Exhibit 8(b)
PARTICIPATION AGREEMENT
Among
[INSURANCE COMPANY],
ProFunds,
and
ProFund Advisors LLC
THIS AGREEMENT, dated as of the ____ day of ______, 200__ by and among
______ (the "Company"), a ______ life insurance company, on its own behalf and
on behalf of each segregated asset account of the Company set forth on Schedule
A hereto, as may be amended from time to time (each account hereinafter
referred to as the "Account"), ProFunds, a Delaware business trust, (the
"Fund"), and ProFund Advisors LLC (the "Adviser"), a Maryland limited liability
company.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance and variable annuity contracts to be
offered by insurance companies which have entered into participation agreements
with the Fund ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
shares of the Portfolios are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, the Adviser, which serves as investment adviser to the Fund, is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by
the Account (the "Contracts"), and said Contracts are listed in Schedule A
hereto, as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to
the aforesaid Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios"), on behalf of the Account to fund the
aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article X hereof, and the terms set forth in the
registration statement, as amended from time to time, the Fund agrees to make
available to the Company for purchase on behalf of the Account, shares of the
Designated Portfolios, such purchases to be effected at net asset value in
accordance with Section 1.3 of this Agreement. Notwithstanding the foregoing,
(i) Portfolios (other than those listed on Schedule A) in existence now or that
may be established in the future will be made available to the Company only as
the Fund may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of shares of any Designated
Portfolio or class thereof, if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, suspension or termination is necessary in the best
interests of the shareholders of such Designated Portfolio. The Fund reserves
the right, upon prior written notice to the Company (given at the earliest
practicable time), to take all actions, including but not limited to, the
dissolution, reorganization, liquidation, merger or sale of all assets of the
Fund or any Portfolio upon the sole authorization of the Board of Trustees,
acting in good faith.
1.2. The Fund shall redeem, at the Company's request, any full or fractional
Designated Portfolio shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Fund shares attributable to Contract owners except in the circumstances
permitted in Section 10.3 of this Agreement, and (ii) the Fund may delay
redemption of Fund shares of any Designated Portfolio to the extent permitted
by the 1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving and accepting purchase and redemption requests
on behalf of the Account (but not with respect to any Fund shares that may
be held in the general account of the Company) for shares of those
Designated Portfolios made available hereunder, based on allocations of
amounts to the Account or subaccounts thereof under the Contracts and other
transactions relating to the Contracts or the Account. Receipt and
acceptance of any such request (or relevant transactional information
therefor) on any day the New York Stock Exchange is open for trading and on
which a Designated Portfolio calculates its net asset value (a "Business
Day") pursuant to the rules of the Securities and Exchange Commission
("SEC") by the Company as such limited agent of the Fund prior to the time
that the Fund ordinarily calculates its net asset value as described from
time to time in the Fund's prospectus (which as of the date of execution of
this Agreement is 4:00 p.m. Eastern Time) shall constitute receipt and
acceptance by the Designated Portfolio on that same Business Day. To
facilitate the Designated Portfolios' daily trading practices, the Company
(i) shall provide the Fund with daily net aggregate trade and other
information relating to the Designated Portfolios at times and in the manner
specified by the Fund prior to the close of business on each Business Day,
with respect to which the Company shall hold the Fund and the Adviser
harmless from any liability resulting from reliance on such daily net
aggregate trade information, and (ii) shall provide the Fund by 9:00 a.m
Eastern time on the following Business Day with a final report of the
previous Business Day's transaction information related to the Designated
Portfolios.
(b) The Company shall pay for shares of each Designated Portfolio on the
Business Day following the Company's receipt and acceptance, in its capacity
as limited agent of the Fund, of a purchase request for such shares. Payment
for Designated Portfolio shares shall be made in federal funds transmitted
to the Fund or other designated person by wire to be received by 2:00 p.m.
Eastern Time on the Business Day following Company's receipt and acceptance,
in its capacity as limited agent of the Fund, of the purchase request for
Designated Portfolio shares (unless the Fund determines and so advises the
Company that sufficient proceeds are available from redemption of shares of
other Designated Portfolios effected pursuant to redemption requests
tendered by the Company on behalf of the Account). If federal funds are not
received on time, such funds will be invested, and Designated Portfolio
shares purchased thereby will be issued, as soon as practicable and the
Company shall promptly, upon the Fund's request, reimburse the Fund for any
charges, costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by, the Fund, or
any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. Upon
receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the
Fund.
(c) Payment for Designated Portfolio shares redeemed by the Account or
the Company shall be made in federal funds transmitted by wire to the
Company or any other designated person on the next Business Day after the
Fund is properly notified of the redemption order of such shares (unless
redemption proceeds are to be applied to the purchase of shares of other
Designated Portfolio in accordance with Section 1.3(b) of this Agreement),
except that the Fund reserves the right to redeem Designated Portfolio
shares in assets other than cash and to delay payment of redemption proceeds
to the extent permitted under Section 22(e) of the 1940 Act and any Rules
thereunder, and in accordance with the procedures and policies of the Fund
as described in the then current prospectus. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company, the Company alone shall be responsible
for such action.
(d) Any purchase or redemption request for Designated Portfolio shares
held or to be held in the Company's general account shall be effected at the
net asset value per share next determined after the Fund's receipt and
acceptance of such request, provided that, in the case of a purchase
request, payment for Fund shares so requested is received by the Fund in
federal funds prior to close of business for determination of such value, as
defined from time to time in the Fund's prospectus.
1.4 The Fund shall use its best efforts to make the net asset value per
share for each Designated Portfolio available to the Company by 6:30 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio
is calculated, and shall calculate such net asset value in accordance with the
Fund's prospectus. Neither the Fund, any Designated Portfolio, the Adviser, nor
any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement, or any loss resulting from such
information, if such information is based on incorrect information supplied by
the Company or any other Participating Insurance Company to the Fund or the
Adviser. The Fund will provide notice of any error in calculation of net asset
value of each portfolio as soon as reasonably practical after discovery
thereof. Any such notice will state for each day for which an error occurred,
the incorrect price, the correct price and the reason fro the price change. The
Fund shall make the Company whole for any losses incurred as a result of
pricing errors.
1.5 The Fund shall furnish notice (by wire or telephone followed by written
confirmation) to the Company as soon as reasonably practicable of any income
dividends or capital gain distributions payable on any Designated Portfolio
shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any
Designated Portfolio shares in the form of additional shares of that Designated
Portfolio. The Company reserves the right, on its behalf and on behalf of the
Account, to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Fund shall notify the Company promptly of the
number of Designated Portfolio shares so issued as payment of such dividends
and distributions. The Company acknowledges and agrees that dividends and
distributions with respect to the shares of any Designated Portfolio shall
constitute consent dividends for purposes of Section 561 of the Internal
Revenue Code of 1986, as amended (the "Code"), that such dividends and
distributions shall be effected in accordance with Section 565 of the Code, and
that the Company will take all necessary actions so that such dividends and
distributions are considered consent dividends.
1.6 Issuance and transfer of Fund shares shall be by book entry only. Share
certificates will not be issued to the Company or the Account. Purchase and
redemption orders for Fund shares shall be recorded in an appropriate ledger
for the Account or the appropriate subaccount of the Account.
1.7(a) The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 2.2 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however,
that until this Agreement is terminated pursuant to Article X, the Company
shall promote the Designated Portfolios on the same basis as other funding
vehicles available under the Contracts. Funding vehicles other than those
listed on Schedule A to this Agreement may be available for the investment of
the cash value of the Contracts, provided, however, (i) any such vehicle or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of the Designated
Portfolios available hereunder; (ii) the Company gives the Fund and the Adviser
45 days written notice of its intention to make such other investment vehicle
available as a funding vehicle for the Contracts; and (iii) unless such other
investment company was available as a funding vehicle for the Contracts prior
to the date of this Agreement and the Company has so informed the Fund and the
Adviser prior to their signing this Agreement, the Fund or Adviser consents in
writing to the use of such other vehicle, such consent not to be unreasonably
withheld.
(e) The Company shall not, without prior notice to the Adviser (unless
otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act.
(f) The Company shall not, without prior notice to the Adviser (unless
otherwise required by applicable law), induce Contract owners to change or
modify the Fund or change the Fund's investment adviser.
(d) The Company shall not, without prior notice to the Fund, induce
Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the Board.
1.8 The Company acknowledges that, pursuant to Form 24F-2, the Fund is not
required to pay fees to the SEC for registration of its shares under the 1933
Act with respect to its shares issued to an Account that is a unit investment
trust that offers interests that are registered under the 1933 Act and on which
a registration fee has been or will be paid to the SEC (a "Registered
Account"). The Company agrees to provide the Fund each year within 60 days of
the end of the Fund's fiscal year, or when
reasonably requested by the Fund, information as to the number of shares
purchased by a Registered Account and any other Account the interests of which
are not registered under the 0000 Xxx. The Company acknowledges that the Fund
intends to rely on the information so provided and represents and warrants that
such information shall be accurate.
ARTICLE II. Representations and Warranties
1.4. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) 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 1933 Act. The Company further represents and
warrants that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal securities and state securities
and insurance laws and that 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, that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under ________ [insert state] insurance laws, and that it (a) has
registered or, prior to any issuance or sale of the Contracts, will register
the Account 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
alternatively (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 1940 Act. The Company shall register and
qualify the Contracts or interests therein as securities in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Company.
1.5. The Fund represents and warrants (a) that Designated Portfolios shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with applicable state and
federal securities laws, (b) that the Fund is and shall remain registered under
the 1940 Act, (c) that shares of the Designated Portfolios will be sold only to
Participating Insurance Companies and their separate accounts or to persons or
plans that communicate to the Fund that they qualify to purchase shares of the
Designated Portfolios under Section 817(h) of the Code, and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Designated Portfolios as constituting investments
of the Account for purposes of Section 817(h) ("Qualified Persons"), and
(d) shares of the Designated Portfolios will not be sold directly to the
general public. The Fund 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. The Fund 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 the Fund.
1.6. The Company represents and warrants that it and each Account are, and
will continue to be, Qualified Persons.
1.7. The Fund makes no representations as to whether any aspect of its
operations, including, but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states.
1.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in all
material respects with the 1940 Act.
1.9. The Adviser represents and warrants that it is registered as an
investment adviser with the SEC.
1.10. The Fund and the Adviser represent and warrant that all of their
trustees/directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Fund are and shall 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 minimum 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 shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
1.11. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Fund and to pay to the Fund any
amounts lost from larceny, embezzlement or other events covered by the
aforesaid bond to the extent such amounts properly belong to the Fund pursuant
to the terms of this Agreement. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Fund and the Adviser in the event
that such coverage no longer applies.
1.12. The Company represents and warrants that it shall comply with any
applicable privacy and notice provisions of 15 U.S.C. (S)(S) 6801-6827 and any
applicable regulations promulgated thereunder (including but not limited to 17
C.F.R. Part 248) as they may be amended.
1.13. The Company represents and warrants that it has in place an anti-money
laundering program ("AML program") that does now and will continue to comply
with applicable laws and regulations, including the relevant provisions of the
USA PATRIOT Act (Pub. L. No. 107-56 (2001)) and the regulations issued
thereunder.
2.11. The Company agrees that it will comply at all times with the
provisions of Rules 22c-1 and 38a-1 under the 1940 Act and, with respect to
Rule 38a-1, shall provide such certifications as may reasonably be requested by
the Fund's Chief Compliance Officer.
2.12. The Company represents and warrants that it will maintain operational
systems and procedures adequate to accommodate stock splits and reverse stock
splits which may be approved by the Board for any of the Designated Portfolios.
The Company acknowledges that any such stock splits and reverse stock splits
shall be determined by the Fund in its sole discretion.
ARTICLE III. Prospectuses and Proxy Statements; Voting
1.14. The Fund or its agent shall provide the Company with as many copies of
the Fund's current prospectus as the Company may reasonably request. The
Company shall bear the expense of printing copies of the current prospectus and
profiles for the Contracts that will be distributed to existing Contract
owners, and the Company shall bear the expense of printing copies of the Fund's
prospectus and profiles that are used in connection with offering the Contracts
issued by the Company. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the current
prospectus set in type or in camera ready format or in electronic format at the
Fund's expense) and other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus for the Fund
is amended) to have the prospectus for the Contracts and the Fund's prospectus
or profile printed together in one document (such printing to be at the
Company's expense).
1.15. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the Fund, at its
expense, shall provide a reasonable number of copies of such SAI free of charge
to the Company for itself and for any owner of a Contract with Contract value
allocated to a Designated Portfolio who requests such SAI.
1.16. The Fund shall provide the Company with information regarding the
Fund's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract. The Company agrees that it will use such information in
the form provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
the manner in which the Company proposes to modify the information, and agrees
that it may not modify such information in any way without the prior consent of
the Fund.
1.17. The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners. If requested by the Company in lieu thereof,
the Fund shall provide such material, reports or other communications in
"camera ready" format on diskette. The Company may request customized reports
to shareholders, but such customized reports shall only be provided at the
Company's expense.
1.18. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners in that Account; and
(iii) vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such Designated Portfolio held by an
Account for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners or to
the extent otherwise required by law. The Company will vote Fund shares held in
any segregated asset account in the same proportion as Fund shares of such
Designated Portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
1.19. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Mixed and Shared Funding
Exemptive Order (See Section 7.1) and consistent with any reasonable standards
that the Fund may adopt and provide in writing.
ARTICLE IV. Sales Material and Information
1.20. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
that the Company develops and in which the Fund (or a Designated Portfolio
thereof) or the Adviser is named. No such material shall be used until approved
by the Fund or its designee, and the Fund will use its best efforts for it or
its designee to review such sales literature or promotional material within ten
Business Days after receipt of such material. The Fund or its designee reserves
the right to reasonably object to the continued use of any such sales
literature or other promotional material in which the Fund (or a Designated
Portfolio thereof) or the Adviser is named, and no such material shall be used
if the Fund or its designee so objects.
1.21. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund or the Adviser in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus or SAI
for the Fund shares, as such registration statement and prospectus or SAI may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature or other promotional material approved by
the Fund or its designee, except with the permission of the Fund or its
designee.
1.22. The Fund and the Adviser, or their designee, shall furnish, or cause
to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the
Company, and the Company will use its best efforts to review such sales
literature or promotional material within ten Business Days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
1.23. The Fund shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account, or the Contracts
other than the information or representations contained in a registration
statement, prospectus (which shall include an offering memorandum, if any, if
the Contracts issued by the Company or interests therein are not registered
under the 1933 Act), or SAI for the Contracts, as such registration statement,
prospectus, or SAI may be amended or supplemented from time to time, or in
published reports for the Account which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Company or its designee, except with
the permission of the Company.
1.24. 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, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios or their shares, promptly after the filing
of such document(s) with the SEC or other regulatory authorities.
1.25. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Contracts or the Account, promptly after the
filing of such document(s) with the SEC or other regulatory authorities. The
Company shall provide to the Fund and the Adviser any complaints received from
the Contract owners pertaining to the Fund or a Designated Portfolio.
1.26. The Fund 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
resulting in a change to the registration statement or prospectus for any
Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
1.27. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund, any Designated Portfolio or any affiliate of
the Fund: 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, 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, and registration
statements, prospectuses, SAIs, shareholder reports, proxy materials, and any
other communications distributed or made generally available with regard to the
Fund.
ARTICLE V. Fees and Expenses
1.28. The Fund shall pay no fee or other compensation to the Company under
this Agreement. Nothing herein shall prevent the parties hereto from otherwise
agreeing to perform and arranging for compensation for (i) distribution and
shareholder-related services under a plan adopted in accordance with Rule 12b-1
under the 1940 Act, and (ii) services (including certain shareholder-related
services) that are not primarily intended to result in the sale of shares of
the Designated Portfolios, which are provided to Contract owners relating to
the Designated Portfolios.
1.29. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal
law and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation
and filing of the Fund's prospectus and registration statement, proxy materials
and reports (except customized reports), setting the prospectus in type,
setting in type and printing the proxy materials and reports to shareholders
(including the costs of printing a prospectus that constitutes an annual
report), the preparation of all statements and notices required by any federal
or state law, and all taxes on the issuance or transfer of the Fund's shares.
1.30. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
1.31. Subject to Company's representations and warranties in Sections 2.1,
2.3 and 6.3, the Fund represents and warrants that it will invest its assets in
such a manner as to ensure that the Contracts will be treated as annuity or
life insurance contracts, whichever is appropriate, under the Code and the
regulations issued thereunder (or any successor provisions). Without limiting
the scope of the foregoing, each Designated Portfolio has complied and will
make every effort to continue to comply with Section 817(h) of the Code and
Treasury Regulation (S)1.817-5, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity, endowment,
or life insurance contracts, and any amendments or other modifications or
successor provisions to such Section or Regulations. In the event of a breach
of this Article VI by the Fund, it will take all reasonable steps (a) to notify
the Company of such breach and (b) to adequately diversify the Fund so as to
achieve compliance within the grace period afforded by Treasury Regulation
(S)1.817-5.
1.32. The Fund represents and warrants that each Designated Portfolio is or
will be qualified as a Regulated Investment Company under Subchapter M of the
Code, and that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provisions) and that it will notify
the Company immediately upon having a reasonable basis for believing that a
Designated Portfolio has ceased to so qualify or that it might not so qualify
in the future.
1.33. The Company represents and warrants that the Contracts are currently,
and at the time of issuance shall be, treated as life insurance or annuity
contracts under applicable provisions of the Code, and that it will make every
effort to maintain such treatment, and that it will notify the Fund and the
Adviser immediately upon having a reasonable basis for believing the Contracts
have ceased to be so treated or that they might not be so treated in the
future. The Company agrees that any prospectus offering a contract that is a
"modified endowment contract" as that term is defined in Section 7702A of the
Code (or any successor or similar provision), shall identify such contract as a
modified endowment contract. In addition, the Company represents and warrants
that each of its Accounts is a "segregated asset account" and that interests in
the Accounts are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. The Company will use every effort to
continue to meet such definitional requirements, and it will notify the Fund
and the Adviser immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
ARTICLE VII. Potential Conflicts
1.34. The Fund represents and warrants that it may rely on an order that was
granted by the SEC in Variable Insurance Funds, et al. (File No.: 812-10694),
Investment Company Act Rel. No. 23594 (Dec. 10, 1998) granting Participating
Insurance Companies and variable annuity separate accounts and variable life
insurance separate accounts relief from the provisions of Sections 9(a), 13(a),
15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Designated
Portfolios 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, qualified pension and retirement plans
outside of the separate account context, and other permitted investors (the
"Mixed and Shared Funding Order"). The parties to this Agreement agree that the
conditions or undertakings required by the Mixed and Shared Funding Order that
may be imposed on the Company, the Fund and/or the Adviser by virtue of such
order by the SEC: (i) shall apply only upon the sale of shares of the
Designated Portfolios to variable life insurance separate accounts (and then
only to the extent required under the 1940 Act); (ii) will be incorporated
herein by reference; and (iii) such parties agree to comply with such
conditions and undertakings to the extent applicable to each such party
notwithstanding any provision of this Agreement to the contrary.
1.35. 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, 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 3.5 and 3.6 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
1.36. Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund (which
shall include the Designated Portfolios) and the Adviser and each of its
trustees/directors and officers, and each person, if any, who controls the
Fund or Adviser within the meaning of Section 15 of the 1933 Act or who is
under common control with the Adviser (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) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statements of any material fact contained in the registration
statement, prospectus (which shall include a written description of a
Contract that is not registered under the 1933 Act), 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 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 the Fund 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
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not supplied
by the Company or persons under its control) or wrongful conduct of the
Company or its agents or persons under the Company's authorization or
control, with respect to the sale or distribution of the Contracts or
Fund 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 of the Fund 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 the Fund by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company; or
(vi) arise as a result of the provision by the Company to the Fund of
insufficient or incorrect information regarding the purchase or
redemption of shares, or the failure of the Company to provide such
information or payment for shares in accordance with the deadlines
stated in Section 1.3; or
(vii) arise out of information provided to the Company pursuant to this
Agreement, or to any other Participating Insurance Company pursuant to
another participation agreement, which information is based on incorrect
information supplied by the Company to the Fund or the Adviser.
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 to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
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), 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 an Indemnified Party, the Company shall
be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice
from the Company to such 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 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.
8.1(d). Each of the Fund and the Adviser will promptly notify the Company
of the commencement of any litigation or proceedings of which it has
knowledge against an Indemnified Party in connection with the issuance or
sale of the Fund shares or the Contracts or the operation of the Fund.
1.37. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (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 Adviser) or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under
any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature 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 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 Adviser or Fund
by or on behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of 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 Fund or the Adviser) or wrongful conduct of the Adviser
with respect to the sale or distribution of the Contracts or Fund
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 Adviser; or
(iv) arise as a result of any failure by the Fund to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Adviser;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance or 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 Adviser 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 Adviser 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), but failure to notify the
Adviser of any such claim shall not relieve the Adviser 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 Party, the Adviser will
be entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Adviser
to such party of the Adviser'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 Adviser 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.
8.2(d). The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings of which it has knowledge
against an Indemnified Party in connection with the issuance or sale of the
Contracts or the operation of the Account.
1.38. Indemnification By the Fund
8.3(a). To the extent permitted by applicable law, the Fund agrees to
indemnify and hold harmless the Company and each of its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses,
claims, expenses, damages, liabilities (including amounts paid in settlement
with the written consent of the Fund) or litigation (including legal and
other expenses) to which the Indemnified Parties may be required to pay or
may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages, liabilities or
expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature 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 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 Adviser or Fund
by or on behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Adviser or the Account, whichever
is applicable.
8.3(c). The Fund 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 Fund 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), but failure to notify the
Fund of any such claim shall not relieve the Fund 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 Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund to
such party of the Fund'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 Fund 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.
8.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or proceeding of which it has knowledge
against an Indemnified Party in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
8.3(e) The Adviser agrees promptly to notify the Fund of the commencement
of any litigation or proceeding of which it has knowledge against it or any
of its respective officers or directors in connection with the Agreement,
the issuance or sale of the Contracts, the operation of the Account, or the
sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
1.39. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
1.40. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance
therewith. If, in the future, the Mixed and Shared Funding Exemptive Order
should no longer be necessary under applicable law, then Article VII shall no
longer apply.
ARTICLE X. Termination
1.41. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to some or all
Designated Portfolios, by three (3) months advance written notice
delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Adviser based upon the Company's determination that shares of the Fund
are not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and the
Adviser in the event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Fund or Adviser in the event that formal
administrative proceedings are instituted against the Company by the
NASD, the SEC, the Insurance Commissioner or like official 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
operation of any Account, or the purchase of the Designated
Portfolios' shares; provided, however, that the Fund or Adviser
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
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund or Adviser by the SEC or
any state securities or insurance department or any other regulatory
body; 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
the Fund or Adviser to perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund and the
Adviser with respect to any Designated Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company
under Subchapter M or fails to comply with the Section 817(h)
diversification requirements specified in Article VI hereof, or if the
Company reasonably believes that such Portfolio may fail to so qualify
or comply; or
(g) termination by the Fund or Adviser by written notice to the Company in
the event that the Contracts fail to meet the qualifications specified
in Section 6.3 hereof; or
(h) termination by either the Fund or the Adviser by written notice to the
Company, if either one or both of the Fund or the Adviser
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company has suffered a material adverse change in
its business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company by written notice to the Fund and the
Adviser, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Adviser has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(j) termination by the Fund or the Adviser by written notice to the
Company, if the Company gives the Fund and the Adviser the written
notice specified in Section 1.7(a)(ii) hereof and at the time such
notice was given there was no notice of termination outstanding under
any other provision of this Agreement; provided, however, any
termination under this Section 10.1(j) shall be effective forty-five
days after the notice specified in Section 1.7(a)(ii) was given; or
(k) termination by the Adviser or Fund if the Board has decided to
(i) refuse to sell shares of any Designated Portfolio to the Company
and/or any of its Accounts; (ii) suspend or terminate the offering of
shares of any Designated Portfolio; or (iii) dissolve, reorganize,
liquidate, merge or sell all assets of the Trust or any Designated
Portfolio, subject to the provisions of Section 1.1; or
(l) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares of a
Designated Portfolio of the Fund in accordance with the terms of the
Contracts, provided that the Company has given at least 45 days prior
written notice to the Fund and Adviser of the date of substitution; or
(m) termination by any party in the event that the Board determines that a
material irreconcilable conflict exists as provided in Article VII.
1.42. (a) Notwithstanding any termination of this Agreement, and except as
provided in Section 10.2(b), the Fund and the Adviser shall, at the option of
the Company, continue, until the one year anniversary from the date of
termination, and from year to year thereafter if deemed appropriate by the Fund
and the Adviser, 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, based on instructions from the owners of the Existing
Contracts, the Accounts shall be permitted to reallocate investments in the
Designated Portfolios of the Fund and redeem investments in the Designated
Portfolios, and shall be permitted to invest in the Designated Portfolios in
the event that owners of the Existing Contracts make additional premium
payments under the Existing Contracts.
Company agrees, promptly after any termination of this Agreement, to take
all steps necessary to redeem the investment of the Accounts in the
Designated Portfolios within one year from the date of termination of the
Agreement as provided in Article X. Such steps shall include, but not be
limited to, obtaining 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. The Fund or the Adviser may, in their discretion, permit the
Accounts to continue to invest in the Designated Portfolios beyond such one
year anniversary for an additional year beginning on the first annual
anniversary of the date of termination, and from year to year thereafter;
provided that the Fund or the Adviser agrees in writing to permit the
Accounts to continue to invest in the Designated Portfolios at the beginning
of any such year.
(b) In the event (i) the Agreement is terminated pursuant to Sections
10.1(g) or 10.1(m), at the option of the Fund or the Adviser; or (ii) the
one year anniversary of the termination of the Agreement is reached or,
after waiver as provided in Section 10.2(a), such subsequent anniversary is
reached (each of (i) and (ii) referred to as a "triggering event" and the
date of termination as provided in (i) or the date of such anniversary as
provided in (ii) referred to as the "request date"), the parties agree that
such triggering event shall be considered as a request for immediate
redemption of shares of the Designated Portfolios held by the Accounts,
received by the Fund as of the request date, and the Fund agrees to process
such redemption request in accordance with the 1940 Act and the regulations
thereunder and the Fund's registration statement.
(c) The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement. The parties
further agree that, to the extent that all or a portion of the assets of the
Accounts continue to be invested in the Fund or any Designated Portfolio of
the Fund, Articles I, II, VI, VII, VIII and IX will remain in effect after
termination.
1.43. The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (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"), (iii) upon 45
days prior written notice to the Fund and Adviser, as permitted by an order of
the SEC pursuant to Section 26(c) of the 1940 Act, but only if a substitution
of other securities for the shares of the Designated Portfolios is consistent
with the terms of the Contracts, or (iv) as permitted under the terms of the
Contract. Upon request, the Company will promptly furnish to the Fund and the
Adviser reasonable assurance that any redemption pursuant to clause (ii) above
is a Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contacts, the Company shall not prevent Contract owners
from allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Adviser 45 days notice of its
intention to do so.
1.44. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
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 the Fund: ProFunds
c/o ProFund Advisors LLC
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
If to Adviser:
ProFund Advisors LLC
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
If to the Company:
[_____________________]
ARTICLE XII. Miscellaneous
1.45. All persons dealing with the Fund must look solely to the property of
the respective Designated Portfolios listed on Schedule A hereto as though each
such Designated Portfolio had separately contracted with the Company and the
Adviser for the enforcement of any claims against the Fund. The parties agree
that neither the Board, officers, agents or shareholders of the Fund assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Fund.
1.46. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written
consent of the affected party until such time as such information has come into
the public domain.
1.47. 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.
1.48. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
1.49. 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.
1.50. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the ________ [insert state] Insurance Commissioner with any
information or reports in connection with services provided under this
Agreement which such Commissioner may request in order to ascertain whether the
variable insurance operations of the Company are being conducted in a manner
consistent with the __________ [insert state] insurance laws and regulations
and any other applicable law or regulations.
1.51. 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.
1.52. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform services under this Agreement. The Company shall promptly notify the
Fund and the Adviser of any change in control of the Company.
1.53. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles) filed with any state or federal regulatory body
or otherwise made available to the public, as soon as practicable and
in any event within 90 days after the end of each fiscal year; and
(b) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulatory, as soon as practicable after the filing
thereof.
12.10 For purposes of this paragraph, each of ProFunds are referred to as a
"Trust." This Agreement constitutes a separate and distinguishable agreement as
between Company and each Trust. The Agreement has been structured as a single
document for convenience only. The representations, warranties, duties and
obligations of each Trust hereunder are several, not joint. The
representations, warranties, duties and obligations of Company to each Trust
are separate and do not inure to another Trust. For purposes of this Agreement,
references to Fund shall mean to each Fund on an individual basis. No Trust
shall be responsible for the actions (or inactions) of another Trust.
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.
[____________________]
By its authorized officer
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
ProFunds
By its authorized officer
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
ProFund Advisors LLC
By its authorized officer
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
[Date]
Schedule A
Account(s) Contract(s) Designated Portfolio(s)
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