Exhibit 8.14(a)
FORM OF FUND PARTICIPATION AGREEMENT
This Fund Participation Agreement (the "Agreement"), effective as of
____________, 2004 is made by and among Xxxxxx Investors Life Insurance Company
("Company"), One Group(R) Investment Trust (the "Trust"), the Trust's investment
advisor, Banc One Investment Advisors Corporation (the "Adviser"), and the
Trust's administrator, One Group Administrative Services, Inc. (the
"Administrator").
WHEREAS, the Trust engages in business as an open-end
management investment company and is available to act as the
investment vehicle for separate accounts established by insurance
companies for individual and group life insurance policies and
annuity contracts with variable accumulation and/or pay-out
provisions (hereinafter referred to individually and/or
collectively as "Variable Insurance Products");
WHEREAS, insurance companies desiring to utilize the Trust as
an investment vehicle under their Variable Insurance Products are
required to enter into participation agreements with the Trust and
the Administrator (the "Participating Insurance Companies");
WHEREAS, shares of the Trust are divided into several series
of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which
may be made available for Variable Insurance Products of
Participating Insurance Companies;
WHEREAS, the Trust intends to offer shares of the series set
forth on Schedule B (each such series hereinafter referred to as a
"Portfolio") as may be amended from time to time by mutual
agreement of the parties hereto under this Agreement to the
accounts of the Company specified on Schedule A (hereinafter
referred to individually as an "Account," collectively, the
"Accounts");
WHEREAS, the Trust has obtained an order from the Securities
and Exchange Commission, granting the Trust exemptions from the
provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended (hereinafter 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 Trust to be sold to and
held by Variable Insurance Product separate accounts of both
affiliated and unaffiliated insurance companies (hereinafter the
"Shared Funding Exemptive Order");
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and its shares are registered
under the Securities Act of 1933, as amended (hereinafter the "1933
Act");
WHEREAS, the Adviser is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and
any applicable state securities laws;
WHEREAS, the Adviser is the investment adviser of the
Portfolios of the Trust;
WHEREAS, the Company has registered certain Variable Insurance
Products under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, each Account intends to purchase shares of the
Portfolios to fund certain of the aforesaid Variable Insurance
Products and the Trust is authorized to sell such shares to each
such Account at net asset value.
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NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Trust, the Adviser, and the Administrator agree as follows:
Article 1
The Contracts
1. The Company represents that it has established each of the Accounts
specified on Schedule A as a separate account under Illinois law, and has
registered each such Account as a unit investment trust under the 1940 Act to
serve as an investment vehicle for variable annuity contracts and/or variable
life contracts offered by the Company (the "Contracts"). The Contracts provide
for the allocation of net amounts received by the Company to separate divisions
of the Account for investment in the shares of the Portfolios. Selection of a
particular division is made by the Contract owner who may change such selection
from time to time in accordance with the terms of the applicable Contract. In
marketing its Contracts, the Company will comply with all applicable state or
Federal laws.
Article 2
Trust Shares
2.1. The Trust agrees to make available for purchase by the Company
shares of the Portfolios and shall execute orders placed for each Account on a
daily basis at the net asset value next computed after receipt by the Trust or
its designee of such order. For purposes of this Section 2.1, the Company shall
be the designee of the Trust for receipt of such orders from the Account and
receipt by such designee shall constitute receipt by the Trust; provided that
the Trust's designated transfer agent receives notice of such order by 9:30 a.m.
Eastern Time on the next following Business Day ("Trade Date plus 1").
Notwithstanding the foregoing, the Company shall use its best efforts to provide
the Trust's designated transfer agent with notice of such orders by 9:00 a.m.
Eastern Time on Trade Date plus 1. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission, as set forth in the Trust's prospectus and statement of
additional information. Notwithstanding the foregoing, the Board of Trustees of
the Trust (hereinafter the "Board") may refuse to permit the Trust to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
2.2. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies for their Variable Insurance Products and, in
the Trust's discretion, to qualified pension and retirement plans. No shares of
any Portfolio will be sold to the general public.
2.3. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Trust held by an Account, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. For purposes of this
Section 2.3, the Company shall be the designee of the Trust for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust's designated transfer
agent receives notice of such request for redemption on Trade Date plus 1 in
accordance with the timing rules described in Section 2.1.
2.4. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Trust shall be made in
accordance with the provisions of such prospectus. The Accounts of the Company,
under which amounts may be invested in the Trust are listed on Schedule A
attached hereto and incorporated herein by reference, as such Schedule A may be
amended from time to time by mutual written agreement of all of the parties
hereto. The Company will give the Trust and the Adviser prompt written notice of
its intention to make available in the future, as a funding vehicle under the
Contracts, any other investment company.
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2.5. The Company will place separate orders to purchase or redeem shares
of each Portfolio. Each order shall describe the net amount of shares and dollar
amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on Trade Date plus 1.
Payment shall be in federal funds transmitted by wire. In the event of net
redemptions, the Portfolio shall pay the redemption proceeds in federal funds
transmitted by wire by 2:00 p.m. Eastern Time on Trade Date plus 1.
Notwithstanding the foregoing, if the payment of redemption proceeds on the next
Business Day would require the Portfolio to dispose of Portfolio securities or
otherwise incur substantial additional costs, and if the Portfolio has
determined to settle redemption transactions for all shareholders on a delayed
basis, proceeds shall be wired to the Company within seven (7) days and the
Portfolio shall notify in writing the person designated by the Company as the
recipient for such notice of such delay by 3:00 p.m. Eastern Time on Trade Date
plus 1.
2.6. Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
2.7. On each record date, the Administrator shall use its best efforts
to furnish same day notice by 6:30 p.m. Eastern Time (by wire, telephone,
electronic media or by fax) to the Company of any dividends or capital gain
distributions payable on the Trust's shares. The Company hereby elects to
receive all such dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Trust shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
2.8. The Administrator shall make the net asset value per share of each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6:30 p.m.
Eastern Time. In the event that the Administrator is unable to meet the 6:30
p.m. time stated immediately above, then the Administrator shall provide the
Company with additional time to notify the Administrator of purchase or
redemption orders pursuant to Sections 2.1 and 2.3, respectively, above. Such
additional time shall be equal to the additional time that the Administrator
takes to make the net asset values available to the Company.
2.9. If the Administrator provides materially incorrect share net asset
value information through no fault of the Company, the Company shall be entitled
to an adjustment with respect to the Trust shares purchased or redeemed to
reflect the correct net asset value per share as subsequently determined by the
Administrator. The determination of the materiality of any net asset value
pricing error shall be based on the Trust's policy for correction of pricing
errors (the "Pricing Policy"). The Company shall correct such error in its
records and in the records prepared by it for Contract owners in accordance with
information provided by the Administrator. Any material error in the calculation
or reporting of net asset value per share, dividend or capital gain information
shall be reported promptly upon discovery to the Company.
2.10. The Administrator shall provide information to the Company of the
amount of shares traded and the associated cost per share (NAV) total trade
amount and the outstanding share balances held by the Account in each Portfolio
as of the end of each Business Day. Such information will be furnished
(electronically or by fax) by 1:00 p.m. Eastern time on the next Business Day
after the Trust's designated transfer agent receives notice of such orders.
Article 3
Prospectuses, Reports to Shareholders and Proxy Statements, Voting
3.1. The Trust shall provide the Company with as many printed copies of
the Trust's current prospectus as the Company may reasonably request. The
Administrator will provide the Company with a copy of the statement of
additional information suitable for duplication. If requested by the Company, in
lieu of providing printed copies, the Trust shall provide camera-ready film or
computer diskettes containing the
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Trust's prospectus and statement of additional information in order for the
Company once each year (or more frequently if the prospectus and/or statement of
additional information for the Trust is amended during the year) to have the
prospectus for the Contracts and the Trust's prospectus printed together in one
document or separately. The Company may elect to print the Trust's prospectus
and/or its statement of additional information in combination with other
investment companies' prospectuses and statements of additional information.
3.2(a). Except as otherwise provided in this Section 3.2, all expenses of
preparing, setting in type and printing and distributing Trust prospectuses and
statements of additional information shall be the expense of the Company. For
prospectuses and statements of additional information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of setting in type, printing and
distributing shall be borne by the Trust. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Trust's prospectus and/or statement of additional information, the Trust
shall bear the cost of typesetting to provide the Trust's prospectus and/or
statement of additional information to the Company in the format in which the
Trust is accustomed to formatting prospectuses and statements of additional
information, respectively, and the Company shall bear the expense of adjusting
or changing the format to conform with any of its prospectuses and/or statements
of additional information. In such event, the Trust will reimburse the Company
in an amount equal to the product of x and y where x is the number of such
prospectuses distributed to owners of the Contracts, and y is the Trust's per
unit cost of printing the Trust's prospectuses. The same procedures shall be
followed with respect to the Trust's statement of additional information. The
Trust shall not pay any costs of typesetting, printing and distributing the
Trust's prospectus and/or statement of additional information to prospective
Contract owners.
3.2(b). The Trust, at its expense, shall provide the Company with copies of
Annual and Semi-Annual Reports (the "Reports") in such quantity as the Company
shall reasonably require for distributing to Contract owners. The cost of
distributing Reports to existing Contract owners shall be borne by Trust. The
Trust, at its expense, shall provide the Contract owners designated by the
Company with copies of its proxy statements and other communications to
shareholders (except for prospectuses and statements of additional information,
which are covered in Section 3.2(a) above). The cost of distributing such proxy
statements and other communications to existing Contract owners shall be borne
by Trust. The Trust shall not pay any costs of distributing Reports and other
communications to prospective Contract owners.
3.2(c). The Company agrees to provide the Trust or its designee with such
information as may be reasonably requested by the Trust to assure that the
Trust's expenses do not include the cost of typesetting, printing or
distributing any of the foregoing documents other than those actually
distributed to existing Contract owners.
3.2(d). The Trust shall pay no fee or other compensation to the Company
under this Agreement, except that if the Trust or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Trust may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Trust in writing.
3.2(e). All expenses, including expenses to be borne by the Trust pursuant
to Section 3.2 hereof, incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust 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 Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses for
the cost of registration and qualification of the Trust's shares.
3.3. If and to the extent required by law, the Company shall with
respect to proxy material distributed by the Trust to Contract owners designated
by the Company to whom voting privileges are required to be extended:
(i) solicit voting instructions from Contract owners;
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(ii) vote the Trust shares in accordance with instructions
received from Contract owners; and
(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such
Portfolio for which instructions have been received, so long
as and to the extent that the Securities and Exchange
Commission continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners.
The Company reserves the right to vote Trust shares held in any segregated asset
account in its own right, to the extent permitted by law.
Article 4
Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust, the Adviser or their designee, drafts of the separate accounts
prospectuses and statements of additional information and each piece of sales
literature or other promotional material prepared by the Company or any person
contracting with the Company to prepare such material in which the Trust, the
Adviser or the Administrator is described, at least ten Business Days prior to
its use. No such material shall be used if the Trust, the Adviser, the
Administrator or their designee reasonably objects to such use within ten
calendar days after receipt of such material.
4.2. Neither the Company nor any person contracting with the Company to
prepare sales literature or other promotional material shall give any
information or make any representations or statements on behalf of the Trust or
concerning the Trust in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or Trust
prospectus, as such registration statement or Trust prospectus may be amended or
supplemented from time to time, or in reports to shareholders or proxy
statements for the Trust, or in sales literature or other promotional material
approved by the Trust or its designee, except with the permission of the Trust
or its designee.
4.3. The Administrator shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material prepared by the Trust in which the Company or its Accounts, are
described at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
calendar days after receipt of such material.
4.4. Neither the Trust, the Administrator, nor the Adviser shall give
any information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts, other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement or prospectus may
be amended or supplemented from time to time, or in published reports or
solicitations for voting instructions for each 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 Trust will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Trust or its
shares, promptly after the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Trust, promptly upon the Trust's
request, at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, solicitations for
voting instructions, pieces of 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 investment in an Account or Contract.
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4.7. For purposes of this Article 4, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, internet, telephone
or tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters,
shareholder newsletters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), and educational or
training materials or other communications distributed or made generally
available to some or all agents or employees.
Article 5
Administrative Services to Contract Owners
5. Administrative services to Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the Trust,
the Adviser or the Administrator. The Trust and the Administrator recognize that
the Account(s) will be the sole shareholder(s) of Trust shares issued pursuant
to the Contracts.
Article 6
Representations and Warranties
6.1. The Trust represents that it believes, in good faith, that each
Portfolio is currently qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and
that it will make every effort to maintain such qualification of the Trust and
that it will notify the Company immediately upon having a reasonable basis for
believing that a Portfolio has ceased to so qualify or that it might not so
qualify in the future.
6.2. The Company represents that it believes, in good faith, that the
Contracts will at all times be treated as annuity contracts or life insurance
policies under applicable provisions of the Code, and that it will make every
effort to maintain such treatment and that it will notify the Trust immediately
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
6.3. The Trust represents that it currently complies with, and agrees
that it will at all relevant times comply with the diversification requirements
set forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5(b), and any
amendments or other modifications to that section or regulation, and that it
will notify the Company immediately upon having a reasonable basis for believing
that a Portfolio has ceased to so qualify or that a Portfolio might not so
qualify in the future.
6.4. The Company represents and warrants that the interests of the
Contracts are or will be registered unless exempt and that it will maintain such
registration under the 1933 Act and the regulations thereunder to the extent
required by the 1933 Act and that the Contracts will be issued and sold in
compliance with all applicable federal and state laws and regulations. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each Account prior to any issuance or sale thereof as a
segregated asset account under the Illinois Insurance Code and the regulations
thereunder and has registered or, prior to any issuance or sale of the
Contracts, will maintain the registration of each Account as a unit investment
trust in accordance with and to the extent required by the provisions of the
1940 Act and the regulations thereunder, unless exempt therefrom, to serve as a
segregated investment account for the Contracts. The Company shall amend its
registration statement for its Contracts under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts.
6.5. The Company represents that it believes, in good faith, that the
Account is a "segregated asset account" and that interests in the Account are
offered exclusively through the purchase of a "variable contract," within the
meaning of such terms under Section 1.817-5(f)(2) of the regulations under the
Code, and
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that it will make every effort to continue to meet such definitional
requirements, and that it will notify the Trust 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.
6.6. The Trust represents and warrants that it is and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount no less than the minimal coverage as required
currently by Rule 17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. Such bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company. The Trust will
notify the Company immediately upon having a reasonable basis for believing that
the Trust no longer has the coverage required by this Section 6.6.
6.7. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and subsidiaries dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage, in an amount not less
than five million dollars ($5,000,000). Such bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. The
Company agrees to make all reasonable efforts to see that this bond or another
bond containing these provisions is in effect at all relevant times under this
Agreement and agrees to notify the Trust immediately upon having a reasonable
basis for believing that the Company no longer has the coverage required by this
Section 6.7.
6.8. The Trust represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Trust
undertakes to have a majority of the disinterested members of the Board
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
6.9. The Adviser and the Administrator each represents and warrants that
it complies with all applicable federal and state laws and regulations and that
it will perform its obligations for the Trust and the Company in compliance with
the laws and regulations of its state of domicile and any applicable state and
federal laws and regulations.
6.10. The Company acknowledges that it will be considered the Trust's
agent for purposes of Rule 22c-1 under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company represents and warrants that
it has adopted and implemented procedures reasonably designed to prevent orders
received from Contract owners after the earlier of the applicable Portfolio's
close and the close of trading on the New York Stock Exchange (generally, 4:00
p.m., Eastern Time) (the "Cut-Off Time") from being aggregated with orders
received prior to the Cut-Off Time. The Company further represents and warrants
that all purchases and redemption orders for the Account transmitted to the
Trust pursuant to Section 2.1 of this Agreement shall be based upon orders
received by the Company prior to the Cut-Off Time.
Article 7
Statements and Reports
7.1. The Administrator or its designee will make available
electronically to the Company within five Business Days after the end of each
month a monthly statement of account confirming all transactions made during
that month in the Account.
7.2. The Trust and Administrator agree to provide the Company no later
than March 1 of each year with the investment advisory and other expenses of the
Trust incurred during the Trust's most recently completed fiscal year, to permit
the Company to fulfill its prospectus disclosure obligations under the SEC's
variable annuity and/or life fee table requirements.
Article 8
Potential Conflicts
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8.1. The Board will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Trust. 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 owners and variable life
insurance contract owners; or (f) a decision by a Participating Insurance
Company 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.
8.2. The Company will report in writing any potential or existing
material irreconcilable conflict of which it is aware to the Administrator.
Upon receipt of such report, the Administrator shall report the potential
or existing material irreconcilable conflict to the Board. The
Administrator shall also report to the Board on a quarterly basis whether
the Company has reported any potential or existing material irreconcilable
conflicts during the previous calendar quarter. The Company will assist the
Board in carrying out its responsibilities under the 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.
8.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, 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 trustees), 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 Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio of the Trust, 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 (i.e.,
annuity contract owners, life insurance policy 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 of making such a change; and (2) establishing a new registered
management investment company or managed separate account. No charge or
penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a
Board determination of an irreconcilable material conflict and the cost of
such remedial action, and these responsibilities will be carried out with a
view only to the interests of Contract owners.
8.4. 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 Trust's election, to withdraw the
affected Account's investment in the Trust and terminate this Agreement
with respect to such Account (at the Company's expense); 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. No charge or penalty
will be imposed as a result of such withdrawal. The Company agrees that it
bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view
only to the interests of Contract owners.
8.5. For purposes of Sections 8.3 through 8.4 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 Trust be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 8.3 through 8.4 to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract
owners materially adversely affected by the irreconcilable material
conflict.
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8.6. 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 Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Shared
Funding Exemptive Order, then the Trust 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.
8.7. Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may
reasonably request so that the Board may fully carry out the obligations
imposed upon them by the provisions hereof and in the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted
more frequently if deemed appropriate by the Board. Without limiting the
generality of the foregoing or the Company's obligations under Section 8.2,
the Company shall provide to the Administrator a written report to the
Board no later than January 15th of each year indicating whether any
material irreconcilable conflicts have arisen during the prior fiscal year
of the Trust. All reports received by the Board of potential or existing
conflicts, and all Board action with regard to determining the existence of
a conflict, notifying Participating Insurance Companies of a conflict, and
determining whether any proposed action adequately remedies a conflict,
shall be properly recorded in the minutes of the Board or other appropriate
records, and such minutes or other records shall be made available to the
Securities and Exchange Commission upon request.
Article 9
Indemnification
9.1. Indemnification By The Company
9.1 (a). The Company agrees to indemnify and hold harmless the Trust,
the Administrator, the Adviser, and each member of their respective Boards
and officers and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.1) 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, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus 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 Trust for use
in the registration statement or prospectus 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 Trust 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 or sales literature of the
Trust not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Trust) or unlawful conduct of the Company or persons under its
control, with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust 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
-9-
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Trust
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(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; as limited by and in
accordance with the provisions of Section 9.1(b) and 9.1(c)
hereof.
9.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Trust, whichever is applicable.
9.1(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 the Indemnified Parties, the
Company shall be entitled to participate, at as own expense, in the defense
of such action. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the Indemnified Party named in the
action. After notice from the Company to such Indemnified Party of the
Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it,
and the Company shall not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof
other than reasonable costs of investigation.
9.1(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 Trust shares or the Contracts
or the operation of the Trust.
9.2. Indemnification by Administrator
9.2(a). The Administrator 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 9.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Administrator) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(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 sales literature of the
Trust (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 Trust or
the Administrator by or on behalf of the Company, the Adviser,
Counsel for the Trust, the independent public accountant to the
Trust, or any person or entity that is not acting as agent for
or controlled by the
-10-
Administrator for use in the registration statement or
prospectus for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, 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 Administrator;
or
(iv) arise as a result of any failure by the Administrator to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Administrator in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Administrator; as
limited by and in accordance with the provisions of Section
9.2(b) and 9.2(c) hereof.
9.2(b). The Administrator shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to the Company or an Account, whichever
is applicable.
9.2(c). The Administrator 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
Administrator 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 Administrator of any such
claim shall not relieve the Administrator 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 Administrator will be
entitled to participate, at its own expense, in the defense thereof. The
Administrator also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After
notice from the Administrator to such Indemnified Party of the
Administrator'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 Administrator will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense
thereof other than reasonable costs of investigation.
9.2(d). The Company agrees promptly to notify the Administrator of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account in which the Portfolios are made
available.
9.3. Indemnification by the Adviser
9.3(a). The Adviser agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 9.3) 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, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
-11-
(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 sales literature of the
Trust (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
the Trust by or on behalf of the Company, the Administrator,
Counsel for the Trust, the independent public accountant to the
Trust, or any person or entity that is not acting as agent for
or controlled by the Adviser for use in the registration
statement or prospectus for the Trust or in sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Portfolio shares;
or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, 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 Adviser to provide the
services and furnish the materials under the terms of this
Agreement (including a failure of the Trust, whether
unintentional or in good faith or otherwise, to comply with the
diversification requirements of Section 817(h) of the Code and
the rules and regulations thereunder); 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 Section 9.3(b) and 9.3(c)
hereof.
9.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as may arise
from such Indemnified Party's willful misfeasance, bad faith, or negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or an Account, whichever is applicable.
9.3(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 Parties, 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 Indemnified Party named in the action.
After notice from the Adviser to such Indemnified 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 Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such Indemnified
Party independently in connection with the defense thereof other than
reasonable costs of investigation.
9.3(d). The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of each
Account, or the sale or acquisition of shares of the Trust.
-12-
9.4. Indemnification by the Trust
9.4(a). The Trust agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 9.4) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Trust) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(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 sales literature of the
Trust (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 Trust by or
on behalf of the Adviser, the Company, or the Administrator for
use in the registration statement or prospectus for the Trust
or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Portfolio shares; or
(ii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, 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 Trust; or
(iii) arise as a result of any failure by the Trust 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
requirements of Section 817(h) of the Code and the rules and
regulations thereunder); or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Section 9.4(b) and 9.4(c)
hereof.
9.4(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as may arise
from such Indemnified Party's willful misfeasance, bad faith, or 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 Trust, the Adviser or an Account, whichever
is applicable.
9.4(c). The Trust 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 Trust 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
Trust of any such claim shall not relieve the Trust 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 Trust
will be entitled to participate, at its own expense, in the defense
thereof. The Trust also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Indemnified Party named in the action.
After notice from the Trust to such Indemnified Party of the Trust's
-13-
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Trust will not be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable
costs of investigation.
9.4(d). The Company agrees to promptly notify the Trust of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of each
Account, or the sale or acquisition of shares of the Trust.
Article 10
Applicable Law
10.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Massachusetts.
10.2. 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
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
Article 11
Termination
11.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason upon ninety (90) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Trust, the
Adviser, and the Administrator with respect to any Portfolio
based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the requirements
of the Contracts. Reasonable advance notice of election to
terminate shall be furnished by the Company, said termination
to be effective ten (10) days after receipt of notice unless
the Trust makes available a sufficient number of shares to
reasonably meet the requirements of the Account within said ten
(10) day period; or
(c) termination by the Company upon written notice to the Trust,
the Adviser, and the Administrator with respect to any
Portfolio in the event any of the 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 medium of the Contracts issued or
to be issued by the Company. The terminating party shall give
prompt notice to the other parties of its decision to
terminate; or
(d) termination by the Company upon written notice to the Trust,
the Adviser and the Administrator with respect to any Portfolio
in the event that such Portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision or if the Company
reasonably believes that the Portfolio may fail to so qualify;
or
(e) termination by the Company upon written notice to the Trust,
the Adviser, and the Administrator with respect to any
Portfolio in the event that such Portfolio fails to meet the
diversification requirements specified in Section 6.3 hereof;
or
(f) termination by either the Trust, the Adviser, or the
Administrator by written notice to the Company, if either one
or more of the Trust, the Adviser, or the Administrator, shall
-14-
determine, in its or their sole judgment exercised in good faith,
that the Company and/or its affiliated companies 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 and that material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of the Trust, the Adviser or
the Administrator, provided that the Trust, the Adviser, or the
Administrator will give the Company sixty (60) days' advance written
notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the
actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Trust, the
Adviser, or the Administrator shall continue to apply on the 60th
day since giving of such notice, then such 60th day shall be the
effective date of termination; or
(g) termination by the Company by written notice to the Trust, the
Adviser, and the Administrator, if the Company shall determine, in
its sole judgment exercised in good faith, that either the Trust,
the Adviser, or the Administrator 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 and that material adverse change or material
adverse publicity will have a material adverse impact upon the
business and operations of the Trust, the Adviser or the
Administrator, provided that the Company will give the Trust, the
Adviser, and the Administrator sixty (60) days' advance written
notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the
actions taken by the Trust, the Adviser, or the Administrator and
any other changes in circumstances since the giving of such notice,
the determination of the Company shall continue to apply on the 60th
day since giving of such notice, then such 60th day shall be the
effective date of termination; or
(h) termination by any party upon the other party's breach of any
representation in Article 6 or any material provision of this
Agreement, which breach has not been cured to the satisfaction of
the terminating party within ten (10) days after written notice of
such breach is delivered to the Trust, the Adviser, the
Administrator or the Company, as the case may be; or
(i) termination by the Trust, the Adviser, or Administrator by written
notice to the Company in the event an Account or Contract is not
registered (unless exempt from registration) or sold in accordance
with applicable federal or state law or regulation, or the Company
fails to provide pass-through voting privileges as specified in
Section 3.3; or
(j) at the option of the Trust or the Adviser in the event that formal
administrative proceedings are instituted against the Company by the
NASD, the SEC, an insurance commissioner 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 Trust's shares, provided, however, that the Trust or
the 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
(k) at the option of the Company in the event that formal administrative
proceedings are instituted against the Trust or the Adviser 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 Trust or the Adviser to perform its
obligations under this Agreement; or
- 15 -
(l) at the option of the Company, with respect to any Account, upon
receipt of any necessary approval and/or the vote of the Contract
owners having an interest in that Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Portfolio shares in accordance with the terms of the
Contracts for which those Portfolio shares had been selected to
serve as the underlying investment medium. The Company will give at
least 30 days prior written notice to the Trust of the date of any
proposed vote to replace the Trust's shares; or
(m) upon assignment of this Agreement without the prior written consent
of all parties hereto, except as provided in Section 13.9 hereof.
11.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Trust shall at the option of the Company, continue to make
available additional shares of the Trust 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 such
further sale of Trust shares is proscribed by law, regulation or applicable
regulatory body, or unless the Trust determines that liquidation of the Trust
following termination of this Agreement is in the best interests of the
applicable Portfolio and its shareholders. Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to direct reallocation of
investments in the Trust, redemption of investments in the Trust and/or
investment in the Trust upon the making of additional purchase payments under
the Existing Contracts. In the event additional shares are made available for
Existing Contracts pursuant to this Section 11.2, this Agreement shall remain in
full force and effect in connection therewith until this Agreement is terminated
in its entirety. The parties agree that this Section 11.2 shall not apply to any
terminations under Article 8 and the effect of such Article 8 terminations shall
be governed by Article 8 of this Agreement.
11.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Trust, the Adviser and the
Administrator the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust and the Adviser) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Trust or the Adviser thirty (30) days notice of its intention to do so.
Article 12
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 Trust:
One Group Investment Trust
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attn: Fund President
If to the Administrator:
One Group Administrative Services, Inc.
- 16 -
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attention: President
If to the Adviser:
Banc One Investment Advisors Corporation
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attn: President
If to the Company:
Xxxxxx Investors Life Insurance Company
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
With a copy to:
One Life Insurance Company
0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attn: Variable Funds Manager
Article 13
Miscellaneous
13.1. All persons dealing with the Trust must look solely to the property
of the Trust for the enforcement of any claims against the Trust as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust. Each of the Company, the
Adviser, and the Administrator acknowledges and agrees that, as provided by the
Trust's Amended and Restated Declaration of Trust, the shareholders, trustees,
officers, employees and other agents of the Trust and the Portfolios shall not
personally be bound by or liable for matters set forth hereunder, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim hereunder. The Trust's Amended and Restated Declaration of Trust is on
file with the Secretary of State of Massachusetts.
13.2. The Company will comply with all applicable laws and regulations
aimed at preventing, detecting, and reporting money laundering and suspicious
transactions. To the extent required by applicable regulation and generally
accepted industry practices, the Company shall take all necessary and
appropriate steps to: (i) obtain, verify, and retain information with regard to
Contract owner identification, and (ii) maintain records of all Contract owner
transactions. The Company will (but only to the extent consistent with
applicable law) take all steps necessary and appropriate to provide the Trust
with any requested information about Contract owners and their accounts in the
event that the Trust shall request such information due to an inquiry or
investigation by any law enforcement, regulatory, or administrative authority.
To the extent permitted by applicable law and regulations, the Company will
notify the Trust of any concerns that the Company may have in connection with
any Contract owner in the context of relevant anti-money laundering laws or
regulations.
13.3. 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
- 17 -
not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain
without the express written consent of the affected party.
13.4. 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.
13.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.6. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities (and
other parties hereto) reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
13.8. 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.
13.9. 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, with advance written notice to
the other parties hereto, assign this Agreement or any rights or obligations
hereunder to any affiliate of or company under common control with the Adviser
if such assignee is duly licensed and registered to perform the obligations of
the Adviser under this Agreement.
13.10. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee upon request, 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 ("GAAP"), if any), as soon as practical and in any event within 90
days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory), as soon as
practical and in any event within 45 days following such period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports
the Company filed with the Securities and Exchange Commission or any state
insurance regulator, as soon as practical after the filing thereof; and
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt thereof.
13.11. The names "One Group(R) Investment Trust" and `Trustees of One
Group(R) Investment Trust" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under an Amended and Restated Declaration of Trust dated January 2000 to
which reference is hereby made and a copy of which is on file at the office of
the Secretary of the Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
obligations of 'One Group Investment Trust' entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding
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upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series of shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
13.12. The Trust and the Administrator agree to consult with the Company
concerning whether any Portfolio of the Trust qualifies to provide a foreign tax
credit pursuant to Section 853 of the Code.
[SIGNATURE PAGES FOLLOW]
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XXXXXX INVESTORS LIFE INSURANCE COMPANY
By:____________________________________
Title:_________________________________
ONE GROUP INVESTMENT TRUST
By:____________________________________
Title:_________________________________
BANC ONE INVESTMENT ADVISORS CORPORATION
By:____________________________________
Title:_________________________________
ONE GROUP ADMINISTRATIVE SERVICES, INC.
By:____________________________________
Title:_________________________________
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SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
----------------------------------------------------------------------------------------------------
Name of Separate Account and Date Established by Board of Form Number
Directors Funded by Separate Account
----------------------------------------------------------------------------------------------------
KILICO Variable Annuity Separate Account, May 29, 1981 L-1000 (Marketing name: Xxxxxx
Advantage III)
L-8696 (Marketing name: Zurich
Preferred Plus)
L-8589 (Marketing name: Zurich
Preferred)
L-1550 (Marketing name: Zurich
Archway)
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Schedule B
Portfolios of the Trust
One Group Investment Trust Bond Portfolio
One Group Investment Trust Government Bond Portfolio
One Group Investment Trust Balanced Portfolio
One Group Investment Trust Large Cap Growth Portfolio
One Group Investment Trust Equity Index Portfolio
One Group Investment Trust Diversified Equity Portfolio
One Group Investment Trust Mid Cap Growth Portfolio
One Group Investment Trust Diversified Mid Cap Portfolio
One Group Investment Trust Mid Cap Value Portfolio
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