PARTICIPATION AGREEMENT
AMONG
PIONEER VARIABLE CONTRACTS TRUST,
GOLDEN AMERICAN LIFE INSURANCE COMPANY
PIONEER INVESTMENT MANAGEMENT, INC.
AND
PIONEER FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT, made and entered into as of the thirteenth day of July, 2001, by
and among PIONEER VARIABLE CONTRACTS TRUST, a Delaware business trust (the
"Trust"), GOLDEN AMERICAN LIFE INSURANCE COMPANY, a Delaware life insurance
company (the "Company") on its own behalf and on behalf of each of the
segregated asset accounts of the Company set forth in Schedule A hereto, as may
be amended from time to time (the "Accounts"), PIONEER INVESTMENT MANAGEMENT,
INC., a Delaware corporation ("PIM") and Pioneer Funds Distributor, Inc.
("PFD"), a corporation organized under the laws of The Commonwealth of
Massachusetts.
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and its
shares are registered or will be registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into several
series and classes of shares, each series being designated a "Portfolio" and
representing an interest in a particular managed pool of securities and other
assets;
WHEREAS, the Trust is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and/or variable
annuity contracts to be offered by insurance companies, including Company, which
have entered into participation agreements with the Trust (the "Participating
Insurance Companies");
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission (the "SEC"), dated July 9, 1997 (File No. 812-10494) (the "Mixed and
Shared Funding Exemptive Order") 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 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 annuity and
variable life insurance companies that may or may not be affiliated with one
another and qualified pension and retirement plans ("Qualified Plans");
WHEREAS, PIM is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law, and
is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable life
insurance contracts (individually, the "Contract" or, collectively, the
"Contracts") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Contracts and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts may invest, is
specified in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, the Portfolios offered by the Trust to the Company and the Accounts are
set forth on Schedule A attached hereto;
WHEREAS, PFD is registered as a broker-dealer with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as amended
(hereinafter the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") and is authorized to sell
shares of the Portfolios to unit investment trusts such as the Accounts;
WHEREAS, Directed Services, Inc. ("Policy Underwriter"), the underwriter for the
variable annuity and the variable life policies, is registered as a
broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in one or more of the Portfolios
specified in Schedule A attached hereto (the "Shares") on behalf of the Accounts
to fund the Contracts, and PFD intends to sell such Shares to the Accounts at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, PIM, PFD
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. PFD and the Company agree to provide pricing information, execute orders
and wire payments for purchases and redemptions of Fund shares as set forth in
this Article I until such time as they mutually agree to utilize the National
Securities Clearing Corporation ("NSCC"). Upon such mutual agreement, PFD and
the Company agree to provide pricing information, execute orders and wire
payments for purchases and redemptions of Fund shares through NSCC and its
subsidiary systems as set forth in Exhibit I.
1.2 PFD agrees to sell to the Company those Shares which the Accounts order in
accordance with the terms of this Agreement (based on orders placed by Contract
owners or participants on that Business Day, as defined below) and which are
available for purchase by such Accounts. Each such order will be executed on a
daily basis at the net asset value next computed after receipt by the Trust or
its designee of the order for the Shares. For purposes of this Section 1.2, the
Company shall be the designee of the Trust for receipt of such orders from
Contract owners or participants and receipt by such designee shall constitute
receipt by the Trust; provided that the Trust or its designee receives written
notice of such orders by the time the Trust ordinarily
-2-
calculates its net asset value as described from time to time in the Trust's
prospectus (which as of the date of this Agreement is 4:00 p.m. New York time on
such Business Day). The Company shall provide written (or facsimile) notice to
PFD of a net purchase of Fund shares by 9:00 a.m. New York time on the following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC.
1.3. PFD agrees to make the Shares available for purchase at the applicable net
asset value per share by the Company and the Accounts on those days on which the
Trust calculates its net asset value in accordance with the rules of the SEC.
Notwithstanding the foregoing, the Board of Trustees of the Trust (the "Board")
may refuse to sell any Shares to the Company and the Accounts, or suspend or
terminate the offering of the Shares to the Company and the Accounts if such
action is required by law or by regulatory authorities having jurisdiction over
PIM, PFD or the Trust or is, 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, in the best interest of the Shareholders of such Portfolio.
1.4. The Trust and PFD will sell Trust shares only to Participating Insurance
Companies and Qualified Plans which have agreed to participate in the Trust to
fund their Separate Accounts and/or Qualified Plans all in accordance with the
requirement of Section 817(h) of the Internal Revenue Code, as amended (the
"Code") and the Treasury regulations thereunder. The Company will not resell the
Shares except to the Trust or its agents.
1.5. The Trust agrees, upon the Company's request, to redeem for cash, any full
or fractional Shares held by the Accounts (based on orders placed by Contract
owners on that Business Day). Each such redemption request shall be executed 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 1.5,
the Company shall be the designee of the Trust for receipt of requests for
redemption from Contract owners or participants and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust or its designee
receives written notice of such request for redemption by the time the Trust
ordinarily calculates its net asset value as described from time to time in the
Trust's prospectus (which as of the date of this Agreement is 4:00 p.m. New York
time on such Business Day). The Company shall provide written (or facsimile)
notice to PFD of a net redemption of Fund shares no later than 9:00 a.m. New
York time on the following Business Day.
1.6. Each purchase, redemption and exchange order placed by the Company shall be
placed separately for each Portfolio and shall not be netted with respect to any
Portfolio. However, with respect to payment of the purchase price by the Company
and of redemption proceeds by the Trust, the Company and the Trust shall net
purchase and redemption orders with respect to each Portfolio and shall transmit
one net payment for all of the Portfolios in accordance with Section 1.7 hereof.
1.7. In the event of net purchases, the Company shall pay for the Shares by 4:00
p.m. New York time on the next Business Day after an order to purchase the
Shares is made in accordance with the provisions of Section 1.2. hereof. Company
shall transmit all such payments in federal funds by wire. If payment in federal
funds for any purchase is not received or is received by the Trust after 4:00
p.m. on such Business Day, the Company shall promptly, upon the Trust's request,
reimburse the Trust for any charges, costs, fees, interest or other expenses
incurred by the Trust in connection with any advances to, or borrowings or
overdrafts by, the Trust, or any similar
-3-
expenses (including the cost of and any loss incurred by the Trust in unwinding
any purchase of securities by the Trust) incurred by the Trust as a result of
portfolio transactions effected by the Trust based upon such purchase request.
In the event of net redemptions, the Trust ordinarily shall pay and transmit the
proceeds of redemptions of Shares by 4:00 p.m. New York time on the same
Business Day on which the netredemption order is received from the Company in
accordance with Section 1.5. hereof, although the Trust reserves the right to
postpone the date of payment or satisfaction upon redemption consistent with
Section 22(e) of the 1940 Act and any rules pomulgated thereunder. Payments for
net redemptions shall be in federal funds transmitted by wire. If payment in
federal funds for any net redemption is not received or is received by the
Company after 4:00 p.m. on such Business Day, the Trust shall promptly, upon the
Company's request, reimburse the Company for any charges, costs, fees, interest
or other expenses incurred by the Company in connection with any advances to, or
borrowings or overdrafts by, the Company, or any similar expenses incurred by
the Company as a result of its payment of redemption proceeds to Contract owners
or participants prior to receiving the redemption proceeds from the Trust.
1.8. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.9. The Trust shall furnish notice (by wire or telephone, followed by written
confirmation) no later than 7:00 p.m. New York time on the ex-dividend date to
the Company of any dividends or capital gain distributions payable on the
Shares. The Company hereby elects to receive all such dividends and
distributions as are payable in cash or Shares on a Portfolio's Shares in
additional Shares of that Portfolio. The Trust shall notify the Company by the
end of the next following Business Day of the number of Shares so issued as
payment of such dividends and distributions.
1.10. The Trust or its custodian shall make the net asset value per share for
each Portfolio available to the Company on each Business Day 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 6:00
p.m. New York time, but will in no event provide such net asset value later than
7:00 p.m. New York time absent extraordinary circumstances. In the event of
extraordinary circumstances resulting in an anticipated delay past 7:00 p.m.,
the Trust or its custodian shall notify the Company no later than 7:00 p.m. of
such anticipated delay. In the event of an error in the computation of a
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), PIM or the Trust shall notify the
Company as soon as possible after the discovery of the error. Such notification
may be verbal, but shall be confirmed promptly in writing in accordance with
Article XII of this Agreement. A pricing error shall be corrected in accordance
with the Trust's internal policies and procedures. If an adjustment is necessary
to correct a material error that occurred through no fault of the Company and
such adjustment has caused Contract owners to receive less than the number of
Shares or redemption proceeds to which they are entitled, the number of Shares
of the applicable Account will be adjusted and the amount of any underpayments
will be paid by the Trust or PIM to the Company for crediting of such amounts to
the Contract owners' accounts. Upon notification by PIM of any overpayment due
to a material error, the Company shall promptly remit to the Trust or PIM, as
appropriate, any overpayment that has not been paid to Contract owner; however,
PIM acknowledges that the Company does not intend to seek additional payments
form any Contract owner who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. The costs of correcting such
adjustments shall be borne by the Trust or PIM unless the Company is at fault in
which case such costs shall be borne
-4-
by the Company. Specifically for the purposes of this Section 1.10, PIM shall
indemnify and hold the Company harmless, from the effective date of this
Agreement, against any amount the Company is required to pay to Contract owners
or participants due to: (i) an incorrect calculation of a Portfolio's daily net
asset value, dividend rate, or capital gains distribution rate or (ii) incorrect
or late reporting of the daily net asset value, dividend rate, or capital gain
distribution rate of a Portfolio, upon written notification by the Company, with
supporting data, to PIM. In addition, PIM shall be liable to the Company for
reasonable systems and out of pocket costs incurred by the Company in making a
Contract owner's or a participant's account whole, if such costs or expenses are
a result of PIM's failure to provide timely or correct net asset values,
dividend and capital gains or financial information and if such information is
not corrected by 4:00 p.m. New York time of the next business day after
releasing such incorrect information provided the incorrect NAV as well as the
correct NAV for each day that the error occurred is provided. If a mistake is
caused in supplying such information or confirmations, which results in a
reconciliation with incorrect information, the amount required to make a
Contract owner's or a participant's account whole shall be borne by the party
providing the incorrect information, regardless of when the error is corrected.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act or are exempt from or not subject to registration
thereunder, and that the Contracts will be issued, sold, and distributed in
compliance in all material respects with all applicable state and federal laws,
including without limitation the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the 1940 Act. The Company further represents
and warrants that it (i) is an insurance company duly organized and in good
standing under applicable law; (ii) has legally and validly established each
Account as a segregated asset account under applicable law; (iii) has registered
or, prior to any issuance or sale of the Contracts, will register the Accounts
as unit investment trusts in accordance with the provisions of the 1940 Act
(unless exempt therefrom) to serve as segregated investment accounts for the
Contracts, and (iv) will maintain such registration for so long as any Contracts
are outstanding. The Company shall amend the registration statements under the
1933 Act for the Contracts and the registration statements under the 1940 Act
for the Accounts from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sales in accordance with
the securities laws of the various states only if and to the extent deemed
necessary by the Company. At the time the Company is required to deliver the
Trust's prospectus or statement of additional information to a purchaser of
Shares in accordance with the requirements of federal or state securities laws,
the Company shall distribute to such Contract purchasers the then current Trust
prospectus, as supplemented.
2.2. The Company represents and warrants that the Contracts are currently and at
the time of issuance will be treated as life insurance, endowment or annuity
contracts under applicable provisions of the Code, that it will maintain such
treatment and that it will notify the Trust or PIM 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.
2.3. The Company represents and warrants that Policy Underwriter, the
underwriter for the individual variable annuity contracts and the variable life
policies, is a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants
-5-
that the Company and Policy Underwriter will sell and distribute such contracts
and policies in accordance in all material respects with all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act and state insurance law suitability requirements.
2.4. The Trust represents and warrants that the Shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
in compliance with the laws of Delaware and that the Trust is and shall remain
registered under the 1940 Act. The Trust 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 Trust shall
register and qualify the Shares for sale in accordance with the laws of the
various states only if and to the extent deemed necessary by the Trust.
2.5. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware. The Trust further represents that it
has adopted a pursuant to Rule 12b-1 under the 1940 Act and imposes an
asset-based charge to finance its distribution expenses with respect to the
Class II shares of certain of the Trust's Portfolios as permitted by applicable
law and regulation.
2.6. PFD represents and warrants that it is a member in good standing of the
NASD and is registered as a broker-dealer with the SEC. PFD represents that it
will sell and distribute the Shares in accordance in all material respects with
all applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.7. PIM represents and warrants that it is and shall remain duly registered as
an investment adviser under the Investment Advisers Act of 1940, as amended.
2.8. No less frequently than annually, the Company shall submit to the Board
such reports, material or data as the Board may reasonably request so that it
may carry out fully the obligations imposed upon it by the conditions contained
in the Mixed and Shared Funding Exemptive Order pursuant to which the SEC has
granted exemptive relief to permit mixed and shared funding.
2.9. The Trust and PIM represent and warrant that all of their respective
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Trust are, and shall continue to
be at all times, covered by one or more blanket fidelity bonds or similar
coverage for the benefit of the Trust in an amount not less than the minimal
coverage required by Rule 17g-1 under the 1940 Act or related provisions as may
be promulgated form time to time. The aforesaid bonds shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. The
Company represents and warrants that all of its respective officers, employees,
and other individuals or entities employed or controlled by the Company dealing
with the money and/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
deemed appropriate by the Company. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. The
Company agrees that any amounts received under such bond relating to a claim
arising under this Agreement will be held by the Company for the benefit of the
Trust. The Company agrees to make all reasonable efforts to maintain such bond
and agrees to notify the Trust and PIM in writing in the event such coverage
terminates.
-6-
2.10. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Code, that the Contracts are currently
at the time of issuance and, assuming the Trust meets the requirements of
Article VI, will be treated as annuity contracts under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and that
it will notify the Trust, PFD and PIM 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. In addition, the Company represents and
warrants that each Account is a "segregated asset account" and that interests in
the Account are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. The Company will use every effort to
continue to meet such definitional requirements, and it will notify the Trust,
PFD and PIM 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.
The Company represents and warrants that it will not purchase Trust shares with
assets derived from tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing only
the Portfolios listed in Schedule A hereto) for the Shares as the Company may
reasonably request for distribution to existing Contract owners whose Contracts
are funded by such Shares. The Trust or its designee shall provide the Company,
at the Company's expense, with as many copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Contracts. If requested by the Company in lieu thereof, the Trust
or its designee shall provide such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company, as
a diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to have
the prospectus for the Contracts and the prospectus for the Shares printed
together in one document; the expenses of such printing to be apportioned
between (a) the Company and (b) the Trust or its designee in proportion to the
number of pages of the Contract and Shares' prospectuses, taking account of
other relevant factors affecting the expense of printing, such as covers,
columns, graphs and charts; the Trust or its designee to bear the cost of
printing the Trust's prospectus portion of such document for distribution to
owners of existing Contracts funded by the Shares and the Company to bear the
expenses of printing the portion of such document relating to the Accounts;
provided, however, that the Company shall bear all printing expenses of such
combined documents where used for distribution to prospective purchasers or to
owners of existing Contracts not funded by the Shares. In the event that the
Company requests that the Trust or its designee provides the Trust's prospectus
in a "camera ready," diskette format or other mutually agreed upon format, the
Trust shall be responsible for providing the prospectus in the format in which
it or PIM is accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus in such format (e.g., typesetting expenses), and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses, subject to PIM's approval which shall not be
unreasonably withheld.
3.2. The prospectus for the Shares shall state that the statement of additional
information for the Shares is available from the Trust or its designee. The
Trust or its designee, at its expense, shall print and provide such statement of
additional information to the Company (or a master
-7-
of such statement suitable for duplication by the Company) for distribution to
any owner of a Contract funded by the Shares. The Trust shall also provide such
statement of additional information to the Company in a mutually agreed upon
electronic format. The Trust or its designee, at the Company's expense, shall
print and provide such statement to the Company (or a master of such statement
suitable for duplication by the Company) for distribution to a prospective
purchaser who requests such statement or to an owner of a Contract not funded by
the Shares.
3.3. The Trust or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Trust's proxy materials,
reports to Shareholders and other communications to Shareholders in such
quantity as the Company shall reasonably require for distribution to Contract
owners. The cost of distributing such documents shall be borne the Trust or its
designee.
3.4 The Trust or PIM will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of any
material change in the Trust's registration statement, particularly any change
resulting in change to the registration statement or prospectus or statement of
additional information for any Account. The Trust and PIM will cooperate with
the Company so as to enable the Company to solicit proxies from Contract owners
or to make changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and PIM will make
reasonable efforts to attempt to have changes affecting Contract prospectuses
become effective simultaneously with the annual updates for such prospectuses.
In addition, the Trust or its designee shall bear the reasonable expense of all
of the Company's costs associated with a proxy for the Trust, including proxy
preparation, group authorization letters, programming for tabulation and
necessary materials (including postage).
3.5. The Trust hereby notifies the Company that it may be appropriate to include
in the prospectus pursuant to which a Contract is offered disclosure regarding
the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Shares in accordance with instructions received from Contract
owners; and
(c) vote the Shares for which no instructions have been received in the
same proportion as the Shares of such Portfolio for which instructions
have been received from Contract owners;
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. The Company
will in no way recommend action in connection with or oppose or interfere with
the solicitation of proxies for the Shares held for such Contract owners. The
Company reserves the right to vote shares held in any segregated asset account
in its own right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate accounts
holding Shares calculates voting privileges in the manner required by the Mixed
and Shared Funding Exemptive Order. The Trust and PIM will notify the Company of
any changes of interpretations or amendments to the Mixed and Shared Funding
Exemptive Order.
-8-
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to PFD or its
designee, each piece of sales literature or other promotional material in which
the Trust, PIM, any other investment adviser to the Trust, or any affiliate of
PIM are named, at least five (5) Business Days prior to its use. No such
material shall be used if PFD or its designee reasonably objects to such use
within five (5) Business Days after receipt of such material. PFD or its
designee shall notify the Company within five (5) Business Days of receipt of
its approval or disapproval of such materials.
4.2. The Company shall not make any representation on behalf of the Trust, PIM,
any other investment adviser to the Trust or any affiliate of PIM and shall not
give any information on behalf of the Trust, PIM, any other investment adviser
to the Trust, or any affiliate of PIM or concerning the Trust or any other such
entity in connection with the sale of the Contracts other than the information
contained in the registration statement, prospectus or statement of additional
information for the Shares, as such registration statement, prospectus and
statement of additional information may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in sales literature or
other promotional material approved by the Trust, PIM, PFD or their respective
designees, except with the permission of the Trust, PIM or their respective
designees. The Trust, PIM, PFD or their respective designees each agrees to
respond to any request for approval on a prompt and timely basis. The Company
shall adopt and implement procedures reasonably designed to ensure that
information concerning the Trust, PIM, PFD or any of their affiliates which is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Contract owners or
prospective Contract owners) is so used, and neither the Trust, PIM, PFD nor any
of their affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
4.3. PFD shall furnish, or shall cause to be furnished, to the Company or its
designee, each piece of sales literature or other promotional material in which
the Company and/or the Accounts is named, at least five (5) Business Days prior
to its use. No such material shall be used if the Company or its designee
reasonably objects to such use within five (5) Business Days after receipt of
such material. The Company shall notify PFD within five (5) Business Days of
receipt of its approval or disapproval of such materials.
4.4. The Trust, PIM and PFD shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts in connection with the sale of the Contracts other
than the information or representations contained in a registration statement,
prospectus, or statement of additional information for the Contracts, as such
registration statement, prospectus and statement of additional information may
be amended or supplemented from time to time, or in reports for the Accounts, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company or its designee
agrees to respond to any request for approval on a prompt and timely basis. The
parties hereto agree that this Section 4.4. is neither intended to designate nor
otherwise imply that PIM is an underwriter or distributor of the Contracts.
4.5. The Trust shall provide, or shall cause to be provided, to the Company at
least one complete copy of all registration statements, prospectuses, statements
of additional information,
-9-
reports, proxy statements, sales literature and other promotional materials, and
all amendments to any of the above, that relate to the Trust or its Shares,
prior to or contemporaneously with the filing of such document with the SEC or
other regulatory authorities. The Company shall provide, or cause to be
provided, for approval by the Trust, the form of any disclosure that it intends
to use in any registration statements, prospectuses, statements of additional
information, and all amendments to any of the above, that relate to the use of
the Portfolios of the Trust as investment options under the Contracts.
4.6. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone, electronic messages
or tape recording, videotape display, signs or billboards, motion pictures, or
other public media, including, for example, on-line networks such as the
Internet or other electronic media), and sales literature (such as brochures,
electronic messages, circulars, reprints or excerpts or any other advertisement,
sales literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials or
communications distributed or made generally available to some or all agents or
employees, and shareholder reports, proxy materials (including solicitations for
voting instructions) and any other material constituting sales literature or
advertising under the NASDR Conduct Rules, the 1933 Act or the 1940 Act.
However, such phrase "sales literature or other promotional material" shall not
include any material that simply lists the names of Portfolios of the Trust in a
list of investment options.
4.7. At the request of any party to this Agreement, each other party will make
available to the other party's independent auditors and/or representative of the
appropriate regulatory agencies, all records, data, and access to operating
procedures that may be reasonably requested in connection with compliance and
regulatory requirements related to the Agreement or any party's obligations
under this Agreement.
4.8 Subject to the terms of Sections 4.1 and 4.2 of this Agreement, the Trust
(and its Portfolios), PIM and PFD hereby each consents in connection with the
marketing of the Contracts to the Company's use of their names or other
identifying marks, including Pioneer Investments(R) and Pioneer's sail logo, in
connection with the marketing of the Contracts. The Trust, PIM or PFD or their
affiliates may withdraw this authorization as to any particular use of any such
name or identifying xxxx at any time: (i) upon a reasonable determination that
such use would have a material adverse effect on its reputation or marketing
efforts or its affiliates or (ii) if any of the Portfolios of the Trust cease to
be available through the Company. Except as set forth in the previous sentence,
the Company will not cause or permit, without prior written permission, the use,
description or reference to a Pioneer party's name, or to the relationship
contemplated in this Agreement, in any advertisement, or promotional materials
or activities, including without limitation, any advertisement or promotional
materials published, distributed, or made available, or any activity conducted
through, the Internet or any other electronic medium.
ARTICLE V. Fees and Expenses
5.1. Neither the Trust, PIM nor PFD shall pay any fee or other compensation to
the Company under this Agreement, other than pursuant to Schedule B attached
hereto, and the Company shall pay no fee or other compensation to the Trust, PIM
or PFD under this Agreement.
-10-
Notwithstanding the foregoing, the parties hereto will bear certain expenses
under the provisions of this Agreement and shall reimburse other parties for
expenses initially paid by one party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from otherwise
agreeing to perform, and arranging for appropriate compensation for, other
services relating to the Trust and/or to the Accounts pursuant to this
Agreement.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of the Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of the Trust's proxy materials and reports to Shareholders; setting in
type and printing its prospectus and statement of additional information (to the
extent provided by and as determined in accordance with Article III above);
setting in type and printing the proxy materials and reports to Contract owners
and participants (to the extent provided by and as determined in accordance with
Article III above); the preparation of all statements and notices required of
the Trust by any federal or state law with respect to its Shares; all taxes on
the issuance or transfer of the Shares; and the costs of distributing the
Trust's prospectuses, reports to Shareholders and proxy materials to owners of
Contracts and participants funded by the Shares and any expenses permitted to be
paid or assumed by the Trust pursuant to a plan, if any, under Rule 12b-1 under
the 1940 Act. The Trust shall not bear any expenses of marketing the Contracts.
5.3. The Company shall bear the expenses of distributing the Shares' prospectus
or prospectuses in connection with new sales of the Contracts. The Company shall
bear all expenses associated with the registration, qualification, and filing of
the Contracts under applicable federal securities and state insurance laws; the
cost of preparing, printing and distributing the Contract prospectus and
statement of additional information; and the cost of preparing, printing and
distributing annual individual account statements for Contract owners as
required by state insurance laws.
5.4. The Company agrees to provide certain administrative services, specified in
Schedule B attached hereto, in connection with the arrangements contemplated by
this Agreement. The parties intend that the services referred to in this Section
5.4 be recordkeeping, shareholder communication, and other transaction
facilitation and processing, and related administrative serves and are not the
services of an underwriter or principal underwriter of the Trust and the Company
is not an underwriter for Shares within the meaning of the 1933 Act.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and PIM represent and warrant that each Portfolio of the Trust in
which an Account invests will meet the diversification requirements of Section
817(h)(1) of the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts, as
they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal Revenue
Service interpreting these sections), as if those requirements applied directly
to each such Portfolio.
6.2. The Trust and PIM represent that each Portfolio will elect to be qualified
as a Regulated Investment Company under Subchapter M of the Code and that they
will maintain such qualification (under Subchapter M or any successor or similar
provision).
-11-
6.3. No Shares of the Trust will be sold directly to the general public.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable annuity contract owners and the variable life insurance policy owners
of the Company and/or affiliated companies ("contract owners") investing in the
Trust. A material irreconcilable conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretive 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 by contract
owners of different Participating Insurance Companies; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of contract
owners. The Board shall have the sole authority to determine if a material
irreconcilable conflict exists, and such determination shall be binding on the
Company only if approved in the form of a resolution by a majority of the Board,
or a majority of the disinterested trustees of the Board. The Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in
carrying out its responsibilities under the conditions set forth in the Trust's
exemptive application pursuant to which the SEC has granted the Mixed and Shared
Funding Exemptive Order by providing the Board, as it may reasonably request,
with all information necessary for the Board to consider any issues raised and
agrees that it will be responsible for promptly reporting any potential or
existing conflicts of which it is aware to the Board including, but not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. The Company also agrees that, if a material
irreconcilable conflict arises, it will at its own cost remedy such conflict up
to and including (a) withdrawing the assets allocable to some or all of the
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 to a vote of all affected contract owners whether to
withdraw assets from the Trust or any Portfolio and reinvesting such assets in a
different investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners (e.g., annuity contract
owners, life insurance owners or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to any of the affected contract owners the option of segregating the
assets attributable to their contracts or policies, and (b) establishing a new
registered management investment company and segregating the assets underlying
the Contracts, unless a majority of Contract owners materially adversely
affected by the conflict have voted to decline the offer to establish a new
registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable conflict,
the Company will withdraw from investment in the Trust each of the Accounts
designated by the disinterested trustees and terminate this Agreement within six
(6)
-12-
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 to remedy any such material irreconcilable
conflict as determined by a majority of the disinterested trustees of the Board.
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 Trust's election, to withdraw the Account's investment
in the Trust and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Trust's independent trustees. Any such withdrawal and termination must take
place within six (6) months after the Trust gives written notice that this
provision is being implemented, and until the end of that six-month period PFD
and the Trust shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Trust.
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 Account's
investment in the Trust and terminate this Agreement within six (6) months after
the Trust's Board informs the Company in writing that it has determined that
such decision has created a material irreconcilable 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 Trust's Board. Until the end of the foregoing
six (6) month period, the Trust and PFD shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of the Trust.
7.6 For purposes of Sections 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 material irreconcilable 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 7.2 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 affected by the material irreconcilable conflict. In
the event that the Board determines that any proposed action does not adequately
remedy any material irreconcilable conflict, then the Company will withdraw the
Account's investment in the Trust 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 independent trustees.
7.7. 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 Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3 and 7.7 of
this Agreement shall continue in effect only to the extent
-13-
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
The Company agrees to indemnify and hold harmless the Trust, PIM, PFD, any
affiliates of PIM, and each of their respective directors, trustees, officers
and each person, if any, who controls the Trust or PIM within the meaning of
Section 15 of the 1933 Act, and any agents or employees of the foregoing (each
an "Indemnified Party," or 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 expenses (including reasonable counsel fees) to which any Indemnified Party
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:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus or statement of additional information for the Contracts or contained
in the Contracts or sales literature or other promotional material 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 reasonable reliance upon and in conformity
with information furnished to the Company or its designee by or on behalf of the
Trust, PIM or PFD for use in the registration statement, prospectus or statement
of additional information for the Contracts or in the Contracts or sales
literature or other promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Shares; or
(b) arise out of or as a result of statements or representations not supplied by
the Company or its designee, or persons under its control (other than statements
or representations contained in the Trust's registration statement, prospectus,
statement of additional information or in sales literature or other promotional
material of the Trust and on which the Company has reasonably relied) or
wrongful conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, statement of
additional information, or sales literature or other promotional 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 statement or statements therein not misleading, if such
statement or omission was
-14-
made in reliance upon information furnished to the Trust by or on behalf of the
Company; or
(d) 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
(e) arise as a result of any failure by the Company to perform any of its
obligations under this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by PIM and PFD
PIM and PFD agree to indemnify and hold harmless the Company and Policy
Underwriter and each of their trustees and officers and each person, if any, who
controls the Company or Policy Underwriter within the meaning of Section 15 of
the 1933 Act, and any agents or employees of the foregoing (each an "Indemnified
Party," or 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 Trust) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Shares or the Contracts and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material 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 statement 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
reasonable reliance upon and in conformity with information furnished to the
Trust, PIM, PFD or their respective designees by or on behalf of the Company for
use in the registration statement, prospectus or statement of additional
information for the Trust or in sales literature or other promotional material
for the Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the Contract's registration
statement, prospectus, statement of additional information or in sales
literature or other promotional material for the Contracts not supplied by the
Trust, PIM, PFD or any of their respective designees or persons under their
respective control and on which any such entity has reasonably relied) or
wrongful conduct of the Trust, PIM, PFD or persons under their control, with
respect to the sale or distribution of the Contracts or Shares; or
-15-
(c) arise out of any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, statement of
additional information, or sales literature or other promotional literature of
the Accounts or relating to 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,
PIM or PFD; or
(d) arise out of or result from any material breach of any representation and/or
warranty made by the Trust in this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement) or arise out of or
result from any other material breach of this Agreement by the Trust; or
(e) arise out of or result from the materially incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend or capital gain
distribution rate; or
(f) arise as a result of any failure by PIM or PFD to perform any of their
respective obligations under this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust, PIM or PFD be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including
without limitation, the Company, or any Participating Insurance Company or any
Contract owner, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by the Company hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by the Company or
any Participating Insurance Company to maintain its segregated asset account
(which invests in any Portfolio) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by the Company or any Participating Insurance Company to
maintain its variable annuity and/or variable life insurance contracts (with
respect to which any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions of the
Code.
8.4. Neither the Company, the Trust, PIM nor PFD shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, willful misconduct, 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.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
notice of commencement of any action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this section,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it
-16-
from any liability which it may have to any Indemnified Party otherwise than
under this section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to such
Indemnified Party. After notice from the indemnifying party of its intention to
assume the defense of an action, the Indemnified Party shall bear the expenses
of any additional counsel obtained by it, and the indemnifying party shall not
be liable to such Indemnified Party under this section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
8.6. A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
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, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS OR LITIGATION
The Trust, PIM, PFD and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Contracts, the
operation of the Accounts, or the purchase of the Shares. Each of the parties
further agrees promptly to notify the other parties of the commencement of any
litigation or proceeding against it or any of its respective officers,
directors, trustees, employees or 1933 Act control persons in connection with
this Agreement, the issuance or sale of the Contracts, the operation of the
Accounts, or the sale or acquisition of Shares. The indemnification provisions
contained in this Article X shall survive any termination of this Agreement.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one, some,
or all Portfolios:
(a) at the option of any party upon three (3) months' advance written notice
delivered to the other parties; provided, however, that such notice shall not be
given earlier than three (3) months following the date of this Agreement; or
-17-
(b) at the option of the Company to the extent that the Shares of Portfolios are
not reasonably available to meet the requirements of the Contracts or are not
"appropriate funding vehicles" for the Contracts, as reasonably determined by
the Company. Without limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for example, such
Shares did not meet the diversification or other requirements referred to in
Article VI hereof; or if the Company would be permitted to disregard Contract
owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act.
Prompt notice of the election to terminate for such cause and an explanation of
such cause shall be furnished to the Trust by the Company; or
(c) at the option of the Trust, PIM or PFD upon institution of formal
proceedings against the Company by the NASD, the SEC, or any insurance
department or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of the
Accounts, or the purchase of the Shares; provided that the party terminating
this Agreement under this provision shall give notice of such termination to the
other parties to this Agreement; or
(d) at the option of the Company upon institution of formal proceedings against
the Trust by the NASD, the SEC, or any state securities or insurance department
or any other regulatory body regarding the duties of the Trust, PIM or PFD under
this Agreement or related to the sale of the Shares; provided that the party
terminating this Agreement under this provision shall give notice of such
termination to the other parties to this Agreement; or
(e) at the option of the Company, the Trust, PIM or PFD upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners having an
interest in the Accounts (or any subaccounts) 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 media. The Company will give
thirty (30) days' prior written notice to the Trust of the Date of any proposed
vote or other action taken to replace the Shares; or
(f) at the option of the Trust, PIM or PFD by written notice to the Company, if
any one or all of the Trust, PIM or PFD 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
(g) at the option of the Company by written notice to the Trust, PIM or PFD, if
the Company shall determine, in its sole judgment exercised in good faith, that
the Trust, PIM or PFD has suffered a material adverse change in this business,
operations, financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) at the option of any party to this Agreement, upon another unaffiliated
party's material breach of any provision of or representation contained in this.
-18-
11.2. The notice shall specify the Portfolio or Portfolios, Contracts and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised for cause
or for no cause.
11.4. Except as necessary to implement Contract owner initiated transactions, or
as required by state insurance laws or regulations, the Company shall not redeem
the Shares attributable to the Contracts (as opposed to the Shares attributable
to the Company's assets held in the Accounts), and the Company shall not prevent
Contract owners from allocating payments to a Portfolio that was otherwise
available under the Contracts, until thirty (30) days after the Company shall
have notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and PFD
shall, at the option of the Company, continue for a period not exceeding six (6)
months to make available additional shares of the Portfolios pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (the "Existing Contracts"),
except as otherwise provided under Article VII of this Agreement; provided,
however, that in the event of a termination pursuant to Section 11.1. (c), (f)
or (h), the Trust, PIM and PFD shall at their option have the right to terminate
immediately all sales of Shares to the Company. Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to transfer
or reallocate investment under the Contracts, redeem investments in any
Portfolio and/or invest in the Trust upon the making of additional purchase
payments under the Existing Contracts.
11.6 Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify the other parties shall survive and not be
affected by any termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement shall also survive and not
be affected by any termination of this Agreement
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier or facsimile 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:
Pioneer Variable Contracts Trust
x/x Xxxx xxx Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Secretary
If to the Company:
Golden American Life Insurance Company
0000 Xxxxxxxx Xxxxx
-00-
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx , Executive Vice President
If to PIM:
Pioneer Investment Management, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxx, Senior Counsel
If to PFD:
Pioneer Funds Distributor, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Senior Vice President
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory authority, each
party hereto shall treat as confidential all information reasonably identified
as confidential in writing by any party hereto and, except as permitted by this
Agreement or as otherwise required by applicable law or regulation, shall not
disclose, disseminate or utilize such other confidential information without the
express written consent of the affected party until such time as it may come
into the public domain. Notwithstanding anything to the contrary in this
Agreement, in addition to and not in lieu of other provisions in this Agreement:
(a) "Confidential Information: includes without limitation all information
regarding the customers of the Company, the Trust, PIM, PFD or any of their
subsidiaries, affiliates or licensees; or the accounts, account numbers, names,
addresses, social security numbers or any other personal identifier of such
customers; or any information derived therefrom.
(b) Neither the Company, the Trust, PIM or PFD may disclose Confidential
Information for any purpose other than to carry out the purpose for which
Confidential Information was provided to the Company, the Trust, PIM or PFD as
set forth in this Agreement; and the Company, the Trust, PIM and PFD agree to
cause their employees, agents and representatives, or any other party to whom
the Company, the Trust, PIM or PFD may provide access to or disclose
Confidential Information to limit the use and disclosure of Confidential
Information to that purpose.
(c) The Company, the Trust, PIM and PFD agree to implement appropriate measures
designed to ensure the security and confidentiality of Confidential Information,
to protect such information against any anticipated threats or hazards to the
security and integrity of such information, and to protect against unauthorized
access to, or use of, Confidential Information that could result in substantial
harm or inconvenience to any of the customers of the Company or any of its
subsidiaries,
-20-
affiliates or licensees; the Company, the Trust, PIM and PFD further agree to
cause all their respective agents, representatives or subcontractors, or any
other party to whom they provide access to or disclose Confidential Information,
to implement appropriate measures to meet the objectives set forth in this
Section 13.1.
13.2. ____ The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.3. ____ This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.4. ____ If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
13.5. ____ The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. ____ Each party hereto shall cooperate with each other party in connection
with inquiries by 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.
13.7. ____ 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.
13.8. ____ A copy of the Trust's Certificate of Trust is on file with the
Secretary of State of Delaware. The Company acknowledges that the obligations of
or arising out of this instrument are not binding upon any of the Trust's
trustees, officers, employees, agents or shareholders individually, but are
binding solely upon the assets and property of the Trust in accordance with its
proportionate interest hereunder. The Company further acknowledges that the
assets and liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon the
assets or property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its proportionate
interest hereunder, and the Company agrees not to proceed against any Portfolio
for the obligations of another Portfolio.
13.9. ____ Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then, such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
13.10. ___ This Agreement of any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
-21-
13.11. ___ The Trust, PIM and PFD agree that the obligations assumed by the
Company shall be limited in any case to the Company and its assets and neither
the Trust, PIM nor PFD shall seek satisfaction of any such obligation from the
shareholders of Company, the directors, officers, employees or agents of the
Company, or any of them.
13.12. ___ No provision of the Agreement may be deemed or construed to modify or
supersede any contractual rights, duties, or indemnifications, as between PIM
and the Trust and PFD and the Trust.
13.13. ___ This Agreement, including any Schedules hereto, may be amended only
by a written instrument executed by each party hereto.
-22-
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 above.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/Xxxxx X. Xxxxxxxx
----------------------
Xxxxx X. Xxxxxxxx, Senior Vice President
Date:
PIONEER VARIABLE CONTRACTS TRUST,
on behalf of the Portfolios
By its authorized officer and not individually,
By: /s/Xxxxxx X. Xxxxx
--------------------
Xxxxxx X. Xxxxx
Secretary
Date:
PIONEER INVESTMENT MANAGEMENT, INC.
By its authorized officer,
By: /s/Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
Date:
-23-
SCHEDULE A
Accounts, Contracts and Portfolios
Subject to the Participation Agreement
--------------------------------------
As of November 26, 2001
======================================== ========================================== ===========================================
Name of Separate
Account and Date Contracts Funded Portfolios and
Established by Board of Directors by Separate Account Class of Shares
Available to Contracts
======================================== ========================================== ===========================================
======================================== ========================================== ===========================================
Variable Annuity Account B, established SmartDesign Variable Annuity Pioneer Fund VCT Portfolio
July 14, 1988 (Class II)
SmartDesign Advantage Variable Annuity
Pioneer Small Company VCT Portfolio (Class
II)
---------------------------------------- ------------------------------------------ -------------------------------------------
======================================== ========================================== ===========================================
Variable Annuity Account B, established GoldenSelect Access Variable Annuity Pioneer Fund VCT Portfolio
July 14, 1988 (Class II)
GoldenSelect DVA Plus Variable Annuity
Pioneer Fund Mid Cap Value VCT Portfolio
GoldenSelect ES II Variable Annuity (Class II)
GoldenSelect Landmark Variable Annuity
GoldenSelect Premium Plus Variable Annuity
GoldenSelect Galaxy Premium Plus Variable
Annuity
---------------------------------------- ------------------------------------------ -------------------------------------------
======================================== ========================================== ===========================================
Variable Annuity Account B, established Retirement Solutions ING Rollover Variable Pioneer Fund VCT Portfolio
July 14, 1988 Annuity (Class II)
Pioneer Equity Income VCT Portfolio (Class
II)
Pioneer Mid Cap Value VCT Portfolio (Class
II)
---------------------------------------- ------------------------------------------ -------------------------------------------
-24-
SCHEDULE B
FEES TO THE COMPANY
-------------------
1. Administrative Services
-----------------------
Administrative services to Contract owners and participants shall be
the responsibility of the Company and shall not be the responsibility of the
Trust or PFD. The Company will provide properly registered and licensed
personnel and any systems needed for all Contract owners servicing and support -
for both fund and annuity and life insurance information and questions,
including:
|X| Communicate all purchase, withdrawal, and exchange orders it receives
from its customers to PFD;
|X| Respond to Contract owner and participant inquires;
|X| Delivery of both Trust and Contract prospectuses as required under
applicable law;
|X| Entry of initial and subsequent orders;
|X| Transfer of cash to Portfolios;
|X| Explanations of Portfolio objectives and characteristics;
|X| Entry of transfers between Portfolios;
|X| Portfolio balance and allocation inquires; and
|X| Provide information to Trust's proxy vendor to enable vendor to mail
Trust proxies.
2. Administrative Service Fees
---------------------------
For the administrative services set forth above, PIM or any of its
affiliates shall pay a servicing fee based on the annual rate of 0.25% of the
average aggregate net daily assets invested in the Class I Shares of the
Portfolios and 0.25% of the average aggregate net daily assets invested in the
Class II Shares of the Portfolios through the Accounts at the end of each
calendar quarter. Such payments will be made to the Company within thirty (30)
days after the end of each calendar quarter. Such fees shall be paid quarterly
in arrears. Each payment will be accompanied by a statement showing the
calculation of the fee payable to the Company for the quarter and such other
supporting data as may be reasonably requested by the Company. The Company will
calculate the asset balance on each day on which the fee is to be paid pursuant
to this Agreement with respect to each Portfolio for the purpose of reconciling
its calculation of average aggregate net daily assets with PIM's calculation.
Annually (as of 12/31) or upon reasonable request of PIM, Company will provide
PIM a statement showing the number of subaccounts in each Class of Shares of
each Portfolio as of the most recent calendar quarter end.
3. 12b-1 Distribution Related Fees (Class II Shares Only)
------------------------------------------------------
In accordance with the Portfolios' plans pursuant to Rule 12b-1 under
the Investment Company Act of 1940, PFD will make payments to the Company at an
annual rate of 0.25% of the average daily net assets invested in the Class II
shares of the Portfolios through the Accounts in each calendar quarter. PFD will
make such payments to the Company within thirty (30) days after the end of each
calendar quarter. Each payment will be accompanied by a statement showing the
calculation of the fee payable to the Company for the quarter and such other
supporting data as may be reasonably requested by the Company. The 12b-1
distribution related fees will be paid to the Company for as long as the
Accounts
own any Shares of a Portfolio and (i) distribution services are being provided
pursuant to this Agreement and (ii) a 12b-1 plan is in effect with respect to
such Portfolio.
-26-
EXHIBIT I
TO
PARTICIPATION AGREEMENT
Procedures for Pricing and Order/Settlement Through National Securities Clearing
Corporation's Mutual Fund Profile System and Mutual Fund Settlement, Entry and
Registration Verification System
1. As provided in Section 1.1 of the Participation Agreement, the parties hereby
agree to provide pricing information, execute orders and wire payments for
purchases and redemptions of Fund shares through National Securities Clearing
Corporation ("NSCC") and its subsidiary systems as follows:
(a) Distributor or the Funds will furnish to Company or its affiliate through
NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset value
information for each Fund, (2) a schedule of anticipated dividend and
distribution payment dates for each Fund, which is subject to change without
prior notice, ordinary income and capital gain dividend rates on the Fund's
ex-date, and (3) in the case of fixed income funds that declare daily dividends,
the daily accrual or the interest rate factor. All such information shall be
furnished to Company or its affiliate by 6:30 p.m. Eastern Time on each business
day that the Fund is open for business (each a "Business Day") or at such other
time as that information becomes available. Changes in pricing information will
be communicated to both NSCC and Company.
(b) Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is calculated as
specified in such Fund's prospectus ("Close of Trading") on each Business Day
("Instructions"), and upon its determination that there are good funds with
respect to Instructions involving the purchase of Shares, Company or its
affiliate will calculate the net purchase or redemption order for each Fund.
Orders for net purchases or net redemptions derived from Instructions received
by Company or its affiliate prior to the Close of Trading on any given Business
Day will be sent to the Defined Contribution Interface of NSCC's Mutual Fund
Settlement, Entry and Registration Verification System ("Fund/SERV") by 5:00
a.m. Eastern Time on the next Business Day. Subject to Company's or its
affiliate's compliance with the foregoing, Company or its affiliate will be
considered the agent of the Distributor and the Funds, and the Business Day on
which Instructions are received by Company or its affiliate in proper form prior
to the Close of Trading will be the date as of which shares of the Funds are
deemed purchased, exchanged or redeemed pursuant to such Instructions.
Instructions received in proper form by Company or its affiliate after the Close
of Trading on any given Business Day will be treated as if received on the next
following Business Day. Dividends and capital gains distributions will be
automatically reinvested at net asset value in accordance with the Fund's then
current prospectuses.
(c) Company or its affiliate will wire payment for net purchase orders by the
Fund's NSCC Firm Number, in immediately available funds, to an NSCC settling
bank account designated by Company or its affiliate no later than 5:00 p.m.
Eastern time on the same Business Day such purchase orders are communicated to
NSCC. For purchases of shares of daily dividend accrual funds, those shares will
not begin to accrue dividends until the day the payment for those shares is
received.
(d) NSCC will wire payment for net redemption orders by Fund, in immediately
available funds, to an NSCC settling bank account designated by Company or its
affiliate, by 5:00 p.m. Eastern Time on the Business Day such redemption orders
are communicated to NSCC, except as
-27-
provided in a Fund's prospectus and statement of additional information.
(e) With respect to (c) or (d) above, if Distributor does not send a
confirmation of Company's or its affiliate's purchase or redemption order to
NSCC by the applicable deadline to be included in that Business Day's payment
cycle, payment for such purchases or redemptions will be made the following
Business Day.
(f) If on any day Company or its affiliate, or Distributor is unable to meet the
NSCC deadline for the transmission of purchase or redemption orders, it may at
its option transmit such orders and make such payments for purchases and
redemptions directly to Distributor or Company or its affiliate, as applicable,
as is otherwise provided in the Agreement.
(g) These procedures are subject to any additional terms in each Fund's
prospectus and the requirements of applicable law. The Funds reserve the right,
at their discretion and without notice, to suspend the sale of shares or
withdraw the sale of shares of any Fund.
2. Company or its affiliate, Distributor and clearing agents (if applicable) are
each required to have entered into membership agreements with NSCC and met all
requirements to participate in the MFPS and Fund/SERV systems before these
procedures may be utilized. Each party will be bound by the terms of their
membership agreement with NSCC and will perform any and all duties, functions,
procedures and responsibilities assigned to it and as otherwise established by
NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level
utilized.
3. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect. Unless otherwise indicated herein, the
terms defined in the Agreement shall have the same meaning as in this Exhibit.
-28-
