EXHIBIT 8 (i)
PARTICIPATION AGREEMENT
AMONG
PIONEER VARIABLE CONTRACTS TRUST
OM FINANCIAL LIFE INSURANCE COMPANY
PIONEER INVESTMENT MANAGEMENT, INC.
AND
PIONEER FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT, made and entered into this 10th day of January, 2007 (the
"Agreement"), by and among PIONEER VARIABLE CONTRACTS TRUST, a Delaware business
trust (the "Trust"), OM FINANCIAL LIFE INSURANCE COMPANY, a Maryland life
insurance company (the "Company") on its own behalf and on behalf of each of the
segregated asset accounts of the. Company set forth in Schedule A hereto, as may
be amended from time to time (the "Accounts"), PIONEER INVESTMENT MANAGEMENT,
INC., a Delaware corporation ("PIM") and PIONEER FUNDS DISTRIBUTOR, INC.
("PFD"), a corporation organized under the laws of The Commonwealth of
Massachusetts. PIM and PFD are members of the UniCredito Italiano banking group,
register of banking groups.
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act
of 1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series and classes of shares, each series being designated a
"Portfolio" and representing an interest in a particular managed pool of
securities and other assets;
WHEREAS, the Trust is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts to be offered by insurance companies, including OM
FINANCIAL Life Insurance Company, which have entered into participation
agreements with the Trust substantially similar to this Agreement (the
"Participating Insurance Companies");
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "SEC"), dated July 9, 1997 (File No. 812-10494) (the
"Mixed and Shared Funding Exemptive Order") 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 Trust to be sold to and held by variable
annuity and variable life insurance companies that mayor may not be affiliated
with one another and qualified pension and retirement plans ("Qualified
Plans");
WHEREAS, PIM is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
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WHEREAS, the Company will issue certain variable annuity and/or
variable life insurance contracts set forth on Schedule A (individually, the
"Contract" or, collectively, the "Contracts") interests under which, if
required by applicable law, will be registered under the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the Contracts that are
allocated to the Accounts;
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, PFD is registered as a broker-dealer with the Securities and
Exchange Commission (the "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. (the "NASD") and is authorized
to sell shares of the Designated Portfolios to unit investment trusts such as
the Accounts;
WHEREAS, Old Mutual Financial Network Securities, Inc. ("Policy
Underwriter"), the underwriter for the variable annuity and the variable life
policies, is registered as a broker-dealer with the SEC under the 1934 Act and
is a member in good standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares (the "Shares") in one or
more of the Designated Portfolios specified in Schedule A attached hereto (the
"Designated Portfolios") on behalf of the Accounts to fund the Contracts, and
PFD intends to sell such Shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
PIM, PFD and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. PFD and the Company agree to provide pricing information, execute
orders and wire payments for purchases and redemptions of Trust shares
as set forth in this Article I until such time as they mutually agree in
writing to utilize the National Securities Clearing Corporation
("NSCC"). Upon such mutual agreement, PFD and the Company agree to
provide pricing information, execute orders and wire payments for
purchases and redemptions of Trust shares through NSCC and its
subsidiary systems as set forth in Exhibit I.
1.2 Trust, through PFD, agrees to sell to the Company those Shares of
the Designated Portfolios which the Accounts order in accordance with
the terms of this Agreement (based on orders placed by Contract owners
or participants on that Business Day, as defined below) executing such
orders on a daily basis at the net asset value (and with no sales
charge) next computed after receipt by the Trust or its designee of the
order for the Shares. For purposes of this Section 1.2, the Company
shall be the designee of the Trust for receipt of such orders from
Contract owners or participants and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust or its designee
receives written (or facsimile) notice of such orders by 11:00 am
Eastern Time on the next following Business Day (or such later time as
permitted by Section 1.10 hereof). "Business Day" shall mean any day on
which the New York Stock Exchange, Inc. (the "NYSE") is open for trading
and on which the Trust calculates its net asset value pursuant to the
rules of the SEC.
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1.3. PFD agrees to make the Shares available for purchase continuously
at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its Designated
Portfolio net asset value in accordance with the rules of the SEC and
the Trust shall calculate such net asset value on each day the NYSE is
open for regular trading. Notwithstanding the foregoing, the Board of
Trustees of the Trust (the "Board") may refuse to sell any Shares of any
Designated Portfolio to the Company and the Accounts, or suspend or
terminate the offering of the Shares of any Designated Portfolio to the
Company and the Accounts if such action is required by law or by
regulatory authorities having jurisdiction over PIM, PFD or the Trust or
is, in the sole discretion of the Board acting in good faith and in
light of its fiduciary duties under federal and any applicable state
laws, in the best interest of the Shareholders of such Designated
Portfolio.
1.4. The Trust and PFD will sell Trust shares only to Participating
Insurance Companies and Qualified Plans which have agreed to participate
in the Trust to fund their Separate Accounts and/or Qualified Plans all
in accordance with the requirement of Section 817(h) of the Internal
Revenue Code, as amended (the "Code") and the Treasury regulations
thereunder. The Company will not resell the Shares except to the Trust
or its agents.
1.5. The Trust agrees, upon the Company's request, to redeem for cash,
any full or fractional Shares held by the Accounts (based on orders
placed by Contract ownerso on that Business Day), executing such
requests on a daily basis at the net asset value next computed after
receipt by the Trust or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the
Trust for receipt of requests for redemption from Contract owners or
participants and receipt by such designee shall constitute receipt by
the Trust; provided that the Trust or its designee receives written (or
facsimile) notice of such request for redemption by 11:00 am Eastern
Time on the next following Business Day (or such later time as permitted
by Section 1.1 0 hereof).
1.6. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Designated Portfolio and shall not
be netted with respect to any Designated Portfolio. However, with
respect to payment of the purchase price by the Company and of
redemption proceeds by the Trust, the Company and the Trust shall net
purchase and redemption orders with respect to each Designated Portfolio
and shall transmit one net payment for all of the Designated Portfolios
in accordance with Section 1.7 hereof.
1.7. In the event of net purchases, the Company shall pay for the net
purchase order of Shares by 2:00 p.m. Eastern Standard Time ("EST") on
the next Business Day after an order to purchase the Shares is made in
accordance with the provisions of Section 1.2. hereof (or such later
time as permitted by Section 1.10 hereof). Company shall transmit all
such payments in federal funds by wire to the Trust or its custodial
account. Upon receipt by the Trust of the payment, such funds shall
cease to be the responsibility of the Company and shall become the
responsibility of the Trust. If payment in federal funds for any
purchase is not received or is received by the Trust after 2:00 p.m. EST
on such Business Day, the Company shall promptly, upon the Trust's
request, reimburse the Trust for any reasonable charges, costs, fees,
interest or other expenses incurred by the Trust in connection with any
required advances to, or borrowings or overdrafts by, the Trust, or any
similar expenses (including the cost of and any loss incurred by the
Trust in unwinding any purchase of securities by the Trust) incurred by
the Trust as a result of Designated Portfolio transactions effected by
the Trust based upon such purchase request. In the event of net
redemptions, the Trust shall pay and transmit the proceeds of net
redemption of Shares by wiring federal funds to the
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Company or its designated custodial account by 2:00 p.m. EST on the next
Business Day after a redemption order is received from the Company in
accordance with Section 1.5. hereof. After consulting with the Company,
the Trust reserves the right to postpone the date of payment or
satisfaction upon redemption consistent with Section 22( e) of the 1940
Act and any rules pomulgated thereunder, provided that in no event may
any such delay by the Trust in paying redemption proceeds cause the
Company or any Account to fail to meet its obligations under Section
22(e) of the 1940 Act. Upon receipt by the Company of the payment, such
funds shall cease to be the responsibility of the Trust and shall become
the responsibility of the Company.
1.8. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts.
The Shares ordered from the Trust will be recorded in an appropriate
title for the Accounts or the appropriate subaccounts of the Accounts.
1.9. The Trust shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of
any income, dividends or capital gain distributions payable on the
Shares of a Designated Portfolio. The Company hereby elects to receive
all such income, dividends and distributions as are payable in
additional Shares of that Designated Portfolio at the ex-dividend net
asset values. The Company reserves the right to revoke this election and
receive all such income, dividends and distributions in cash. The Trust
shall notify the Company by the end of the next following Business Day
of the number of Shares so issued as payment of such income,
dividends-and distributions.
1.10. The Trust or its custodian shall make the net asset value per
share for each Designated Portfolio available to the Company via
electronic means on each Business Day as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 6:00 p.m.
New York time. In the event the Trust is unable to meet the 6:00 p.m.
time stated herein, it shall provide additional time for the Company to
place orders for the purchase and redemption of Trust Shares and wire
net payments for the purchase of Trust Shares. Such additional time
shall be equal to the additional time which the Trust takes to make the
net asset value available to the Company. In the event of an error in
the computation or reporting of a Designated Portfolio's net asset value
per share ("NAV") or any dividend or capital gain distribution (each, a
"pricing error"), PIM or the Trust shall notify the Company as soon as
possible after the discovery of the error. Such notification may be
verbal, but shall be confirmed promptly in writing in accordance with
Article XII of this Agreement. A pricing error shall be corrected in
accordance with the Trust's internal policies and procedures. If the
Trust provides the Company materially incorrect net asset value per
share information (as determined under SEC guidelines), the Trust shall
adjust the number of Shares of the applicable Account or the Company to
reflect the correct net asset value per share, and the amount of any
underpayments will be paid by PIM to the Company for crediting of such
amounts to the Contract owners' or the Company's accounts. Upon
notification by PIM of any overpayment due to a material error, the
Company shall use its best efforts to, at Adviser's cost, promptly remit
to the Trust or PIM, as appropriate, any overpayment that has not been
paid to Contract owner; however, PIM acknowledges that the Company does
not intend to seek additional payments from any Contract owner who,
because of a pricing error, may have underpaid for units of interest
credited to his/her account. The costs of correcting such errors shall
be borne by the PIM and PIM shall reimburse the Company for any expenses
incurred related to correction of the net asset value (including
correcting Contract owners accounts).
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1.11. The Trust will not sell Trust Shares to any insurance company or
separate account unless an agreement containing provisions substantially
the same as Articles I, III, V, VI and VII of this Agreement, and
Sections 2.1 and 2.2 of Article II are in effect to govern such sales.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that interests under the
Contracts are or will be registered under the 1933 Act or are exempt
from or not subject to registration thereunder, and that the Contracts
will be issued, sold, and distributed in compliance in all material
respects with all applicable state and federal laws, including without
limitation the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the 1940 Act. The Company further represents and
warrants that it (i) is an insurance company duly organized and in good
standing under applicable law; (ii) has legally and validly established
each Account as a segregated asset account under applicable law; (iii)
has registered or, prior to any issuance or sale of the Contracts, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Contracts, and (iv) will maintain
such registration for so long as any Contracts are outstanding. The
Company shall amend the registration statements under the 1933 Act for
the Contracts and the registration statements under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable
law. The Company shall register and qualify the Contracts for sales in
accordance with the securities laws of the various states only if and to
the extent deemed necessary by the Company. At the time the Company is
required to deliver the Trust's prospectus to a purchaser of Shares in
accordance with the requirements of federal or state securities laws,
provided the Trust has timely provided the current Trust prospectus as
supplemented in sufficient quantity as required by Section 3.1 hereof,
the Company shall distribute to such Contract purchasers the then
current Trust prospectus, as supplemented as described in Section 3.1
hereof.
2.2. The Company represents and warrants that the Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code,
that it will make every effort to maintain such treatment and that it
will notify the Trust or PIM 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; provided, however, that the
Company makes no representation or undertaking regarding any Contract to
the extent such representation or undertaking is dependent on compliance
by any investment vehicle in which the Company or an Account may invest
with the requirements of Subchapter M or Section 817(h) of the Code, the
regulations thereunder, or any successor provision or regulation.
2.3. The Company represents and warrants that Policy Underwriter, the
underwriter for the individual variable annuity contracts and the
variable life policies, is a member in good standing of the NASD and is
a registered broker-dealer with the SEC. The Company represents and
warrants that the Company and Policy Underwriter will sell and
distribute such contracts and policies in accordance in all material
respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940
Act and state insurance law suitability requirements.
2.4. The Trust and PIM represent and warrant that the Shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance in compliance with applicable law and that the
Trust is and shall remain registered as an open-end management
investment company under the 0000 Xxx. The Trust shall
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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 Trust shall register and qualify
the Shares for sale in accordance with the laws of the various states
only if and to the extent deemed necessary by the Trust.
2.5. The Trust and PIM represent and warrant that the Trust is lawfully
organized and validly existing under the laws of the State of Delaware
and that the Trust does and will comply in all material respects with
applicable provisions of the 1940 Act and any applicable regulations
thereunder. The Trust further represents that it has adopted a plan
pursuant to Rule 12b-l under the 1940 Act and imposes an asset-based
charge to finance its distribution expenses with respect to the Class II
shares of certain of the Trust's Designated Portfolios as permitted by
applicable law and regulation.
2.6. PFD represents and warrants that (i) it is lawfully organized and
validly existing under the laws of its state of organization; and (ii)
it is a member in good standing of the NASD and is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended (the
"1934 Act") and will remain duly registered under all applicable federal
and state securities laws. PFD represents and warrants that it serves as
principal underwriter/distributor of the Trust and will perform its
obligations for the Trust in accordance in all material respects with
all applicable state and federal securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.7. PIM represents and warrants that (i) it is lawfully organized and
validly existing under the laws of its state of organization; and (ii)
it is and shall remain duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and under all
applicable federal and state securities laws; and that it will perform
its obligations for the Trust in accordance in all material respects
with the laws of all applicable state and federal securities laws.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably request
so that it may carry out fully the obligations imposed upon it by the
conditions contained in the Mixed and Shared Funding Exemptive Order
pursuant to which the SEC has granted exemptive relief to permit mixed
and shared funding.
2.9. The Trust and PIM represent and warrant that all of their
respective directors/trustees, officers, employees, investment advisers,
and other individuals or entities having access to the money and/or
securities of the Trust are, and shall continue to be at all times,
covered by one or more blanket fidelity bonds or similar coverage for
the benefit of the Trust in an amount not less than the minimal coverage
required by Rule 17 g-l under the 1940 Act or related provisions as may
be promulgated form time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company represents and warrants that all of its
respective officers, employees, and other individuals or entities
employed or controlled by the Company dealing with the money and/or
securities of the Trust are, and shall continue to be at all times,
covered by a blanket fidelity bond or similar coverage in an amount
deemed appropriate by the Company. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to
maintain such bond and agrees to notify the Trust and PIM in writing in
the event such coverage terminates.
2.10. The Trust and PIM represent that the Trust will use its best
efforts to comply with the laws of its state of domicile, and, to the
extent specifically requested in writing by the Company, any
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other applicable state insurance laws or regulations as they may apply
to the investment objectives, policies and restrictions of the
Designated Portfolios, as they may apply to the Trust. If the Trust
cannot comply with such state insurance laws or regulations, it will so
notify the Company in writing. The Company represents that it will use
its best efforts to notify the Trust of any restrictions imposed by
state insurance laws that may become applicable to the Trust as a result
of the Accounts' investments therein. The Trust and PIM agree that, upon
request, they will furnish the information required by state insurance
laws to assist the Company in obtaining the authority needed to issue
the Contracts in various states.
2.11 The Company represents and warrants that each Account is a
"segregated asset account" and that interests in the Account are offered
exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code
and the regulations thereunder; provided, however, that the Company
makes no representation or undertaking regarding any Contract to the
extent such representation or undertaking is dependent on compliance by
any investment vehicle in which the Company or an Account may invest
with the requirements of Subchapter M or Section 817(h) of the Code, the
regulations thereunder, or any successor provision or regulation. The
Company will use every effort to continue to meet such definitional
requirements, and it will notify the Trust, PFD and PIM immediately upon
having a reasonable basis for believing that such requirements have
ceased to be met or that they might not be met in the future. The
Company represents and warrants that it will not purchase Trust shares
with assets derived from tax-qualified retirement plans exc.ept,
indirectly, through Contracts purchased in connection with such plans.
ARTICLE ILL. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually (or in the case of a prospectus supplement, when
that supplement is issued), the Trust or its designee shall timely
provide the Company, free of charge, with as many copies of the current
prospectus for the Shares (describing only the Designated Portfolios
listed in Schedule A hereto) and any supplements thereto as the Company
may reasonably request for distribution, at the Trust's expense, to
existing Contract owners whose Contracts are funded by such Shares. The
Trust or its designee shall provide the Company, at the Company's
expense, with as many copies of the current prospectus for the Shares
(describing only the Designated Portfolios listed in Schedule A hereto)
and any supplements thereto as the Company may reasonably request for
distribution to prospective purchasers of Contracts. If requested by the
Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as
set in type or, at the request of the Company, as a diskette in the form
sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended)
to have the prospectus for the Contracts and the prospectus for the
Shares printed together in one document; the expenses of such printing
to be apportioned between (a) the Company and (b) the Trust or its
designee in proportion to the number of pages of the Contract and
Shares' prospectuses, taking account of other relevant factors affecting
the expense of printing, such as covers, columns, graphs and charts; the
Trust or its designee to bear the cost of printing the Trust's
prospectus portion of such document for distribution to owners of
existing Contracts funded by the Shares and the Company to bear the
expenses of printing the portion of such document relating to the
Accounts; provided, however, that the Company shall bear all printing
expenses of such combined documents where used for distribution to
prospective purchasers or to owners of existing Contracts not funded by
the Shares. In the event that the Company requests that the Trust or its
designee provides the Trust's prospectus in a "camera ready," diskette
format or other mutually agreed upon format, the Trust shall be
responsible for providing the prospectus in the
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format in which it or PIM is accustomed to formatting prospectuses and
shall bear the expense of providing the prospectus in such format (e.g.,
typesetting expenses), and the Company shall bear the expense of
adjusting or changing the format to confirm with any of its
prospectuses, subject to PIM's approval which shall not be unreasonably
withheld. Notwithstanding the foregoing, the Trust shall also provide
the Company, at the Trust's expense, no less frequently than annually,
copies of the Designated Portfolios prospectuses in PDF format for use
on the Company's and/or affiliated producer's websites.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall print and
provide to the Company with as many copies of such statement of
additional information and any and any supplements thereto as the
Company may reasonably request for distribution, at the Trust's expense,
to any owner of a Contract funded by the Shares. To the extent that the
Designated Portfolio(s) are one or more of several Portfolios of the
Trust, the Trust shall bear the cost of providing the Company only with
disclosure related to the Designated Portfolio(s). The Trust shall also
provide such statement of additional information to the Company in a
mutually agreed upon electronic format. The Trust or its designee, at
the Company's expense, shall print and provide such statement to the
Company (or a master of such statement suitable for duplication by the
Company) for distribution to a prospective purchaser who requests such
statement or to an owner of a Contract not funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge,
if and to the extent applicable to the Shares, copies of the Trust's
proxy materials, reports to Shareholders and other communications to
Shareholders in such quantity as the Company shall reasonably require
for distribution to Contract owners. The cost of distributing such
documents shall be borne by the Trust or its designee.
3.4 The Trust or PIM will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated
Portfolio, and of any material change in the Trust's registration
statement, particularly any change resulting in change to the
registration statement or prospectus or statement of additional
information for any Account. The Trust and PIM will cooperate with the
Company so as to enable the Company to solicit proxies from Contract
owners or to make changes to its prospectus, statement of additional
information or registration statement, in an orderly manner. The Trust
and PIM will make reasonable efforts to attempt to have changes
affecting Contract prospectuses become effective simultaneously with the
annual updates for such prospectuses.
3.5. The Trust hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which a Contract is offered
disclosure regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Shares of the Designated Portfolios held in the Account
in accordance with instructions received from Contract owners;
and
(c) vote the Shares of the Designated Portfolios held in the Account
for which no instructions have been received in the same
proportion as the Shares of such designated Portfolio for which
instructions have been received from Contract owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable contract
owners. The Company reserves the right to vote 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 holding Shares calculates voting
privileges in the manner required by the Mixed and Shared Funding
Exemptive Order. The Trust and PIM will notify the Company of any
changes of interpretations or amendments to the Mixed and Shared Funding
Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to PFD
or its designee, each piece of sales literature or other promotional
material in which the Trust, PIM, or any affiliate of PIM are named, at
least five (5) Business Days prior to its use. No such material shall be
used if PFD or its designee reasonably objects to such use within five
(5) Business Days after receipt of such material. PFD or its designee
shall notify the Company within five (5) Business Days of receipt of its
approval or disapproval of such materials.
4.2. The Company shall not make any representation on behalf of the
Trust or PIM, and shall not give any information on behalf of the Trust
or PIM or concerning the Trust in connection with the sale of the
Contracts other than the information contained in the registration
statement, prospectus or statement of additional information for the
Shares, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales literature
or other promotional material approved by the Trust, PIM, PFD or their
respective designees, except with the permission of the Trust, PIM or
their respective designees. The Trust, PIM, PFD or their respective
designees each agrees to respond to any request for approval on a prompt
and timely basis. The Company shall adopt and implement procedures
reasonably designed to ensure that information concerning the Trust,
PIM, PFD or any of their affiliates which is intended for use only by
brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Contract owners or prospective Contract
owners) is so used, and neither the Trust, PIM, PFD nor any of their
affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
4.3. PFD 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 the Accounts is named, at least
five (5) Business Days prior to its use. No such material shall be used
if the Company or its designee reasonably objects to such use within
five (5) Business Days after receipt of such material. The Company shall
notify PFD within five (5) Business Days of receipt of its approval or
disapproval of such materials.
4.4. The Trust, PIM and PFD shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts other than the information or representations
contained in a registration statement, prospectus, or statement of
additional information for the Contracts, as such registration
statement, prospectus and statement of additional information may be
amended or supplemented from time to time, or in published reports for
the Accounts which are in the public domain, or in sales literature or
other promotional
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material approved by the Company or its designee, except with the
written permission of the Company. The Company or its designee agrees to
respond to any request for approval on a prompt and timely basis. The
parties hereto agree that this Section 4.4. is neither intended to
designate nor otherwise imply that PIM is an underwriter or distributor
of the Contracts.
4.5. The Company and the Trust shall provide, or shall cause to be
provided, to the other at least one complete copy of all registration
statements, prospectuses, statements of additional information, reports,
proxy statements, sales literature and other promotional materials, and
all amendments to any of the above, that relate to the Contracts, or to
the Trust or its Shares, prior to or contemporaneously with the filing
of such document with the SEC or other regulatory authorities.
4.6. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone,
electronic messages or tape recording, videotape display, signs or
billboards, motion pictures, or other public media, including, for
example, on-line networks such as the Internet or other electronic
media), and sales literature (such as brochures, electronic messages,
circulars, reprints or excerpts or any other advertisement, sales
literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials
or communications distributed or made generally available to some or all
agents or employees, and shareholder reports, proxy materials (including
solicitations for voting instructions) and any other material
constituting sales literature or advertising under the NASDR Conduct
Rules, the 1933 Act or the 1940 Act. However, such phrase "sales
literature or other promotional material" shall not include any material
that simply lists the names of Designated Portfolios of the Trust in a
list of investment options.
4.7. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records,
data, access to operating procedures that may be reasonably requested in
connection with compliance and regulatory requirements related to the
Agreement or any party's obligations under this Agreement.
4.8 Subject to the terms of Sections 4.1 and 4.2 of this Agreement, the
Trust (and its Designated Portfolios), PIM and PFD hereby each consents
in connection with the marketing of the Contracts to the Company's use
of their names or other identifying marks, including PIONEER
INVESTMENTS(R) and Pioneer's sail logo, in connection with the marketing
of the Contracts. The Trust, PIM or PFD or their affiliates may withdraw
this authorization as to any particular use of any such name or
identifying xxxx at any time: (i) upon a reasonable determination that
such use would have a material adverse effect on its reputation or
marketing efforts or its affiliates or (ii) if any of the Designated
Portfolios of the Trust cease to be available through the Company.
ARTICLE V. FEES AND EXPENSES
5.1. Neither the Trust, PIM nor PFD xxxXx pay any fee or other
compensation to the Company under this Agreement, other than pursuant to
Schedule B attached hereto, and the Company xxxXx pay no fee or other
compensation to the Trust, PIM or PFD under this Agreement.
Notwithstanding the foregoing, the parties hereto will bear certain
expenses under the provisions of
10
this Agreement and shall reimburse other parties for expenses initially
paid by one party but allocated to another party. In addition, nothing
herein shall prevent the parties hereto from otherwise agreeing to
perform, and arranging for appropriate compensation for, other services
relating to the Trust and/or to the Accounts pursuant to this Agreement.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable
federal and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration
fees; preparation and filing of the Trust's proxy materials and reports
to Shareholders; setting in type and printing its prospectus and
statement of additional information (to the extent provided by and as
determined in accordance with Article III above); setting in type and
printing the proxy materials and reports to Shareholders (to the extent
provided by and as determined in accordance with Article III above); the
preparation of all statements and notices required of the Trust by any
federal or state law with respect to its Shares; all taxes on the
issuance or transfer of the Shares; and the costs of preparing and
distributing the Trust's prospectuses, reports to Shareholders and proxy
materials to owners of Contracts and participants funded by the Shares
and any expenses permitted to be paid or assumed by the Trust pursuant
to a plan, if any, under Rule 12b-l under the 0000 Xxx.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses to prospective Contract owners. The Company
shall bear all expenses associated with the registration, qualification,
and filing of the Contracts under applicable federal securities and
state insurance laws; the cost of preparing, printing and distributing
the Contract prospectus and statement of additional information; and the
cost of preparing, printing and distributing annual individual account
statements for Contract owners as required by state insurance laws.
5.4. The Company agrees to provide certain administrative services,
specified in Schedule B attached hereto, in connection with the
arrangements contemplated by this Agreement. The parties intend that the
services referred to in Schedule B be recordkeeping, shareholder
communication, and other transaction facilitation and processing, and
related administrative services and are not the services of an
underwriter or principal underwriter of the Trust and the Company is not
an underwriter for Shares within the meaning of the 1933 Act.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and PIM represent and warrant that each Designated
Portfolio of the Trust in which an Account invests does and at all times
will meet the diversification requirements of Section 8l7(h)(1) of the
Code and any regulations thereunder applicable to variable contracts as
defined in Section 817( d) of the Code and any amendments or other
modifications or successor provisions to such Sections or regulations
(and any revenue rulings, revenue procedures, notices, and other
published announcements of the Internal Revenue Service interpreting
these sections or regulations), as if those requirements applied directly
to each such Designated Portfolio. The Trust will notify the Company
immediately upon having a reasonable basis for believing that a breach of
this Section 6.1 has occurred or might occur in the future, and (b) in
the event of such a breach, to adequately diversify the Designated
Portfolio so as to achieve compliance within the grace period afforded by
Treasury Regulation ss.1.817-5. fu addition, the Trust or PIM shall
immediately notify the Company if either the Trust or PIM becomes aware
that the Company may be precluded from "looking through" to the
investments of any Designated Portfolio, pursuant to the "look through"
rules found in Treasury Regulation 1.817-5.
11
6.2. The Trust and PIM represent and warrant that each Designated
Portfolio is currently qualified as a Regulated Investment Company under
Subchapter M of the Code and that they will maintain such qualification
(under Subchapter M or any successor or similar provision) and that no
other Participating Insurance Company will purchase shares in any
Designated Portfolio for any purpose or under any circumstances that
would preclude the Company from "looking through" to the investments of
each Designated Portfolio in which it invests, pursuant to the "look
through" rules found in Treasury Regulation 1.817-5. The Trust or PIM
will notify the Company immediately upon having a reasonable basis for
believing that any Designated Portfolio has ceased to so qualify or that
any might not so qualify in the future.
6.3. The Trust agrees that Shares of the Trust will be sold only to
Participating Insurance Companies and their separate accounts, qualified
pension and retirement plans. No Shares of the Trust will be sold
directly to the general public.
6.4 PIM agrees to provide the Company with a certificate or statement
indicating compliance by each Designated Portfolio of the Trust with
Section 817(h) of the Code, no later than thirty (30) days following
such Company request.
6.5. The Trust and PIM represent and warrant that the Trust is and shall
maintain compliance with Rule 38a-1 under the 1940 Act and PIM
represents and warrants that PIM is and shall maintain compliance with
Rule 206(4)-7 under the Advisers Act.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Designated Portfolio of the
Trust for the existence of any irreconcilable material conflict between
the interests of the variable annuity contract owners and the variable
life insurance policy owners of the Company and/or affiliated companies
("contract owners") investing in the Trust. 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 interpretive letter,
or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Designated
Portfolio are being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance contract
owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners. The Board shall
have the sole authority to determine if a material irreconcilable
conflict exists, and such determination shall be binding on the Company
only if approved in the form of a resolution by a majority of the Board,
or a majority of the disinterested trustees of the Board. The Board will
give prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set
forth in the Trust's exemptive application pursuant to which the SEC has
granted the Mixed and Shared Funding Exemptive Order by providing the
Board, as it may reasonably request, with all information necessary for
the Board to consider any issues raised and agrees that it will be
responsible for promptly reporting any potential or existing conflicts
of which it is aware to the Board including, but not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
12
The Company also agrees that, if a material irreconcilable conflict
arises, it will at its own cost and to the extent reasonably practicable
(as determined by a majority of the disinterested directors), take
whatever steps are necessary to remedy such conflict up to and including
(a) withdrawing the assets allocable to some or all of the Accounts from
the Trust or any Designated Portfolio and reinvesting such assets in a
different investment mediUll1, including (but not limited to) another
Designated Portfolio of the Trust, or submitting to a vote of all
affected contract owners whether to withdraw assets from the Trust or
any Designated Portfolio and reinvesting such assets in a different
investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners (E.G., annuity
contract owners, life insurance owners or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to any of the affected contract owners the
option of segregating the assets attributable to their contracts or
policies, and (b) establishing a new registered management investment
company and segregating the assets underlying the Contracts, unless a
majority of Contract owners affected by the conflict have voted to
decline the offer to establish a new registered management investment
company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately remedies
any material irreconcilable conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
material irreconcilable conflict, the Company will withdraw from
investment in the Trust each of the subaccounts of the Accounts
designated by the disinterested trustees and terminate this Agreement
within six (6) months after the Board informs the Company in writing of
the foregoing determination or such period as may be required to obtain
any necessary exemptive relief from the Commission with regard to the
substitution of underlying funds; provided, however, that such
withdrawal and termination shall be limited to the extent required to
remedy any such material irreconcilable conflict as determined by a
majority of the disinterested trustees of the Board.
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 Trust's election, to withdraw
the affected sub-account of the Account's investment in the Trust and
terminate this Agreement with respect to the sub-account; provided,
however, that such withdrawal and termination shall be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the Trust's independent trustees. Any such
withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being implemented
or such period as may be required to obtain any necessary exemptive
relief from the Commission with regard to the substitution of underlying
funds. Until the end of that period PFD and the Trust shall continue to
accept and implement orders by the Company for the purchase and
redemption of shares of the Trust.
7.5. If material irreconcilable conflict arises because of 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 sub-account of the Account's investment in the
Trust and terminate this Agreement with respect to the sub-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 Trust's
Board. Any such withdrawal and termination must take place within six
(6) months after the Trust gives written notice that this provision is
being implemented or such period as may be required to obtain any
necessary exemptive relief from the Commission with regard to the
substitution of underlying funds. Until the end of the foregoing period,
the Trust and PFD shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
13
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 material
irreconcilable conflict, but in no event will the Trust be required to
establish a new funding medium for the Contracts. The Company shall not
be required to establish a new funding medium for the contracts if an
offer to do so has been declined by vote of a majority of Contract
owners affected by the irreconcilable material conflict. In the event
that the Board determines that any proposed action does not adequately
remedy any material irreconcilable conflict, then the Company will
withdraw the Account's investment in the Trust 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 independent trustees.
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 1940 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
Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules
are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3 and 7.7 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 VID. INDEMNIFICATION
8.1. Indenmification by the Company
The Company agrees to indemnify and hold harmless the Trust, PIM,
and PFD, and each of their respective directors, trustees, officers and
each person, if any, who controls the Trust or PIM within the meaning of
Section 15 of the 1933 Act, and any agents or employees of the foregoing
(each an "Indemnified Party," or collectively, the "Indemnified Parties"
for purposes of this Section 8.1) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or actions in respect thereof
(including reasonable counsel fees) to which any Indemnified Party may
become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages, liabilities
or actions in respect thereof or settlements are related to the sale,
holding or acquisition of the Shares or the Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Contracts or contained in the Contracts or
sales literature or other promotional material 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 indenmify shall not apply as to any
Indenmified Party if such
14
statement or omission or such alleged statement or omission was
made in reasonable reliance upon and in conformity with
information furnished to the Company or its designee by or on
behalf of the Trust, PIM or PFD for use in the registration
statement, prospectus or statement of additional information for
the Contracts or in the Contracts or sales literature or other
promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Shares; or
(b) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Trust's registration statement,
prospectus, statement of additional information or in sales
literature or other promotional material of the Trust or any
amendment or supplement to the foregoing, not supplied by the
Company or its designee, and on which the Company has reasonably
relied) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the
Contracts or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Trust, 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 and in conformity with information furnished to
the Trust by or on behalf of the Company; or
(d) 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; or
(e) arise as a result of any failure by the Company to perform any
of its obligations under this Agreement;
as limited by and in accordance with the provisions of this Article
VIII.
8.2. Indemnification by the Trust, PIM and PFD
The Trust, PIM and PFD (PIM and PFD jointly and severally),
agree to indemnify and hold harmless the Company and Policy Underwriter
and each of their respective directors, trustees, officers and each
person, if any, who controls the Company or Policy Underwriter within
the meaning of Section 15 of the 1933 Act, and any agents or employees
of the foregoing (each an "Indemnified Party," or collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and
all losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or actions in
respect thereof (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses,
damages, liabilities or actions in respect thereof or settlements are
related to the sale, holding or acquisition of the Shares or the
Contracts and:
15
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement 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
reasonable reliance upon and in conformity with information
furnished to the Trust, PIM, PFD or their respective designees
by or on behalf of the Company for use in the registration
statement, prospectus or statement of additional information for
the Trust or in sales literature or other promotional material
for the Trust (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contract's registration statement, prospectus, statement of
additional information or in sales literature or other
promotional material for the Contracts not supplied by the
Trust, PIM, PFD or any of their respective designees or persons
under their respective control and on which any such entity has
reasonably relied) or wrongful conduct of the Trust, PIM, PFD or
persons under their control, with respect to the sale or
distribution of the Contracts or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Accounts or
relating to 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
Trust, PIM or PFD; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in 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 arise
out of or result from any other material breach of this
Agreement by the Trust; or
(e) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate;
(f) arise out of or result from any material breach of any
representation and/or warranty made by the Trust, PIM or PDF in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Trust, PIM or PDF; or
(g) arise as a result of any failure by the Trust, PIM or PFD to
perform any of their respective obligations under this
Agreement;
16
as limited by and in accordance with the provisions of this Article
Vill.
8.3. In no event shall the Trust, PIM: or PFD be liable under the
indemnification provisions contained in this Agreement to any
Indemnified Parties, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from (i) a breach of
any representation, warranty, and/or covenant made by the Company
hereunder; (ii) the failure by the Company to maintain its segregated
asset account (which invests in any Portfolio) as a legally and validly
established segregated asset account under applicable state law and as a
duly registered unit investment trust under the provisions of the 1940
Act (unless exempt therefrom); or (iii) the failure by the Company to
maintain its variable annuity and/or variable life insurance contracts
(with respect to which any Portfolio serves as an underlying funding
vehicle) as life insurance, endowment or annuity contracts under
applicable provisions of the Code; unless Company's breach of any such
representation, warranty and/or covenant or failure described in (i)
through (iii) above results from a breach of any representation,
warranty, and/or covenant made by the Trust, PIM and/or PFD or the
failure by the Trust, PIM and/or PFD to perform any of their respective
obligations under this Agreement.
8.4. Neither the Company, the Trust, PIM nor PFD shall be liable under
the indemnification provisions contained in this Agreement with respect
to any losses, claims, damages, liabilities, expenses or action in
respect thereof to which an Indemnified Party would otherwise be subject
by reason of such Indemnified Party's willful misfeasance, willful
misconduct, 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.
8.5. Any person obligated to provide indemnification under this Article
VIII ("Indemnifying Party") for the purpose of this Section 8.5 will not
be liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party") for the purpose of this
Section 8.5 unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the
claim will have been served upon such Indemnified Party (or after such
party will have received notice of such service on any designated
agent); but the omission to so notify the Indemnifying Party will not
relieve it from any liability which it may have to any Indemnified Party
otherwise than under this section, except to the extent that the failure
to notify results in the failure of actual notice to the Indemnifying
Party and such Indemnifying Party is damaged solely as a result of
failure to give such notice. In case any such action is brought against
any Indemnified Party, and it notified the Indemnifying Party of the
commencement thereof, the Indemnifying Party will be entitled to
participate therein at its own expense and, to the extent that it may
wish, assume the defense thereof, with counsel satisfactory to such
Indemnified Party. After notice from the Indemnifying Party of its
intention to assume the defense of an action, the Indemnified Party
shall bear the expenses of any additional counsel obtained by it, and
the Indemnifying Party shall not be liable to such Indemnified Party
under this section for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation, unless:
(a) the Indemnifying Party and the Indemnified Party will have
mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party will
not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or
if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
17
8.6. The Trust and PIM acknowledge that any failure (whether intentional
or in good faith or otherwise) to comply with the diversification
requirements specified in Article VI, Section 6.1 of this Agreement may
result in the Contracts not being treated as variable contracts for
federal income tax purposes, which would have adverse tax consequences
for Contract owners and could also adversely affect the Company's
corporate tax liability. Accordingly, without in any way limiting the
effect of Section 8.2 hereof and without in any way limiting or
restricting any other remedies available to the Company, the Trust, PlM
and PFD will pay (PIM and PFD jointly and severally) all costs
associated with or arising out of any failure, or any anticipated or
reasonably foreseeable failure, of the Trust or any Designated Portfolio
to comply with Section 6.1 of this Agreement, including all costs
associated with correcting or responding to any such failure; such costs
may include, but are not limited to, the costs involved in creating,
organizing, and registering a new investment company as a funding medium
for the Contracts and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Trust or Designated Portfolio (including
but not limited to an order pursuant to Section 26(b) of the 1940 Act);
fees and expenses oflegal counsel and other advisors to the Company and
any federal income taxes or tax penalties (or "toll charges" or
exactments or amounts paid in settlement) incurred by the Company in
connection with any such failure or anticipated or reasonably
foreseeable failure. Such indemnification and reimbursement obligation
shall be in addition to any other indemnification and reimbursement
obligations of the Trust, PlM and/or PFD under this Agreement.
8.7. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this Article
VIII shall survive any termination of this Agreement.
8.3. In no event shall the Trust, PIM or PFD be liable under the
indemnification provisions contained in this Agreement to any individual
or entity, including without limitation, the Company, or any
Participating Insurance Company or any Contract owner, with respect to
any losses, claims, damages, liabilities or expenses that arise out of
or result from (i) a breach of any representation, warranty, and/or
covenant made by the Company hereunder or by any Participating Insurance
Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by the
Company or any Participating Insurance Company to maintain its
segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state
law and as a duly registered unit investment trust under the provisions
of the 1940 Act (unless exempt therefrom); or (iii) the failure by the
Company or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which
any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions of
the Code.
ARTICLE IX. APPLICABLE LAW
18
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The State of
Maryland without reference to its conflicts of law provisions.
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 SEC may grant (including, but not limited to, the
Mixed and Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS OR LITIGATION
The Trust, PIM, PFD and the Company agree that each such party
shall promptly notify the other parties to this Agreement, in writing,
of the institution of any formal proceedings brought against such party
or its designees by the NASD, the SEC, or any insurance department or
any other regulatory body regarding such party's duties under this
Agreement or related to the sale of the Contracts, the operation of the
Accounts or the Trust, or the sale of the Shares. Each of the parties
further agrees promptly to notify the other parties of the commencement
of any litigation or proceeding against it or any of its respective
officers, directors, trustees, employees or 1933 Act control persons in
connection with this Agreement, the issuance or sale of the Contracts,
the operation of the Accounts or the Trust, or the sale or acquisition
of Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or
one, some, or all Designated Portfolios:
(a) at the option of any party upon six (6) months' advance written
notice delivered to the other parties or, if later, upon receipt
of any required exemptive relief or orders from the SEC, unless
otherwise agreed in a separate written agreement among the
parties; provided, however, that such notice shall not be given
earlier than six (6) months following the date of this
Agreement; or
(b) at the option of the Company with respect to any Designated
Portfolio to the extent that the Shares of the Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts or are not "appropriate funding vehicles" for
the Contracts, as reasonably determined by the Company. Without
limiting the generality of the foregoing, the Shares of a
Designated Portfolio would not be "appropriate funding vehicles"
if, for example, such Shares did not meet the diversification or
other requirements referred to in Article VI hereof; or if the
Company would be permitted to disregard Contract owner voting
instructions pursuant to Rule 6e-2 or 6e-3(T) under the 1940
Act. Prompt notice of the election to terminate for such cause
and an explanation of such cause shall be furnished to the Trust
by the Company; or
(c) at the option of the Trust, PIM or PFD upon institution of
formal proceedings against the Company by the NASD, the SEC, or
any insurance department or any other regulatory body regarding
the Company's duties under this Agreement or related to the sale
of the Contracts, the operation of the Accounts, or the purchase
of the Shares; provided that the party terminating this
Agreement under this provision determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform its
obligations under this Agreement and shall give notice of such
termination to the other parties to this Agreement; or
19
(d) at the option of the Company upon institution of formal
proceedings against the Trust, PIM or PFD by the NASD, the SEC,
or any state securities or insurance department or any other
regulatory body; provided that the party terminating this
Agreement under this provision determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Trust's, PIM's or PFD's ability
to perform its obligations under this Agreement shall give
notice of such termination to the other parties to this
Agreement; or
(e) at the option of the Company, the Trust, PIM or PFD upon receipt
of any necessary regulatory approvals and/or the vote of the
Contract owners having an interest in the Accounts (or any
subaccounts) to substitute the shares of another investment
company for the corresponding Designated Portfolio Shares in
accordance with the terms of the Contracts for which those
Designated Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30)
days' prior written notice to the Trust of the Date of any
proposed vote or other action taken to replace the Shares; or
(f) at the option of the Trust, PIM or PFD by written notice to the
Company, if any one or all of the Trust, PIM or PFD
respectively, shall determine, in their sole judgment exercised
in good faith, that the Company 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, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(g) at the option of the Company by written notice to the Trust, PIM
or PFD, if the Company shall determine, in its sole judgment
exercised in good faith, that the Trust, PIM or PFD has suffered
a material adverse change in this business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity, such
termination to be effective sixty (60) days' after receipt by
the other parties of written notice of the election to
terminate; or
(h) at the option of any party to this Agreement, upon another
unaffiliated party's material breach of any provision of or
representation contained in this Agreement; or
(i) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Portfolio in the event
any of the Designated 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 Company.
20
11.2. No termination of this Agreement will be effective unless and
until the party terminating this Agreement gives prior written notice to
all other parties of its intent to terminate, which notice will set
forth the basis for the termination. The notice shall specify the
Designated Portfolio or Designated Portfolios, Contracts and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised
for cause or for no cause.
11.4. Except as necessary to implement Contract owner initiated
transactions, or as permitted by state insurance laws or regulations,
the Company shall not redeem the Shares attributable to the Contracts
(as opposed to the Shares attributable to the Company's assets held in
the Accounts).
11.5. Notwithstanding any termination of this Agreement, the Trust, PIM:
and PFD shall, at the option of the Company, continue for a period not
exceeding six (6) months to make available additional shares of the
Designated Portfolios pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of
TERMINation of this Agreement (the "Existing Contracts"), except as
otherwise provided under Article VII of this Agreement; provided,
however, that in the event of a termination pursuant to Section 11.1.
(c), (f) or (h), the Trust, PIM and PFD shall at their option have the
right to terminate all sales of Shares to the Company upon 30 days
advance written notice to the Company. SpecificaIly, without limitation,
the owners of the Existing Contracts shall be permitted to transfer or
reallocate investment under the Contracts, redeem investments in any
Designated Portfolio and/or invest in the Designated Portfolio's Shares
upon the making of additional purchase payments under the Existing
Contracts.
11.6 Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify the other parties shall
survive and not be affected by any termination of this Agreement. In
addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of
this Agreement
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail, overnight courier or facsimile to the other party at the address
of such party set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Trust:
Pioneer Variable Contracts
Trust 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxxxx Xxxxxx, Secretary
If to the Company:
OM FINANCIAL Life Insurance Company
0000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Securities Counsel: Xxx Xxxxx
21
If to PIM:
Pioneer Investment Management,
Inc. 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, General Counsel
If to PFD:
Pioneer Funds Distributor,
Inc. 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000 Attn: Xxxxx
Xxxxxx, President
ARTICLE XIll. MISCELLANEOUS
13.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential all
information reasonably identified as confidential in writing by
any party hereto and, except as permitted by this Agreement or as
otherwise required by applicable law or regulation, shall not
disclose, disseminate or utilize such other confidential
information without the express written consent of the affected
party until such time as it may come into the public domain.
Notwithstanding anything to the contrary in this Agreement, in
addition to and not in lieu of other provisions in this Agreement:
(a) "Confidential Information" includes without limitation
all information regarding the customers of the Company,
the Trust, PIM, PFD or any of their subsidiaries,
affiliates or licensees; or the accounts, account
numbers, names, addresses, social security numbers or
any other personal identifier of such customers; or any
information derived therefrom.
(b) Neither the Company, the Trust, PIM or PFD may disclose
Confidential Information for any purpose other than to
carry out the purpose for which Confidential Information
was provided to the Company, the Trust, PIM or PFD as
set forth in this Agreement; and the Company, the Trust,
PIM and PFD agree to cause their employees, agents and
representatives, or any other party to whom the Company,
the Trust, PIM or PFD may provide access to or disclose
Confidential Information to limit the use and disclosure
of Confidential Information to that purpose.
(c) The Company, the Trust, PIM and PFD agree to implement
appropriate measures designed to ensure the security and
confidentiality of Confidential Information, to protect
such information against any anticipated threats or
hazards to the security and integrity of such
information, and to protect against unauthorized access
to, or use of, Confidential Information that could
result in substantial harm or inconvenience to any of
the customers of the Company or any of its subsidiaries,
affiliates or licensees; the Company, the Trust, PIM and
PFD further agree to cause all their respective agents,
representatives or subcontractors, or any other party to
22
whom they provide access to or disclose Confidential
Information, to implement appropriate measures to meet
the objectives set forth in this Section 13.1.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedules (each a "Schedule," and collectively, the
"Schedules") and Exhibits (each an "Exhibit," and collectively, the
"Exhibits") attached hereto, as modified from time to time, are
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by 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.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
13.8. A copy of the Trust's Certificate of Trust is on file with the
Secretary of State of Delaware. The Company acknowledges that the
obligations of or arising out of this instrument are not binding upon
any of the Trust's trustees, officers, employees, agents or shareholders
individually, but are binding solely upon the assets and property of the
Trust. The Company further acknowledges that the assets and liabilities
of each Designated Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon
the assets or property of the Designated Portfolio on whose behalf the
Trust has executed this instrument. The Company also agrees not to
proceed against any Designated Portfolio for the obligations of another
Designated Portfolio.
13.9. Neither this Agreement nor any of the rights and obligations
hereunder may be assigned by any party without the prior written consent
of all parties hereto.
13.10. The Trust, PIM and PFD agree that the obligations assumed by the
Company shall be limited in any case to the Company and its assets and
neither the Trust, PIM nor PFD shall seek satisfaction of any such
obligation from the shareholders of Company, the directors, officers,
employees or agents of the Company, or any of them.
13.11. No provision of the Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications,
running from PIM to the Trust and PFD to, respectively the Trust.
13.12. This Agreement, including any Schedules or Exhibits hereto, may
be amended only by a written instrument executed by each party hereto.
23
12.13 The parties have entered into or shall enter into a Shareholder
Information Agreement as required by Rule 22c-2 under 1940 Act in
connection with the Contracts. This Agreement shall control with regard
to the terms of the business relationship described in this Agreement.
To the extent that the terms of the Shareholder Information Agreement
conflict with the terms of this Agreement, the terms of the Shareholder
Information Agreement shall control to the extent required by Rule
22c-2.
13.13. Each Designated Portfolio agrees to consult in advance with the
Company concerning any decision to elect or not to pass through the
benefit of any foreign tax credits to the Designated Portfolio's
shareholders pursuant to Section 853 of the Code.
13.14. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms. 13.15. The parties to this
Agreement acknowledge and agree that this Agreement shall not be
exclusive in any respect.
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 above.
OM FINANCIAL LIFE INSURANCE COMPANY
By its authorized officer,
By:
Name: Xxxxxxx X. XxXxxxx
Title: SVP, General Counsel & Secretary
Date: January 18, 2007
PIONEER VARIABLE CONTRACTS TRUST,
on behalf of the Designated Portfolios
By its authorized officer and not individually,
By:
Name: Xxxxxxxxxxx Xxxxxx
Title: Secretary
Date: January 17, 2007
PIONEER INVESTMENT MANAGEMENT, INC.
By its authorized officer,
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President and Chief Operations Officer
Date: January 17, 2007
PIONEER FUNDS DISTRIBUTOR, INC.
By its authorized officer,
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
Date: January 17, 2007
SCHEDULE A ACCOUNTS, CONTRACTS AND DESIGNATED PORTFOLIOS SUBJECT TO THE
PARTICIPATION AGREEMENT
As of January 10, 2007
Name of Separate Account and Date Contracts Funded by Designated Portfolios and Class of Shares
Account and Date by Separate Account Available to Contracts
Old Mutual Financial Network Beacon Navigator Variable Pioneer Cullen Value VCT II
Separate Account VA Annuity Pioneer Equity Income VCT II
Pioneer Fund VCT II
Pioneer Small Cap Value VCT II
Pioneer High Yield VCT II
Pioneer Strategic Income VCT II
SCHEDULE B
1. ADMINISTRATIVE SERVICES
Administrative services to Contract owners and participants shall be the
responsibility of the Company and shall not be the responsibility of the Trust
or PFD. The Company will provide properly registered and licensed personnel
and any systems needed for all Contract owners servicing and support - for
both fund and annuity and life insurance information and questions, including
o Communicate all purchase, withdrawal, and exchange
orders it receives from its customers to PFD
o Respond to Contract owner and participant inquiries
o Delivery of both Trust and Contract Prospectuses as
required under applicable law
o Entry of transfers between Designated Portfolio
objectives and characteristics
o Entry of transfers between Designated Portfolios
o Designated Portfolio balance and allocation inquiries;
and
o Mail Trust proxies
2. ADMINISTRATIVE SERVICE FEES
For the administrative services set forth above, PIM or any of its affiliates
shall pay a servicing fee based on the annual rate of 0.25% of the average
aggregate net daily assets invested in the Class II Shares of the Designated
Portfolios through the Accounts at the end of each calendar quarter. Such
payments will be made to the Company within thirty (30) days after the end of
each calendar quarter. Such fees shall be paid quarterly in arrears. Each
payment will be accompanied by a statement showing the calculation of the fee
payable to the Company for the quarter and such other supporting data as may be
reasonably requested by the Company. The Company will calculate the asset
balance on each day on which the fee is to be paid pursuant to this Agreement
with respect to each Designated Portfolio for the purpose of reconciling its
calculation of average aggregate net daily assets with PIM's calculation.
Annually (as of December 31) or upon reasonable request of PIM, Company will
provide PIM a statement showing the number of subaccounts in each Class of
Shares of each Designated Portfolio as of the most recent calendar quarter end.
3. 12B-L DISTRIBUTION RELATED FEES (CLASS II SHARES ONLY)
In accordance with the Designated Portfolios' plans pursuant to Rule 12b-l under
the Investment Company Act of 1940, PFD will make payments to the Company at an
annual rate of 0.25% of the average daily net assets invested in the Class IT
shares of the Designated Portfolios through the Accounts in each calendar
quarter. PFD will make such payments to the Company within thirty (30) days
after the end of each calendar quarter. Each payment will be accompanied by a
statement showing the calculation of the fee payable to the Company for the
quarter and such other supporting data as may be reasonably requested by the
Company. The Rule 12b-l distribution related fees will be paid to the Company
for as long as the Accounts own any Shares of a Designated Portfolio and (i)
distribution services are being provided pursuant to this Agreement and (ii) a
Rule 12b-l plan is in effect with respect to such Designated Portfolio.
27
Exhibit I
To Participation Agreement
Procedures for Pricing and Order/Settlement Through National Securities Clearing
Corporation's Mutual Fund Profile System and Mutual Fund Settlement, Entry and
Registration Verification System
1. As provided in Section 1.1 of the Participation Agreement, the parties
hereby agree to provide pricing information, execute orders and wire
payments for purchases and redemptions of Trust shares through National
Securities Clearing Corporation ("NSCC") and its subsidiary systems as
follows;
(a) PFD or the Trust will furnish to Company or its affiliate through NSCC's
Mutual Fund Profile System ("MFPS") (1) the most current net asset value
information for each Designated Portfolio, (2) same day notice of the
declaration of any income, dividends or capital gain distributions
payable on the Shares of a Designated Portfolio, and (3) in the case of
fixed income funds that declare daily dividends, the daily accrual or the
interest rate factor. All such information shall be furnished to Company
or its affiliate by 6:30 p.m. Eastern Time on each Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange,
Inc. (the "NYSE") is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the SEC. Changes in pricing
information will be communicated to both NSCC and Company.
(b) Upon receipt of Trust purchase, exchange and redemption instructions for
acceptance as of the time at which a Designated Portfolio's net asset
value is calculated as specified in such Designated Portfolio's
prospectus ("Close of Trading") on each Business Day ("Instructions"),
and upon its determination that there are good funds with respect to
Instructions involving the purchase of Shares, Company or its affiliate
will calculate the net purchase or redemption order for each Designated
Portfolio. Orders for net purchases or net redemptions derived from
Instructions received by Company or its affiliate prior to the Close of
Trading on any given Business Day will be sent to the Defined
Contribution Interface of NSCC's Mutual Fund Settlement, Entry and
Registration Verification System ("FundSERV") by 5:00 a.m. Eastern Time
on the next Business Day. Subject to Company's or its affiliate's
compliance with the foregoing, Company or its affiliate will be
considered the agent of PFD and the Designated Portfolios, and the
Business Day on which Instructions are received by Company or its
affiliate in proper form prior to the Close of Trading will be the date
as of which shares of the Designated Portfolios are deemed purchased,
exchanged or redeemed pursuant to such Instructions. Instructions
received in proper form by Company or its affiliate after the Close of
Trading on any given Business Day will be treated as if received on the
next following Business Day. Dividends and capital gains distributions
will be automatically reinvested at net asset value in accordance with
the Designated Portfolio's then current prospectuses.
(c) Company or its affiliate will wire payment for net purchase orders by the
Trust's NSCC Firm Number, in immediately available funds, to an NSCC
settling bank account designated by Trust or its aff1liate no later than 5
:00 p.m. Eastern time on the same Business Day such purchase orders are
communicated to NSCC. For purchases of shares of daily dividend accrual
funds, those shares will not begin to accrue dividends until the day the
payment for those shares is received.
(d) Trust will wire payment for net redemption orders, in immediately
available funds, to an NSCC settling bank account designated by Company or
its affiliate, by 5:00 p.m. Eastern Time on the Business Day such
redemption orders are communicated to NSCC.
(e) With respect to (c) above, if PFD does not send a confirmation of
Company's or its affiliate's purchase or redemption order to NSCC by the
applicable deadline to be included in that Business Day's payment cycle,
payment for such purchases will be made the following Business Day.
28
(f) If on any day Company or its affiliate, or PFD is unable to meet the
NSCC deadline for the transmission of purchase or redemption orders, it
may at its option transmit such orders and make such payments for
purchases and redemptions directly to PFD or Company or its affiliate,
as applicable, as is otherwise provided in the Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and subject to the terms of the Agreement and the
requirements of applicable law. The Funds reserve the right, at their
discretion and without notice, to suspend the sale of shares or withdraw
the sale of shares of any Fund subject to the conditions of Section 1.3
of the Participation Agreement to which this Exhibit I is attached.
2. Company or its affiliate, PFD and clearing agents (if applicable) are each
required to have entered into membership agreements with NSCC and met all
requirements to participate in the MFPS and FundSERV systems before these
procedures may be utilized. Each party will be bound by the terms of their
membership agreement with NSCC and will perform any and all duties, functions,
procedures and responsibilities assigned to it and as otherwise established by
NSCC applicable to the MFPS and FundSERV system and the Networking Matrix Level
utilized.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect. Unless otherwise indicated herein, the
terms defined in the Agreement shall have the same meaning as in this Exhibit.
29
