EXHIBIT 8 (n)
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST, XXX XXXXXX ASSET MANAGEMENT,
XXX XXXXXX FUNDS INC.
and
OM FINANCIAL LIFE INSURANCE COMPANY
Dated as of
January 2, 2007
TABLE OF CONTENTS
PAGE
ARTICLE I. Purchase and Redemption of Fund Shares 3
ARTICLE II. Representations and Warranties 4
ARTICLE ill. Prospectuses, Reports to Shareholders
and Proxy Statements; Voting 7
ARTICLE IV. Sales Material and Information 9
ARTICLE V. Fees and Expenses 10
ARTICLE VI. Diversification 11
ARTICLE VII. Potential Conflicts 11
ARTICLE Vill. Anti-Money Laundering 13
ARTICLE IX. Indemnification 14
ARTICLE X. Applicable Law 22
ARTICLE XI. Termination 22
ARTICLE XII. Notices 24
ARTICLE Xli. Miscellaneous 25
SCHEDULE A Separate Accounts and Associated Contracts A-I
SCHEDULE B Portfolios of The Universal Institutional Funds,
Inc.
Available Under this Agreement B-1
SCHEDULE C Proxy Voting Procedures C-l
SCHEDULE D Operating Procedures D-l
THIS AGREEMENT is made and entered into as of the 2nd day of January,
2007 by and among OLD MUTUAL FINANCIAL NETWORK. (the "Company"), a Maryland
corporation, on its own behalf and on behalf of each separate account of the
Company set forth on Schedule A hereto as may be amended from time to time
(each such account referred to as an "Account"), V AN KAMPEN LIFE INVESTMENT
TRUST (the "Fund"), a Delaware business trust, XXX XXXXXX FUNDS INC. (the
"Underwriter"), a Delaware corporation, and XXX XXXXXX ASSET MANAGEMENT (the
"Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products enter into
participation agreements with the Fund, the Underwriter and the Adviser
substantially similar to the Agreement (the "Participating Insurance
Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, anyone or more of which may be made available under this
Agreement; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual written agreement of the
parties hereto, to the Account( s) of the Company (all references herein to
"shares" of a Portfolio shall mean the class or classes of shares specifically
identified on Schedule B); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated September 19, 1990 (File No. 812-7552), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by Variable Insurance Product
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
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WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser manages the Portfolios of the Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") and serves as principal underwriter of the shares of the Fund; and
WHEREAS, the Company offers or proposes to offer certain Variable
Insurance Products that it has registered (or will register) under the 1933 Act
(the "Contracts"), each as set forth on Schedule A hereto; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered (or will register) certain Accounts
as unit investment trusts under the 1940 Act that are attributable to the
Contracts ("Accounts"), each as set forth on Schedule A hereto; 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 or sub-Account thereof (together, as applicable, an
"Account"), to fund the Contracts and the Underwriter is authorized to sell
such shares to each such Account at net asset value; and
WHEREAS, the Fund, acting through the Fund's transfer agent, has
established a master account on its mutual fund shareholder account system (the
"T/A Account") reflecting the aggregate ownership of shares of the Fund and all
transactions involving such shares by the Company on behalf of the Accounts;
and
WHEREAS, the Company, the Fund, the Underwriter and the Adviser wish to
permit the Fund to receive, and the Company, or its authorized agent, to
transmit, purchase, exchange and redemption orders of Portfolio shares using
either manual procedures or the National Securities Clearing Corporation
("NSCC") Fund/SERV System ("Fund/SERV"), as set forth in the attached Schedule
D; and
WHEREAS, if the Company, the Fund, the Underwriter and the Adviser wish
to receive and transmit Fund shares via Fund/SERV, it is intended that the Fund
and the Company will establish an account using Fund/SERV (the "Fund/SERV
Account") that will reflect corresponding transactions and Fund share balances
in the T/A Account.
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NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Underwriter and the Adviser agree as follows:
ARTICLE I. PURCHASE AND REDEMPTION OF FUND SHARES
1.1. The Fund and the Underwriter agree to sell to the Company shares
of the Portfolio(s) and shall execute purchase orders placed for each Account
on each Business Day at the net asset value (and with no sales charges) next
computed after receipt by the Fund or its designee of such purchase order. For
purposes of this Section 1.1, and for purposes of Rule 22c1 under the 1940 Act,
the Company shall be the designee of the Fund and the Underwriter for receipt
of such purchase 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 the time specified in the Operating Procedures attached hereto as
Schedule D (the "Operating Procedures"). "Business Day" shall mean any day on
which the New York Stock Exchange, Inc. is open for trading and on which the
Fund calculates its net asset value pursuant to SEC rules.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
shares of the Portfolios available continuously 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 SEC rules and the
Fund shall calculate such net asset value on each day that the New York Stock
Exchange, Inc. is open for trading. Notwithstanding the foregoing, the Board
of Trustees of the Fund (the "Board") may refuse to permit the Fund to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of a Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Portfolio(s) held by
the Company, executing such redemption requests for each Account on each
Business Day 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 1.4,
and for purposes of Rule 22c-1 under the 1940 Act, the Company shall be the
designee of the Fund and the Underwriter 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 order by
the time specified in the Operating Procedures.
1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus to the extent not
inconsistent with the terms and conditions of this Agreement.
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1.6. The Fund and the Company will settle all purchase and redemption
orders transmitted pursuant to Sections 1.1 and 1.4 of this Agreement,
respectively, in accordance with the Operating Procedures.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Share 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 sub-account of each Account.
1.8. The Fund will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III, V, VI and VII of this Agreement, and Sections 2.1
and 2.4 of Article II are in effect to govern such sales.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) if it
intends to become a member of the NSCC, it will be a member of good standing
of the NSCC, or will be otherwise entitled to use Fund/SERV, and it will
abide by the rules and regulations of the NSCC; (iii) it has legally and
validly established each Account prior to any issuance or sale thereof
as a segregated asset account under applicable laws and regulations; and
(iv) it has registered or, prior to any issuance or sale of the
Contracts, will register and will thereafter maintain the registration
of each Registered Account as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a segregated investment
account for the Contracts. The Company further represents and warrants
that: (i) the interests under the Contracts are or will be registered
and shall remain registered under the 1933 Act; and (ii) the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws. The Company shall amend the
registration statement for the Accounts and the Contracts under the 1940
Act and the 1933 Act, respectively, from time to time as required in
order to effect the continuous offering of the Contracts.
2.2. The Fund and the Underwriter represent and warrant 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 Maryland and all applicable federal and state laws and that the Fund
is and shall remain registered as an open-end management investment company
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.
2.3. The Fund and the Adviser represent and warrant that each
Portfolio is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
and that they will maintain such qualification (under
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Subchapter M or any successor or similar provision) and that no other
Participating Insurance Company will purchase shares in any Portfolio for any
purpose or under any circumstances that would preclude the Company from "looking
through" to the investments of each Portfolio in which it invests, pursuant to
the "look through" rules found in Treasury Regulation 1.817-5. The Fund or
Adviser will notify the Company immediately upon having a reasonable basis for
believing that any Portfolio has ceased to so qualify or that any might not so
qualify in the future.
2.4. The Company represents and warrants that each Contract is and will
continue to be treated as a "variable contract" under applicable provisions of
the Code and applicable Treasury Regulations promulgated thereunder. The
Company further represents and warrants that it will make every effort to
maintain such treatment and that it will notify the Fund immediately upon
having a reasonable basis for believing that any Contract has ceased to be so
treated or that any Account or Contract might not be so treated in the future;
provided, however, that the Company makes no representation or undertaking
regarding any Contract to the extent such representation or undertaking is
dependent on compliance by any investment vehicle in which the Company or an
Account may invest with the requirements of Subchapter M or Section 817(h) of
the Code, the regulations thereunder, or any successor provision.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
Undertakes to have the Board, at least a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. 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 its
state of domicile and, to the extent specifically requested in writing by the
Company, any other applicable state insurance laws or regulations, and the Fund
represents that its operations are and shall at all times remain in material
compliance with the laws of its state of domicile, to the extent required to
perform this Agreement. The Fund and the Adviser agree that they will furnish
the information required by state insurance laws to assist the Company in
obtaining the authority needed to issue the Contracts in various states.
2.7. The Fund and the Adviser represent and warrant that the Fund is
lawfully organized and validly existing under the laws of the State of Delaware
and that the Fund does and will comply in all material respects with the 1940
Act and any applicable regulations thereunder. The Fund and Adviser represent
and warrant that the Fund's operations, and that of each Portfolio, does and
will comply with applicable federal law. The Fund and the Adviser represent and
warrant that the Fund is a member in good standing of the NSCC, or is otherwise
entitled to use Fund/SERV, and will abide by the rules and regulations of the
NSCC.
2.8. The Adviser represents and warrants that it is lawfully organized
and validly existing under the laws of its state of organization; it is and
shall remain duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and will remain duly
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registered under all applicable federal and state securities laws; and it will
perform its obligations for the Fund in compliance in all material respects
with the laws of its state of domicile and any applicable state and federal
securities laws.
2.9. The Underwriter represents and warrants that it is lawfully
organized and validly existing under the laws of its state of organization; it
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended (the" 1934 Act"); it shall remain duly registered under all applicable
federal and state securities laws; it is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and serves as
principal underwriter/distributor of the Fund; and it will perform its
obligations for the Fund in compliance in all material respects with the laws
of its state of domicile and any applicable state and federal securities laws.
2.10. The Fund and Adviser represent and warrant that all of the Fund's
directors, officers, employees, investment advisers, and other
individuals/entities having access to 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 as currently required by Rule 17 g-1 of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
blanket fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Account(s) are and shall
continue to be at ail times covered by a blanket fidelity bond or similar
coverage for the benefit of the Company and/or the Account(s) that is
reasonable and customary in light of the Company's obligations under this
Agreement. The aforesaid includes coverage for larceny and embezzlement and
shall be issued by a reputable bonding company in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund, the Underwriter and the Adviser in the event that
such coverage no longer applies.
2.12. The Fund and the Adviser represent and warrant that for each
quarter each Portfolio of the Fund does and will meet the diversification
requirements of Section 817 (h) of the Code and any regulations thereunder
applicable to variable contracts as defined in Section 817(d) of the Code, and
any amendments or other modifications or successor provisions to such Sections
or regulations (and any revenue rulings, revenue procedures, notices, and
other published announcements of the Internal Revenue Service interpreting
these Sections and regulations), as if those requirements applied directly to
each such Portfolio. Fund or Adviser will notify Insurance Company immediately
upon either Fund or Adviser having a reasonable basis for believing any
Portfolio has ceased to comply or might not so comply, and will immediately
take all necessary steps to adequately diversify the Portfolio so as to
achieve compliance within the grace period afforded by Treasury Regulation ss.
1.817 -5.
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The Adviser agrees to provide the Company, upon request, with a certificate or
statement indicating compliance by each Portfolio of the Fund with Section
817(h) of the Code, such certificate or statement to be sent to the Company no
later than thirty (30) days following the end of each calendar quarter.
2.13. The Fund and Adviser represent and warrant that the Fund is and
shall maintain compliance with Rule 38a-1 under the 1940 Act and Adviser
represents and warrants that the Adviser is and shall maintain compliance with
Rule 206(4)-7 under the Advisers Act.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements;
Voting
3.1. At least annually (or in the case of a prospectus supplement, when
that supplement is issued), the Fund or its designee shall timely provide the
Company with as many printed copies of the Fund's current prospectus and
statement of additional information ("SAI") describing only the Portfo1io(s)
and any supplements thereto as the Company may reasonably request for
distribution, at the Fund's expense, to existing Contract owners. To the extent
that the Portfolio(s) are one or more of several Portfolios of the Fund, the
Fund shall bear the cost of providing the Company only with disclosure related
to the Portfolio(s) (except with respect to the SAI which the Company
acknowledges includes combined disclosure for all of the active portfolios of
the fund). The Company will distribute the prospectus (and SAI as requested by
Contract owners) and supplements to existing, Contract owners and the Company
shall bear such costs. The Fund shall provide the Company, at the Company's
expense, with as many copies of the current Fund prospectus and SAI describing
only the Portfolio(s) and any supplement thereto, as the Company may reasonably
request for distribution to prospective purchasers of Contracts. If requested
by the Company, in lieu of providing printed copies the Fund shall provide
camera ready film or computer diskettes containing such documentation,
including a final copy of a current prospectus set in type at the Fund's
expense, and such other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus and/or SAI for the
Fund is amended during the year) to have the prospectus or other disclosure
document for the Contracts, and/or other fund companies, and the Fund's
prospectus (and/or SAI for the Fund and the SAI for the Contracts) printed
together in one document, in which case the Fund agrees to pay its
proportionate share of reasonable expenses directly related to the required
disclosure of information concerning the Fund.
3.2. The statement of additional information of the Fund shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.3. The Fund or its designee, at the Fund's expense, shall provide the
Company or its mailing agent with printed copies of the Fund's current
shareholder/Contract owner reports and other permissible communications to
shareholders/Contract owners in such quantity as the Company may reasonably
request for distribution, at the Fund's expense, to existing Contract owners.
The Company will distribute these reports and other communications to existing
Contract owners and the Company shall bear such costs. If requested by the
Company, in lieu of providing printed copies the Fund shall provide
camera-ready film or computer diskettes containing the Fund's shareholder
reports, and such other assistance as is reasonably necessary in order for the
Company twice each year (once for the Fund's semi-annual report and once for
the Fund's annual report) to have the reports for the Contract owners, and/or
reports of other fund companies, and the Fund's shareholder
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reports printed together in one document in which case the Fund agrees to pay
its proportionate share of reasonable expenses directly related to the required
disclosure of information concerning the Fund.
3.4 The Fund, at its expense, shall provide the Company or its mailing
agent with copies of its proxy statements and other related proxy
communications (except for prospectuses and statements of additional
information that are covered in Section 3.1 and reports to shareholders that
are covered in Section 3.4) to shareholders in such quantity as the Company
shall reasonably require for distributing to Existing Contract Owners. The
Company will distribute this proxy material, and other communications to
existing Contract owners and will xxxx the Fund for the reasonable cost of such
distribution; provided that any proxy materials required as a result of events
originating from the Company will be furnished and distributed at the expense
of the Company. The Fund shall not pay any costs of distributing such materials
to prospective Contract owners.
3.5. If and to the extent required by law, the Company shall distribute
all proxy materials furnished by the Fund to Contract owners to whom voting
privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares held in the Account in accordance
with instructions received from Contract owners; and
(iii) vote Portfolio shares held in the Account for which no
instructions have been received in the same proportion as
Portfolio shares for which instructions have been received
from the Company's Contract owners;
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require passthrough voting privileges for variable contract owners. The
Company reserves the right to vote Portfolio shares held in any segregated
asset account in its own right, to the extent permitted by law. If the Company
is required to solicit voting instructions, the Fund and the Company shall
follow the procedures, and shall have the corresponding responsibilities, for
the handling of proxies and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each of their
separate accounts participating in the Fund (and for which the soliciting of
voting instructions is required) calculates voting privileges in a manner
consistent with the standards set forth on Schedule C, which standards will
also be provided to the other Participating Insurance Companies.
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC 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 Fund is not one of the trusts described in Section 16(c) of the
0000 Xxx) as well as with Section 16(a) of the 1940 Act and, if and when
applicable,
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Section 16(b) of the 1940 Act. Further, the Fund will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) of the 1940 Act
with respect to periodic elections of directors and with whatever rules the
SEC may promulgate with respect thereto.
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, the Underwriter or the Adviser is named, at least
ten (10) Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within ten (10) 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 Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement or prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund
which are in the public domain or approved by the Fund for distribution to
Fund shareholders, or in sales literature or other promotional material
approved by the Fund or its designee, except with the permission of the Fund
or its designees. The Fund and the Adviser agree to respond to any request for
approval on a prompt and timely basis.
4.3. The Fund or its 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 and/or its Account(s) or
Contract(s) are named at least ten (10) 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 (10) Business Days after receipt of such material.
4.4. Neither the Fund, the Underwriter nor the Adviser shall give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts, other than the information or
representations contained in a registration statement, prospectus, for the
Contracts, as such documents may be amended or supplemented from time to time,
or in 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 provided by the Company or its designee, except with
the written permission of the Company. The Company agrees to respond to any
request for approval on a prompt and timely basis.
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, within a
reasonable time after filing of each such document with the Commission or the
NASD.
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4.6. The Company will provide to the Fund, to the extent applicable, at
least one complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no action letters, and all amendments to any of
the above, that relate to investment in the Fund or the Portfolios under the
Contracts within a reasonable time after filing of each such document with the
Commission or the NASD.
4.7. The Fund and Adviser will provide the Company with as much notice as
is reasonably 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 registration statement or prospectus or
statement of additional information for any Account. The Fund and Adviser will
cooperate with the Company so as to enable the Company to solicit proxies from
Contract owners or to make changes to its prospectus, statement of additional
information or registration statement, in an orderly manner. The Fund and
Adviser will make reasonable efforts to attempt to have changes affecting
Contract prospectuses become effective simultaneously with the annual updates
for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited, to advertisements
(sucho as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information or other disclosure
documents, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to the Company under
this Agreement, except that if the Fund or any Portfolio adopts and implements
a service plan and/or a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution and shareholder servicing expenses, then the Underwriter
may make payments to the Company or to the underwriter for the Contracts
pursuant to such plans if and in amounts agreed to by the Underwriter in
writing.
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. Except as otherwise
set forth in Section 3.2 of this Agreement, the Fund shall bear the expenses
for the cost of registration and qualification of the Fund's shares, including
without limitation, the preparation of and filing with the SEC of Forms N-CSR
and Rule 24f-2 Notices and payment of all applicable registration or filing
fees with respect
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to shares of the Fund, preparation and filing of the Fund's prospectus, SAI and
registration statement, proxy materials and reports, setting the prospectus and
SAI in type, printing the prospectus and SAI, setting in type and printing the
proxy materials and reports to shareholders/Contract owners (including the
costs of printing a Fund prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares; any expenses
permitted to be paid or assumed by the Fund pursuant to a plan, if any, under
Rule 12b-1 under the 1940 Act; and other costs associated with preparation of
prospectuses and SAIs for the Designated Portfolios in electronic or typeset
format, as well as any distribution and other expenses as set forth in Article
III of this Agreement.
ARTICLE VI. Diversification
[Reserved. ]
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by contract owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Fund shall promptly inform the Company if the Board determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded. The Fund Board will record in its minutes, or other appropriate
records, all reports received by it and all action with regard to a conflict.
The Company agrees that these responsibilities will be carried out with a view
only to the interests of Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that an irreconcilable material conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to
11
remedy or eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another portfolio of the
Fund, or submitting the question whether such segregation should be implemented
to a vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (I.E., annuity contract owners, life insurance
policy owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to
the affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account. No charge or penalty will be imposed as a result of such withdrawal.
The Company agrees that it bears the responsibility to take remedial action in
the event of a Board determination of an irreconcilable material conflict and
the cost of such remedial action, and that these responsibilities will be
carried out with a view only to the interests of Contract owners.
7.4. If an irreconcilable material conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
sub-account of the Account's investment in the Fund and terminate this
Agreement with respect to such sub-account (at the Company's expense);
provided, however that such withdrawal and termination shall be limited to the
extent required by the foregoing . irreconcilable material conflict as
determined by a majority of the disinterested members of the Board. No charge
or penalty will be imposed as a result of such withdrawal. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented or such
period as may be required to obtain any necessary exemptive relief from the
Commission with regard to the substitution of underlying funds. Until the end
of such period the Fund, Adviser and Underwriter will, to the extent permitted
by law and any exemptive relief previously granted to the Fund, continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Fund. The Company agrees that it bears the responsibility to take
remedial action in the event of a Board determination of an irreconcilable
material conflict and the cost of such remedial action, and that these
responsibilities will be carried out with a view only to the interests of
Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 or 7.4 to establish
a new funding medium for the Contracts if an offer to do so has been declined
by vote of a majority of Contract owners affected by the irreconcilable
material conflict.
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
12
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.7, 3.8, 7.1, 7.2, 7.3 and
7.4 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
7.7. Each of the Company and the Adviser shall at least annually submit
to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon it
by the provisions hereof and in the Shared Funding Exemptive Order. Such
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board.
ARTICLE VIII. ANTI-MONEY LAUNDERING
8.1. The Company represents and warrants that it is in compliance and
will continue to be in compliance with all applicable anti-money laundering
laws and regulations, including the Bank Secrecy Act, as amended by the USA
PATRIOT Act, .and implementing regulations of the Bank Secrecy Act ("BSA
Regulations"). and: applicable guidance issued by, the SEC and the guidance and
rules of the applicable Exchanges, SROs and the NASD (collectively,
"Guidance").
8.2. In connection with the Fund's reliance on Company to perform
Customer Identification Program ("ClP") procedures on its behalf, the Company
represents and warrants that (1) Company is subject to a rule implementing 31
US.c. 5318(h) and maintains an anti-money laundering program consistent with
the USA PATRIOT Act and the rules thereunder; (2) Company is regulated by a
Federal functional regulator as that term is defined under 31.C.F.R.
ss.103.120(a)(2); (3) Company has implemented a ClP compliant with Section 326
and 31 C.F.R. ss.103.137(b) that enables Company to form a reasonable belief
that it knows the true identity of its customers, including procedures to
obtain information from and verify the identity of customers, maintain records
of the information used to verify identity, determine whether the customer
appears on any government list of known or suspected terrorists or terrorist
organizations, and provide customers with adequate notice that the institution
is requesting information to verify their identities; and (4) Company will
certify annually that it has implemented its anti-money laundering program and
that it or its agent will perform all aspects of its ClP procedures with
respect to customers referred to the Fund by the Company.
8.3. The Company represents and warrants that to the extent that any
owner of a Contract which provides for the allocation of purchase payments and
Contract value to sub accounts investing in shares of a Portfolio is a current
or former Senior Foreign Political Figure ("SFPF"), an immediate family member
of a SFPF, a person who is widely known (or is actually known by the Company)
to maintain a close personal relationship with any such individual, or a
corporation, business or other entity that has been formed by or for the
benefit of such individual, it has conducted appropriate due diligence of such
customer consistent with Section 312 of the USA PATRIOT Act and any applicable
BSA Regulations and Guidance.
13
8.4. The Company represents and warrants that to the extent any owner of
a Contract is a foreign bank, it has taken reasonable measures and has obtained
certifications and will obtain re-certifications that indicate that such
Contract owner is not a foreign shell bank, as defined in the BSA Regulations.
8.5. The Company will take all reasonable and practicable steps to ensure
that it does not accept or maintain investments in any Contract from:
(i) A person or entity (A) who is or becomes subject to sanctions
administered by the U.S. Office of Foreign Assets Control ("OF AC"), is included
in any executive order or is on the list of Specially Designated Nationals and
Blocked Persons maintained by OF AC, or (B) whose name appears on such other
lists of prohibited persons and entities as may be mandated by applicable U.S.
law or regulation.
(ii) A foreign shell bank (i.e., a bank with no physical presence
in any country).
8.6 The Company agrees to immediately notify in writing the Anti-Money
Laundering Compliance Officer of the Fund if it becomes aware of any suspicious
activity or pattern of activity or any activity that may require further review
to determine whether it is suspicious in connection with the Funds.
8.7 The Company agrees that if the Fund, Underwriter or Adviser is
required to supply information, documentation or guidance to a securities
regulatory organization ("SRO") or government department or agency about the CIP
of the Fund or the Underwriter or the Adviser or the measures taken to obtain
information and to verify the identity of any owner of a Contract who has
allocated purchase payments or Contract value to Portfolios available under the
Contract, Company shall allow such SRO or government department or agency to
examine its files pertaining to such Contract owner.
ARTICLE IX. INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY
9.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, the Adviser and each member of the Board and each officer and
employee of the Fund, and each director, officer and employee of the Underwriter
and the Adviser, and each person, if any, who controls the Fund, the Underwriter
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" and individually, an "Indemnified Party," for purposes
of this Section 9.1) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or actions in respect thereof (including reasonable legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses, or actions in respect thereof, or settlements
are related to the sale, holding or acquisition of the Fund's shares or the
Contracts and:
14
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus, for the Contracts or
contained in the Contracts or sales or other promotional
literature for the Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein 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, the
Adviser or the Underwriter for use in the registration
statement, prospectus, SAI, for the Contracts or in the
Contracts or sales or other promotional literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the
Company or its designee, and other than statements or
representations authorized in writing by the Fund, the
Underwriter or the Adviser) or unlawful conduct of the Company
or persons under its control, with respect to the sale, holding
or distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result 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 thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Fund by
or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(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 other material
breach of this Agreement by the Company.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 9.1(b) and 9.1 (c) below.
9.1 (b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or action
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 or duties under this Agreement.
15
9.1 (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 any 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, except to the extent that
the failure to notify results in the failure of actual notice to the Company
and the Company is damaged solely as a result of failure to give such notice.
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 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, unless:
(i) the Company and the Indemnified Party will have mutually agreed
to the retention of such counsel; or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the Company and the Indemnified
Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing
interests between them. The Company will not be liable for any
settlement of any proceeding effected without its written
consent but if settled with such consent or if there is a final
judgment for the plaintiff, the Company agrees to indemnify the
Indemnified Party from and against any loss or liability by
reason of such settlement or judgment. A successor by law of the
parties to this Agreement will be entitled to the benefits of
the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX will
survive any termination of this Agreement.
9.1 (d). The Fund, the Underwriter or the Adviser, as applicable, will
promptly notify the Company of the commencement of any litigation or
proceedings against an Indemnified Party in connection with this Agreement,
the issuance, holding or sale of the Fund shares or the Contracts, or the
operation of the Fund.
9.2. INDEMNIFICATION BY THE UNDERWRITER
9.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors, officers, agents and employees, and each
person, if any, who controls the Company
16
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually, an "Indemnified Party," for purposes of this Section
9.2) against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter) or actions in respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses, or actions in respect thereof, or settlements
are related to the sale, holding or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus, SAI for the Fund or
sales literature or other promotional material of the Fund
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated 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 Fund, the Underwriter or the Adviser by or
on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales
literature or other promotional material for the Fund (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in
registration statement, prospectus, or sales or other
promotional literature for the Contracts not supplied by the
Fund or the Underwriter or persons under their respective
control and other than statements or representations
authorized in writing by the Company) or unlawful conduct of
the Fund or the Underwriter or persons under their
respective control, with respect to the sale or distribution
of the Contracts or in writing shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, SAI, or sales or other
promotional 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
the Company by or on behalf of the Fund or the Underwriter
or persons under the control of the Fund or Underwriter; or
(iv) arise as a result of any failure by the Underwriter or Fund
to provide the services and furnish the materials under the
terms of this Agreement; or
17
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or
the Fund in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Underwriter or the Fund.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 9.2(b) and 9.2(c) below.
9.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or action
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.
9.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
failure to notify results in the failure of actual notice to the Underwriter and
the Underwriter is damaged solely as a result of failure to give such notice. 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. 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 fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation, unless
(i) the Underwriter and the Indemnified Party will have mutually
agreed to the retention of such counsel; or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the Underwriter and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them. The Underwriter will not be
liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there is
a final judgment for the plaintiff, the Underwriter agrees to
indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. A successor
by law of the parties to this Agreement will be entitled to the
benefits of the indemnification contained in this Article IX.
The indemnification provisions contained in this Article IX will
survive any termination of this Agreement.
18
9.2(d). The Company will promptly notify the Underwriter of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s).
9.3. INDEMNIFICATION BY THE ADVISER AND THE FUND
9.3(a) The Adviser and the Fund, jointly and severally agree to
indemnify and hold harmless the Company and each of its directors, officers,
agents and employees, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually, an "Indemnified Party," for purposes of this
Section 9.3) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser or Fund, respectively) or actions in respect thereof (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise;
insofar as such losses, claims, damages, liabilities or expenses, or actions
in respect thereof, or settlements are related to the sale, holding or
acquisition of the Fund shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, or SAI for the Fund or sales
literature or other promotional material of the Fund (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated 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 Fund, the
Underwriter or the Adviser by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the
Fund or in sales literature or other promotional material for
the Fund (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or 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 or other
promotional literature for the Contracts not supplied by the
Fund or the Adviser or persons under their respective control
and other than statements or representations authorized in
writing by the Company) or unlawful conduct of the Fund or the
Adviser or persons under their respective control, with respect
to the sale or distribution of the Contracts or Fund shares; or
19
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, SAI, or sales or other
promotional 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
the Company by or on behalf of the Fund or the Adviser or
persons under the control of the Fund or Adviser; or
(iv) arise as a result of any failure by the Fund or Adviser 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 Fund or Adviser in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Fund or Adviser.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 9.3(b) and 9.3(c) below.
9.3(b). The Adviser or Fund shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or action 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. 9.3(c). The Adviser or Fund (the "Indemnifying Parties" for purposes
of this Section 9.3(c)) 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 Adviser 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 Adviser of any such claim shall not
relieve the Adviser from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision, except to the extent that the failure to notify
results in the failure of actual notice to the Indemnifying Parties and the
Indemnifying Parties is damaged solely as a result of failure to give such
notice. In case any such action is brought against the Indemnified Parties, the
Adviser will be entitled to participate, at its own expense, in the defense
thereof. The Adviser also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Adviser to such party of the Adviser'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 Adviser will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation, unless
20
(i) the Indemnifying Parties and the Indemnified Party will have
mutually agreed to the retention of such counsel; or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Parties and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Parties will
not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or
if there is a final judgment for the plaintiff, the Indemnifying
Parties agree to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or
judgment. A successor by law of the parties to this Agreement
will be entitled to the benefits of the indemnification
contained in this Article IX. The indemnification provisions
contained in this Article IX will survive any termination of
this Agreement.
9.3( d). The Company will promptly notify the Adviser of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s)~ .
9.4 INDEMNIFICATION FOR FAILURE TO COMPLY WITH DIVERSIFICATION
REQUIREMENTS
The Fund, Adviser and Underwriter acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the diversification
requirements specified in Article II, Section 2.12 of this Agreement may result
in the Contracts not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect the Company's corporate tax liability. Accordingly,
without in any way limiting the effect of Sections 9.2(a) or 9.3(a) hereof and
without in anyway limiting or restricting any other remedies available to the
Company, the Fund, the Adviser and the Underwriter shall indemnify the Company
against any losses, claims, expenses, damages, liabilities and settlements to
which the Company is subject due to such failure.
ARTICLE X. APPLICABLE LAW
10.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland
without reference to its conflict of law provisions.
10.2. 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 (including, but not limited to, the Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
21
ARTICLE XI. TERMINATION
11.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason with respect to one,
some or all of the Portfolios, upon six (6) month's advance
written notice to the other parties or, if later, upon receipt
of any required exemptive relief or orders from the SEC, unless
otherwise agreed in a separate written agreement among the
parties; or
(b) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio based
upon the Company's determination that shares of such Portfolio
are not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the
event that any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser 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 and
in good faith believes that the Portfolio may fail to so
qualify; or
(e) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the
event that such Portfolio fails to meet the diversification
requirements specified in Section 2.12 hereof or if the Company
reasonably and in good faith believes the Portfolio may fail to
meet such requirements; or
(f) termination by the Fund, the Underwriter or the Adviser by
written notice to the Company if the Fund, the Underwriter or
the Adviser, as applicable, 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, financial condition or prospects since
the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of the Fund, the Adviser or the
Underwriter, such termination to be effective sixty (60) days'
after receipt by the other parties of written notice of the
election to terminate; or
(g) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser, if the Company shall determine, in
its sole judgment exercised in good faith, that the Fund, the
Underwriter or the Adviser and/or any of their affiliated
22
companies has suffered a material adverse change in its
business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of the Company, such termination to
be effective upon written notice of the election to terminate;
or
(h) termination by the Fund, the Underwriter or the Adviser by
written notice to the Company, if the Company gives the Fund,
the Underwriter and the Adviser the written notice specified in
Section 1.5 hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however, any termination
under this Section 11.1(h) shall be effective forty-five (45)
days after the notice specified in Section 1.5 was given; or
(i) termination by any party to this Agreement upon another party's
material breach of any provision of this Agreement; or
(j) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission of
any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the operation of
the Account, or the purchase of the Fund shares, provided that
the Fund determines in its sole judgment, exercised in good
faith, that any such proceeding would have a material adverse
effect on the Company's ability to perform its obligations under
this Agreement; or
(k) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund, the Underwriter or the Adviser by the NASD, the Commission
or any state securities or insurance department or any other
regulatory body, provided that the Company determines in its
sole judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Fund's, the
Underwriter's or the Adviser's ability to perform its
obligations under this Agreement; or
(1) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account) to
substitute the shares of another investment company for the
corresponding Portfolio's shares of the Fund in accordance with
the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying portfolio. The Company
will give sixty (60) days' prior written notice to the Fund of
the date of any proposed vote or other action taken to replace
the Fund's shares or of the filing of any required regulatory
approval(s).
11.2. Notwithstanding any termination of this Agreement with respect to
one or more Portfolios, the Fund and the Underwriter shall at the option of the
Company continue to make available additional shares of the Fund, pursuant to
the terms and conditions of this Agreement,
23
for all Contracts in effect on the effective date of termination of this
Agreement (the "Existing Contracts"), unless such further sale of Portfolio
shares is proscribed by law, regulation or applicable regulatory authority, or
unless the Board determines that liquidation of the Portfolio following
termination of this Agreement is in the best interests of the Portfolio.
Specifically, subject to the foregoing, the owners of the Existing Contracts
shall be permitted to direct reallocation of investments in the Portfolio,
redemption of investments in the Portfolio and/or investment in the Portfolio
upon the making of additional purchase payments under the Existing Contracts.
The parties agree that this Section 11.2 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Xxx Xxxxxx Life Investment Trust
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000
Attention: President
If to the Adviser:
XxxXxxxxx Asset Management
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Underwriter:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000
Attention: President
If to the Company:
OM Financial Life Insurance Company
0000 Xxxxx Xxxxxx, 0xx Xxxxx - Xxxxx
Xxxxxxxxx, XX 00000
Attention: Securities Counsel
24
ARTICLE XIII. MISCELLANEOUS
13.1. All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund, as neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability for obligations entered into on behalf of the Fund. Each of the
Company, the Underwriter and the Adviser acknowledges and agrees that, as
provided by the Fund's Agreement and Declaration of Trust, the shareholders,
trustees, officers, employees and other agents of the Fund and the Portfolios
shall not personally be bound by or be liable for matters set forth hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder. A Certificate of Trust referring to the Fund's
Agreement and Declaration of Trust is on file with the Secretary of State of
Delaware.
13.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another party (as such terms are
defined in SEC Regulation S-P) and any other information reasonably identified
as confidential in writing by another party ("Confidential Information"). Each
party agrees not to disclose, disseminate or utilize another party's
Confidential Information except: (i) as permitted by this Agreement, (ii) upon
the written consent of the other party, (iii) where the Confidential
Information comes into the public domain through no fault of the party
receiving the information, or (iv) as otherwise required or permitted under
applicable law.
13.3. 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.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5. 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.
13.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the National Association of Securities Dealers and state insurance regulators)
and shall permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish state insurance
authorities with any information or reports in connection with services
provided under this Agreement which such authorities may request in order to
ascertain whether the insurance operations of the Company are being conducted
in a manner consistent with applicable law and regulations.
13.7. 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.
25
13.8. 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.
13.9. The Fund, Underwriter and the Adviser acknowledge that the
identities of the customers of the Company or any of its affiliates
(collectively the "Protected Parties" for purposes of this Section 14.9),
information maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees or
agents in connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties. The Fund,
Underwriter and the Adviser agree that if they come into possession of any list
or compilation of the identities of or other information about the Protected
Parties' customers, or any other property of the Protected Parties, other than
such information as may be independently developed or compiled by the Fund,
Underwriter or the Adviser from information supplied to them by the Protected
Parties' customers who also maintain accounts directly with the Fund,
Underwriter or the Adviser, the Fund, Underwriter and the Adviser will hold
such information or property in confidence and refrain from using, disclosing
or distributing any of such information or other property except: (a) with the
Company's prior written consent; or (b) as required by law or judicial process.
The Fund and the Adviser acknowledge that any breach of the agreements in this
Section 14.9 would result in immediate and irreparable haim to the Protected
:Parties for which there would be no adequate remedy at law and agree that in
the event of such a breach, the Protected Parties will be entitled to equitable
relief by way of temporary and permanent injunctions, as well as such other
relief as any court of competent jurisdiction deems appropriate.
13.10 Unless otherwise specifically provided in this Agreement, no
provision of this Agreement may be amended or modified in any manner except by
a written agreement executed by all parties.
13.11 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
13.12 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or board action, as applicable,
by such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
13.13 The schedules to this Agreement (each a "Schedule," collectively,
the "Schedules") form an integral part hereof and are incorporated herein by
reference. The parties to this Agreement may agree in writing to amend the
Schedules to this Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Portfolios of the Fund or other
applicable terms of this Agreement. References herein to any Schedule are to
the Schedule then in effect, taking into account any amendments thereto.
26
13.14 Each Portfolio agrees to consult in advance with the Company
concerning any decision to elect or not to pass through the benefit of any
foreign tax credits to the Portfolio's shareholders pursuant to Section 853 of
the Code.
13.15 The parties have entered into or shall enter in to an Shareholder
Information Agreement as required by Rule 22c-2 under 1940 Act in connection
with the Contracts. This Agreement shall control with regard to the terms of the
business relationship described in this Agreement. To the extent that the terms
of the Shareholder Information Agreement conflict with the terms of this
Agreement, the terms of the Shareholder Information Agreement shall control to
the extent required by Rule 22c-2.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative of the date specified above.
OM FINANCIAL LIFE INSURANCE COMPANY
BY:
NAME:
TITLE:
XXX XXXXXX LIFE INVESTMENT TRUST
BY:
NAME: XXXXX XXXXXXX
TITLE: CFO AND TREASURER
XXX XXXXXX ASSET MANAGEMENT
BY:
NAME: XXXXXX XXXX
TITLE: MANAGING DIRECTOR
XXX XXXXXX FUNDS INC.
BY:
NAME: XXXXXX XXXXXXX
TITLE: MANAGING DIRECTOR
28
(ii)
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative of the date specified above.
OM FINANCIAL LIFE INSURANCE COMPANY
By:
---------------------
Name:
Title:
XXX XXXXXX INVESTMENT TRUST
By:
---------------------
Name: Xxxxx Xxxxxxx
Title: CFO and Treasurer
XXX XXXXXX ASSET MANAGEMENT
By:
---------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
29
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Form Number and Name of
Date Established by Board of Directors Contract Funded by Separate Account
ACCOUNT(S) CONTRACT(S)
Old Mutual Financial Network Beacon Navigator
Separate Account VA FGL FPDVA 2006 (individual)
FGL FPDVA-2006(group)
SCHEDULE B
PORTFOLIOS OF THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
AVAILABLE UNDER THIS AGREEMENT
Growth and Income Portfolio - Class II Shares
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
o The proxy proposals are given to the Company by the Fund as
early as possible before the date set by the Fund for the
shareholder meeting to enable the Company to consider and
prepare for the solicitation of voting instructions from
Contract owners and to facilitate the establishment of
tabulation procedures. At this time the Fund will inform the
Company of the Record, Mailing and Meeting dates. This will be
done verbally approximately two months before the shareholder
meeting.
o Promptly after the Record Date, the Company will perform a "tape
run", or other activity, which will generate the names,
addresses, and number of units which are attributed to each
Contract Owner; Po1icyholder,(the "Customer"} o as of the Record
Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers'
accounts as of the Record Date.
Note: The number of proxy statements is determined by the
activities described in this Step #2. The Company will use its
best efforts to call in the number of Customers to the Fund, as
soon as possible, but no later than two weeks after the Record
Date.
o The Fund's Annual Report must be sent to each Customer by the
Company either before or together with the Customers' receipt of
voting instruction solicitation material. The Fund will provide
the last Annual Report to the Company pursuant to the terms of
Section 3.4 of the Participation Agreement to which this
Schedule relates.
o The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at
its expense, shall produce and personalize the Voting
Instruction Cards. The Fund or its affiliate must approve the
Card before it is printed. Allow approximately 2-4 Business Days
for printing information on the Cards. Information commonly
found on the Cards includes:
name (legal name as found on account registration)
address
fund oraccount number coding
to state number of units
individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
o During this time, the Fund will develop, produce and pay for the
Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are
provided and paid for by the Company). Contents of envelope sent
to Customers by the Company will include:
Voting Instruction Card(s)
One proxy notice and statement (one document)
return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent "urge buckslip" - optional, but
recommended (this is a small, single sheet of paper that request
Customers to vote as quickly as possible and that their vote is
important; one copy will be supplied by the Fund.)
cover letter - optional; supplied by Company and reviewed and
approved in advance by the Fund
o The above contents should be received by the Company
approximately 3-5Business Days before mail date. Individual in
charge at Company reviews and approves the contents of the
mailing package to ensure correctness and completeness. Copy of
this approval sent to the Fund.
o Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time
to the Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as
calendar days from (but NOT including,) the shareholder
meeting, counting backwards.
o Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort Cards on
arrival by proposal into vote categories of all yes, no, or
mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
o Signatures on Card checked against legal name on account
registration that was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
C-2
o If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to Customer with an
explanatory letter and a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be
NOT RECEIVED for purposes of vote tabulation. Any Cards that
have been "kicked out" (e.g. mutilated, illegible) of the
procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are
usually remedied individually.
o There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the
vote is progressing may then be calculated. If the initial
estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
o The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund
receives the tabulations stated in terms of a percentage and the
number of SHARES.) The Fund must review and approve tabulation
format.
o Final tabulation in shares is verbally given by the Company to
the Fund on the morning of the shareholder meeting not later
than 10:00 a.m .
o Eastern time., The Fund, may request 'an ' earlier deadline if
reasonable and if required to calculate the vote in time for the
shareholder meeting.
o A Certification of Mailing and Authorization to Vote Shares will
be required from the Company as well as an original copy of the
final vote. The Fund will provide a standard form for each
Certification.
o The Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or
accounting purposes, the Fund will be permitted reasonable
access to such Cards.
o All approvals and "signing-off' may be done orally, but must
always be followed up in writing.
C-3
for reimbursement of any loss sustained by the Fund that may arise out of the
improper transmittal of such Orders.
All Orders transmitted to the Fund via Fund/SERV will be communicated
in accordance with Fund/SERV rules, guidelines and procedures. The Company
acknowledges that certain cash flows may be known on or before a trade date,
and the Company agrees to use its reasonable efforts to notify the Fund of
such cash flows before such trade date.
D. FUND/SERV CONFIRMATION. The Fund or its designee will transmit a
confirmation via Fund/SERV that will set forth, for each T/A Account, the
number of Portfolio shares purchased, exchanged and redeemed, the beginning
and ending share balances, and the net asset value per share. The Fund
reserves the right, in its sole discretion, (i) to reject any Order
(notwithstanding that Company may have received Fund/SERV confirmation of the
Order), and (ii) to require any Order to be settled outside of Fund/SERV, in
which case the Fund shall not
confirm such Order via Fund/SERV and such Order shall settle in accordance
with the Manual Procedures discussed below.
E. PRICING OF ORDERS. Day 1 Trades communicated to the Fund as provided
under Section C of these Fund/SERV Procedures will be effected at, the Share
Price for the applicable Portfolio.
F. SETTLEMENT. Day 1 Trades confirmed by the Fund via Fund/SERV will
settle in U.S. dollars in accordance with the Fund's profile within Fund/SERV
applicable to the Company.
G. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or designee will furnish
same day notice to the Company or its designee of the declaration of any
income, dividends or other distributions payable on the shares of each
Portfolio via Networking. The Company hereby elects to receive income,
dividends and distributions with respect to a Portfolio in additional shares
of the Portfolio held by the T/A Account(s) at the ex-dividend date net asset
values. The Company reserves the right to revoke this election and receive all
such income, dividends and distributions in cash. The Fund or its designee
will notify the Company or its designee, via Networking, as to the number of
shares so issued.
H. ACCOUNT REPORTING AND VERIFICATION. The Fund or its designee will
transmit or make available to the Company, via Networking, a report containing
any transactions or other activity occurring in a T/A Account on a Business
Day, including any Fund/SERV transactions, and the share balance for each T/A
Account in accordance with Fund/SERV's Networking guidelines. The Company will
promptly review and verify this information on Networking and immediately
advise the Fund or designee in writing of any discrepancies between the
Company's records and the balance in the T/A Account(s).
If the Company chooses not to utilize Networking, the Fund or designee
will deliver to the Company a physical statement for the preceding calendar
month reflecting the shares of each Portfolio held by the T/A Account(s) as of
the end of such preceding month and all purchases, exchanges and redemptions
by the Company of shares of a Portfolio during such preceding month. The
Company will, immediately on receipt of any physical confirmation or statement
D-2
concerning an Account, verify the information contained therein against the
information contained on the Company's record-keeping system and immediately
advise the Fund in writing of any discrepancies between such information.
The Fund and the Company will cooperate to resolve any such
discrepancies mentioned in this Section H as soon as reasonably practicable.
I. PROCESSING ADIUSTMENTS. In the event of any error or delay with
respect to these FundiSERV and Networking Procedures that is not caused by the
Company or its designee, the Fund will make any adjustments on its (or its
transfer agent's) accounting system necessary to correct such error or delay.
The Company will make the corresponding adjustments on its recordkeeping
system. The Company and the Fund will each provide the other with prompt notice
of any errors or delays of the type referred to in these FundiSERV and
Networking Procedures.
J. FUNDISERV UNAVAILABILITY. If the FundiSERV and Networking systems are
unavailable for any reason, or if it is otherwise impracticable to operate in
accordance with these FundiSERV and Networking Procedures, transactions shall
be processed in accordance with the Manual Procedures below.
II: MANUAVPROCEDURES
A. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each Portfolio,
the Fund or it transfer agent will provide the Company with (i) the Share Price
determined as of the Close of Trading on each Business Day; and (ii) in the
case of fixed income and money market Portfolios which declare dividends daily,
the daily accrual interest rate factor. The Fund will use its best efforts to
communicate, or have its transfer agent communicate, such information to the
Company or its designee by 6:00 p.m. Eastern Time each Business Day. In the
event that the Fund is unable to meet the 6:00 p.m. time stated herein, it
shall provide additional time for the Company to place orders for the purchase
and redemption of Fund shares and wire net payments for the purchase of Fund
shares. Such additional time shall be equal to the additional time which the
Fund takes to make the net asset value available to the Company.
B. TRANSMITTAL OF ORDERS. The Company agrees that, unless otherwise
agreed to in writing with the Fund, Instructions received by the Company prior
to the Close of Trading on any Business Day ("Day 1 ") will be transmitted to
the Fund by facsimile no later than 11 :00 a.m. Eastern Time on the following
Business Day ("Day 2") or such later time as permitted by Schedule D, Section
II.A., hereof (such Orders are referred to as "Day 1 Trades"). Each
transmission by the Company or its designee of a purchase, exchange or
redemption order relating to a Business Day ("Order") will constitute a
representation by the Company that such Order was based on Instructions that
the Company received and accepted as being in good order prior to the Close of
Trading on that Business Day, and that the Order included all purchase,
exchange and redemption Instructions so received by the Company.
All Orders transmitted to the Fund will be communicated in U.S. dollars
and will indicate the date of the transaction. On Business Days where there are
no Orders, or where the net dollar amount for purchases and redemptions for an
Account equals zero, the communication will so indicate. The Company
acknowledges that certain cash flows may be known on or before a trade
D-3
date, and the Company agrees to use its reasonable efforts to notify
the Fund of such cash flows before such trade date.
C. PRICING OF ORDERS. Day 1 Trades communicated to the Fund
by 11 :00 a.m. Eastern Time on Day 2 or such later time as permitted
by Schedule D, Section IT.A., hereof will be effected at the Share
Price for the applicable Portfolio on Day 1.
D. SETTLEMENT.
1. Purchase Orders. In the case of Day 1 Trades that
constitute a net purchase (including exchanges) Order, the Company or
its designee will arrange for a federal funds wire transfer of the
net purchase amount to a custodial account designated by the Fund by
3:00 p.m. Eastern Time on Day 2 or such later time as permitted by
Schedule D, Section IT.A., hereof. Upon receipt by the Fund or such
custodial account of the payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
2. Redemption Orders. In the case of Day 1 Trades that
constitute a net redemption (including exchanges) Order, the Fund or
its designee will arrange for a federal funds wire transfer of the
net redemption amount toa custodial account designated by the Company
on Day 2, or in no instant later than the time provided for
in the applicable Portfolio's prospectus. Opon receipt by the Company
or such custodial account. of the payment, such fund shall cease to
the responsibility of the Fund and shall become the responsibility
of the Company.
3. Generally. Settlements will be in U.S. dollars. On any
Business Day when the Federal Reserve Wire Transfer System is
closed, all communication and processing rules will be suspended
for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System
is open. Transactions that are the subject of such Orders will
be processed at the Share Price for the applicable Portfolio on
the Business Day to which the Orders originally relate.
E. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or its designee
will furnish same day notice to the Company or its designee of the
declaration of any income, dividends or other distributions payable
on the shares of each Portfolio, via facsimile or other method
agreed upon by the parties. The Company hereby elects to receive all
such income, dividends and distributions with respect to a Portfolio
in additional shares of the Portfolio held by the T/A Account(s) at
the ex-dividend date net asset values. The Company reserves the
right to revoke this election and receive all such income, dividends
and other distributions in cash. The Fund or designee will notify
the Company or its designee as to the number of shares so issued as
payment of such income, dividends and distributions.
F. ACCOUNT REPORTING AND VERIFICATION. The Fund or its
designee will deliver to the Company or its designee in writing,
via facsimile or other method agreed upon in writing by the
parties a statement for the preceding calendar month reflecting
the shares of each Portfolio held by the T/A Account(s) as of
the end of such preceding month and all purchases, exchanges and
redemptions by the Company of shares of a Portfolio during such
preceding month. The Company will, immediately on receipt of any
statement concerning a T/A Account, verify the information
contained therein against the information contained on the
Company's record keeping system and immediately
D-4
advise the Fund or its designee, in writing of any discrepancies
between such information. The Fund and the Company will cooperate to
resolve any such discrepancies as soon as reasonably practicable.
G. CORRECTION OF NET ASSET VALUE. If the Fund provides the Company
materially incorrect net asset value per share information (as determined
under SEC guidelines), the Fund shall make an adjustment to the number of
shares purchased or redeemed for the Accounts to reflect the correct net asset
value per share, and the Adviser shall bear the cost of correcting such errors
and shall reimburse the Company for any expenses incurred related to
correction of the net asset value (including correcting Contract owner
accounts). Any material error in the calculation or reporting of net asset
value per share, dividend or capital gain information shall be reported to the
Company upon discovery by the Fund.
D-5
