund/SERV for processing on or as of a given Business Day ("Day 1") shall have
been received in proper form and time stamped by you prior to the Close of
Trading on Day 1. Such orders shall receive the share price next calculated
following the Close of Trading on Day 1, provided that we receive Instructions
from Fund/SERV by 6:30 a.m. Eastern Time on the next Business Day ("Day 2"). You
represent and warrant that orders received in good order and time stamped by you
after the Close of Trading on Day 1 shall be treated by you and transmitted to
Fund/SERV as if received on Day 2. Such orders shall receive the share price
next calculated following the Close of Trading on Day 2. All Instructions we
receive from Fund/SERV after 6:30 a.m. Eastern Time on Day 2 shall be processed
by us on the following Business Day and shall receive the share price next
calculated following the close of trading on Day 2. You represent and warrant
that you have, maintain and periodically test, procedures and systems in place
reasonably designed to prevent orders received after the Close of Trading on Day
1 from being executed with orders received before the Close of Trading on Day 1,
and periodically monitor the systems to determine their effectiveness. Subject
to your compliance with the foregoing, you will be considered the designee of
the Underwriter and the Portfolios, and the Business Day on which Instructions
are received by you in proper form prior to the Close of Trading will be the
date as of which shares of the Portfolios are deemed purchased, exchanged or
redeemed pursuant to such Instructions. Dividends and capital gain distributions
will be automatically reinvested at net asset value in accordance with the
Portfolio's then current prospectus.
3.4.4 We shall calculate the net asset value per share of each Portfolio on each
Business Day, and shall furnish to you through NSCC's Networking or Mutual Fund
Profile System: (i) the most current net asset value information for each
Portfolio; and (ii) in the case of fixed income funds that declare daily
dividends, the daily accrual or the interest rate factor. All such information
shall be furnished to you by 6:30 p.m. Eastern Time on each Business Day or at
such other time as that information becomes available.
3.4.5 You will wire payment for net purchase orders by the Trust's NSCC Firm
Number, in immediately available funds, to an NSCC settling bank account
designated by you in accordance with NSCC rules and procedures on the same
Business Day such purchase orders are communicated to NSCC. For purchases of
shares of daily dividend accrual funds, those shares will not begin to accrue
dividends until the day the payment for those shares is received.
3.4.6 We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent or you as our designee) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. NSCC will wire payment for net redemption orders by the
Trust, in immediately available funds, to an NSCC settling bank account
designated by you in accordance with NSCC
rules and procedures on the Business Day such redemption orders are communicated
to NSCC, except as provided in the Trust's prospectus and statement of
additional information.
3.4.7 Issuance and transfer of the Portfolio shares will be by book entry only.
Stock certificates will not be issued to you or the Accounts. Portfolio shares
purchased from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
3.4.8 We shall furnish through NSCC's Networking or Mutual Fund Profile System
on or before the ex-dividend date, notice to you of any income dividends or
capital gain distributions payable to the Accounts on the shares of any
Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
3.4.9 All orders are subject to acceptance by Underwriter and become effective
only upon confirmation by Underwriter. Underwriter reserves the right: (i) not
to accept any specific order or part of any order for the purchase or exchange
of shares through Fund/SERV; and (ii) to require any redemption order or any
part of any redemption order to be settled outside of Fund/SERV, in which case
the order or portion thereof shall not be "confirmed" by Underwriter, but rather
shall be accepted for redemption in accordance with Section 3.4.11 below.
3.4.10 All trades placed through Fund/SERV and confirmed by Underwriter via
Fund/SERV shall settle in accordance with Underwriter's profile within Fund/SERV
applicable to you. Underwriter agrees to provide you with account positions and
activity data relating to share transactions via Networking.
3.4.11 If on any specific day you or Underwriter are unable to meet the NSCC
deadline for the transmission of purchase or redemption orders for that day, a
party may at its option transmit such orders and make such payments for
purchases and redemptions directly to you or us, as applicable, as is otherwise
provided in the Agreement; provided, however, that we must receive written
notification from you by 9:00 a.m. Eastern Time on any day that you wish to
transmit such orders and/or make such payments directly to us.
3.4.12 In the event that you or we are unable to or prohibited from
electronically communicating, processing or settling share transactions via
Fund/SERV, you or we shall notify the other, including providing the
notification provided above in Section 3.4.11. After all parties have been
notified, you and we shall submit orders using manual transmissions as are
otherwise provided in the Agreement.
3.4.13 These procedures are subject to any additional terms in each Portfolio's
prospectus and the requirements of applicable law. The Trust reserves the right,
at its discretion and without notice, to suspend the sale of shares or withdraw
the sale of shares of any Portfolio.
3.4.14 Each party to the Agreement agrees that, in the event of a material error
resulting from incorrect information or confirmations, the parties will seek to
comply in all material respects with the provisions of applicable federal
securities laws.
3.4.15 You and Underwriter represent and warrant that each: (a) has entered into
an agreement with NSCC; (b) has met and will continue to meet all of the
requirements to participate in Fund/SERV and Networking; (c) intends to remain
at all times in compliance with the then current rules and procedures of NSCC,
all to the extent necessary or appropriate to facilitate such communications,
processing, and settlement of share transactions; and (d) will notify the other
parties to this Agreement if there is a change in or a pending failure with
respect to its agreement with NSCC.
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
4.1 We shall pay no fee or other compensation to you under this Agreement except
as provided on Schedule F, if attached.
4.2 We shall prepare and be responsible for filing with the SEC, and any state
regulators requiring such filing, all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
4.3 We shall use reasonable efforts to provide you, on a timely basis, with such
information about the Trust, the Portfolios and each Adviser, in such form as
you may reasonably require, as you shall reasonably request in connection with
the preparation of disclosure documents and annual and semi-annual reports
pertaining to the Contracts.
4.4 At your option, we shall provide you, at our expense, with either: (i) for
each Contract owner who is invested through the Account in a subaccount
corresponding to a Portfolio ("designated subaccount"), one copy of each of the
following documents on each occasion that such document is required by law or
regulation to be delivered to such Contract owner who is invested in a
designated subaccount: the Trust's current prospectus, annual report,
semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining specifically to
the Portfolios ("Designated Portfolio Documents"); or (ii) a camera ready copy
of such Designated Portfolio Documents in a form suitable for printing and from
which information relating to series of the Trust other than the Portfolios has
been deleted to the extent practicable. In connection with clause (ii) of this
paragraph, we will pay for proportional printing costs for such Designated
Portfolio Documents in order to provide one copy for each Contract owner who is
invested in a designated subaccount on each occasion that such document is
required by law or regulation to be delivered to such Contract owner, and
provided the appropriate documentation is provided and approved by us. We shall
provide you with a copy of the Trust's current statement of additional
information, including any amendments or supplements, in a form suitable for you
to duplicate. The expenses of furnishing, including mailing, to Contract
owners the documents referred to in this paragraph shall be borne by you. For
each of the documents provided to you in accordance with clause (i) of this
paragraph 4.4, we shall provide you, upon your request and at your expense,
additional copies. In no event shall we be responsible for the costs of printing
or delivery of Designated Portfolio Documents to potential or new Contract
owners or the delivery of Designated Portfolio Documents to existing contract
owners.
4.5 We shall provide you, at our expense, with copies of any Trust-sponsored
proxy materials in such quantity as you shall reasonably require for
distribution to Contract owners who are invested in a designated subaccount. You
shall bear the costs of distributing proxy materials (or similar materials such
as voting solicitation instructions) to Contract owners.
4.6 You assume sole responsibility for ensuring that the Trust's prospectuses,
shareholder reports and communications, and proxy materials are delivered to
Contract owners in accordance with applicable federal and state securities laws.
5. Voting
5.1 All Participating Insurance Companies shall have the obligations and
responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
5.2 If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners; and (iii) vote Trust shares
owned by subaccounts for which no instructions have been received from Contract
owners in the same proportion as Trust shares of such Portfolio for which
instructions have been received from Contract owners; 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. You reserve the right to vote
Trust shares held in any Account in your own right, to the extent permitted by
law.
5.3 So long as, and to the extent that, the SEC interprets the 1940 Act to
require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. Sales Material, Information and Trademarks
6.1 For purposes of this Section 6, "Sales literature or other Promotional
material" includes, but is not limited to, portions of the following that use
any logo or other trademark related to the Trust, or Underwriter or its
affiliates, or refer to the Trust: 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, electronic communication or other public media), 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 or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees in
any media, and disclosure documents, shareholder reports and proxy materials.
6.2 You shall furnish, or cause to be furnished to us or our designee, at least
one complete copy of each registration statement, prospectus, statement of
additional information, private placement memorandum, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "Disclosure Documents"), as well as any report, solicitation for
voting instructions, Sales literature or other Promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. You shall furnish, or shall cause to be furnished, to us
or our designee each piece of Sales literature or other Promotional material in
which the Trust or an Adviser is named, at least fifteen (15) Business Days
prior to its proposed use. No such material shall be used unless we or our
designee approve such material and its proposed use.
6.3 You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee. You shall send us a complete copy of
each Disclosure Document and item of Sales literature or other Promotional
materials in its final form within twenty (20) days of its first use.
6.4 We shall not give any information or make any representations or statements
on behalf of you or concerning you, the Accounts or the Contracts other than
information or representations, including naming you as a Trust shareholder,
contained in and accurately derived from Disclosure Documents for the Contracts
(as such Disclosure Documents may be amended or supplemented from time to time),
or in materials approved by you for distribution, including Sales literature or
other Promotional materials, except as required by legal process or regulatory
authorities or with your written permission.
6.5 Except as provided in Section 6.2, you shall not use any designation
comprised in whole or part of the names or marks "Franklin" or "Xxxxxxxxx" or
any logo or other trademark relating to the Trust or the Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
you shall cease all use of any such name or xxxx as soon as reasonably
practicable.
6.6 You shall furnish to us ten (10) Business Days prior to its first submission
to the SEC or its staff, any request or filing for no-action assurance or
exemptive relief naming, pertaining to, or affecting, the Trust, the Underwriter
or any of the Portfolios.
6.7 You agree that any posting of Portfolio prospectuses on your website will
result in the Portfolio prospectuses: (i) appearing identical to the hard copy
printed version or .pdf format file provided to you by us (except that you may
reformat .pdf format prospectus files in order to delete blank pages and to
insert .pdf format prospectus supplement files provided by us to you); (ii)
being clearly associated with the particular Contracts in which they are
available and posted in close proximity to the applicable Contract prospectuses;
(iii) having no less prominence than prospectuses of any other underlying funds
available under the Contracts; and (iv) being used in an authorized manner.
Notwithstanding the above, you understand and agree that you are responsible for
ensuring that participation in the Portfolios, and any website posting, or other
use, of the Portfolio prospectuses is in compliance with this Agreement and
applicable state and federal securities and insurance laws and regulations,
including as they relate to paper or electronic use of fund prospectuses. The
format of such presentation, the script and layout for any website that mentions
the Trust, the Underwriter, an Adviser or the Portfolios shall be routed to us
as sales literature or other promotional materials, pursuant to Section 6 of
this Agreement.
In addition, you agree to be solely responsible for maintaining and updating the
Portfolio prospectuses' PDF files (including prospectus supplements) and
removing and/or replacing promptly any outdated prospectuses, as necessary,
ensuring that any accompanying instructions by us, for using or stopping use are
followed. You agree to designate and make available to us a person to act as a
single point of communication contact for these purposes. We are not responsible
for any additional costs or additional liabilities that may be incurred as a
result of your election to place the Portfolio prospectuses on your website. We
reserve the right to revoke this authorization, at any time and for any reason,
although we may instead make our authorization subject to new procedures.
6.8 Each of your and your distributor's registered representatives, agents,
independent contractors and employees, as applicable, will have access to our
websites at xxxxxxxxxxxxxxxxx.xxx, and such other URLs through which we may
permit you to conduct business concerning the Portfolios from time to time
(referred to collectively as the "Site") as provided herein: (i) upon
registration by such individual on a Site, (ii) if you cause a Site Access
Request Form (an "Access Form") to be signed by your authorized supervisory
personnel and submitted to us, as a Schedule to, and legally a part of, this
Agreement, or (iii) if you provide such individual with the necessary access
codes or other information necessary to access the Site through any generic or
firm-wide authorization we may grant you from time to time. Upon receipt by us
of a completed registration submitted by an individual
through the Site or a signed Access Form referencing such individual, we shall
be entitled to rely upon the representations contained therein as if you had
made them directly hereunder and we will issue a user identification, express
number and/or password (collectively, "Access Code"). Any person to whom we
issue an Access Code or to whom you provide the necessary Access Codes or other
information necessary to access the Site through any generic or firm-wide
authorization we may grant you from time to time shall be an "Authorized User."
We shall be entitled to assume that such person validly represents you and that
all instructions received from such person are authorized, in which case such
person will have access to the Site, including all services and information to
which you are authorized to access on the Site. All inquiries and actions
initiated by you (including your Authorized Users) are your responsibility, are
at your risk and are subject to our review and approval (which could cause a
delay in processing). You agree that we do not have a duty to question
information or instructions you (including Authorized Users) give to us under
this Agreement, and that we are entitled to treat as authorized, and act upon,
any such instructions and information you submit to us. You agree to take all
reasonable measures to prevent any individual other than an Authorized User from
obtaining access to the Site. You agree to inform us if you wish to restrict or
revoke the access of any individual Access Code. If you become aware of any loss
or theft or unauthorized use of any Access Code, you agree to contact us
immediately. You also agree to monitor your (including Authorized Users') use of
the Site to ensure the terms of this Agreement are followed. You also agree that
you will comply with all policies and agreements concerning Site usage,
including without limitation the Terms of Use Agreement(s) posted on the Site
("Site Terms"), as may be revised and reposted on the Site from time to time,
and those Site Terms (as in effect from time to time) are a part of this
Agreement. Your duties under this section are considered "services" required
under the terms of this Agreement. You acknowledge that the Site is transmitted
over the Internet on a reasonable efforts basis and we do not warrant or
guarantee their accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, you acknowledge that the Site is provided for
informational purposes only, and is not intended to comply with any requirements
established by any regulatory or governmental agency.
7. Indemnification
7.1 Indemnification By You
7.1.1 You agree to indemnify and hold harmless the Underwriter, the Trust and
each of its Trustees, officers, employees and agents and each person, if any,
who controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the "Indemnified
Party" for purposes of this Section 7) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with your written
consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of
shares of the Trust or the Contracts and
7.1.1.1 arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a Disclosure Document for the
Contracts or in the Contracts themselves or in sales literature generated or
approved by you on behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively, "Company Documents" for the
purposes of this Section 7), 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 indemnity 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 was accurately derived from written information furnished to you by or
on behalf of the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
7.1.1.2 arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from Trust
Documents as defined below in Section 7.2) or wrongful conduct of you or persons
under your control, with respect to the sale or acquisition of the Contracts or
Trust shares; or
7.1.1.3 arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined below in
Section 7.2 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 statement or omission was made in reliance upon and
accurately derived from written information furnished to the Trust by or on
behalf of you; or
7.1.1.4 arise out of or result from any failure by you to provide the services
or furnish the materials required under the terms of this Agreement;
7.1.1.5 arise out of or result from any material breach of any representation
and/or warranty made by you in this Agreement or arise out of or result from any
other material breach of this Agreement by you; or
7.1.1.6 arise out of or result from a Contract failing to be considered a life
insurance policy or an annuity Contract, whichever is appropriate, under
applicable provisions of the Code thereby depriving the Trust of its compliance
with Section 817(h) of the Code.
7.1.2 You shall not be liable under this indemnification provision with
respect to any Losses 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 Trust or Underwriter,
whichever is applicable. You shall also not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified you 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 you of any such claim shall not relieve you from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, you shall be entitled to participate, at your own expense, in the
defense of such action. Unless the Indemnified Party releases you from any
further obligations under this Section 7.1, you also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from you to such party of your election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel retained by it, and you 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.
7.1.3 The Indemnified Parties will promptly notify you of the commencement of
any litigation or proceedings against them in connection with the issuance or
sale of the Trust shares or the Contracts or the operation of the Trust.
7.2 Indemnification By The Underwriter
7.2.1 The Underwriter agrees to indemnify and hold harmless you, and each of
your directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
and individually an "Indemnified Party" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter, which consent shall
not be unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or expense
and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such Losses are
related to the sale or acquisition by the Accounts of the shares of the Trust or
the Contracts and:
7.2.1.1 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 sales literature of the Trust (or any amendment or supplement to
any of the foregoing) (collectively, the "Trust Documents") 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 of such alleged statement or
omission was made in reliance upon anzd in conformity with information furnished
to us by or on behalf of you for use in the Registration Statement or prospectus
for the Trust or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust shares;
or
7.2.1.2 arise out of or as a result of statements or representations (other than
statements or representations contained in the Disclosure Documents or sales
literature for the Contracts not supplied by the Underwriter or persons under
its control) or wrongful
conduct of the Trust, Adviser or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or Trust shares to the
Accounts; or
7.2.1.3 arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Disclosure Document or sales literature covering
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
you by or on behalf of the Trust; or
7.2.1.4 arise as a result of any failure by us 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 representation specified above in Section 2.2.7 and the
diversification requirements specified above in Section 2.2.8); or
7.2.1.5 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 7.2.2 and 7.2.3
hereof.
7.2.2 The Underwriter shall not be liable under this indemnification provision
with respect to any Losses 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 you or the Accounts, whichever is applicable.
7.2.3 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 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. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further obligations under this
Section 7.2, the Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Underwriter to such party of the Underwriter's election to
assume the defense thereof, the Indemnified Party shall bear the 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.
7.2.4 You agree promptly to notify the Underwriter of the commencement of any
litigation or proceedings against you or the Indemnified Parties in connection
with the issuance or sale of the Contracts or the operation of each Account.
7.3 Indemnification By The Trust
7.3.1 The Trust agrees to indemnify and hold harmless you, and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 7.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Trust, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct of
the Board or any member thereof, are related to the operations of the Trust, and
arise out of or result from any material breach of any representation and/or
warranty made by the Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Sections 7.3.2 and 7.3.3 hereof. It is
understood and expressly stipulated that neither the holders of shares of the
Trust nor any Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation hereunder, but the
Trust only shall be liable.
7.3.2 The Trust shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against any Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to you, the
Trust, the Underwriter or each Account, whichever is applicable.
7.3.3 The Trust shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Trust in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claims shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Trust of any such claim shall not relieve the
Trust from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Trust will be entitled to participate, at its own expense, in the defense
thereof. Unless the Indemnified Party releases the Trust from any further
obligations under this Section 7.3, the Trust also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Trust to such party of the Trust's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.3.4 You agree promptly to notify the Trust of the commencement of any
litigation or proceedings against you or the Indemnified Parties in connection
with this Agreement, the issuance or sale of the Contracts, with respect to the
operation of the Account, or the sale or acquisition of shares of the Trust.
8. Notices
Any notice, except for those provided in Sections 3.2.1 and 3.2.2 of the
Agreement, shall be sufficiently given when sent by registered or certified
mail, or by nationally recognized overnight courier services, to the other party
at the address of such party set forth in Schedule G below or at such other
address as such party may from time to time specify in writing to the other
party.
9. Termination
9.1 This Agreement may be terminated by mutual agreement at any time. If this
Agreement is so terminated, we shall, at your option, continue to make available
additional shares of any Portfolio and redeem shares of any Portfolio for any or
all Contracts or Accounts existing on the effective date of termination of this
Agreement, pursuant to the terms and conditions of this Agreement.
9.2 This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by sixty (60) days'
advance written notice delivered to the other parties. If this Agreement is so
terminated, we may, at our option, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio for any or all Contracts or
Accounts existing on the effective date of termination of this Agreement,
pursuant to the terms and conditions of this Agreement; alternatively, we may,
at our option, redeem the Portfolio shares held by the Accounts, provided that
such redemption shall not occur prior to six (6) months following written notice
of termination, during which time we will cooperate with you in effecting a
transfer of Portfolio assets to another underlying fund pursuant to any legal
and appropriate means.
9.3 This Agreement may be terminated immediately by us upon written notice to
you if you materially breach any of the representations and warranties made in
this Agreement or you are materially in default in the performance of any of
your duties or obligations under the Agreement, receive a written notice thereof
and fail to remedy such default or breach to our reasonable satisfaction within
30 days after such notice. If this Agreement so terminates, the parties shall
cooperate to effect an orderly windup of the business which may include, at our
option, a redemption of the Portfolio shares held by the Accounts, provided that
such redemption shall not occur prior to a period of up to six (6) months
following written notice of termination, during which time we will cooperate
reasonably with you in effecting a transfer of Portfolio assets to another
underlying fund pursuant to any legal and appropriate means.
9.4 This Agreement may be terminated immediately by us upon written notice to
you if, with respect to the representations and warranties made in sections
2.1.3, 2.1.5, 2.1.7 and 2.4.2 of this Agreement: (i) you materially breach any
of such representations and warranties; or (ii) you inform us that any of such
representations and warranties may no longer be true or might not be true in the
future; or (iii) any of such representations and warranties were not true on the
effective date of this Agreement, are at any time no longer true, or have not
been true during any time since the effective date of this Agreement. If this
Agreement is so terminated, the Trust may redeem, at its option in kind or for
cash, the Portfolio shares held by the Accounts on the effective date of
termination of this Agreement.
9.5 This Agreement may be terminated by the Board of Trustees of the Trust, in
the exercise of its fiduciary duties, either upon its determination that such
termination is a necessary and appropriate remedy for a material breach of this
Agreement which includes a violation of laws, or upon its determination to
completely liquidate a Portfolio. Pursuant to such termination, the Trust may
redeem, at its option in kind or for cash, the Portfolio shares held by the
Accounts on the effective date of termination of this Agreement.
9.6 This Agreement shall terminate immediately in the event of its assignment by
any party without the prior written approval of the other parties, or as
otherwise required by law. If this Agreement is so terminated, the Trust may
redeem, at its option in kind or for cash, the Portfolio shares held by the
Accounts on the effective date of termination of this Agreement.
9.7 This Agreement shall be terminated as required by the Shared Funding Order,
and its provisions shall govern.
9.8 The provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners,
except that we shall have no further obligation to sell Trust shares with
respect to Contracts issued after termination.
9.9 You shall not redeem Trust shares attributable to the Contracts (as opposed
to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(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"); or (iii) as permitted by an order of the SEC
pursuant to Section 26(c) of the 1940 Act. Upon request, you shall promptly
furnish to us the opinion of your counsel (which counsel shall be reasonably
satisfactory to us) to the effect that any redemption pursuant to clause (ii) of
this Section 9.9 is a Legally Required Redemption. Furthermore, you shall not
prevent Contract owners from allocating payments to any Portfolio that has been
available under a Contract without first giving us ninety (90) days advance
written notice of your intention to do so.
10. Miscellaneous
10.1 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions of this Agreement
or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more counterparts,
all of which taken together shall constitute one and the same instrument.
10.3 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.
10.4 This Agreement shall be construed and its provisions interpreted under and
in accordance with the laws of the State of California. It shall also be subject
to the provisions of the federal securities laws and the rules and regulations
thereunder, to any orders of the SEC on behalf of the Trust granting it
exemptive relief, and to the conditions of such orders. We shall promptly
forward copies of any such orders to you.
10.5 The parties to this Agreement acknowledge and agree that all liabilities of
the Trust arising, directly or indirectly, under this Agreement, of any and
every nature whatsoever, shall be satisfied solely out of the assets of the
Trust and that no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
10.6 The parties to this Agreement agree that the assets and liabilities of each
Portfolio of the Trust are separate and distinct from the assets and liabilities
of each other Portfolio. No Portfolio shall be liable or shall be charged for
any debt, obligation or liability of any other Portfolio.
10.7 Each party to this Agreement shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
FINRA, 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.
10.8 Each party shall treat as confidential all information of the other party
which the parties agree in writing is confidential ("Confidential Information").
Except as permitted by this Agreement or as required by appropriate governmental
authority (including, without limitation, the SEC, the FINRA, or state
securities and insurance regulators) the receiving party shall not disclose or
use Confidential Information of the other party before it enters the public
domain, without the express written consent of the party providing the
Confidential Information.
10.9 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 to this Agreement are entitled to under
state and federal laws.
10.10 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
10.11 Neither this Agreement nor any rights or obligations created by it may be
assigned by any party without the prior written approval of the other parties.
10.12 No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both parties.
Notwithstanding the foregoing, the Site Terms may be separately amended as
provided therein and, as so amended and in effect from time to time, shall be a
part of this Agreement.
10.13 Each party to the Agreement agrees to limit the disclosure of nonpublic
personal information of Contract owners and customers consistent with its
policies on privacy with respect to such information and Regulation S-P of the
SEC. Each party hereby agrees that it will comply with all applicable
requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer
privacy acts, rules and regulations. Each party further represents that it has
in place, and agrees that it will maintain, information security policies and
procedures for protecting nonpublic personal customer information adequate to
conform to applicable legal requirements.
IN WITNESS WHEREOF, each of the parties has caused their duly authorized
officers to execute this Agreement.
The Company: American United Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxx
Name:Xxxxxxx X. Xxxxxx
Title: VP Marketing Operations
Distributor for the Company: OneAmerica Securities, Inc.
By: /s/ Xxxxxxxx X. Filing
Name: Xxxxxxxx X. Filing
Title: President
The Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
Only on behalf of each
Portfolio listed on
Schedule C hereof.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
The Underwriter: Franklin/Xxxxxxxxx Distributors, Inc.
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
Schedule A
The Company and its Distributor
THE COMPANY
American United Life Insurance Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
An insurance company organized under the laws of the State of Indiana.
THE DISTRIBUTOR
OneAmerica Securities, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
A corporation organized under the laws of the State of Indiana.
Schedule B
Accounts of the Company
Name of Account SEC Registration Yes/No
AUL American Individual Unit Trust Yes
AUL American Individual Variable Life Universal Life Yes
AUL American Individual Variable Annuity Yes
AUL American Individual Variable Annuity B Yes
Schedule C
Available Portfolios and Classes of Shares of the Trust
Franklin Small Cap Value Securities Fund, Class I
Templetom Global Income Securities Fund, Class I
Franklin Templteton VIP Founding Funds Allocation Fund, Class I
In addition to portfolios and classes of shares listed above, any additional
Portfolios and classes of shares other than Class 3 shares are included in this
Schedule C listing provided that:
(1) the Legal Department of Franklin Xxxxxxxxx Investments receives
from a person authorized by you a written notice in the form attached
(which may be electronic mail or sent by electronic mail) ("Notice")
indentifying this Agreement as provided in the Notice and specifying: (1)
the names and classes of shares of additional portfolios that you propose
to offer as investment options of the Separate Accounts under the
Contracts; and (ii) the date that you propose to begin offering Separate
Account interests investing in the additioanl Portfolios under the
Contracts; and
(2) we do not within ten (10) Business Days following receipt of the
Notice send you a writing (wich may be electronic mail) objecting to your
offering such Separate Accounts investing in additional Portfolios and
classes of shares under the Contracts.
Provided that we do not object as provided above,your Notice shall amend,
supplement and become a part of this Schedule C and the Agreement.
Form of Notice Pursuant to Schedule C of Participation Agreement
To: General Counsel c/o
Xxxxx Xxx (XXXX@xxx.xxx) or Xxxxx Xxxxxxxx (xxxxxxx@xxx.xxx)
Fax: 000-000-0000
Xxxxxxx Xxxxxxxxx Investments
0 Xxxxxxxx Xxxxxxx,
Xxxx. 000, 0xx Xxxxx
Xxx Xxxxx, XX 00000
With respect to the following agreement(s) (collectively, the "Agreeement")
(please reproduce and complete table for multiple agreements):
Date of Participation Agreement:
Insurance Company(ies):
Insurance Company Distributor(s):
As provided by Scheudule C of the Agreement, this Notice proposes to Franklin
Xxxxxxxxx Variable Insurance Products Trust, and Franklin/Xxxxxxxxx
Distributors, Inc. the addition as of the offering date(s) listed below of the
following Portfolios as additional investment options listed on Schedule C:
Names and Classes of Shares of Additional Portfolios
Listing of current classes for your reference:
Class 1 (no 12b-1 fee);
Class 2 (12b-1 fee of 25 bps); or
Class 4 (12b-1 fee of 35 bps)
Name and authorizedperson of insurance company:
Contact information:
Schedule D
Contracts of the Company
All variable life and variable annuity contracts issued by separate accounts
listed on Schedule B of this Agreement
Schedule E
This schedule is not used
Schedule F
Rule 12b-1 Plans of the Trust
Compensation
For each Class 2 Portfolio named on Schedule C of this Agreement the Company's
Distributor is eligible to receive a maximum annual payment rate of 0.25% stated
as a percentage per year of that Portfolio's Class 2 average daily net assets,
pursuant to the terms and conditions referenced below under its Class 2 Rule
12b-1 Distribution Plan.
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio shares
("Eligible Shares") that are subject to a Rule 12b-1 plan adopted under the
1940 Act (the "Plan"), the Company's Distributor may participate in the Plan.
To the extent the Company, its Distributor or its affiliates, agents or
designees (collectively "you") provide any activity or service which is
primarily intended to assist in the promotion, distribution or account servicing
of Eligible Shares ("Rule 12b-1 Services") or variable contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Rule 12b-1 Services" may include, but are
not limited to, printing of prospectuses and reports used for sales purposes,
preparing and distributing sales literature and related expenses,
advertisements, education of dealers and their representatives, and similar
distribution-related expenses, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contract Owners"), education of
Contract Owners, answering routine inquiries regarding a Portfolio, coordinating
responses to Contract Owner inquiries regarding the Portfolios, maintaining such
accounts or providing such other enhanced services as a Trust Portfolio or
Contract may require, or providing other services eligible for service fees as
defined under FINRA rules.
Your acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the value of
Eligible Shares owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the compensation provision
stated above. The aggregate annual fees paid pursuant to each Plan shall not
exceed the amounts stated as the "annual maximums" in the Portfolio's
prospectus, unless an increase is approved by shareholders as provided in the
Plan. These maximums shall be a specified percent of the value of a Portfolio's
net assets attributable to Eligible Shares owned by the Company on behalf of its
Accounts (determined in the same manner as the Portfolio uses to compute its net
assets as set forth in its effective Prospectus). The Rule 12b-1 fee will be
paid to you within thirty (30) days after the end of the three-month periods
ending in January, April, July and October.
You shall furnish us with such information as shall reasonably be requested by
the Trust's Boards of Trustees ("Trustees") with respect to the Rule 12b-1 fees
paid to you pursuant to the Plans. We shall furnish to the Trustees, for their
review on a quarterly basis, a written report of the amounts expended under the
Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Trustees, including the Trustees who are not
interested persons of the Trust and who have no financial interest in the Plans
or any related agreement ("Disinterested Trustees"). Each Plan may be terminated
at any time by the vote of a majority of the Disinterested Trustees, or by a
vote of a majority of the outstanding shares as provided in the Plan, on sixty
(60) days' written notice, without payment of any penalty. The Plans may also be
terminated by any act that terminates the Underwriting Agreement between the
Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the Trust. Continuation
of the Plans is also conditioned on Disinterested Trustees being ultimately
responsible for selecting and nominating any new Disinterested Trustees. Under
Rule 12b-1, the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to furnish, such
information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, the Trust is permitted to implement or continue Plans or the provisions
of any agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Trustees are able to conclude that the Plans
will benefit each affected Trust Portfolio and class. Absent such yearly
determination, the Plans must be terminated as set forth above. In the event of
the termination of the Plans for any reason, the provisions of this Schedule F
relating to the Plans will also terminate. You agree that your selling
agreements with persons or entities through whom you intend to distribute
Contracts will provide that compensation paid to such persons or entities may be
reduced if a Portfolio's Plan is no longer effective or is no longer applicable
to such Portfolio or class of shares available under the Contracts.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency. You agree to provide complete disclosure as required by all
applicable statutes, rules and regulations of all rule 12b-1 fees received from
us in the prospectus of the Contracts.
Schedule G
Addresses for Notices
To the Company: American United Life Insurance Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attenton: Xxxxxxx Xxxxxx, Associate General Council
and Chief Council of the Broker-Dealer
To the Distributor: OneAmerica Securities, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
ATTENTION: Nick Filing
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
Xxx Xxxxxxxx Xxxxxxx, Xxxx. 000 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Vice President
To the Underwriter: Franklin/Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxxx, 0xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
If to the Trust or Underwriter
with a copy to: Franklin Xxxxxxxxx Xxxxxxxxxxx
Xxx Xxxxxxxx Xxxxxxx, Xxxx. 000 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Schedule H
Shared Funding Order
Templeton Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24018
1999 SEC LEXIS 1887
September 17, 1999
ACTION: Notice of application for an amended order of exemption pursuant to
Section 6(c) of the Investment Company Act of 1940 (the "1940 Act") 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.
TEXT: Summary of Application: Templeton Variable Products Series Fund (the
"Templeton Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust
(formerly Franklin Valuemark Funds) (the "VIP Trust," and together with the
Templeton Trust, the "Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or any
successor to TFAC, and any future open-end investment company for which TFAC or
any affiliate is the administrator, sub-administrator, investment manager,
adviser, principal underwriter, or sponsor ("Future Funds") seek an amended
order of the Commission to (1) add as parties to that order the VIP Trust and
any Future Funds and (2) permit shares of the Funds and Future Funds to be
issued to and held by qualified pension and retirement plans outside the
separate account context.
Applicants: Templeton Variable Products Series Fund, Franklin Xxxxxxxxx Variable
Insurance Products Trust, Xxxxxxxxx Funds Annuity Company or any successor to
TFAC, and any future open-end investment company for which TFAC or any affiliate
is the administrator, sub-administrator, investment manager, adviser, principal
underwriter, or sponsor (collectively, the "Applicants").
Filing Date: The application was filed on July 14, 1999, and amended and
restated on September 17, 1999.
Hearing or Notification of Hearing: An order granting the application will be
issued unless the Commission orders a hearing. Interested persons may request a
hearing by writing to the Secretary of the Commission and serving Applicants
with a copy of the request, personally or by mail. Hearing requests should be
received by the Commission by 5:30 p.m., on October 12, 1999, and should be
accompanied by proof of service on the Applicants in the form of an affidavit
or, for lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request notification
by writing to the Secretary of the Commission.
Addresses: Secretary, Securities and Exchange Commission, 000 Xxxxx Xxxxxx, XX,
Xxxxxxxxxx, X.X. 00000-0000.
Applicants: Templeton Variable Products Series Fund and Franklin Xxxxxxxxx
Variable Insurance Products Trust, 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or Xxxxx X.
Xxxxx, Branch Chief, Office of Insurance Products, Division of Investment
Management, at (000) 000-0000.
Supplementary Information: The following is a summary of the application. The
complete application is available for a fee from the SEC's Public Reference
Branch, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000 (tel. (202)
000-0000).
Applicants' Representations:
1. Each of the Funds is registered under the 1940 Act as an open-end management
investment company and was organized as a Massachusetts business trust. The
Templeton Trust currently consists of eight separate series, and the VIP Trust
consists of twenty-five separate series. Each Fund's Declaration of Trust
permits the Trustees to create additional series of shares at any time. The
Funds currently serve as the underlying investment medium for variable annuity
contracts and variable life insurance policies issued by various insurance
companies. The Funds have entered into investment management agreements with
certain investment managers ("Investment Managers") directly or indirectly owned
by Franklin Resources, Inc. ("Resources"), a publicly owned company engaged in
the financial services industry through its subsidiaries.
2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is the sole
insurance company in the Franklin Xxxxxxxxx organization, and specializes in the
writing of variable annuity contracts. The Templeton Trust has entered into a
Fund Administration Agreement with Franklin Xxxxxxxxx Services, Inc. ("FT
Services"), which replaced TFAC in 1998 as administrator, and FT Services
subcontracts certain services to TFAC. FT Services also serves as administrator
to all series of the VIP Trust. TFAC and FT Services provide certain
administrative facilities and services for the VIP and Templeton Trusts.
3. On November 16, 1993, the Commission issued an order granting exemptive
relief to permit shares of the Xxxxxxxxx Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (Investment Company Act
Release No. 19879, File No. 812-8546) (the "Original Order"). Applicants
incorporate by reference into the application the Application for the Original
Order and each amendment thereto, the Notice of Application for the Original
Order, and the Original Order, to the extent necessary, to supplement the
representations made in the application in support of the requested relief.
Applicants represent that all of the facts asserted in the Application for the
Original Order and any amendments thereto remain true and accurate in all
material respects to the extent that such facts are relevant to any relief on
which Applicants continue to rely. The Original Order allows the Templeton Trust
to offer its shares to insurance companies as the investment vehicle for their
separate accounts supporting variable annuity contracts and variable life
insurance contracts (collectively, the "Variable Contracts"). Applicants state
that the Original Order does not (i) include the VIP Trust or Future Funds as
parties, nor (ii) expressly address the sale of shares of the Funds or any
Future Funds to qualified pension and retirement plans outside the separate
account context including, without limitation, those trusts, plans, accounts,
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(b),
408(k), 414(d), 457(b), 501(c)(18) of the Internal Revenue Code of 1986, as
amended (the "Code"), and any other trust, plan, contract, account or annuity
that is determined to be within the scope of Treasury Regulation
1.817.5(f)(3)(iii) ("Qualified Plans").
4. Separate accounts owning shares of the Funds and their insurance company
depositors are referred to in the application as "Participating Separate
Accounts" and "Participating Insurance Companies," respectively. The use of a
common management investment company as the underlying investment medium for
both variable annuity and variable life insurance separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common management investment company as the
underlying investment medium for variable annuity and/or variable life insurance
separate accounts of unaffiliated insurance companies is referred to as "shared
funding."
Applicants' Legal Analysis:
1. Applicants request that the Commission issue an amended order pursuant to
Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to the
Original Order and exempting scheduled premium variable life insurance separate
accounts and flexible premium variable life insurance separate accounts of
Participating Insurance Companies (and, to the extent necessary, any principal
underwriter and depositor of such an account) and the Applicants from 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)
(and any comparable rule) thereunder, respectively, to the extent necessary to
permit shares of the Funds and any Future Funds to be sold to and held by
Qualified Plans. Applicants submit that the exemptions requested are appropriate
in the public interest, consistent with the protection of investors, and
consistent with the purposes fairly intended by the policy and provisions of the
1940 Act.
2. The Original Order does not include the VIP Trust or Future Funds as parties
nor expressly address the sale of shares of the Funds or any Future Funds to
Qualified Plans. Applicants propose that the VIP Trust and Future Funds be added
as parties to the Original Order and the Funds and any Future Funds be permitted
to offer and sell their shares to Qualified Plans.
3. Section 6(c) of the 1940 Act provides, in part, that the Commission, by order
upon application, may conditionally or unconditionally exempt any person,
security or transaction, or any class or classes of persons, securities or
transactions from any provisions of the 1940 Act or the rules or regulations
thereunder, if and to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the 1940 Act.
4. In connection with the funding of scheduled premium variable life insurance
contracts issued through a separate account registered under the 1940 Act as a
unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial exemptions from
various provisions of the 1940 Act, including the following: (1) Section 9(a),
which makes it unlawful for certain individuals to act in the capacity of
employee, officer, or director for a UIT, by limiting the application of the
eligibility restrictions in Section 9(a) to affiliated persons directly
participating in the management of a registered management investment company;
and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to the extent that those
sections might be deemed to require "pass-through" voting with respect to an
underlying fund's shares, by allowing an insurance company to disregard the
voting instructions of contractowners in certain circumstances.
5. These exemptions are available, however, only where the management investment
company underlying the separate account (the "underlying fund") offers its
shares "exclusively to variable life insurance separate accounts of the life
insurer, or of any affiliated life insurance company." Therefore, Rule 6e-2 does
not permit either mixed funding or shared funding because the relief granted by
Rule 6e-2(b)(15) is not available with respect to a scheduled premium variable
life insurance separate account that owns shares of an underlying fund that also
offers its shares to a variable annuity or a flexible premium variable life
insurance separate account of the same company or of any affiliated life
insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares of
the underlying fund to Qualified Plans.
6. In connection with flexible premium variable life insurance contracts issued
through a separate account registered under the 1940 Act as a UIT, Rule
6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act. These exemptions, however, are available only where
the separate account's underlying fund offers its shares "exclusively to
separate accounts of the life insurer, or of any affiliated life insurance
company, offering either scheduled contracts or flexible contracts, or both; or
which also offer their shares to variable annuity separate accounts of the life
insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T)
permits mixed funding but does not permit shared funding and also does not
permit the sale of shares of the underlying fund to Qualified Plans. As noted
above, the Original Order granted the Xxxxxxxxx Trust exemptive relief to permit
mixed and shared funding, but did not expressly address the sale of its shares
to Qualified Plans.
7. Applicants note that if the Funds were to sell their shares only to Qualified
Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be necessary.
Applicants state that the relief provided for under Rule 6e-2(b)(15) and Rule
6e-3(T)(b)(15) does not relate to qualified pension and retirement plans or to a
registered investment company's ability to sell its shares to such plans.
8. Applicants state that changes in the federal tax law have created the
opportunity for each of the Funds to increase its asset base through the sale of
its shares to Qualified Plans. Applicants state that Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the assets underlying Variable Contracts. Treasury
Regulations generally require that, to meet the diversification requirements,
all of the beneficial interests in the underlying investment company must be
held by the segregated asset accounts of
one or more life insurance companies. Notwithstanding this, Applicants note that
the Treasury Regulations also contain an exception to this requirement that
permits trustees of a Qualified Plan to hold shares of an investment company,
the shares of which are also held by insurance company segregated asset
accounts, without adversely affecting the status of the investment company as an
adequately diversified underlying investment of Variable Contracts issued
through such segregated asset accounts (Treas. Reg. 1.817-5(f)(3)(iii)).
9. Applicants state that the promulgation of Rules 6e-2(b)(15) and
6e-3(T)(b)(15) under the 1940 Act preceded the issuance of these Treasury
Regulations. Thus, Applicants assert that the sale of shares of the same
investment company to both separate accounts and Qualified Plans was not
contemplated at the time of the adoption of Rules 6e-2(b)(15) and
6e-3(T)(b)(15).
10. Section 9(a) provides that it is unlawful for any company to serve as
investment adviser or principal underwriter of any registered open-end
investment company if an affiliated person of that company is subject to a
disqualification enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,
subject to the limitations on mixed and shared funding. These exemptions limit
the application of the eligibility restrictions to affiliated individuals or
companies that directly participate in the management of the underlying
portfolio investment company.
11. Applicants state that the relief granted in Rule 6e-2(b)(15) and
6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the amount
of monitoring of an insurer's personnel that would otherwise be necessary to
ensure compliance with Section 9 to that which is appropriate in light of the
policy and purposes of Section 9. Applicants submit that those Rules recognize
that it is not necessary for the protection of investors or the purposes fairly
intended by the policy and provisions of the 1940 Act to apply the provisions of
Section 9(a) to the many individuals involved in an insurance company complex,
most of whom typically will have no involvement in matters pertaining to
investment companies funding the separate accounts.
12. Applicants to the Original Order previously requested and received relief
from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the extent
necessary to permit mixed and shared funding. Applicants maintain that the
relief previously granted from Section 9(a) will in no way be affected by the
proposed sale of shares of the Funds to Qualified Plans. Those individuals who
participate in the management or administration of the Funds will remain the
same regardless of which Qualified Plans use such Funds. Applicants maintain
that more broadly applying the requirements of Section 9(a) because of
investment by Qualified Plans would not serve any regulatory purpose. Moreover,
Qualified Plans, unlike separate accounts, are not themselves investment
companies and therefore are not subject to Section 9 of the 1940 Act.
13. Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) provide
exemptions from the pass-through voting requirement with respect to several
significant matters, assuming the limitations on mixed and shared funding are
observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A) provide that the
insurance company may disregard the voting instructions of its contractowners
with respect to the investments of an underlying fund or any contract between a
fund and its investment adviser, when required to do so by an insurance
regulatory authority (subject to the provisions of paragraphs (b)(5)(i) and
(b)(7)(ii)(A) of the Rules). Rules 6e-2(b)(15)(iii)(B) and
6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance company may disregard
contractowners' voting instructions if the contractowners initiate any change in
such company's investment policies, principal underwriter, or any investment
adviser (provided that disregarding such voting instructions is reasonable and
subject to the other provisions of paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and
(C) of the Rules).
14. Applicants assert that Qualified Plans, which are not registered as
investment companies under the 1940 Act, have no requirement to pass-through the
voting rights to plan participants. Applicants state that applicable law
expressly reserves voting rights to certain specified persons. Under Section
403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of a
fund sold to a Qualified Plan must be held by the trustees of the Qualified
Plan. Section 403(a) also provides that the trustee(s) must have exclusive
authority and discretion to manage and control the Qualified Plan with two
exceptions: (1) when the Qualified Plan expressly provides that the trustee(s)
are subject to the direction of a named fiduciary who is not a trustee, in which
case the trustees are subject to proper directions made in accordance with the
terms of the Qualified Plan and not contrary to ERISA; and (2) when the
authority to manage, acquire or dispose of assets of the Qualified Plan is
delegated to one or more
investment managers pursuant to Section 402(c)(3) of ERISA. Unless one of the
two above exceptions stated in Section 403(a) applies, Qualified Plan trustees
have the exclusive authority and responsibility for voting proxies. Where a
named fiduciary to a Qualified Plan appoints an investment manager, the
investment manager has the responsibility to vote the shares held unless the
right to vote such shares is reserved to the trustees or the named fiduciary.
Where a Qualified Plan does not provide participants with the right to give
voting instructions, Applicants do not see any potential for material
irreconcilable conflicts of interest between or among variable contract holders
and Qualified Plan investors with respect to voting of the respective Fund's
shares. Accordingly, Applicants state that, unlike the case with insurance
company separate accounts, the issue of the resolution of material
irreconcilable conflicts with respect to voting is not present with respect to
such Qualified Plans since the Qualified Plans are not entitled to pass-through
voting privileges.
15. Even if a Qualified Plan were to hold a controlling interest in one of the
Funds, Applicants believe that such control would not disadvantage other
investors in such Fund to any greater extent than is the case when any
institutional shareholder holds a majority of the voting securities of any
open-end management investment company. In this regard, Applicants submit that
investment in a Fund by a Qualified Plan will not create any of the voting
complications occasioned by mixed funding or shared funding. Unlike mixed or
shared funding, Qualified Plan investor voting rights cannot be frustrated by
veto rights of insurers or state regulators.
16. Applicants state that some of the Qualified Plans, however, may provide for
the trustee(s), an investment adviser (or advisers), or another named fiduciary
to exercise voting rights in accordance with instructions from participants.
Where a Qualified Plan provides participants with the right to give voting
instructions, Applicants see no reason to believe that participants in Qualified
Plans generally or those in a particular Qualified Plan, either as a single
group or in combination with participants in other Qualified Plans, would vote
in a manner that would disadvantage Variable Contract holders. In sum,
Applicants maintain that the purchase of shares of the Funds by Qualified Plans
that provide voting rights does not present any complications not otherwise
occasioned by mixed or shared funding.
17. Applicants do not believe that the sale of the shares of the Funds to
Qualified Plans will increase the potential for material irreconcilable
conflicts of interest between or among different types of investors. In
particular, Applicants see very little potential for such conflicts beyond that
which would otherwise exist between variable annuity and variable life insurance
contractowners.
18. As noted above, Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable contracts held in an underlying
mutual fund. The Code provides that a variable contract shall not be treated as
an annuity contract or life insurance, as applicable, for any period (and any
subsequent period) for which the investments are not, in accordance with
regulations prescribed by the Treasury Department, adequately diversified.
19. Treasury Department Regulations issued under Section 817(h) provide that, in
order to meet the statutory diversification requirements, all of the beneficial
interests in the investment company must be held by the segregated asset
accounts of one or more insurance companies. However, the Regulations contain
certain exceptions to this requirement, one of which allows shares in an
underlying mutual fund to be held by the trustees of a qualified pension or
retirement plan without adversely affecting the ability of shares in the
underlying fund also to be held by separate accounts of insurance companies in
connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)). Thus,
Applicants believe that the Treasury Regulations specifically permit "qualified
pension or retirement plans" and separate accounts to invest in the same
underlying fund. For this reason, Applicants have concluded that neither the
Code nor the Treasury Regulations or revenue rulings thereunder presents any
inherent conflict of interest.
20. Applicants note that while there are differences in the manner in which
distributions from Variable Contracts and Qualified Plans are taxed, these
differences will have no impact on the Funds. When distributions are to be made,
and a Separate Account or Qualified Plan is unable to net purchase payments to
make the distributions, the Separate Account and Qualified Plan will redeem
shares of the Funds at their respective net asset value in conformity with Rule
22c-1 under the 1940 Act (without the imposition of any sales charge) to provide
proceeds to meet distribution needs. A Qualified Plan will make distributions in
accordance with the terms of the Qualified Plan.
21. Applicants maintain that it is possible to provide an equitable means of
giving voting rights to Participating Separate Account contractowners and to
Qualified Plans. In connection with any meeting of shareholders, the Funds will
inform each shareholder, including each Participating Insurance Company and
Qualified Plan, of information necessary for the meeting, including their
respective share of ownership in the relevant Fund. Each Participating Insurance
Company will then solicit voting instructions in accordance with Rules 6e-2 and
6e-3(T), as applicable, and its participation agreement with the relevant Fund.
Shares held by Qualified Plans will be voted in accordance with applicable law.
The voting rights provided to Qualified Plans with respect to shares of the
Funds would be no different from the voting rights that are provided to
Qualified Plans with respect to shares of funds sold to the general public.
22. Applicants have concluded that even if there should arise issues with
respect to a state insurance commissioner's veto powers over investment
objectives where the interests of contractowners and the interests of Qualified
Plans are in conflict, the issues can be almost immediately resolved since the
trustees of (or participants in) the Qualified Plans can, on their own, redeem
the shares out of the Funds. Applicants note that state insurance commissioners
have been given the veto power in recognition of the fact that insurance
companies usually cannot simply redeem their separate accounts out of one fund
and invest in another. Generally, time-consuming, complex transactions must be
undertaken to accomplish such redemptions and transfers. Conversely, the
trustees of Qualified Plans or the participants in participant-directed
Qualified Plans can make the decision quickly and redeem their interest in the
Funds and reinvest in another funding vehicle without the same regulatory
impediments faced by separate accounts or, as is the case with most Qualified
Plans, even hold cash pending suitable investment.
23. Applicants also state that they do not see any greater potential for
material irreconcilable conflicts arising between the interests of participants
under Qualified Plans and contractowners of Participating Separate Accounts from
possible future changes in the federal tax laws than that which already exist
between variable annuity contractowners and variable life insurance
contractowners.
24. Applicants state that the sale of shares of the Funds to Qualified Plans in
addition to separate accounts of Participating Insurance Companies will result
in an increased amount of assets available for investment by the Funds. This may
benefit variable contractowners by promoting economies of scale, by permitting
increased safety of investments through greater diversification, and by making
the addition of new portfolios more feasible.
25. Applicants assert that, regardless of the type of shareholders in each Fund,
each Fund's Investment Manager is or would be contractually and otherwise
obligated to manage the Fund solely and exclusively in accordance with that
Fund's investment objectives, policies and restrictions as well as any
guidelines established by the Board of Trustees of such Fund (the "Board"). The
Investment Manager works with a pool of money and (except in a few instances
where this may be required in order to comply with state insurance laws) does
not take into account the identity of the shareholders. Thus, each Fund will be
managed in the same manner as any other mutual fund. Applicants therefore see no
significant legal impediment to permitting the sale of shares of the Funds to
Qualified Plans.
26. Applicants state that the Commission has permitted the amendment of a
substantially similar original order for the purpose of adding a party to the
original order and has permitted open-end management investment companies to
offer their shares directly to Qualified Plan in addition to separate accounts
of affiliated or unaffiliated insurance companies which issue either or both
variable annuity contracts or variable life insurance contracts. Applicants
state that the amended order sought in the application is identical to precedent
with respect to the conditions Applicants propose should be imposed on Qualified
Plans in connection with investment in the Funds.
Applicants' Conditions:
If the requested amended order is granted, Applicants consent to the following
conditions:
1. A majority of the Board of each Fund shall consist of persons who are not
"interested persons" thereof, as defined by Section 2(a)(19) of the 1940 Act,
and the rules thereunder and as modified by any applicable orders of the
Commission, except that if this condition is not met by reason of the death,
disqualification or bona fide resignation of any Board Member or Members, then
the operation of this condition shall be suspended: (a) for a period of 45 days
if the vacancy or vacancies may be filled by the remaining Board Members; (b)
for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the Commission may
prescribe by order upon application.
2. The Board will monitor their respective Fund for the existence of any
material irreconcilable conflict among the interests of the Variable Contract
owners of all Separate Accounts investing in the Funds and of the Qualified Plan
participants investing in the Funds. The Board will determine what action, if
any, shall be taken in response to such conflicts. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive 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 the Funds are being managed; (e) a difference in voting
instructions given by variable annuity contract owners, variable life insurance
contract owners, and trustees of Qualified Plans; (f) a decision by an insurer
to disregard the voting instructions of Variable Contract owners; or (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of Qualified Plan participants.
3. Participating Insurance Companies, the Investment Managers, and any Qualified
Plan that executes a fund participation agreement upon becoming an owner of 10
percent or more of the assets of an Fund (a "Participating Qualified Plan"),
will report any potential or existing conflicts of which it becomes aware to the
Board of any relevant Fund. Participating Insurance Companies, the Investment
Managers and the Participating Qualified Plans will be responsible for assisting
the Board in carrying out its responsibilities under these conditions by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This responsibility includes, but is not limited to,
an obligation by each Participating Insurance Company to inform the Board
whenever voting instructions of Contract owners are disregarded and, if
pass-through voting is applicable, an obligation by each Participating Qualified
Plan to inform the Board whenever it has determined to disregard Qualified Plan
participant voting instructions. The responsibility to report such information
and conflicts, and to assist the Board, will be contractual obligations of all
Participating Insurance Companies investing in the Funds under their agreements
governing participation in the Funds, and such agreements shall provide that
these responsibilities will be carried out with a view only to the interests of
the Variable Contract owners. The responsibility to report such information and
conflicts, and to assist the Board, will be contractual obligations of all
Participating Qualified Plans under their agreements governing participation in
the Funds, and such agreements will provide that their responsibilities will be
carried out with a view only to the interests of Qualified Plan participants.
4. If it is determined by a majority of the Board of a Fund, or by a majority of
the disinterested Board Members, that a material irreconcilable conflict exists,
the relevant Participating Insurance Companies and Participating Qualified Plans
will, at their own 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 material irreconcilable conflict, which
steps could include: (a) in the case of Participating Insurance Companies,
withdrawing the assets allocable to some or all of the Separate Account s from
the Fund or any portfolio thereof and reinvesting such assets in a different
investment medium, including another portfolio of an Fund or another Fund, or
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable 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
Variable Contract owners the option of making such a change; (b) in the case of
Participating Qualified Plans, withdrawing the assets allocable to some or all
of the Qualified Plans from the Fund and reinvesting such assets in a different
investment medium; and (c) establishing a new registered management investment
company or managed Separate Account. If a material irreconcilable conflict
arises because of a decision by a Participating Insurance Company to disregard
Variable Contract owner voting instructions, and that decision represents a
minority position or would preclude a majority vote, then the insurer may be
required, at the Fund's election, to withdraw the insurer's Separate Account
investment in such Fund, and no charge or penalty will be imposed as a result of
such withdrawal. If a material irreconcilable conflict arises because of a
Participating Qualified Plan's decision to disregard Qualified Plan participant
voting instructions, if applicable, and that decision represents minority
position or would preclude a majority vote, the Participating Qualified Plan may
be required, at the Fund's election, to withdraw its investment in such Fund,
and no charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take remedial action in the event of a determination by a
Board of a material irreconcilable conflict and to bear the cost of such
remedial action will be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds, and these responsibilities will be carried out with
a view only to the interest of Variable Contract owners and Qualified Plan
participants.
5. For purposes of Condition 4, a majority of the disinterested Board Members of
the applicable Board will determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the relevant Fund or the Investment Managers be required to establish a new
funding medium for any Contract. No Participating Insurance Company shall be
required by Condition 4 to establish a new funding medium for any Variable
Contract if any offer to do so has been declined by vote of a majority of the
Variable Contract owners materially and adversely affected by the material
irreconcilable conflict. Further, no Participating Qualified Plan shall be
required by Condition 4 to establish a new funding medium for any Participating
Qualified Plan if (a) a majority of Qualified Plan participants materially and
adversely affected by the irreconcilable material conflict vote to decline such
offer, or (b) pursuant to governing Qualified Plan documents and applicable law,
the Participating Qualified Plan makes such decision without a Qualified Plan
participant vote.
6. The determination of the Board of the existence of a material irreconcilable
conflict and its implications will be made known in writing promptly to all
Participating Insurance Companies and Participating Qualified Plans.
7. Participating Insurance Companies will provide pass-through voting privileges
to Variable Contract owners who invest in registered Separate Accounts so long
as and to the extent that the Commission continues to interpret the 1940 Act as
requiring pass-through voting privileges for Variable Contract owners. As to
Variable Contracts issued by unregistered Separate Accounts, pass-through voting
privileges will be extended to participants to the extent granted by issuing
insurance companies. Each Participating Insurance Company will also vote shares
of the Funds held in its Separate Accounts for which no voting instructions from
Contract owners are timely received, as well as shares of the Funds which the
Participating Insurance Company itself owns, in the same proportion as those
shares of the Funds for which voting instructions from contract owners are
timely received. Participating Insurance Companies will be responsible for
assuring that each of their registered Separate Accounts participating in the
Funds calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The obligation to calculate voting privileges
in a manner consistent with all other registered Separate Accounts investing in
the Funds will be a contractual obligation of all Participating Insurance
Companies under their agreements governing their participation in the Funds.
Each Participating Qualified Plan will vote as required by applicable law and
governing Qualified Plan documents.
8. All reports of potential or existing conflicts received by the Board of a
Fund and all action by such Board with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating
Qualified Plans of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
meetings of such Board or other appropriate records, and such minutes or other
records shall be made available to the Commission upon request.
9. Each Fund will notify all Participating Insurance Companies that separate
disclosure in their respective Separate Account prospectuses may be appropriate
to advise accounts regarding the potential risks of mixed and shared funding.
Each Fund shall disclose in its prospectus that (a) the Fund is intended to be a
funding vehicle for variable annuity and variable life insurance contracts
offered by various insurance companies and for qualified pension and retirement
plans; (b) due to differences of tax treatment and other considerations, the
interests of various Contract owners participating in the Fund and/or the
interests of Qualified Plans investing in the Fund may at some time be in
conflict; and (c) the Board of such Fund will monitor events in order to
identify the existence of any material irreconcilable conflicts and to determine
what action, if any, should be taken in response to any such conflict.
10. Each Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders (which, for these purposes, will be the persons having a voting
interest in the shares of the Funds), and, in particular, the Funds will either
provide for annual shareholder meetings (except insofar as the Commission may
interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the type of trust
described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of the
1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further,
each Fund will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of Board
Members and with whatever rules the Commission may promulgate with respect
thereto.
11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is amended, or
proposed Rule 6e-3 under the 1940 Act 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 on terms and conditions materially different
from any exemptions granted in the order requested in the application, then the
Funds and/or Participating Insurance Companies and Participating Qualified
Plans, as appropriate, shall take such steps as may be necessary to comply with
such Rules 6e-2 and 6e-3(T), as amended, or proposed Rule 6e-3, as adopted, to
the extent that such Rules are applicable.
12. The Participating Insurance Companies and Participating Qualified Plans
and/or the Investment Managers, at least annually, will submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out obligations imposed upon it by the conditions contained in
the application. Such reports, materials and data will be submitted more
frequently if deemed appropriate by the Board. The obligations of the
Participating Insurance Companies and Participating Qualified Plans to provide
these reports, materials and data to the Board, when the Board so reasonably
requests, shall be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds.
13. If a Qualified Plan should ever become a holder of ten percent or more of
the assets of a Fund, such Qualified Plan will execute a participation agreement
with the Fund that includes the conditions set forth herein to the extent
applicable. A Qualified Plan will execute an application containing an
acknowledgment of this condition upon such Qualified Plan's initial purchase of
the shares of any Fund.
Conclusion:
Applicants assert that, for the reasons summarized above, the requested
exemptions are appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Xxxxxxxxx Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24079
1999 SEC LEXIS 2177
October 13, 1999
ACTION: Order Granting Exemptions
TEXT: Xxxxxxxxx Variable Products Series Fund ("Xxxxxxxxx Trust"), Franklin
Xxxxxxxxx Variable Insurance Products Trust ("VIP Trust"), Xxxxxxxxx Funds
Annuity Company ("TFAC") or any successor to TFAC, and any future open-end
investment company for which TFAC or any affiliate is the administrator,
sub-administrator, investment manager, adviser, principal underwriter, or
sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment
on September 17, 1999 seeking an amended order of the Commission pursuant to
Section 6(c) of the Investment Company Act of 1940 ("1940 Act") exempting them
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). The prior order (Rel. No. IC-19879)
granted exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies. The proposed relief
would amend the prior order to add as parties to that order the VIP Trust and
any Future Funds and to permit shares of the Xxxxxxxxx Trust, the VIP Trust, and
Future Funds to be issued to and held by qualified pension and retirement plans
outside the separate account context.
A notice of the filing of the application was issued on September 17, 1999 (Rel.
No. IC-24018). The notice gave interested persons an opportunity to request a
hearing and stated that an order granting the application would be issued unless
a hearing should be ordered. No request for a hearing has been filed, and the
Commission has not ordered a hearing.
The matter has been considered, and it is found that granting the requested
exemptions is appropriate in the public interest and consistent with the
protection of investors and the purposes intended by the policy and provisions
of the 1940 Act.
Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested
exemptions from 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, be, and hereby are, granted,
effective forthwith.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
