EXHIBIT 9(b)
FORM OF PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this ___ day of ______, 1997
by and between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated
business trust formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS &
CO., a New York limited partnership (the "Distributor"), and __________ LIFE
INSURANCE COMPANY, a ____ life insurance company (the "Company"), on its own
behalf and on behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares
of beneficial interest (the "Trust shares") consisting of one or more
separate series ("Series") of shares, each such Series representing an
interest in a particular investment portfolio of securities and other
assets (a "Fund"), and which Series may be subdivided into various classes
("Classes") with each such Class supporting a distinct charge and expense
arrangement; and
WHEREAS, the Trust was established for the purpose of serving as
an investment vehicle for insurance company separate accounts supporting
variable annuity contracts and variable life insurance policies to be
offered by insurance companies and may also be utilized by qualified
retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute
Trust shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the
Distributor desires to sell shares of certain Series and/or Classes to
such separate account(s);
NOW, THEREFORE, in consideration of their mutual promises, the
Trust, the Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1. "Account" -- the separate account of the Company described
more specifically in Schedule 1 this Agreement. If more than one
separate account is so described, the term shall refer to each separate
account.
1.2. "Business Day" -- each day that the Trust is open for
business as provided in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and
any successor thereto.
1.4. "Contracts" -- the class or classes of variable annuity
contracts and/or variable life insurance policies issued by the Company and
described more specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as
distinguished from all Product Owners.
1.6. "Participating Account" -- a separate account investing all
or a portion of its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating
Account, including the Company.
1.8. "Participating Plan" -- any qualified retirement plan
investing in the Trust.
1.9. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan, including the
Account and the Company.
1.10. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the
Contracts.
1.11. "Product Owners" -- owners of Products, including Contract
Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13. "Registration Statement" -- with respect to the Trust
shares or a class of Contracts, the registration statement filed with the
SEC to register such securities under the 1933 Act, or the most recently
flied amendment thereto, in either case in the form in which it was
declared or became effective. The Contracts' Registration Statement for
each class of Contracts is described more specifically on Schedule 2 to
this Agreement. The Trust's Registration Statement was filed on Form N-1A
(File No. 333-_____).
1.14. "1940 Act Registration Statement" -- with respect to the
Trust or the Account, the registration statement filed with the SEC to
register such person as an investment company under the 1940 Act, or the
most recently filed amendment thereto. The Account's 1940 Act Registration
Statement is described more specifically on Schedule 2 to this Agreement.
The Trust's 1940 Act Registration Statement was filed on Form N-1A (File
No. 811-_____).
1.15. "Prospectus" -- with respect to shares of the Trust or a
class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933
Act. With respect to any provision of this Agreement requiring a party to
take action in accordance with a Prospectus, such reference thereto shall
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be deemed to be to the version last so filed prior to the taking of such
action. For purposes of Article IX, the term "Prospectus" shall include any
statement of additional information incorporated therein.
1.16. "Statement of Additional Information" -- with respect to
the shares of the Trust or a class of Contracts, each version of the
definitive statement of additional information or supplement thereto filed
with the SEC pursuant to Rule 497 under the 1933 Act. With respect to any
provision of this Agreement requiring a party to take action in accordance
with a Statement of Additional Information, such reference thereto shall be
deemed to be the last version so filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
1.18. "NASD" -- The National Association of Securities Dealers,
Inc.
1.19. "1933 Act" -- the Securities Exchange Act of 1933, as
amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as
amended.
ARTICLE II
SALE OF TRUST SHARES
2.1. AVAILABILITY OF SHARES
(a) The Trust has granted to the Distributor exclusive authority
to distribute the Trust shares and to select which Series or Classes
of Trust shares shall be made available to Participating Investor.
Pursuant to such authority, and subject to Article X hereof, the
Distributor shall make available to the Company for purchase on behalf
of the Account, shares of the Series and Classes listed on Schedule 3
to this Agreement, such purchase to be effected at net asset value in
accordance with Section 2.3 of this Agreement. Such Series and Classes
shall be made available to the Company in accordance with the terms
and provisions of this Agreement until this Agreement is terminated
pursuant to Article X or the distributor suspends or terminates the
offering of shares of such Series or Class in the circumstances
described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or that may be established in
the future will be made available to the Company only as the
Distributor may so provide, subject to the Distributor's rights set
forth in Article X to suspend or terminate offering shares of any
Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and
conditions of its distribution
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agreement with the Distributor; and (ii) the Trust reserves thc right
in its sole discretion to refuse to accept request for the purchase
of Trust shares.
2.2. REDEMPTIONS. The Trust shall redeem, at the Company's
request, any full or fractional Trust shares held by the Company on behalf of
the Account, such redemptions to be effected at net asset value in accordance
with Section 2.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Trust shares attributable to Contract Owners except in
the circumstances permitted in Article X of this Agreement, and (ii) the Trust
may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for a Series.
2.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as an agent of the Trust
for the limited purpose of receiving purchase and redemption requests
on behalf of the Account (but not with respect to any Trust shares
that may be held in the general account of tbe Company) for shares of
those Series or Class made available hereunder, based on allocations
of amount to the Account or subaccounts thereof under the
Contracts, other transactions relating to the Contracts or the Account
and customary processing of the Contracts. Receipt of any such
requests (or effectuation of such transaction or processing) on any
Business Day by the Company as such limited agent of the Trust prior
to the Trust's close of business as defined from time to time in the
Trust's Prospectus (which as of the date of execution of this
Agreement is 4:00 p.m. Eastern Time) shall constitute receipt by the
Trust on that same Business Day, provided that the Trust receives
actual and sufficient notice of such request by 8:00 a.m. Eastern
Time on the next following Business Day. Such notice may be
communicated by telephone to the office or person designated for
such notice by the Trust, and shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class on
the same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Series or Class shares shall be
made in Federal funds transmitted to the Trust by wire to be received
by the Trust by 12:00 noon Eastern Time on the day the Trust receives
actual notice of the purchase request for Series shares (unless the
Trust determines and so advises the Company that sufficient proceeds
are available from redemption of shares of other Series or Classes
effected pursuant to redemption requests tendered by the Company on
behalf of the Account) but in no event may proceeds from the
redemption of shares requested pursuant to an order received after
8:00 a.m. Eastern Time on any Business Day be applied to the
payment for shares for which a purchase order was received prior to
8:00 a.m. Eastern Time on such day. If the issuance of shares is
canceled because Federal funds are not timely received, the Company
shall indemnify the respective Fund and Distributor with respect to
all costs, expenses and losses relating thereto. Upon the Trust's
receipt of Federal funds so
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wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Trust. If Federal
funds are not received on time, such funds will be invested, and
Series or Class shares purchased thereby will be issued, as soon as
practicable after actual receipt of such funds but in any event not
on the same day that the notice was received.
(c) Payment for Series or Class shares redeemed by the Account or
the Company shall be made in Federal funds transmitted by wire to the
Company or any other person properly designated in writing by the
Company, such funds to be transmitted by 6:00 p.m. Eastern Time on the
next Business Day after the Trust receives actual notice of the
redemption order for Series or Class shares (unless redemption
proceeds are to be applied to the purchase of Trust shares of other
Series or Classes in accordance with Section 2.3(b) of this
Agreement), except that the Trust reserves the right to redeem Series
or Class shares in assets other than cash and to delay payment of
redemption proceeds to the extent permitted by the 1940 Act, any rules
or regulations or orders thereunder, or the Trust's Prospectus. The
Trust shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds by the Company; the
Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Series or Class shares
held or to be held in the Company's general account shall be effected
at the net asset value per share next determined after the Trust's
actual receipt of such request, provided that, in the case of a
purchase request, payment for Trust shares so requested is received by
the Trust in Federal funds prior to close of business for
determination of such value, as defined from time to time in the Trust
Prospectus.
(e) Prior to the first purchase of any Trust shares hereunder,
the Company and the Trust shall provide each other with all
information necessary to effect wire transmissions of Federal funds
to the other party and all other designated persons pursuant to such
protocols and security procedures as the parties may agree upon.
Should such information change thereafter, the Trust and the Company,
as applicable, shall notice the other in writing of such changes,
observing the same protocols and security procedures, at least three
Business Days in advance of when such change is to take effect. The
Company and the Trust shall observe customary procedures to protect
the confidentiality and security of such information, but the Trust
shall not be liable to the Company for any breach of security.
(f) The procedures set forth herein are subject to any additional
terms set forth in the Prospectus or by the requirements of applicable
law.
2.4. NET ASSET VALUE. The Trust shall use its best efforts to
inform the Company of the net asset value per share for each Series or
Class available to the Company by 6:00 P.M. Eastern Time each Business
Day, and in any event, as soon as reasonably
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practicable after the net asset value per share for such Series or Class is
calculated. The Trust shall calculate such net asset value in accordance
with the [Trust's Prospectus].
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish notice
to the Company as soon as reasonably practicable of any income dividends or
capital gain distributions payable on any Series or Class shares. The
Company, on its behalf and on behalf of the Account, hereby elects to
receive all such dividends and distributions as are payable on any Series
shares in the form of additional shares of that Series or Class. The
Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash; to be effective, such revocation must be made in
writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Company promptly
of the number of Series or Class shares so issued as payment of such
dividends and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be
by book entry only. Stock certificates will not be issued to the Company or
the Account. Purchase and redemption orders for Trust shares shall be
recorded in an appropriate ledger for the Account or the appropriate
subaccount of the Account.
2.7. PRICING ERRORS. Any material errors in the calculation of
net asset value, dividends or capital gain information shall be reported
immediately upon discovery to the Company. An error shall be deemed
"material" based on the SEC's position, and policy with regard to
materiality, as it may be modified from time to time. If the amount of the
error results in an adjustment of less than $10.00 for any redemption made
from the affected Fund by a Contract Owner, the error shall be considered
immaterial. Non-material errors will be corrected in the next Business
Day's net asset value per share for the Series or Class in question.
Neither the Trust, any Fund, the Distributor, nor any of their affiliates
shall be liable for any information provided to the Company to this
Agreement which information is based on incorrect information supplied by
or on behalf of the Company or any other Participating Company to the Trust
or the Distributor.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall
sell Trust shares only to insurance companies and their separate accounts
and to persons or plans ("Qualified Persons") that qualify to purchase
shares of the Trust under Section 817(h) of the Code and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Trust as constituting investments of the
Account for the purpose of satisfying the diversification requirements of
Section 817(h). The Distributor and the Trust shall not sell Trust shares
to any insurance company or separate account unless an agreement complying
with Article VIII of this Agreement is in effect to govern such sales. The
Company hereby represents and warrants that it and the Account are
Qualified Persons.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. COMPANY. The Company represents and warrants that: (i) the Company
is an insurance company duly organized and in good standing under [____________]
insurance law; (ii) the Account is a validly existing separate account, duly
established and maintained in accordance with applicable law; (iii) the
Account's 1940 Act Registration Statement has been filed with the SEC in
accordance with the provisions of the 1940 Act and the Account is duly
registered as a unit investment trust thereunder; (iv) the Contracts'
Registration Statement has been declared effective by the SEC; (v) the Contracts
will be issued in compliance in all material respects with all applicable
Federal and state laws; (vi) the Contracts have been filed, qualified and/or
approved for sale, as applicable, under the insurance laws and regulations of
the states in which the Contracts will be offered; (vii) the Account will
maintain its registration under the 1940 Act and will comply in all material
respects with the 1940 Act; (viii) the Contracts currently are, and at the time
of issuance will be, treated as annuity contracts or life insurance policies,
whichever is appropriate, under applicable provisions of the Code; (ix) the
Company's entering into and performing its obligations under this Agreement does
not and will not violate its charter documents or by-laws, rules or regulations,
or any agreement to which it is a party; and (x) the Company will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.3. TRUST. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been filed
with the SEC in accordance with the provisions of the 1940 Act and the Trust is
duly registered as an open-end management investment company thereunder; (iii)
the Trust's Registration Statement has been declared effective by the SEC; (iv)
the Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v) the Trust will remain registered under and will
comply in all material respects with the 1940 Act during the term of this
Agreement; (iv) each Fund of the Trust intends to qualify as a "regulated
investment company" under Subchapter M of the Code and to comply with the
diversifiction standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) investment policies of each Fund are in
material compliance with any investment restrictions set forth on Schedule 4 to
this Agreement. The Trust, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state.
3.3 DISTRIBUTOR. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing under
New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws.
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3.4. LEGAL AUTHORITY. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust 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.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all of
its directors, officers, partners and employees dealing with the money and/or
securities of the Trust are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the amount required by the applicable rules of the NASD and
the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. All
parties shall make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, shall provide evidence thereof
promptly to any other party upon written request therefor, and shall notify the
other parties promptly in the event that such coverage no longer applies.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. CONTRACTS FILINGS. The Company shall amend the Contracts'
Registration Statement and the Account's 1940 Act Registration Statement from
time to time as required in order to effect the continuous offering of the
Contracts in compliance with applicable law or as may otherwise be required by
applicable law, but in any event shall maintain a current effective Contracts'
Registration Statement and the Account's registration under the 1940 Act for so
long as the Contracts are outstanding unless the Company has supplied the Trust
with an SEC no-action letter or opinion of counsel satisfactory to the Trust's
counsel to the effect that maintaining such Registration Statement on a current
basis is no longer required. The Company shall be responsible for filing all
such Contract forms, applications, marketing materials and other documents
relating to the Contracts and/or the Account with state insurance commissions,
as required or customary, and shall use its best efforts: (i) to obtain any and
all approvals thereof, under applicable state insurance law, of each state or
other jurisdiction in which Contracts are or may be offered for sale; and (ii)
to keep such approvals in effect for so long as the Contracts are outstanding.
4.3. VOTING OF TRUST SHARES. With respect to any matter put to vote by
the holders of Trust shares ("Voting Shares"), the Company shall: (i) solicit
voting instructions from Contract Owners to which Voting Shares are
attributable; (ii) vote Voting Shares of each Series attributable to Contract
Owners in accordance with instructions or proxies timely
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received from such Contract Owners; (iii) vote Voting Shares of each Series
attributable to Contract Owners for which no instructions have been received in
the same proportion as Voting Shares of such Series for which instructions have
been timely received; and, (iv) vote Voting Shares of each Series held by the
Company on its own behalf or on behalf of the Account that are not attributable
to Contract Owners in the same proportion as Voting Shares of such Series for
which instructions have been timely received. The Company shall be responsible
for assuring that voting privileges for the Account are calculated in a manner
consistent with the provisions set forth above and with other Participating
Insurance Companies. Neither the Company nor any of its affiliates will in any
way recommend action in connection with, or oppose or interfere with, the
solicitation of proxies for the Trust shares held for such Contract Owners,
except with respect to matters as to which the Company has the right under Rule
6e-2 or 6e-3(T) under the 1940 Act, to vote the Trust shares without regard to
voting instructions from Contract Owners.
4.4. STATE INVESTMENT RESTRICTIONS. The Company acknowledges and agrees
that it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions under state insurance law
applicable to any Fund, and that neither the Trust nor the Distributor shall
bear any responsibility to the Company, other Participating Insurance Companies
or any Product Owners for any such determination or the correctness of such
determination. Schedule 4 sets forth the investment restrictions that the
Company and/or other Participating Insurance Companies have determined are
applicable to any Fund and with which the Trust has agreed to comply as of the
date of this Agreement. The Company shall inform the Trust of any investment
restrictions imposed by state insurance law that the Company determines may
become applicable to the Trust or a Fund from time to time as a result of the
Account's investment therein, other than those set forth on Schedule 4 to this
Agreement. Upon receipt of any such information from the Company or any other
Participating Insurance Company, the Trust shall determine whether it is in the
best interests of shareholders to comply with any such restrictions. If the
Trust determines that it is not in the best interests of shareholders (it being
understood that "shareholders" for this purpose shall mean Product Owners) to
comply with a restriction determined to be applicable by the Company, the Trust
shall so inform the Company, and the Trust and the Company shall discuss
alternative accommodations in the circumstances. If the Trust determines that it
is in the best interests of shareholders to comply with such restrictions, the
Trust and the Company shall amend Schedule 4 to this Agreement to reflect such
restrictions, subject to obtaining any required shareholder approval thereof.
4.5. DRAFTS OF FILINGS. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, prepared by or on behalf of either of them
and that mentions the other party by name. Such drafts shall be provided to the
other party sufficiently in advance of filing such materials with regulatory
authorities in order to allow such other party a reasonable opportunity to
review the materials .
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4.6. COPIES OF FILINGS. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities.
4.7. REGULATORY RESPONSES. Each party shall promptly provide to all
other parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.6 of this Agreement.
4.8. COMPLAINTS AND PROCEEDINGS.
(a) The Trust and/or the Distributor shall immediately notify the
Company of: (i) the issuance by any court or regulatory body of any stop
order, cease and desist order, or other similar order (but not an order of
exemption or approval) with respect to the Trust's Registration Statement or
the Trust's Prospectus; (ii) any request by the SEC for any amendment to the
Trust's Registration Statement or Trust's Prospectus; (iii) the initiation
of any Proceedings for that purpose or for any other purposes relating to
the registration or offering of the Trust shares; or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Trust shares
or any Class or Series in any state or jurisdiction, including, without
limitation, any circumstance in which (A) such shares are not registered
and, in all material respects, issued and sold in accordance with applicable
state and federal law or (B) such law precludes the use of such shares as an
underlying investment medium for the Contracts. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor
of; (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not an order of
exemption of approval) with respect to the Contracts' Registration Statement
or the Contracts' Prospectus; (ii) any request by the SEC for any amendment
to the Contracts' Registration Statement or Prospectus; (iii) the initiation
of any proceedings for that purpose or for any other purposes relating to
the registration or offering of the Contracts; or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order issued, to
obtain the lifting thereof at the earliest possible time.
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(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated therewith in
connection with issuance or sale of Trust shares or the Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or a
Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts.
4.9. COOPERATION. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be fully responsible as to
the Trust and the Distributor for the sale and marketing of the Contracts. The
Company shall provide Contracts, the Contracts' and Trust's prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. The Company
shall ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. The Company shall
ensure that each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations, including
without limitation the rules of the NASD. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning the Trust
and the Distributor that is intended for use only by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution to
Contract Owners or offerees) is so used.
5.2. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall be
fully responsible as to the Trust and the Distributor for the underwriting,
issuance, service and administration of the Contracts and for the administration
of the Account, including, without limitation, the calculation of performance
information for Contracts, the timely payment of Contract Owner redemption
requests and processing of Contract transactions, and the maintenance of a
service center, such functions to be performed in all respects at a level
commensurate with those standards prevailing in the variable insurance industry.
The Company shall provide to Contract Owners all Trust reports, solicitations
for voting instructions including any related Trust proxy solicitation
materials, and updated Trust prospectuses as required under the federal
securities laws.
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5.3. CUSTOMER COMPLAINTS. The Company shall promptly address all
customer complaints and resolve such complaints consistent with high ethical
standards and principles of ethical conduct.
5.4. TRUST PROSPECTUSES AND REPORTS. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
and any supplement thereto; (ii) each Statement of Additional Information and
any supplement thereto; (ii) any Trust proxy soliciting material; and (iv) any
Trust periodic shareholder reports. The Trust and the Company may agree upon
alternate arrangements, but in all cases, the Trust reserves the right to
approve the printing of any such material. The Trust shall provide the Company
at least 10 days advance written notice when any such material shall become
available, provided, however, that in the case of a supplement, the Trust shall
provide the Company notice reasonable in the circumstances, it being understood
that circumstances surrounding such supplement may not allow for advance notice.
The Company may not alter any material so provided by the Trust or the
Distributor (including without limitation presenting or delivering such material
in a different medium, e.g., electronic or internet) than what was originally
indicated, without the prior written consent of the Distributor.
5.5. TRUST ADVERTISING MATERIAL. No piece of advertising or sales
literature or other promotional material in which the Trust or the Distributor
is named (including, without limitation, material for prospects, existing
Contract Owners, brokers' rating or ranking agencies, or the press, whether in
print, radio, television, video, Internet, or other electronic medium) shall be
used by the Company or any person directly or indirectly authorized by the
Company, including without limitation, underwriters, distributors, and sellers
of the Contracts, except with the prior written consent of the Trust or the
Distributor, as applicable, as to the form, content and medium of such material.
Any such piece shall be furnished to the Trust for such consent prior to its
use. The Trust shall respond to any request for written consent on a prompt and
timely basis, but failure to respond shall not relieve the Company of the
obligation to obtain the prior written consent of the Trust. After receiving
the Trust's or Distributor's consent to the use of any such material, no further
changes may be made without obtaining the Trust's or Distributor's consent to
such changes. The Trust or Distributor may at any time in its sole discretion
revoke such written consent, and upon notification of such revocation, the
Company shall no longer use the material subject to such revocation. Until
further notice to the Company, the Trust has delegated its rights and
responsibilities under this provision to the Distributor.
5.6. CONTRACTS ADVERTISING MATERIAL. No piece of advertising or sales
literature or other promotional material in which the Company is named shall be
used by the Trust or the Distributor, except with the prior written consent of
the Company. Any such piece shall be furnished to the Company for such consent
prior to its use. The Company shall respond to any request for written consent
on a prompt and timely basis, but failure to
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respond shall not relieve the Company of the obligation to obtain the prior
written consent of the Company. The Company may at any time in its sole
discretion revoke any written consent, and upon notification of such revocation,
neither the Trust nor the Distributor shall use the material subject to such
revocation. The Company, upon prior written notice to the Trust, may delegate
its rights and responsibilities under this provision to the principal
underwriter for the Contracts.
5.7. TRADE NAMES. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor has
been revoked. The Company shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust in each instance.
5.8. REPRESENTATIONS BY COMPANY. The Company shall not give any
information or make any representations or statements about the Trust or the
Funds nor shall it authorize or allow any other person to do so except
information or representations contained in the Trust's Registration Statement
or the Trust's Prospectus or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in writing by the Trust
or its designee in accordance with this Article V, or in published reports or
statements of the Trust in the public domain, except with the prior written
consent of the Trust.
5.9. REPRESENTATIONS BY TRUST. The Trust shall not give any information
or make any representations on behalf of the Company or concerning the Company,
the Account or the Contracts other than the information or representations
contained in the Contracts' Registration Statement or Contracts' Prospectus or
in published reports of the Account which are in the public domain or in sales
literature or other promotional material approved in writing by the Company in
accordance with this Article V, except with the prior written consent of the
Company.
5.10. ADVERTISING. For purposes of this Article V, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 1933 Act.
ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(h). Each Fund of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Fund as an investment company underlying the Account, and the
Trust shall notify the Company immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
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6.2. SUBCHAPTER M. Each Fund of the Trust shall maintain the
qualification of the Fund as a registered investment company (under Subchapter M
or any successor or similar provision), and the Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall ensure the continued treatment of the
Contracts as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
and the Distributor immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future.
ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectus, Trust's Statement of Additional Information,
Trust's Registration Statement, Trust proxy materials and
shareholder reports, and preparation of a camera-ready copy
of the foregoing;
(c) preparation of all statements and notices required by any
Federal or state securities law;
(d) printing and mailing of all materials and reports required
to be provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees, including, without
limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans,
relating to the Trust; and
(g) any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act.
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7.3. COMPANY EXPENSES. Expenses incident to the Company's performance
of its duties and obligations under this Agreement include, but are not limited
to, the costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus and
Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, include
printing and dissemination of Contracts' and the Trust's
Prospectuses and compensation for Contract sales;
(d) administration of the Contracts;
(e) solicitation of voting instructions with respect to Trust proxy
materials;
(f) payment of all applicable fees, including, without limitation, all
fees due under Rule 24f-2 relating to the Contracts; and,
(g) preparation, printing and dissemination of all statements and
notices to Contract Owners required by any Federal or state
insurance law other than those paid for by the Trust.
(h) preparation, printing and dissemination of all marketing materials
for the Contracts and Trust except where other arrangements are made
in advance.
7.4. 12b-1 PAYMENTS. The Trust shall pay no fee or other compensation to
the Company under this Agreement, except that if the Trust or any Series adopts
and implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses, then payments may be made to the Company in accordance
with such plan. The Trust currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or in
contravention of such rule, although it may make payments pursuant to Rule
12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Trust undertakes to have a Board of
Trustees, a majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
-15-
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. EXEMPTIVE ORDER. The parties to this Agreement acknowledge
that the Trust has filed an application with the SEC to request an order (the
"Exemptive Order") granting relief from various provisions of the 1940 Act and
the rules thereunder to the extent necessary to permit Trust shares to be sold
to and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated Participating Insurance Companies and other
Qualified Persons. It is anticipated that the Exemptive Order, when and if
issued, shall require the Trust and each Participating Insurance Company to
comply with conditions and undertakings substantially as provided in this
Article VII. The Trust will not enter into a participation agreement with any
other Participating Insurance Company unless it imposes the same conditions and
undertakings on that company as are imposed on the Company pursuant to this
Article VIII.
8.2. COMPANY REPORTING REQUIREMENTS. The Company shall report any
potential or existing conflicts promptly to the Trust Board, and in particular
whenever Contract Owner voting instructions are disregarded, and recognizes that
it shall be responsible for assisting the Trust Board in carrying out its
responsibilities in connection with the Exemptive Order. The Company agrees to
carry out such responsibilities with a view to the interests of Contract Owners.
8.3. TRUST BOARD REVIEW. If a majority of the members of the Trust
Board, or a majority of Trustees who are not interested persons of the Trust as
defined by the 1940 Act (the "Disinterested Trustees"), determines that a
material irreconcilable conflict exists with regard to Contract Owner
investments in the Trust, the Trust Board shall give prompt notice to all
participating Insurance Companies. If the Trust Board determines that the
Company is responsible for causing or creating such conflict, the Company shall
at no cost and expense to the Trust, and to the extent reasonably practicable
(as determined by a majority of the Disinterested Trustees), take such action as
is necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include, but shall not be limited to: (i) withdrawing the
assets allocable to the Account from the Trust and reinvesting such assets in a
different investment medium or submitting the question of whether such
segregation should be implemented to a vote of all affected Contract Owners; or
(ii) establishing a new registered management investment company.
8.4. WITHDRAWAL. If a material irreconcilable conflict arises as a
result of a decision by the Company to disregard Contract Owner voting
instructions and such decision represents a minority position or would preclude
a majority vote by all Contract Owners having an interest in the Trust, the
Company may be required, at the Trust Board's election, to withdraw the
Account's investment in the Trust.
8.5. REMEDIAL ACTION. For purposes of this Article, a majority of the
Disinterested Trustees shall determine whether or not any proposed action
adequately
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remedies any irreconcilable material conflict, but in no event shall the Trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article to establish a new
funding medium for any Contract if an offer to do so has been declined by vote
of a majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict.
8.6. SUCCESSOR RULES. If and to the extent that Rule 6c-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (a) the Trust and/or the Company,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the
extent such rules are applicable, and (b) Sections 8.2 through 8.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
hold harmless the Trust, the Distributor and each person who controls or is
affiliated with the Trust or the Distributor within the meaning of such terms
under 1933 Act or 1940 Act (but not any Participating Insurance Companies or
Qualified Persons) and any officer, trustee, partner, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Contracts Registration Statement, Contracts
Prospectus, sales literature or other promotional material for the
Contracts or the Contracts themselves (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Company by the Trust or
the Distributor for use in the Contracts Registration Statement,
Contracts Prospectus or in the Contracts or sales literature or
promotional material for the Contracts (or any amendment or
- 17 -
supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Trust Registration Statement, Trust Prospectus or sales
literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Trust or Distributor in writing by or
on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of; or violation
of federal or state law by, the Company or persons under its control
or subject to its authorization, including without limitation, any
broker-dealers or agents authorized to sell the Contracts, with
respect to the sale, marketing or distribution of the Contracts or
Trust shares, including, without limitation any impermissible use of
broker-only material, unsuitable or improper sales of the Contracts
or unauthorized representations about the Contracts or the Trust; or
(d) arise as a result of any failure by the Company or persons under its
control (or subject to its authorization) to provide services,
furnish materials or make payments as required under this Agreement;
or
(e) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Agreement,
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust
shares or payment therefor on a timely basis in accordance with the
procedures set forth in Article II, or any unauthorized use of the
names or trade names of the Trust or the Distributor.
This indemnification will be in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust shall indemnify and hold
harmless the Company and each person who controls or is affiliated with the
Company within the meaning of such terms under the 1933 Act or 1940 Act and any
officer, director, employee or agent of the foregoing against any and all
losses, claims, damages or liabilities,
-18-
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, Trust Prospectus
or sales literature or other promotional material of the Trust (or
any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made; provided that this obligation to indemnify shall not
apply if such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the Company to
the Trust for use in the Trust Registration Statement, Trust
Prospectus or sales literature or promotional material for the Trust
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing
by the Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or its
Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of
this Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any
warranties contained in Article III hereof).
This indemnification will be in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
- 19 -
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor shall
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, Trust Prospectus
or sales literature or other promotional material of the Trust (or
any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made; provided that this obligation to indemnify shall not
apply if such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the Company to
the Trust for use in the Trust Registration Statement, Trust
Prospectus or sales literature or promotional material for the Trust
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement or a material fact contained in
the Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing
by the Distributor to the Company; or
(c) arise out of or are based upon wrongful conduct of the Distributor
or persons under its control with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Distributor or persons under
its control to provide services, furnish materials or make payments
as required under the terms of this agreement; or
(e) arise out of any material breach by the Trust or persons under its
control of this Agreement (including any breach of Section 6.1 of
this Agreement and any warranties contained in Article III hereof).
- 20 -
This indemnification will be in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due
to the wilful misfeasance, bad faith, gross negligence or reckless
disregard of duty by the party seeking indemnification.
9.4. It is the parties' intention in the event of an occurrence for
which the Trust agreed to indemnify the Company, the Company shall seek
indemnification from the Trust only in circumstances in which the Trust is
entitled to seek indemnification from a third party with respect to the same
event or cause thereof.
9.5. INDEMNIFICATION PROCEDURES. After receipt by a party
entitled to indemnification ("indemnified party") under this Article IX
of notice of the commencement of any action, if a claim in respect
thereof is to be made by the indemnified party against any person
obligated to provide indemnification under this Article IX ("indemnifying
party"), such indemnified party will notify the indemnifying party in writing
of the commencement thereof as soon as practicable thereafter,
provided that the omission to so notify the indemnifying party will not
relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the
failure to give such notice. The indemnifying party, upon the request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall 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
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement
or judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article
IX. The indemnification provisions contained in this Article IX shall survive
any termination of this Agreement.
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ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. RELATIONSHIP OF PARTIES. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the Securities Act of 1933, and rules and regulations
promulgated thereunder.
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other insurance companies and
investors (subject to Section 2.8 hereof) and the cash value of the Contracts
may be invested in other investment companies, provided, however, that until
this Agreement is terminated pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made available
hereunder on the same basis as other funding vehicles available
under the Contracts and shall not make available additional funding
vehicles other than those listed on Schedule 3 to this Agreement
unless: (i) any such vehicle or series thereof, has investment
objectives or policies that are substantially different from the
investment objectives and policies of the Funds made available
hereunder; or (ii) the Trust or Distributor consents in writing to
the use of such other vehicle, such consent not to be unreasonably
withheld;
(b) the Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action to
operate the Account as a management investment company under the
1940 Act;
(c) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit,
induce or encourage Contract Owners to change or modify the Trust to
change the Trust's distributor or investment adviser, to transfer or
withdraw Contract Values allocated to a Fund, or to exchange their
Contracts for contracts not allowing for investment in the Trust;
(d) the Company shall not substitute another investment company for one
or more Fund except with the written consent of the Distributor; and
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(e) the Company shall not withdraw the Account's investment in the Trust
or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine Contract processing.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Fund that has been made available hereunder, the Account no longer
invests in that Fund and the Company has confirmed in writing to the
Distributor if so requested by the Distributor, that it no longer intends to
invest in such Fund. However, certain obligations of, or restrictions on, the
parties to this Agreement may terminate as provided in Sections 10.3 through
10.6 and the Company may be required to redeem Trust shares pursuant to Section
10.7 or in the circumstances contemplated by Article VIII. Article IX and
Sections 5.7 and 10.9 shall survive any termination of this agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the
Trust and the Distributor to make Trust shares available to the Company for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that such proceedings are
likely, by the NASD, the SEC, 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
operation of the Account, the administration of the Contracts or
the purchase of Trust shares, or an expected or anticipated ruling,
judgment or outcome which would, in the Distributor's reasonable
judgment exercised in good faith, materially impair the Company's or
Trust's ability to meet and perform the Company's or Trust's
obligations and duties hereunder, such termination effective upon 15
days prior written notice;
(b) in the event any of the Contracts are not registered, issued or
sold in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised
in good faith, that either (1) the Company shall have suffered a
material adverse change in its business or financial condition or
(2) the Company shall have been the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of either the Trust or the
Distributor such termination effective upon 30 days prior written
notice;
-23-
(d) if the Distributor suspends or terminates the offering of Trust
Shares of any Series or Class to all Participating Investors or
only designated Participating Investors, if such action is required
by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Distributor acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series (it being understood that "shareholders"
for this purpose shall mean Product Owners), such notice effective
immediately upon receipt of written notice, it being understood
that a lack of Participating Investor interest in a Series or Class
may be grounds for a suspension or termination as to such Series or
Class and that a suspension or termination shall apply only to the
specified Series or Class;
(e) upon the Company's assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement)
unless the Trust consents thereto, such termination effective upon
30 days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of
the Trust within 10 days after written notice of such breach has
been delivered to the Company, such termination effective upon
expiration of such 10-day period; or
(g) upon termination of this Agreement pursuant to Section 10.3 or
notice from the Company pursuant to Section 10.5 or 10.6, such
termination effective upon 15 days prior written notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit
owners of Contracts in effect on the effective date of such termination
(hereinafter referred to as "Existing Contracts") to reallocate investments in
the Trust, redeem investments in the Trust and/or invest in the Trust upon the
making of additional purchase payments under the Existing Contracts.
10.5. TERMINATION OF INVESTMENT IN A FUND. The Company may elect to
cease investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below);
(a) if the Trust informs the Company pursuant to Section 4.4 that it
will not cause such Fund to comply with investment restrictions as
requested by
-24-
the Company and the Trust and the Company are unable to agree upon
any reasonable alternative accommodations;
(b) if Series shares in such Fund are not reasonably available to meet
the requirements of the Contracts as determined by the Company
(including any non-availability as a result of notice given by the
Distributor pursuant to Section 10.4(d)), and the Distributor, after
receiving written notice from the Company of such non-availability,
fails to make available, within 10 days after receipt of such
notice, a sufficient number of Trust shares of such Series or an
alternate Series to meet the requirements of the Contracts; or
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations
thereunder and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct
such failure;
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. TERMINATION OF INVESTMENT BY THE COMPANY. The Company may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or withdraw its
investment or the Account's investment in the Trust, subject to compliance with
applicable law, upon written notice to the Trust within 15 days of the
occurrence of any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by NASD, the SEC or
any state securities or insurance commission or any other regulatory
body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund
ceases to qualify as a Regulated Investment Company udner Subchapter
M of the Code, or under any successor or similar provision, or if
the Company reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct
such failure within 30 days; or
(c) if the Trust or Distributor is in material breach of a provision of
this Agreement, which breach has not been cured to the satisfaction
of the Company within 10 days after written notice of such breach
has been delivered to the Trust or the Distributor, as the case may
be.
-25-
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and
acknowledge that it is essential for compliance with Section 817(h) of the
Code that the Contracts qualify as annuity contracts or life insurance
policies, as applicable, under the Code. Accordingly, if any of the
Contracts cease to qualify as annuity contracts or life insurance
policies, as applicable, under the Code, or if the Trust reasonably
believes that any such Contracts may fail to so qualify, the Trust shall
have the right to require the Company to redeem Trust shares attributable
to such Contracts upon notice to the Company and the Company shall so
redeem such Trust shares in order to ensure that the Trust complies with
the provisions of Section 817(h) of the Code applicable to ownership of
Trust shares. Notice to the Company shall specify the period of time the
Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be
determined with reference to the requirements of Section 817(h) of the
Code. In addition, the Company may be required to redeem Trust shares
pursuant to action taken or request made by the Trust Board in accordance
with the Exemptive Order described in Article VIII or any conditions or
undertakings set forth or referenced therein, or other SEC rule,
regulation or order that may be adopted after the date hereof. The Company
agrees to redeem shares in the circumstances described herein and to
comply with applicable terms and provisions. Also, in the event that the
Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.4(d) of this Agreement, the Company, upon request
by the Distributor will cooperate in taking appropriate action to withdraw
the Account's investment in the respective Fund.
10.8. MINIMUM INVESTMENT. The Company acknowledges its
intention to make the selected Funds of the Trust available under the
Contracts for a significant period of time and acknowledges further that a
termination of this Agreement or the availability of a Fund would prevent
the Trust from benefitting from the anticipated economies of scale and
the Distributor from recovering its up-front costs in establishing the
systems and interface required under the terms of this Agreement.
Accordingly, in the event that the Company withdraws all or substantially
all of its investment in the Trust or a Fund less than three years after
the initial investment in the Trust or Fund (other than in response to
actions by the Distributor pursuant to Section 10.4(d) of this Agreement),
the Company, upon request, shall reimburse the Distributor for reasonably
identifiable costs attributable to the start-up of the Trust or Fund, as
applicable, and establishing the systems and interface required by this
Agreement.
10.9. CONFIDENTIALITY. The Company will keep confidential any
information acquired as a result of this Agreement regarding the business
and affairs of the Trust, the Distributor, and their affiliates.
-26-
ARTICLE XI
APPLICABLE TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect, as appropriate, changes in or relating
to the Contracts, or Series or funding vehicles thereof, additions of new
classes of Contracts to be issued by the Company and separate accounts therefor
investing in the Trust. Such amendments may be made effective by executing the
form of amendment included on each schedule attached hereto. The provisions of
this Agreement shall be equally applicable to each such class of Contracts,
Series and Accounts, effective as of the date of amendment of such Schedule,
unless the context otherwise requires.
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this Agreement
is to be made in writing and shall be given:
If to the Trust:
Xxxxxxx X. Grip
President
Xxxxxxx Sachs Variable Insurance Trust
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxxxx X. Grip
President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
[Name]
[Title]
___________________ Life Insurance Company
[Street Address]
[City, State]
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
-27-
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Delaware, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the
rules, regulations and rulings thereunder, including such exemptions
from those statutes, rules and regulations as the SEC may grant, and
the terms hereof shall be limited, interpreted and construed in
accordance therewith.
(b) 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.
(c) If any provision of this Agreement shall be held or made invalid by
a court decision, statue, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) 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.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which together shall constitute one and the same
instrument.
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for
the obligations of any other Series of the Trust.
-28-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
officer on thc date specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: _________ By: __________________________
Name:
Title:
XXXXXXX, SACHS & CO.
(Distributor)
Date: _________ By: __________________________
Name:
Title:
________________LIFE INSURANCE COMPANY
(Company)
Date: _________ By: __________________________
Name:
Title:
-29-
SCHEDULE 1
----------
Accounts of the Company
Investing in the Trust
Effective as of the date of the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
-------------------------------------------------------------------------------
Date Established by SEC 1940 Act
Name of Account Board of Directors Registration Type of Product
and Subaccounts of the Company Number Supported by Account
-------------------------------------------------------------------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
===============================================================================
[Form of Amendment to Schedule 1]
Effective as of ___________, the following separate accounts of the Company are
hereby added to this Schedule 1 and made subject to the Agreement.
-------------------------------------------------------------------------------
Date Established by SEC 1940 Act
Name of Account Board of Directors Registration Type of Product
and Subaccounts of the Company Number Supported by Account
-------------------------------------------------------------------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 1 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust [ ] Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
-30-
SCHEDULE 2
----------
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date of the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
-------------------------------------------------------------------------------
SEC 1933 Act Name of
Policy Market- Registration Supporting
ing Name Number Account Annuity or Life
-------------------------------------------------------------------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
===============================================================================
[Form of Amendment to Schedule 2]
Effective as of ___________, the following classes of Contracts are hereby added
to this Schedule 2 and made subject to the Agreement:
-------------------------------------------------------------------------------
SEC 1933 Act Name of
Policy Market- Registration Supporting
ing Name Number Account Annuity or Life
-------------------------------------------------------------------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
--------------- ------------------- ------------- ---------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust [ ] Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
-31-
SCHEDULE 3
----------
Trust Classes and Series and Other Funding
Vehicles Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust
Classes and Series and other Funding Vehicles are available under the Contracts:
---------------------------------------------------------------
Contracts Market- Trust Classes Other Funding
ing Name and Series Vehicles
---------------------------------------------------------------
----------------- ------------------- ---------------------
----------------- ------------------- ---------------------
----------------- ------------------- ---------------------
===============================================================
[Form of Amendment to Schedule 3]
Effective as of ___________, the following Schedule 3 is hereby amended to
reflect the following changes in Trust Classes and Series and other funding
vehicles:
---------------------------------------------------------------
Contracts Market- Trust Classes Other Funding
ing Name and Series Vehicles
---------------------------------------------------------------
----------------- ------------------- ---------------------
----------------- ------------------- ---------------------
----------------- ------------------- ---------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust [ ] Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
-32-
SCHEDULE 4
----------
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
===============================================================================
[Form of Amendment to Schedule 4]
Effective as of ____________, this Schedule 4 is hereby amended to reflect the
following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust [__________] Life Insurance Company
--------------------------------------
Xxxxxxx, Sachs & Co.
-33-
