AMENDMENT NO. 2 TO PARTICIPATION AGREEMENT
Among
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
and
PIMCO FUNDS DISTRIBUTORS LLC
This Amendment No. 2 to the Participation Agreement dated November 15, 1999
(the "Agreement") between Cova Financial Services Life Insurance Company (the
"Company"), PIMCO Variable Insurance Trust (the "Fund"), and PIMCO Funds
Distributors LLC (the "Underwriter") is effective as of February 12,2001.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
WHEREAS, effective February 12, 2001 the name of the Company was changed to
MetLife Investors Insurance Company;
WHEREAS, the Trust, the Underwriter and the Company desire to amend
Schedule A to the Agreement in accordance with the terms of the Agreement.
NOW, THEREFORE, in consideration of the above premises, the Trust, the
Underwriter and the Company hereby agree:
1. Amendment. The Company shall be MetLife Investors Insurance Company.
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2. Amendment. Schedule A to the Agreement is amended to read in its
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entirety as the Schedule A attached hereto.
3. Effectiveness. These Amendments shall be effective as of the date
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hereof.
4. Continuation. Except as set forth above, the Agreement shall remain in
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full force and effect in accordance with its terms.
5. Counterparts. This Amendment No. 2 may be executed simultaneously in two
-------------
or more counterparts, each of which taken together shall constitute one and the
same instrument.
METLIFE INVESTORS INSURANCE COMPANY
By its authorized officer
By: /s/ J. Xxxxxx Xxxxxx
----------------------------------------
Title: Senior Vice President & Chief Actuary
Date: 5/17/01
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: /s/ [ILLEGIBLE SIGNATURE]
----------------------------------------
Title: Senior Vice President
Date: 6/5/01
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Title: Executive Vice President
Date: 6/4/01
2
Schedule A
PIMCO Variable Insurance Trust Portfolios:
PIMCO Total Return Bond Portfolio
PIMCO High Yield Bond Portfolio
PIMCO Low Duration Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
Separate Account:
MetLife Investors Variable Annuity Account One
Dated: February 12, 2001
3
AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT
Among
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
and
PIMCO FUNDS DISTRIBUTORS LLC
This Amendment No. 1 to the Participation Agreement dated November 15, 1999
(the "Agreement") between Cova Financial Services Life Insurance Company (the
"Company"), PIMCO Variable Insurance Trust (the "Fund"), and PIMCO Funds
Distributors LLC (the "Underwriter") is effective as of April 1, 2000.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
WHEREAS, the Company, the Fund, and the Underwriter have entered into the
Agreement to provide for the purchase by the Company, on behalf of one or more
of its segregated asset accounts ("Accounts"), of shares of beneficial interest
of the several series ("Portfolios") of the Fund;
WHEREAS, the Fund, effective April 1,2000, may offer shares of its
Portfolios in two classes, designated "Institutional Class" shares and
"Administrative Class" shares;
WHEREAS, the shares of the Portfolios offered prior to April 1, 2000 have
been designated as Administrative Class shares;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree that the final WHEREAS clause in the Agreement be
amended to read as follows:
"WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Administrative Class
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,
and the Underwriter is authorized to sell such shares to the Account
at net asset value;"
This Amendment No. 1 may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
By its authorized officer
By: /s/ Xxxxx X. Nase11i
---------------------------------
Title: Vice President
Date: 5/25/00
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Title:
Date:
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
By: /s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------------
Title: Executive Vice President
Date: 7/11/00
2
PARTICIPATION AGREEMENT
Among
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
and
PIMCO FUNDS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the 15th day of November, 1999 by and among
Cova Financial Services Life Insurance Company, (the "Company"), a Missouri 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"), PIMCO
Variable Insurance Trust (the "Fund"), a Delaware business trust, and PIMCO
Funds Distributors LLC (the "Underwriter"), a Delaware 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 (the
"Variable Insurance Products") to be offered by insurance companies which have
entered into participation agreements with the Fund and Underwriter
("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 has obtained an order from the Securities and Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts 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(b15) and 6e3(T)(b)(15)
thereunder, if and to the extent necessary to permit shares of the Fund to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies (the
"Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company (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;
WHEREAS, the Underwriter, which serves as distributor to the Fund, 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 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, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The 'Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so
instructed, the Underwriter to make available to the Company for purchase
on behalf of the Account Fund shares of those Designated Portfolios
selected by the Underwriter. Pursuant to such authority and instructions,
and subject to Article X hereof, the Underwriter agrees to make available
to the Company for purchase on behalf of the Account, shares of those
Designated Portfolios listed on Schedule A to this Agreement, such
purchases to be effected at net asset value in accordance with Section 1.3
of this Agreement. Notwithstanding the foregoing, (i) Fund series (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
Underwriter may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund 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.
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 purchase and redemption requests
on behalf of the Account (but not
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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 of any such request
(or relevant transactional information therefor) on any day the New
York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the SEC (a
"Business Day") 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 Prospectus (which as of the
date of execution of this Agreement is 4:00 p.m. Eastern Time) shall
constitute receipt by the Fund on that same Business Day, provided
that the Fund receives notice of such request by 9:00 a.m. Eastern
Time on the next following Business Day.
(b) The Company shall pay for shares of each Designated Portfolio
on the same day that it notifies the Fund of a purchase request for
such shares. Payment for Designated Portfolio shares shall be made in
federal funds transmitted to the Fund by. wire to be received by the
Fund by 4:00 p.m. Eastern Time on the day the Fund is notified 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 Portfolios 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 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 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 7:00
p.m. Eastern Time each Business Day, and in any
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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. In the event the
Fund is unable to meet the 7:00 p.m. time stated herein, it shall provide
additional time for the Company to place orders on the next Business Day,
as outlined in section 1.3(a), for the purchase and redemption of shares.
Such additional time shall equal the additional time which the Fund takes
to make the net asset value available to the Company. Neither the Fund, any
Designated Portfolio, the Underwriter, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this
Agreement which information is based on incorrect information supplied by
the Company or any other Participating Insurance Company to the Fund or the
Underwriter.
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.
1.6. Issuance and transfer of Fund shares shall be by book entry only.
Stock 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 1.8 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.
(b) The Company shall not, without prior notice to the
Underwriter (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under
the 1940 Act.
(c) The Company shall not, without prior notice to the
Underwriter (unless otherwise required by applicable law), induce
Contract owners to change or modify the Fund or change the Fund's
distributor or 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 of Trustees of the Fund.
1.8. The Underwriter and the Fund shall sell Fund shares only to
Participating Insurance Companies and their separate accounts and to
persons or plans ("Qualified Persons") that communicate to the Underwriter
and the Fund that they qualify to purchase shares of the Fund under Section
817(h)(4) of the Internal Revenue Code of 1986, as amended (the "Code")
and the regulations thereunder without impairing the ability of the Account
to consider the portfolio investments of the Fund as constituting
investments of the Account for the purpose of satisfying the
diversification requirements
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of Section 817(h). The Underwriter and the Fund shall not sell Fund shares
to any insurance company or separate account unless an agreement complying
with Article VI of this Agreement is in effect to govern such sales, to the
extent required. The Company hereby represents and warrants that it and the
Account are Qualified Persons.
1.9 The Fund will provide notice of any material error in calculation
of net asset value per share, dividend or capital gain information of a
Designated 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 for the
price change. The Fund will make the Company and the Account whole for any
payments or adjustments to the number of shares in the Account that are
reasonably demonstrated to be required as a result of pricing errors.
ARTICLE II. Representations and Warranties
------------------------------
2.1. 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 Missouri
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.
2.2. The Fund represents and warrants that Fund 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 and that the Fund is and shall remain registered under the
0000 Xxx. 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 or the
Underwriter.
2.3. The Fund may make payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act. Prior to financing distribution
expenses pursuant to Rule 12b-1, the Fund will have the Board, a majority
of whom are not interested persons of the Fund, formulate and approve a
plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution
expenses.
2.4. 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.
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2.5. 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.
2.6. The Underwriter 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 Underwriter further represents that it will sell and distribute
the Fund shares in accordance with any applicable state and federal
securities laws.
2.7. The Fund and the Underwriter represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, 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.
2.8. 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 Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many copies of
the Fund's current prospectus (describing only the Designated Portfolios
listed on Schedule A) or, to the extent permitted, the Fund's profiles as
the Company may reasonably request. The Fund 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 new prospectus on
diskette 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 with other funds available under the Contracts. The allocation of
the expenses of such printing will be governed by Section 5.3 of this
agreement.
3.2. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the
Underwriter (or 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 who requests such SAI.
3.3. 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
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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.
3.4. 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.
3.5. The Company shall:
(i) solicit voting instructions nom Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio 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 portfolio
for which voting instructions have been received from Contract owners, to the
extent permitted by law.
3.6. 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 Shared Funding
Exemptive Order and consistent with any reasonable standards that the Fund
may adopt and provide in writing.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. 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 or the Underwriter is named at least 15
Business Days prior to its intended use. No such material shall be used
unless the Fund or its designee objects to its use 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 or the Underwriter is named, and no such material
shall be used if the Fund or its designee so object.
4.2. 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 or the Underwriter 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 or by the Underwriter, except with the permission of the Fund or
the Underwriter or the designee of either.
- 7 -
4.3. The Fund and the Underwriter, 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 at least 15 Business Days prior to its
intended use. No such material shall be used unless the Company objects to
its use 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.
4.4. The Fund and the Underwriter 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.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares, promptly after the
filing of such document(s) with the SEC or other regulatory authorities.
4.6. 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 Underwriter any complaints received from the Contract
owners pertaining to the Fund or the Designated Portfolio.
4.7. 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.
4.8. 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 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 (ie., 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
- 8 -
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
-----------------
5.1. The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund
or any Portfolio adopts and implements a plan pursuant to Rule 12b-l to
finance distribution expenses, then the Fund or Underwriter may make
payments to the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Underwriter in writing, and such payments will be
made out of existing fees otherwise payable to the Underwriter, past
profits of the Underwriter, or other resources available to the
Underwriter. Currently, no such payments are contemplated.
5.2. 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, 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.
5.3. For the initial 12-month period following the effective date of
the agreement, the Fund shall contribute a maximum of $5,000 in aggregate
towards the expenses of the combined printing of the Fund's prospectus to
owners of Contracts issued by the Company to such Contract owners, with any
additional expenses to be borne by the Company. The Company shall bear all
printing expenses of such combined documents where used for distribution to
prospective purchasers. The Fund and the Company may agree at a future date
to adjust the amount contributed by the Fund for expenses described under
this Section 5.3 relating to the printing of a combined prospectus for
existing Contract owners. The Fund shall bear the expense of distributing
the Fund's proxy materials to owners of the Contracts.
ARTICLE VI. Diversification and Qualification
---------------------------------
6.1. The Fund 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 continue to
comply with Section 817(h) of the Code and Treasury Regulation ss.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 Regulation 1.817-5.
- 9 -
6.2. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it
will 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 it has ceased to so qualify or
that it might not so qualify in the future.
6.3. The Company represents that the Contracts are currently, and at
the time of issuance shall be, treated as life insurance or annuity
insurance contracts, under applicable provisions of the Code, and that it
will maintain such treatment, and that it will notify the Fund and the
Underwriter 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.
ARTICLE VII. Potential Conflicts
-------------------
The following provisions shall apply only upon issuance of the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts, and then only to the extent required under the 0000 Xxx.
7.1. The Board will monitor the Fund for tl1e existence of any
material irreconcilable conflict between the interests of the Contract
owners of all separate accounts investing in the Fund. An irreconcilable
material 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 Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists
and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in
carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Board
whenever Contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up
to and including: (1) withdrawing the assets allocable to some or all of
the separate accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected contract owners
and, as appropriate, segregating the assets of any appropriate group (ie.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract
owners the option
- 10 -
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 the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement with respect
to each 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
members of the Board. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this
provision is being implemented, and until the end of that six month period
the Fund shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with the majority of other state regulators, then the Company will withdraw
the affected Account's investment in the Fund and terminate this Agreement
with respect to such Account within six months after the Board informs the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; 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 members of the Board. Until the end of the foregoing six
month period, the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contract if an offer
to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In
the event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemption Order
or any amendment thereto contains terms and conditions different from
Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then
the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps. as may be necessary to comply with the Mixed and
Shared Funding Exemptive Order, and Sections 3.4, 3.5, 3.6, 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 the Mixed and Shared Funding Exemptive Order or any amendment
thereto. 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 6e2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in
effect only to the
- 11 -
extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By the Company
------------------------------
8.1 (a). The Company agrees to indemnify and hold harmless the
Fund and the Underwriter and each of its trustees/directors and
officers, and each person, if any, who controls the Fund or
Underwriter within the meaning of Section 15 of the 1933 Act or who is
under common control with the Underwriter (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
- 12 -
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) 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). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter 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
Underwriter) 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
- 13 -
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 Underwriter 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 Underwriter or persons under
its control) or wrongful conduct of the Fund or Underwriter or
persons under their 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 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 Fund or the Underwriter, or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, 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
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter 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 Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have
- 14 -
notified the Underwriter 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
Underwriter of any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Underwriter to such party of the Underwriter'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
Underwriter 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.
The Company agrees promptly to notify the Underwriter 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 the Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). 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 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
(ii) 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 Underwriter or the Account, whichever is applicable.
- 15 -
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 and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceeding 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
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
California.
9.2. 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, any 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
-----------
10.1. 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
Underwriter 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
Underwriter 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
- 16 -
(d) termination by the Fund or Underwriter 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
Fund's shares; provided, however, that the Fund or Underwriter
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
Underwriter by the NASD, 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 Underwriter to perform its obligations under this Agreement;
or
(f) termination by the Company by written notice to the Fund and the
Underwriter 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 Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Article 6.3 hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter 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
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund, Adviser, or the
Underwriter 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 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 Underwriter of the date
of substitution; or
- 17 -
(k) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict
exists as provided in Article VII.
10.2. Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"), unless the Underwriter requests that the Company seek an order
pursuant to Section 26(b) of the 1940 Act to permit the substitution of
other securities for the shares of the Designated Portfolios in which case
additional shares will be made available until the order of substitution is
granted. The Underwriter agrees to split the cost of seeking such an order,
and the Company agrees that it shall reasonably cooperate with the
Underwriter and seek such an order upon request. Specifically, the owners
of the Existing Contracts may be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts
(subject to any such election by the Underwriter). 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 this Section 10.2
shall not apply to any terminations under Section 10.1(g) of this
Agreement.
10.3. 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 Underwriter, as
permitted by an order of the SEC pursuant to Section 26(b) 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 Underwriter 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 Underwriter 45 days notice
of its intention to do so.
10.4. 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: PIMCO Variable Insurance Trust.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
If to the Company: Cova Financial Life Insurance Company
Xxx Xxxxx Xxxx, Xxxxx 0000
- 00 -
Xxxxxxxx Terrace, IL 60181
Attention: General Counsel
If to Underwriter: PIMCO Funds Distributors LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ARTICLE XII. Miscellaneous
-------------
12.1. All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such
Designated Portfolio had separately contracted with the Company and the
Underwriter 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.
12.2. 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.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. 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.
12.6. 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 Missouri 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 annuity operations of the Company are being conducted
in a manner consistent with the Missouri variable annuity laws and
regulations and any other applicable law or regulations.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8. 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.
- 19 -
12.9. 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.
- 20 -
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.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY:
By its authorized officer
By: /s/ Xxxxx X. Nase11i
---------------------------------
Name: Xxxxx X. Nase11i
Title: Assistant Vice President
Date: 11/18/99
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
Date: 12/9/99
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
By: /s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Executive Vice President
Date: 11/30/99
- 21 -
Schedule A
PIMCO VARIABLE INSURANCE TRUST PORTFOLIOS:
PIMCO Total Return Bond Portfolio
PIMCO High Yield Bond Portfolio
PIMCO Low Duration Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
Separate Account: Cova Variable Annuity Account One
Dated , 199
