EXHIBIT h(7)
PARTICIPATION AGREEMENT
AMONG
ING VARIABLE PORTFOLIOS, INC.
AND
RELIASTAR LIFE INSURANCE COMPANY
AND
ING FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT, made and entered into as of this 1st day of May, 2002,
among ING RELIASTAR LIFE INSURANCE COMPANY (the "Company"), a life insurance
company organized under the laws of Minnesota, on its own behalf and on behalf
of each separate account of the Company as set forth on Schedule A hereto, as
such Schedule may be amended from time to time (each such account hereinafter
referred to as the "Account"), ING VARIABLE PORTFOLIOS, INC. (ING VPI) an
open-ended management investment company and corporation organized under the
laws of Maryland, and ING FUNDS DISTRIBUTOR, INC. (the "Distributor"), a
corporation organized under the laws of the State of Delaware.
WHEREAS, ING VPI is an open-end diversified management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Contracts") to be offered by insurance companies which have
entered into Participation Agreements with ING VPI and the Distributor (the
"Participating Insurance Companies"); and
WHEREAS, the beneficial interest in ING VPI is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, ING VPI may rely on an order ("Aetna Variable Fund et al.,
Investment Company Act Rel. No. 23616 (December 21, 1998) from the Securities
and Exchange Commission ("SEC"), granting the variable annuity and variable life
insurance separate accounts participating in ING VPI exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company
Act of 1940, as amended (the "1940 Act"), and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of ING VPI
to be sold to and held by variable annuity and variable life insurance separate
accounts of the Participating Insurance Companies (the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, ING VPI is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain of the
Contracts under the 1933 Act, the 1940 Act and applicable state securities and
insurance law; and
WHEREAS, the Company represents herein that each Account is a duly
organized, validly existing separate account, which was established by
resolution of the Board of Directors of the Company, on the dates shown for such
Accounts on Schedule A hereto, to set aside and invest assets attributable to
one or more of the Contracts; and
WHEREAS, the Company has registered or will register the Accounts
(except those Accounts for which no such registration is required) as unit
investment trust under the 1940 Act; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the Contracts
and the Distributor is authorized to sell such shares to unit investment trust
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company,
ING VPI and the Distributor agree as follows:
ARTICLE I
SALE OF ING VPI SHARES
1.1. The Distributor agrees, subject to ING VPI's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company those ING
VPI shares representing interests in Authorized Funds which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by ING VPI or its designee of the order for the shares of ING VPI.
For purposes of this Section 1.1, the Company shall be the designee of ING VPI
for receipt of such orders from each Account and receipt by such designee shall
constitute receipt by ING VPI; provided that ING VPI receives notice of such
order by 10:00 a.m., Eastern time, on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange ("NYSE") is open
for trading and on which ING VPI calculates its net asset value pursuant to the
rules of the SEC. The initial Authorized Funds are set forth in Schedule B, as
such schedule is amended from time to time.
1.2. ING VPI agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which ING VPI calculates its net asset value pursuant
to the rules of the SEC and ING VPI shall use reasonable efforts to calculate
such net asset value on each day the NYSE is open for trading. Notwithstanding
the foregoing, the Directors of ING VPI (the "Directors") may refuse to sell
shares of any Authorized Fund to the Company or any other person, or suspend or
terminate the offering of shares of any Authorized Fund if such action is
required by law or by regulatory authorities having jurisdiction over ING VPI or
if the Directors determine, in the exercise of their fiduciary responsibilities,
that to do so would be in the best interests of shareholders.
1.3. ING VPI and the Distributor agree that shares of ING VPI will
be sold only to Participating Insurance Companies and their separate accounts
and other persons who are
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permissible investors consistent with the Accounts meeting the requirements of
Treas. Reg. 1.817-5.
1.4. ING VPI shall redeem its shares in accordance with the terms
of its then-current prospectus. For purposes of this Section 1.4, the Company
shall be the designee of ING VPI for receipt of requests for redemption from
each Account and receipt by such designee shall constitute receipt by ING VPI;
provided that ING VPI receives notice of such request for redemption by 10:00
a.m., Eastern time, on the next following Business Day.
1.5. The Company shall purchase and redeem the shares of Authorized
Funds offered by the then-current prospectus and statement of additional
information ("SAI') of ING VPI in accordance with the provisions of such
prospectus and SAI.
1.6. The Company shall pay for ING VPI shares on the next Business
Day after an order to purchase ING VPI shares is made in accordance with the
provisions of Article I hereof. Payment shall be in federal funds transmitted by
wire.
1.7. Issuance and transfer of ING VPI's shares will be by book
entry only. Share certificates will not be issued to the Company or to any
Account. Shares ordered from ING VPI will be recorded as instructed by the
Company to the Distributor in an appropriate title for each Account or the
appropriate sub-account of each Account.
1.8. The Distributor shall furnish prompt notice (by wire or
telephone, followed by written confirmation) to the Company of the declaration
of any income, dividends or capital gain distributions payable on ING VPI's
shares. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Authorized Fund shares in
additional shares of that Authorized Fund. The Company reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash. The Distributor shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.9. The Distributor shall make the net asset value per share for
each Authorized Fund available to the Company on a daily basis as soon as
reasonably practical after ING VPI calculates its net asset value per share, and
each of ING VPI and the Distributor shall use its reasonable best efforts to
make such net asset value per share available by 6:00 p.m., Eastern time, but in
no event later than 7:00 p.m., Eastern time, each Business Day.
1.10. Any error in the calculation of the net asset value, dividend
and capital gain information greater than or equal to $0.01 per share of ING
VPI's shares, shall be reported immediately upon discovery to the Company. Any
error of a lesser amount shall be corrected in the next Business Day's net asset
value per share for ING VPI. Any such notice will state for each day for which
an error occurred the incorrect price, the correct price and, to the extent
communicated to ING VPI's shareholders, the reason for the price change. The
Company may send this notice or a derivation thereof (so long as such derivation
is approved in advance by the Distributor) to contract owners or participants
whose accounts are affected by the price change. The parties will negotiate in
good faith to develop a reasonable method for effecting such adjustments. ING
VPI shall provide the Company, on behalf of the Account or the appropriate
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subaccount of each Account, with a prompt adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value.
For purposes of this Section 1.10, ING VPI or the Distributor shall be liable to
the Company for any amount the Company is required to pay to Contract owners or
participants due to (i) an incorrect calculation of a Fund's daily net asset
value, dividend rate, or capital gain distribution rate, in accordance with ING
VPI's procedures or (ii) incorrect or late reporting of the daily net asset
value or capital gain distribution rate of an Authorized Fund, in accordance
with ING VPI's procedures, upon written notification by the Company, with
supporting data, to ING VPI, provided, however, that neither ING VPI nor the
Distributor shall be liable for any information provided to the Company pursuant
to this Agreement which information is based on inaccurate information supplied
by the Company to ING VPI or any of its affiliates, or for any incorrect or late
reporting because of acts of God or systems or mechanical failures over which
ING VPI, or the Distributor or the investment adviser to ING VPI have no
reasonable control; and provided further that the Distributor and Officers of
ING VPI shall in good faith discuss with the Company the bearing of any expenses
described in (i) and (ii) above for which ING VPI or Distributor are not liable
under this provision. In addition, ING VPI or the Distributor shall be liable to
the Company for systems and out of pocket costs incurred by the Company in
making a Contract owner's or a participant's account whole, if such costs or
expenses are a result of ING VPI's failure to provide timely or correct net
asset values, dividend and capital gains or financial information, and if such
information is not corrected by 4pm EST of the next business day after
releasing such incorrect information. If a mistake is caused in supplying such
information or confirmations, which results in a reconciliation with incorrect
information, the amount required to make a Contract owner's or a participant's
account whole shall be borne by the party providing the incorrect information,
regardless of when the error is corrected.
1.11. The parties may agree to provide pricing information, execute
orders and wire payments for purchases and redemptions through National
Securities Clearing Corporation's Fund/SERV system in which case such activities
will be governed by the provisions set forth in an Exhibit to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that
(a) at all times during the term of this Agreement, the
Contracts are or will be registered (except those Contracts which are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 0000 Xxx) under the 1933 Act and the 1940 Act; the
Contracts will be issued and sold in compliance in all material respects with
all applicable laws and the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a separate
account under applicable law and has registered or, prior to any issuance or
sale of the Contracts, will register
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each Account (except those Accounts which have not been registered in proper
reliance upon an exclusion from registration under the 0000 Xxx) as a unit
investment ING VPI in accordance with the provisions of the 1940 Act to serve as
a segregated investment account for the Contracts;
(b) the Contracts are currently treated as endowment,
annuity or life insurance contracts, under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will make every
effort to maintain such treatment and that it will notify ING VPI and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future; and
(c) all notices to ING VPI of the purchase and/or
redemption of ING VPI shares by each Account shall be accurate.
2.2. ING VPI represents and warrants that
(a) at all times during the term of this Agreement, ING
VPI shares sold pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sold by ING VPI to the Company in
compliance with all applicable laws, subject to the terms of Section 2.4 below,
and ING VPI is and shall remain registered under the 1940 Act. ING VPI shall
amend the Registration Statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. ING VPI shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by ING VPI or the Distributor in connection with their sale by ING VPI to the
Company and only as required by Section 2.4;
(b) each Authorized Fund is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that ING VPI
will use its best efforts to maintain such qualification (under Subchapter M or
any successor provision) and that it will notify the Company immediately upon
having a reasonable basis for believing that an Authorized Fund has ceased to so
qualify or that it might not so qualify in the future; and
(c) ING VPI is lawfully organized and validly existing
under the laws of the Commonwealth of Maryland and that it does and will comply
in all material respects with the 1940 Act.
2.3. The Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Distributor further represents that it will sell and distribute ING VPI shares
in accordance with all applicable securities laws applicable to it, including
without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. Notwithstanding any other provision of this Agreement, ING VPI
shall be responsible for the registration and qualification of its shares and of
ING VPI itself under the laws of any jurisdiction only in connection with the
sale of shares directly to the Company through the Distributor. ING VPI shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of ING
VPI shares or ING VPI by ING VPI may be required in connection with the sale of
the Contracts
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or the indirect interest of any Contract in any shares of ING VPI and advising
ING VPI thereof at such time and in such manner as is necessary to permit ING
VPI to comply.
2.5. ING VPI makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.6. ING VPI and the Distributor represent and warrant that all of
their Directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of ING VPI are
and continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of ING VPI in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company.
ARTICLE III
PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. ING VPI shall provide the Company with a sufficient quantity
of its prospectus, SAI and any supplements to any of these materials once each
year (or more frequently if these materials are amended), to be used in
connection with the offerings and transactions contemplated by this Agreement.
In addition, ING VPI shall provide the Company with a sufficient quantity of its
proxy materials that are required to be sent to Contract owners or participants.
In lieu of ING VPI providing the Company with printed copies of its prospectus,
SAI, supplements and proxy materials, the Company shall have the right to
request that ING VPI transmit a copy of such materials in an electronic format
(camera-ready copy), 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 or
participants.
3.2. ING VPI's prospectus shall state that the SAI for ING VPI is
available from ING VPI, and ING VPI shall provide the SAI free of charge to any
owner of a Contract or to any prospective Contract owner who requests the SAI.
Distributor and ING VPI, as appropriate, agree to provide to Company with as
many copies of the SAI as reasonably requested by Company.
3.3. ING VPI, at its expense, shall provide the Company with copies
of its reports to shareholders, proxy material and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to the Contract owners or participants. The Company shall respond
to requests for documents regarding ING VPI in a manner that is consistent with
SEC rules, including, but not limited to, Item 1(b) of Form N-1A, which requires
requested documents to be sent within three (3) business days from the date of
request.
3.4. The Company shall vote all ING VPI shares as required by law
and the Mixed and Shared Funding Exemptive Order. The Company reserves the right
to vote ING VPI shares held in any separate account in each Company's own right,
to the extent permitted by law and the Mixed and Shared Funding Exemptive Order.
The Company shall be responsible for assuring
6
that each of its separate accounts participating in ING VPI calculates voting
privileges in a manner consistent with all legal requirements and the Mixed and
Shared Funding Exemptive Order.
3.5. ING VPI will comply with all applicable provisions of the 1940
Act requiring voting by shareholders.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1. Without limiting the scope or effect of Section 4.2 hereof,
the Company shall furnish, or shall cause to be furnished, to the Distributor
each piece of sales literature or other promotional material (as defined
hereafter) in which ING VPI, its investment adviser or the Distributor is named
at least 15 days prior to its use. No such material shall be used if the
Distributor objects to such use within five (5) Business Days after receipt of
such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of ING VPI or concerning ING VPI in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for ING
VPI shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for ING VPI, or in sales literature or other promotional material
approved by ING VPI or its designee or by the Distributor, except with the
written permission of ING VPI or the Distributor or the designee of either or as
is required by law.
4.3. The Distributor or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material prepared by the Distributor in which the Company
and/or the Company's Account is named at least 15 days prior to its use. No such
material shall be used if the Company or its designee object to such use within
five (5) Business Days after receipt of such material.
4.4. Neither ING VPI nor the Distributor shall give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners or participants,
or in sales literature or other promotional material approved by the Company or
its designee, except with the written permission of the Company or as is
required by law.
4.5. For purposes of this Article IV, 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), 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),
7
educational or training materials or other communications distributed or made
generally available to some or all registered representatives.
4.6. ING VPI will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, notices and exemptive orders related to applications for exemptive
relief from the requirements of the federal securities laws, and all amendments
to any of the above, that relate to ING VPI or its shares, promptly after the
filing of such document with the SEC, the NASD or other regulatory authority.
4.7. The Company will provide to ING VPI at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, notices and exemptive orders related to applications for exemptive
relief from the requirements of the federal securities laws, and all amendments
to any of the above, that relate to ING VPI or its shares, promptly after the
filing of such document with the SEC, the NASD, or other regulatory authority.
ARTICLE V
FEES AND EXPENSES
5.1. If ING VPI or any Authorized Fund adopts and implements a plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses,
subject to obtaining any required exemptive orders or other regulatory
approvals, ING VPI or Distributor may make payments to the Company or to the
underwriter for the Account if and in such amounts agreed to by the parties in
writing.
5.2. All expenses incident to performance by ING VPI under this
Agreement shall be paid by ING VPI to the extent permitted by law. ING VPI shall
bear the expenses for the cost of registration and qualification of ING VPI's
shares, preparation and filing of ING VPI's prospectus and registration
statement, proxy materials and reports, setting the prospectus and shareholder
reports in type, setting in type and printing the proxy materials, and the
preparation of all statements and notices required by any federal or state law,
in each case as may reasonably be necessary for the performance by it of its
obligations under this Agreement. All expenses incident to the solicitation and
tabulation of ING VPI's proxy materials will be paid by ING VPI, including
postage.
5.3. ING VPI shall pay for the cost of typesetting and printing
periodic fund reports to shareholders, prospectuses, prospectus supplements,
statements of additional information and other materials that are required by
law to be sent to Contract owners or participants, as well as the cost of
distributing such materials. The Company shall pay for the cost of printing ING
VPI's prospectuses and statements of additional information and for the
distribution thereof for prospective Contract owners or participants. Each party
shall be provided with such supporting data as may reasonably be requested for
determining expenses under this Article V.
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ARTICLE VI
DIVERSIFICATION
6.1. ING VPI will invest its assets to cause each Authorized Fund
to maintain a diversified pool of investments that would, if such Fund were a
segregated asset account, satisfy the diversification requirements of Treasury
Reg. Section 1.817-5(b)(1) or (2). In the event of a breach of this Article VI
by ING VPI, it will take all reasonable steps: (a) to notify the Company of such
breach; and (b) to adequately diversify ING VPI so as to achieve compliance
within the grace period afforded by Treasury Regulation 1.817-5.
ARTICLE VII
POTENTIAL CONFLICTS
7.1. The Directors will monitor ING VPI for the existence of any
material irreconcilable conflict between the interests of the Contract owners or
participants of all separate accounts investing in ING VPI. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Authorized Fund are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners or participants; or (f) a decision by an
insurer to disregard the voting instructions of Contract owners or participants.
ING VPI shall promptly inform the Company if the Directors determine that a
material irreconcilable conflict exists and the implications thereof.
7.2. 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 their responsibilities under the Mixed and Shared Funding Exemptive
Order, by providing the Directors with all information reasonably necessary for
the Directors to consider any issues raised. This responsibility includes, but
is not limited to, an obligation by the Company to inform the Directors whenever
Contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Directors, or a
majority of the disinterested Directors, that a material irreconcilable conflict
exists, the Company shall to the extent reasonably practicable (as determined by
a majority of the disinterested Directors), take, at the Company's expense (but
only if the Directors determine that the Company is responsible for causing or
creating said conflict, said conflict is caused by operation of law or said
conflict is the result of some other cause outside the control of ING VPI or any
of the Participating Insurance Companies), whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from ING VPI or any Authorized Fund thereof and reinvesting such assets in a
different investment medium, including (but not limited to) another series of
ING VPI, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners or participants and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
contract owners or participants, life insurance contract owners or participants,
or variable
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contract owners or participants of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners or participants the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at ING VPI's election, to withdraw the affected
Account's investment in one or more portfolios of ING VPI and terminate this
Agreement with respect to such Account; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Directors. No charge or penalty shall be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place within six
(6) months after ING VPI gives written notice that this provision is being
implemented, and until the end of that six month period, the Distributor and ING
VPI shall, to the extent permitted by law and any exemptive relief previously
granted to ING VPI, continue to accept and implement orders of the Company for
the purchase (and redemption) of shares of ING VPI.
7.5. If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company to
disregard Contract owner voting instructions and that decision represents a
minority position or would preclude a majority vote, then the Company may be
required, at ING VPI's direction, to withdraw the affected Account's investment
in one or more Authorized Funds of ING VPI; 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. Any such withdrawal and termination must take place
within six (6) months after ING VPI gives written notice that this provision is
being implemented, unless a shorter period is required by law, and until the end
of the foregoing six month period (or such shorter period if required by law),
the Distributor and ING VPI shall, to the extent permitted by law and any
exemptive relief previously granted to ING VPI, continue to accept and implement
orders by that Company for the purchase (and redemption) of shares of ING VPI.
No charge or penalty will be imposed as a result of such withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested Directors shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. Neither ING VPI
nor the Distributor shall be required to establish a new funding medium for the
Contracts, nor shall the Company be required to do so, if an offer to do so has
been declined by vote of a majority of Contract owners or participants
materially adversely affected by the material irreconcilable conflict. In the
event that the Directors determine that any proposed action does not adequately
remedy any material irreconcilable conflict, then the Company will withdraw the
Account's investment in one or more Authorized Funds of ING VPI and terminate
this Agreement within six (6) months (or such shorter period as may be required
by law or any exemptive relief previously granted to ING VPI) after the
Directors inform the Company in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall be limited to the
extent required by any
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such material irreconcilable conflict as determined by a majority of the
disinterested Directors. No charge or penalty will be imposed as a result of
such withdrawal.
7.7. The responsibility to take remedial action in the event of the
Directors' determination of a material irreconcilable conflict and the
obligation of the Company set forth in this Article VII shall be carried out
with a view only to the interests of Contract owners or participants.
7.8. 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) ING VPI and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4 and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
7.9. The Company has reviewed the Mixed and Shared Funding
Exemption Order and hereby assumes all obligations referred to therein which are
required, including, without limitation, the obligation to provide reports,
material or data as the Directors may request, as conditions to such order, to
be assumed or undertaken by the Company.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by the Company
8.1. (a). The Company shall indemnify and hold harmless ING VPI,
the Distributor and ING Investments, LLC (the "Adviser"), and each of the
Directors, directors of the Distributor or the Adviser, officers, employees or
agents of ING VPI, the Distributor or the Adviser, and each person, if any, who
controls ING VPI, Adviser or the Distributor within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company which consent
may not be unreasonably withheld) or litigation expenses (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 or acquisition of ING VPI's shares or the
Contracts or the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
a registration statement, prospectus or SAI for the Contracts
or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a
11
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of ING
VPI 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 ING VPI shares;
or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations
contained in ING VPI's registration statement or prospectus,
or in sales literature for ING VPI shares not supplied by the
Company, or persons under its control) or wrongful conduct of
the Company or its agents or employees or persons under its
control, with respect to the sale or distribution of the
Contracts or ING VPI shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of ING VPI or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished to ING VPI or the
Distributor by or on behalf of the Company; or
(iv) arise out of or result from any breach of any
material representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company, as limited
by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1. (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to ING VPI, whichever is applicable.
8.1. (c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim but failure to notify the Company of any such claim shall
not relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at the
Company's expense, in the defense of such
12
action. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After notice
from the Company to such Indemnified Party of the Company's election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Company will not be liable to
such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.1. (d) The Distributor shall promptly notify the Company of the
commencement of any litigation or proceedings against ING VPI or the Distributor
in connection with the issuance or sale of ING VPI Shares or the Contracts or
the operation of ING VPI.
8.1. (e) The provisions of this Section 8.1 shall survive any
termination of this Agreement.
8.2. Indemnification by the Distributor
8.2. (a) The Distributor shall indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act 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, damages, liabilities (including amounts
paid in settlement with the written consent of the Distributor which consent may
not be unreasonably withheld) or litigation expenses (including reasonable legal
and other expenses) to which the Indemnified Parties may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of ING VPI's shares or the Contracts or
the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
a registration statement, prospectus, or SAI for ING VPI or
the sales literature for ING VPI prepared by ING VPI or
Distributor (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Distributor or ING VPI by or on behalf of the
Company for use in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or ING VPI shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature for the Contracts not supplied by the
Distributor or persons under its control) of the Distributor
or persons under its
13
control, with respect to the sale or distribution of the
Contracts or ING VPI shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Distributor;
or
(iv) arise out of or result from any breach of any
material representation and/or warranty made by the
Distributor or ING VPI in this Agreement or arise out of or
result from any other material breach of this Agreement by the
Distributor or ING VPI; as limited by and in accordance with
the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2. (b) The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2. (c) The Distributor shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Distributor in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Distributor of any such claim
shall not relieve the Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Distributor will be entitled to participate, at its
own expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Distributor to such Indemnified Party
of the Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Distributor will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
8.2. (d) The Company shall promptly notify the Distributor, the
Adviser, and ING VPI of the commencement of any litigation or proceedings
against it or any of its officers or directors, in connection with the issuance
or sale of the Contracts or the operation of each Account.
14
8.2. (e) The provisions of this Section 8.2 shall survive any
termination of this Agreement.
ARTICLE IX
APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
9.2. This Agreement shall he subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X
TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party, with respect to some or
all of the Authorized Funds, upon sixty (60) days' advance written notice to the
other parties; or
(b) at the option of ING VPI or the Distributor in the
event that formal administrative proceedings are instituted against the Company
by the NASD, the SEC, any State Insurance Commissioner or any other regulatory
body regarding the Company's duties under this Agreement or related to the sales
of the Contracts, with respect to the operation of any Account, or the purchase
of ING VPI shares, provided, however, that ING VPI or the Distributor determines
in its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Company
to perform its obligations under this Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against ING VPI or Distributor by the
NASD, the SEC, or any state securities or insurance department or any other
regulatory body in respect of the sale of shares of ING VPI to the Company,
provided, however, that the Company determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of ING VPI or Distributor to perform its
obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of
the Contract owners or participants having an interest in such Account (or any
subaccount) to substitute the shares of another investment company for the
corresponding Authorized Fund shares of ING VPI in accordance with the terms of
the Contracts for which those Authorized Fund shares had been selected to serve
as the underlying investment media. The Company will give 30 days' prior written
notice to ING VPI of the date of any proposed vote to replace ING VPI's shares;
15
(e) with respect to any Authorized Fund, upon 30 days'
advance written notice from the Distributor to the Company, upon a decision by
the Distributor to cease offering shares of ING VPI for sale; or
(f) 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 which material breach is not cured within thirty
(30) days of said notice.
10.2. It is understood and agreed that the right of any party hereto
to terminate this Agreement pursuant to Section 10.1 (a) may be exercised for
any reason or for no reason.
10.3. No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for such termination. Such prior written notice shall be
given in advance of the effective date of termination as required by this
Article X.
10.4. Notwithstanding any termination of this Agreement, subject to
Sections 1.2 and 10.5 of this Agreement, ING VPI and the Distributor shall, at
the option of the Company, continue to make available additional shares of ING
VPI pursuant to the terms and conditions of this Agreement, for all Contracts in
effect as of the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, subject to Sections 1.2 and
10.5 of this Agreement, the owners or participants of the Existing Contracts
shall be permitted to reallocate investments in ING VPI, redeem investments in
ING VPI and/or invest in ING VPI upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.4 shall not
apply to any termination under Article VII and the effect of such Article VII
termination shall be governed by Article VII of this Agreement.
10.5. If any party terminates this Agreement with respect to any
Authorized Fund pursuant to the provisions under Article X, the Agreement shall
nevertheless continue in effect as to any shares of ING VPI that are outstanding
as of the date of such termination (the "Initial Termination Date"). This
continuation shall extend to the earlier of (a) the date as of which an Account
no longer owns shares of the affected Authorized Fund or (b) the date (the
"Final Termination Date") as of 180 days following the Initial Termination Date,
or, at the Distributor's option, such later date as is necessary for the Company
to obtain a substitution order from the SEC, the application for which the
Company will diligently pursue.
10.6. The Company shall not redeem ING VPI shares attributable to
the Contracts (as opposed to ING VPI shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract owner or
participant initiated transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request, the
Company will promptly furnish to ING VPI and the Distributor an opinion of
counsel for the Company, reasonably satisfactory to ING VPI, to the effect that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
subject to Sections 1.2 and 10.5 of this Agreement, the Company shall not
prevent Contract owners or participants from allocating payments to an
16
Authorized Fund that was otherwise available under the Contracts without first
giving ING VPI or the Distributor 90 days' written notice of its intention to do
so.
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to ING VPI:
ING Variable Portfolios, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
If to the Distributor:
ING Funds Distributor, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
If to the Company:
ReliaStar Life Insurance Company
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, XX 00000
Attn: J. Xxxx XxXxxxxx
ARTICLE XII
MISCELLANEOUS
12.1. A copy of the Agreement and Declaration of ING VPI is on file
with the Secretary of State of the State of Maryland, and notice is hereby given
that this instrument is executed on behalf of the Directors of ING VPI as
Directors and not individually and that the obligations of or arising out of
this instrument, including without limitation Article VI, are not binding upon
any of the Directors or shareholders individually but binding only upon the
assets and property of ING VPI.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
17
12.5. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.6. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.7. Notwithstanding any other provision of this Agreement, the
obligations of ING VPI and the Distributor are several and, without limiting in
any way the generality of the foregoing, neither such party shall have any
liability for any action or failure to act by the other party, or any person
acting on such other party's behalf.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
ING VARIABLE PORTFOLIOS, INC.
BY ITS AUTHORIZED OFFICER,
/s/ Xxxxxxxx X. Xxxxxxxx
---------------------------------
NAME: Xxxxxxxx X. Xxxxxxxx
TITLE: VP Secretary
RELIASTAR LIFE INSURANCE COMPANY
BY ITS AUTHORIZED OFFICER,
/s/ Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
NAME: Xxxxxx X. Xxxxxxxxxxx
TITLE: Vice President
ING FUNDS DISTRIBUTOR, INC.
BY ITS AUTHORIZED OFFICER,
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: Executive V.P., CFO, Treasurer
18
SCHEDULE A
CONTRACTS AND SEPARATE ACCOUNTS
SEPARATE ACCOUNT(S): CONTRACTS:
------------------------------ ----------
ReliaStar Select*Life Variable Account FlexDesign VUL
(October 11,1984) Variable Accumulation Design VUL
Variable Estate Design VUL
ING Protector Elite VUL
SCHEDULE B
ING VARIABLE PORTFOLIOS, INC.
Eligible Portfolios
ING VP Index Plus LargeCap Portfolio
ING VP Index Plus MidCap Portfolio
ING VP Index Plus SmallCap Portfolio
NSCC EXHIBIT
Effective Date:
Procedures for Pricing and Order/Settlement Through National Securities
Clearing Corporation's Mutual Fund Profile System and Mutual Fund Settlement,
Entry and Registration Verification System.
1. As provided in Section 1.11 of the Participation Agreement, the parties
hereby agree to provide pricing information, execute orders and wire payments
for purchase and redemptions of Fund Shares through National Security Clearing
Corporation ("NSCC") and its subsidiary systems as follows:
(a) Distributor or the Funds will furnish to the Company or its
affiliate through NSCC's Mutual Fund Profile System ("MFPS")
(1) the most current net asset value information for each
Fund, (2) a schedule of anticipated dividend and distribution
payment dates for each Fund, which is subject to change
without prior notice, ordinary income and capital gain
dividend rates on the Fund's ex-date, and (4) in the case of
fixed income funds that declare daily dividends, the daily
accrual or the interest rate factor. All such information
shall be furnished to the Company or its affiliate by 6:30
p.m. Easter Time on each business day that the Fund is open
for business (each a "Business Day") or at such other time as
that information becomes available. Changes in pricing
information will be communicated to both NSCC and the Company
or its affiliate.
(b) Upon receipt of Fund purchase, exchange and redemption
instructions for acceptance as of the time at which a Fund's
net asset value is calculated as specified in such Fund's
prospectus ("Close of Trading") on each Business Day
("Instructions"), and upon its determination that there are
good funds with respect to Instructions involving the purchase
of Shares, the Company or its affiliate will calculate the net
purchase or redemption order for each Fund. Orders for net
purchases or redemptions derived from Instructions received by
the Company or its affiliate prior to the Close of Trading on
any given Business Day will be sent to the Defined
Contribution Interface of NSCC's Mutual Fund Settlement, Entry
and Registration Verification System ("Fund/SERV") by 5:00
a.m. Eastern Time on the next Business Day. Subject to the
Company's or its affiliate's compliance with the foregoing,
the Company or its affiliate will be considered the agent of
the Distributor and the Funds, and the Business Day on which
Instructions are received by the Company or its affiliate in
proper form prior to the Close of Trading will be the date as
of which shares of the Funds are deemed purchased, exchanged
or redeemed pursuant to such Instructions. Instructions
received in proper form by the Company or its affiliate after
the Close of Trading on any given Business Day will be treated
as if received on the next following Business
Day. Dividends and capital gains distributions will be
automatically reinvested at net asset value in accordance with
the Fund's then current prospectuses.
(c) The Company or its affiliate will wire payment for net
purchase orders by the Fund's NSCC Firm Number, in immediately
available funds, to an NSCC settling bank account designated
by the Company or its affiliate no later than 5:00 p.m.
Eastern time on the same Business Day such purchase orders are
communicated to NSCC. For purchases of shares of daily
dividend accrual funds, those shares will not begin to accrue
dividends until the day the payment for those shares is
received.
(d) NSCC will wire payment for net redemption orders by Fund, in
immediately available funds, to an NSCC settling bank account
designated by the Company or its affiliate, by 5:00 p.m.
Eastern Time on the Business Day such redemption orders are
communicated to NSCC, except as provided in a Fund's
prospectus and statement of additional information.
(e) With respect to (c) or (d) above, if Distributor does not send
a confirmation of the Company's or its affiliate's purchase or
redemption order to NSCC by the applicable deadline to be
included in that Business Day's payment cycle, payment for
such purchases or redemptions will be made the following
Business Day.
(f) If on any day the Company or its affiliate or Distributor is
unable to meet the NSCC deadline for the transmission of
purchase or redemption orders, it may at its option transmit
such orders and make such payments for purchases and
redemptions directly to Distributor or to the Company or its
affiliate, as applicable, as is otherwise provided in the
Agreement.
(g) These procedures are subject to any additional terms in each
Fund's prospectus and the requirements of applicable law. The
Funds reserve the right, at their discretion and without
notice, to suspend the sale of shares or withdraw the sale of
shares of any Fund.
2. The Company or its affiliate, Distributor and clearing agents (if
applicable) are each required to have entered into membership agreements with
NSCC and met all requirements to participate in the MFPS and Fund/SERV systems
before these procedures may be utilized. Each party will be bound by the terms
of their membership agreement with NSCC and will perform any and all duties,
functions, procedures and responsibilities assigned to it and as otherwise
established by NSCC applicable to the MFPS and Fund/SERV system and the
Networking Matrix Level utilized.
3. Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect. Unless otherwise indicated
herein, the terms defined in the Agreement shall have the same meaning as in
this Exhibit.
2
