EXHIBIT 26 (h) (10)
PARTICIPATION AGREEMENT AMONG PHL VARIABLE INSURANCE COMPANY,
LAZARD ASSET MANAGEMENT AND LAZARD RETIREMENT SERIES
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 25th day of April, 2005, by and
among PHL VARIABLE INSURANCE COMPANY ("Insurance Company"), a life insurance
company organized under the laws of the State of New York, LAZARD ASSET
MANAGEMENT SECURITIES LLC ("Lazard"), a Delaware limited liability company and
LAZARD RETIREMENT SERIES, INC. ("Fund"), with respect to the Fund's Portfolios
named on Schedule 1, as it may be amended from time to time (each a
"Portfolio").
ARTICLE I.
DEFINITIONS
The following terms used in this Agreement will have the meanings set forth
below:
1.1 "1933 Act" means the Securities Act of 1933, as amended.
1.2 "1940 Act" means the Investment Company Act of 1940, as amended.
1.3 "Board" means Fund's Board of Directors.
1.4 "Business Day" means any day for which the New York Stock Exchange is
open for business and the Portfolios calculate net asset value per
share as described in the Portfolio Prospectuses and pursuant to
applicable law and rules of the Commission (defined below).
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Commission" means the Securities and Exchange Commission.
1.7 "Contract" means a variable annuity or variable life insurance
contract that uses a Portfolio as an underlying investment medium.
1.8 "Contract Prospectus" means the currently effective prospectus and
statement of additional information or other offering documents with
respect to a Contract (such as a written description of a Contract not
registered under the 1933 Act), including any supplements or
amendments thereto.
1.9 "Contractholder" means any person that is a party to a Contract with
Insurance Company.
1.10 "Disinterested Board Members" mean those members of the Board that are
not deemed to be "interested persons" of Fund, as defined in the 0000
Xxx.
1.11 "General Account" means the general account of Insurance Company.
1.12 "IRS" means the Internal Revenue Service.
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1.13 "NASD" means the National Association of Securities Dealers, Inc.
1.14 "Notice" means the notice related to the Order.
1.15 "Order" means Fund's mixed and shared funding exemptive order of the
Commission pursuant to Section 6(c) of the 0000 Xxx.
1.16 "Participants" mean individuals who participate under a group
Contract.
1.17 "Participating Company" means any insurance company, including
Insurance Company, that offers variable annuity and/or variable life
insurance contracts and that has entered into an agreement with Fund
for the purpose of making Portfolio shares available to serve as the
underlying investment medium for such contracts.
1.18 "Parties" means Insurance Company, Lazard and Fund, on behalf of
itself and each Portfolio, collectively and, each, a "Party".
1.19 "Portfolio Prospectus" means the currently effective prospectus and
statement of additional information with respect to a Portfolio,
including any supplements or amendments thereto.
1.20 "Separate Account" means a separate account duly established by
Insurance Company that invests in a Portfolio and is named on Schedule
1.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1 Insurance Company represents, warrants and covenants that:
(a) it is and will remain an insurance company duly organized and in good
standing under applicable law;
(b) it has legally and validly established and will maintain each Separate
Account pursuant to applicable insurance laws and regulations;
(c) it has registered, or prior to any issuance or sale of the Contract,
will register, and will maintain the registration of each Separate
Account as a unit investment trust under the 1940 Act, to the extent
required thereby, to serve as a segregated investment account for the
Contracts, or, alternatively, it has not so registered the Separate
Accounts in proper reliance upon an exclusion from such registration
(which exclusion will be communicated to Fund);
(d) each Separate Account is and at all times will be eligible to invest
in shares of a Portfolio without such investment disqualifying
Portfolio as an investment medium for insurance company separate
accounts supporting variable annuity and/or variable life insurance
contracts;
(e) each Separate Account is and at all times shall be a "segregated asset
account" and interests in each Separate Account that are offered to
the public will be issued exclusively
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through the purchase of a Contract that is and at all times shall be a
"variable contract," in each case within the meaning of such terms
under Section 817 of the Code and the regulations thereunder;
Insurance Company agrees to notify Fund and Lazard 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;
(f) the Contracts are and at all times shall, assuming compliance by Fund
and Lazard with the terms of this Agreement, be treated as life
insurance, endowment or annuity contracts under applicable provisions
of the Code, and it will notify Fund promptly 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; and
(g) all of its employees and agents who deal with money and/or securities
of Fund are and will continue to be at all times covered by a blanket
fidelity bond or similar coverage, which will include coverage for
larceny and embezzlement and will be issued by a reputable bonding
company, in an amount not less than that required to be maintained by
Fund. Insurance Company agrees to hold for the benefit of Fund and to
pay to Fund any amounts lost from larceny, embezzlement or other
events covered by said bond to the extent such amounts properly belong
to Fund pursuant to the terms of this Agreement.
2.2 Insurance Company represents, warrants and covenants that: (a) units
of interest in each Separate Account available through the purchase of
Contracts are registered under the 1933 Act, or are not so registered
in proper reliance upon an exclusion from such registration; (b) the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws, including state
insurance suitability requirements; and (c) Insurance Company will
otherwise comply in all material respects with all applicable federal
and state laws, including state insurance laws and regulations, in the
performance of this Agreement.
2.3 Insurance Company will not enter into any arrangements, formal or
informal, to permit or facilitate any Contractholder use of market
timing or excessive trading strategies with respect to Portfolio
shares by Contractholders. Insurance Company has implemented
procedures reasonably designed to guard against market timing of the
Funds by Contract holders to monitor for such activities and will
cooperate with Fund's reasonable requests in taking steps to deter and
to detect the use of market timing or excessive trading strategies by
Contractholders, including providing identity information (solely for
the purpose of deterring and detecting the use of market timing or
excessive trading strategies by Contractholders) and other information
Fund reasonably requests.
2.4 Fund, on behalf of each Portfolio where indicated, and Lazard
represent and warrant that:
(a) (i) Fund is and will remain lawfully organized and validly existing
under the laws of Maryland; (ii) each Portfolio has been duly
designated as a series of Fund in accordance with the laws of Maryland
and Fund's organizational documents; (iii) Fund is and will remain
registered with the Commission as an open-end, management investment
company under the 1940 Act; and (iv) Fund is in material compliance
with applicable federal and state laws.
(b) Portfolio shares are registered under the 1933 Act;
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(c) Fund possesses and will maintain all legal and regulatory licenses,
approvals, consents and/or exemptions required for it to operate and
offer its shares as an underlying investment medium for the Contracts;
(d) each Portfolio is or will be qualified as a regulated investment
company under Subchapter M of the Code, it will make every effort to
maintain such qualification, and it will notify Insurance Company
promptly upon having a reasonable basis for believing that any
Portfolio invested in by a Separate Account has ceased to so qualify
or that it might not so qualify in the future; and
(e) all of Fund's directors, officers, employees, investment advisers, and
other individuals/entities who deal with the money and/or securities
of Fund are and will continue to be at all times covered by a blanket
fidelity bond or similar coverage, which will include coverage for
larceny and embezzlement and will be issued by a reputable bonding
company, for the benefit of Fund in an amount not less than that
required by Rule 17g-1 under the 0000 Xxx.
2.5 Fund makes no representation as to whether any aspect of its
operations, including without limitation, investment policies, fees
and expenses, complies with the insurance laws of any state.
2.6 Fund and Lazard represent, warrant and covenant that Portfolio's
assets will be managed and invested in a manner that complies with the
requirements of Section 817(h) of the Code and Treasury Regulation
1.817-5, relating to the diversification requirements for variable
annuity, endowment or life insurance contracts. If a Portfolio fails
to comply with Section 817(h) of the Code, Fund and Lazard will take
all reasonable steps to adequately diversify the Portfolio so as to
achieve compliance within the grace period afforded by Treasury
Regulation 1.817-5. If Fund does not adequately diversify the
Portfolio during the grace period, Fund or Lazard will promptly notify
Insurance Company that the Portfolio has failed to so comply. In
addition, Fund or Lazard will promptly notify Insurance Company if
either Fund or Lazard becomes aware that Insurance Company may be
precluded from "looking through" to the investment of any Portfolio,
pursuant to the "look through" rules in Treasury Regulation 1.817-5.
In the event the IRS asserts in writing in connection with any
governmental audit or review of Insurance Company or, to Insurance
Company's knowledge, of any Contractholder, that any Portfolio has
failed or allegedly failed to comply with the diversification
requirements of Section 817(h) of the Code or the regulations
thereunder or Insurance Company otherwise becomes aware of any facts
that could give rise to any claim against Fund or its affiliates as a
result of such a failure or alleged failure, Insurance Company will
promptly notify Fund and Lazard of such assertion or potential claim
and will permit Fund and Lazard and its affiliates and their legal and
accounting advisers to participate in any conferences, discussions or
proceedings with the IRS, any Contractholder or any other claimant
regarding such claims.
2.7 Fund and Lazard each represent, warrant and covenant that Portfolio
shares sold pursuant to the Agreement will be (a) registered under the
1933 Act to the extent required thereby, (b) duly authorized for
issuance and sold in compliance with the Agreement and, in all
material respects, with all applicable federal and state laws. Fund
will amend the registration statement of Portfolio shares under the
1933 Act and Fund's registration statement under the 1940 Act from
time to time as required in order to effect the continuous offering of
Portfolio shares.
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2.8 Lazard represents, warrants and covenants that (a) it is and will
remain lawfully organized and validly existing under the laws of the
state of its organization; (b) it is and will remain registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended,
and a member of the NASD; and (c) it is and will remain duly
registered and licensed under all applicable federal and state laws
and will perform its obligations hereunder in compliance in all
material respects with all applicable federal and state laws.
2.9 Each Party represents, warrants and covenants that (a) it has full
power and authority to enter into and perform its obligations under
this Agreement; (b) it has duly taken all necessary steps to authorize
the person signing this Agreement on its behalf to do so and to
authorize the performance of its obligations under this Agreement; and
(c) assuming the accuracy of and compliance with this representation,
warranty and covenant by all other Parties, this Agreement will be
valid, binding on, and enforceable against such Party in accordance
with its terms, subject only to such limitations as apply generally to
the rights of creditors, such as, but not limited to, bankruptcy laws,
laws governing the insolvency of insurance companies and other
entities and principles of equity.
2.10 Each Party agrees that it will comply with all applicable laws and
regulations relating to consumer privacy ("Privacy Law") and that it
is prohibited from using or disclosing any nonpublic personal
information (as defined in Regulation S-P, or any similar term or
terms as defined in other applicable Privacy Law, "Customer
Information") received from another Party other than (a) as required
by law, regulation or rule; (b) as permitted in writing by the
disclosing party; (c) to its affiliates; or (d) as necessary to
perform this Agreement or to service Contractholders, in each case in
compliance with the reuse and redisclosure provisions of Privacy Law.
Each Party will use its best efforts to (a) cause its employees and
agents to be informed of and to agree to be bound by Privacy Law and
the provisions of this Agreement and (b) maintain physical, electronic
and procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access
to or use of, Customer Information.
2.11 Insurance Company and Fund have adopted and implemented compliance
policies and procedures reasonably designed to guard against money
laundering activities to detect and report suspicious activities and
to comply with the applicable provisions of the Bank Secrecy Act, as
amended by the USA PATRIOT Act, and any and all regulations thereunder
or any similar money laundering laws or regulations applicable to the
Fund or the Insurance Company, as they may be amended (the "AML
Requirements"). Insurance Company and Fund will notify the other in
the event that this representation ceases to be true.
(a) Insurance Company will ensure the ability of federal examiners to
obtain information and records relating to AML Requirements and the
ability of Lazard and Fund or their agents to inspect the records and
facilities of Insurance Company regarding compliance with AML
Requirements.
(b) Insurance Company will provide Fund with such information,
representations and certifications regarding compliance with AML
Requirements as Fund may reasonably request.
(c) Insurance Company will notify Fund if any of Insurance Company's
representations with respect to compliance with AML Requirements cease
to be true.
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ARTICLE III.
FUND SHARES
3.1 Fund agrees to make the shares of each Portfolio available for
purchase by Insurance Company and each Separate Account at net asset
value on each Business Day, subject to the terms and conditions of
this Agreement and the Portfolio Prospectus. Fund may refuse to sell
the shares of any Portfolio to any person, or suspend or terminate the
offering of the shares of any Portfolio, as permitted by law or by
regulatory authorities having jurisdiction or if, 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,
suspension or termination is necessary and in the best interests of
the shareholders of such Portfolio, including Insurance Company and
the Separate Accounts.
3.2 Fund agrees that it shall sell shares of the Portfolios only to
Participating Companies and their separate accounts, the general
accounts of Participating Companies and their affiliates and to
qualified pension and retirement plans. No shares of any Portfolio
will otherwise be sold to the general public.
3.3 Subject to the provisions of this Agreement, Fund agrees to sell to
Insurance Company those shares of the Portfolios that Insurance
Company, on behalf of the Separate Accounts, orders, and agrees to
redeem for cash, on Insurance Company's request, any full or
fractional shares of Portfolio held by Insurance Company on behalf of
the Separate Accounts executing such orders and requests in the manner
set out in Schedule 2 hereto.
3.4 Except as noted in this Article III, Fund and Insurance Company agree
that orders and related payments to purchase and redeem Portfolio
shares will be processed in the manner set out in Schedule 2 hereto.
(a) Insurance Company represents that it has adopted, and will at all
times during the term of this Agreement maintain, procedures ("Late
Trading Procedures") reasonably designed to ensure that any and all
orders relating to the purchase, sale or exchange of Portfolio shares
communicated by Insurance Company to Fund or its agent to be treated
in accordance with Schedule 2 as having been received on a Business
Day have been received by Insurance Company by the Close of Trading
(as defined in Schedule 2) on such Business Day and were not modified
after the Close of Trading, and that all orders received from
Contractholders but not rescinded by the Close of Trading were
communicated to Fund or its agent as received for that Business Day.
(b) Each transmission of Share orders by Insurance Company shall
constitute a representation by Insurance Company that such orders are
accurate and complete and relate to orders received by Contract
Distributor by the Close of Trading on the Business Day for which the
order is to be priced and that such transmission includes all orders
relating to Portfolio shares received from Contractholders but not
rescinded by the Close of Trading.
(c) Insurance Company will provide Fund with (i) a copy of the Late
Trading Procedures and (ii) such certifications and representations
regarding the Late Trading Procedures as Fund may reasonably request.
Insurance Company will ensure the ability of appropriate regulatory
authorities to obtain information and records relating to the Late
Trading Procedures and permit Lazard and Fund or their agents upon
reasonable request to
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inspect the records and facilities of Insurance Company regarding
compliance with the Late Trading Procedures.
3.5 Fund will confirm each purchase or redemption order made by Insurance
Company. Transfer of Portfolio shares will be by book entry only. No
share certificates will be issued to Insurance Company. Shares ordered
from Fund will be recorded in an appropriate title for Insurance
Company, on behalf of each Separate Account or the General Account.
3.6 Fund will notify Insurance Company of the amount of dividend and
capital gain, if any, per share of each Portfolio to which each
Separate Account is entitled on the ex-dividend date of the Fund, or,
if not a Business Day, on the first Business Day thereafter. Insurance
Company hereby elects to reinvest all dividends and capital gains of
any Portfolio in additional shares of that Portfolio at the applicable
net asset value per share, until Insurance Company otherwise notifies
Fund in writing. Fund will, on the day after the payable date or, if
not a Business Day, on the first Business Day thereafter, notify
Insurance Company of the number of shares so issued. Insurance Company
reserves the right, on its behalf and on behalf of its Separate
Accounts, to revoke this election and to receive all dividends and
capital gain distributions in cash.
ARTICLE IV.
STATEMENTS AND REPORTS
4.1 Fund will provide Insurance Company with monthly statements of account
for each Separate Account's Portfolio accounts as of the end of each
month by the fifteenth (15th) Business Day of the following month.
4.2 (a) At least annually, Fund or its designee will provide Insurance
Company, free of charge, with as many copies of Portfolio Prospectuses
as Insurance Company may reasonably request for distribution by
Insurance Company to existing Contractholders and Participants with
respect to Separate Accounts invested in the relevant Portfolios.
(b) If requested by Insurance Company, Fund or its designee will provide
Portfolio Prospectuses in "camera ready" and/or "web ready" copy or,
at the request of Insurance Company, in the electronic format sent to
the financial printer and other assistance as is reasonably necessary
in order for the Parties once a year (or more frequently if the
Portfolio Prospectuses are supplemented or updated) to have the
Contract Prospectuses and the Portfolio Prospectuses printed together
in one document or a document combining Portfolio Prospectuses with
prospectuses of other funds in which the Contracts may invest. The
expenses of such printing will be apportioned between Insurance
Company, on the one hand, and the Fund (with respect to existing
Contract owners) or Lazard (with respect to prospective Contract
owners) in proportion to the number of pages of the Contract
Prospectus (borne by Insurance Company) and the Portfolio Prospectus
(borne by the Fund).
(c) Fund or its designee will provide Insurance Company, at Insurance
Company's expense, with as many copies of Portfolio Prospectuses as
Insurance Company may reasonably request for distribution by Insurance
Company to prospective purchasers of Contracts.
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(d) The form of the Portfolio Prospectuses provided to Insurance Company
will be the final form of Portfolio Prospectus as filed with the
Commission, which form will include only those Portfolios identified
on Schedule 1.
4.3 Fund will provide Insurance Company with at least one complete copy of
all registration statements, Portfolio Prospectuses, periodic reports
and proxy statements, sales literature and other promotional
materials, and all applications for exemptive orders and requests for
no-action letters that are relevant to a Separate Account and all
amendments to any of the above that relate to the Fund or its shares,
contemporaneous with the filing of such documents with the Commission
or other regulatory authorities, or, if such materials are not filed,
contemporaneously with first use.
4.4 Fund will provide Insurance Company with copies of each Portfolio's
periodic reports, proxy statements and other printed materials (which
the Portfolio customarily provides to its shareholders) in quantities
as Insurance Company may reasonably request for distribution by
Insurance Company to each Contractholder and Participant with respect
to Separate Accounts invested in that Portfolio. If requested by
Insurance Company in lieu thereof, Fund will provide at Fund's expense
such documentation (including a final copy of Fund's proxy statements,
periodic reports to shareholders, and other communications to
shareholder, as set in type or in camera ready and/ or web ready copy)
and other assistance as reasonably necessary for Insurance Company to
print such shareholder communications for distribution to
Contractholders and Participants.
4.5 Insurance Company will provide Fund with at least one complete copy of
all registration statements, periodic reports, proxy statements,
applications for exemptive orders, requests for no-action letters, and
all amendments to any of the above, that are material to a Portfolio
contemporaneously with the filing of such documents with the
Commission or other regulatory authorities, or, if such materials are
not filed, contemporaneously with first use. Insurance Company will
provide to Fund and Lazard any complaints received from
Contractholders pertaining to Fund or a Portfolio.
ARTICLE V.
EXPENSES
5.1 Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
(a) Lazard may pay the Insurance Company's contract distributor for
distribution and/or other services relating to Portfolio shares
pursuant to any distribution plan adopted by Fund in accordance with
Rule 12b-1 under the 1940 Act, subject to the terms of an agreement
between the Insurance Company's contract distributor and Lazard
related to such plan.
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ARTICLE VI.
EXEMPTIVE RELIEF
6.1 Fund acknowledges that Board will monitor Fund for the existence of
any material irreconcilable conflict between the interests of the
contractholders of Participating Company separate accounts investing
in Fund, including material irreconcilable conflicts arising by reason
of (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) and administrative or
judicial decision in any relevant proceeding; (d) the manner in which
the investments of any Portfolio are being managed; (e) a difference
in voting instructions given by contractholders of different
Participating Companies; or (f) a decision by a Participating Company
to disregard voting instructions of its contractholders.
6.2 Insurance Company acknowledges that it has reviewed a copy of the
Order and, in particular, has reviewed the conditions to the relief
set forth in the Notice. As required by the conditions set forth in
the Notice, Insurance Company will report any potential or existing
conflicts of which it is aware promptly to the Board.
6.3 Insurance Company will be responsible for assisting the Board in
carrying out its responsibilities under the Order by providing the
Board with all information necessary for the Board to consider any
issues raised including, without limitation, information whenever
Contract voting instructions are disregarded. No less than annually,
Insurance Company will submit to the Board such reports, materials, or
data as the Board may reasonably request so that the Board may carry
out fully the obligations imposed upon it by the Order. Insurance
Company agrees to carry out such responsibilities with a view only to
the interests of existing Contractholders.
6.4 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists
with regard to contractholder investments in Fund, the Board will give
prompt notice to all Participating Companies. If the Board determines
that Insurance Company is a Participating Company for whom the
conflict is relevant, Insurance Company will at its sole cost and
expense, and to the extent reasonably practicable (as determined by a
majority of the Disinterested Board Members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict.
Such necessary action may include, but will not be limited to:
(a) withdrawing the assets allocable to some or all Separate Accounts from
Fund or any Portfolio and reinvesting such assets in a different
investment medium (which may include another Portfolio);
(b) submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders and, as
appropriate, segregating the assets of any appropriate group (i.e.
variable annuity or variable life insurance Contractholders) that
votes in favor of such segregation; and/or
(c) establishing a new registered management investment company or managed
separate account.
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6.5 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions
and that decision represents a minority position or would preclude a
majority vote, Insurance Company may be required, at the Board's
election, to withdraw the investments of its Separate Accounts in
Fund.
6.6 For the purpose of this Article, a majority of the Disinterested Board
Members will determine whether any proposed action adequately remedies
any material irreconcilable conflict, but in no event will Fund or
Lazard or any other investment adviser of Fund be required to bear the
expense of establishing a new funding medium for any Contract.
Insurance Company will not be required by this Article to establish a
new funding medium for any Contract if an offer to do so has been
declined by vote of a majority of the Contractholders materially and
adversely affected by the material irreconcilable conflict.
6.7 The Board's determination of the existence of a material
irreconcilable conflict and its implications will be made known
promptly and in writing to Insurance Company.
6.8 No action by Insurance Company taken or omitted, and no action by a
Separate Account or Fund taken or omitted as a result of any act or
failure to act by Insurance Company pursuant to this Article VI will
relieve Insurance Company of its obligations under, or otherwise
affect the operations of, this Article VI.
ARTICLE VII.
VOTING OF PORTFOLIO SHARES
7.1 Insurance Company will provide pass-through voting privileges to all
Contractholders and Participants so long as and to the extent the
Commission continues to interpret the 1940 Act as requiring
pass-through voting privileges or to the extent otherwise required by
law. Accordingly, Insurance Company, where applicable, will vote
shares of a Portfolio held in each Separate Account in a manner
consistent with voting instructions timely received from its
Contractholders and Participants. Insurance Company will be
responsible for assuring that the Separate Account determines voting
privileges in a manner consistent with other Participating Companies.
Insurance Company will vote shares for which it has not received
timely voting instructions, as well as shares it owns, in the same
proportion as it votes those shares for which it has received voting
instructions. Insurance Company reserves the right to vote Fund shares
held in any segregated account for its own account, to the extent
permitted by law.
7.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are
amended, or if Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the 1940 Act or the rules thereunder with respect to
mixed and shared funding on terms and conditions materially different
from any exemptions granted in the Order, then Fund, and/or the
Participating Companies, as appropriate, will take such steps as may
be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VI of this Agreement will continue in effect only to the
extent that terms and conditions substantially identical to Article VI
are contained in such Rules as so amended or adopted if Fund is
otherwise required to continue to comply with the conditions of the
Order.
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7.3 Fund and Insurance Company each agree that it will comply with all
applicable provisions of the 1940 Act, the regulations thereunder,
Commission orders and Commission staff interpretations regarding
pass-through voting.
7.4 Insurance Company agrees that it will not, without prior written
notice to Fund and Lazard, solicit, introduce or encourage
Contractholders or Participants to change or supplement Fund's
investment adviser.
ARTICLE VIII.
MARKETING
8.1 Fund or its designee will periodically furnish Insurance Company with
sales literature or other promotional materials for each Portfolio, in
quantities as Insurance Company may reasonably request, for
distribution to prospective purchasers of Contracts. Expenses for the
printing and distribution of such documents will be borne by Insurance
Company in accordance with Articles IV and V of this Agreement.
8.2 Insurance Company will designate certain persons or entities that will
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company.
8.3 Insurance Company will furnish, or will cause to be furnished, to Fund
each piece of Insurance Company's sales literature or other
promotional material in which Fund, Lazard or Fund's investment
adviser or administrator is named, at least five (5) Business Days
prior to its use. No such material will be used unless Fund and Lazard
or their respective designees approve such material in writing.
8.4 Fund will furnish, or will cause to be furnished, to Insurance Company
each piece of Fund's or Lazard's sales literature or other promotional
material in which Insurance Company or a Separate Account is named, at
least five (5) Business Days prior to its use. No such material will
be used unless Insurance Company approves such material in writing.
8.5 Insurance Company will not give any information or make any
representations or statements on behalf of Fund, Lazard or the Fund's
investment adviser or concerning Fund or any Portfolio other than the
information or representations contained in a Portfolio Prospectus,
periodic reports, proxy statements or in sales literature or other
promotional material approved by Fund or Lazard or their designees.
8.6 Fund and Lazard and their affiliates and agents will not give any
information or make any representations on behalf of Insurance Company
or concerning Insurance Company, a Separate Account, or the Contracts
other than the information or representations contained in a Contract
Prospectus, in published reports for each Separate Account that are
approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material
approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed
for use, in a newspaper, magazine or other periodical,
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radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures or other public media), sales
literature (such as any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, or reprints or excerpts of any other advertisement, sales
literature or published article), educational or training materials or
other communications distributed or made generally available to some
or all agents or employees, prospectuses, statements of additional
information, shareholder reports and proxy materials, and any other
material constituting sales literature or advertising under the rules
of the NASD, the 1940 Act or the 1933 Act.
ARTICLE IX.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless Fund, Lazard,
any investment adviser of a Portfolio, and their affiliates, and each
of their respective directors, trustees, general members, officers,
employees, agents and each person, if any, who controls any of the
foregoing entities or persons within the meaning of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
9.1), against any and all losses, claims, damages or liabilities,
joint or several (including any reasonable investigative, legal and
other expenses reasonably incurred in connection with or any amounts
paid in settlement of, any action, suit or proceeding or any claim
asserted) (collectively, "Losses") for which the Indemnified Parties
may become subject insofar as such Losses (or actions in respect
thereof):
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement, Contract Prospectus, Contract or sales literature or other
promotional material relating to a Separate Account or the Contracts
(collectively, "Account documents") or arise out of or are based upon
the omission or the alleged omission to state in any Account documents
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that Insurance Company will
not be liable in any such case to the extent that any such Loss arises
out of or is based upon any such materially untrue statement or
material omission, or alleged materially untrue statement or alleged
material omission made in any Account document which materially untrue
statement or material omission or alleged materially untrue statement
or alleged material omission was made in reliance upon and in
conformity with written information furnished by or on behalf of such
Indemnified Party specifically for use therein;
(b) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement, Portfolio Prospectus or sales literature or other
promotional material relating to Fund or a Portfolio (collectively,
"Portfolio documents") or arise out of or are based upon the omission
or the alleged omission to state in any Portfolio documents a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, provided such materially untrue statement or material
omission or alleged materially untrue statement or alleged material
omission was made in
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reliance upon and in conformity with information furnished to Fund or
Lazard by or on behalf of Insurance Company specifically for use
therein;
(c) arise out of or as a result of statements or representations (other
than statements or representations contained in any Portfolio document
not made in reliance upon and in conformity with information furnished
to Fund or Lazard by or on behalf of Insurance Company specifically
for use therein and on which Insurance Company has reasonably relied)
or wrongful conduct of Insurance Company or its respective agents and
persons under their respective control with respect to the sale and
distribution of Contracts or Portfolio shares;
(d) arise out of any material breach of any representation, warranty
and/or covenant made by Insurance Company in this Agreement, or arise
out of or result from any other material breach of this Agreement by
Insurance Company;
(e) arise out of or are related to any tax liability under Section 851 of
the Code arising from purchases or redemptions by the General Account
or the account of Insurance Company's affiliates.
(f) arise out of Insurance Company's incorrect calculation and/or
incorrect or untimely reporting of net purchase or net redemption
orders.
9.2 Fund and Lazard agree to indemnify and hold harmless Insurance Company
and each of its respective directors, trustees, general members,
officers, employees, agents and each person, if any, who controls
Insurance Company within the meaning of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 9.2), against
Losses for which Indemnified Parties may become subject insofar as
such Losses (or actions in respect thereof):
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Portfolio documents or
arise out of or are based upon the omission or the alleged omission to
state in any Portfolio documents a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that neither Fund nor Lazard will be liable in any such case
to the extent that any such Loss arises out of or is based upon any
such materially untrue statement or material omission or alleged
materially untrue statement or alleged material omission made in any
Portfolio document which materially untrue statement or material
omission or alleged materially untrue statement or alleged material
omission was made in reliance upon and in conformity with information
furnished by or on behalf of such Indemnified Party specifically for
use therein or otherwise for use in connection with the sale of the
Contracts or Portfolio shares;
(b) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in Account documents or arise
out of or are based upon the omission or the alleged omission to state
in any Account documents a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, provided such
materially untrue statement or material omission or alleged materially
untrue statement or alleged material omission was made in reliance
upon and in conformity with written information
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furnished to Insurance Company by or on behalf of Fund or Lazard
specifically for use therein;
(c) arise out of or as a result of statements or representations (other
than statements or representations contained in any Account document
not made in reliance upon an din conformity with information furnished
to Insurance Company by or on behalf of Fund or Lazard specifically
for use therein and on which Fund or Lazard have reasonably relied) or
wrongful conduct of Fund or Lazard or their respective agents and
persons under their respective control with respect to the sale and
distribution of Contracts or Portfolio shares;
(d) arise out of any material breach of any representation, warranty
and/or covenant made by Fund or Lazard in this Agreement, or arise out
of or result from any other material breach of this Agreement by Fund
or Lazard; or
(e) arise out incorrect or untimely calculation and/or reporting of the
daily net asset value, dividend rate or capital gain distribution rate
of a Portfolio; provided, however, that Losses arising out of
incorrect calculation of daily net asset value shall be determined in
accordance with paragraph 7 of Schedule 2.
9.3 In no event will any Party be liable for any consequential,
incidental, special or indirect damages.
9.4 Notwithstanding anything herein to the contrary, in no event shall
Fund or Lazard be liable to any individual or entity including,
without limitation, Insurance Company, Contract Distributor or any
Contractholder or Participant, with respect to any Losses that arise
out of or result from a breach of any representation, warranty, and/or
covenant made by Insurance Company or Contract Distributor hereunder
or by any Participating Company under an agreement containing
substantially similar representations, warranties and covenants.
9.5 (a) Promptly after receipt by a Party that may be entitled to
indemnification under this Article ("Indemnified Party" for purposes
of this Section 9.5) of notice of the commencement of any action which
may result in Losses, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under
this Article ("Indemnifying Party" for purposes of this Section 9.5),
notify Indemnifying Party of the commencement thereof. The failure to
so notify will not relieve Indemnifying Party from any liability under
this Article IX, except to the extent that Indemnifying Party is
damaged as a result of the failure to give such notice. If Indemnified
Party notifies Indemnifying Party of the commencement of any such
action, Indemnifying Party will be entitled to participate therein
and, to the extent that it may wish, assume the defense thereof, with
counsel reasonably satisfactory to Indemnified Party, and to the
extent that Indemnifying Party has given notice to such effect and is
performing its obligations under this Article, Indemnifying Party will
not be liable for any legal or other expenses subsequently incurred by
Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation. Notwithstanding the foregoing, in
any such proceeding, any Indemnified Party will have the right to
retain its own counsel, but the fees and expenses of such counsel will
be at its expense unless (a) Indemnifying Party and 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 Indemnifying Party and Indemnified Party and
representation of both parties by the
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same counsel would be inappropriate due to actual or potential
differing interests between them. Indemnifying Party will not be
liable for any settlement of any proceeding effected without its
written consent.
(b) No party will be liable under any of the foregoing indemnification
provisions with respect to any Losses or litigation to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith or gross negligence
in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.
9.6 A successor by law of any Party to this Agreement will be entitled to
the benefits of the indemnification contained in this Article IX.
ARTICLE X.
COMMENCEMENT AND TERMINATION
10.1 This Agreement will be effective as of the date first written above
and will continue in force until terminated in accordance with the
provisions herein.
10.2 This Agreement will terminate without penalty as to one or more
Portfolios:
(a) at any time from the date hereof upon 60 days' written notice;
(b) at the option of Insurance Company if it determines that shares of any
Portfolio are not reasonably available to meet the requirements of the
Contracts; Insurance Company will furnish prompt written notice of
election to terminate and termination will be effective upon receipt
of written notice by the other Parties;
(c) at the option of any Party other than Fund, in the event that (i) the
Portfolio ceases, after the passage of any applicable grace period, to
qualify as a regulated investment company under Subchapter M of the
Code or any successor provision or fails to comply with the
diversification requirements of Section 817(h) of the Code specified
in Section 2.5 of this Agreement, or if such terminating Party
reasonably believes that the Portfolio may fail to so qualify or
comply or (ii) the Portfolio's shares are not registered, issued or
sold in accordance with applicable federal law, or such law precludes
the use of such shares as the underlying investment medium of
Contracts issued or to be issued by Insurance Company; notice of
termination will be delivered by the terminating Party to all other
Parties and will specify the effective date of termination, which will
in no event be earlier than when all of such notices have been
received by all other Parties;
(d) at the option of Insurance Company upon the institution of formal
proceedings against Fund or Lazard or their respective affiliates by
the Commission or the NASD or any other regulatory body, the expected
or anticipated ruling, judgment or outcome of which would, in
Insurance Company's reasonable judgment, materially impair the other's
ability to meet and perform its obligations and duties hereunder;
prompt written notice of election to terminate will be furnished with
termination to be effective as specified therein;
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(e) at the option of Fund upon the institution of formal proceedings
against Insurance Company or its affiliates by the Commission, the
NASD or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in Fund's reasonable judgment,
materially impair the other's ability to meet and perform its
obligations and duties hereunder; prompt written notice of election to
terminate will be furnished with termination to be effective as
specified therein;
(f) upon termination of the Investment Management Agreement between Fund,
on behalf of its Portfolios, and Lazard or its successors unless
Insurance Company specifically approves the selection of a new
investment adviser for the Portfolios; notice of termination will be
delivered by the terminating Party to all other Parties and will
specify the effective date of termination, which will in no event be
more than 180 days after such notices will have been received by all
other Parties; Fund will promptly furnish notice of termination of the
Investment Management Agreement to each other Party;
(g) at the option of Fund upon a determination by the Board in good faith
and in light of its fiduciary duties to the Portfolios' shareholders
(including, without limitation, Insurance Company and the Separate
Accounts) under federal and any applicable state laws that it is no
longer advisable and in the best interests of shareholders for Fund to
continue to operate pursuant to this Agreement; notice of termination
shall be effective upon notice by Fund to Insurance Company of such
termination will be delivered by Fund to all other Parties and will
specify the effective date of termination which will in no event be
earlier than when all of such notices have been received by all other
Parties;
(h) at the option of any Party, if that Party will determine, in its sole
judgment reasonably exercised in good faith, that any other Party has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and such
material adverse change or material adverse publicity is likely to
have a material adverse impact upon the business and operation of the
terminating Party, such terminating Party will notify each other Party
in writing of such determination and its intent to terminate this
Agreement, and, if after considering the actions taken by the entity
suffering the adverse change or publicity and any other changes in
circumstances since the giving of such notice, such determination of
the terminating Party will continue to apply on the thirtieth day
after such notice has been received by all other Parties, such
thirtieth day will be the effective date of termination;
(i) upon assignment (as defined in the 0000 Xxx) of this Agreement, unless
made with the written consent of the non-assigning Parties;
(j) at the option of Insurance Company, upon any substitution of the
shares of another investment company or series thereof for shares of
Fund in accordance with the terms of the Contracts, provided that
Insurance Company has given at least forty-five days prior written
notice to Fund and Lazard of the date of substitution; or
(k) at the option of any Party, upon another Party's breach of any
material representation, warranty, covenant or other provision of this
Agreement; notice of termination will be delivered by the terminating
Party to all other Parties and will be effective thirty days after the
notice has been received by all other Parties, but only if the
breaching Party has not cured the breach, in all material respects, by
the end of that thirty day period and will specify the effective date
of termination which will in no event be earlier than when all of such
notices have been received by all other Parties.
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Any such termination pursuant to this Article X will not affect the
operation of Articles V or IX of this Agreement and such expense and
indemnification provisions will survive any termination of this
Agreement. The Parties agree that any termination pursuant to Article
VI will be governed by that Article.
10.3 Notwithstanding any termination of this Agreement, Fund and
Lazard may, at the option of Insurance Company, continue to make
available additional Portfolio shares pursuant to the terms and
conditions of this Agreement as provided below, for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as the "Existing Contracts").
Specifically, without limitation, the owners of the Existing
Contracts or Insurance Company, whichever will have legal
authority to do so, will be permitted to reallocate investments
among the Portfolios, redeem investments in the Portfolios
and/or invest in the Portfolios upon the making of additional
purchase payments under the Existing Contracts. The availability
of additional shares hereunder will be subject to the
restrictions and limitations set forth in this Agreement as
applicable.
10.4 In the event of any termination of this Agreement, the Parties
agree to cooperate and give reasonable assistance to one another
in taking all necessary and appropriate steps for the purpose of
ensuring that a Separate Account owns no shares of a Portfolio
beyond six months from the date of termination. Such steps may
include, without limitation, substituting other investment
company shares for those of the affected Portfolio.
ARTICLE XI.
AMENDMENTS
11.1 Any changes in the terms of this Agreement will be made by
agreement in writing by the Parties hereto, except as otherwise
specified herein.
ARTICLE XII.
NOTICE
12.1 Each notice required by this Agreement will be given by
certified mail, return receipt requested, to the appropriate
Parties at the following addresses:
Insurance Company: PHL Variable Insurance Company
One American Row, H-G
P. O. Box 5056 Hartford,
Connecticut 06102-5056
Attention: Xxxx X. X'Xxxxxxx
with a copy to: PHL Variable Insurance Company
One American Row, H-11
P. O. Xxx 0000 Xxxxxxxx,
Xxxxxxxxxxx 00000-0000
Attention: General Counsel
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Fund: Lazard Retirement Series, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Lazard: Lazard Asset Management Securities LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
with a copy to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Notice will be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII.
MISCELLANEOUS
13.1 If any provision of this Agreement is held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of
this Agreement will not be affected thereby.
13.2 The rights, remedies, indemnities and obligations contained in
this Agreement are cumulative and are in addition to any and all
rights, remedies, indemnities and obligations, at law or in
equity, to which the Parties are entitled.
13.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one
and the same instrument.
ARTICLE XIV.
LAW
14.1 This Agreement will be construed in accordance with the internal
laws of the State of New York, without giving effect to
principles of conflict of laws.
IN WITNESS WHEREOF, this Agreement has been executed and attested on
behalf of the Parties as of the date first above written.
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PHL VARIABLE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxxx X'Xxxxxxx
----------------------------------
Attest: /s/ Xxxx X. Xxxxx Xxxx Xxxxxxx X'Xxxxxxx, Senior Vice President
---------------------
LAZARD RETIREMENT SERIES, INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Attest: /s/ Xxxx X. Xxxxx Xxxxxxx Xxxxxxx, Deputy Chairman
---------------------
LAZARD ASSET MANAGEMENT SECURITIES LLC
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Attest: /s/ Xxxx X. Xxxxx Xxxxxxx Xxxxxxx, Deputy Chairman
---------------------
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SCHEDULE 1
Portfolios
----------
Lazard Retirement Small Cap Portfolio
Separate Accounts
-----------------
PHL Variable Accumulation Account
PHLVIC Variable Universal Life Account
PHL Variable--Lazard Participation Agrmt Final clean.doc
SCHEDULE 2
PORTFOLIO SHARE ORDER PROCESSING
--------------------------------
PRICING
-------
1. Each Business Day, Fund will use its best efforts to make each Portfolio's
closing net asset value per share ("NAV") available to Insurance Company by
6:30 p.m. Eastern time.
2. At the end of each Business Day, Insurance Company will calculate each
Separate Account's unit values. Using this unit value, Insurance Company
will process that Business Day's Contract and Separate Account transactions
to determine the net dollar amount of each Portfolio's shares to be
purchased or redeemed.
3. Fund hereby appoints Insurance Company as its agent for the limited purpose
of receiving orders for the purchase and redemption of Portfolio shares for
the Separate Accounts. Orders that Insurance Company receives from
Contractholders by the close of regular trading (the "Close of Trading") on
the New York Stock Exchange (the "NYSE") (usually 4:00 p.m., Eastern time)
on each Business Day will be treated by Fund and Insurance Company as though
received on that Business Day. Orders that Insurance Company receives after
the Close of Trading will be treated by Fund and Insurance Company as though
received on the next Business Day. All orders are subject to acceptance or
rejection in the sole discretion of Lazard or Fund or its agent, and orders
will be effective only upon receipt in proper form.
4. Insurance Company will transmit net purchase or redemption orders to Fund or
its designee by 9:30 a.m. Eastern time on the Business Day next following
the effective trade date. For informational purposes only, Insurance Company
will separately describe the amount of shares of each Portfolio that are
being purchased, redeemed, or exchanged from one Portfolio to the other. In
addition, Insurance Company will use its best efforts to notify Fund in
advance of any unusually large purchase or redemption orders.
5. Fund will execute purchase and redemption orders for a Portfolio's shares
that relate to Insurance Company's General Account, or that do not relate to
Contract transactions, at that Portfolio's NAV next determined after Fund
(not Insurance Company) receives the order and any related purchase payments
in accordance with this Schedule.
6. Fund will execute purchase and redemption orders for a Portfolio's shares
that relate to Contracts funded by Separate Accounts either registered under
the 1940 Act or not so registered in the same manner, but only to the extent
that Insurance Company represents and warrants that it is legally or
contractually obligated to treat such orders in the same manner. Each order
for Portfolio shares placed by Insurance Company that is attributable, in
whole or in part, to Contracts funded by an unregistered Separate Account
will be deemed to constitute such representation and warranty by Insurance
Company unless the order specifically states to the contrary. Otherwise,
Fund will treat orders attributable to unregistered Separate Account
Contracts in the same manner as orders for the General Account.
7. Fund will execute purchase or redemption orders for a Portfolio's shares
that do not satisfy the conditions specified in this Schedule at the
Portfolio's NAV next determined after such conditions have been satisfied.
PHL Variable--Lazard Participation Agrmt Final clean.doc
8. If Fund provides Insurance Company with materially incorrect net asset value
per share information through no fault of Insurance Company, Insurance
Company, on behalf of the Separate Account, may be entitled to an adjustment
to the number of shares purchased or redeemed to reflect the correct net
asset value per share in accordance with Fund's current policies for
correcting pricing errors. Any material error in the calculation of net
asset value per share, dividend rate or capital gain distribution rate
information will be reported promptly upon discovery to Insurance Company.
PAYMENT
-------
9. Insurance Company will pay for any net purchase order by wiring Federal
Funds to Fund or its designated custodial account by 4:00 p.m. Eastern time
on the same Business Day it transmits the order to Fund. If Fund does not
receive such payment by 4:00 p.m., Insurance Company will promptly, upon
Fund's request, reimburse Fund for any charges, costs, fees, interest or
other expenses incurred by Fund in connection with any advances to, or
borrowings or overdrafts by, Fund, or any similar expenses incurred by Fund,
as a result of portfolio transactions effected by Fund based upon such
purchase request.
10. Fund will pay for any net redemption order by wiring the redemption proceeds
to Insurance Company on the same Business Day after Insurance Company
transmits such order to Fund or, upon notice to Insurance Company, such
longer period as permitted by the 1940 Act or the rules, orders or
regulations thereunder. In the case of any net redemption order requesting
the application of proceeds from the redemption of one Portfolio's shares to
the purchase of another Portfolio's shares, Fund will so apply such proceeds
the same Business Day that Insurance Company transmits such order to Fund.
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