EXHIBIT 8 (a)
PARTICIPATION AGREEMENT
AMONG
OM FINANCIAL LIFE INSURANCE COMPANY,
OLD MUTUAL FINANCIAL NETWORK SECURITIES, INC.
ALLIANCE XXXXXXXXX, X.X.
AND
ALLIANCE XXXXXXXXX INVESTMENTS, INC.
DATED AS OF
JANUARY 2, 2007
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 2nd day of January,
2007 ("Agreement"), by and among OM Financial Life Insurance Company, a
Maryland life insurance company ("Insurer") (on behalf of itself and each
separate account of the Insurer named in Schedule A to this Agreement, as may
be amended from time to time (each account referred to as the "Separate
Account" and collectively as the "Separate Accounts"); Old Mutual Financial
NETWORK Securities, Inc., a Maryland corporation ("Contracts Distributor"), the
principal underwriter with respect to the Contracts referred to below;
AllianceBernstein Variable Products Series Fund, Inc. (the "Fund") an open-end
management investment company organized under the laws of Maryland;
AllianceBernstein L.P., a Delaware limited partnership ("Adviser"), the
investment adviser of the Fund referred to below; and AllianceBernstein
Investments, Inc., a Delaware corporation ("Distributor"), the Fund's principal
underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS, the Fund engages in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially
similar to this Agreement (the "Participating Insurance Companies"), and
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WHEREAS, beneficial interests in the Fund are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets; and
WHEREAS, the Insurer, as depositor, has established the Separate Accounts
to serve as investment vehicles for certain variable annuity contracts and
variable life insurance policies offered by the Insurer set forth on Schedule A
(the "Contracts"); and
WHEREAS the Insurer, the Distributor, and the Fund desire that Class B
shares of the Fund's managed portfolios listed on Schedule A (the "Portfolios";
reference herein to the "Fund" includes reference to each Portfolio to the
extent the context requires) be made available by Distributor to serve as
underlying investment media for the Contracts; and
WHEREAS the Contracts provide for the allocation of net amounts received
by Insurer to separate series (the "Divisions"; reference herein to the
"Separate Account" includes reference to each Division to the extent the
context requires) of the Separate Account(s) for investment in shares of
corresponding managed portfolios that are made available through the Separate
Account to act as underlying investment media;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurer intends to purchase shares of the Portfolios on behalf
of the Separate Accounts to fund the
Contracts;
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and Distributor will make Class B shares of the
Portfolios available to Insurer for this purpose at net asset value and with no
sales charges, all subject to the following provisions:
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SECTION 1. SALE OF FUND SHARES
1.1 Timely Pricing and Orders.
(a) The Fund agrees to sell to the Insurer those shares of the
Portfolios which each Separate Account orders (based on orders placed by
Contract owners on that Business Day, as defined below), executing such orders
on a daily basis at the net asset value (and with no sales charges) next
computed after receipt by the Fund or its designee of the order for the shares
of the Fund. For purposes of this Section 1.1, the Insurer will be the designee
of the Fund for receipt of such orders from each Separate Account and receipt
by such designee will constitute receipt by the Fund; provided that the Fund
receives notice of such order by 11:00 a.m. Eastern Time on the next following
Business Day or such later time as permitted by Section 1.1 (c) hereof.
"Business Day" will mean any day on which the New York Stock Exchange (the
"NYSE") is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission (the
"Commission" or "SEC").
(b) The Fund agrees to redeem for cash, upon the Insurer's request, any
full or fractional shares of the Fund held by the Insurer (based on orders
placed by Contract owners on that Business Day), executing such requests on a
daily basis at the net asset value next computed after receipt and acceptance by
the Fund or its agent of the request for redemption. For purposes of this
Section 1.1, the Insurer will be the designee of the Fund for receipt of
requests for redemption from each Separate Account and receipt by such designee
will constitute receipt by the Fund; provided the Fund receives notice of such
requests for redemption by 11:00 a.m. Eastern Time on the next following
Business Day or such later time as permitted by Section I.I (c) hereof.
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( c) The Fund or its designated agent will provide closing net asset
value, dividend and capital gain information for each Portfolio to Insurer via
electronic means on each Business Day as soon as reasonably practical after the
Fund calculates the Portfolio's net asset value. The Fund or its designated
agent will use its best efforts to provide this information by 6:00 p.m.,
Eastern time each Business Day. In the event that the Fund is unable to meet
the 6:00 p.m. time stated herein, it shall provide additional time for the
Insurer to place orders for the purchase and redemption of Fund shares and wire
net payments for the purchase of Fund shares. Such additional time shall be
equal to the additional time which the Fund takes to make the net asset value
available to the Insurer. If the Fund provides the Insurer materially incorrect
net asset value per share information (as determined under SEC guidelines), the
Fund shall make an adjustment to the number of shares purchased or redeemed for
the Separate Accounts to reflect the correct net asset value per share, and the
Adviser shall bear the cost of correcting such errors and shall reimburse the
Insurer for any expenses incurred related to correction of the net asset value
(including correcting Contract owner accounts). Any material error in the
calculation or reporting of net asset value per share, dividend or capital gain
information shall be reported to the Insurer upon discovery by the Fund.
Insurer will use these data to calculate unit values, which in turn will be
used to process transactions that receive that same Business Day's Separate
Account Division's unit values. Such Separate Account processing will be done
the same evening, and corresponding orders with respect to Fund shares will be
placed the morning of the following Business Day. Insurer will use its best
efforts to place such orders with the Fund by 11:00 a.m., Eastern Time.
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1.2 TIMELV PAYMENTS.
Insurer will transmit orders for purchases and redemptions of Fund shares
to Distributor, and will wire payment for net purchases to a custodial account
designated by the Fund on the next Business Day after the order for Fund shares
is placed. Fund shall pay for net redemptions by wiring federal funds to an
account designated by Insurer on the next Business Day after the order is
placed, to the extent practicable, and in any event be made within six calendar
days after the date the order is placed in order to enable Insurer to pay
redemption proceeds within the time specified in Section 22(e) of the Investment
Company Act of 1940, as amended (the "1940 Act").
1.3 AVAILABILITV OF SHARES.
(a) The Fund agrees to make shares of the Portfolios available
continuously for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days on
which the Fund calculates its Portfolio net asset value pursuant to rules of
the Commission and the Fund shall calculate such net asset value on each day
which the NYSE is open for regular trading; provided, however, that the Board
of Directors of the Fund (the "Fund 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 Fund Board, acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of such
Portfolio.
(b) The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, qualified
pension and retirement plans. No shares of any
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Portfolio will be sold directly to the general public.
(c) Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Insurer or to any Separate
Account. Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Separate Account or the appropriate sub-account of
each Separate Account.
1.4 INCOME. DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
The Fund will furnish same day notice (by facsimile) to the Insurer of
the declaration of any income, dividends or capital gain distributions payable
on each Portfolio's shares. Insurer hereby elects to reinvest all dividends and
capital gains distributions in additional shares of the corresponding Portfolio
at the ex-dividend net asset values until Insurer otherwise notifies the Fund in
writing. The Insurer reserves the right to revoke this election and to receive
all such dividends and distributions in cash. The Fund will notify the Insurer
of the number of shares so issued as payment of such income, dividends and
distributions.
SECTION 2. PROSPECTUS AND PROXY STATEMENTS
2.1 At least annually (or in the case of a prospectus supplement, when
such supplement is issued), the Fund will timely provide the Insurer with as
many copies of the current Fund prospectus (describing only the Portfolio(s) and
any supplements thereto as the Insurer may reasonably request for distribution,
at the Fund's expense, to Contract owners at the time of Contract fulfillment
and confirmation. To the extent that the Portfolio(s) are one or more of
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several Portfolios of the Fund, the Fund shall bear the cost of providing the
Insurer only with disclosure related to the Portfolio(s). The Fund will provide,
at the Fund's expense, as many copies of said prospectus as necessary for
distribution, at the Fund's expense, to existing Contract owners. The Fund will
provide the copies of said prospectus to the Insurer or to Insurer's designated
mailing agent". The Insurer will distribute the prospectus to existing Contract
owners and will xxxx the Fund for the reasonable cost of such distribution. The
Fund shall provide the Insurer, at the Insurer's expense, with as many copies of
the current Fund prospectus (describing only the Portfolios) and any supplement
thereto, as the Insurer may reasonably request for distribution to prospective
purchasers of Contracts. If requested by the Insurer, in lieu thereof, the Fund
will provide such documentation, including a final copy of a current prospectus
set in type at the Fund's expense, and other assistance as is reasonably
necessary in order for the Insurer at least annually (or more frequently if the
Fund prospectus is amended more frequently) to have the new prospectus for the
Contracts and the Fund's new prospectus printed together, in which case the Fund
agrees to pay its proportionate share of reasonable expenses directly related to
the required disclosure of information concerning the Fund. The Fund will, upon
request, provide the Insurer with a copy of the Fund's prospectus through
electronic means to facilitate the Insurer's efforts to provide Fund
prospectuses via electronic delivery, in which case the Fund agrees to pay its
proportionate share of reasonable expenses related to the required disclosure of
information concerning the Fund.
2.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available upon request. The Fund will
provide the Insurer, at the Fund's expense, with as many copies of the SAI and
any supplements thereto as the Insurer may ablegal- 646509 vi 7
reasonably request for distribution, at the Fund's expense, to prospective
Contract owners and applicants. The Fund will provide, at the Fund's expense, as
many copies of said XXx as necessary for distribution, at the Fund's expense, to
any existing Contract owner who requests said XXx or whenever state or federal
law requires that such statement be provided. The Fund will provide the copies
of said XXx to the Insurer or to Insurer's designated mailing agent. The Insurer
will distribute the XXx as requested or required and will xxxx the Fund for the
reasonable cost of such distribution.
2.3 The Fund, at its expense, will provide the Insurer or Insurer's
designated mailing agent with copies of its proxy material, if any, reports to
shareholders/Contract owners and other permissible communications to
shareholders/Contract owners in such quantity as the Insurer will reasonably
require. The Insurer will distribute this proxy material, reports and other
communications to existing Contract owners and will xxxx the Fund for the
reasonable cost of such distribution.
2.4 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will provide for
annual meetings (except insofar as the Commission may interpret Section 16 of
the 1940 Act not to require such meetings) or, as the Fund currently intends, to
comply with Section 16(c) of the 1940 Act (although the Fund is not one of the
trusts described in Section 16(c) of the 0000 Xxx) as well as with Sections
16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of directors and with whatever rules
the Commission may promulgate with respect thereto.
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SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
The Fund will bear the cost of its registering as a management investment
company under the 1940 Act and registering its shares under the Securities Act
of 1933, as amended (the "1933 Act"), and keeping such registrations current and
effective and qualifying Fund shares; including, without limitation, the
preparation of and filing with the SEC of Forms N-CSR, N-SAR and Rule 24f-2
Notices respecting the Fund and its shares and payment of all applicable
registration or filing fees with respect to any of the foregoing. Insurer will
bear the cost of registering the Separate Account as a unit investment trust
under the 1940 Act and registering units of interest under the Contracts under
the 1933 Act and keeping such registrations current and effective; including,
without limitation, the preparation and filing with the SEC of Forms N-SAR and
Rule 24f-2 Notices respecting the Separate Account and its units of interest and
payment of all applicable registration or filing fees with respect to any of the
foregoing.
3.3 OTHER (NON-SALES-RELATED) EXPENSES.
The Fund will bear the costs of preparing, filing with the SEC and
setting for printing the Fund's prospectus, statement of additional information
and any amendments or supplements thereto
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(collectively, the "Fund Prospectus"), Fund periodic reports to
Shareholders/Participants (as defined below), Fund proxy material and other
shareholder/Participant communications relating to the Funds and any related
requests for voting instructions from Participants. The Fund will bear the costs
of the preparation of all statements and notices required by any federal or
state law; all taxes on the issuance or transfer of the Fund's shares; any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act; and other costs associated with preparation
of prospectuses and SAls for the Portfolios in electronic or typeset format, as
well as any distribution and other expenses as set forth in Article II of this
Agreement. Insurer will bear the costs of preparing, f1ling with the SEC and
setting for printing, the Separate Account's prospectus relating to the
Contracts, statement of additional information and any amendments or supplements
thereto (collectively, the "Contract Prospectus"), any periodic reports to
owners relating to the Contracts, annuitants or participants under the Contracts
(collectively, "Participants"), and other Participant communications relating to
the Contracts. The Fund and insurer each will bear the costs of printing in
quantity and delivering to existing Participants the documents as to which it
bears the cost of preparation as set forth above in this Section 3.3, it being
understood that reasonable cost allocations will be made in cases where any such
Fund and Insurer documents are printed or mailed on a combined or coordinated
basis.
3.4 OTHER SALES-RELATED EXPENSES.
Expenses of distributing the Portfolio's shares and the Contracts will
be paid by Contracts Distributor and other parties, as they shall determine by
separate agreement.
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3.5 PARTIES TO COOPERATE.
The Adviser, Insurer, Contracts Distributor, and Distributor each agrees
to cooperate with the others, as applicable, in arranging to print, mail and/or
deliver combined or coordinated prospectuses or other materials of the Fund and
Separate Account.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) The Fund and Adviser represent and warrant that each Portfolio is
currently qualified as a regulated investment company ("RIC") under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), and that they
will maintain such qualification (under Subchapter M or any successor or
similar provision) and that no other Participating Insurance Company will
purchase shares in any Portfolio for any purpose or under any circumstances
that would preclude the Insurer from "looking through" to the investments of
each Portfolio in which it invests, pursuant to the "look through" rules found
in Treasury Regulation 1.817-5. The Fund, Adviser or Distributor will notify
Insurer 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.
(b) Insurer represents that it believes, in good faith, that the
Contracts are and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code and that
it will make every effort to maintain such treatment. Insurer will notify the
Fund and Distributor immediately upon having a reasonable basis for believing
that any of the Contracts have ceased to be so treated or that they might not be
so treated in the future; provided,
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however, that the Insurer makes no representation or undertaking regarding any
Contract to the extent such representation or undertaking is dependent on
compliance by any investment vehicle in which the Insurer or a Separate Account
may invest with the requirements of Subchapter M or Section 8l7(h) of the Code,
the regulations thereunder, or any successor provision.
(c) Insurer represents that it believes, in good faith, that the
Separate Account is a "segregated asset account" and that interests in the
Separate Account are offered exclusively through the purchase of or transfer
into a "variable contract," within the meaning of such terms under Section
8l7(h) of the Code and the regulations thereunder. Insurer will make every
effort to continue to meet such definitional requirements and will notify the
Fund and Distributor 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.
(d) The Fund and Adviser represent and warrant that for each quarter
each Portfolio of the Fund does and will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Code and the regulations issued thereunder;
including, but not limited to, that the Fund will at all times comply with the
diversification requirements of Section 8l7(h) of the Code and any regulations
thereunder applicable to variable contracts as defined in Section 817(d) of the
Code and any amendments or other modifications or successor provisions to such
Sections or regulations (and any revenue rulings, revenue procedures, notices,
and other published announcements of the Internal Revenue Service interpreting
those Sections or regulations), as if those requirements applied directly to
each such Portfolio. The Fund will notify the Insurer immediately upon having a
reasonable basis for believing that the Fund or a Portfolio thereunder has
ceased to comply with the diversification
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requirements or that the Fund or Portfolio might not comply with the
diversification requirements in the future. In the event of a breach of this
representation and warranty the Fund will take all reasonable necessary steps to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.
(e) The Insurer represents and warrants that it will not purchase shares
of the Portfolio(s) with assets derived from tax-qualified retirement plans
except, indirectly, through Contracts purchased in connection with such plans.
(f) The Adviser agrees to provide the Insurer with a certificate or
statement indicating compliance by each Portfolio of the Fund with Section
817(h) of the Code, such certificate or statement to be sent to the Insurer no
later than thirty (30) days following the end of each calendar quarter.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) The Adviser will use its best efforts to cause the Fund to comply
with any applicable state insurance laws or regulations, to the extent
specifically requested in writing by Insurer. If it cannot comply, it will so
notify Insurer in writing.
(b) Insurer represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has full corporate power) authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement and (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under Maryland law.
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(d) Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(e) Fund, Adviser and Distributor represent and warrant that the Fund is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Maryland and has full power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement
(f) Adviser represents and warrants that it is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement
(g) The Fund and Adviser represent and warrant that the Fund is and
shall maintain compliance with Rule 38a-1 under the 1940 Act and Adviser
represents and warrants that the Adviser is and shall maintain compliance with
Rule 206(4)-7 under the Advisers Act.
4.3 SECURITIES LAWS.
(a) Insurer represents and warrants that (i) interests under the
Contracts will be registered under the 1933 Act to the extent required by the
1933 Act and the Contracts will be duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Separate Account is and will remain
registered under the 1940 Act to the extent required by the 1940 Act, (iii) the
Separate Account does and will comply in all material respects with the
requirements of the 1940 Act and the rules
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thereunder, (iv) the Separate Account's 1933 Act registration statement relating
to the Contracts, together with any amendments thereto, will, at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder, and (v) the Contract Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) The Fund, Adviser and Distributor represent and warrant that (i)
Portfolio shares sold pursuant to this Agreement will be registered under the
1933 Act to the extent required by the 1933 Act and duly authorized for issuance
and sold in compliance with applicable law, (ii) the Fund is and will remain
registered as an open-end management investment company under the 1940 Act for
so long as such Portfolio shares are sold, (iii) the Fund will amend the
registration statement for its shares under the 1933 Act and itself under the
1940 Act from time to time as required in order to effect the continuous
offering of its shares, (iv) the Fund does and will comply in all material
respects with the requirements of the 1940 Act and the rules thereunder, (v) the
Fund's 1933 Act registration statement, together with any amendments thereto,
will at all times comply in all material respects with the requirements of the
1933 Act and rules thereunder, and (vi) the Fund Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(c) The Fund will register and qualify its shares for sale in accordance
with the laws of any state or other jurisdiction only if and to the extent
reasonably deemed advisable by the Fund, Insurer or any other life insurance
company utilizing the Fund.
(d) Distributor and Contracts Distributor each represents and warrants
that it is registered as a broker-dealer with the SEC under the Securities
Exchange Act of 1934, as amended, and will remain duly registered under all
applicable federal and state securities laws, and is a member in
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good standing of the National Association of Securities Dealers Inc. (the
"NASD"). Distributor represents and warrants that it serves as principal
underwriter/distributor of the Fund and that it will perform its obligations for
the Fund in accordance in all material respects with the laws of the state of
Maryland and any applicable state and federal securities laws.
(e) The Fund and Adviser represent and warrant that all of the Fund's
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and 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 as required currently by Rule 17g-(I) of the 1940 Act or
related provisions as may be promulgated from time to time.
(f) The Adviser represents and warrants that it is lawfully organized
and validly existing under the laws of the state of Delaware; it is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and will remain duly registered under all applicable federal and
state securities laws; and that it will perform its obligations for the Fund in
accordance in all material respects with the laws of the state of Delaware and
any applicable state and federal securities laws.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) Distributor or the Fund shall immediately notify Insurer of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Fund Prospectus, (iii) the
initiation of any
16
proceedings for that purpose or for any other purpose relating to the
registration or offering of the Fund's shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Fund shares in any
state or jurisdiction, including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law or (y) such law
precludes the use of such shares as an underlying investment medium of the
Contracts issued or to be issued by Insurer. Distributor and the Fund will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Insurer and Contracts Distributor shall immediately notify the Fund
of (i) the issuance by any court or regulatory body of any stop order, cease and
desist order or similar order with respect to the Separate Account's
registration statement under the 1933 Act relating to the Contracts or the
Contract Prospectus, (ii) the initiation of any proceedings for that purpose or
for any other purpose relating to the registration or offering of the Separate
Account interests pursuant to the Contracts, or (iii) any other action or
circumstances that may prevent the lawful offer or sale of said interests in any
state or jurisdiction, including, without limitation, any circumstances in which
said interests are not registered and, in all material respects, issued and sold
in accordance with applicable state and federal law. Insurer and Contracts
Distributor will make every reasonable effort to prevent the issuance of any
such stop order, cease and desist order or similar order and, if any such order
is issued, to obtain the lifting thereof at the earliest possible time.
4.5 INSURER TO PROVIDE DOCUMENTS.
Upon request, Insurer will provide the Fund and the Distributor one
complete copy of SEC registration statements, definitive Contract Prospectuses,
reports, any preliminary and final voting
17
instruction solicitation material, applications for exemptions, requests for
no-action letters, and amendments to any of the above, that relate to the
Separate Account or the Contracts, within a reasonable time after the filing of
such document with the SEC or other regulatory authorities (except that with
respect to post-effective amendments to such Prospectuses and SAls, only those
prospectuses and SAls that relate to or refer to the Fund will be provided).
4.6 FUND TO PROVIDE DOCUMENTS.
Upon request, the Fund will provide to Insurer one complete copy of SEC
registration statements, Fund Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the Fund or its shares,
within a reasonable time after the filing of such document with the SEC or other
regulatory authorities.
4.7 SHAREHOLDER INFORMATION
Notwithstanding anything in this Agreement to the contrary, prior to the
implementation of the Shareholder Information Agreement described in Section
20( e) hereto, or the date by which funds must be able to request and promptly
receive shareholder identity and transaction information pursuant to
shareholder information agreements pursuant to Rule 22c-2, whichever is
earlier, the parties agree that they will work together in good faith to
establish procedures providing the Fund through the Distributor with such
information as the Distributor may convey that the Fund considers necessary or
desirable to review the possible existence and extent of market timing by any
Contract owner.
4.8 The Insurer will furnish, or will cause to be furnished, to the Fund
or the Adviser,
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each piece of sales literature or other promotional material in which the Fund
or the Adviser is named, at least ten (10) Business Days prior to its use. No
such material will be used if the Fund or the Adviser reasonably objects to such
use within five (5) Business Days after receipt of such material.
4.9 The Insurer will 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, prospectus or XXx for
Fund shares, as such registration statement, prospectus and XXx may be amended
or supplemented from time to time, or in reports or proxy statements for the
Fund, or in published reports for the Fund which are in the public domain or
approved by the Fund or the Adviser or their designees for distribution, or in
sales literature or other material provided by the Fund or by the Adviser,
except with permission of the Fund or the Adviser or their designees. The Fund
and the Adviser agree to respond to any request for approval on a prompt and
timely basis.
4.10 The Fund or the Adviser will furnish, or will cause to be
furnished, to the Insurer or its designee, each piece of sales literature or
other promotional material in which the Insurer or its separate account is
named, at least ten (10) Business Days prior to its use. No such material will
be used if the Insurer or its designee reasonably objects to such use within
five (5) Business Days after receipt of such material. 4.11 The Fund and the
Adviser will not give any information or make any representations or statements
on behalf of the Insurer or concerning the Insurer, each Separate Account, or
the Contracts other than the information or representations contained in a
registration statement, prospectus or XXx for the Contracts, as such
registration statement, prospectus and XXx may be amended or supplemented from
time to time, or in published reports for each Separate ablegal- 646509 vI 19
Account or the Contracts which are in the public domain or approved by the
Insurer for distribution to Contract owners, or in sales literature or other
material provided by the Insurer, except with written permission of the Insurer.
The Insurer agrees to respond to any request for approval on a prompt and timely
basis.
4.12 The Fund and Adviser will provide the Insurer with as much notice
as is reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Fund's registration statement, particularly any
change resulting in a change to the registration statement or prospectus or
statement of additional information for any Separate Account. The Fund and
Adviser will cooperate with the Insurer so as to enable the Insurer to solicit
proxies from Contract owners or to make changes to its prospectus, statement of
additional information or registration statement, in an orderly manner. The Fund
and Adviser will make reasonable efforts to attempt to have changes affecting
Contract prospectuses become effective simultaneously with the annual updates
for such prospectuses.
4.13 For purposes of this Section 4, the phrase "sales literature or
other promotional Material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (i.e., on-
line networks such as the Internet or other electronic messages)), 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, registration statements,
prospectuses, SAls, shareholder reports, and proxy materials
20
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The Fund represents and warrants it has obtained an order exempting it
from certain provisions of the 1940 Act and rules thereunder so that the Fund
is available for investment by certain other entities, including, without
limitation, separate accounts funding variable life insurance policies and
separate accounts of insurance companies unaffiliated with Insurer ("Mixed and
Shared Funding Order"). The Parties recognize that the SEC has imposed terms
and conditions for such orders that are substantially identical to many of the
provisions of this Section 5.
5.2 DISINTERESTED DIRECTORS.
The Fund agrees that its Board of Directors shall at all times consist
of directors a majority of whom (the "Disinterested Directors") are not
interested persons of Adviser or Distributor within the meaning of Section
2(a)(19) of the 1940 Act.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
The Fund agrees that its Board of Directors will monitor each Portfolio
for the existence of any material irreconcilable conflict between the interests
of the participants in all separate accounts of life insurance companies
utilizing the Fund, including the Separate Account. Insurer agrees to inform
the Board of Directors of the Fund of the existence of or any potential for any
such material irreconcilable conflict of which it is aware. The concept of a
"material irreconcilable conflict' is not
21
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or by participants
of different life insurance companies utilizing the Fund; or
(f) a decision by a life insurance company utilizing the Fund to
disregard the voting instructions of participants.
Insurer will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably necessary for the Board of Directors to consider any issue raised,
including information as to a decision by Insurer to disregard voting
instructions of Participants.
22
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Insurer and the other life insurance
companies utilizing the Fund will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including:
(i) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including another
Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected
participants and, as appropriate, segregating the assets of any
particular group (e.g., annuity contract owners or participants,
life insurance contract owners or all contract owners and
participants of one or more life insurance companies utilizing
the Fund) that votes in favor of such segregation, or offering
to the affected contract owners or participants the option of
making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a Management
Company.
(b) If the material irreconcilable conflict arises because of Insurer's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a
23
majority vote, Insurer may be required, at the Fund's election, to withdraw the
Separate Account's investment in the Fund and terminate this Agreement with
respect to such sub-account; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will be imposed
as a result of such withdrawal. Any such withdrawal must take place within six
months after the Fund gives written notice to Insurer that this provision is
being implemented or such period as may be required to obtain any necessary
exemptive relief from the Commission with regard to the substitution of
underlying funds. Until such withdrawal Distributor and the Fund shall continue
to accept and implement orders by Insurer for the purchase and redemption of
shares of the Fund.
(c) If an irreconcilable material conflict arises because a particular
state insurance regulator's decision applicable to Insurer conflicts with the
majority of other state regulators, then Insurer will withdraw the Separate
Account's investment in the Fund and terminate this Agreement with respect to
such sub-account; provided, however, that such withdrawal and termination will
be limited to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such withdrawal. Any
such withdrawal and termination must take place within six months after the
Fund's Board of Directors informs Insurer in writing that it has determined that
such decision has created an irreconcilable material conflict or such period as
may be required to obtain any necessary exemptive relief from the Commission
with regard to the substitution of underlying funds. Until such withdrawal
Distributor and Fund shall continue to accept and implement orders by Insurer
for the purchase and redemption of shares of the Fund.
24
(d) Insurer agrees that any remedial action taken by it in resolving any
irreconcilable material conflict with respect to the Separate Accounts will be
carried out at its expense and with a view only to the interests of
Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any
irreconcilable material conflict. In no event, however, will the Fund or
Distributor be required to establish a new funding medium for any Contracts.
Insurer will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants affected by the irreconcilable material conflict.
5.5 NOTICE TO INSURER.
The Fund will promptly make known in writing to Insurer the Board of
Directors' determination of the existence of a irreconcilable material conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Insurer and the Fund will at least annually submit to the Board of
Directors of the Fund such reports, materials or data as the Board of Directors
may reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
25
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which the Fund is serving as an investment medium
for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to mixed and shared funding, the Parties agree that they will comply
with the terms and conditions thereof and that the terms of this Section 5
shall be deemed modified if and only to the extent required in order also to
comply with the terms and conditions of such exemptive relief that is afforded
by any of said rules that are applicable.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
(a) at the option of Insurer or Distributor upon at least six months
advance written notice to the other Parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise agreed in a
separate written agreement among the parties, or
(b) at the option of the Fund upon (i) at least sixty days advance
written notice to the other Parties, and (ii) approval by a majority of the
disinterested Directors upon a finding that a continuation of this Contract is
contrary to the best interests of the Fund; or
26
(c) at the option of the Fund, upon written notice to the other Parties,
upon institution of formal proceedings against Insurer or Contracts Distributor
by the NASD, the SEC, any state insurance regulator or any other regulatory body
if the Fund reasonably determines in good faith that such proceedings, or the
facts on which such proceedings would be based, have a material likelihood of
imposing material adverse consequences on the Portfolio to be terminated; or
(d) at the option of Insurer, upon written notice to the other Parties,
upon institution of formal proceedings against the Fund, Adviser, or Distributor
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body if Insurer reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material likelihood of imposing
material adverse consequences on Insurer, Contracts Distributor or the Division
corresponding to the Portfolio to be terminated; or
(e) at the option of any Party, upon written notice to the other
Parties, in the event that (i) the Portfolio's shares are not registered and, in
all material respects, issued and sold in accordance with any applicable state
and/or federal law or (ii) such law precludes the use of such shares as an
underlying investment medium of the Contracts issued or to be issued by Insurer;
or
(f) upon termination of the corresponding Division's investment in the
Portfolio pursuant to Section 5 hereof; or
(g) at the option of Insurer, upon written notice to the other Parties,
with respect to any Portfolio, if the Portfolio ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if the
Insurer reasonably and in good faith believes that the Portfolio may fail to so
qualify; or
(h) at the option of Insurer, upon written notice to the other Parties,
with respect to any Portfolio, if the Portfolio fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if the Insurer
reasonably and in good faith believes the Portfolio may fail to meet such
requirements; or
(i) at the option of the Insurer, upon written notice to the other
parties, with respect to any Portfolio if shares of the Portfolio are not
reasonably available to meet the requirements of the Contracts as determined in
good faith by the Insurer; or
(j) at the option of any party to this Agreement, upon written notice to
the other parties, upon another party's material breach of any provision of this
Agreement; or
(k) at the option of the Insurer, if the Insurer determines in its sole
judgment exercised in good faith that the Fund, the Adviser or Distributor has
suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the business
and operations of the Fund, Adviser or Distributor and hence to the Insurer; or
(1) at the option of the Fund or the Adviser, if the Fund or Adviser
respectively, determines in its sole judgment exercised in good faith that the
Insurer has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Fund or the Adviser, such termination to
be effective sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
28
(m) at the option of the Insurer or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners having an
interest in the Separate Account (or any sub-account) to substitute the shares
of another investment company for the corresponding Portfolio's shares of the
Fund in accordance with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying portfolio. The Insurer will
give sixty (60) days' prior written notice to the Fund of the date of any
proposed vote or other action taken to replace the Fund's shares or of the
filing of any required regulatory approva1(s).
6.2 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES
Notwithstanding any termination of this Agreement, the Fund, Adviser and
Distributor shall continue to make available shares of the Portfolios pursuant
to the terms and conditions of this Agreement, for all Contracts in effect on
the effective date of termination of this Agreement (the "Existing Contracts"),
except as otherwise provided under Section 5 of this Agreement. Specifically,
and without limitation, the Distributor shall facilitate the sale and purchase
of shares of the Portfolios as necessary in order to process premium payments,
surrenders and other withdrawals, and transfers or reallocations of values
under Existing Contracts.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATIONS.
All representations and warranties and indemnifications will survive the
termination of this Agreement. In addition, with respect to Existing Contracts,
all provisions of this Agreement also will survive and not be affected by any
termination of this Agreement.
29
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The other Parties hereto agree to cooperate with and give reasonable
assistance to Insurer in taking all necessary and appropriate steps for the
purpose of ensuring that the Separate Account owns no shares of a Portfolio
after the Final Termination Date with respect thereto.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
SECTION 9. CLASS B DISTRIBUTION PAYMENTS
From time to time during the term of this Agreement the Distributor may
make payments to the Contracts Distributor pursuant to a distribution plan
adopted by the Fund with respect to the Class B shares of the Portfolios
pursuant to Rule 12b-l under the 1940 Act (the "Rule 12b-l Plan) in
consideration of the Contracts Distributor's furnishing distribution services
relating to the Class B shares of the Portfolios and providing administrative,
accounting and other services, including personal service and/or the
maintenance of Participant accounts, with respect to such shares. The
Distributor has no obligation to make any such payments, and the Contracts
Distributor waives any such payment, until the Distributor receives monies
therefore from the Fund, which the Fund represents shall be promptly paid. Any
such payments made pursuant to this Section 9 shall be subject to the
following terms and conditions:
(a) Any such payments shall be in such amounts as the Distributor may
from time to time advise the Contracts Distributor in writing but in any event
not in excess of the amounts permitted by the Rule 12bo l Plan. Such payments
may include a service fee in the amount of .25 of 1 % per annum of the average
daily net assets of the Fund attributable to the Class B shares of a Portfolio
held by clients of the Contracts Distributor. Any such service fee shall be
paid solely for personal service and/or the maintenance of Participant
accounts.
(b) The provisions of this Section 9 relate to a plan adopted by the
Fund pursuant to Rule 12b-l. In accordance with Rule 12b-l, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to this Section 9 shall provide the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
(c) The provisions of this Section 9 shall remain in effect for not more
than a year and thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually in conformity with Rule
12b-1 and the 1940 Act. The provisions of this Section 9 shall automatically
terminate in the event of the assignment (as defined by the 0000 Xxx) of this
Agreement, in the event the Rule 12b-l Plan terminates or is not continued or
in the event this Agreement terminates or ceases to remain in effect. In
addition, the provisions of this Section 9 may be terminated at any time,
without penalty, by either the Distributor or the Contracts Distributor with
respect to any Portfolio on not more than 60 days' nor less than 30 days'
written notice delivered or mailed by registered mail, postage prepaid, to the
other party.
31
SECTION 10. NOTICES
Notices and communications required or permitted by Section 2 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given
to the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
32
OM Financial Life Insurance Company
0000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Securities Counsel (Xxx Xxxxx)
FAX: (000) 000-0000
AllianceBemstein Investments, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn.: Xxxxxx X. Xxxxx
FAX: (000) 000-0000
AllianceBemstein L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxx
FAX: (000) 000-0000
SECTION 11. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
Insurer will distribute all proxy material furnished by the Fund to
Participants. Insurer will (a) vote Fund shares in accordance with instructions
received from Participants; and (b) vote Fund shares that are attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Fund shares for which said instructions have been received
from Participants so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass- through voting privileges for variable
contract owners. The Insurer reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law. Other
participating life insurance companies utilizing the Fund will be responsible
for calculating voting privileges in a manner consistent with that of Insurer,
as prescribed by this Section 11.
33
SECTION 12. FOREIGN TAX CREDITS
The Adviser agrees to consult in advance with Insurer concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to the Fund's shareholders.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION OF FUND. DISTRIBUTOR AND ADVISER BY INSURER.
(a) Except to the extent provided in Sections 13.1(b) and 13.1
(c), below, Insurer agrees to indemnify and hold harmless the Fund, Distributor
and Adviser, each of their directors and officers, and each person, if any, who
controls the Fund, Distributor or Adviser within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 13. 1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Insurer) or
actions in respect thereof (including, to the extent reasonable, 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 actions are related to the sale, acquisition, or holding
of the Fund's shares 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 the Prospectus for the Contracts, the
Contracts or, to the extent prepared by Insurer or Contracts
Distributor, sales literature or advertising for the Contracts (or
any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission
34
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
Insurer or Contracts Distributor by or on behalf of the Fund,
Distributor or Adviser for use in the registration statement or
the Prospectus for the Contracts, the Contracts, or in sales
literature or advertising (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any other statements or
representations by or on behalf of the Insurer (other than
statements or representations contained in the Fund's 1933 Act
registration statement, Fund Prospectus, sales literature or
advertising of the Fund, or any amendment or supplement to any
of the foregoing, not supplied for use therein by or on behalf
of Insurer or Contracts Distributor) or the grossly negligent,
illegal or fraudulent conduct of Insurer or Contracts
Distributor or persons under their control (including, without
limitation, their employees and "Associated Persons," as that
term is defined in paragraph (m) of Article I of the NASD's
By-Laws ("Associated Persons,">>, in connection with 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 any material fact contained in the Fund's
1933 Act registration statement, Fund Prospectus, sales
literature or advertising of the Fund, or any amendment or
35
supplement to any of the foregoing, 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 Fund,
Adviser or Distributor by or on behalf of Insurer or Contracts
Distributor for use in the Fund's 1933 Act registration
statement, Fund Prospectus, sales literature or advertising of
the Fund, or any amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by Insurer or Contracts
Distributor to perform the obligations, provide the services and
furnish the materials required of them under the terms of this
Agreement; or
(v) arise out of any material breach of any representation and/or
warranty made by the Insurer in this Agreement or arise out of or
result from any other material breach by the Insurer of this
Agreement.
(b) Insurer shall not be liable under this Section 13.1 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties
under this Agreement or by reason of that Indemnified Party's reckless disregard
of obligations or duties under this Agreement or to Distributor, Adviser or the
Fund.
(c) Insurer shall not be liable under this Section 13.1 with respect to
any action against an Indemnified Party unless the Fund, Distributor or Adviser
shall have notified Insurer in writing within a reasonable time after the
summons or other first legal process giving information of the nature of
36
the action 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 Insurer of any such action shall not relieve
Insurer from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 13.1,
except to the extent that the failure to notify results in the failure of actual
notice to the Insurer and such Insurer is damaged solely as a result of failure
to give such notice. In case any such action is brought against an Indemnified
Party, Insurer shall be entitled to participate, at its own expense, in the
defense of such action. Insurer also shall be entitled to assume the defense
thereof, with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from Insurer to
such Indemnified Party of Insurer's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Insurer and shall bear the fees and
expenses of any additional counsel retained by it, and Insurer 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 unless:
(i) the Insurer and the Indemnified Party will have mutually agreed
to the retention of such counsel; or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the Insurer and the Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Insurer will not be liable for any settlement
of any proceeding effected without its written consent but if
settled with such consent or if there is a final judgment for the
plaintiff, the Insurer agrees to indemnify the Indemnified
37
Party from and against any loss or liability by reason of such
settlement or judgment. A successor by law of the parties to this
Agreement will be entitled to the benefits of the indemnification
contained in this Section 13.
13.2 INDEMNIFICATION OF INSURER AND CONTRACTS DISTRIBUTOR BY ADVISER
AND DISTRIBUTOR.
(a) Except to the extent provided in Sections 13.2(d) and 13.2(e),
below, Adviser and Distributor, jointly and severally, agree to indemnify and
hold harmless Insurer and Contracts Distributor, each of their
directors/trustees, officers, employees and agents, and each person, if any, who
controls Insurer or Contracts Distributor within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 13.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Adviser) or
actions in respect thereof (including, to the extent reasonable, 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 actions are related to the sale, acquisition, or holding
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 Fund's
1933 Act registration statement, Fund Prospectus, Fund SAI,
sales literature or advertising of the Fund or sales literature
or advertising 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
38
statement or omission was made in reliance upon and in conformity
with information furnished to Distributor, Adviser or the Fund by
or on behalf of Insurer or Contracts Distributor for use in the
Fund's 1933 Act registration statement, Fund Prospectus, or in
sales literature or advertising (or any amendment or supplement
to any of the foregoing) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the registration statement, Prospectus, sales
literature or advertising for the Contracts, or any amendment or
supplement to any of the foregoing, not supplied for use therein
by or on behalf of Distributor, Adviser, or the Fund) or the
grossly negligent, illegal or fraudulent conduct of the Fund,
Distributor, Adviser or persons under their control (including,
without limitation, their employees and Associated Persons), in
connection with 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 any
material fact contained in the registration statement, Prospectus,
sales literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, 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 statement or omission was made in reliance
upon and in conformity with information furnished to Insurer or
Contracts Distributor by or on behalf of the Fund, Distributor or
Adviser for use in the registration statement, Prospectus, sales
literature or
39
advertising covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor to perform the obligations, provide the services and
furnish the materials required of them 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 Adviser, Distributor or
the Fund in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser,
Distributor or the Fund;
(b) The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the diversification
requirements specified in Section 4.1 ( c) of this Agreement may result in the
Contracts not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect the Insurer's corporate tax liability. Accordingly,
without in any way limiting the effect of Section 13.2(a) hereof and without in
any way limiting or restricting any other remedies available to the Insurer,
Adviser and Distributor will pay on a joint and several basis all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Portfolio to comply with Section 4.1(c)
of this Agreement, including all costs associated with correcting or responding
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 Fund or Portfolio (including but not
limited to an order pursuant to Section 26(b) of the 1940 Act); fees and
expenses of legal counsel and other advisors to the Insurer and any federal
income taxes or tax penalties (or "toll charges" or exactments or amounts paid
in settlement) incurred by the Insurer in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund, the Adviser and/or the Distributor under
this Agreement.
(c) Adviser shall not be liable under this Section 13.2 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties
under this Contract or by reason of such Indemnified Party's reckless disregard
of its obligations and duties under this Agreement or to Insurer, Contracts
Distributor or the Separate Account.
(d) Adviser, and Distributor (the "Indemnifying Parties" for purposes of
this Section 13.2(e) shall not be liable under this Section 13.2 with respect to
any action against an Indemnified Party unless Insurer or Contracts Distributor
shall have notified Indemnifying Parties in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action 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 Indemnifying Parties of any such action shall not
relieve Indemnifying Parties from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
41
account of this Section 13.2, except to the extent that the failure to notify
results in the failure of actual notice to the Indemnifying Party and such
Indemnifying Party is damaged solely as a result of failure to give such notice.
In case any such action is brought against an Indemnified Party, Indemnifying
Parties will be entitled to participate, at its own expense, in the defense of
such action. Indemnifying Parties also shall be entitled to assume the defense
thereof (which shall include, without limitation, the conduct of any ruling
request and closing agreement or other settlement proceeding with the Internal
Revenue Service), with counsel approved by the Indemnified Party named in the
action, which approval shall not be unreasonably withheld. After notice from
Indemnifying Parties to such Indemnified Party of Indemnifying Parties election
to assume the defense thereof, the Indemnified Party will cooperate fully with
Indemnifying Parties and shall bear the fees and expenses of any additional
counsel retained by it, and Indemnifying Parties 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 unless:
(i) the Indemnifying Party and the Indemnified Party will have
mutually agreed to the retention of such counsel; or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party will
not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or
if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against
any loss or liability by
42
reason of such settlement or judgment. A successor by law of the
parties to this Agreement will be entitled to the benefits of the
indemnification contained in this Section 13.
13.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Section 13.1 (c) or l3.2 (e) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to
be an admission by the indemnifying Party of liability. culpability or
responsibility, and the indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
SECTION 14. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law without regard for that state's
principles of conflict of laws.
This Agreement will be subject to the provisions of the 1933 Act. the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including. but not limited to, the
Mixed and Shared Funding Order) and the terms hereof will be interpreted and
construed in accordance therewith.
43
SECTION 15. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 16. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 17. RIGHTS CUMULATIVE
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, that the Parties are entitled to under federal and state
laws.
SECTION 18. NON-EXCLUSIVE AGREEMENT
The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
44
SECTION 19. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 20. MISCELLANEOUS
(a) The Fund, Adviser, and Distributor acknowledge that the identities
of the customers of the Insurer or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 20(a>>, information maintained
regarding those customers, and all computer programs and procedures developed by
the Protected Parties or any of their employees or agents in connection with the
Insurer's performance of its duties under this Agreement are the valuable
property of the Protected Parties. The Fund, Adviser, and Distributor agree that
if they come into possession of any list or compilation of the identities of or
other information about the Protected Parties' customers, or any other property
of the Protected Parties, other than such information as may be independently
developed or compiled by the Fund, Adviser or Distributor from information
supplied to them by the Protected parties' customers who also maintain accounts
directly with the Fund, Adviser, or Distributor, the Fund, Adviser and
Distributor will hold such information or property in confidence and refrain
from using, disclosing or distributing any of such information or other property
except: (a) with the Insurer's prior written consent; or (b) as required by law
or judicial process. The Fund, Adviser and Distributor acknowledge that any
breach of the agreements in this Section 20(a) would result in immediate and
irreparable harm to the Protected Parties for which there would be no adequate
remedy at law and agree that in the event of such a breach, the Protected
Parties will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent jurisdiction
deems appropriate.
45
(b) Each party to this Agreement will cooperate with each other party
and all appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and will permit each other
and 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.
(c) Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as applicable, by
such party and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with
its terms.
(d) The schedules to this Agreement (each, a "Schedule," collectively,
the "Schedules") form an integral part hereof and are incorporated herein by
reference. The parties to this Agreement may agree in writing to amend the
Schedules to this Agreement from time to time to reflect changes in or relating
to the Contracts, the Separate Accounts or the Portfolios of the Fund or other
applicable terms of this Agreement. References herein to any Schedule are to the
Schedule then in effect, taking into account any amendments thereto.
(e) The parties have entered into or shall enter into a Shareholder
Information Agreement as required by Rule 22c-2 under the 1940 Act in connection
with the Contracts. To the extent that the terms of the Shareholder Information
Agreement conflict with the terms of this Agreement, the terms of the
Shareholder Information Agreement shall control to the extent required by
Rule 22c-2.
46
Name: Xxxxxxx X. XxXxxxx
Title: SVP, Secretary, General Counsel
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
OM FINANCIAL LIFE INSURANCE COMPANY
By:
----------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: SVP, Secretary, General Counsel
OLD MUTUAL FINANCIAL NETWORK SECURITIES, INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: VP, Secretary, CCO
ALLIANCE XXXXXXXXX
Name:XXXX X. XXXXXX
TITLE: SECRETARY
ALLIANCE XXXXXXXXX INVESTMENTS, INC.
By:
----------------------------------
Name:
-------------------------------
Title:
------------------------------
SCHEDULE A
SEPARATE ACCOUNT
OLD MUTUAL FINANCIAL NETWORK SEPARATE ACCOUNT VA
CONTRACTS
BEACON NAVIGATOR variable annuity
FUND PORTFOLIOS
VPS International Growth B VPS International Value B
