Exhibit 8.9(a)
FUND PARTICIPATION AGREEMENT
----------------------------
This Fund Participation Agreement (the "Agreement"), effective as of
February 2, 2004 is made by and among Federal Xxxxxx Life Assurance Company
("Company"), One Group//(R)// Investment Trust (the "Trust"), the Trust's
investment advisor, Banc One Investment Advisors Corporation (the "Adviser"),
and the Trust's administrator, One Group Administrative Services, Inc. (the
"Administrator").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle
for separate accounts established by insurance companies for
individual and group life insurance policies and annuity contracts
with variable accumulation and/or pay-out provisions (hereinafter
referred to individually and/or collectively as "Variable Insurance
Products");
WHEREAS, insurance companies desiring to utilize the Trust as an
investment vehicle under their Variable Insurance Products are
required to enter into participation agreements with the Trust and the
Administrator (the "Participating Insurance Companies");
WHEREAS, shares of the Trust are divided into several series of
shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may
be made available for Variable Insurance Products of Participating
Insurance Companies;
WHEREAS, the Trust intends to offer shares of the series set
forth on Schedule B (each such series hereinafter referred to as a
"Portfolio") as may be amended from time to time by mutual agreement
of the parties hereto under this Agreement to the accounts of the
Company specified on Schedule A (hereinafter referred to individually
as an "Account," collectively, the "Accounts");
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission, granting the Trust exemptions from the provisions
of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by Variable
Insurance Product separate accounts of both affiliated and
unaffiliated insurance companies (hereinafter the "Shared Funding
Exemptive Order");
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and its shares are registered
under the Securities Act of 1933, as amended (hereinafter the "1933
Act");
WHEREAS, the Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and any
applicable state securities laws;
WHEREAS, the Adviser is the investment adviser of the Portfolios
of the Trust;
WHEREAS, the Company has registered certain Variable Insurance
Products under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, each Account intends to purchase shares of the Portfolios
to fund certain of the aforesaid Variable Insurance Products and the
Trust is authorized to sell such shares to each such Account at net
asset value.
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Trust, the Adviser, and the Administrator agree as
follows:
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Article 1
The Contracts
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1. The Company represents that it has established each of the
Accounts specified on Schedule A as a separate account under Illinois law,
and has registered each such Account as a unit investment trust under the
1940 Act to serve as an investment vehicle for variable annuity contracts
and/or variable life contracts offered by the Company (the "Contracts").
The Contracts provide for the allocation of net amounts received by the
Company to separate divisions of the Account for investment in the shares
of the Portfolios. Selection of a particular division is made by the
Contract owner who may change such selection from time to time in
accordance with the terms of the applicable Contract. In marketing its
Contracts, the Company will comply with all applicable state or Federal
laws.
Article 2
Trust Shares
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2.1. The Trust agrees to make available for purchase by the Company
shares of the Portfolios and shall execute orders placed for each Account
on a daily basis at the net asset value next computed after receipt by the
Trust or its designee of such order. For purposes of this Section 2.1, the
Company shall be the designee of the Trust for receipt of such orders from
the Account and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust's designated transfer agent receives notice
of such order by 9:30 a.m. Eastern Time on the next following Business Day
("Trade Date plus 1"). Notwithstanding the foregoing, the Company shall use
its best efforts to provide the Trust's designated transfer agent with
notice of such orders by 9:00 a.m. Eastern Time on Trade Date plus 1.
"Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value
pursuant to the rules of the Securities and Exchange Commission, as set
forth in the Trust's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the Trust
(hereinafter the "Board") may refuse to permit the Trust to sell shares of
any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
2.2. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies for their Variable Insurance Products
and, in the Trust's discretion, to qualified pension and retirement plans.
No shares of any Portfolio will be sold to the general public.
2.3. The Trust agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Trust held by an Account, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Trust or its designee of the request for redemption. For
purposes of this Section 2.3, the Company shall be the designee of the
Trust for receipt of requests for redemption from each Account and receipt
by such designee shall constitute receipt by the Trust; provided that the
Trust's designated transfer agent receives notice of such request for
redemption on Trade Date plus 1 in accordance with the timing rules
described in Section 2.1.
2.4. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Trust shall be made in
accordance with the provisions of such prospectus. The Accounts of the
Company, under which amounts may be invested in the Trust are listed on
Schedule A attached hereto and incorporated herein by reference, as such
Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto. The Company will give the Trust and the Adviser
prompt written notice of its intention to make available in the future, as
a funding vehicle under the Contracts, any other investment company.
2.5. The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of
shares and dollar amount of each Portfolio to be purchased or
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redeemed. In the event of net purchases, the Company shall pay for
Portfolio shares on Trade Date plus 1. Payment shall be in federal funds
transmitted by wire. In the event of net redemptions, the Portfolio shall
pay the redemption proceeds in federal funds transmitted by wire by 2:00
p.m. Eastern Time on Trade Date plus 1. Notwithstanding the foregoing, if
the payment of redemption proceeds on the next Business Day would require
the Portfolio to dispose of Portfolio securities or otherwise incur
substantial additional costs, and if the Portfolio has determined to settle
redemption transactions for all shareholders on a delayed basis, proceeds
shall be wired to the Company within seven (7) days and the Portfolio shall
notify in writing the person designated by the Company as the recipient for
such notice of such delay by 3:00 p.m. Eastern Time on Trade Date plus 1.
2.6. Issuance and transfer of the Trust's shares will be by book
entry only. Share certificates will not be issued to the Company or any
Account. Shares ordered from the Trust will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
2.7. On each record date, the Administrator shall use its best
efforts to furnish same day notice by 6:30 p.m. Eastern Time (by wire,
telephone, electronic media or by fax) to the Company of any dividends or
capital gain distributions payable on the Trust's shares. The Company
hereby elects to receive all such dividends and capital gain distributions
as are payable on the Portfolio shares in additional shares of that
Portfolio. The Company reserves the right to revoke this election and to
receive all such dividends and capital gain distributions in cash. The
Trust shall notify the Company of the number of shares so issued as payment
of such dividends and distributions.
2.8. The Administrator shall make the net asset value per share of
each Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. Eastern Time. In the event that the Administrator is unable to
meet the 6:30 p.m. time stated immediately above, then the Administrator
shall provide the Company with additional time to notify the Administrator
of purchase or redemption orders pursuant to Sections 2.1 and 2.3,
respectively, above. Such additional time shall be equal to the additional
time that the Administrator takes to make the net asset values available to
the Company.
2.9. If the Administrator provides materially incorrect share net
asset value information through no fault of the Company, the Company shall
be entitled to an adjustment with respect to the Trust shares purchased or
redeemed to reflect the correct net asset value per share as subsequently
determined by the Administrator. The determination of the materiality of
any net asset value pricing error shall be based on the Trust's policy for
correction of pricing errors (the "Pricing Policy"). The Company shall
correct such error in its records and in the records prepared by it for
Contract owners in accordance with information provided by the
Administrator. Any material error in the calculation or reporting of net
asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to the Company.
2.10. The Administrator shall provide information to the Company of
the amount of shares traded and the associated cost per share (NAV) total
trade amount and the outstanding share balances held by the Account in each
Portfolio as of the end of each Business Day. Such information will be
furnished (electronically or by fax) by 1:00 p.m. Eastern time on the next
Business Day after the Trust's designated transfer agent receives notice of
such orders.
Article 3
Prospectuses, Reports to Shareholders and Proxy Statements, Voting
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3.1. The Trust shall provide the Company with as many printed
copies of the Trust's current prospectus as the Company may reasonably
request. The Administrator will provide the Company with a copy of the
statement of additional information suitable for duplication. If requested
by the Company, in lieu of providing printed copies, the Trust shall
provide camera-ready film or computer diskettes containing the Trust's
prospectus and statement of additional information in order for the Company
once each year (or more frequently if the prospectus and/or statement of
additional information for the Trust is amended during the year) to have
the prospectus for the Contracts and the Trust's prospectus printed
together in one document or
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separately. The Company may elect to print the Trust's prospectus and/or
its statement of additional information in combination with other
investment companies' prospectuses and statements of additional
information.
3.2(a). Except as otherwise provided in this Section 3.2, all expenses
of preparing, setting in type and printing and distributing Trust
prospectuses and statements of additional information shall be the expense
of the Company. For prospectuses and statements of additional information
provided by the Company to its existing owners of Contracts in order to
update disclosure as required by the 1933 Act and/or the 1940 Act, the cost
of setting in type, printing and distributing shall be borne by the Trust.
If the Company chooses to receive camera-ready film or computer diskettes
in lieu of receiving printed copies of the Trust's prospectus and/or
statement of additional information, the Trust shall bear the cost of
typesetting to provide the Trust's prospectus and/or statement of
additional information to the Company in the format in which the Trust is
accustomed to formatting prospectuses and statements of additional
information, respectively, and the Company shall bear the expense of
adjusting or changing the format to conform with any of its prospectuses
and/or statements of additional information. In such event, the Trust will
reimburse the Company in an amount equal to the product of x and y where x
is the number of such prospectuses distributed to owners of the Contracts,
and y is the Trust's per unit cost of printing the Trust's prospectuses.
The same procedures shall be followed with respect to the Trust's statement
of additional information. The Trust shall not pay any costs of
typesetting, printing and distributing the Trust's prospectus and/or
statement of additional information to prospective Contract owners.
3.2(b). The Trust, at its expense, shall provide the Company with
copies of Annual and Semi-Annual Reports (the "Reports") in such quantity
as the Company shall reasonably require for distributing to Contract
owners. The cost of distributing Reports to existing Contract owners shall
be borne by Trust. The Trust, at its expense, shall provide the Contract
owners designated by the Company with copies of its proxy statements and
other communications to shareholders (except for prospectuses and
statements of additional information, which are covered in Section 3.2(a)
above). The cost of distributing such proxy statements and other
communications to existing Contract owners shall be borne by Trust. The
Trust shall not pay any costs of distributing Reports and other
communications to prospective Contract owners.
3.2(c). The Company agrees to provide the Trust or its designee with
such information as may be reasonably requested by the Trust to assure that
the Trust's expenses do not include the cost of typesetting, printing or
distributing any of the foregoing documents other than those actually
distributed to existing Contract owners.
3.2(d). The Trust shall pay no fee or other compensation to the
Company under this Agreement, except that if the Trust or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Trust may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Trust in
writing.
3.2(e). All expenses, including expenses to be borne by the Trust
pursuant to Section 3.2 hereof, incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it that
all its shares are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent deemed advisable by
the Trust, in accordance with applicable state laws prior to their sale.
The Trust shall bear the expenses for the cost of registration and
qualification of the Trust's shares.
3.3. If and to the extent required by law, the Company shall with
respect to proxy material distributed by the Trust to Contract owners
designated by the Company to whom voting privileges are required to be
extended:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instructions
received from Contract owners; and
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(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such
Portfolio for which instructions have been received, so
long as and to the extent that the Securities and
Exchange Commission continues to interpret the 1940 Act
to require pass-through voting privileges for variable
contract owners.
The Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law.
Article 4
Sales Material and Information
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4.1. The Company shall furnish, or shall cause to be furnished, to
the Trust, the Adviser or their designee, drafts of the separate accounts
prospectuses and statements of additional information and each piece of
sales literature or other promotional material prepared by the Company or
any person contracting with the Company to prepare such material in which
the Trust, the Adviser or the Administrator is described, at least ten
Business Days prior to its use. No such material shall be used if the
Trust, the Adviser, the Administrator or their designee reasonably objects
to such use within ten calendar days after receipt of such material.
4.2. Neither the Company nor any person contracting with the
Company to prepare sales literature or other promotional material shall
give any information or make any representations or statements on behalf of
the Trust or concerning the Trust in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Trust prospectus, as such registration statement
or Trust prospectus may be amended or supplemented from time to time, or in
reports to shareholders or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Trust or its
designee, except with the permission of the Trust or its designee.
4.3. The Administrator shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature
or other promotional material prepared by the Trust in which the Company or
its Accounts, are described at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably
objects to such use within ten calendar days after receipt of such
material.
4.4. Neither the Trust, the Administrator, nor the Adviser shall
give any information or make any representations on behalf of the Company
or concerning the Company, each Account, or the Contracts, other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement or prospectus
may be amended or supplemented from time to time, or in published reports
or solicitations for voting instructions for each Account which are in the
public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other promotional material approved by
the Company or its designee, except with the permission of the Company.
4.5. The Trust will provide to the Company at least one complete
copy of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, applications for exemptions,
requests for no-action letters, and all amendments to any of the above,
that relate to the Trust or its shares, promptly after the filing of such
document with the Securities and Exchange Commission or other regulatory
authorities.
4.6. The Company will provide to the Trust, promptly upon the
Trust's request, at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, solicitations
for voting instructions, pieces of sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the investment in an
Account or Contract.
4.7. For purposes of this Article 4, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use
in, a newspaper, magazine, or other periodical, radio, television,
internet, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature
(i.e., any written
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communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, shareholder newsletters, seminar texts, reprints or excerpts
of any other advertisement, sales literature, or published article), and
educational or training materials or other communications distributed or
made generally available to some or all agents or employees.
Article 5
Administrative Services to Contract Owners
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5. Administrative services to Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the
Trust, the Adviser or the Administrator. The Trust and the Administrator
recognize that the Account(s) will be the sole shareholder(s) of Trust
shares issued pursuant to the Contracts.
Article 6
Representations and Warranties
------------------------------
6.1. The Trust represents that it believes, in good faith, that
each Portfolio is currently qualified as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code") and that it will make every effort to maintain such qualification
of the Trust and that it will notify the Company immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or
that it might not so qualify in the future.
6.2. The Company represents that it believes, in good faith, that
the Contracts will at all times be treated as annuity contracts or life
insurance policies under applicable provisions of the Code, and that it
will make every effort to maintain such treatment and that it will notify
the Trust immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated
in the future.
6.3. The Trust represents that it currently complies with, and
agrees that it will at all relevant times comply with the diversification
requirements set forth in Section 817(h) of the Code, and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5(b), and any amendments or other modifications to that section or
regulation, and that it will notify the Company immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or
that a Portfolio might not so qualify in the future.
6.4. The Company represents and warrants that the interests of the
Contracts are or will be registered unless exempt and that it will maintain
such registration under the 1933 Act and the regulations thereunder to the
extent required by the 1933 Act and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws and
regulations. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account prior to any
issuance or sale thereof as a segregated asset account under the Illinois
Insurance Code and the regulations thereunder and has registered or, prior
to any issuance or sale of the Contracts, will maintain the registration of
each Account as a unit investment trust in accordance with and to the
extent required by the provisions of the 1940 Act and the regulations
thereunder, unless exempt therefrom, to serve as a segregated investment
account for the Contracts. The Company shall amend its registration
statement for its Contracts under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of its
Contracts.
6.5. The Company represents that it believes, in good faith, that
the Account is a "segregated asset account" and that interests in the
Account are offered exclusively through the purchase of a "variable
contract," within the meaning of such terms under Section 1.817-5(f)(2) of
the regulations under the Code, and that it will make every effort to
continue to meet such definitional requirements, and that it will notify
the Trust immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in
the future.
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6.6. The Trust represents and warrants that it is and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount no less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. Such bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Trust will notify the Company immediately upon having
a reasonable basis for believing that the Trust no longer has the coverage
required by this Section 6.6.
6.7. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and subsidiaries dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage, in an amount not
less than five million dollars ($5,000,000). Such bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to see
that this bond or another bond containing these provisions is in effect at
all relevant times under this Agreement and agrees to notify the Trust
immediately upon having a reasonable basis for believing that the Company
no longer has the coverage required by this Section 6.7.
6.8. The Trust represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act,
the Trust undertakes to have a majority of the disinterested members of the
Board formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
6.9. The Adviser and the Administrator each represents and warrants
that it complies with all applicable federal and state laws and regulations
and that it will perform its obligations for the Trust and the Company in
compliance with the laws and regulations of its state of domicile and any
applicable state and federal laws and regulations.
6.10. The Company acknowledges that it will be considered the
Trust's agent for purposes of Rule 22c-1 under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company represents
and warrants that it has adopted and implemented procedures reasonably
designed to prevent orders received from Contract owners after the earlier
of the applicable Portfolio's close and the close of trading on the New
York Stock Exchange (generally, 4:00 p.m., Eastern Time) (the "Cut-Off
Time") from being aggregated with orders received prior to the Cut-Off
Time. The Company further represents and warrants that all purchases and
redemption orders for the Account transmitted to the Trust pursuant to
Section 2.1 of this Agreement shall be based upon orders received by the
Company prior to the Cut-Off Time.
Article 7
Statements and Reports
----------------------
7.1. The Administrator or its designee will make available
electronically to the Company within five Business Days after the end of
each month a monthly statement of account confirming all transactions made
during that month in the Account.
7.2. The Trust and Administrator agree to provide the Company no
later than March 1 of each year with the investment advisory and other
expenses of the Trust incurred during the Trust's most recently completed
fiscal year, to permit the Company to fulfill its prospectus disclosure
obligations under the SEC's variable annuity and/or life fee table
requirements.
Article 8
Potential Conflicts
-------------------
8.1. The Board will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Trust. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or
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securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
8.2. The Company will report in writing any potential or existing
material irreconcilable conflict of which it is aware to the Administrator.
Upon receipt of such report, the Administrator shall report the potential
or existing material irreconcilable conflict to the Board. The
Administrator shall also report to the Board on a quarterly basis whether
the Company has reported any potential or existing material irreconcilable
conflicts during the previous calendar quarter. The Company will assist the
Board in carrying out its responsibilities under the Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Board
whenever Contract owner voting instructions are disregarded.
8.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at
their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested trustees), take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio of the Trust, or submitting the question whether such
segregation should be implemented to a vote of all affected Contract owners
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance policy owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account. No charge or
penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a
Board determination of an irreconcilable material conflict and the cost of
such remedial action, and these responsibilities will be carried out with a
view only to the interests of Contract owners.
8.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw the
affected Account's investment in the Trust and terminate this Agreement
with respect to such Account (at the Company's expense); provided, however
that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested members of the Board. No charge or penalty
will be imposed as a result of such withdrawal. The Company agrees that it
bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view
only to the interests of Contract owners.
8.5. For purposes of Sections 8.3 through 8.4 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Trust be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 8.3 through 8.4 to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract
owners materially adversely affected by the irreconcilable material
conflict.
8.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the Shared Funding Exemptive
Order) on terms and conditions materially different from those contained in
the Shared Funding Exemptive Order, then the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
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8.7. Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may
reasonably request so that the Board may fully carry out the obligations
imposed upon them by the provisions hereof and in the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted
more frequently if deemed appropriate by the Board. Without limiting the
generality of the foregoing or the Company's obligations under Section 8.2,
the Company shall provide to the Administrator a written report to the
Board no later than January 15/th/ of each year indicating whether any
material irreconcilable conflicts have arisen during the prior fiscal year
of the Trust. All reports received by the Board of potential or existing
conflicts, and all Board action with regard to determining the existence of
a conflict, notifying Participating Insurance Companies of a conflict, and
determining whether any proposed action adequately remedies a conflict,
shall be properly recorded in the minutes of the Board or other appropriate
records, and such minutes or other records shall be made available to the
Securities and Exchange Commission upon request.
Article 9
Indemnification
---------------
9.1. Indemnification By The Company
9.1(a). The Company agrees to indemnify and hold harmless the Trust,
the Administrator, the Adviser, and each member of their respective Boards
and officers and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Trust for use in the registration statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Trust not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Trust) or unlawful conduct of the Company or persons under its
control, with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Trust
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
- 9 -
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; as limited by and in
accordance with the provisions of Section 9.1(b) and 9.1(c)
hereof.
9.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Trust, whichever is applicable.
9.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at as own expense, in the defense
of such action. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the Indemnified Party named in the
action. After notice from the Company to such Indemnified Party of the
Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it,
and the Company shall not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof
other than reasonable costs of investigation.
9.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the Contracts
or the operation of the Trust.
9.2. Indemnification by the Adviser
9.2(a). The Administrator agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 9.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Administrator) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Trust or the Administrator by or on behalf of
the Company, the Adviser, Counsel for the Trust, the
independent public accountant to the Trust, or any person or
entity that is not acting as agent for or controlled by the
Administrator for use in the registration statement or
prospectus for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the
- 10 -
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Administrator;
or
(iv) arise as a result of any failure by the Administrator to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Administrator in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Administrator; as
limited by and in accordance with the provisions of Section
9.2(b) and 9.2(c) hereof.
9.2(b). The Administrator shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to the Company or an Account, whichever
is applicable.
9.2(c). The Administrator shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Administrator in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Administrator of any such
claim shall not relieve the Administrator from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action
is brought against the Indemnified Parties, the Administrator will be
entitled to participate, at its own expense, in the defense thereof. The
Administrator also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After
notice from the Administrator to such Indemnified Party of the
Administrator's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained
by it, and the Administrator will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense
thereof other than reasonable costs of investigation.
9.2(d). The Company agrees promptly to notify the Administrator of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account in which the Portfolios are made
available.
9.3. Indemnification by the Trust
9.3(a). The Adviser agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 9.3) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or
- 11 -
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Adviser or the Trust by or on behalf of the Company, the
Administrator, Counsel for the Trust, the independent public
accountant to the Trust, or any person or entity that is not
acting as agent for or controlled by the Adviser for use in
the registration statement or prospectus for the Trust or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this
Agreement (including a failure of the Trust, whether
unintentional or in good faith or otherwise, to comply with
the diversification requirements of Section 817(h) of the Code
and the rules and regulations thereunder); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser; as limited by and in
accordance with the provisions of Section 9.3(b) and 9.3(c)
hereof.
9.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as may arise
from such Indemnified Party's willful misfeasance, bad faith, or negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or an Account, whichever is applicable.
9.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Adviser of any such claim shall not relieve the Adviser from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Adviser will be entitled to participate, at its own expense, in the defense
thereof. The Adviser also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Indemnified Party named in the action.
After notice from the Adviser to such Indemnified Party of the Adviser's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such Indemnified
Party independently in connection with the defense thereof other than
reasonable costs of investigation.
9.3(d). The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of each
Account, or the sale or acquisition of shares of the Trust.
9.4. Indemnification by the Trust
9.4(a). The Trust agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this
- 12 -
Section 9.4) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Trust) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Trust by or on behalf of the Adviser, the
Company, or the Administrator for use in the registration
statement or prospectus for the Trust or in sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Portfolio shares;
or
(ii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Trust; or
(iii) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements of Section 817(h) of the Code and the rules and
regulations thereunder); or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Section 9.4(b) and 9.4(c)
hereof.
9.4(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as may arise
from such Indemnified Party's willful misfeasance, bad faith, or negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company the Trust, the Adviser or an Account, whichever
is applicable.
9.4(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Trust of any such claim shall not relieve the Trust from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the Trust
will be entitled to participate, at its own expense, in the defense
thereof. The Trust also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Indemnified Party named in the action.
After notice from the Trust to such Indemnified Party of the Trust's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Trust will not be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable
costs of investigation.
- 13 -
9.4(d). The Company agrees to promptly notify the Trust of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of each
Account, or the sale or acquisition of shares of the Trust.
Article 10
Applicable Law
--------------
10.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Massachusetts.
10.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
Article 11
Termination
-----------
11.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason upon ninety (90) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Trust, the
Adviser, and the Administrator with respect to any Portfolio
based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt of
notice unless the Trust makes available a sufficient number of
shares to reasonably meet the requirements of the Account
within said ten (10) day period; or
(c) termination by the Company upon written notice to the Trust,
the Adviser, and the Administrator with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts
issued or to be issued by the Company. The terminating party
shall give prompt notice to the other parties of its decision
to terminate; or
(d) termination by the Company upon written notice to the Trust,
the Adviser and the Administrator with respect to any
Portfolio in the event that such Portfolio ceases to qualify
as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision or if the
Company reasonably believes that the Portfolio may fail to so
qualify; or
(e) termination by the Company upon written notice to the Trust,
the Adviser, and the Administrator with respect to any
Portfolio in the event that such Portfolio fails to meet the
diversification requirements specified in Section 6.3 hereof;
or
(f) termination by either the Trust, the Adviser, or the
Administrator by written notice to the Company, if either one
or more of the Trust, the Adviser, or the Administrator, shall
determine, in its or their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity
and that material adverse change or material adverse publicity
will have a material adverse impact upon the business and
operations of the Trust, the Adviser or the
- 14 -
Administrator, provided that the Trust, the Adviser, or the
Administrator will give the Company sixty (60) days' advance
written notice of such determination of its intent to
terminate this Agreement, and provided further that after
consideration of the actions taken by the Company and any
other changes in circumstances since the giving of such
notice, the determination of the Trust, the Adviser, or the
Administrator shall continue to apply on the 60th day since
giving of such notice, then such 60th day shall be the
effective date of termination; or
(g) termination by the Company by written notice to the Trust, the
Adviser, and the Administrator, if the Company shall
determine, in its sole judgment exercised in good faith, that
either the Trust, the Adviser, or the Administrator has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity
and that material adverse change or material adverse publicity
will have a material adverse impact upon the business and
operations of the Trust, the Adviser or the Administrator,
provided that the Company will give the Trust, the Adviser,
and the Administrator sixty (60) days' advance written notice
of such determination of its intent to terminate this
Agreement, and provided further that after consideration of
the actions taken by the Trust, the Adviser, or the
Administrator and any other changes in circumstances since the
giving of such notice, the determination of the Company shall
continue to apply on the 60th day since giving of such notice,
then such 60th day shall be the effective date of termination;
or
(h) termination by any party upon the other party's breach of any
representation in Article 6 or any material provision of this
Agreement, which breach has not been cured to the satisfaction
of the terminating party within ten (10) days after written
notice of such breach is delivered to the Trust, the Adviser,
the Administrator or the Company, as the case may be; or
(i) termination by the Trust, the Adviser, or Administrator by
written notice to the Company in the event an Account or
Contract is not registered (unless exempt from registration)
or sold in accordance with applicable federal or state law or
regulation, or the Company fails to provide pass-through
voting privileges as specified in Section 3.3; or
(j) at the option of the Trust or the Adviser in the event that
formal administrative proceedings are instituted against the
Company by the NASD, the SEC, an insurance commissioner or any
other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Trust's
shares, provided, however, that the Trust or the Adviser
determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material
adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(k) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or
the Adviser by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Trust or the Adviser to perform its obligations
under this Agreement; or
(l) at the option of the Company, with respect to any Account,
upon receipt of any necessary approval and/or the vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Portfolio shares in accordance
with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying investment
medium. The Company will
- 15 -
give at least 30 days prior written notice to the Trust of the
date of any proposed vote to replace the Trust's shares; or
(m) upon assignment of this Agreement without the prior written
consent of all parties hereto, except as provided in Section
13.9 hereof.
11.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Trust shall at the option of the Company, continue to make
available additional shares of the Trust pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts") unless such further sale of Trust shares is proscribed by law,
regulation or applicable regulatory body, or unless the Trust determines
that liquidation of the Trust following termination of this Agreement is in
the best interests of the applicable Portfolio and its shareholders.
Specifically, without limitation, the owners of the Existing Contracts
shall be permitted to direct reallocation of investments in the Trust,
redemption of investments in the Trust and/or investment in the Trust upon
the making of additional purchase payments under the Existing Contracts. In
the event additional shares are made available for Existing Contracts
pursuant to this Section 11.2, this Agreement shall remain in full force
and effect in connection therewith until this Agreement is terminated in
its entirety. The parties agree that this Section 11.2 shall not apply to
any terminations under Article 8 and the effect of such Article 8
terminations shall be governed by Article 8 of this Agreement.
11.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's
assets held in the Account) except (i) as necessary to implement Contract
owner initiated or approved transactions, or (ii) as required by state
and/or federal laws or regulations or judicial or other legal precedent of
general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly
furnish to the Trust, the Adviser and the Administrator the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory to
the Trust and the Adviser) to the effect that any redemption pursuant to
clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall
not prevent Contract owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Trust
or the Adviser thirty (30) days notice of its intention to do so.
Article 12
Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Trust:
One Group Investment Trust
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attn: Fund President
If to the Administrator:
One Group Administrative Services, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attention: President
- 16 -
If to the Adviser:
Banc One Investment Advisors Corporation
0000 Xxxxxxx Xxxxxxx, Xxxxx 0-X
Xxxxxxxx, Xxxx 00000-0000
Attn: President
If to the Company:
Federal Xxxxxx Life Assurance Company
0000 XxXxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Variable Funds Manager
Article 13
Miscellaneous
-------------
13.1. All persons dealing with the Trust must look solely to the
property of the Trust for the enforcement of any claims against the Trust
as neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust. Each of the
Company, the Adviser, and the Administrator acknowledges and agrees that,
as provided by the Trust's Amended and Restated Declaration of Trust, the
shareholders, trustees, officers, employees and other agents of the Trust
and the Portfolios shall not personally be bound by or liable for matters
set forth hereunder, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder. The Trust's Amended
and Restated Declaration of Trust is on file with the Secretary of State of
Massachusetts.
13.2. The Company will comply with all applicable laws and
regulations aimed at preventing, detecting, and reporting money laundering
and suspicious transactions. To the extent required by applicable
regulation and generally accepted industry practices, the Company shall
take all necessary and appropriate steps to: (i) obtain, verify, and retain
information with regard to Contract owner identification, and (ii) maintain
records of all Contract owner transactions. The Company will (but only to
the extent consistent with applicable law) take all steps necessary and
appropriate to provide the Trust with any requested information about
Contract owners and their accounts in the event that the Trust shall
request such information due to an inquiry or investigation by any law
enforcement, regulatory, or administrative authority. To the extent
permitted by applicable law and regulations, the Company will notify the
Trust of any concerns that the Company may have in connection with any
Contract owner in the context of relevant anti-money laundering laws or
regulations.
13.3. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
13.4. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.6. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
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13.7. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
(and other parties hereto) reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
13.8. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations at law or in equity, which the parties hereto are
entitled to under state and federal laws.
13.9. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Adviser may, with advance
written notice to the other parties hereto, assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser if such assignee is duly licensed and registered
to perform the obligations of the Adviser under this Agreement.
13.10. The Company shall furnish, or shall cause to be furnished, to
the Trust or its designee upon request, copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in any
event within 90 days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory),
as soon as practical and in any event within 45 days following such period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof; and
(e) any other public report submitted to the Company by
independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as practical after
the receipt thereof.
13.11. The names "One Group//(R)// Investment Trust" and 'Trustees of
One Group//(R)// Investment Trust" refer respectively to the Trust created
and the Trustees, as trustees but not individually or personally, acting
from time to time under an Amended and Restated Declaration of Trust dated
January 2000 to which reference is hereby made and a copy of which is on
file at the office of the Secretary of the Commonwealth of Massachusetts
and elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of 'One Group Investment Trust'
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the
Trust, and all persons dealing with any series of shares of the Trust must
look solely to the assets of the Trust belonging to such series for the
enforcement of any claims against the Trust.
13.12. The Trust and the Administrator agree to consult with the
Company concerning whether any Portfolio of the Trust qualifies to provide
a foreign tax credit pursuant to Section 853 of the Code.
[SIGNATURE PAGES FOLLOW]
- 18 -
FEDERAL XXXXXX LIFE ASSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Executive Vice President
----------------------------------
ONE GROUP INVESTMENT TRUST
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: Secretary
----------------------------------
BANC ONE INVESTMENT ADVISORS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: Pres. and CEO
----------------------------------
ONE GROUP ADMINISTRATIVE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Title: Vice President
----------------------------------
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SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
-------------------------------
--------------------------------------------------------------------------------
Name of Separate Account and Date Form Number
Established by Board of Directors Funded by Separate Account
--------------------------------------------------------------------------------
FKLA Variable Annuity Separate Account, S-3258 (Marketing name: The
May 23, 2003 One//(R)// Variable Annuity/SM/)
--------------------------------------------------------------------------------
FKLA Variable Annunity Separate Account, S-3253 (Marketing name: One Life
May 23, 2003 Advantage III)
--------------------------------------------------------------------------------
FKLA Variable Annunity Separate Account, S-3257, S-9377, S-9378 (Marketing
May 23, 2003 name: One Life Preferred Plus)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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Schedule B
----------
Portfolios of the Trust
-----------------------
One Group Investment Trust Bond Portfolio
One Group Investment Trust Government Bond Portfolio
One Group Investment Trust Balanced Portfolio
One Group Investment Trust Large Cap Growth Portfolio
One Group Investment Trust Equity Index Portfolio
One Group Investment Trust Diversified Equity Portfolio
One Group Investment Trust Mid Cap Growth Portfolio
One Group Investment Trust Diversified Mid Cap Portfolio
One Group Investment Trust Mid Cap Value Portfolio
- 21 -
