PARTICIPATION AGREEMENT - XXXXXXX
EXHIBIT
8(i)
FUND PARTICIPATION
AGREEMENT
among
XXXXXXX VARIABLE
SERIES, INC.
and
XXXXXXX ASSET
MANAGEMENT COMPANY, INC.
and
INSURANCE
COMPANY
[
Insurance
Company
] (the “Company”), XXXXXXX VARIABLE SERIES, INC.
BALANCED PORTFOLIO (the “Fund”) and XXXXXXX ASSET MANAGEMENT
COMPANY, INC. (the “Adviser”) hereby agree to an arrangement
whereby the Fund shall be made available to serve as underlying investment
media for Variable Annuity or Variable Life Contracts
(“Contracts”) to be issued by the Company.
1. Establishment of Accounts; Availabilitv of
Fund.
(a)
The Company represents that it has established Variable Annuity
Accounts I and II and may establish such other accounts as may be set forth
in Schedule A attached hereto and as may be amended from time to time with
the mutual consent of the parties hereto (the “Accounts”), each of
which is a separate account under Connecticut Insurance law, and has
registered or will register each of the Accounts (except for such Accounts
for which no such registration is required) as a unit investment trust under
the Investment Company Act of 1940 (the “1940 Act”), to serve as
an investment vehicle for the Contracts. Each Contract provides for the
allocation of net amounts received by the Company to an Account for
investment in the shares of one or more specified open-end management
investment companies available through that Account as underlying investment
media. Selection of a particular investment management company and changes
therein from time to time are made by the participant, beneficiary or
Contract owner, as applicable under a particular Contract.
(b)
The Adviser represents and warrants that the investments of the
series of the Fund (each designated a “Portfolio”) specified in
Schedule B attached hereto (as may be amended from time to time with the
mutual consent of the parties hereto) will at all times be adequately
diversified within the meaning of Section 817(h) of the Internal Revenue
Code of 1986, as amended (the “Code”), and the Regulations
thereunder, and that at all times while this Agreement is in effect, all
beneficial interests will be owned by one or more insurance companies or by
any other party permitted under Section 1.8175(f)(3) of the Regulations
promulgated under the Code or by the successor thereto, or by any other
party permitted under a Revenue Ruling or private letter ruling granted by
the Internal Revenue Service.
2. Pricing Information; Orders;
Settlement.
(a)
The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on behalf of
each Account at the net asset value applicable to each order on those days
on which the Fund calculates its net asset value (a “Business
Day”). Fund shares shall be purchased and redeemed in such quantity and
at such time determined by the Company to be necessary to meet the
requirements of those Contracts for which the Fund serve as underlying
investment media, provided, however, that the Board of Directors of the Fund
(hereinafter the “Directors”) may upon reasonable notice to the
Company, 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 Directors, acting in good faith and in the
best interests of the shareholders of any Portfolio and is acting in
compliance with their fiduciary obligations under federal and/or any
applicable state laws.
(b) The Fund will provide to the Company closing net asset value,
dividend and capital gain information at the close of trading each day that
the New York Stock Exchange (the “Exchange”) is open (each such
day a “Business Day”), and in no event later than 7:00 p.m.
Eastern Standard Time on such Business Day. The Company will send via
facsimile or electronic transmission to the Fund or its specified agent
orders to purchase and/or redeem Fund shares by 10:00 am. Eastern Standard
Time the following business day. Payment for net purchases will be wired by
the Company to an account designated by the Fund to coincide with the order
for shares of the Fund.
(c)
The Fund hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption orders for Fund shares
relating to the Contracts from Contract owners or participants. Orders from
Contract owners, participants or beneficiaries received from any distributor
of the Contracts (including affiliates of the Company) by the Company,
acting as agent for the Fund, prior to the close of the Exchange on any
given business day will be executed by the Fund at the net asset value
determined as of the close of the Exchange on such Business Day, provided
that the Fund receives written (or facsimile) notice of such order by 10
a.m. Eastern Standard Time on the next following Business Day. Any orders
received by the Company acting as agent on such day but after the close of
the Exchange will be executed by the Fund at the net asset value determined
as of the close of the Exchange on the next business day following the day
of receipt of such order, provided that the Fund receives written (or
facsimile) notice of such order by 10 a.m. Eastern Standard Time within two
days following the day of receipt of such order.
(d)
Payments for net redemptions of shares of the Fund will be wired
by the Fund to an account designated by the Company. Payments for net
purchases of the Fund will be wired by the Company to an account designated
by the Fund on the same Business Day the Company places an order to purchase
Fund shares. Payments shall be in federal funds transmitted by
wire.
(e)
Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other party), and
shall not be liable in the event that an error is a result of any
misinformation supplied by the other party.
(f)
The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule B offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information. The
Company shall not permit any person other than a Contract owner, participant
or beneficiary to give instructions to the Company which would require the
Company to redeem or exchange shares of the Fund. This provision shall not
be construed to prohibit the Company from substituting shares of another
fund, as permitted by law.
3. Expenses.
(a)
Except as otherwise provided in this Agreement, all expenses
incident to the performance by the Fund under this Agreement shall be paid
by the Fund or the Adviser, including the cost of registration of Fund
shares with the Securities and Exchange Commission (the “SEC”) and
in states where required. The Fund and Adviser shall pay no fee or other
compensation to the Company under this Agreement, and the Company shall pay
no fee or other compensation to the Fund or Adviser, except as provided
herein and in Schedule C attached hereto and made a part of this Agreement
as may be amended from time to time with the mutual consent of the parties
hereto. All expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party, unless otherwise
specified in this Agreement.
(b)
The Fund or the Adviser shall provide to the Company Post Script
files of periodic fund reports to shareholders and other materials that are
required by law to be sent to Contract owners. In addition, the Fund or the
Adviser shall provide the Company with a sufficient quantity of its
prospectuses, statements of additional information and any supplements to
any of these materials, to be used in connection with the offerings and
transactions contemplated by this Agreement. In addition, the Fund shall
provide the Company with a sufficient quantity of its proxy material that is
required to be sent to Contract owners. The Adviser shall be permitted to
review and approve the typeset form of such material prior to such printing
provided such material has been provided by the Adviser to the Company
within a reasonable period of time prior to typesetting.
(c)
In lieu of the Fund’s or Adviser’s providing printed
copies of prospectuses, statements of additional information and any
supplements to any of these materials, the Company shall have the right to
request that the Fund transmit a copy of such materials in an electronic
format (Post Script files), which the Company may use to have such materials
printed together with similar materials of other Account funding media that
the Company or any distributor will distribute to existing or prospective
Contract owners, participants or beneficiaries.
4. Representations.
The
Company agrees that it and its agents shall not, without the written consent
of the Fund or the Adviser, make representations concerning the Fund, or its
shares except those contained in the then current prospectuses and in
current printed sales literature approved by or deemed approved by the Fund
or the Adviser.
5. Termination.
This
Agreement shall terminate as to the sale and issuance of new
Contracts:
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(a) at the option of either the Company, the Adviser or
the Fund, upon sixty days advance written notice to the other
parties;
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(b) at the option of the Company, upon one week advance
written notice to the Adviser and the Fund, if Fund shares are not
available for any reason to meet the requirement of Contracts as
determined by the Company. Reasonable advance notice of election to
terminate shall be furnished by Company;
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(c) at the option of either the Company, the Adviser or
the Fund, immediately upon institution of formal proceedings against the
broker-dealer or brokerdealers marketing the Contracts, the Account, the
Company, the Fund or the Adviser by the National Association of Securities
Dealers, Inc. (the “NASD”), the SEC or any other regulatory
body;
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(d) upon the determination of the Accounts to substitute
for the Fund’s shares the shares of another investment company in
accordance with the terms of the applicable Contracts. The Company will
give 60 days written notice to the Fund and the Adviser of any decision to
replace the Fund’s’ shares;
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(e) upon assignment of this Agreement, unless made with
the written consent of all other parties hereto;
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(f) if Fund shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Fund shares
as an underlying investment medium for Contracts issued or to be issued by
the Company. Prompt notice shall be given by the appropriate party should
such situation occur.
6. Continuation of Agreement.
Termination as the result of any cause listed in Section S shall not
affect the Fund’s obligation to furnish its shares to Contracts then in
force for which its shares serve or may serve as the underlying medium
unless such further sale of Fund shares is prohibited by law or the SEC or
other regulatory body, or is determined by the Directors to be necessary to
remedy or eliminate an irreconcilable conflict pursuant to Section 10
hereof.
7. Advertising Materials; Filed
Documents.
(a)
Advertising and sales literature with respect to the Fund
prepared by the Company or its agents for use in marketing its Contracts
will be submitted to the Fund or its designee for review before such
material is submitted to any regulatory body for review. No such material
shall be used if the Fund or its designee
reasonably object to such use in writing, transmitted by facsimile within two
business days after receipt of such material.
(b)
At the Company’s request, the Fund will provide additional
copies of its financials as soon as available to the Company and at least
one complete copy of all registration statements, prospectuses, statements
of additional information, annual and semi-annual reports, proxy statements
and/or all amendments or supplements to any of the above that relate to the
Fund promptly after the filing of such document with the SEC or other
regulatory authorities. At the Adviser’s request, the Company will
provide to the Adviser at least one complete copy of all registration
statements, prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or supplements to
any of the above that relate to the Account promptly after the filing of
such document with the SEC or other regulatory authority.
(c)
The Fund or the Adviser will provide via Excel spreadsheet
diskette format or in electronic transmission to the Company at least
quarterly portfolio information necessary to update Fund profiles within
seven business days following the end of each quarter.
(d)
The Adviser will reimburse the Company for any incorrect
information provided to the Company under this Section as provided for in
Schedule C.
8. Proxy Voting.
(a)
The Company shall provide pass-through voting privileges on Fund
shares held by registered separate accounts to all Contract owners and
participants to the extent the SEC continues to interpret the 1940 Act as
requiring such privileges. The Company shall provide pass-through voting
privileges on Fund shares held by unregistered separate accounts to all
Contract owners.
(b)
The Company will distribute to Contract owners, participants and
beneficiaries, as appropriate, all proxy material furnished by the Fund and
will vote Fund shares in accordance with instructions received from such
Contract owners, participants and beneficiaries. If and to the extent
required by law, the Company, with respect to each group Contract and in
each Account, shall vote Fund shares for which no instructions have been
received in the same ’ proportion as shares for which such instructions
have been received. The Company and its agents shall not oppose or interfere
with the solicitation of proxies for Fund shares held for such Contract
owners, participants and beneficiaries.
9. Indemnification.
(a)
The Company agrees to indemnify and hold harmless the Adviser,
and its directors, officers, employees, agents and each person, if any, who
controls the Fund or its Adviser within the meaning of the Securities Act of
1933 (the “1933 Act”) against any losses, claims, damages or
liabilities to which the Fund or any such director, officer, employee,
agent, or controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, prospectus or sales literature of the Company or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or as a result of
conduct, statements or representations (other than statements or
representations contained in the prospectuses or sales literature of the
Fund) of the Company or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are the underlying
investment. The Company will reimburse any legal or other expenses
reasonably incurred by the Fund or any such director, officer,
employee, agent, investment adviser, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon (i) an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus in
conformity with written materials furnished to the Company by the Fund
specifically for use therein or (ii) the willful misfeasance, bad faith, or
gross negligence by the Fund or Adviser in the performance of its duties or
the Fund’s or Adviser’s reckless disregard of obligations or
duties under this Agreement or to the Company, whichever is applicable. This
indemnity agreement will be in addition to any liability which Company may
otherwise have.
(b)
The Adviser agree to indemnify and hold harmless the Company and
its directors, officers, employees, agents and each person, if any, who
controls the Company within the meaning of the 1933 Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, prospectuses or sales literature of
the Fund or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Adviser will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, employee, agent, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Adviser will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or omission or alleged
omission made in such Registration Statement or prospectuses which are in
conformity with written materials furnished to the Adviser by the Company
specifically for use therein.
(c)
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
under this Section 9. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish to, assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
10. Potential Conflicts.
(a)
The Company has received a copy of an application for exemptive
relief, as amended, filed by the Fund on and with the SEC and the order
issued by the SEC dated 11/21/88 (File No. 812-7095) in response thereto
(the “Shared Funding Exemptive Order”). The Company has reviewed
the conditions to the requested relief set forth in such application for
exemptive relief. As set forth in such application, the Directors will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contract holders of all separate accounts
(“Participating Companies”) investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons,
including: (i) an action by any state insurance regulatory authority; (ii) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar actions by insurance, tax or
securities regulatory authorities; (iii) an administrative or judicial
decision in any relevant proceeding; (iv) the manner in which the
investments of any portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contractholders and variable life
insurance contractholders; or (vi) a decision by an insurer to disregard the
voting instructions of contractholders. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
(b)
The Company will report any potential or existing conflicts of
which it is aware to the Directors. The Company will assist the Directors in
carrying out its responsibilities under the Shared Funding Exemptive
Order by providing the Directors with all information reasonably necessary for
the Directors to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Directors whenever
contractholder voting instructions are disregarded.
(c)
If a majority of the Directors, or a majority of its
disinterested Directors, determines that a material irreconcilable conflict
exists with regard to contractholder investments in a Fund, the Directors
shall give prompt notice to all Participating Companies. If the Directors
determines that the Company is responsible for causing or creating said
conflict, the Company shall at its sole cost and expense, and to the extent
reasonably practicable (as determined by a majority of the disinterested
Directors), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include but
shall not be limited to:
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(i) withdrawing the assets allocable to the Account from
the Fund and reinvesting such assets in a different investment medium or
submitting the question of whether such segregation should be implemented
to a vote of all affected contractholders and as appropriate, segregating
the assets of any appropriate group (i.e., annuity contract owners, life
insurance contract owners, or variable contract owners of one or more
Participating Companies) that votes in favor of such segregation, or
offering to the affected contractholders the option of making such a
change; and/or
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(ii) establishing a new registered management investment
company or managed separate account.
(d)
If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contractholder voting instructions
and said decision represents a minority position or would preclude a
majority vote by all of its contractholders having an interest in the Fund,
the Company at its sole cost, may be required, at the Directors’
election, to withdraw an Account’s investment in the Fund and terminate
this Agreement; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Directors.
(e)
For the purpose of this Section 10, a majority of the
disinterested Directors shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for any
Contract. The Company, shall not be required by this Section 10 to establish
a new funding medium for any Contract if an offer to do so has been declined
by vote of a majority of the Contract owners, participants or beneficiaries
materially adversely affected by the irreconcilable material
conflict.
11. Miscellaneous.
(a)
Amendment and Waiver. Neither this
Agreement, nor any provision hereof, may be amended, waived, discharged or
terminated orally, but only by an instrument in writing signed by all
parties hereto.
(b)
Notices. All notices and other
communications hereunder shall be given or made in writing and shall be
delivered personally, or sent by telex, telecopier or registered or
certified mail, postage prepaid, return receipt requested or recognized
overnight courier service to the party or parties to whom they are directed
at the following addresses, or at such other addresses as may be designated
by notice from such party to all other parties.
To the
Company:
To the
Fund:
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Group, Ltd.
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Xxxxxxxxxx Xxxxxx, Xxxxx 0000X
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Xxxxxxxx, Xxxxxxxx 00000
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Xxxxxxxxx Xxxxx
Any notice, demand or
other communication given in a manner prescribed in this subsection (b)
shall be deemed to have been delivered on receipt.
(c)
Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
(d)
Counterparts. This Agreement may
be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this Agreement by
signing any such counterpart.
(e)
Severability. In case any one or
more of the provisions contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
(f)
Entire Agreement. This Agreement
constitutes the entire agreement and understanding between the parties
hereto and supersedes all prior agreement and understandings relating to the
subject matter hereof.
(g)
Governing Law. This Agreement
shall be governed and interpreted in accordance with the laws of the State
of Connecticut.
(h)
It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
(i)
The terms of this Agreement and the Schedules thereto will be
held confidential by each party except to the extent that either party or
its counsel may deem it necessary to disclose such terms.
12. Limitation on Liability of Trustees.
etc.
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