EXHIBIT 8 (m)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into and effective the 18TH of January
2007 (the "AGREEMENT"), by and among OM Financial Life Insurance Company, a life
insurance company organized under the laws of the State of Maryland (the
"COMPANY"), on behalf of itself and each separate account of the Company named
in Schedule A to this Agreement, as may be amended from time to time (each
account referred to as the "ACCOUNT" and collectively as the "ACCOUNTS"); Third
Avenue Variable Series Trust, an open-end management investment company
organized under the laws of the State of Delaware (the "FUND"); Third Avenue
Management LLC, a limited liability company organized under the laws of the
State of Delaware and investment adviser to the Fund (the "ADVISER"); and X.X.
Xxxxxxx LLC, a limited liability company organized under the laws of the State
of Delaware and principal distributor of the Fund (the "DISTRIBUTOR").
WHEREAS, the Fund is registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 ACT"), and was established for the
purpose of serving as an investment vehicle for separate accounts established
under state law to hold assets in support of variable life insurance contracts
and variable annuity contracts within the meaning of section 817(d) of the
Internal Revenue Code of 1986, as amended (the "CODE"), to be offered by
companies taxed as domestic insurance companies under the Code that have entered
into participation agreements substantially similar to this Agreement (the
"PARTICIPATING INSURANCE COMPANIES"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "PORTFOLIOS"); and
WHEREAS, the Company is taxed as a domestic insurance company under
Subchapter L of the Code and is an issuer of variable life insurance contracts
and variable annuity contracts within the meaning of Code section 817(d), which
contracts are set forth on Schedule A (the "CONTRACTS"), and, as depositor, has
established the Accounts set forth on Schedule A, each of which may be divided
into two or more subaccounts ("SUBACCOUNTS;" reference herein to "Accounts"
includes reference to each Subaccount thereof to the extent the context
requires), to hold assets that serve as investment vehicles for the Contracts
and funding agreements offered by the Company; and
WHEREAS, the Accounts are duly organized, validly existing separate
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of Maryland, to set aside and invest assets in support
of the Contracts, each Account is registered as a unit investment trust under
the 1940 Act, and the security interests deemed to be issued by the Accounts
under the Contracts will be registered as securities under the Securities Act of
1933 (the "1933 ACT") (or will be exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios named in
Schedule B, as such schedule may be amended from time to time (the "DESIGNATED
PORTFOLIOS"), on behalf of the Accounts to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Adviser and the Distributor agree as follows:
ARTICLE I: SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios that each Account orders (based on orders placed by Contract owners
in accordance with the terms of this Agreement), executing such orders on a
daily basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order for the
shares of the Fund. For purposes of this Section 1.1, the Company will be the
designee of the Fund for receipt of such orders from each Account and receipt by
such designee will constitute receipt by the Fund; PROVIDED THAT the Company
receives such orders prior to the close of regular trading on the New York Stock
Exchange and the Fund receives notice of such orders by 10:00 a.m. Eastern Time
on the next following Business Day or such later time as permitted by Section
1.11. "BUSINESS DAY" will mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission (the "COMMISSION"). The
Fund may net the notice of redemptions it receives from the Company under
Section 1.3 of this Agreement against the notice of purchases it receives from
the Company under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an order
to purchase Fund shares is made in accordance with Section 1.1. Payment will be
made in federal funds transmitted by wire. Upon receipt by the Fund of the
payment, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Fund held by the Company (based on orders placed by
Contract owners on that Business Day), executing such requests on a daily basis
at the net asset value next computed after receipt and acceptance by the Fund
or its agent of the request for redemption. For purposes of this Section 1.3,
the Company will be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee will constitute
receipt by the Fund; provided the Company receives such orders prior to the
close of regular trading on the New York Stock Exchange and the Fund receives
notice of such requests for redemption by 10:00 a.m. Eastern Time on the next
following Business Day or such later time as permitted by Section 1.11. After
consulting with the Company, the Fund reserves the right to delay payment of
redemption proceeds, but in no event may any such delay by the Fund in paying
redemption proceeds cause the Company or any Account to fail to meet its
obligations under Section 22(e) of the 0000 Xxx.
1.4 The Company will place separate orders to purchase or redeem shares of each
Designated Portfolio. Each order shall describe the net amount of shares and
dollar amount of each Designated Portfolio to be purchased or redeemed. In the
event of net purchases, the Company shall pay for net purchase orders by wiring
federal funds to Fund or its designated custodial account (by 2:00 p.m. EST) on
the next Business Day after an order to purchase Designated Portfolio shares is
received and processed by the Fund in accordance with the provisions of Section
1.1 hereof or such later time as permitted by Section 1.11. Upon receipt by the
Fund of
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the payment, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund. In the event of net redemptions,
the Fund shall pay the net redemption proceeds by wiring federal funds to the
Company or its designated custodial account (by 2:00 pm EST) on the next
Business Day after an order to redeem a Designated Portfolio's shares is made
in accordance with the provision of Section 1.2 hereof. Upon receipt by the
Company of the payment, such funds shall cease to be the responsibility of the
Fund and shall become the responsibility of the Company.
1.5 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share by the
Company and its Accounts on those days on which the Fund calculates its
Designated Portfolio net asset value pursuant to rules of the Commission and
the Fund shall use best efforts to calculate such net asset value on each day
on which the NYSE is open for regular trading; provided, however, that the
Board of Directors of the Fund (the "FUND BOARD") may refuse to sell shares of
any Portfolio to any person or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Fund Board acting in
good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Portfolio.
1.6 The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, to qualified pension and
retirement plans, or to such other persons as are permitted under applicable
provisions of the Code and the regulations promulgated thereunder, the sale to
which will not impair the tax treatment currently afforded the Contracts. No
shares of any Portfolio will be sold directly to the general public.
1.7 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, VI and VII of this Agreement, and Sections 2.1, 2.2, 2.3,
and 2.4 of Article II are in effect to govern such sales.
1.8 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus; provided that the Fund provides 60
days' advance written notice of any provision that is inconsistent with the
terms of this Agreement, and provided that in no event shall the Company be
required to receive purchase and redemption orders any earlier than prior to
the close of regular trading on the New York Stock Exchange in order to receive
the net asset value next computed on that Business Day to the extent permitted
by applicable law, including the Commission staff s no-action letter to New
York Life Fund Incorporated (publicly available May 7, 1971), and provided that
no such provision shall limit Company's right to purchase and redeem Fund
shares as set forth in this Agreement except as required by law. The Company
agrees that Fund shares are not transferable by the Company other than to the
Fund upon redemption or from one Account to another Account.
1.9 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate Subaccount of each
Account.
1.10 The Fund will furnish same day notice (by facsimile or by e-mail) to the
Company of the
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declaration of any income, dividends, or capital gain distributions payable on
each Designated Portfolio's shares. The Company hereby elects to receive all
such dividends and distributions as are payable on the Portfolio shares in the
form of additional shares of that Portfolio at the exdividend date net asset
values. The Company reserves the right to revoke this election (but must do so
in a writing given in accordance with Article XI below) and thereafter to
receive all such dividends and distributions in cash. The Fund will notify the
Company of the number of shares so issued as payment of such income, dividends,
and distributions.
1.11 The Fund will make the net asset value per share information 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 will use its reasonable best efforts to make such net
asset value per share available by 7:00 p.m., Eastern Time, on each day on
which the NYSE is open for regular trading. In the event that the Fund is
unable to meet the 7:00 p.m. time stated herein, it shall provide additional
time for the Company to place orders for the purchase and redemption of Fund
shares and wire net payments for the purchase of Fund shares. Such additional
time shall be equal to the additional time that the Fund takes to make the net
asset value available to the Company. If the Fund provides the Company with
materially incorrect net asset value per share information (as determined under
SEC guidelines), the Fund shall make an adjustment to the number of shares
purchased or redeemed for the Accounts to reflect the correct net asset value
per share, and the Adviser shall bear the cost of correcting such errors and
shall reimburse the Company for any documented out-of-pocket expenses (NOT
including compensation of Company staff) incurred related to correction of the
net asset value (including correcting Contract owner accounts). Any material
error in the calculation or reporting of net asset value per share, dividend or
capital gain information shall be reported to the Company upon discovery by the
Fund.
ARTICLE II: REPRESENTATIONS AND WARRANTIES
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 registration
thereunder, and that the Contracts will be issued, sold, and distributed in
compliance with all applicable federal and state laws. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law, that it is taxed as a domestic insurance
company under the Code, that it has legally and validly established each
Account as a separate account under applicable law, that each Account is or
will be registered as a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a segregated investment account for the Contracts,
or is exempt from registration thereunder, and that it will maintain such
registration for so long as any Contracts are outstanding, as applicable. The
Company will amend the registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the Account
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 will
register and qualify the Contracts for sale in accordance with the securities
laws of the various states only if and to the extent required by applicable
law.
2.2 The Company represents and warrants that the Contracts are currently, and
covenants and warrants that at the time of issuance will be, qualified as
variable life insurance contracts or variable annuity contracts (as applicable)
under applicable provisions of the Code and that it will make every effort to
maintain such treatment, including availing itself of any correction or
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closing agreement procedures permitted under the Code or 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 the Fund with the requirements of
Subchapter M and Section 817(h) of the Code, the regulations thereunder, or any
successor provision.
2.3 The Company represents and warrants that it is taxed as a domestic
insurance company under Subchapter L of the Code; that it will be the owner of
the Fund shares under all applicable laws (subject to the Fund's
acknowledgement that the Contract owners are deemed to be the beneficial owners
of the Fund shares); that Fund shares will constitute the only assets of any
Subaccount of an Account treated as a "segregated asset account" (as defined in
the regulations promulgated pursuant to section 817(h) of the Code) holding
Fund shares; and that interests in each Account holding Fund shares are
available exclusively through the purchase of a variable contract within the
meaning of section 817(d) of the Code.
2.4 The Company represents and warrants that it will not purchase shares of the
Designated Portfolio(s) with assets derived from tax-qualified retirement plans
except, indirectly, through Contracts purchased in connection with such plans.
The Company represents and warrants that it will not transfer any Fund shares
except to the Fund upon redemption or from one Account to another Account.
2.5 The Company represents and warrants that it will notify the Fund and the
Adviser immediately upon having a reasonable basis for believing that any of
its representations and warranties in this Article II have ceased to be
accurate or will not be accurate in the future. In the event any such
occurrence will have a material adverse effect on the Fund, the Company shall,
upon notice by the Fund, take all reasonable steps to seek an order pursuant to
Section 26(c) of the 1940 Act to permit the substitution of other securities
for the shares of the Designated Portfolios.
2.6 Each of the Fund and the Adviser represents and warrants that shares of the
Designated Portfolio(s) sold pursuant to this Agreement will be registered
under the 1933 Act and duly authorized for issuance in accordance with
applicable law and represents and warrants that the Fund is, and will remain
registered as an open-end management investment company under the 1940 Act for
as long as such shares of the Designated Portfolio(s) are sold pursuant to this
Agreement. The Fund will amend the registration statement for its shares under
the 1933 Act and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Fund will register and qualify the
shares of the Designated Portfolio(s) for sale in accordance with the laws of
the various states only if and to the extent required by applicable law.
2.7 Each of the Fund and the Adviser represents and warrants that it will use
its reasonable commercial efforts to comply with the laws of its respective
state of domicile and, to the extent reasonably requested in writing by the
Company, any 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 Fund. If the Fund cannot (or in its
discretion elects not to) comply with such state insurance laws or regulations,
it will so notify the Company in writing. Neither the Fund nor the Adviser
makes any other representation as to whether any aspect of their respective
operations (including, but not limited to, fees and expenses, and
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investment policies) complies with the insurance laws or regulations of any
state. The Company hereby covenants that it will use its best efforts to notify
the Fund and the Adviser in writing of any restrictions imposed by state
insurance laws that may become applicable to the Fund as a result of the
Accounts' investments therein. The Fund and the Adviser agree that they will
furnish the information required by state insurance laws to assist the Company
in obtaining the authority needed to issue the Contracts in various states.
2.8 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-l under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-l,
the Fund undertakes to have the directors of its Fund Board, a majority of who
are not "interested" persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
2.9 The Fund represents and warrants that it is lawfully organized and validly
existing under the laws of the State of Delaware and that the Fund does and
will comply in all material respects with applicable provisions of the 1940 Act
and any applicable regulations thereunder. The Fund represents and warrants
that the Fund's operations, and that of each Designated Portfolio, do and will
comply with applicable federal and state law.
2.10 The Fund represents and warrants that all of the Fund's directors,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and will continue to be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as required
currently by Rule 17 g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond includes coverage for larceny
and embezzlement and is issued by a reputable bonding company.
2.11 The Adviser represents and warrants that it is lawfully organized and
validly existing under the laws of its state of organization; it is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended (the "ADVISERS ACT"), and will remain duly registered under all
applicable federal and state securities laws; and that it will perform its
obligations for the Fund in accordance in all material respects with the laws
of the State of Delaware and any applicable state and federal securities laws.
2.12 The Distributor represents and warrants that it is lawfully organized and
validly existing under the laws of its state of organization; it is registered
as a broker-dealer under the Securities Exchange Act of 1934, as amended (the
"1934 ACT") and will remain duly registered under all applicable federal and
state securities laws; it is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), and it serves as principal
underwriter/distributor of the Fund; and it will perform its obligations for
the Fund in accordance in all material respects with the laws of the State of
Delaware and any applicable state and federal securities laws.
2.13 The Fund and Adviser represent and warrant that each Designated Portfolio
currently qualifies as a Regulated Investment Company ("RIC") under Subchapter M
of the Code and they will maintain qualification of each Designated Portfolio as
a RIC. The Fund will notify the Company immediately upon having a reasonable
basis for believing that any Designated Portfolio has ceased to so qualify or
that it might not so qualify in the future.
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2.14 The Fund and Adviser represent and warrant that each Designated Portfolio
will be "adequately diversified" within the meaning of section 817(h) of the
Code, the regulations thereunder, and any amendments or other modifications or
successor provisions to such section or regulation; provided that the shares of
such Designated Portfolio comprise the only assets of any Subaccount of an
Account treated as a segregated asset account (as defined by the regulations
promulgated pursuant to section 817(h) of the Code) holding shares of such
Designated Portfolio. The Fund will notify the Company promptly upon having a
reasonable basis for believing that the Fund or a Portfolio thereunder has
ceased to comply with the diversification requirements or that the Fund or
Portfolio is likely not to comply with the diversification requirements in the
future. In the event of a breach of this representation and warranty, the Fund
will take all reasonable steps to adequately diversify the relevant Designated
Portfolio so as to achieve compliance with Treasury regulation section 1.817-5.
ARTICLE III: FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether intentional
or in good faith or otherwise) of the Fund to comply with the requirements of
Subchapter M of the Code or the diversification requirements of Section 817(h)
of the Code may result in the Contracts not being treated as variable contracts
for federal income tax purposes, which could have adverse tax consequences for
Contract owners and could also adversely affect the Company's corporate tax
liability. The Fund and the Adviser further acknowledge that any such failure
may result in costs and expenses being incurred by the Company in obtaining
whatever regulatory authorizations are required to substitute shares of another
investment company for those of the failed Fund as well as fees and expenses of
legal counsel and other advisors to the Company and any federal income taxes,
interest or tax penalties incurred by the Company in connection with any such
failure.
3.2 Upon request from time to time, the Fund agrees to provide the Company with
a certificate or statement indicating compliance by each Portfolio of the Fund
with Section 817(h) of the Code, such certificate or statement to be sent to
the Company no later than forty-five (45) days following the end of each
calendar quarter.
3.3 The Fund represents and warrants that the Fund is in and shall maintain
substantial compliance with Rule 38a-1 under the 1940 Act, and the Adviser
represents and warrants that the Adviser is in and shall maintain substantial
compliance with Rule 206(4)-7 under the Advisers Act.
ARTICLE IV: PROSPECTUS AND PROXY STATEMENTSNOTING
4.1 At least annually (or in the case of a prospectus supplement, when that
supplement is issued), the Fund will timely provide the Company with as many
copies of the current Fund prospectus (describing only the Designated
Portfolio(s)) and any supplements thereto as the Company may reasonably request
for distribution to Contract owners at the time of Contract fulfillment and
confirmation. The Fund will provide, at the Fund's expense, as many copies of
said prospectus as necessary for distribution to existing Contract owners. The
Fund will provide the copies of said prospectus to the Company or
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to its mailing agent. The Company will distribute the prospectus to existing
Contract owners at its expense. The Fund also shall provide to the Company, at
the Company's expense, as many copies of the current Fund prospectus (describing
only the Designated Portfolio(s) and any supplement thereto, as the Company may
reasonably request for distribution to prospective purchasers of Contracts. If
requested by the Company, in lieu thereof, the Fund will provide such
documentation, including a final copy of a current prospectus set in type at the
Fund's expense, and other assistance as is reasonably necessary in order for the
Company at least annually (or more frequently if the Fund prospectus is amended
more frequently) to have the new prospectus for the Contracts and the Fund's new
prospectus printed together, in which case the Fund agrees to pay its
proportionate share of reasonable expenses directly related to the required
disclosure of information concerning the Fund. The Fund will, upon request,
provide the Company with a copy of the Fund's prospectus through electronic
means to facilitate the Company's efforts to provide Fund prospectuses via
electronic delivery.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available upon request from the
Company. The Fund will provide the Company, at the Company's expense, with as
many copies of the SAI and any supplements thereto as the Company may
reasonably request for distribution, at the Company's expense, to prospective
Contract owners and applicants. To the extent that the Designated Portfolio(s)
are one or more of several Portfolios of the Fund, the Fund shall bear the cost
of providing the Company only with disclosure related to the Designated
Portfolio(s). The Fund will provide, at the Fund's expense, as many copies of
its SAI as is necessary for distribution to any existing Contract owner who
requests such statement or whenever state or federal law requires that such
statement be provided. The Fund will provide the copies of said SAI to the
Company or to its mailing agent. The Company will distribute the SA! as
requested.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to shareholders/Contract
owners, and other permissible communications to shareholders/Contract owners in
such quantity as the Company will reasonably require. The Company will
distribute such reports and other communications to existing Contract owners.
The Company will distribute proxy material related to the Account to existing
Contract owners. The Company will distribute proxy material related to the Fund
to existing Contract owners and will xxxx the Fund for the reasonable cost of
such distribution.
4.4 If and to the extent required by law, the Company will:
(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 shares of the Designated Portfolios held in the Account for
which no timely instructions have been received in the same proportion
as shares of such Designated Portfolio for which instructions have been
received from the Company's Contract owners,
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Fund shares held in any segregated asset
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account in its own right, to the extent permitted by law. The Company will be
responsible for assuring that the Accounts participating in the Fund calculate
voting privileges in a manner consistent with all legal requirements, including
the Proxy Voting Procedures set forth in Schedule C and the Mixed and Shared
Funding Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the Commission may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, to comply
with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of the 0000 Xxx) as well as with Section 16(a) and,
if and when applicable, Section 16(b). Further, the Fund will act in accordance
with the Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of directors and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE V: SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or the
Adviser, each piece of sales literature or other promotional material in which
the Fund or the Adviser is named, at least ten (10) Business Days prior to its
use. No such material will be used if the Fund or the Adviser reasonably
objects to such use within five (5) Business Days after receipt of such
material.
5.2 The Company will not, except with advance written permission of the Fund or
the Adviser, give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the exact information or specific representations
contained in the registration statement, prospectus, or SAI for Fund shares, as
such registration statement, prospectus, and SAI may be amended or supplemented
from time to time, or in reports or proxy statements for the Fund approved by
the Fund or the Adviser for distribution, or in sales literature or other
material provided by the Fund or by the Adviser. The Fund and the Adviser agree
to respond to any request for approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or its separate account is named, at least ten
(10) Business Days prior to its use. No such material will be used if the
Company or its designee reasonably objects to such use within five (5) Business
Days after receipt of such material.
5.4 The Fund and the Adviser will not, except with written permission of the
Company, give any information or make any representations or statements on
behalf of the Company or concerning the Company, any Account, or the Contracts
other than the information or representations contained in a registration
statement, prospectus, or SAI for the Contracts, as such registration
statement, prospectus, or SAI may be amended or supplemented from time to time,
or in reports for any Account or the Contracts that are approved by the Company
for distribution to Contract owners, or in sales literature or other material
provided by the Company. The Company agrees to respond to any request for
approval on a prompt and timely basis.
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5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, exemption orders, no-action
letters, and all amendments to any of the above that relate to the Fund or its
shares within a reasonable time after filing of each such document with, or
obtaining of such document from, the Commission or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for voting
instructions, sales literature and other promotional materials, exemption
orders, no action letters, and all amendments to any of the above, that relate
to the Contracts or each Account, within a reasonable time after filing of each
such document with, or obtaining of such documents from, the Commission or the
NASD (except that with respect to post-effective amendments to such
prospectuses and SAIs and sales literature and promotional material, only those
prospectuses and SAIs and sales literature and promotional material that relate
to or refer to the Fund will be provided.) In addition, the Company will
provide to the Fund at least one complete copy of (i) a registration statement
that relates to the Contracts or each Account, containing representative and
relevant disclosure concerning the Fund; and (ii) any post-effective amendments
to any registration statements relating to the Contracts or such Account that
refer to or relate to the Fund.
5.7 The Fund and the Adviser 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 Fund's registration statement, particularly
any change that will require a change to the registration statement or
prospectus or statement of additional information for any Account. The Fund and
the Adviser will cooperate with the Company so as to enable the Company to
solicit proxies from Contract owners or to make changes to its prospectus,
statement of additional information or registration statement, in an orderly
manner. The Fund and the Adviser will reasonably consider having changes to the
Fund's documents that would require changes to the Contract documents become
effective simultaneously with the annual updates for such documents.
5.8 For purposes of this Article V, 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 or tape recording, videotape display,
signs or billboards, motion pictures, or other public media, (i.e., on-line
networks such as the Internet or other electronic messages)), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials and any other material constituting
sales literature or advertising under the NASD rules, the 1933 Act or the 0000
Xxx.
5.9 The Fund, the Adviser, and the Distributor hereby consent to the Company's
use of the names of the Fund, the Adviser, and the Distributor, as well as the
names of the Designated Portfolios set forth in Schedule B of this Agreement,
solely in connection with marketing the Contracts, subject to the terms of
Sections 5.1 of this Agreement. The Company acknowledges
10
and agrees that the Adviser and the Distributor and/or their affiliates own all
right, title, and interest in and to the names and related service marks,
design logos, and products relating to the Third Avenue Variable Series Trust
and Third Avenue, and covenants not, at any time, to challenge the rights of
the Fund, the Adviser, and the Distributor and/or their affiliates to such name
or design or the validity or distinctiveness thereof The Fund, the Adviser, and
the Distributor hereby consent to the Company's use, for the sole purpose of
marketing the Contracts, of any trademark, trade name, service xxxx or logo
used by the Fund, the Adviser, and the Distributor, subject to the Fund's, the
Adviser's, and/or the Distributor's prior written approval of such use and in
accordance with reasonable requirements of the Fund, the Adviser, or the
Distributor. Such consent will terminate with the termination of this
Agreement. The Fund, the Adviser, or the Distributor may withdraw this consent
as to any particular use of any such name or identifying marks at any time (i)
upon the Fund's, the Adviser's, or the Distributor's reasonable determination
that such use would have a material adverse effect on the reputation or
marketing efforts of the Adviser, the Distributor, or such Fund or (ii) if no
investment company or series or class of shares of any investment company
advised by the Adviser or distributed by the Distributor continues to be
offered through variable insurance contracts issued by the Company; provided,
however, that the Adviser or the Distributor may, in either's individual
discretion, continue to use materials prepared or printed prior to the
withdrawal of such authorization. The Company agrees and acknowledges that all
use of any designation comprised in whole or in part of the name, trademark,
trade name, service xxxx, or logo under this Agreement shall inure to the
benefit of the Fund, the Adviser, and/or the Distributor.
5.10 The Fund, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information concerning
the Company, the Fund, the Adviser, or the Distributor, respectively, and their
respective affiliated companies, that is intended for use only by brokers or
agents selling the Contracts is properly marked as "Not For Use With The
Public" or by some similar designation of the same import, and that such
information is only so used.
ARTICLES VI: FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under this
Agreement, except as provided below: (a) if the Fund adopts and implements a
plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution and
shareholder servicing expenses with respect to any Designated Portfolio, then,
subject to obtaining any required exemption orders or other regulatory
approvals, the Fund or the Distributor may make payments to the Company or to
the underwriter for the Contracts if and in such amounts agreed to by the Fund
in writing; and (b) the Fund or the Distributor may pay fees to the Company for
administrative services provided to Contract owners that are not primarily
intended to result in the sale of shares of the Designated Portfolio or of
underlying Contracts as may be separately agreed to in writing.
6.2 All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. All shares of the Designated
Portfolios will be duly authorized for issuance and registered in accordance
with applicable federal law and, to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to sale. The Fund will bear the
expenses for the cost of registration and qualification of the Fund's shares,
including without limitation, the preparation of and filing with the Commission
of Forms N-CSR
11
and N-SAR and Rule 24f-2 Notices and payment of all applicable registration or
filing fees with respect to shares of the Fund; preparation and filing of the
Fund's prospectus, SAI and registration statement, proxy materials and reports;
typesetting and printing the Fund's prospectus and SAI (to the extent provided
by and as determined in accordance with Article IV above); typesetting and
printing proxy materials and reports to Contract owners (including the costs of
printing a Fund prospectus that constitutes an annual report) (to the extent
provided by and as determined in accordance with Article IV above); the
preparation of all statements and notices required by any federal or state law;
all taxes on the issuance or transfer of the Fund's shares; any expenses
permitted to be paid or assumed by the Fund pursuant to a plan, if any, under
Rule 12b-1 under the 1940 Act; and other costs associated with preparation of
prospectuses and SAIs for the Designated Portfolios in electronic or typeset
format, as well as any other expenses as set forth in Article IV of this
Agreement.
ARTICLE VII: MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief from
certain provisions of the 1940 Act and certain Rules thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and qualified
pension and retirement plans outside of the separate account context (the
"MIXED AND SHARED FUNDING EXEMPTIVE ORDER"). The parties to this Agreement
agree that the conditions or undertakings specified in the Mixed and Shared
Funding Exemptive Order and that may be imposed on the Company, the Fund and/or
the Adviser by virtue of the receipt of such order by the Commission, will be
incorporated herein by reference, and such parties agree to comply with such
conditions and undertakings to the extent applicable to each such party.
7.2 The Fund agrees that the Fund Board shall at all times consist of trustees
a majority of whom (the "DISINTERESTED TRUSTEES") are not interested persons of
the Fund within the meaning of Section 2(a)(19) of the 1940 Act and the rules
thereunder and as modified by any applicable orders of the SEC, except that if
this condition is not met by reason of the death, disqualification, or bona
fide resignation of any director, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
maybe filled by the Board; (b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies or (c) for such
longer period as the Commission may prescribe by order upon application.
7.3 The Company will report any potential or existing conflicts of which it is
aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Fund Board whenever Contract owner voting instructions are to be disregarded.
The Fund Board will record in its minutes, or other appropriate records, all
reports received by it and all action with regard to a conflict. The Company
will 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.
12
7.4 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 Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 4.4, 4.5, 7.1, 7.2, and 7.3
of this Agreement will 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. Notwithstanding the foregoing, the Fund, in
its sole discretion, retains the right to terminate this Agreement if
compliance with Rule 6e-2 and Rule 6e-3(T) as amended would be more burdensome
on the Fund, provided that, any such termination will be effected in accordance
with Section 10.1 below.
ARTICLE VIII: INDEMNIFICATION
8.1 Indemnification by the Company.
(a) The Company agrees to indemnify and hold harmless the Fund, the Adviser,
the Distributor, and each person, if any, who controls the Fund, the Adviser,
or the Distributor within the meaning of such terms under the federal
securities laws and any director, trustee, officer, employee or agent of the
foregoing (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,
such consent not to be unreasonably withheld or delayed) or actions in respect
thereof (including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regu1ation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale, acquisition, or holding of the Fund shares or the Contracts and:
(1) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement, prospectus or SAI 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 or necessary to make
such statements not misleading in light of the circumstances in which
they were made; provided that this agreement to indemnify will not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund, the
Adviser, or the Distributor for use in the registration statement,
prospectus or SAI for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(2) 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 Fund registration statement, prospectus, XXx or sales literature
13
or other promotional material of the Fund, or any amendment or
supplement to the foregoing, not supplied by the Company or its
designee) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(3) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Fund registration statement, prospectus,
SAI or sales literature or other promotional material of the Fund (or
amendment or supplement) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make such statements not misleading in light of the circumstances in
which they were made, if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company or its designee; or
(4) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(5) arise out of 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 by the Company of this Agreement;
except to the extent provided in Sections 8.1 (b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company otherwise
may have.
(b) No party will be entitled to indemnification under Section 8.1(a) if such
loss, claim, damage, liability or action is due to the willful misfeasance, bad
faith, or gross negligence in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard of its obligations
or duties under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance, holding or
sale of the Fund shares or the Contracts or the operation of the Fund.
8.2 Indemnification by the Adviser, the Distributor, and the Fund
(a) The Adviser, the Distributor, and the Fund jointly and severally agree to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of such terms under the federal securities laws
and any director, officer, employee or agent of the foregoing (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 Adviser and Distributor, such
consent not to be unreasonably withheld or delayed) or actions in respect
thereof (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
sale, acquisition, or holding of the Fund shares or the Contracts and:
(1) arise out of or are based upon any untrue statement or alleged untrue
statement of any
14
material fact contained in the registration statement, prospectus or SAI
for the Fund or sales literature or other promotional material of the
Fund (or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated or necessary to make such
statements not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify will not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Adviser, the Distributor, or the Fund by or
on behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature of the Fund (or
any amendment or supplement thereto) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or representations (other
than statements or representations contained in the Contracts or in the
Contract or Fund registration statements, prospectuses or statements of
additional information or sales literature or other promotional material
for the Contracts, or any amendment or supplement to the foregoing, not
supplied by the Adviser, the Distributor, or the Fund or persons under
the control of the Adviser, the Distributor, or the Fund respectively)
or wrongful conduct of the Adviser, the Distributor, or the Fund or
persons under the control of the Adviser, the Distributor, or the Fund,
respectively, with respect to the sale or distribution of the Contracts
or Fund shares; or
(3) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI or
sales literature or other promotional material covering the Contracts
(or any amendment or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated or
necessary to make such statement or statements not misleading in light
of the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Adviser, the
Distributor, or the Fund or persons under the control of the Adviser,
the Distributor, or the Fund; or
(4) arise as a result of any failure by the Adviser, the Distributor, or
the Fund to provide the services and furnish the materials under the
terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the Distributor, or
the Fund in this Agreement, or arise out of or result from any other
material breach of this Agreement by the Adviser, the Distributor, or
the Fund;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification will be in addition to any liability that the Adviser, the
Distributor, or the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a) if such
loss, claim, damage, liability or action is due to the willful misfeasance, bad
faith, or gross negligence in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard or its obligations or
duties under this Agreement.
15
(c) The Indemnified Parties will promptly notify the Adviser, the Distributor
and the Fund of the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection with the issuance,
holding or sale of the Contracts or the operation of the Account.
(d) Without in any way limiting the joint and several liability of the Fund,
Adviser, and Distributor pursuant to Section 8.2(a), the Advisor and the
Distributor shall not require the Fund to bear the cost of indemnification for
losses attributable to the Adviser and/or Distributor.
8.3 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII (as
such, the "INDEMNIFYING PARTY" for the purpose of this Section 8.3) 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 (as such, the "INDEMNIFIED PARTY" for the purpose of this Section
8.3) unless such Indemnified Party has 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 has been served upon such
Indemnified Party (or after such party has received notice of such service on
any designated agent), but failure to notify the Indemnifying Party of any such
claim will not relieve the Indemnifying Party from any liability that it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of the indemnification provision of this Article VIII, except
to the extent that the failure to notify or delay in notifying results in the
failure or material delay of actual notice to the Indemnifying Party and such
Indemnifying Party is damaged solely as a result of the failure to give or
delay in giving such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to participate, at
its own expense, in the defense thereof. The Indemnifying Party also will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party or parties named in the action. After notice from the Indemnifying
Party to the Indemnified Party of the Indemnifying Party's election to assume
the defense thereof, the Indemnified Party will bear the fees and expenses of
any additional counsel retained by it, and the Indemnifying Party will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation, unless:
(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 parties
joined by impleader) 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 (such
consent not to be unreasonably withheld or delayed) 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. A
successor by law of the parties to this Agreement will be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article
16
VIII will survive any termination of this Agreement.
8.4 Indemnification of the Company for the Fund's Failure to Comply with
Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether intentional or
in good faith or otherwise) to comply with the diversification requirements
specified in Section 2.14 of this Agreement may result in the Contracts not
being treated as variable contracts for federal income tax purposes, which
could 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(a) hereof and without in any way
limiting or restricting any other remedies available to the Company, the Fund,
the Adviser and the Distributor will pay on a joint and several basis all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply with
Section 2.14 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 Fund or Portfolio
(including but not limited to an order pursuant to Section 26(c) of the 1940
Act); fees and expenses of legal 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 Fund, the Adviser and/or the Distributor
under this Agreement.
ARTICLE IX: APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York without
reference to its conflicts of law provisions.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof will be interpreted and construed
in accordance therewith.
ARTICLE X: TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to one, some
or all of the Designated Portfolios, upon six (6) months' advance written notice
to the other parties or, if later, upon receipt of any required exemptive relief
or orders from the Commission, unless otherwise agreed in a separate written
agreement among the parties; or
17
(b) at the option of the Company, upon written notice to the other parties,
with respect to any Portfolio if shares of the Designated Portfolio are not
reasonably available to meet the requirements of the Contracts as determined in
good faith by the Company; or
(c) at the option of the Company, upon written notice to the other parties,
with respect to any Portfolio in the event any of such Portfolio's shares are
not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or
(d) at the option of the Fund, upon written notice to the other parties, upon
institution of formal proceedings against the Company by the NASD, the
Commission, the Insurance Commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to the sale of
the Contracts, the administration of the Contracts, the operation of the
Account, the purchase of the Fund shares, or otherwise, provided that the Fund
determines in its good faith judgment that any such proceeding could have a
material adverse effect on the Company's ability to perform its obligations
under this Agreement in accordance with the terms thereof; or
(e) at the option of the Company, upon written notice to the other parties,
upon institution of formal proceedings against the Fund, the Adviser, or the
Distributor by the NASD, the Commission or any state securities or insurance
department or any other regulatory body, provided that the Company determines
in its sole judgment, exercised in good faith, that any such proceeding would
have a material adverse effect on the Fund's or the Adviser's ability to
perform its obligations under this Agreement; or
(f) at the option of the Company, upon written notice to the other parties,
with respect to any Designated Portfolio, if a Designated Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company reasonably and in
good faith believes that the Designated Portfolio may fail to so qualify; or
(g) at the option of the Company, upon written notice to the other parties,
with respect to any Designated Portfolio if the Designated Portfolio fails to
meet the diversification requirements specified in Section 2.14 hereof or if
the Company reasonably and in good faith believes the Designated Portfolio may
fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written notice to the
other parties, upon another party's material breach of any provision of this
Agreement; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that the Fund, the Adviser or the Distributor
has suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of material
adverse publicity which is likely to have a material adverse impact upon the
business and operations of the Fund, the Adviser, or the Distributor and hence
to the Company; or
(j) at the option of the Fund or the Adviser, if the Fund or Adviser
respectively each determine in its sole judgment exercised in good faith that
the Company has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the
18
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Fund or the Adviser,
such termination to be effective sixty (60) days after receipt by the other
parties of written notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any necessary
regulatory approvals and/or the vote of the Contract owners having an interest
in the Account (or any sub-account) to substitute the shares of another
investment company for the corresponding Portfolio's shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying portfolio. The Company will give sixty
(60) days' prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares or of the filing of any
required regulatory approval( s); or
(1) at the option of the Company or the Fund upon a determination by a majority
of the Fund Board, or a majority of the disinterested Fund Board members, that
an irreconcilable material conflict exists among the interests of: (1) all
contract owners of variable insurance products of all separate accounts; or (2)
the interests of the Participating Insurance Companies investing in the Fund as
set forth in Article VII of this Agreement;
(m) at the option of the Fund in the event any of the Contracts are not issued
or sold in accordance with applicable federal and/or state law. Termination
will be effective immediately upon such occurrence without notice; or
(n) at the option of the Fund in the event that either or both of Rule 6e-2 and
Rule 6e-3(T) are amended, or Rule 6e-3(T) is adopted, and the Fund determines
the terms of the Rules as amended or adopted are burdensome on the Fund in
accordance with Section 7.4 above. Termination under this Section 10.1(n) shall
be effective upon 6 months advance written notice to Company, or if shorter,
upon advance notice to the Company equal to the period between the date the
amended rules are adopted and the compliance date for the amended rules;
provided that the right of termination provided by this Section 10.1 (n) shall
in no way limit either party's right to terminate under (and on the schedule
permitted by) Section 10. 1 (a) above.
10.2 Notice Requirement
(a) 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.
(b) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice will be given in advance
of the effective date of termination as required by such provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the Adviser and the
Distributor will, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "EXISTING CONTRACTS"). Specifically,
without limitation, the owners of the Existing Contracts will be permitted to
19
reallocate investments in the Designated Portfolios (as in effect on such
date), redeem investments in the Designated Portfolios and/or invest in the
Designated Portfolios upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.3 will not apply to
any terminations under Article VII and the effect of such Article VII
terminations will be governed by Article VII of this Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be affected
by any such termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement (as the same shall relate
to such Existing Accounts) also will survive and not be affected by any
termination of this Agreement.
ARTICLE XI: NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other parties.
If to the Company:
OM Financial Life Insurance Company
0000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Securities Counsel: Xxx Xxxxx
If to the Fund:
Third Avenue Variable Series
Trust x/x Xxxxx Xxxxxx Management
LLC 000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
If to the Adviser:
Third Avenue Management LLC
000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
If to the Distributor:
X.X. Xxxxxxx, Inc.
000 Xxxxx Xxxxxx,
00xx xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
20
ARTICLE XII: MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the
directors, officers, agents or shareholders assume (nor shall any have) any
personal liability for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the customers
of the Company or any of its affiliates (collectively the "PROTECTED PARTIES"
for purposes of this Section 12.2), information maintained regarding those
customers, and all computer programs and procedures developed by the Protected
Parties or any of their employees or agents in connection with the Company's
performance of its duties under this Agreement are the valuable property of the
Protected Parties. The Fund and the Adviser agree that if they come into
possession of any list or compilation of the identities of or other information
about the Protected Parties' customers, or any other property of the Protected
Parties, other than such information as may be independently developed or
compiled by the Fund or the Adviser from information supplied to them by the
Protected Parties' customers who also maintain accounts directly with the Fund
or the Adviser or the Distributor, the Fund and the Adviser will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with the
Company's prior written consent; (b) as required by law or judicial process; or
( c) for the purposes contemplated by this Agreement. The Fund and the Adviser
acknowledge that any breach of the agreements in this Section 12.2 could result
in immediate and irreparable harm to the Protected Parties for which there
might be no adequate remedy at law and agree that in the event of such a
breach, the Protected Parties will be entitled to seek equitable relief
including temporary and permanent injunctions, as well as such other relief as
any court of competent jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will not
be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties hereto.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
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12.9 Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and will provide to each
other and such authorities copies of such books and records as may be
reasonably requested in writing in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.10 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.
12.11 The schedules to this Agreement (each, a "SCHEDULE," collectively, the
"SCHEDULES") form an integral part hereof and are incorporated herein by
reference. The parties to this Agreement may agree in writing to amend the
Schedules to this Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Designated Portfolios of the Fund or
other applicable terms of this Agreement reflected on such Schedules.
References herein to any Schedule are to the Schedule then in effect, taking
into account any amendments thereto.
12.12 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.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
THIRD AVENUE VARIABLE SERIES TRUST
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
THIRD AVENUE MANAGEMENT LLC
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
OM Financial Life Insurance Company
By:
Name: Xxxxxxx X. XxXxxxx
Title: SVP, General Counsel & Secretary
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PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of OM Financial Life
Insurance Company are permitted in accordance with the provisions of this
Agreement to invest in Designated Portfolios of the Fund:
NAME OF SEPARATE ACCOUNT:
Old Mutual Financial Network Separate Account VA
CONTRACTS FUNDED BY SEPARATE ACCOUNT:
Beacon Navigator variable annuity
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PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolio(s) of the Fund.
THIRD AVENUE VALUE PORTFOLIO
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PARTICIPATION AGREEMENT SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to enable
the Company to consider and prepare for the solicitation of voting instructions
from owners of the Contracts and to facilitate the establishment of tabulation
procedures. At this time the Fund will inform the Company of the Record,
Mailing and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contract owner/policyholder (the "CUSTOMER") as of
the Record Date. Allowance should be made for account adjustments made after
this date that could affect the status of the Customers' accounts as of the
Record Date.
NOTE: The number of proxy statements is determined by the activities described
in this Step #2. The Company will use its best efforts to call in the number of
Customers to the Fund, as soon as possible, but no later than two weeks after
the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company either
before or together with the Customers' receipt of voting, instruction
solicitation material. The Fund will provide the last Annual Report to the
Company pursuant to the terms of Section 6.2 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("CARDS" or "CARD") is
provided to the Company by the Fund. The Company, at its expense, shall produce
and personalize the Voting Instruction Cards. The Fund or its affiliate must
approve the Card before it is printed. Allow approximately 2-4 business days
for printing information on the Cards. Information commonly found on the Cards
includes: _ name (legal name as found on account registration) address _ Fund
or account number _ coding to state number of units _ individual Card number
for use in tracking and verification of votes (already on Cards as printed by
the Fund). (This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices and
statements will be sent to Company for insertion into envelopes (envelopes and
return envelopes are provided and paid for by the Company). Contents of
envelope sent to Customers by the Company will include:
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Voting Instruction Card(s) _ one proxy notice and statement (one document) _
return envelope (postage pre-paid by Company) addressed to the Company or its
tabulation agent _ "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote as quickly as
possible and states that their vote is important. One copy will be supplied by
the Fund.) _ cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company. * The Fund must allow at least a 15-day
solicitation time to the Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from (but NOT
including,) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place in
another department or another vendor depending on process used. An often used
procedure is to sort Cards on arrival by proposal into vote categories of all
yes, no, or mixed replies, and to begin data entry. NOTE: Postmarks are not
generally needed. A need for postmark information would be due to an insurance
company's internal procedure and has not been required by the Fund in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card. NOTE: For Example, if the account registration is
under "Xxxx X. Xxxxx, Trustee," then that is the exact legal name to be printed
on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a new
Card and return envelope. The mutilated or illegible Card is disregarded and
considered to be NOT RECEIVED for purposes of vote tabulation. Any Cards that
have been "kicked out" (e.g. mutilated, illegible) of the procedure are "hand
verified," i.e., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the Cards
as they first arrive into categories depending upon their vote; an estimate of
how the vote is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of that vote should
occur. This may entail a recount.
12. The actual tabulation of votes is done in units which are then converted to
shares. (It is very important that the Fund receives the tabulations stated in
terms of a percentage and the number of SHARES.) The Fund must review and
approve tabulation format.
13. The Fund may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the
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Company as well as an original copy of the final vote. The Fund will provide a
standard form for each Certification. 15. The Company will be required to box
and archive the Cards received from the Customers. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or accounting
purposes, the Fund will be permitted reasonable access to such Cards.
16. All approvals and "signing-off may be done orally, but must always be
followed up in writing.
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