EXHIBIT (8)(p)
PARTICIPATION AGREEMENT
AMONG
VANGUARD VARIABLE INSURANCE FUNDS
AND
THE VANGUARD GROUP, INC.
AND
VANGUARD MARKETING CORPORATION
AND
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
THIS AGREEMENT, made and entered into as of the ____ day of ___________,
2000, by and among VANGUARD VARIABLE INSURANCE FUNDS (hereinafter the "Fund"), a
Delaware business trust, THE VANGUARD GROUP, INC. (hereinafter the "Sponsor"), a
Pennsylvania corporation, VANGUARD MARKETING CORPORATION (hereinafter the
"Distributor"), a Delaware corporation, and __________________________
(hereinafter the "Company") a Connecticut corporation, on its own behalf and on
behalf of each segregated asset account of the Company named in Schedule A
hereto as may be amended from time to time (each such account hereinafter
referred to as the "Account").
WHEREAS, the Fund was organized to act as the investment vehicle for
variable life insurance policies and variable annuity contracts to be offered by
separate accounts of insurance companies which have entered into participation
agreements with the Fund and the Sponsor (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio," and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the assets of each Portfolio of the Fund are managed by several
entities (the "Advisers"), each of which is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940 and any applicable
state securities laws; and
WHEREAS, the Company has established or will establish one or more Accounts
to fund certain variable life insurance policies (the "Variable Insurance
Products"), the offering of each of which will be made pursuant to a private
placement memorandum ("PPM") in reliance on certain exemptions from the
requirements of federal securities law for placement of securities other than by
means of a public offering, and the Accounts and the interests in the Variable
Insurance products funded thereby will not be registered under the 1933 Act
and/or the 1940 Act in reliance upon exemptions therein; and
WHEREAS, each Account is duly organized, validly existing segregated asset
account, established by resolution in the Board of Directors of the Company, on
the date shown for each Account on Schedule A hereto, to set aside and invest
assets attributable to the Variable Insurance Products; and
WHEREAS, the Distributor is a wholly-owned subsidiary of the Sponsor, is
registered as a broker dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act")
and is a member in good standing of the National Association of Securities
Dealers, Inc. "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios on behalf
of each Account to fund the Variable Insurance Products and the Sponsor is
authorized to sell such shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Sponsor and the Distributor agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Sponsor and the Distributor agree to sell to the Company those
shares of the Portfolios of the Fund listed on Schedule B which each Account
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the order for the shares
of the Fund. For purposes of this Section 1.1, the Company shall be the designee
of the Fund for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such order by 8:30 a.m. Eastern time on the next following Business
Day. The Fund may, at its discretion, accept orders to purchase until 3:00 p.m.
Eastern time. "Business Day" shall mean any day on which the New York Stock
Exchange ("NYSE") is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC.
1.2 The Fund, subject to the provisions of Article IX of this Agreement,
agrees to make its shares available indefinitely for purchase at the applicable
net asset value per share by the Company and its Accounts on those days on which
the Fund calculates its net asset value pursuant to the rules of the SEC and the
Fund shall use its best efforts to calculate such net asset value on each day
which the NYSE is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person including, but not limited to, the Company, or suspend
or terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board, acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
1.3 Fund and the Sponsor agree that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts. No shares of any
Portfolio will be sold to the general public.
1.4 The Fund and the Sponsor will not sell Fund shares to any Participating
Insurance Company or its separate account unless an agreement containing a
provision substantially the same as Section 2.4 of Article II of this Agreement
is en effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any full
or Fractional shares of the Fund held by an Account, executing such requests on
a daily basis (except as described below) at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
Notwithstanding the foregoing, if the payment of redemption proceeds on the next
Business Day would require the Fund to dispose of Portfolio securities or
otherwise incur substantial additional costs, the Fund may determine to settle
one or more redemption transactions on a delayed basis, in which case proceeds
shall be wired to the Company with seven (7) days and the Fund shall notify the
Company of such a delay by 3:00 Eastern time on the same Business Day that the
Company transmits the redemption order the Fund. Furthermore, notwithstanding
the foregoing, the Fund reserves the right to suspend redemption privileges or
pay redemptions in kind, as disclosed in the Fund's prospectus or statement of
additional information. The Fund agrees to treat the Company like any other
shareholder in similar circumstances in making these determinations.
1.6 The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund and in accordance with the
provisions of such prospectus and the accompanying statement of additional
information.
1.7 With respect to payment of the purchase price by the Company and of
Redemption proceeds by the fund, the Company and the Fund shall net all purchase
and redemption orders on a given Business Day and shall transmit one net payment
for all of the Portfolios in accordance with Section 1.8 hereof.
1.8 In the event of net purchases, the Company shall pay for Fund shares by
3:00 p.m. Eastern time on the next Business Day after an order to purchase the
Shares is made in accordance with the provisions of Section 1.1 hereof. In the
event of net redemptions, the Fund shall pay the redemption proceeds by 3:00
p.m. Eastern time on the next Business Day after an order to redeem the shares
is made in accordance with the provisions of Section 1.5 hereof. If net
redemption proceeds are not received by 3:00 p.m. Eastern time on the next
Business Day, the Fund will reimburse the Company for all costs reasonable
incurred as a result of the delay. Payment shall be in federal funds transmitted
by wire. For purposes of Section 2.10, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund. If the Company fails to pay for
Fund shares as required by this Section 1.8, then the Fund shall be entitled to
redeem the shares to cover the cost. The Company shall be responsible for any
shortfall between the purchase and the redemption; the Fund shall be entitles to
retain any gain.
1.9 Issuance and transfer of a Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account. The Fund shall furnish to the
Company the CUSIP number assigned to each Portfolio of the Fund identified in
Schedule B hereto.
1.10 The Fund shall furnish advance notice, as practicable, but at the
latest same day notice (by wire or telephone, followed by written confirmation)
to the Company of any income, dividends or capital gain distributions on the
Fund's shares. The Company hereby elects to receive all such income, dividends
and capital gain distributions as are payable on the Portfolio shares in
additional shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash. The Fund shall notify the Company of the number of shares
so issued as payment of dividends and distributions.
1.11 The Fund shall make the daily net asset value, dividend and capital
gain Information for each Portfolio available on a per share basis to the
Company as soon as reasonable practical after the information is calculated
(normally by 6:30 p.m. Eastern time) and shall use its best efforts to make such
net asset value per share available by 7:00 p.m. Eastern time on each Business
Day. Related to this obligation, the Fund shall provide a contact name or names
and telephone numbers of the persons responsible for providing daily net asset
value, dividend and capital gain information to the Company. If the Fund
provides materially incorrect share net asset value information, the Fund, in
cooperation with the
Company, shall make an adjustment to the number of shares purchased or redeemed
for the Accounts to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share, dividend or
capital gains information shall be reported promptly upon discovery the Company.
The Fund or the Sponsor shall reimburse the Account and Variable Insurance
Product owners for any loss caused by any error in its calculation of net asset
value, dividend and capital gain information.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that (I) the Variable Insurance
Products are exempt from or not subject to registration under the 1933 Act and
(ii) the Variable Insurance Products will be issued and sold in compliance in
all material respects with all applicable federal and state laws and with state
insurance suitability requirements. The Company further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established each Account
prior to any issuance or sale thereof as a segregated asset account under
Section 38a-43 of the Connecticut Insurance Code and each Account is exempt from
registration under the 1940 Act. The Company will notify the Fund if it believes
an Accoule will cease to qualify for the exception from the definition of
investment company provided under Sections 3(c)(1), 3(c)(7), or 3(c)(11) of the
1940 Act. Notification shall be made prior to the end of the calendar quarter in
which the Company becomes aware that the Account may cease to qualify.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of the State of Connecticut and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. The Fund shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund, the
Distributor, or the Sponsor.
2.3 The Fund represents that it is qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and that it will make every effort to maintain qualification (under
Subchapter M or any successor or similar provision and (ii) it will notify the
Company immediately upon having a reasonable basis for believing that it ceased
to so qualify or that it might not so qualify in the future. The Fund
acknowledges that any failure to qualify as a Regulated Investment Company will
eliminate the ability of the subaccounts to avail themselves of the "look
through" provisions of Section 817(h) of the Code, and that as a result the
Variable Insurance Products will almost certainly fail to qualify as endowment
or life insurance contracts under Section 817(h) of the Code.
2.4 The Company represents that the Variable Insurance Products will be
treated as endowment or life insurance contracts under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Sponsor immediately upon having a reasonable
basis for believing that the Variable Insurance Products have ceased to be so
treated or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Connecticut and the Fund and the Sponsor represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Connecticut to the extent required to perform this
Agreement.
2.7 The Distributor represents and warrants that it is a member in good
standing Of the NASD and is registered as a broker-dealer with the SEC. The
Distributor further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Connecticut and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 0000 Xxx.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in all
material respects with the 1940 Act and any applicable regulations thereunder.
2.9 The Sponsor represents and warrants that the Advisers to the Fund are
and The Sponsor shall use its best effort to cause the Advisers to, remain duly
registered in all material respects under all applicable federal and state
securities laws and to perform their obligations for the Fund in compliance in
all material respects with the laws of the State of Connecticut and any
applicable state and federal securities laws.
2.10 The Fund and Sponsor represent and warrant that all of their trustees,
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage required currently by Rule 17g-1 under the 1940 Act or other
applicable laws or regulations as may be promulgated from time to time. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.11 With respect to the Accounts, which are exempt from registration under
the 1940 Act in reliance upon Section 3(c)(1) or Section 3(c)(7) thereof, the
Company represents and warrants that:
(a) ____________________________ is the principal underwriter for each
such Account and any subaccounts thereof and is a registered broker-
dealer with the SEC under the 1934 Act;
(b) the shares of the Portfolios of the Fund are and will continue to be
the only investments securities held by the corresponding subaccounts;
and
(c) with regard to each Portfolio, the Company, if permitted by law, on
behalf of the corresponding subaccount, will:
(i) vote such shares held by it in the same proportion as the vote
of all other holders of such shares; and
(ii) 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 0000 Xxx.
2.12 The fund represents that it will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular the Fund will
either provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if an when applicable, 16(b). Further,
the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the SEC may promulgate with respect thereto.
ARTICLE III. OFFERING DOCUMENTS AND REPORTS
3.1 The Fund, the Sponsor or their designee shall provide the Company (at
the Sponsor's expense) with as many copies of the Fund's current prospectus as
the Company may reasonably request. The Company shall provide a copy of the
Fund's prospectus to each person to whom it provides the PPM for the Variable
Insurance Products. If requested by the Company in lieu thereof, the Fund or the
Sponsor shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's or the Sponsor's expense) and other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus for the Fund is amended) to have the PPM
for the Variable Insurance Products and the Fund's prospectus printed together
in one document (such printing to be at the Company's expense).
3.2 The Fund's prospectus shall state that the statement of additional
information
for the Fund is available from the Sponsor (or in the Fund's discretion, the
prospectus shall state that the statement of additional information is available
from the Fund) and the Sponsor (or the Fund), at its expense, shall print and
provide such statement free of charge to the Company and to any owner of a
Variable Insurance Product or prospective owner who requests such statement.
3.3 The Fund, at its own expense, shall provide the Company with copies of its
reports to shareholders, other communications to shareholders, and, if required
by applicable law, proxy material, in such quantity as the Company shall
reasonable require for distributing to Variable Insurance Produce owners. The
Fund shall provide to the Company the prospectuses and annual reports referenced
in this Agreement within fifteen (15) days prior to a Company's obligation to
mail, the Company agrees to provide the Fund with advance notice of such date.
If the documents are not delivered to the Company within ten (10) days of the
Company's obligation to mail, the Fund shall reimburse the Company for any
extraordinary out-of-pocket costs (including, but not limited to, overtime for
printing and mailing).
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund, its Advisers or the Sponsor is named, at least ten Business Days
prior to its use. The Company may use such material in fewer than ten Business
Days if it receives the written consent of the Fund or its designee. No such
material shall be used if the Fund or its designee reasonably objects to such
use within ten Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with the
sale of the Variable Insurance Products other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Sponsor, except with the permission of the Fund or the
Sponsor or the designee of either.
4.3 The Fund, Sponsor, Distributor or their designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company or an Account is
named at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.4 The Fund, the Distributor and the Sponsor shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Variable Insurance Products other than the information or
representations contained in a PPM for the Variable Insurance Products, as such
PPM may be amended or supplemented from time to time, or in published reports
for each Account which are in the public domain or approved by the Company for
distribution to contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, prior to or
contemporaneously with the filing of each document with the SEC or other
regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
PPMs, reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemption, requests for no action
letters, and all amendments to any of the above, that relate to the Variable
Insurance Products or each Account, prior to or contemporaneously with the
filing of such document with the SEC or other regulatory authorities, or, in the
case of a PPM, at least three Business Days before any sales are made by use of
the relevant PPM.
4.7 The Company and the Fund shall also each promptly inform the other of the
results of any examination by the SEC (or other regulatory authorities) that
relates to the Variable Insurance Products, the Fund or its shares, and the
party that was the subject of the examination shall provide the other party with
a copy of relevant portions of any "deficiency letter" or other correspondence
or written report regarding any such examination.
4.8 The Fund and the Sponsor will provide the Company with as much notice as
is reasonable practicable of any proxy solicitation for any Portfolio, and of
any material change in the Fund's registration statement, particularly any
change resulting in a change to the PPM for any Account. The Fund and the
Sponsor will cooperate with the Company so as to enable the Company to solicit
voting instructions from owners of Variable Insurance Products, to the extent a
solicitation is required by applicable law, or to make changes to its PPM in a
orderly manner.
4.9 For purposes of this Article IV, the phrase "sales literature and other
promotional material" is subject to applicable laws and regulations governing
the private placement of securities, particularly the prohibition against making
a general solicitation. The phrase includes, but is not limited to, sales
literature (i.e., any written communication distributed or made generally
available to customers, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published articles), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and PPMs, shareholder reports, and proxy
materials.
ARTICLE V. FEES AND EXPENSES
5.1 The Fund and Sponsor shall pay no fee or other compensation to the Company
under this Agreement. Nothing herein shall prevent the parties hereto from
otherwise agreeing to perform, and arranging for appropriate compensation for,
other services relating to the Fund and or to the Accounts.
5.2 All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall see to it that all its shares are registered
and authorized for issuance in accordance with applicable federal law and, if
and to the extent deemed advisable by the Fund, in accordance with applicable
state laws prior to their sale. The Fund shall bear the fees and expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, all taxes on the issuance or
transfer of the Fund's shares.
5.3 The Fund shall bear the expenses of printing, and the Company shall bear
the expenses of distributing, the Fund's prospectus to owners of Variable
Insurance Products issued by the Company. The Company shall bear the expenses of
distributing the Fund's proxy materials (to the extent such proxy solicitation
is required by law) and reports to owners of Variable Insurance Products.
ARTICLE VI. DIVERSIFICATION
6.1 The Fund will at all times invest money from the Variable Insurance Products
in such a manner as to ensure that the Variable Insurance Products will be
treated as variable contracts under the Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Fund and the
Sponsor represent and warrant that each Portfolio of the Fund will meet the
diversification requirements of Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for endowment
or life insurance contracts and any amendments or other modifications to such
Section or Regulations, as if those requirements applied directly to each such
Portfolio. In the event of a breach of this Article VI by the Fund, it will take
all reasonable steps (a) to notify Company of such breach and (b) to adequately
diversify, each Portfolio of the Fund so as to achieve compliance with the grace
period afforded by Regulation 817-5.
6.2 The Fund and the Sponsor represent that each Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code and
they will maintain such qualification (under Subchapter M or any successor or
similar provision).
ARTICLE VII. INDEMNIFICATION
7.1 Indemnification by the Company
7.1(a) The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act, the Sponsor and the
Distributor (collectively, the "Indemnified parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Variable Insurance Products and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the PPM for the Variable
Insurance Products or contained in the contract or policy or sales
literature for the Variable Insurance Products (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund for use
in the PPM for the Variable Insurance Products or in the contract or
policy sales literature )or any amendment or supplement) or otherwise for
use in connection with the sale of the Variable Insurance Products or the
Fund shares; or
(ii) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company,
or persons under its control) or unlawful conduct of the Company or
persons under its control, with respect to the sale or distribution of
the Variable Insurance Products of Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the Fund or any amendment or supplement thereto or the
omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
(iv) result from any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any material breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Section 7.1(b) and 7.1(c)
hereof.
7.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful malfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
7.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on a designated agent), but failure to notify the Company of any
such claim shall not relieve the Company 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 Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such a party of the
Company's election to assume the defense thereof, the Indemnified party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.1(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Variable Insurance Products
or the operation of the Fund.
7.2 Indemnification by the Sponsor
7.2(a) The Sponsor agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Sponsor) 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 are related to the
sale or acquisition of the Fund's shares or the Variable Insurance Products and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing, or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Sponsor or
Fund by or on behalf of the Company for use in the registration
statement or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Variable Insurance Products or Fund shares;
or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the PPM
or sales literature for the Variable Insurance Products not
supplied by the Sponsor or persons under its control) or
unlawful conduct of the Fund, the Advisers or persons under
their control, with respect to the sale or distribution of the
Variable Insurance Products or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a PPM or sales literature covering
the Variable Insurance Products, or any amendment or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund; or
(iv) result from any failure by the Sponsor or the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure to
comply with the diversification requirements specified in
Article VI or this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Sponsor or the Fund
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Sponsor or the Fund;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b) The Sponsor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Accounts, whichever is applicable.
7.2(c) The Sponsor 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 Sponsor 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
any such service on any designated agent), but failure to notify the Sponsor of
any such claim shall not relieve the Sponsor 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 any case any such action is
brought against the Indemnified Parties, the Sponsor will be entitled to
participate, at its own expense, in the defense thereof. The Sponsor also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Sponsor to such party of the
Sponsor'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
Sponsor will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by each party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.2(d) The Company agrees promptly to notify the Sponsor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Variable Insurance
Products or the operation of each Account.
7.3 INDEMNIFICATION BY THE FUND
7.3(a) The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes
of this Section 7.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims damages, liabilities or expenses (or action in respect
thereof) or settlements resulting from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services and
furnish the materials under the terms of this Agreement (including a
failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof.
7.3(b) The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Sponsor or each Account, whichever is applicable.
7.3(c) The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability 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 Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party or the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
independently in connection with the defense thereof other than reasonable costs
of litigation.
7.3(d) The Company and the Sponsor agree promptly to notify the Fund of
the commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Variable Insurance Products, with respect to the operation of an
Account, or the sale or acquisition of shares of the Fund.
7.4 INDEMNIFICATION BY THE DISTRIBUTOR
7.4(a) The Distributor agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.4) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Sponsor) 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 are related to the
sale or acquisition of the Fund's shares or the Variable Insurance Products and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify hall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Distributor or Fund by or on behalf of the Company for
use in the registration statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Insurance Products or Fund
shares; or
(ii) arise out of or as a result of statements or representations (other than
statements or representations contained in the PPM or sales literature for
the Variable Insurance Products not supplied by the Distributor or persons
under its control) or unlawful conduct of the Fund, the Advisers or
persons under their control, with respect to the sale or distribution of
the Variable Insurance Products or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a PPM or sales literature covering the Variable
Insurance Products, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to
be stated therein or
necessary to make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) result from any failure by the Distributor or the Fund to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Distributor or the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Distributor of the Fund;
as limited by and in accordance with the provisions of Sections 7.4(b) and
7.4(c) hereof.
7.4(b) The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Accounts, whichever is applicable.
7.4(c) The Distributor 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 Distributor 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
any such service on any designated agent), but failure to notify the Distributor
of any such claim shall not relieve the Distributor 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 any case any such action
is brought against the Indemnified Parties, the Distributor will be entitled to
participate, at its own expense, in the defense thereof. The Sponsor also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Distributor to such party of
the Distributor's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Distributor will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by each party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.4(d) The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Variable Insurance
Products or the operation of each account.
ARTICLE VIII. APPLICABLE LAW
8.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Connecticut.
8.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant,
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. TERMINATION
9.1 Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Sponsor with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonable
available to meet the requirements of the Variable Insurance
Products; or
(c) termination bay the Company by written notice to the Fund and the
Sponsor with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Variable Insurance Products issued or to be issued by the Company;
or
(d) termination by the Company by written notice to the Fund and the
Sponsor with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify (in the event of such termination, the Company
shall withdraw all assets allocable to the separate accounts from
the Portfolio and shall reinvest such assets in a different
investment medium, including, but not limited to, another Portfolio
of the Fund); or
(e) termination by the Company by written notice to the Fund and the
Sponsor with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements as
specified in Article VI
hereof (in the event of such termination, the Company shall
withdraw all assets allocable to the separate accounts from the
Portfolio and shall reinvest such assets in a different investment
medium, including, but not limited to, another Portfolio of the
Fund); or
(f) termination by the Fund, Sponsor, or Distributor by written notice
to the Company, if any of the Fund, Sponsor, or Distributor shall
determine, in its sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a material
adverse change in its business, operations, or financial condition
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Sponsor, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund, Sponsor, or
Distributor has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity.
9.2 Notwithstanding any termination of this Agreement, the Fund and the
Sponsor shall at the option of the Company, continue to make available shares of
the Fund pursuant to the terms and conditions of this Agreement, for all
Variable Insurance Products in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investment sin the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts.
9.3 The Company shall not redeem Fund shares attributable to the Variable
Insurance Products (as opposed to Fund shares attributable to the Company's
assets held in the Accounts) except (i) as necessary to implement Variable
Insurance Products owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption"). Upon request, the Company will promptly furnish to the Fund and
the Sponsor the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Sponsor) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent owners of Variable Insurance Products from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Sponsor 90 days notice of its
intention to do so.
ARTICLE X. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier or facsimile to the other party at the address of such
party set forth below or at such other address as such party may from time to
time specify in writing to the other party.
If to the Fund: Vanguard Variable Insurance Funds
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
If to the Sponsor: The Vanguard Group, Inc.
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attn: R. Xxxxxxx Xxxxxx
If to the Distributor: Vanguard Marketing Corporation
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attn: R. Xxxxxxx Xxxxxx
If to the Company:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
ARTICLE XI. MISCELLANEOUS
11.1 It is understood and stipulated that neither the shareholders of any
Portfolio nor the officers or trustees of the Fund shall be personally liable
hereunder.
11.2 Subject to the requirements of the legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Variable Insurance Products and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not (unless it has obtained the express
written consent of the affected party) disclose, disseminate
or utilize such names and addresses and other confidential information until
such time as it may come into the public domain.
11.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
11.6 Each party hereto shall cooperate with each party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
11.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
11.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
11.9 The Company shall furnish, or cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's Annual Financial Statement on Statutory Basis as soon as
practical and in any event within 90 days after the end of each fiscal
year; and
(b) any PPM or other materials distributed in connection with the sale of the
Variable Insurance Products to the extent such PPM or other materials
reference the Fund.
11.10 This Agreement, including any Schedule hereto, may be amended or
modified only by written instrument, executed by duly authorized officers of the
parties.
[THE REMAINDER OF THIS PAGE INTENTIONALLY
HAS BEEN LEFT BLANK]
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account Contracts Funded by Separate Account
------------------------ ------------------------------------
Separate Account ICMG Series 111-B GVL 93(P)
IVL-97P
SCHEDULE B
PORTFOLIOS
The following Portfolios of the Vanguard Variable Insurance Funds shall
be made available as investments underlying the Variable Insurance Products:
Money Market Portfolio
High-Grade Bond Portfolio
High-Yield Bond Portfolio
Short-Term Corporate Portfolio
Balanced Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
Mid-Cap Index Portfolio
REIT Index Portfolio
Small Company Growth Portfolio
International Portfolio
