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EXHIBIT 1 A (8)
FORM OF PARTICIPATION AGREEMENTS BETWEEN
SEPARATE ACCOUNT
AND
INVESTMENT COMPANIES
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PARTICIPATION AGREEMENT
Among
CIGNA VARIABLE PRODUCTS GROUP,
CIGNA FINANCIAL ADVISORS, INC.
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the ____ day of _____,
1995 by and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY (hereinafter the
"Company"), a Connecticut corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may
be amended from time to time (each such account hereinafter referred to as the
"Account"), and CIGNA VARIABLE PRODUCTS GROUP, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and CIGNA Financial Advisors, Inc. (hereinafter the
"Underwriter"), a Connecticut corporation.
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act")
and is available to act as an investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
the Underwriter (hereinafter "Participating Insurance Companies") and the
Fund's shares are registered under the Securities Act of 1933 ("1933 Act");
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular
managed portfolio of securities and other assets, any one or more of which may
be made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter referred
to as a "Portfolio");
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated December__, 1995 (File No.812-9698), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the 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 annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Mixed and Shared Funding Exemptive Order");
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WHEREAS, CIGNA Investments, Inc. (the "Adviser") is duly registered
as an investment adviser under the 1940 Act and any applicable state
securities law;
WHEREAS, the Company has registered or will register certain
variable insurance products under the 1933 Act;
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors
of the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable insurance
products ;
WHEREAS, the Company has registered or will register each Account
as a unit investment trust under the 1940 Act;
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC" or "Commission") under the Securities
Exchange Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable insurance products
and the Underwriter is authorized to sell such shares to each Account at net
asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale and Redemption of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1. the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to
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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.
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 and to qualified pension and retirement plans. No shares of any
Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter 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, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day. Payment shall be in
federal funds transmitted by wire.
1.6. 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.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1. hereof. Payment shall be in federal funds
transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the
Fund of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Fund will be recorded in an appropriate title
for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio.
The Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis by 6:30 p.m. Hartford,
Connecticut time.
ARTICLE II. Representations and Warranties
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2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance law suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 38a-433 of the Connecticut General Statutes and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with all applicable federal and
state securities laws and that the Fund is and shall remain registered under
the 0000 Xxx. The Fund shall amend the Registration Statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as life insurance contracts (including endowment contracts) or annuity
insurance contracts under applicable provisions of the Code, and that it will
make every effort to maintain such treatment and that it will notify the Fund
and the Underwriter 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.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Fund undertakes to have a board of trustees, 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 applicable laws
and the Fund and the Underwriter represent that their respective operations are
and shall at all times remain in material compliance with applicable laws to
the extent required to perform this Agreement.
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2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of Connecticut and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 0000 Xxx.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Adviser represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws
of the State of Connecticut and any applicable state and federal securities
laws.
2.10. The Fund and Underwriter each severally represent and
warrant that all of its directors, officers, employees, investment advisers,
and other individuals/entities dealing with the money and/or securities of the
Fund are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not less than
the minimal coverage as required currently by Rule 17g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities under its control dealing with the money and/or securities
of the Fund are covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund, and that said bond is issued by a reputable bonding
company, includes coverage for larceny and embezzlement, and is 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 and the Underwriter in the event that
such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready copy or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended or supplemented during the year) to have
the prospectus for the Contracts and the Fund's prospectus printed together in
one document, and to have the Statement of Additional Information if
applicable, for the Fund and the Statement of Additional Information for the
Contracts printed together in one document. Alternatively, the Company may
print the Fund's prospectus and/or its Statement of Additional Information in
combination with other fund companies' prospectuses and statements of
additional information. Except as provided below, all expenses of printing and
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distributing Fund prospectuses and Statements of Additional Information shall
be the expense of the Company. For prospectuses and Statements of Additional
Information provided by the Company to its existing owners of Contracts in
order to update disclosure as required by the 1933 Act and/or the 1940 Act, the
cost of printing shall be borne by the Fund. The cost of preparing, printing
and shipping of the prospectuses, proxy materials, periodic fund reports and
other materials of the Fund to the Company shall be paid by the Fund; provided,
however, that if at any time the Fund or its agent reasonably deems the usage
by the Company of such items to be excessive, it may, prior to the delivery of
any quantity of materials in excess of what is deemed reasonable, request that
the Company demonstrate the reasonableness of such usage. If the reasonableness
of such usage has not been adequately demonstrated, the Fund may request that
the Company pay the cost of printing and delivery of any excess copies of such
materials. If the Company chooses to receive camera-ready copy or computer
diskettes in lieu of receiving printed copies of the Fund's prospectus, the
Fund will reimburse the Company in an amount equal to the product of A and B
where A is the number of such prospectuses distributed to owners of the
Contracts, and B is the Fund's per unit cost of typesetting and printing the
Fund's prospectus. The same procedures shall be followed with respect to the
Fund's Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the
Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts. The Company shall be responsible for the cost
of printing and distributing Fund prospectuses and Statements of Additional
Information to prospective Contract Owners.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Fund, Underwriter or
the Company .
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners:
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate
account,
so long as and to the extent that the Commission continues to interpret the
1940 Act to require pass-through voting privileges for variable contract
owners. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting
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by shareholders, and in particular the Fund will either provide for annual
meetings or comply with Section 16) of the 1940 Act (although the Fund is not
one of the trusts described in Section 16(c) of that Act) to the extent
applicable. Further, the Fund will act in accordance with the Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate
with respect thereto.
3.6 The Company will vote the shares of the Fund held by the
Company in the Separate Account in accordance with written instructions
received from certificate or policy owners. The Company will vote shares for
which it has not received instructions, as well as shares attributable to the
Company, in the same proportion as it votes shares for which it has received
instructions.
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 or its investment adviser or the Underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within seven
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 and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or
its designee or by the Underwriter, except with the permission of the Fund or
the designee of the Fund.
4.3. The Fund, Underwriter, 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
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within seven Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions,
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requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with the filing of such
document with the Securities and Exchange Commission or other regulatory
authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, 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 the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following that refer to the Fund for any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, 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, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter 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 plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts in amounts agreed to by the Underwriter
in writing and such payments will be made out of existing fees otherwise
payable to the Underwriter, past profits of the Underwriter or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund, (Currently, no such payments are contemplated.)
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders, 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.
5.3 The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
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ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board of Directors of the Fund 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 variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2. The Company 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 Mixed and 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.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that the Company has caused or created a
material irreconcilable conflict, the Company shall at its expense and to the
extent reasonably practicable (as determined by a majority of the disinterested
trustees), take whatever steps are necessary to 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 contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
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contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six (6) months after
the Fund gives written notice that this provision is being implemented, and
until the end of that six month period the Underwriter and Fund shall continue
to accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board
informs the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and Fund shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but
in no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within Six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent 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 Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the Mixed
and Shared Funding 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 3.4, 3.5, 7.1, 7.2,
7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
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ARTICLE VIII. Indemnification
8.. The Company agrees to indemnify and hold harmless the Fund and
the Underwriter and their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls the Fund and the Underwriter
within the meaning of the Securities Act of 1933 (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any Losses to
which the Indemnified Parties may become subject, insofar as such losses result
from a breach by the Company of this Agreement. The Company will reimburse any
legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of the Fund or the Underwriter in performing their
obligations under this Agreement.
8.2. Promptly after receipt by an Indemnified Party hereunder of
notice of the commencement of action, such Indemnified Party will, if a claim
in respect thereof is to be made against the Indemnifying Party hereunder,
notify the Indemnifying Party of the commencement thereof; but the omission so
to notify the Indemnifying Party will not relieve it from any liability which
it may have to any Indemnified Party otherwise than under this Section 8. In
case any such action is brought against any Indemnified Party, and it notifies
the Indemnifying Party of the commencement thereof, the Indemnifying Party will
be entitled to participate therein and, to the extent that it may wish to,
assume the defense thereof, with counsel satisfactory to such Indemnified
Party, and after notice from the Indemnifying Party to such Indemnified Party
of its election to assume the defense thereof, the Indemnifying Party will not
be liable to such Indemnified Party under this Section 8 for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than the reasonable costs of investigation.
8.3. If the Indemnifying Party assumes the defense of any such
action, the Indemnifying Party shall not, without the prior written consent of
the indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to the
entry of any judgement in respect thereof, unless in connection with such
settlement, compromise or consent, each Indemnified Party receives from such
claimant an unconditional release from all liability in respect of such claim.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933
Act, the 1934 Act, and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant (including, but
not limited to, the Mixed and Shared Funding
13
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by 6 months' advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter 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 and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
10.2. Effect of Termination. Notwithstanding any termination of the
Agreement, 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, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that
continuation of availability to existing contracts shall not apply if
proscribed by law or the SEC or other regulatory body.
ARTICLE XI. Notices
14
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:
CIGNA Variable Products Group
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xx. 00000-0000
ATTENTION: Xxxxxx X. Xxxxxxx, III S-210
If to the Company:
Connecticut General Life Insurance Company
CIGNA Group Insurance Division
0000 Xxxxxxxx Xxxxxx, XXX-00
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Counsel
CIGNA Group Insurance Division
If to the Underwriter:
CIGNA FINANCIAL ADVISORS, INC.
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX
00000-0000
ATTENTION: Xxxxx Xxxxxxx, S-203
ARTICLE XII. Miscellaneous
12.1. 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 assume any personal
liability for obligations entered into on behalf of the Fund.
15
12.2. Subject to the requirements of legal process and regularly
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by the Agreement, shall not disclose, disseminate or utilize such
names and addressed and other confidential information until such time as it
may come into the public domain without the express written consent of the
affected party.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. 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.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7. 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.
12.8. 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; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed
and registered to perform the obligations of the Underwriter under this
Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (if one is prepared
under generally accepted accounting principles ("GAAP"), as
soon as practical and in any event within 120 days after the
end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP if
any), as soon as practical and in any event within 60 days
after the end of each
16
quarterly period:
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
(f) such reports, materials, or data as the Fund may reasonably
request so that the Fund may fully carry out the obligations
imposed on the Fund by the Fund's Mixed and Shared Funding
Exemptive Order, and such reports, materials, and data shall
be submitted more frequently if deemed appropriate by the
Fund.
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 and its seal to be hereunder affixed hereto as of the date
specified below.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
CIGNA VARIABLE PRODUCTS GROUP
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
CIGNA FINANCIAL ADVISORS, INC.
17
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
18
Schedule A
The following is a list of separate accounts and contract forms for which one
or more portfolios of CIGNA Variable Products Group are to be made available by
Connecticut General Life Insurance Company :
Name of Separate Account Policy Form Numbers of Contracts Funded By
------------------------ Separate Account --
----------------
CG Variable Life Insurance XX605481 - Group Flexible Premium
Separate Account A established Variable Life Insurance Policy, - Nonpar
May 22, 1995
19
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 20th day of December,
1994 by and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a Connecticut corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may
be amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation. This Agreement supersedes a
similar agreement among the parties that became effective as of October 26,
1988, which agreement is hereby terminated by mutual agreement of the parties.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the " 1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and
1
20
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter 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 (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors
of the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the " 1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading
2
21
and on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund shall
use reasonable efforts to calculate such net asset value on each day which the
New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. 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 any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter 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, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day. Payment shall be in
federal funds transmitted by wire.
1.6. 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. The Company agrees that all
net amounts available under the variable annuity contracts and variable life
insurance policies with the form number(s) which are listed on Schedule A
attached hereto and incorporated herein by this reference, as such Schedule A
may be amended from time to time hereafter by mutual written agreement of all
the parties hereto, (the "Contracts") shall be invested in the Fund, in such
other Funds advised by the Adviser as may be mutually agreed to in writing by
the parties hereto, or in the Company's general account, provided that such
amounts may also be invested in an investment company other than the Fund if
(a) such other investment company, or series thereof, has investment objectives
or policies that are substantially different from the investment objectives and
policies of all the Portfolios of the Fund which the Company is then using as
funding vehicles under any Contract; or (b) the Company gives the Fund and the
Underwriter 45 days written notice of its intention to
3
22
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company either is listed on Schedule C
hereto or was available as a funding vehicle for the Contracts prior to the
date of this Agreement and the Company so informs the Fund and Underwriter
prior to their signing this Agreement (a list of such funds appearing on
Schedule C to this Agreement); or (d) the Fund or Underwriter consents to the
use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by
the Fund of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Fund will be recorded in an appropriate title
for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio.
The Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time).
ARTICLE 11. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 38a-433 of the Connecticut General Statutes and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for the Contracts.
4
23
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Connecticut and
all applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or
the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently treated
as endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter 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.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, 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 the
State of Connecticut and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Connecticut to the extent required to perform
this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of Connecticut and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 1940 Act.
5
24
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws
of the State of Connecticut and any applicable state and federal securities
laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. 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 Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is 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 and the Underwriter in the event that such coverage
no longer applies.
ARTICLE 111. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and
to have the Statement of Additional Information for the Fund and the Statement
of Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies'
prospectuses and statements of additional information. Except as provided in
the following three sentences, all expenses of printing and distributing Fund
prospectuses and Statements of Additional Information shall be the expense of
the Company. For prospectuses and Statements of Additional Information
provided by the Company to its existing owners of Contracts in order to update
disclosure as required by the 1933 Act and/or the 1940 Act, the cost of
printing shall be borne by the Fund. If
6
25
the Company chooses to receive camera-ready film or computer diskettes in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the
Fund's per unit cost of typesetting and printing the Fund's prospectus. The
same procedures shall be followed with respect to the Fund's Statement of
Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the
Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate
account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating Insurance
Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the
7
26
requirements of Section 16(a) with respect to periodic elections of trustees
and with whatever rules the Commission 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 or its investment adviser or the Underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within seven
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 and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or
its designee or by the Underwriter, except with the permission of the Fund or
the Underwriter or the designee of either.
4.3. The Fund, Underwriter, 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
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within seven Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for
8
27
exemptions, requests for no action letters, and all amendments to any of the
above, that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, 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, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter 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 plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
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6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
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 variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company 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.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable 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 trustees), take whatever steps are necessary to 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
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such
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29
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.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six (6) months after
the Fund gives written notice that this provision is being implemented, and
until the end of that six month period the Underwriter and Fund shall continue
to accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board
informs the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and Fund shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but
in no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent 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 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
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 3.4, 3.5, 7.1,
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7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the Registration
Statement or prospectus for the Contracts or in the Contracts or
sales 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 (other than statements or representations contained
in the Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund Shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment 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
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31
made in reliance upon 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, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against an
Indemnified Party as such may arise from such Indemnified Party's
willful 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 or to the Fund, whichever is applicable.
8.1(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. 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.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Fund Shares or
the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
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8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the 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 or prospectus or sales
literature of the Fund (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company for
use in the Registration Statement or prospectus for the
Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the 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 literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons
under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature 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
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of
this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in
Article VI of this Agreement); or
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33
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(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. 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.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements result
from the gross negligence, bad faith or willful misconduct of the Board or any
member thereof, are related to the operations of the Fund and:
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34
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of
this Agreement (including a failure to comply with the
diversification requirements specified in Article VI of
this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties under
this Agreement or to the Company, the Fund, the Underwriter or each Account,
whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by 60 days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter 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 and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company;
or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor
or similar provision, or if the Company reasonably believes
that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that
such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by the Underwriter by written notice to the
Company, if the Underwriter determines, in its sole judgment
exercised in good faith, that the Company, or the Company and
its affiliated companies taken as a whole, 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;
however, before the Underwriter may terminate the Agreement
under this subparagraph (f) on account of material adverse
publicity, the following
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procedures shall apply: (i) the Underwriter shall notify the
Company, in writing, of the reason or reasons it intends to
terminate the Agreement for the prospective termination, in
sufficient detail for the Company to respond to the
Underwriter's specific concerns; (ii) the Company shall then
have three (3) business days in which to formulate and submit a
written response to the Underwriter; and (iii) the Company may,
if it desires, meet in person with the Underwriter at a time
and place designated by the Underwriter for a discussion of the
issues.
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter
the written notice specified in Section 1.6(b) 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
10.1 (h) shall be effective forty five (45) days after the
notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, 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, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.2 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.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
or approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request,
the Company will promptly furnish to the Fund and the Underwriter the opinion
of counsel for the Company (which counsel shall be reasonably satisfactory to
the Fund and the Underwriter) to the effect that any redemption pursuant to
clause (ii) above is a Legally Required Redemption, or (iii) as permitted by an
order of the SEC pursuant to Section 26(b) of the 1940 Act.. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or
the Underwriter 90 days notice of its intention to do so.
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37
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
If to the Company:
Connecticut General Life Insurance Company
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Counsel, Individual
Insurance
If to the Underwriter:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 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 assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information until such time as it
may come into the public domain without the express written consent of the
affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
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12.5 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.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 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.
12.8. 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; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed
and registered to perform the obligations of the Underwriter under this
Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (if one is
prepared under generally accepted accounting principles
("GAAP"), as soon as practical and in any event within
120 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP,
if any), as soon as practical and in any event within 60
days after the end of each quarterly period:
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery
thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state insurance
regulator, as soon as practical after the filing thereof;
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39
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or
special audit made by them of the books of the Company,
as soon as practical after the receipt thereof.
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 and its seal to be hereunder affixed hereto as of the date
specified below.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: /s/ XXX X. XXXXX
------------------------
Name: Xxx X. Xxxxx
------------------------
Title: Senior Vice President
------------------------
VARIABLE INSURANCE PRODUCTS FUND
By: /s/ J. XXXX XXXXXXXX
------------------------
Name: J. Xxxx Xxxxxxxx
------------------------
Title: Senior VP
------------------------
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ XXXX X. XXXXX
------------------------
Name: Xxxx X. Xxxxx
------------------------
Title: President
------------------------
21
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Schedule A
The following is a list of contracts and forms for which one or more
portfolios of Variable Insurance Products Fund or Variable Insurance Products
Fund II are to be made available by Connecticut General Life Insurance Company
in CG Variable Annuity Separate Account II or CG Variable Life Insurance
Separate Account I:
Name of Separate Account and Policy Form Numbers of
Contracts Funded By Separate
Account
CG Variable Annuity Separate Account II AN420 - Flexible Payment
Deferred Variable Annuity
Contract with Fixed and
Variable Accounts - Nonpar
CG Variable Life Separate Account I LN605 - Flexible Premium Variable
Life Insurance Policy - Xxxxxx
00
41
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Fund by the Underwriter, the Fund and
the Company. 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 Insurance Company to perform the
steps delineated below.
1 . The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the Fund for
the shareholder meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform the Company of
the Record, Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. 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 contractowner/policyholder (the
"Customer") 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 Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to
the Company pursuant to the terms of Section 3.3 of the Agreement to
which this Schedule relates.
4. 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 Legal Department of the Underwriter or its affiliate ("Fidelity
Legal") 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:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. 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.)
23
42
5. During this time, Fidelity Legal will develop, produce, and the Fund
will 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 Insurance Company). Contents of
envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to
the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed
and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business 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 Fidelity
Legal.
7. 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 meeting, counting backwards.
8. 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 Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Xxxxxxx X.
Xxxxx, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
24
43
10. 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, 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 "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.
11. 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.
12. 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.)
Fidelity Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. 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. Fidelity Legal will provide a standard form for each
Certification.
15. 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,
Fidelity Legal will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
25
44
SCHEDULE C
Other investment companies which will be made available under variable annuity
contracts or variable life insurance policies issued by the Company through CG
Variable Annuity Separate Account II or CG Variable Life Insurance Separate
Account I:
ALGERFUNDS
Xxxxx American Small Capitalization Portfolio
Xxxxx American Leveraged Allap Portfolio
Xxxxx American MidCap Growth Portfolio
Xxxxx American Growth Portfolio
MFSFUNDS
MFS Total Return Serids
MFS Utilities Series
MFS World Government Series
XXXXXXXXX & XXXXXX ADVISERS MANAGEMENT TRUST
Xxxxxxxxx & Xxxxxx Advisers Management Trust Balanced Portfolio
Xxxxxxxxx & Xxxxxx Advisers Management Trust Limited Maturity Bond
Portfolio
Xxxxxxxxx & Xxxxxx Advisers Management Trust Partners Portfolios
QUEST FOR VALUE FUNDS
Quest Global Equity Portfolio
Quest Managed Portfolio
Quest Small Cap Portfolio
26
45
AMENDMENT TO PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
WHEREAS, the above-referenced Agreement was originally executed as of
the 20th day of December, 1994; and
WHEREAS, the parties thereto are desirous of modifying said Agreement
in several respects;
NOW therefore, said Agreement is hereby amended, effective as of the
21st day of June, 1995, as follows.
1. Schedule A to the Agreement is hereby amended to read as follows:
Schedule A
The following is a list of separate accounts and contract forms for which one
or more portfolios of Variable Insurance Products Fund or Variable Insurance
Products Fund II are to be made available by Connecticut General Life Insurance
Company:
Name of Separate Account Policy Form Numbers of Contracts Funded By
------------------------ Separate Account
----------------
CG Variable Annuity Separate Account II AN420 - Flexible Payment Deferred Variable
Annuity Contract with Fixed and Variable
Accounts - Nonpar
CG Variable Life Separate Account I LN605 - Flexible Premium Variable Life
Insurance Policy - Nonpar
CG Variable Life Insurance Separate Account A XX605481 Group Flexible Premium
Variable Life Insurance Policy, Xxxxxx
0
46
2. Section 2.4 of the Agreement is hereby amended to read as follows:
2.4. The Company represents that the Contracts are currently
treated as life insurance contracts (including endowment contracts) or annuity
insurance contracts, under applicable provisions of the Code and that it will
make every effort to maintain such treatment and that it will notify the Fund
and the Underwriter 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.
3. Subsection (a) of Section 10.1 of the Agreement is hereby amended to read
as follows:
(a) termination by any party for any reason upon six months' advance
written notice delivered to the other parties; or
4. Article XI of the Agreement is amended to read as follows:
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
If to the Company:
Connecticut General Life Insurance Company
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Counsel, Individual
Insurance
AND ALSO TO
Connecticut General Life Insurance Company
c/o CIGNA Group Insurance Division
Two Liberty Place
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Counsel, Group
Insurance Division
2
47
If to the Underwriter:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
5. Section 12.1 of the Agreement is amended to read as follows:
12.1 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 assume any personal
liability for obligations entered into on behalf of the Fund. All persons
dealing with the Company must look solely to the property of the Company for
the enforcement of any claims against the Company as neither the Board,
officers, agents or shareholders of Company assume any personal liability for
obligations entered into on behalf of the Company.
6. Subsection 12.9(b) of the Agreement is amended to read as follows:
(b) the Company's quarterly statements (statutory, if any, and
GAAP, if any), as soon as practical and in any event within 60 days after the
end of each quarterly period:
7. Subsection 12.9(e) of the Agreement is hereby amended to read as follows:
(e) any other material report submitted to the Company by
independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as practical after
the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed in its name and on its behalf by its duly authorized
representative as of the date first specified above.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
BY: /s/ XXX X. XXXXX
----------------------
Name: Xxx X. Xxxxx
----------------------
Title: Senior Vice President
----------------------
3
48
VARIABLE INSURANCE PRODUCTS FUND
VARIABLE INSURANCE PRODUCTS FUND II
By: /s/ J. XXXX XXXXXXXX
----------------------
J. Xxxx Xxxxxxxx
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
BY: /s/ XXXX X. XXXXX
----------------------
Xxxx X. Xxxxx
President
4
49
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as of
August ___, 1995 by and between CONNECTICUT GENERAL LIFE INSURANCE COMPANY (the
"Company") TCI PORTFOLIOS, INC. (the "Issuer") and the investment adviser of
the Issuer, INVESTORS RESEARCH CORPORATION ("Investors Research").
WHEREAS, the Company offers to the public certain individual and group
variable annuity contracts and group variable life insurance contracts and
provides individual coverages under Certificates issued under the group
contracts described in this agreement (collectively called the "Contracts");
and
WHEREAS, Issuer is a mutual fund registered under the Investment
Company Act of 1940, as amended ("40 Act") and offers and issues its shares only
to insurance companies to fund variable annuity and variable life insurance
contracts and offers several portfolios or series, including but not limited to
TCI Growth ("Fund"); and
WHEREAS, the Company wishes to offer the Fund as an investment option
under the Contracts; and,
WHEREAS, on the terms and conditions hereinafter set forth, Investors
Research and the Issuer desire to make shares of the Fund available as an
investment option under the Contracts and to retain the Company to perform
certain administrative services on behalf of the Fund;
NOW, THEREFORE, the Company, the Issuer and Investors Research agree
as follows:
1. TRANSACTIONS IN THE FUND. Subject to the terms and conditions
of this Agreement, the Issuer will make shares of the Fund available to be
purchased, exchanged, or redeemed, by the Company on behalf of the Account
(defined in SECTION 6(a) below) through a single account at the net asset value
applicable to each order. The Fund's shares shall be purchased and redeemed on
a net basis in such quantity and at such time as determined by the Company to
satisfy the requirements of the Contracts for which the Fund serves as
underlying investment media. Dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the Fund.
2. ADMINISTRATIVE SERVICES. The Company shall be solely
responsible for providing all administrative services for the Contract owners.
The Company agrees that it will maintain and preserve all records as required
by law to be maintained and preserved, and will otherwise comply with all laws,
rules and regulations applicable to the marketing of the Contracts and the
provision of administrative services to the Contract owners.
FPA\CIGNA
AUGUST 14, 1995 1
50
3. PROCESSING AND TIMING OF TRANSACTIONS.
(a) The Issuer hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption orders for Fund shares
from the Contract owners. On each day the New York Stock Exchange (the
"Exchange") is open for business (each, a "Business Day"), the Company may
receive instructions from the Contract owners for the purchase or redemption of
shares of the Fund ("Orders"). Orders received and accepted by the Company
prior to the close of regular trading on the Exchange (the "Close of Trading")
on any given Business Day and transmitted to the Issuer by 9:00 p.m. Central
time on such Business Day will be executed by the Issuer at the net asset value
determined as of the Close of Trading on such Business Day. Any Orders
received by the Company on such day but after the Close of Trading, and all
Orders that are transmitted to the Issuer after 9:00 p.m. Central time on such
Business Day, will be executed by the Issuer at the net asset value determined
as of the Close of Trading on the next Business Day following the day of
receipt of such Order. The day on which an Order is executed by the Issuer
pursuant to the provisions set forth above is referred to herein as the
"Effective Trade Date".
(b) By 5:30 p.m. Central time on each Business Day, Investors
Research will provide to the Company via facsimile or other electronic
transmission acceptable to the Company the Fund's net asset value, dividend and
capital gain information and, in the case of income funds, the daily accrual
for interest rate factor (mil rate), determined at the Close of Trading.
(c) By 9:00 p.m. Central time on each Business Day, the Company
will provide to Investors Research via facsimile or other electronic
transmission acceptable to Investors Research a report stating whether the
Orders received by the Company from Contract owners by the Close of Trading on
such Business Day resulted in the Account being a net purchaser or net seller
of shares of the Fund.
(d) Upon the timely receipt from the Company of the report
described in (c) above, Investors Research will execute the purchase or
redemption transactions (as the case may be) at the net asset value computed as
at the Close of Trading on the Effective Trade Date. Payment for net purchase
transactions shall be made by wire transfer by the Company to the custodial
account designated by the Fund on the Business Day next following the effective
Trade Date. Payments for net redemption transactions shall be made by wire
transfer by the Issuer to the account designated by the Company within the time
period set forth in the Fund's then-current prospectus; provided, however,
Investors Research will use all reasonable efforts to settle all redemptions on
the Business Day next following the Effective Trade Date. 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 and the Effective Trade Date will apply.
2
51
4. PROSPECTUS AND PROXY MATERIALS.
(a) Investors Research shall provide to the shareholder of record
copies of the Issuer's proxy materials, periodic fund reports to shareholders
and other materials that are required by law to be sent to the Issuer's
shareholders. In addition, Investors Research shall provide the Company with a
sufficient quantity of prospectuses of the Fund to be used in conjunction with
the transactions contemplated by this Agreement, together with such additional
copies of the Issuer's prospectuses as may be reasonably requested by Company.
If the Company provides for pass-through voting by the Contract owners,
Investors Research will provide the Company with a sufficient quantity of proxy
materials for each Contract owner.
(b) The cost of preparing, printing and shipping of the
prospectuses, proxy materials, periodic fund reports and other materials of the
Issuer to the Company shall be paid by Investors Research; provided, however,
that if at any time Investors Research or its agent reasonably deems the usage
by the Company of such items to be excessive, it may, prior to the delivery of
any quantity of materials in excess of what is deemed reasonable, request that
the Company demonstrate the reasonableness of such usage. If the Investors
Research believes the reasonableness of such usage has not been adequately
demonstrated, it may request that the Company pay the cost of printing
(including press time) and delivery of any excess copies of such materials.
Unless the Company agrees to make such payments, Investors Research may refuse
to supply additional materials and this section shall not be interpreted as
requiring delivery by Investors Research or Issuer of any copies in excess of
the number of copies required by law.
(c) The cost of distribution, if any, of any prospectuses, proxy
materials, periodic fund reports and other materials of the Issuer to the
Contract owners shall be paid by the Company and shall not be the
responsibility of Investors Research or the Issuer.
5. COMPENSATION AND EXPENSES.
(a) The Company shall be the sole shareholder of Fund shares
purchased pursuant to this Agreement (the "Record Owners"). The Company and
the Record Owners shall properly complete any applications or other forms
required by Investors Research or the Issuer.
(b) Investors Research acknowledges that it will derive a
substantial savings in administrative expenses, such as a reduction in expenses
related to postage, shareholder communications and recordkeeping, by virtue of
having a single shareholder account for the Account rather than having each
Contract owner as a shareholder. In consideration of the Administrative
Services and performance of all other obligations under this Agreement by the
Company, Investors Research will pay the Company a fee (the "Administrative
Services fee") equal to 20 basis points (0.20%) per annum of the average
aggregate amount invested by the Company under this Agreement, commencing with
the month in which the average aggregate market value of investments by the
Company (on behalf of the Contract owners) in the Fund exceeds $10 million. No
payment obligation shall arise until the Company's average aggregate investment
in the Fund reaches $10 million, and such payment obligation, once commenced,
shall
3
52
be suspended with respect to any month during which the Company's average
aggregate investment in the Fund drops below $10 million.
(c) The parties understand that Investors Research customarily
pays, out of its management fee, another affiliated corporation for the type of
administrative services to be provided by the Company to the Contract owners.
The parties agree that the payments by Investors Research to the Company, like
Investors Research's payments to its affiliated corporation, are for
administrative services only and do not constitute payment in any manner for
investment advisory services or for costs of distribution.
(d) For the purposes of computing the payment to the Company
contemplated by this SECTION 5, the average aggregate amount invested by the
Account in the Fund over a one month period shall be computed by totalling the
Company's aggregate investment (share net asset value multiplied by total
number of shares of the Fund held by the Company) on each Business Day during
the month and dividing by the total number of Business Days during such month.
(e) Investors Research will calculate the amount of the payment to be
made pursuant to this SECTION 5 at the end of each calendar quarter and will
make such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by Investors Research for the relevant month and such other
supporting data as may be reasonably requested by the Company.
(f) In the event Investors Research reduces its management fee
with respect to the Fund after the date hereof, Investors Research may amend
the Administrative Services fee payable with regard to such Fund by providing
the Company 30 days' advance written notice of any such adjustment. The
revised Administrative Services fee shall become effective as of the latter of
30 days from the date of delivery of the notice or the date prescribed in the
notice.
6. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants that: (i) this Agreement
has been duly authorized by all necessary corporate action and, when executed
and delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
CG Variable Life Insurance Separate Account A (the "Account"), which is a
separate account under Connecticut Insurance law, and has registered the
Account as a unit investment trust under the 1940 Act to serve as an investment
vehicle for the Contracts; (iii) each Contract provides for the allocation of
net amounts received by the Company to the Account for investment in the shares
of one of more specified investment companies selected among those companies
available through the Account to act as underlying investment media; (iv)
selection of a particular investment company is made by the Contract owner
under a particular Contract, who may change such selection from time to time in
accordance with the terms of the applicable Contract; and (v) the activities of
the Company contemplated by this Agreement comply with all provisions of
federal and state insurance, securities, and tax laws applicable to such
activities.
4
53
(b) Investors Research represents that: (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of
Investors Research and Issuer, enforceable in accordance with its terms; and
(ii) the investments of the Fund will at all times be adequately diversified
within the meaning of Section 817(h) of the Internal Revenue Service Code of
1986, as amended (the "Code"), and the regulations thereunder, and that at all
times wile this Agreement is in effect, all beneficial interests in the Fund
will be owned by one or more insurance companies or by any other party
permitted under Section 1.817-5(f)(3) of the Regulations promulgated under the
Code.
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and
state laws applicable to its respective activities under this Agreement.
(b) Each party shall promptly notify the other parties in the
event that it is, for any reason, unable to perform any of its obligations
under this Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to the Account on any Business Day
will be based upon instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange on that Business Day.
(d) The Company agrees to make every reasonable effort to market
its Contracts. It will use its best efforts to give equal emphasis and
promotion to shares of the Fund as is given to other underlying investments of
the Account.
(e) The Company shall not, without the written consent of
Investors Research, make representations concerning the Issuer or the shares of
the Fund except those contained in the then-current prospectus and in current
printed sales literature approved by Investors Research or the Issuer.
(f) Advertising and sales literature with respect to the Issuer or the
Fund prepared by the Company or its agents, if any, for use in marketing shares
of the Fund as underlying investment media to Contract owners shall be
submitted to Investors Research for review and approval before such material is
used.
(g) Investors Research will provide to the Company at least one
complete copy of all prospectuses, statements of additional information, annual
and semi-annual reports, proxy statements and all amendments or supplements to
any of the above that relate to the Fund promptly after the filing of such
document with the SEC or other regulatory authorities. Investors Research will
provide the Company at least one complete copy of the most recent registration
statement of the Issuer upon request.
5
54
(h) The Company will provide to Investors Research at least one
complete copy of all registration statements, prospectuses, statements of
additional information, annual and semi-annual reports, proxy statements, and
all amendments or supplements to any of the above that relate to the Account
promptly after the filing of such document with the SEC or other regulatory
authority.
8. USE OF NAMES. Except as otherwise expressly provided for in
this Agreement, neither Investors Research nor the Issuer shall use any
trademark, trade name, service xxxx or logo of the Company, or any variation of
any such trademark, trade name, service xxxx or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Issuer or Investors Research, or any variation of any such trademarks, trade
names, service marks, or logos, without the prior written consent of either the
Issuer or Investors Research, as appropriate, the granting of which shall be at
the sole option of Investors Research and/or the Issuer.
9. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to
all Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in SECTION 11(a) below) participating in the Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy
material furnished by Investors Research and will vote shares in accordance
with instructions received from such Contract owners. The Company shall vote
Fund shares for which no instructions have been received in the same proportion
as shares for which such instructions have been received. The Company and its
agents shall not oppose or interfere with the solicitation of proxies for Fund
shares held for such Contract owners.
10. INDEMNITY.
(a) Investors Research agrees to indemnify and hold harmless the
Company and its officers, directors, employees, agents, affiliates and each
person, if any, who controls the Company within the meaning of the Securities
Act of 1933 (collectively, the "Indemnified Parties" for purposes of this
SECTION 10(a)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses
(including legal and other expenses) (collectively, "Losses"), to which the
Indemnified Parties may become subject, insofar as such Losses result from a
breach by Investors Research of a material provision of this Agreement.
Investors Research will reimburse any legal or other expenses reasonably
incurred by the Indemnified Parties in connection with investigating or
defending any such Losses. Investors Research shall not be liable for
indemnification hereunder if such Losses are
6
55
attributable to the negligence or misconduct of the Company in performing its
obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless Investors
Research and the Issuer and their respective officers, directors, employees,
agents, affiliates and each person, if any, who controls the Issuer or
Investors Research within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this SECTION 10(b))
against any Losses to which the Indemnified Parties may become subject, insofar
as such Losses result from a breach by the Company of a material provision of
this Agreement. The Company will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with investigating
or defending any such Losses. The Company shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of Investors Research or the Issuer in performing their obligations
under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this SECTION 10. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish to,
assume the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this SECTION 10 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such
action, the indemnifying party shall not, without the prior written consent of
the indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to the
entry of any judgement in respect thereof, unless in connection with such
settlement, compromise or consent, each indemnified party receives from such
claimant an unconditional release from all liability in respect of such claim.
11. POTENTIAL CONFLICTS.
(a) The Company has received a copy of an application for
exemptive relief, as amended, filed by Investors Research on December 21, 1987,
with the SEC and the order issued by the SEC in response thereto (the "Shared
Funding Exemptive Order"). The Company has reviewed the conditions to the
requested relief set forth in such application for exemptive relief. As set
forth in such application, the Board of Directors of the Issuer (the "Board")
will monitor the Issuer for the existence of any material irreconcilable
conflict between the interests of the contract owners of all separate accounts
("Participating Companies") investing in funds of the
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Issuer. An irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance regulatory authority;
(ii) 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 actions by insurance, tax or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any portfolio
are being managed; (v) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract owners; or (vi) a
decision by an insurer to disregard the voting instructions of contract owners.
The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) 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.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in the Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the
Company is responsible for causing or creating said conflict, the Company shall
at its sole cost and expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Board members), 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 Fund 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 and as
appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract
owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to
the affected contract owners the option of making
such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw the
Account's investment in the Issuer and terminate this Agreement; provided,
however, that such withdrawal
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and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For the purpose of this SECTION 11, a majority of the
disinterested Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Issuer be required to establish a new funding medium for any Contract.
The Company shall not be required by this SECTION 11 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.
12. TERMINATION. This agreement shall terminate as to the sale
and issuance of new Contracts:
(a) at the option of either the Company, Investors Research or the
Issuer upon six months' advance written notice to the other;
(b) at the option of the Company if the Fund's shares are not
available for any reason to meet the requirement of Contracts as determined by
the Company. Reasonable advance notice of election to terminate shall be
furnished by Company;
(c) at the option of either the Company, Investors Research or the
Issuer, upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, the Company, or the Issuer
by the National Association of Securities Dealers, Inc. (the "NASD"), the SEC
or any other regulatory body;
(d) upon termination of the Management Agreement between the
Issuer and Investors Research. Notice of such termination shall be promptly
furnished to the Company. This SUBSECTION (d) shall not be deemed to apply if
contemporaneously with such termination a new contract of substantially similar
terms is entered into between the Fund and Investors Research;
(e) upon the requisite vote of Contract owners having an interest
in the Issuer to substitute for the Issuer's shares the shares of another
investment company in accordance with the terms of Contracts for which the
Issuer's shares had been selected to serve as the underlying investment medium.
The Company will give 60 days' written notice to the Issuer and Investors
Research of any proposed vote to replace the Fund's shares;
(f) upon assignment of this Agreement unless made with the written
consent of all other parties hereto;
(g) if the Issuer's shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Fund shares as an
underlying investment medium of Contracts issued or to be issued by the
Company. Prompt notice shall be given by either party should such situation
occur; or
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(h) at the option of the Issuer, if the Issuer reasonably
determines in good faith that the Company is not offering shares of the Fund in
conformity with the terms of this Agreement or applicable law.
(i) at the option of any party hereto upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order.
13. CONTINUATION OF AGREEMENT. Termination as the result of any
cause listed in SECTION 12 shall not affect the Issuer's obligation to furnish
its shares to Contracts then in force for which its shares serve or may serve
as the underlying medium unless such further sale of Fund shares is proscribed
by law or the SEC or other regulatory body.
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees
that this Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
15. SURVIVAL. The provisions of SECTION 8 (use of names) and
SECTION 10 (indemnity) of this Agreement shall survive termination of this
Agreement.
16. AMENDMENT. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally, or sent by
telex, telecopier, express delivery or registered or certified mail, postage
prepaid, return receipt requested, to the party or parties to whom they are
directed at the following addresses, or at such other addresses as may be
designated by notice from such party to all other parties.
To the Company:
Connecticut General Life Insurance Company
Two Liberty Place
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
(000) 000-0000 (telephone number)
(000) 000-0000 (telecopy number)
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To the Issuer or Investors Research:
Twentieth Century Mutual Funds
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
(000) 000-0000 (telephone number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
without the written consent of all parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement, including the Attachments
hereto, constitutes the entire agreement between the parties with respect to
the matters dealt with herein, and supersedes all previous agreements, written
or oral, with respect to such matters.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date set forth above.
CONNECTICUT GENERAL LIFE INVESTORS RESEARCH CORPORATION
INSURANCE COMPANY
By: /s/ XXXX X. XXXXXXX By: /s/ XXXXXXX X. XXXXX
---------------------------- -----------------------------
Name: Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxx
-------------------------- Executive Vice President
Title: Vice President
-------------------------
TCI PORTFOLIOS, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President
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