Exhibit 27(h)xi
PARTICIPATION AGREEMENT
AMONG
TRANSAMERICA LIFE INSURANCE COMPANY,
AND
FIRST EAGLE FUNDS DISTRIBUTORS,
A DIVISION OF ASB SECURITIES, INC.
THIS AGREEMENT, dated as of the _______ day of ____, 2003 by and among
TRANSAMERICA LIFE INSURANCE COMPANY (the "Company"), an Iowa insurance company,
on its own behalf and on behalf of each segregated asset account of the Company
set forth on Schedule A hereto as may be amended from time to time (each account
hereinafter referred to as the "Account"), First Eagle Variable Funds, Inc. (the
"Fund"), a corporation organized under the laws of Maryland, and First Eagle
Funds Distributors, a division of ASB Securities, Inc. (the "Underwriter"), a
Delaware limited liability company.
WHEREAS, the Fund engages in business as an open-end management
investment company and is or will be available to act as the investment vehicle
for separate accounts established for variable life insurance and variable
annuity contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of common stock of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (the "SEC") granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Xxxxxxx and X. Xxxxxxxxxxxx Advisers, LLC (the "Adviser"),
which serves as investment adviser to the Fund, is duly registered as an
investment adviser under the federal Investment Advisers Act of 1940, as
amended, and any applicable state securities laws;
1
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Fund has granted to the Underwriter exclusive
authority to distribute the Fund's shares, and has agreed to instruct, and has
so instructed, the Underwriter to make available to the Company for purchase on
behalf of the Account Fund shares of those Designated Portfolios selected by the
Underwriter. Pursuant to such authority and instructions, and subject to Article
X hereof, the Underwriter agrees to make available to the Company for purchase
on behalf of the Account, shares of those Designated Portfolios listed on
Schedule A to this Agreement, such purchases to be effected at net asset value
in accordance with Section 1.3 of this Agreement. Notwithstanding the foregoing,
(i) Fund series (other than those listed on Schedule A) in existence now or that
may be established in the future will be made available to the Company only as
the Underwriter may so provide, and (ii) the Board of Directors of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, suspension or termination is necessary in the best
interests of the shareholders of such Designated Portfolio.
1.2 The Fund shall redeem, at the Company's request, any
full or fractional Designated Portfolio shares held by the Company on behalf of
the Account, such redemptions to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Fund shares attributable to Contract owners except in
the circumstances permitted in Section 10.3 of this Agreement, and (ii) the Fund
may delay redemption of Fund shares of any Designated Portfolio to the extent
2
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
then current Fund Prospectus.
1.3 Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an
agent of the Fund for the limited purpose of receiving purchase and
redemption requests on behalf of the Account for shares of those
Designated Portfolios made available hereunder, based on allocations of
amounts to the Account or subaccounts thereof under the Contracts and
other transactions relating to the Contracts or the Account. Receipt of
any such request (or relevant transactional information therefor) on
any day the New York Stock Exchange is open for trading and on which
the Fund calculates it net asset value pursuant to the rules of the SEC
(a "Business Day") by the Company as such limited agent of the Fund
prior to the time that the Fund calculates its net asset value as
described from time to time in the Fund Prospectus (which as of the
date of execution of this Agreement is 4:00 p.m. Eastern Time) shall
constitute receipt by the Fund on that same Business Day, provided that
the Fund receives notice of such request by 9:30 a.m. Eastern Time on
the next following Business Day.
(b) The Company shall pay for shares of each
Designated Portfolio on the same day it notifies the Fund of a purchase
request for such shares. Payment for Designated Portfolio shares shall
be made in federal funds transmitted to the Fund by wire to be received
by the Fund by 4:00 p.m. Eastern Time on the day the Fund is notified
of the purchase request for Designated Portfolio shares (unless the
Fund determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Designated Portfolios
effected pursuant to redemption requests tendered by the Company on
behalf of the Account). If federal funds are not received on time, such
funds will be invested, and Designated Portfolio shares purchased
thereby will be issued, as soon as practicable and the Company shall
promptly, upon the Fund's request, reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of
portfolio transactions effected by the Fund based upon such purchase
request. Upon receipt of federal funds so wired, such funds shall cease
to be the responsibility of the Company and shall become the
responsibility of the Fund.
(c) Payment for Designated Portfolio shares
redeemed by the Account or the Company shall be made in federal funds
transmitted by wire to the Company or any other designated person on
the next Business Day after the Fund is properly notified of the
redemption order of such shares (unless redemption proceeds are to be
applied to the purchase of shares of other Designated Portfolio in
accordance with Section 1.3(b) of this Agreement), except that the Fund
reserves the right to delay payment of redemption proceeds to the
extent permitted under Section 22(e) of the 1940 Act and any Rules
thereunder, and in accordance with the procedures and policies of the
Fund as described in the then current
3
prospectus. The Fund shall not bear any responsibility whatsoever for
the proper disbursement or crediting of redemption proceeds by the
Company. The Company alone shall be responsible for such action.
1.4 The Fund shall use its best efforts to make the net
asset value per share for each Designated Portfolio available to the Company by
6:30 p.m. Eastern Time each Business Day, and in any event, as soon as
reasonably practicable after the net asset value per share for such Designated
Portfolio is calculated, and shall calculate such net asset value in accordance
with the Fund's Prospectus. If the Fund provides the Company with materially
incorrect share net asset value information through no fault of the Company, the
Company on behalf of the Account shall be entitled, to the extent reasonably
practicable, to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value, and the Underwriter shall promptly, on
request of the Company, reimburse the Company, or cause the responsible party to
reimburse the Company, for any reasonable out-of-pocket charges, costs, fees or
other expenses incurred by the Company in implementing the steps determined by
the Fund to be necessary to correct the pricing error. Neither the Fund, any
Designated Portfolio, the Underwriter, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company to
the Fund or the Underwriter.
1.5 The Fund shall furnish notice (by wire or telephone
followed by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Designated Portfolio shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Designated Portfolio shares in the form of additional shares of
that Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company
promptly of the number of Designated Portfolio shares so issued as payment of
such dividends and distributions.
1.6 Issuance and transfer of Fund shares shall be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.7 (a) The parties hereto acknowledge that the
arrangement contemplated by this Agreement is not exclusive; the Fund's shares
may be sold to other insurance companies (subject to Section 1.8 hereof) and the
cash value of the Contracts may be invested in other investment companies
(b) The Company shall not, without prior notice to
the Underwriter (unless otherwise required by applicable law), induce Contract
owners to change or modify the Fund or change the Fund's distributor or
investment adviser.
1.8 The Underwriter and the Fund shall sell Fund shares
only to Participating Insurance Companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Fund under Section 817(h) of the
4
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Fund as constituting investments of the Account for
the purpose of satisfying the diversification requirements of Section 817(h).
The Underwriter and the Fund shall not sell Fund shares to any insurance company
or separate account unless an agreement complying with Article VI of this
Agreement is in effect to govern such sales. Subject to Sections 6.1 and 6.2
hereof, the Company hereby represents and warrants that it and the Account are
Qualified Persons. The Fund reserves the right to cease offering shares of any
Designated Portfolio in the discretion of the Fund.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the
Contracts (a) are or, prior to issuance, will be registered under the 1933 Act
or, alternatively (b) are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in transactions
that are properly exempt from registration under the 1933 Act. The Company
further represents and warrants that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal securities and
state securities and insurance laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law, that it has legally and
validly established the Account prior to any issuance or sale thereof as a
segregated asset account under Iowa insurance laws, and that it (a) has
registered or, prior to any issuance or sale of the Contracts, will register the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts, or
alternatively (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 1940 Act. The Company shall register and
qualify the Contracts or interests therein as securities in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Company.
2.2 The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with applicable state and federal
securities laws and that the Fund is and shall remain registered under the 0000
Xxx. The Fund shall amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Fund or the Underwriter.
2.3 The Fund intends to make payments to finance
distribution expenses pursuant to Rule 12b-l under the 1940 Act. In this regard,
the Fund's board of directors, a majority of whom are not interested persons of
the Fund, have formulated and approved the Fund's plan adopted pursuant to Rule
12b-l under the 1940 Act to finance distribution expenses.
2.4 The Fund makes no representations as to whether any
aspect of its operations, including, but not limited to, investment policies,
fees and expenses, complies with the insurance and other applicable laws of the
various states, except that the Fund represents that
5
the Fund's investment policies, fees and expenses, are and shall at all times
remain in compliance with the laws of Iowa to the extent required to perform
this Agreement, provided, however, that the Company shall notify the Fund with
respect to any additional requirements that are specifically directed to the
Company by state insurance departments.
2.5 The Fund represents that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a
member in good standing of the NASD and is registered as a broker-dealer with
the SEC. The Underwriter further represents that it will sell and distribute the
Fund shares in accordance with the laws of Iowa and any applicable state and
federal securities laws.
2.7 The Underwriter represents and warrants that the
Adviser is and shall remain duly registered under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of Iowa and any
applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant
that all of their directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage as required currently by Rule 17g-l of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities employed or controlled by the Company dealing with the
money and/or securities of the Account are covered by a blanket fidelity bond or
similar coverage for the benefit of the Account, in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company.
2.10 The Company represents and warrants that it has
adopted policies and procedures reasonably designed to detect and prevent money
laundering activities in compliance with applicable laws, regulations and
regulatory interpretations. The Company undertakes that it shall (a) conduct its
operations in accordance with applicable laws, regulations and regulatory
interpretations; (b) provide access to its books, records and operations
relating to its anti-money laundering compliance by appropriate regulatory
authorities, the Underwriter and, if appropriate, the Fund; (c) upon request,
provide a copy of its anti-money laundering program (or a summary of its
program) to the Underwriter and, if appropriate, the Fund; (d) upon reasonable
request, certify, in writing that the Company is in compliance with applicable
anti- money laundering laws, rules, regulations and regulatory interpretations
with respect to the services provided under this Agreement; and (e) provide
periodic reports to the Underwriter and, if appropriate, the Fund, concerning
anti-money laundering activities and compliance exceptions, as may agree from
time to time among the parties.
6
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1 The Underwriter shall provide the Company with as
many copies of the Fund's current prospectus (describing only the Designated
Portfolios listed on Schedule A) as the Company may reasonably request. The
Company shall bear the expense of printing copies of the current prospectus for
the Contracts that will be distributed to existing Contract owners, and the
Company shall bear the expense of printing copies of the Fund's prospectus that
are used in connection with offering the Contracts issued by the Company. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the new prospectus on diskette at the
Fund's expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the prospectus for the
Designated Portfolios printed together in one document (such printing to be at
the Company's expense).
3.2 The Fund's prospectus shall state that the current
Statement of Additional Information ("SAI") for the Fund is available, and the
Underwriter (or the Fund), at its expense, shall provide a reasonable number of
copies of such SAI free of charge to the Company for itself and for any owner of
a Contract who requests such SAI.
3.3 The Fund, at its expense, shall provide the Company
with copies of its proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract
owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners;
and
(iii) vote Fund shares for which no instructions
have been received in the same proportion as
Fund shares of such portfolio for which
instructions have been received.
The Company will vote Fund shares held in any segregated asset account in the
same proportion as Fund shares of such portfolio for which voting instructions
have been received from Contract owners, to the extent permitted by law.
3.5 Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating in a
Designated Portfolio calculates voting privileges as required by the Shared
Funding Exemptive Order and consistent with any reasonable standards that the
Fund may adopt and provide in writing. The Fund hereby confirms that the manner
in which the Company currently calculates voting privileges is consistent with
the manner in which other Participating Insurance Companies are required to
calculate voting privileges. The Fund and the Underwriter will notify the
Company if either becomes aware that another Participating Insurance Company has
changed the manner in which it so calculates voting privileges.
7
3.6 The Fund will comply with all provisions of the 1940
Act requiring voting by shareholders, and in particular the fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as Sections 16(a) and, if and when applicable, 16(b). Further, the
Fund will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rule the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee, at least fifteen business days prior to
first use, each piece of sales literature or other promotional material that the
Company develops and in which the Fund (or a Designated Portfolio thereof) or
the Adviser or the Underwriter is named. No such material shall be used until
approved by the Fund or its designee, and the Fund will use its best efforts for
it or its designee to review such sales literature or promotional material
within ten Business Days after receipt of such material. The Fund or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named, and no
such material shall be used if the Fund or its designee so object.
4.2 The Company shall not give any information or make
any representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus or SAI for
the Fund shares, as such registration statement and prospectus or SAI may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the permission of the
Fund or the Underwriter or the designee of either.
4.3 The Fund and the Underwriter, or their designee,
shall furnish, or shall cause to be, furnished, to the Company, at least fifteen
business days prior to first use, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, or the Contracts, is named. No such material shall be used until
approved by the Company, and the Company will use its best efforts to review
such sales literature or promotional material within ten Business Days after
receipt of such material. The Company reserves the right to reasonably object to
the continued use of any such sales literature or other promotional material in
which the Company and/or its Account, or the Contracts, is named, and no such
material shall be used if the Company so objects.
4.4 The Fund and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus (which shall
include an offering memorandum, if any, if the Contracts issued by the Company
or interests therein are not registered under the 1933 Act), or SAI for the
Contracts, as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the
8
Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company.
4.5 The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, contemporaneously with the filing
of such document(s) with the SEC or other regulatory authorities. The Fund will
provide to the Company any complaints filed with the SEC received that pertain
to the Company, the Account, or the Contracts.
4.6 The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses (which shall include
an offering memorandum, if any, if the Contracts issued by the Company or
interests therein are not registered under the 1933 Act), SAIs, reports,
solicitations for voting instructions, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC or other
regulatory authorities. The Company shall provide to the Fund and the
Underwriter any complaints received from the Contract owners pertaining to the
Fund or the Designated Portfolio filed with the SEC.
4.7 The Fund will provide the Company with as much notice
as is reasonably practicable of any proxy solicitation for any Designated
Portfolio, and of any material change in the Fund's registration statement,
particularly any change resulting in a change to the registration statement or
prospectus for any Account. The Fund will work with the Company so as to enable
the Company to solicit proxies from Contract owners, or to make changes to its
prospectus or registration statement, in an orderly manner. The Fund will make
reasonable efforts to attempt to have changes affecting Contract prospectuses
become effective simultaneously with the annual updates for such prospectuses.
4.8 For purposes of this Article IV, the phrase "sales
literature and other promotional materials" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
and sales literature (i.e., any written or electronic communication distributed
or made generally available to customers or the public, including brochures,
circulars, reports, market letters, form letters, telemarketing scripts, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), distributed or made generally available to customers or to
the public, educational or training materials or other communications
distributed or made generally available to some or all agents or employees, and
registration statements, prospectuses, SAIs, shareholder reports, proxy
materials, and any other communications distributed or made generally available
with regard to the Fund.
9
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or
other compensation to the Company under this Agreement, except that, the
Underwriter may, to the extent permitted under the Fund's distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act or as otherwise authorized by
the Fund's Board of Directors, make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund, provided that the Fund may separately agree to make payments to the
Company or to the underwriter for the Contracts for certain transfer agency or
other services. Notwithstanding the previous two sentences, the Underwriter may
also separately agree to make payments to the Company or to the underwriter for
the Contracts for these transfer agency or other services.
5.2 All expenses incident to performance by the Fund
under this Agreement shall be paid by the Fund. The Fund shall see to it that
all its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the Fund,
in accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1 The Fund will invest its assets in such a manner as
to ensure that the Contracts will be treated as variable annuity or variable
life insurance contracts, whichever is appropriate, under the Code and the
regulations issued thereunder (or any successor provisions). Without limiting
the scope of the foregoing, each Designated Portfolio has complied and will
continue to comply with Section 817(h) of the Code and Treasury Regulation
Section. 1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, and any amendments or other modifications or successor provisions to
such Section or Regulations. In the event of a breach of this Article VI by the
Fund, it will take all reasonable steps (a) to notify the Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Regulation 817.5.
6.2 The Fund represents that it is or will be qualified
as a Regulated Investment Company under Subchapter M of the Code, and that it
will make every effort to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that
10
it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
6.3 Subject to Sections 6.1 and 6.2 hereof, the Company
represents that the Contracts are currently, and at the time of issuance shall
be, treated as life insurance or annuity insurance contracts, under applicable
provisions of the Code, and that it will make every effort to maintain such
treatment, and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII. Potential Conflicts
The following provisions shall apply with respect to the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts.
7.1 The Board will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of the Contract
owners of all separate accounts investing in the Fund. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company will assist the Board
in carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever Contract
owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a
majority of its disinterested members, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense (to be allocated as near as practicable in proportion to such parties'
respective responsibilities for such conflict) and to the extent reasonably
practicable (as determined by a majority of the disinterested Board members),
take whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, up to and including: (1) withdrawing the assets allocable to
some or all of the separate accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question whether
11
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 contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected contract owners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because
of a decision by the Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
each Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Fund shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because
a particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3 to
establish a new funding medium for the Contract if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent the Mixed and Shared Funding
Exemption Order or any amendment thereto contains terms and conditions different
from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then
the Fund and/or the Participating Insurance
12
Companies, as appropriate, shall take such steps as may be necessary to comply
with the Mixed and Shared Funding Exemptive Order, and Sections 3.4, 3.5, 3.6,
7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in the Mixed and Shared Funding Exemptive Order or any amendment
thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1., 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the
Fund, the Underwriter, the Adviser and each of its directors and officers, and
each person, if any, who controls the Fund or Underwriter within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statements of
any material fact contained in the
registration statement, prospectus (which
shall include an offering memorandum, if
any), or SAI for the Contracts or contained
in the Contracts or sales literature for the
Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or
are based upon the omission or the alleged
omission to state therein a material fact
required to be stated therein or necessary
to make the statements therein not
misleading, provided that this agreement to
indemnify shall not apply as to any
Indemnified Party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Company by or on behalf of the Fund for use
in the registration statement, prospectus or
SAI for the Contracts or in the Contracts or
sales literature (or any amendment or
13
supplement) or otherwise for use in
connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus, SAI, or
sales literature of the Fund not supplied by
the Company or persons under its control) or
wrongful conduct of the Company or its
agents or persons under the Company's
authorization or control, with respect to
the sale or distribution of the Contracts or
Fund Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, SAI, or sales literature of the
Fund or any amendment thereof or supplement
thereto or the omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein not misleading if such a
statement or omission was made in reliance
upon information furnished to the Fund by or
on behalf of the Company; or
(iv) arise as a result of any material failure by
the Company to provide the services and
furnish the materials under the terms of
this Agreement (including a failure, whether
unintentional or in good faith or otherwise,
to comply with the qualification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material
breach of any representation and/or warranty
made by the Company in this Agreement or
arise out of or result from any other
material breach of this Agreement by the
Company,
as limited by and in accordance with the provisions of Sections 8.1 (b) and 8.1
(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation -incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement, whichever is applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon
14
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against an Indemnified Party, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of it directors and officer and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement or prospectus or SAI or sales
literature of the Fund (or any amendment or
supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, provided that this agreement
to indemnify shall not apply as to any
Indemnified Party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Underwriter or Fund by or on behalf of the
Company for use in the registration
statement, prospectus or SAI for the Fund or
in sales literature (or any amendment or
supplement) or otherwise for use in
connection with the sale of the Contracts or
Fund shares; or
15
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus, SAI or
sales literature for the Contracts not
supplied by the Underwriter or persons under
its control) or wrongful conduct of the Fund
or Underwriter or persons under their
control, with respect to the sale or
distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, SAI or sales literature covering
the Contracts, or any amendment thereof or
supplement thereto, or the omission or
alleged omission to state therein a material
fact required to be stated therein or
necessary to make the statement or
statements therein not misleading, if such
statement or omission was made in reliance
upon information furnished to the Company by
or on behalf of the Fund or the Underwriter;
or
(iv) arise as a result of any material failure by
the Fund or the Underwriter to provide the
services and furnish the materials under the
terms of this Agreement (including a failure
of the Fund, whether unintentional or in
good faith or otherwise, to comply with the
diversification and other qualification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material
breach of any representation and/or warranty
made by the Underwriter in this Agreement or
arise out of or result from any other
material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such
16
service on any designated agent), but failure to notify the Underwriter of any
such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
8.3 Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company and each of it directors and officer and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements result from the gross negligence, bad faith or willful misconduct
of the Board or any member thereof, are related to the operations of the Fund
and:
(i) arise as a result of any material failure by
the Fund to provide the services and furnish the
materials under the terms of this Agreement
(including a failure to comply with the
diversification requirements specified in Article VI
of this Agreement); or
(ii) arise out of or result from any material
breach of any representation and/or warranty made by
the Fund in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Fund, as limited by and in accordance with the
provisions of Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or each Account, whichever is applicable.
17
8.3(c). The Fund shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Fund will be entitled to participate, at its
own expense, in the defense thereof. The Fund also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or 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 either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of New
York.
9.2 This Agreement shall be subject to the provisions of
the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and regulations
as the SEC may grant (including, but not limited to, any Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith. If, in the future, the Mixed and Shared Funding
Exemptive Order should no longer be necessary under applicable law, then Article
VII shall no longer apply.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and
effect until the first to occur of:
(a) termination by any party, for any reason with respect
to some or all Designated Portfolios, by 60 days
advance written notice delivered to the other parties
subject to applicable state law; or
(b) termination by the Company by written notice to the
Fund and the Underwriter based upon the Company's
determination that shares of the Fund are not
reasonably available to meet the requirements of the
Contracts; or
18
(c) termination by the Company by written notice to the
Fund and the Underwriter in the event any of the
Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event
that formal administrative proceedings are instituted
against the Company by the NASD, the SEC, the
Insurance Commissioner or like official of any state
or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of
the Contracts, the operation of any Account, or the
purchase of the Fund's shares; provided, however,
that the Fund or Underwriter determines in its sole
judgment exercised in good faith, that any such
administrative proceedings will have a material
adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the
Fund or Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other
regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good
faith, that any such administrative proceedings will
have a material adverse effect upon the ability of
the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the
Fund and the Underwriter with respect to any
Designated Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company
under Subchapter M or fails to comply with the
Section 817(h) diversification requirements specified
in Article VI hereof, or if the Company reasonably
believes that such Portfolio may fail to so qualify
or comply; or
(g) termination by the Fund or Underwriter by written
notice to the Company in the event that the Contracts
fail to meet the qualifications specified in Article
VI hereof, or
(h) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both
of the Fund or the Underwriter respectively, shall
determine, in their sole judgment exercised in good
faith, that the Company has suffered a material
adverse change in its business, operations, financial
condition, or prospects since the date of this
Agreement or is the subject of material adverse
publicity; or
19
(i) termination by the Company by written notice to the
Fund and the Underwriter, if the Company shall
determine, in its sole judgment exercised in good
faith, that the Fund, Adviser, or the Underwriter has
suffered a material adverse change in its business,
operations, financial condition or prospects since
the date of this Agreement or is the subject of
material adverse publicity; or
(j) termination by the Company upon any substitution of
the shares of another investment company or series
thereof for shares of a Designated Portfolio of the
Fund in accordance with the terms of the Contracts,
provided that the Company has given at least 45 days
prior written notice to the Fund and Underwriter of
the date of substitution; or
(k) termination by any party in the event that the Fund's
Board of Directors determines that a material
irreconcilable conflict exists as provided in Article
VII.
10.2 Notwithstanding any termination of this Agreement,
the Fund and the Underwriter shall, at the option of the Company, continue to
make available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"), unless the Underwriter elects to compel a substitution of other
securities for the shares of the Designated Portfolios as may be required under
Article VII. Specifically, the owners of the Existing Contracts may be permitted
to reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts (subject to any such election by the Underwriter). The
parties agree that this Section 10.2 shall not apply to any terminations under
Article VII and the effect of such Article VII terminations shall be governed by
Article VII of this Agreement. The parties further agree that this Section 10.2
shall not apply to any terminations under Section 10.1 (f) or (g) of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable
to the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract owner
initiated or approved transactions, (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) as permitted
by an order of the SEC pursuant to Section 26(b) of the 1940 Act, but only if a
substitution of other securities for the shares of the Designated Portfolios is
consistent with the terms of the Contracts, or (iv) as permitted under the terms
of the Contract. Upon request, the Company will promptly furnish to the Fund and
the Underwriter reasonable assurance that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the 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 Fund or the Underwriter
45 days notice of its intention to do so.
20
10.4 Notwithstanding any termination of this Agreement,
each party's obligation under Article VIII to indemnify the other parties shall
survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail, postage prepaid, return receipt requested, or by nationally
recognized overnight courier, charges prepaid, with evidence of delivery, 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
parties, and such notice shall be effective upon delivery.
If to the Fund:
First Eagle Variable Funds, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
If to the Company:
TRANSAMERICA LIFE INSURANCE COMPANY,
0000 Xxxxxxxx Xxxx, XX
Xxxxx Xxxxxx, Xxxx 00000-00000
Attention: Extraordinary Markets, Legal Department
If to the Underwriter:
First Eagle Funds Distributors,
A Division of ASB Securities, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to
the property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents nor shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
12.2 Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as such information has
come into the public domain.
21
12.3 The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each party
hereto further agrees to furnish the Insurance Commissioner of the relevant
state(s) with any information or reports in connection with services provided
under this Agreement which such Commissioner may request in order to ascertain
whether the variable contract operations of the Company are being conducted in a
manner consistent with applicable state variable contract laws and regulations
and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in
this Agreement are cumulative and are in addition to any and all rights,
remedies, and obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
12.8 This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto, except that the Underwriter may effect such an assignment to
any successor that becomes general distributor with respect to the Fund without
such consent of the other parties hereto.
12.9 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following reports:
the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles) filed with any state
or federal regulatory body or otherwise made available to the
public, as soon as practicable and in any event within 90 days
after the end of each fiscal year; and
the Account registration statement (without exhibits) and
financial reports of the Company filed with the SEC or any
state insurance regulatory, as soon as practicable after the
filing thereof.
12.10 Each of the Underwriter and the Fund reserve the
right, in its discretion upon notice to (and acceptance by) the other and the
Company, to amend or modify this Agreement at any time The creation of any
series or class of shares of the Fund in the future
22
will not affect the terms of this Agreement with respect to any existing series
or class of shares, and will not constitute an amendment or modification to this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY: TRANSAMERICA LIFE INSURANCE COMPANY,
By its authorized officer
By: ______________________________________
Title: ___________________________________
Date: ____________________________________
FUND: FIRST EAGLE VARIABLE FUNDS, INC.
By its authorized officer
By: ______________________________________
Title: ___________________________________
Date: ____________________________________
UNDERWRITER: FIRST EAGLE FUNDS DISTRIBUTORS, A DIVISION
OF ASB SECURITIES, INC.
By its authorized officer
By: ______________________________________
Title: ___________________________________
Date: ____________________________________
23
SCHEDULE A
Segregated Asset Accounts of the Company
Transamerica Corporate Separate Account Sixteen
Contracts to be Issued by the Company
Advantage X
Designated Portfolio Shares to be Purchased
First Eagle Overseas Variable Fund
Other Funding Vehicles Available Under the Contracts (Current as of signing of
Agreement)
Gateway Variable Insurance Trust
Fidelity Variable Insurance Products Funds
PIMCO Variable Insurance Trust
PBHG Insurance Series Fund
X. Xxxx Price Equity Series, Inc.
Janus Aspen Series
Vanguard Variable Insurance Fund
Royce Capital Fund
Third Avenue Variable Series Trust
Rydex Variable Trust
24
