EXHIBIT 8(k)
PARTICIPATION AGREEMENT
-----------------------
Among
STEINROE VARIABLE INVESTMENT TRUST
XXXXX XXX & XXXXXXX INCORPORATED
and
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 31st day of March, 1997 by
and among PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY, (hereinafter "Insurance
Company"), a Missouri company, on its own behalf and on behalf of its Separate
Account V (the "Account"); STEINROE VARIABLE INVESTMENT TRUST, a business trust
organized under the laws of Massachusetts (hereinafter the "Fund"); and XXXXX
XXX & FARNHAM INCORPORATED (hereinafter the "Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and/or variable annuity
Contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies which have entered into participation agreements similar to
this Agreement (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated July 1, 1988 (File No. 812-7044),
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, (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 Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
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; and
WHEREAS, Insurance Company has registered or will register certain variable
annuity Contracts supported wholly or partially by the Account (the "Contracts")
under the 1933 Act and said Contracts are listed in Schedule A hereto, as it may
be amended from time to time by mutual written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of Insurance
Company on February 14, 1992, to set aside and invest assets attributable to the
Contracts; and
WHEREAS Insurance Company has registered or will register the Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Insurance Company intends to purchase shares in the Portfolio(s)
listed in Schedule B hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolio(s)"), on behalf of the Account to
fund the aforesaid Contracts, and the Fund is authorized to sell such shares to
unit investment trusts such as the Account at net asset value; and
WHEREAS, Insurance Company will perform certain services for the Fund and
Adviser in connection with the Contracts; and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Trust (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
NOW, THEREFORE, in consideration of their mutual promises, Insurance
Company, the Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Fund agrees to sell to Insurance Company those shares of the
Designated Portfolio(s) which the Account orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Portfolios. For purposes of this
Section 1.1, Insurance Company shall be the designee of the Fund for receipt of
such orders and receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of the applicable order by 10:00 a.m.
Eastern time on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of the SEC.
1.2. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by Insurance
Company and the Account on those days on which the Fund calculates its
Designated Portfolio(s)' net asset value pursuant to rules of the SEC, and the
Fund shall calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse 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.
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1.3. The Fund will not sell shares of the Designated Portfolio(s) to any
other insurance company or separate account unless an agreement containing
provisions substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article
VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash on Insurance Company's request,
any full or fractional shares of the Fund held by Insurance Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. Requests for
redemption identified by Insurance Company, or its agent, as being in connection
with surrenders, annuitizations, or death benefits under the Contracts, upon
prior written notice, will be executed within seven (7) calendar days after
receipt by the Fund or its designee of the requests for redemption. If permitted
by an order of the SEC under Section 22(e) of the 1940 Act, the Fund shall be
permitted to delay sending redemption proceeds to Insurance Company beyond the
foregoing deadlines, provided, however, that the Account receives similar relief
to defer paying proceeds to Contract Owners, and further, that the Account is
treated no less favorably than the other shareholders of the Designated
Portfolios. This Section 1.4 may be amended, in writing, by the parties
consistent with the requirements of the 1940 Act and interpretations thereof.
For purposes of this Section 1.4, Insurance Company shall be the designee of the
Fund for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of the
applicable request for redemption by 10:00 a.m. Eastern time on the next
following Business Day.
1.5. 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 1.3 and Article VI hereof) and the cash
value of the Contracts may be invested in Unaffiliated Funds.
1.6. Insurance Company shall pay for Fund shares by 11:00 a.m. Eastern
time on the next Business Day after an order to purchase Fund shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed the
same day as the purchase.
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1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 11:00 a.m. Eastern time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Insurance Company or the Account.
Shares ordered from the Fund will be recorded in an appropriate title for the
Account or the appropriate sub-account of the Account.
1.9. The Fund or its designee shall furnish same day notice (by wire or
telephone, followed by written confirmation) to Insurance Company of any income,
dividends or capital gain distributions payable on the Designated Portfolio(s)'
shares. Insurance Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Portfolio shares in additional
shares of that Portfolio. Insurance Company reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash. The Fund or its designee shall notify Insurance Company by the end of
the next following Business Day of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to Insurance 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 6:00
p.m. Eastern time. The Fund or its designee shall notify Insurance Company by
5:45 p.m. Eastern time in the event that the Fund cannot meet such 6:00 p.m.
deadline. In such event the Fund shall use its best efforts to make such value
available as soon thereafter as is practicable. If the Fund provides incorrect
share net asset value information, Insurance Company shall be entitled to an
adjustment to the number of shares purchased or redeemed to reflect the correct
net asset value per share (and, if and to the extent necessary, Insurance
Company shall make adjustments to the number of units credited and/or unit
values for the Contracts for the periods affected). In the event adjustments are
required to correct any error in computation of a Portfolio's net asset value
per share, or dividend or capital gain distribution,
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the Adviser or the fund shall notify Insurance company as soon as possible after
discovering the need for such adjustments. Notification can be made verbally,
but must be confirmed in writing. If an adjustment is necessary to correct an
error which has caused Contract Owners to receive less than the amount to which
they are entitled, the number of shares of the applicable Contract Owners
accounts. If Contract Owners have received amounts in excess of the amounts to
which they otherwise would have been entitled prior to an adjustment for an
error, Insurance Company, when requested by the Adviser of the Fund, will make a
good faith attempt to collect such excess amounts from the Contract Owners. Any
overpayments that have not yet been paid to Contract Owners will be remitted by
Insurance Company upon notification by the Adviser of such overpayment. In no
event shall Insurance Company be liable to Fund or Advisor for any such
adjustments or overpayment amounts or be required to collect excess amounts from
Contract Owners where prohibited by law or regulation.
ARTICLE II. Representations and Warranties
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2.1. Insurance Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. Insurance 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 the Account prior to any issuance or sale thereof as a segregated
asset account under applicable law (Sections 376 and 400 of the Missouri
Insurance Law) and has registered 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.
2.2. The Fund represents and warrants that Designated Portfolio shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 1940
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Act. 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.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-l
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund and Adviser agree to comply with applicable provisions and SEC
staff interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are legitimate and not
excessive. To the extent that the Fund decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Board, a majority of whom
are not interested persons of the Fund, formulate and approve any plan pursuant
to Rule 12b-l under the 1940 Act to finance distribution expenses.
2.4. The Fund represents and warrants that the investment policies, fees
and expenses of the Designated Portfolio(s) are and shall at all times remain in
compliance with the insurance and other applicable laws of the State of Missouri
any other applicable state to the extent required to perform this Agreement. The
Fund further represents and warrants that Designated Portfolio shares will be
sold in compliance with the insurance laws of the State of Missouri all
applicable state insurance and securities laws. Insurance Company will advise
the Fund of any applicable changes in Missouri law that affect the Designated
Portfolios, and the Fund will be deemed to be in compliance with this Section
2.4 so long as the Fund complies with such advice of Insurance Company. 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 with
the concurrence of Insurance Company.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and the
Exemptive Order and that the Fund is and shall at all times maintain
qualification as a Regulated Investment Company under Subchapter M of the Code
(as defined below).
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2.6. The Adviser represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of Delaware and any applicable state and
federal securities laws, including registration as an investment advisor under
the Investment Advisors Act of 1940.
2.7. The Fund and the Adviser represent and warrant that all of their
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 minimal coverage required by
Section 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.8. The Fund will provide Insurance Company with as much advance notice as
is reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in its
registration statement or prospectus affecting the Designated Portfolio(s) and
any proxy solicitation affecting the Designated Portfolio(s)) and consult with
Insurance Company in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts. The Fund or Adviser agree to share equitably in expenses
incurred by Insurance Company as a result of actions taken by the Fund,
consistent with the allocation of expenses contained in Schedule C.
2.9. The Insurance Company represents, assuming that the Fund complies
with Article VI of this Agreement, that the Contracts are currently treated as
annuity Contracts under applicable provisions of the Internal Revenue Code of
1986 ("the Code"), as amended, and that it will make every effort to maintain
such treatment and that it will notify the Fund 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.
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2.10. Insurance Company represents and warrants that it will not purchase
Fund shares with assets derived from tax-qualified retirement plans except
indirectly, through Contracts purchased in connection with such plans.
2.11. Insurance Company represents and warrants that it will not transfer
or otherwise convey shares of any Designated Portfolio, without the prior
written consent of the Fund, which consent shall not be unreasonably withheld.
ARTICLE III. Prospectuses and Proxy Statements; Voting
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3.1. At least annually, the Fund or the Adviser shall provide Insurance
Company with as many copies of the Fund's current prospectus for the Designated
Portfolio(s) as Insurance Company may reasonably request for marketing purposes
(including distribution to Contract Owners with respect to new sales of a
Contract). If requested by Insurance Company in lieu thereof, the Adviser or
Fund shall provide such documentation (including a final copy of the new
prospectus for the Designated Portfolio(s)) and other assistance as is
reasonably necessary in order for Insurance Company once each year (or more
frequently if the prospectus for the Designated Portfolio are amended) to have
the prospectus for the Contracts and the Fund's prospectus for the Designated
Portfolio(s) printed together in one document. The Fund and Adviser agree that
the prospectus, and semi-annual and annual reports for the Designated
Portfolio(s) provided pursuant to this Section 3.1 will describe only the
Designated Portfolio(s) and will not name or describe any other portfolios or
series that may be in the Fund unless required by law.
3.2. If applicable state or federal laws or regulations require that the
Statement of Additional Information ("SAI") for the Fund be distributed to all
Contract purchasers, then the Adviser or the Fund shall provide Insurance
Company with the Fund's SAI or documentation thereof in such quantities and/or
with expenses to be borne in accordance with Schedule C hereof.
3.3. The Fund or the Adviser shall provide Insurance Company with as many
copies of the Fund's SAI as each of them may reasonably request. The Fund or the
Adviser shall also
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provide such SAI to any owner of a Contract or prospective owner who requests
such SAI (although it is anticipated that such requests will be made to
Insurance Company).
3.4. The Fund shall provide Insurance Company with copies of its
prospectus, SAI, proxy material, reports to stockholders and other
communications to stockholders for the Designated Portfolio(s) in such quantity
as Insurance Company shall reasonably require for distributing to Contract
Owners.
3.5. It is understood and agreed that, except with respect to information
regarding Insurance Company provided in writing by that party, Insurance Company
is not responsible for the content of the prospectus or SAI for the Designated
Portfolio(s). It is also understood and agreed that, except with respect to
information regarding the Fund, Adviser or the Designated Portfolio(s) provided
in writing by the Fund or Adviser, neither the Fund nor Adviser are responsible
for the content of the prospectus or SAI for the Contracts.
3.6. If and to the extent required by law Insurance Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Designated Portfolio shares in accordance with instructions
received from Contract Owners; and
(iii) vote Designated Portfolio shares for which no instructions have been
received in the same proportion as Designated Portfolio shares for
which instructions have been received from Contract Owners, so long
as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable Contract
Owners. Insurance Company reserves the right to vote Fund shares held
in any segregated asset account in its own right, to the extent
permitted by law.
3.7. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts holding shares of a Designated Portfolio
calculates voting privileges in the manner required by the Shared Funding
Exemptive Order. Insurance Company represents that its procedures currently are
in compliance in all material respects with such requirements.
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The Fund agrees to promptly notify Insurance Company of any changes of
interpretations or amendments of the Shared Funding Exemptive Order.
3.8. 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 (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, 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 with 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 directors or trustees and with whatever rules the
Commission may promulgate with respect thereto. The Fund reserves the right,
upon 45 days prior written notice to Insurance Company, to take all actions,
including but not limited to, the dissolution, merger, and sale of all assets of
the Fund or any Designated Portfolio upon the sole authorization of the Board,
to the extent permitted by the laws of The Commonwealth of Massachusetts and the
1940 Act.
ARTICLE IV. Sales Material and Information.
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4.1. Insurance Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of major sales literature or
other significant promotional material that Insurance Company develops or
proposes to use and in which the Fund (or a Portfolio thereof), its investment
adviser or one of its sub-advisers or the underwriter for the Fund shares is
named in connection with the Contracts, at least 10 (ten) Business Days prior to
its use. No such material shall be used if the Fund or its designee objects to
such use within 5 (five) Business Days after receipt of such material. The Fund
reserves the right to review any pieces of sales literature or other promotional
material that are not deemed major or significant.
4.2. Insurance 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 for the
Fund shares, as such registration statement and prospectus may be amended or
statement supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales
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literature or other promotional material approved by the Fund or its designee or
by the Adviser, except with the permission of the Fund or the Adviser.
4.3. The Fund or Adviser shall furnish, or shall cause to be furnished, to
Insurance Company, a copy of each piece of major sales literature or other
significant promotional material in which Insurance Company and/or its separate
account(s) is named at least 10 (ten) Business Days prior to its use. No such
material shall be used if Insurance Company objects to such use within 5 (five)
Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information or make any
representations on behalf of Insurance Company or concerning Insurance Company,
the Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Account, or in sales literature or other
promotional material approved by Insurance Company or its designee, except with
the permission of Insurance Company.
4.5. The Fund will provide to Insurance Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
major sales literature and other significant promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that date to the Designated Portfolio(s), contemporaneously with the
filing of such document(s) with the SEC or NASD or other regulatory authorities.
4.6. Insurance Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, SAIs, reports, solicitations for
voting instructions, major sales literature and other significant 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, NASD, or
other regulatory authority.
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4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), 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, and proxy materials.
4.8. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representative
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and the Adviser shall pay no fee or other compensation to
Insurance Company under this Agreement, and Insurance Company shall pay no fee
or other compensation to the Fund or Adviser under this Agreement, although the
parties hereto will bear certain expenses in accordance with Schedule C,
Articles III, V, and other provisions of this Agreement.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, as further provided in Schedule C. The Fund shall see
to it that all shares of the Designated Portfolio(s) 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.
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5.3. The parties shall bear the expenses of routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by Insurance
Company, as provided in Schedule C.
5.4. The Fund and Adviser acknowledge that a principal feature of the
Contracts is the Contract owner's ability to choose from a number of
unaffiliated mutual funds (and portfolios or series thereof), including the
Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the
Contract's cash value between funds and portfolios. The Fund and Adviser agree
to cooperate with Insurance Company facilitating the operation of the Account
and the Contracts as intended, including but not limited to, cooperation in
facilitating transfers between Unaffiliated Funds.
5.5. Insurance Company agrees to provide certain administrative services
in connection with the arrangements contemplated by this Agreement. The parties
acknowledge and agree that the services referred to in this Section 5.5 are
recordkeeping, shareholder communication, and other transaction facilitation and
processing, and related administrative services only and are not the services of
an underwriter or a principal underwriter of the Fund and that Insurance Company
not an underwriter for the shares of the Designated Portfolio(s), within the
meaning of the 1933 Act or the 1940 Act.
ARTICLE VI. Diversification and Qualification
---------------------------------
6.1. The Fund and Adviser represent and warrant that the Fund will at all
times sell its shares and invest its assets in such a manner as to ensure that
the Contracts will be treated as annuity Contracts under the Code, and the
regulations issued thereunder. Without limiting the scope of the foregoing, the
Fund and Adviser represent and warrant that the Fund and each Designated
Portfolio thereof will at all times comply with Section 817(h) of the Code and
Treasury Regulation (S)1.817-5, as amended from time to time, 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. The
Fund and the Adviser agree that shares of the Designated Portfolio(s) will be
sold only to Participating Insurance Companies and their separate accounts.
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6.2. No shares of any series or portfolio of the Fund will be sold to the
general public.
6.3. The Fund and Adviser represent and warrant that the Fund and each
Designated Portfolio is currently qualified as a Regulated Investment Company
under Subchapter M of the Code, and that it will maintain such qualification
(under Subchapter M or any successor or similar provisions) as long as this
Agreement is in effect.
6.4. The Fund or Adviser will notify Insurance Company immediately upon
having a reasonable basis for believing that the Fund or any Portfolio has
ceased to comply with the aforesaid Section 817(h) diversification or Subchapter
M qualification requirements or might not so comply in the future.
6.5. The Fund and Adviser acknowledge that full compliance with the
requirements referred to in Sections 6.1, 6.2, and 6.3 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as annuity Contracts for federal income tax
purposes, which would have adverse tax consequences for Contract Owners and
could also adversely affect Insurance Company corporate tax liability. The Fund
and Adviser also acknowledge that it is solely within their power and control to
meet those requirements. Accordingly, without in any way limiting the effect of
Section 8.3 hereof and without in any way limiting or restricting any other
remedies available to Insurance Company, the Adviser will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with reasonable
and appropriate corrections or responses to any such failure; such costs may
include, but are not limited to, the costs involved in creating, organizing, and
registering a new investment company as a funding medium for the Contracts
and/or the costs of obtaining whatever regulatory authorizations are required to
substitute shares of another investment company for those of the failed
Portfolio (including but not limited to an order pursuant to Section 26(b) of
the 1940 Act); such costs are to include, but are not limited to, fees and
expenses of legal counsel and other advisors to Insurance Company and any
federal income taxes or tax penalties (or "toll charges" or exactments or
amounts paid in
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settlement) incurred by Insurance Company with respect to itself or owners of
its Contracts in connection with any such failure or anticipated or reasonably
foreseeable failure.
6.6. The Fund shall be in compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, and will notify
Insurance Company if the Fund shall ever be out of compliance.
ARTICLE VII. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
------------------------------
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 Designated Portfolio(s) 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 a Participating Insurance Company to
disregard the voting instructions of Contract Owners. The Board shall promptly
inform Insurance Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. Insurance Company will report any potential or existing conflicts of
which it is aware to the Board. Insurance 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 Insurance Company to inform the Board whenever Contract Owner voting
instructions are to be disregarded. Such responsibilities (other than the duty
to report, which is unqualified) shall be carried out by Insurance Company with
a view only to the interests of its Contract Owners.
16
7.3. If it is determined by a majority of the Board, or a majority of its
directors who are not interested persons of the Fund, the Adviser or any sub-
adviser to any of the Portfolios (the "Independent Directors"), that a material
irreconcilable conflict exists, Insurance Company and other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), 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 Designated Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another Designated Portfolio of the Fund, or submitting the question
whether such segregation should be implemented to a vote of all affected
Contract Owners and, as appropriate, segregating the assets of any appropriate
group (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
Insurance Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Insurance Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the Independent Directors. 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 the effective date of such
termination the Fund shall continue to accept and implement orders by Insurance
Company 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 Insurance Company conflicts
with the majority of other state regulators, then Insurance Company will
withdraw the Account's investment in the Fund and terminate this Agreement
within six months after the Board informs Insurance Company in
17
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 effective date of such termination the Fund shall continue
to accept and implement orders by Insurance Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Trustees 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.
Insurance Company shall not be required by Section 7.3 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. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then Insurance Company will withdraw the Account's investment in the
Fund and terminate this Agreement within six (6) months after the Board informs
Insurance Company in writing of the foregoing determination; provided, however,
that such withdrawal and termination shall be limited to the extent required by
any such material irreconcilable conflict as determined by a majority of the
Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the 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 3.6, 3.7, 3.8, 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.
18
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By Insurance Company
8.l (a). Insurance Company agrees to indemnify and hold harmless the Fund
and its officers and each member of its Board and the Adviser (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of Insurance 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, expenses, 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 statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus 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 in writing to
Insurance Company on behalf of the Adviser or Fund 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
Fund shares; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in any
registration statement, prospectus, or SAI for any Unaffiliated
Fund, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make
the statements therein not misleading, or otherwise pertain to or
arise in connection with the availability of any Unaffiliated
Funds as an underlying funding vehicle in respect of the
Contracts; or
(iii) arise out of or are based upon statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by Insurance Company or persons under its
control) or wrongful conduct of Insurance
19
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iv) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, 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 in writing to the Fund by or on behalf
of Insurance Company; or
(v) arise as a result of any failure by Insurance Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(vi) arise out of or result from any material breach of any
representation and/or warranty made by Insurance Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by Insurance Company.
as limited by and in accordance with any provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1 (b). Insurance Company shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or 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 Fund, whichever is applicable.
8.1 (c). Insurance 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 Insurance 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 Insurance Company
of any such claim shall not relieve Insurance 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, except to the
extent that Insurance Company has been prejudiced by such failure to give
notice. In case
20
any such action is brought against the Indemnified Parties, Insurance Company
shall be entitled to participate, at its own expense, in the defense of such
action. Insurance Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice from
Insurance Company to such party of Insurance 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 Insurance 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 Insurance 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 should such litigation or proceedings represent, allege or concern a
material breach of any representation, warranty or covenant of this Agreement.
8.2. Indemnification by the Adviser
------------------------------
8.2 (a). The Adviser agrees to indemnify and hold harmless Insurance
Company and each of its directors and officers and each person, if any, who
controls Insurance 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 Adviser) 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
21
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Adviser or Fund by
or on behalf of Insurance Company for use in the registration
statement or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or are based upon statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Contracts not supplied by the Adviser or persons under its
control) or wrongful conduct of the Fund or Adviser or persons
under their control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of or are based upon 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 in writing to
Insurance Company by or on behalf of the Adviser or Fund; or
(iv) arise as a result of any failure by the Fund or Adviser to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification and
other qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or 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 Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such
22
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to Insurance Company or the Account, whichever is applicable.
8.2(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, except to the extent that the Adviser
has been prejudiced by such failure to give notice. 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
party named in the action. After notice from the Adviser to such 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 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). Insurance Company agrees promptly to notify the Adviser 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 should such litigation or proceedings represent, allege
or concern a material breach of any representation, warranty or covenant of this
Agreement.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless Insurance Company
and each of its directors and officers and each person, if any, who controls
Insurance Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, expenses, damages, liabilities (including
23
amounts paid in settlement with the written consent of the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may be
required to pay or may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, expenses, damages, liabilities
or expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely calculation or
reporting of the daily net asset value per share or dividend or
capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or 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 Insurance
Company, the Fund, the Adviser or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than
24
on account of this indemnification provision, except to the extent that the Fund
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Fund to such party of the Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). Insurance Company agrees promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund should such litigation or proceedings
represent, allege or concern a material breach of any representation, warranty
or covenant of this Agreement.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the 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.
25
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Designated Portfolios, upon one (1)
year advance written notice delivered to the other parties;
provided, however, that such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of Insurance Company by written notice to the
other parties with respect to any Designated Portfolio based
upon Insurance Company reasonable and good faith determination
that shares of such Designated Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) at the option of Insurance Company by written notice to the
other parties with respect to any Designated Portfolio 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 Insurance Company; or
(d) at the option of the Fund in the event that formal
administrative proceedings are instituted against Insurance
Company by the NASD, the SEC, the Insurance Commissioner or
like official of any state or any other regulatory body
regarding Insurance 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 shares or the shares or
sponsor of any Unaffiliated Fund, provided, however, that the
Fund determines in its sole judgment exercised reasonably and
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of Insurance
Company to perform its obligations under this Agreement or
would have a material adverse impact upon the Fund; or
(e) at the option of Insurance Company in the event that formal
administrative proceedings are instituted against the Fund or
Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, provided, however, that
Insurance Company determines in its sole judgment exercised
reasonably and in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Fund or Adviser to perform its obligations under this Agreement;
or
(f) at the option of Insurance Company by written notice to the Fund and
the Adviser with respect to any Portfolio if Insurance Company
reasonably and
26
in good faith believes that the Portfolio will fail to meet the Section
817(h) diversification requirements or Subchapter M qualifications
specified in Article VI hereof; or
(g) at the option of either the Fund or the Adviser, if (i) the Fund or
Adviser, respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that Insurance Company has suffered
a material adverse change in their business or financial condition or
is the subject of material adverse publicity and that material adverse
change or publicity will have a material adverse impact on Insurance
Company's ability to perform its obligations under this Agreement, (ii)
the Fund or Adviser notifies Insurance Company of that determination
and its intent to terminate this Agreement, and (iii) after considering
the actions taken by Insurance Company and any other changes in
circumstances since the giving of such a notice, the determination of
the Fund or Adviser shall continue to apply on the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall be the
effective date of termination; or
(h) at the option of Insurance Company, if (i) Insurance Company shall
determine, in its sole judgment reasonably exercised in good faith,
that either the Fund or the Adviser have suffered a material adverse
change in their business or financial condition or is the subject of
material adverse publicity and that material adverse change or
publicity will have a material adverse impact on the Fund's or
Adviser's ability to perform its obligations under this Agreement, (ii)
Insurance Company notifies the Fund or Adviser, as appropriate, of that
determination and its intent to terminate this Agreement, and (iii)
after considering the actions taken by the Fund or Adviser and any
other changes in circumstances since the giving of such a notice, the
determination of Insurance Company shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which sixtieth
(60th) day shall be the effective date of termination; or
10.2. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination.
10. 3. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Adviser shall, at the option of Insurance 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"). Specifically, without limitation, the owners of the Existing
Contracts
27
shall be permitted to reallocate investments in the Designated Portfolio(s) (as
in effect on such date), redeem investments in such Designated Portfolio(s)
and/or invest in such Designated Portfolio(s) upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.3 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.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
SteinRoe Variable Investment Trust
c/o Liberty Investment Services, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to Insurance Company:
Providian Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ATTN: Xxxx Xxxxxx
28
If to the Adviser:
Xxxxx Xxx & Farnham Incorporated
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
ARTICLE XII. Miscellaneous
-------------
12.1. 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 may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information designated as proprietary by another party.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the Missouri Insurance
Commission with any information
29
or reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of Insurance Company are being conducted in a manner consistent with
the Missouri Variable Annuity Regulations and any other applicable law or
regulations.
12.6. 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.
12.7. 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.
12.8. All persons dealing with the Fund and any Designated Portfolio shall
look solely to the assets of such Designated Portfolio for the enforcement of
any claims against the Fund hereunder. Each other party acknowledges and agrees
that none of the Trustees, officers or shareholders of the Fund shall have any
personal liability for any obligations entered into by or on behalf of the Fund.
30
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.
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
By its authorized officer,
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: Vice President
Date: 4/2/97
Adviser:
XXXXX XXX & XXXXXXX INCORPORATED
By its authorized officer,
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: President
Date: 4/7/97
Fund:
STEINROE VARIABLE INVESTMENT TRUST,
ON BEHALF OF THE DESIGNATED PORTFOLIO(S)
By its authorized officer,
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: Vice President
Date: 4/7/97
31
SCHEDULE A
----------
Contracts Form
--------- Numbers
-------
Providian Advisor's Edge Variable Annuity
SCHEDULE B
----------
SteinRoe Capital Appreciation Fund
SCHEDULE C
----------
Expenses
--------
1. The Fund and Insurance Company will pay the costs of printing and/or
distributing copies of the documents based upon an allocation of costs that
reflects the Fund's share of the total costs determined according to the
number of pages of the parties' and other funds' respective portions of the
documents.
2. The Adviser and Insurance Company will pay the costs of printing and/or
distributing copies of the documents based upon an allocation of costs that
reflects the Adviser's share of the total costs determined according to the
number of pages of the parties' and other funds' respective portions of the
documents.
============================================================================================
RESPONSIBLE
ITEM FUNCTION PARTY
============================================================================================
PROSPECTUS
--------------------------------------------------------------------------------------------
Annual Update Printing 1
Distribution 1
-------------------------------------------------------------------------------------------
New Sales: Marketing (supply and distribution of prospectuses to 2
persons who have not yet invested in a Designated
Portfolio)
Delivery of prospectuses to satisfy legal prospectus 1
delivery requirements (e.g., copies sent with
confirmations of sales)
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Existing Owners: Supply quantities described in Section 3.4 1
Distribution 1
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Interim Updates
--------------------------------------------------------------------------------------------
New Sales: Marketing (supply and distribution of prospectuses 2
to persons who have not yet invested in a
Designated Portfolio)
Delivery of prospectuses to satisfy legal prospectus 1
delivery requirements (e.g., copies sent with
confirmations of sales)
If required by Participating Insurance Company (PIC) PIC
--------------------------------------------------------------------------------------------
Existing Owners: If required by Fund or Adviser: Fund
If required by PIC: PIC
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
STATEMENT OF Same as Prospectus Same
ADDITIONAL
INFORMATION
--------------------------------------------------------------------------------------------
PROXY MATERIALS Printing Fund
OF THE FUND
Distribution
(a) If required by law: Fund
(b) If required by participating insurance company PIC
--------------------------------------------------------------------------------------------
ANNUAL REPORTS Printing Fund
& OTHER
COMMUNICATIONS Distribution 1
WITH SHAREHOLDERS
OF THE FUND
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
OPERATIONS OF FUND All operations and related expenses, including the Fund
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, the preparation of all statements and
notices required by any federal or state law and all
taxes on the issuance of the Fund's shares, and all
costs of management of the business affairs of the Fund.
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