EXHIBIT 8(i)
M FUND, INC.
------------
PARTICIPATION AGREEMENT
With
PACIFIC LIFE INSURANCE COMPANY
AND PACIFIC LIFE & ANNUITY COMPANY
THIS AGREEMENT, made and entered into this 8th day of January 2003, by and
among M Fund, Inc., a corporation organized and existing under the laws of the
State of Maryland (the "Fund"), M Financial Investment Advisers, Inc., a
corporation organized and existing under the laws of the State of Colorado (the
"Adviser"), M Holdings Securities, Inc., a corporation organized and existing
under the laws of the State of Oregon (the "Distributor"), M Life Insurance
Company, a life insurance company organized and existing under the laws of the
State of California, Pacific Life Insurance Company, a life insurance company
organized and existing under the laws of the State of California ("Pacific
Life"); on its own behalf and on behalf of each separate account of Pacific Life
identified herein, and Pacific Life & Annuity Company, a life insurance company
organized and existing under the laws of the State of Arizona ("PL&A" and
together with Pacific Life, "Companies" or each separately as "Company"), on its
own behalf and on behalf of each separate account of PL&A identified herein.
WHEREAS, the Fund is a series-type mutual fund offering shares of
beneficial interest (the "Fund shares") consisting of one or more series
("Series") of shares ("Series shares"), each such Series share representing an
interest in a particular managed portfolio of securities and other assets; and
WHEREAS, Pacific Life, the Fund, the Advisor and the Distributor are
currently parties to a Fund Participation Agreement dated February 7, 2000, as
amended on August 7, 2000, and amended on December 11, 2001, and as amended
January 2, 2002 (the "Current Agreement"), pursuant to which Fund shares are
offered and sold to certain segregated asset accounts to Pacific Life; and
WHEREAS, the Fund was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies; and
WHEREAS, each Company desires that the Fund serve as an investment vehicle
for certain separate account(s) of each Company;
WHEREAS, the Adviser is duly registered as an investment adviser pursuant
to the Investment Advisers Act of 1940;
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD").
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser, the Distributor and the Companies agree as follows:
ARTICLE I. Additional Definitions
1.1. "Account"--each separate account of the respective Company described
more specifically in Schedule 1 to this Agreement (as may be amended from time
to time).
1.2. "Business Day"--each day that the Fund is open for business as
provided in the Fund Prospectus.
1.3. "Code"--the Internal Revenue Code of 1986, as amended.
1.4. "Contracts"--the class or classes of variable annuity contracts and
variable life insurance policies issued by the respective Company and described
more specifically on Schedule 2 to this Agreement (as may be amended from time
to time).
1.5. "Contract Owners"--the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "NASD"--National Association of Securities Dealers, Inc.
1.7. "Participating Account"--a separate account investing all or a
portion of its assets in the Fund, including the Account.
1.8. "Participating Insurance Company"--any insurance company investing
in the Fund on its behalf or on behalf of a Participating Account, including the
Companies.
1.9. "Products"--variable annuity contracts and variable life insurance
policies supported by Participating Accounts investing assets attributable
thereto in the Fund, including the Contracts.
1.10. "Product Owners"--owners of Products, including Contract Owners.
1.11. "Prospectus"--with respect to the Fund shares or a class of
Contracts or interests in the Contracts or Accounts, each version of the
definitive prospectus therefore or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Prospectus, such
reference thereto shall be deemed to be to the version last so filed prior to
the taking of such action. For purposes of Section 4.6 and Article VIII, the
term "Prospectus" shall include any statement of additional information
incorporated therein.
-2-
1.12. "Registration Statement"--with respect to the Fund shares or a class
of Contracts or interests in the Contracts or Accounts, the registration
statement filed with the SEC to register the securities issued thereby under the
1933 Act, or the most recently filed amendment thereto, in either case in the
form in which it was declared or became effective. The Contracts Registration
Statement (if any) is described more specifically on Schedule 2 to this
Agreement. The Fund Registration Statement was filed on Form N-1A (File No.
33-95472).
1.13. "1940 Act Registration Statement"--with respect to the Fund or the
Account, the registration statement filed with the SEC to register such person
as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account 1940 Act Registration Statement (if any) is
described more specifically on Schedule 2 to this Agreement. The Fund's 1940 Act
Registration Statement was filed on Form N-1A (File No. 811-9082).
1.14. "Statement of Additional Information"--with respect to the Fund or
a class of Contracts, each version of the definitive statement of additional
information or supplement thereto filed with the SEC pursuant to Rule 497 under
the 0000 Xxx.
1.15. "SEC"--the Securities and Exchange Commission.
1.16. "1933 Act"--the Securities Act of 1933, as amended.
1.17. "1940 Act"--the Investment Company Act of 1940, as amended.
1.18. "1934 Act"--The Securities Exchange Act of 1934, as amended
ARTICLE II. Sale of Fund Shares
2.1. The Fund shall make shares of those Series listed on Schedule 3 to
this Agreement available for purchase by each Company on its own behalf or on
behalf of the Account, such purchases to be effected at net asset value in
accordance with Section 2.3 of this Agreement. Notwithstanding the foregoing,
(i) Fund Series in existence now or that may be established in the future and
not listed on Schedule 3 will be made available to the Companies only as the
Adviser may so provide, and (ii) the Board of Directors of the Fund (the "Fund
Board") may suspend or terminate the offering of Fund shares of any Series or
class thereof, if such action is required by law or by regulatory authorities
having jurisdiction or if, 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, suspension or termination is necessary or in the best interests of
the shareholders of any Series (it being understood that "shareholders" for this
purpose shall mean Product Owners).
2.2. The Distributor agrees to sell to each Company those shares of the
Series offered and made available by the Fund and identified on Schedule 3 that
a Company orders on its
-3-
own behalf and on behalf of its Account and agrees to execute such orders on
each day on which the Fund calculated its net asset value in accordance with
Section 2.5 of this Agreement.
2.3. The Fund shall redeem, at a Company's request, any full or fractional
shares of the Fund held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 2.4 of
this Agreement. Notwithstanding the foregoing, the Fund may delay redemption of
Fund shares of any Series to the extent permitted by the 1940 Act or any rules,
regulations or orders thereunder.
2.4. Purchase and Redemption Procedures
(a) For purposes of Section 2.1, 2.2, and 2.3, the Fund hereby
appoints each Company, or its agent, as designee of the Fund for the
limited purpose of receiving purchase and redemption requests for shares of
the Fund based on allocations of amounts to the Account or subaccounts
thereof under the Contracts and other transactions arising out of the
Contracts. Receipt of any such request (or relevant transactional
information therefor) on any Business Day by a Company, or its agent, as
such designee of the Fund prior to the Fund's close of business as defined
from time to time in the Fund Prospectus (which as of the date of execution
of this Agreement is 4 p.m. Eastern Time) shall constitute receipt by the
Fund on that same Business Day, provided that the Fund receives notice of
such request by 10:00 a.m. Eastern Time on the next following Business Day.
(b) Each Company shall pay for shares of each Series on the same day
that the Company, or its agent, notifies the Fund of a purchase request for
such shares. Payment for Series shares shall be made in federal funds
transmitted to the Fund by wire to be received by the Fund by 11:00 a.m.
Eastern Time on the day the Fund is notified of the purchase request for
Series shares (unless the Fund determines and so advises the Company, or
its agent, that sufficient proceeds are available from redemption of shares
of other Series effected pursuant to redemption requests tendered by the
Company on behalf of the Account). If federal funds are not received on
time, such funds will be invested, and Series shares purchased thereby will
be issued, as soon as practicable.
(c) Payment for Series shares redeemed by the Account or a Company
shall be made in federal funds transmitted by wire to the Company or any
other designated person on the next Business Day after the Fund is properly
notified of the redemption order of Series shares (unless redemption
proceeds are to be applied to the purchase of Fund shares of other Series
in accordance with Section 2.4(b) of this Agreement), except that the Fund
reserves the right to delay payment of redemption proceeds to the extent
permitted under Section 22(e) of the 0000 Xxx. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds; the Companies alone shall be responsible for such
action.
-4-
(d) Any purchase or redemption requests for Fund shares that do not
result directly from transactions relating to the Contracts or the Account
shall be effected at the net asset value per share next determined after
the Fund's receipt of such request, provided that, in the case of a
purchase request, payment for Fund shares so requested is received by the
Fund in federal funds prior to close of business for determination of such
value, as defined from time to time in the Fund Prospectus.
2.5. The Fund shall use its best efforts to calculate and make the net
asset value per share for each Series available to each Company, or its agent,
by 6:00 p.m. Eastern Time each Business Day, and in any event, as soon as
reasonably practicable after the net asset value per share for such Series is
calculated, and shall calculate such net asset value in accordance with the Fund
Prospectus. Neither the Fund, any Series, the Adviser, the Distributor, nor any
of their affiliates shall be liable for any information provided to the
Companies pursuant to this Agreement to the extent such information is based on
incorrect information supplied by the Companies or any other Participating
Insurance Company or Qualified Person (as defined in Section 2.9 of this
Agreement) to the Fund, the Distributor or the Adviser.
2.6. The Fund shall furnish notice to each Company, or its agent, (by fax,
or telephone followed by written confirmation) as soon as reasonably
practicable, and no later than the same day, of any income dividends or capital
gain distributions payable on any Series shares. Each Company, on its behalf and
on behalf of its Account, hereby elects to receive all such dividends and
distributions as are payable on any Series shares in the form of additional
shares of that Series. Each Company reserves the right, on its behalf and on
behalf of its Account, to revoke this election and to receive all such dividends
and distributions in cash. The Fund shall notify the Companies promptly of the
number of Series shares so issued as payment of such dividends and
distributions.
2.7. Issuance and transfer of Fund shares shall be by book entry only.
Stock certificates will not be issued to the Companies or their Accounts
Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
2.8. (a) Each Company may withdraw its Account's investment in the Fund or
a Series of the Fund only: (i) as necessary to facilitate Contract Owner
requests; (ii) upon a determination by a majority of the Fund Board, or a
majority of disinterested Fund Board members, that an irreconcilable material
conflict exists among (x) the interests of all Product Owners or (y) the
interests of the Participating Insurance Companies investing in the Fund;
(iii) upon requisite vote of the Contract Owners having an interest in the
affected Series; (iv) as required by state and/or federal laws or regulations
or judicial or other legal precedent of general implication; (v) upon sixty
(60) days advance written notice; (vi) from a Series, upon a change in the
Portfolio Manager for that Series; or (vii) as permitted by an order of the
SEC pursuant to Section 26(b) of the 1940 Act.
-5-
(b) The Companies shall not, without the prior written consent of the
Adviser (unless otherwise required by applicable law), solicit, induce or
encourage Contract Owners to change or modify the Fund or change the Fund's
investment adviser.
2.9. The Fund and the Distributor shall sell Fund shares only to
Participating Insurance Companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase and hold shares of the Fund
under Section 817(h) of the Code. The Fund and the Distributor shall not sell
Fund shares to any insurance company, separate account or Qualified Person
unless an agreement containing provisions substantially similar to Articles II,
V, and VII of this Agreement is in effect to govern such sales (to the extent
required in order to comply with the "Exemptive Order" referred to in Section
7.1 below).
ARTICLE III. Representations and Warranties
3.1. Pacific Life represents and warrants that: (i) it is an insurance
company duly organized, validly existing and in good standing under California
insurance law; (ii) the Account is (or will be prior to the purchase by the
Company of Fund shares for the Account) a validly existing separate account,
duly established and maintained in accordance with applicable law; (iii) the
Contracts will be issued in compliance in all material respects with all
applicable federal and state laws; (iv) the Contracts currently are and at the
time of issuance will be treated as annuity contracts or life insurance policies
(including modified endowment contracts), whichever is appropriate, under
applicable provisions of the Code; and (v) the Company and its Account qualify
(or will qualify prior to the purchase by the Company of Fund shares for the
Account) to purchase and hold shares of the Fund under Section 817(h) of the
Code.
3.2. PL&A represents and warrants that: (i) it is an insurance company duly
organized, validly existing and in good standing under Arizona insurance law;
(ii) the Account is (or will be prior to the purchase by the Company of Fund
shares for the Account) a validly existing separate account, duly established
and maintained in accordance with applicable law; (iii) the Contracts will be
issued in compliance in all material respects with all applicable federal and
state laws; (iv) the Contracts currently are and at the time of issuance will be
treated as annuity contracts or life insurance policies (including modified
endowment contracts), whichever is appropriate, under applicable provisions of
the Code; and (v) the Company and its Account qualify (or will qualify prior to
the purchase by the Company of Fund shares for the Account) to purchase and hold
shares of the Fund under Section 817(h) of the Code.
3.3. The Fund represents and warrants that: (i) the Fund is a corporation
duly organized, validly existing and in good standing under Maryland law; (ii)
the Fund's 1940 Act Registration Statement has been filed with the SEC in
accordance with the provisions of the 1940 Act and the Fund is and shall remain
duly registered as an open-end management investment company thereunder; (iii)
the Fund Registration Statement has been declared effective by the SEC (or will
be declared effective before the sale by the Fund of its shares pursuant to this
Agreement); (iv) Fund shares sold pursuant to this Agreement have been duly
authorized for issuance in
-6-
accordance with applicable law; (v) the Fund currently qualifies as a "regulated
investment company" under Subchapter M of the Code and is and shall remain in
compliance with Section 817(h) of the Code; (vi) the Fund's investment policies
are in material compliance with any investment restrictions set forth on
Schedule 4 to this Agreement; and (vii) the Fund does and will comply in all
material respects with the 1940 Act. The Fund, however, makes no representation
as to whether any aspect of its operations (including, but not limited to, fees
and expenses and investment policies) otherwise complies with the insurance laws
or regulations of any state.
3.4. The Adviser represents and warrants that it is and will remain
registered in all material respects as an investment adviser under federal and
all applicable state securities laws, and shall perform its obligations
hereunder in compliance in all material respects with any such applicable state
and federal laws. The Adviser represents that it will manage the Fund consistent
with the Fund's investment objectives, policies, and restrictions.
3.5. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
3.6. 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 action, 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.
3.7. The Fund represents and warrants that all of its directors, officers,
and employees 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 as required currently by Rule 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.
3.8. Each Company represents and warrants that all of its directors,
officers, and employees 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. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
ARTICLE IV. Filings, Information and Expenses
4.1. The Fund shall amend the Fund Registration Statement and the Fund's
1940 Act Registration Statement from time to time as required in order to effect
the continuous offering of Fund shares and to maintain the Fund's registration
under the 1940 Act for so long as Fund shares are sold. The Fund shall file,
register, qualify and obtain approval of the Fund shares for sale under state
securities laws to the extent necessary to remain in compliance with state law.
-7-
4.2. Unless other arrangements are made, the Fund shall provide the
Companies with: (i) a copy, in camera-ready form or otherwise suitable for
printing or duplication, of each Fund Prospectus and any supplement thereto and
each Fund Statement of Additional Information and any supplement thereto; and
(ii) copies of the Fund's proxy materials, reports to shareholders, and other
communications to shareholders in such quantity as the Companies shall
reasonably require for distributing to Contract Owners.
4.3. The Companies shall amend each Contract's Registration Statement (if
any) and the Account's 1940 Act Registration Statement (if any) from time to
time as required in order to effect the continuous offering of the Contracts or
as may otherwise be required by applicable law. The Companies shall file,
register, qualify and obtain approval of their respective Contracts for sale to
the extent required by applicable insurance and securities laws of the various
states.
4.4. The Companies shall inform the Fund of any investment restrictions
imposed by state insurance law that may become applicable to the Fund from time
to time as a result of the Account's investment therein (including, but not
limited to, restrictions with respect to fees and expenses and investment
policies), other than those set forth on Schedule 4 to this Agreement. Upon
receipt of such information from the Companies, the Fund shall determine whether
it is in the best interests of shareholders to comply with any such
restrictions. If the Fund determines that it is not in the best interests of
shareholders (it being understood that "shareholders" for this purpose shall
mean Product Owners), the Fund shall so inform the Company, and the Fund and the
Company shall discuss alternative accommodations in the circumstances. If the
Fund determines that it is in the best interests of shareholders to comply with
such restrictions, the Fund and the Companies shall amend Schedule 4 to this
Agreement to reflect such restrictions.
4.5. The Companies shall provide Contracts, Contracts and Fund
Prospectuses, Contracts and Fund Statements of Additional Information, reports,
solicitations for voting instructions including any related Fund proxy
solicitation materials, and all amendments or supplements to any of the
foregoing, to Contract Owners and prospective Contract Owners, all in accordance
with the federal and any applicable state securities laws.
4.6. The Distributor shall sell and distribute the shares of the Series of
the Fund in accordance with the applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rule of Fair Practice, and state law.
4.7. All expenses incident to each party's performance under this Agreement
(including expenses expressly assumed by such party pursuant to this Agreement)
shall be paid by such party to the extent permitted by law.
(a) Expenses assumed by the Fund include, but are not limited to, the
costs of: (i) registration and qualification of the Fund shares under the
federal securities laws; (ii) preparation and filing with the SEC of the
Fund Prospectus, Fund Statement of Additional Information ("SAI"), Fund
Registration Statement, Fund proxy materials and
-8-
shareholder reports, and supplements thereto, and preparation of a
camera-ready copy thereof; (iii) preparation of all statements and notices
required for the Fund by any federal or state securities law; (iv) printing
and mailing to Contract Owners of all Prospectuses, SAI's, proxy materials
and reports, and supplements thereto, required to be provided by the Fund
to its shareholders; (v) all taxes on the issuance or transfer of Fund
shares; and (vi) 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. The Fund
otherwise shall pay no fee or other compensation to the Companies under
this Agreement, unless the parties otherwise agree, except that if the Fund
or any Series adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then payments may be made to the
Companies in accordance with such plan. The Fund currently does not intend
to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or in contravention of such rule, although it may
make payments pursuant to Rule 12b-1 in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have a Board of Directors, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(b) Expenses assumed by each Company include, but are not limited to,
the costs of: (i) registration and qualification of the Contracts under the
federal and any applicable state securities laws; (ii) preparation and
filing with the SEC of the Contracts Prospectus and Contracts Registration
Statement; and (iii) preparation and dissemination of all statements and
notices to Contract Owners required by any federal or state insurance law
other than those paid for by the Fund.
(c) Expenses assumed by the Distributor include, but are not limited
to the costs of printing the Fund Prospectuses and SAI's for use in
connection with the sale of the Contracts to prospective Contract owners.
4.8. Any piece of advertising or sales literature or other promotional
material prepared by a Company in which the Fund is named and which will be used
by that Company shall be furnished by the Company to the Fund not less than 15
days prior to its use. No such material shall be used without prior written
approval of the Fund. The Fund may delegate its rights and responsibilities
under this provision to the Adviser or Distributor.
4.9. Any piece of advertising or sales literature or other promotional
material in which a Company or the Account is named and which will be used by
the Fund, the Adviser or the Distributor shall be furnished by the Fund, Adviser
or the Distributor, as applicable, to that Company not less than 15 days prior
to its use. No such material shall be used without prior written approval of the
Company.
4.10. The Companies shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund to
the public (including current and
-9-
prospective Contract owners) in connection with the sale of the Contracts other
than the information or representations contained in the Fund Registration
Statement or Fund Prospectus (as such Registration Statement or Prospectus may
be amended or supplemented from time to time) or in reports or proxy statements
for the Fund, or in sales literature or other promotional material approved in
accordance with Section 4.8 of this Agreement, except with the prior written
consent of the Fund.
4.11. The Fund, the Adviser and the Distributor shall not give any
information or make any representations on behalf of the Companies or concerning
the Companies, the Account or the Contracts other than the information or
representations contained in the Contracts Registration Statement or Contracts
Prospectus (as such Registration Statement or Prospectus may be amended or
supplemented from time to time) or in published reports of the Account which are
in the public domain or approved in writing by the Companies for distribution to
Contract Owners, or in sales literature or other promotional material approved
in accordance with Section 4.9 of this Agreement except with the prior written
consent of the Companies.
4.12. The Fund and each Company shall provide to the other upon request at
least one complete copy of all Registration Statements, Prospectuses, Statements
of Additional Information, periodic and other shareholder or Contract Owner
reports, proxy statements, solicitations of voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Fund, the Contracts or the Account, as the case may
be, promptly after the filing by or on behalf of such party of such document
with the SEC or other regulatory authorities.
4.13. Each party shall provide to the other upon request copies of draft
versions of any Registration Statements, Prospectuses, Statements of Additional
Information, periodic and other shareholder or Contract Owner reports, proxy
statements, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, to the extent
that the other party reasonably needs such information for purposes of preparing
a report or other filing to be filed with or submitted to a regulatory agency.
If a party requests any such information before it has been filed, the other
party will provide the requested information if then available and in the
version then available at the time of such request.
4.14. Each party hereto shall cooperate with the other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall 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. However, such access shall not extend to attorney-client
privileged information.
-10-
4.15. Each Company reserves the right to modify any of its Contracts in any
respect whatsoever. Each Company reserves the right in its sole discretion to
suspend the sale of any of its Contracts, in whole or in part, or to accept or
reject any application for the sale of a Contract. Each Company agrees to notify
the Fund, the Distributor and the Adviser promptly upon the occurrence of any
event the Company believes might necessitate a material modification or
suspension.
4.16. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any material
constituting sales literature or advertising under the NASD rules, the 1940 Act
or the 1933 Act.
ARTICLE V. Voting of Fund Shares
5.1. With respect to any matter put to vote by the holders of Fund shares
or Series shares ("Voting Shares"), to the extent required by law (including the
Exemptive Order referred to in Section 7.1 below) each Company shall:
(a) solicit voting instructions from Contract Owners to which Voting
Shares are attributable;
(b) vote Voting Shares of each Series attributable to Contract Owners
participating in an account in accordance with instructions or proxies
timely received from such Contract Owners;
(c) vote Voting Shares of each Series attributable to Contract Owners
participating in an account for which no instructions have been received in
the same proportion as Voting Shares of such Series from Contract Owners
participating in an account for which instructions have been timely
received; and
(d) vote Voting Shares of each Series held by the Company on behalf of
the Account that are not attributable to Contract Owners in the same
proportion as Voting Shares of such Series from Contract Owners
participating in an account for which instructions have been timely
received;
(e) vote Voting Shares of each series held by the Company on its
behalf that are not attributable to Contract Owners in the same proportions
as Voting shares of such Series held by the Company's Accounts in the
aggregate.
provided, however, that if the SEC changes its interpretations of voting
privileges for variable contracts each Company may vote such shares in its own
right. Each Company shall be responsible for assuring that voting privileges for
the Account are calculated in a manner consistent with the provisions set forth
above.
-11-
5.2. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange 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.
ARTICLE VI. Compliance with Code
6.1. The Fund shall comply with Section 817(h) of the Code, and all
regulations issued thereunder and shall notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so qualify or that
it might not so qualify in the future.
6.2. The Fund shall maintain its qualification as a regulated investment
company (under Subchapter M of the Code or any successor or similar provision),
and shall notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
6.3. Each Company shall maintain the treatment of the Contracts as annuity
contracts or life insurance policies, whichever is appropriate, under applicable
provisions of the Code and shall notify the Fund, the Distributor and the
Adviser 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.
ARTICLE VII. Potential Conflicts
7.1. The parties to this Agreement acknowledge that the Fund has obtained
an order of exemption from the SEC (the "Exemptive Order," File No. 812-9674)
granting relief from various provisions of the 1940 Act and the rules thereunder
to the extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons (as
defined in Section 2.9). The Fund hereby notifies the Company that Contracts
Prospectus disclosure regarding potential risks of such mixed and shared funding
may be appropriate.
7.2. The Fund Board shall monitor the existence of any material
irreconcilable conflict between the interests of Product Owners. The Fund Board
shall promptly inform the Company if it determines that a material
irreconcilable conflict exists and the implications thereof.
-12-
7.3. (a) The Companies shall report any potential or existing conflicts
promptly to the Fund Board, and in particular whenever Contract Owner voting
instructions are disregarded, and recognizes that it shall be responsible for
assisting the Fund Board in carrying out its responsibilities in connection with
the Exemptive Order. The Companies agree to carry out such responsibilities with
a view only to the interests of Contract Owners.
(b) The Companies shall at least annually submit to the Fund Board
such reports, materials or data as the Fund Board may reasonably request so
that the Fund Board and the Fund may fully carry out the obligations
imposed upon them by the conditions of the Exemptive Order, and such
reports, material and data shall be submitted more frequently if deemed
appropriate by the Fund Board.
7.4. If a majority of the Fund Board, or a majority of its directors who
are not "interested persons" as defined in the 1940 Act ("Disinterested
Directors"), determines that a material irreconcilable conflict exists with
regard to Contract Owner investments in the Fund, the Fund Board shall give
prompt notice to all Participating Insurance Companies. If the Fund Board
determines that a Company is responsible in full or in part for causing or
creating said conflict, that Company (and other responsible Participating
Insurance Companies) shall at no cost and expense to the Fund, and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include, but shall
not be limited to:
(a) Withdrawing the assets allocable to the Account from the Fund or
any Series thereof and reinvesting such assets in a different investment
medium, or submitting the question of 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 other Product Owners) that votes
in favor of such segregation or offering to the affected Contract Owners
the option of making such a change; and
(b) Establishing a new registered management investment company.
7.5. If a material irreconcilable conflict arises as a result of a decision
by a Company to disregard Contract Owner voting instructions and said decision
represents a minority position or would preclude a majority vote by all Contract
Owners having an interest in the Fund, that Company may be required, at the Fund
Board's election, to withdraw the Account's investment in the Fund and terminate
this Agreement with respect to such Account; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Disinterested 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 that six month period the Adviser and
Fund shall continue to accept and implement orders by that
-13-
Company for the purchase (and redemption) of shares of the Fund (subject to
Section 2.1 above). No charge or penalty will be imposed as a result of such
withdrawal.
7.6. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to a Company conflicts with the
majority of other state regulators, then that Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within six months after the Board informs that Company in writing
that it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the Disinterested Directors. Until the end of the
foregoing six month period, the Adviser and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund (subject to Section 2.1 above).
7.7. For purposes of this Article, a majority of the Disinterested
Directors shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict, but in no event shall the Fund be required
to bear the expense of establishing a new funding medium for any Contract. The
Companies shall not be required by this Article to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
Disinterested Directors.
7.8. 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 provisions of the
1940 Act or the rules promulgated thereunder with respect to mixed and shared
funding on terms and conditions materially different from those contained in the
Exemptive Order, then (a) the Fund and/or the Companies, as appropriate, shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as
amended, or Rule 6e-3, as adopted, as applicable, to the extent such rules are
applicable, and (b) Sections 7.2 through 7.7 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Companies. Each Company shall indemnify and
hold harmless the Fund, the Adviser and the Distributor and each person who
controls the Fund, the Adviser or the Distributor within the meaning of such
terms under the 1933 Act (but not any
-14-
Participating Insurance Companies or Qualified Plans) and any officer, trustee,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid with the written consent of that Company in settlement of, any action, suit
or proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts themselves (or any
amendment or supplement to any of the foregoing), or 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 in light
of the circumstances in which they were made; provided that this obligation
to indemnify shall not apply if such statement or omission or such alleged
statement or alleged omission was made in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of the
Fund, Distributor or Adviser for use in the Contracts Registration
Statement, Contracts Prospectus or in the Contracts or sales literature or
promotional material for the Contracts (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
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Fund Registration Statement, Fund Prospectus
or sales literature or other promotional material of the Fund (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 in light
of the circumstances in which they were made, if such statement or omission
was made in reliance upon and in conformity with information furnished in
writing to the Fund, the Distributor or the Adviser by or on behalf of the
Company; or
(c) arise out of or are based upon any wrongful conduct of the Company
or persons under its control (or subject to its authorization) with respect
to the sale or distribution of the Contracts or Fund shares; or
(d) arise as a result of any failure by the Company to provide the
services and furnish the materials or to make any payments as required
under this Agreement; or
(e) arise out of any material breach by the Company of this Agreement.
This indemnification will be in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or
-15-
liability is due to the wilful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the party seeking indemnification.
8.2. Indemnification by the Fund. The Fund shall indemnify and hold
harmless each Company and each person who controls the Company within the
meaning of such terms under the 1933 Act and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid with the
written consent of the Fund in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional
material of the Fund (or any amendment or supplement to any of the
foregoing), or 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 in light of the circumstances in which
they were made; provided that this obligation to indemnify shall not apply
if such statement or omission or alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing to the Fund by or on behalf of the Company for use in the Fund
Registration Statement, Fund Prospectus or sales literature or promotional
material for the Fund (or any amendment or supplement to any of the
foregoing); or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature or other promotional material for 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 in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon information furnished in
writing by or on behalf of the Fund to the Company; or
(c) arise out of or are based upon wrongful conduct of the Fund or
persons under its control (or subject to its authorization) with respect to
the sale of Fund shares; or
(d) arise as a result of any failure by the Fund to provide the
services and furnish the materials required under the terms of this
Agreement; or
-16-
(e) arise out of any material breach by the Fund of this Agreement
(including any breach of Article VI of this Agreement).
This indemnification will be in addition to any liability that the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. Indemnification by the Adviser. The Adviser shall indemnify and hold
harmless each Company and each person who controls the Company within the
meaning of such term under the 1933 Act and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid with the
written consent of the Adviser in settlement of, any action, suit or proceeding
or any claim asserted), to which they or any of them may become subject under
any statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities are related to the sale or acquisition of the
Fund's shares or the Contract and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional
material of the Fund (or any amendment or supplement to any of the
foregoing), or 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 in light of the circumstances in which
they were made; provided that this obligation to indemnify shall not apply
if such statement or omission or alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing by or on behalf of the Company to the Fund or the Adviser for use
in the Fund Registration Statement, Fund Prospectus or sales literature or
promotional material for the Fund (or any amendment or supplement to any of
the foregoing); or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature or other promotional material for 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 in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon information furnished in
writing by or on behalf of the Adviser to the Company; or
(c) arise out of or are based upon wrongful conduct of the Fund or the
Adviser with respect to the sale of Fund shares; or
-17-
(d) arise as a result of any failure by the Fund or the Adviser to
provide the services and furnish the materials required under the terms of
this Agreement; or
(e) arise out of any material breach by the Fund or the Adviser of
this Agreement (including any breach of Article VI of this Agreement).
This indemnification will be in addition to any liability that the Adviser may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.4. Indemnification by the Distributor. The Distributer shall indemnify
and hold harmless each Company and each person who controls the Company within
the meaning of such term under the 1933 Act and any officer, director, employee
or agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid with the
written consent of the Distributer in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities are related to the sale or
acquisition of the Fund's shares or the Contract and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional
material of the Fund (or any amendment or supplement to any of the
foregoing), or 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 in light of the circumstances in which
they were made; provided that this obligation to indemnify shall not apply
if such statement or omission or alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing by or on behalf of the Company to the Fund, the Adviser or the
Distributor for use in the Fund Registration Statement, Fund Prospectus or
sales literature or promotional material for the Fund (or any amendment or
supplement to any of the foregoing); or
(b) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature or other promotional material for 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 in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon information furnished in
writing by or on behalf of the Distributor to the Company; or
-18-
(c) arise out of or are based upon wrongful conduct of the Fund or the
Distributer with respect to the sale of Fund shares; or
(d) arise as a result of any failure by the Distributor to provide the
services and furnish the materials required under the terms of this
Agreement; or
(e) arise out of any material breach by the Distributor of this
Agreement (including any breach of Article VI of this Agreement).
This indemnification will be in addition to any liability that the Distributor
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article VIII of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article VIII ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article VIII, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel and to participate in the
defense of such proceeding, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall 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 shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment against the indemnified party, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
The amount of any indemnification due a Company by the Adviser or the
Distributor that is not satisfied by the Adviser or Distributor, respectively,
shall be satisfied by making adjustments to one or more of the reinsurance
treaties that exist between thatCompany and M Life Insurance Company. The manner
in which such adjustments are made shall be reasonably agreed to by that Company
and M Life Insurance Company.
-19-
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland,
without giving effect to the principles of conflicts of law.
9.2. This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant, and the terms hereof shall
be limited, interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall not terminate until the Fund is dissolved,
liquidated, or merged into another entity, or, as to any Series of the Fund, the
Account no longer invests in that Series. However, certain obligations of, or
restrictions on, the parties to this Agreement may terminate as provided in
Sections 10.2 and 10.3, and each Company may be required to redeem shares
pursuant to Section 10.4 or in the circumstances contemplated by Article VII.
10.2. Termination of the Fund's Obligation to Sell. The obligation of the
Fund and the Distributor to sell shares to a Company pursuant to Article II of
this Agreement shall terminate at the option of the Fund or the Distributor upon
notice to the Company as provided below:
(a) the Fund Board has terminated the offering of Fund shares or
Series shares pursuant to Section 2.1 of this Agreement; or
(b) upon institution of formal proceedings against the Company by the
NASD, the SEC, the insurance commission of any state or any other
regulatory body regarding the Company's duties under this Agreement or
related to the sale of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Fund shares, or an
expected or anticipated ruling, judgment or outcome which would, in the
Fund's reasonable judgment, materially impair the Company's ability to meet
and perform the Company's obligations and duties hereunder; or
-20-
(c) in the event any of the Contracts or interests in the Contracts or
Account, as applicable, are not registered, issued or sold in accordance
with applicable federal and/or state law; or
(d) if the Fund, the Adviser, or the Distributor respectively, shall
determine, in their sole judgment exercised in good faith, that either (1)
the Company shall have suffered a material adverse change in its business
or financial condition since the date of this Agreement or (2) the Company
shall have been the subject of material adverse publicity which is likely
to have a material adverse impact upon the business and operations of
either the Fund, the Adviser or the Distributor; or
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of any Contract or the Account to another
insurance company pursuant to an assumption reinsurance agreement) unless
the Fund consents thereto; or
(f) upon termination pursuant to Section 10.1 or notice from the
Company pursuant to Section 10.3.
Termination of the Fund's and Distributor's obligation shall take effect
immediately upon the giving of such notice upon the occurrence of an event
described in clauses (b) or (c) above, and 10 (ten) days after the giving of
such notice in all other cases. In exercising its option to terminate its
obligation to sell shares to the Company, the Fund and Distributor will continue
to make Fund shares available to the extent necessary to permit owners of
Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts, unless the Existing
Contracts are the basis for the termination. In that case, the Fund may
nonetheless elect to continue to make Fund shares available for Existing
Contracts and if it so elects, shall promptly notify the Company whether the
Fund is electing to make Fund shares available after termination.
10.3. As to each Company. The restrictions on a Company under Section
2.8(a) of this Agreement shall terminate at the option of the Company upon 10
days' notice to the Fund:
(a) if shares of any Series are not reasonably available to meet the
requirements of the Contracts as determined by the Company, and the
Distributor or the Fund, after receiving written notice from the Company of
such non-availability, fails to make available a sufficient number of Fund
shares to meet the requirements of the Contracts within 10 days after
receipt thereof; or
(b) upon institution of formal proceedings against the Fund or the
Distributor by the NASD, the SEC or any state securities or insurance
commission or any other regulatory body; or
-21-
(c) if the Fund ceases to qualify as a regulated investment company
under Subchapter M of the Code, or under any successor or similar
provision, or if the Company reasonably believes the Fund may fail to so
qualify, and the Fund, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure; or
(d) if the Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder, and
the Fund, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure; or
(e) if the Fund informs the Company pursuant to Section 4.4 that the
Fund will not comply with investment restrictions as requested by the
Company, and the Fund and the Company are unable to agree upon any
reasonable alternative accommodations; or
(f) upon receipt by the Company of any necessary regulatory approvals
and any necessary vote of the Contract Owners having an interest in the
Account (or any subaccount) to substitute the shares of another investment
company for the corresponding Series shares of the Fund in accordance with
the terms of the Contracts for which those Series shares had been selected
to serve as the underlying investment media. The Company will give 30 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
(g) upon a material breach of any provision of this Agreement by
either the Fund, the Adviser or the Distributor; or
(h) if the Company determines in its sole judgment exercised in good
faith, that either the Fund, the Adviser or the Distributor has suffered a
material adverse change in its business, operations, or financial
conditions 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 Company.
10.4. Companies Required to Redeem. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Fund reasonably believes that any such Contracts may fail to
so qualify, the Fund shall have the right to require a Company to redeem Shares
attributable to such Contracts upon ten (10) days written notice to the Company
and the Company shall so redeem such Shares in order to ensure that the Fund
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Fund Shares. Notice to the Company shall specify the period of time
the Company has to redeem the Shares or to make other arrangements satisfactory
to the Fund and its counsel, such period of time to be determined with reference
to the requirements of
-22-
Section 817(h) of the Code. In addition, the Companies may be required to redeem
Shares pursuant to action taken or request made by the Fund Board in accordance
with an order of the SEC as described in Article VII, or other SEC rule,
regulation or order that may be adopted after the date hereof. The Companies
agree to redeem Shares in such circumstances and to comply with applicable terms
and provisions.
ARTICLE XI. Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, or Series or funding vehicles thereof, additions of new classes of
Contracts to be issued by a Company and separate accounts therefor investing in
the Fund. The provisions of this Agreement shall be equally applicable to each
such class of Contracts, Series and Accounts, effective as of the date of
amendment of such Schedule, unless the context otherwise requires.
ARTICLE XII. Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Fund:
M Fund, Inc.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: President
If to the Adviser:
M Financial Investment Advisers, Inc.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: President
If to Pacific Life:
Pacific Life Insurance Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Variable Regulatory Compliance
-23-
If to PL&A:
Pacific Life & Annuity Company
000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Variable Regulatory Compliance
If to the Distributor:
M Holdings Securities, Inc
River Park Center
000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt
requested, by overnight delivery with a nationally recognized courier or by
electronically transmitted facsimile, and shall be effective upon receipt or
three days after mailing.
ARTICLE XIII. Miscellaneous
13.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13.4. Subject to the requirement of legal process and regulatory authority,
each party hereto shall treat as if confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement shall not disclose, disseminate, or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
13.5. 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.
-24-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
PACIFIC LIFE INSURANCE COMPANY
(Company)
By: _____________________________________
Name: Xxxxx X. Xxxxxxx
Title: President
By: _____________________________________
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
PACIFIC LIFE & ANNUITY COMPANY
By: _____________________________________
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
By: _____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
M FUND, INC.
(Fund)
By: _____________________________________
Name: Xxxxxx X. Xxxxx
Title: President
M FINANCIAL INVESTMENT ADVISERS, INC.
(Adviser)
By: _____________________________________
Name: Xxxxxx X. Xxxxx
Title: President
M HOLDINGS SECURITIES, INC.
By: _____________________________________
Name: Xxxxx X'Xxxxxx
Title: President
-25-
M LIFE INSURANCE COMPANY
By: _____________________________________
Name: Xxxxx X'Xxxxxx
Title: Senior VP
-26-
Schedule 1
Accounts of Pacific Life
Investing in the Fund
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
==============================================================================================================
Name of Account Date Established by SEC 1940 Act Type of Product
and Subaccounts Board of Directors of Registration Number Supported by Account
the Company (if applicable)
--------------------------------------------------------------------------------------------------------------
Pacific Select Exec May 12, 1988 811-05563 Variable Life Policies
--------------------------------------------------------------------------------------------------------------
Xxxxxxx International Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxx Core Growth Variable
Account
--------------------------------------------------------------------------------------------------------------
Frontier Capital Appreciation
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Enhanced U.S. Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Business Opportunity Value
Variable Account
--------------------------------------------------------------------------------------------------------------
Pacific COLI July 17, 1992 811- Variable Life Policies
--------------------------------------------------------------------------------------------------------------
Xxxxxxx International Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxx Core Growth Variable
Account
--------------------------------------------------------------------------------------------------------------
Frontier Capital Appreciation
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Enhanced U.S. Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Business Opportunity Value
Variable Account
--------------------------------------------------------------------------------------------------------------
Pacific COLI II October 12, 1998 811- Variable Life Policies
--------------------------------------------------------------------------------------------------------------
Xxxxxxx International Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxx Core Growth Variable
Account
--------------------------------------------------------------------------------------------------------------
Frontier Capital Appreciation
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Enhanced U.S. Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
-27-
==============================================================================================================
Name of Account Date Established by SEC 1940 Act Type of Product
and Subaccounts Board of Directors of Registration Number Supported by Account
the Company (if applicable)
--------------------------------------------------------------------------------------------------------------
Business Opportunity Value
Variable Account
--------------------------------------------------------------------------------------------------------------
Pacific COLI III October 12, 1998
--------------------------------------------------------------------------------------------------------------
Xxxxxxx International Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxx Core Growth Variable
Account
--------------------------------------------------------------------------------------------------------------
Frontier Capital Appreciation
Variable Account
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Enhanced U.S. Equity
Variable Account
--------------------------------------------------------------------------------------------------------------
Business Opportunity Value
Variable Account
==============================================================================================================
Accounts of Pacific Life & Annuity Company
Investing in the Fund
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
=================================================================================================================
Name of Account Date Established by SEC 1940 Act Type of Product
and Subaccounts Board of Directors of Registration Number Supported by Account
the Company (if applicable)
-----------------------------------------------------------------------------------------------------------------
PL&A Separate Account II June 8, 2002 811- Variable Life Policies
-----------------------------------------------------------------------------------------------------------------
Xxxxxxx International Equity
Variable Account
-----------------------------------------------------------------------------------------------------------------
Xxxxxx Core Growth Variable
Account
-----------------------------------------------------------------------------------------------------------------
Frontier Capital Appreciation
Variable Account
-----------------------------------------------------------------------------------------------------------------
Xxxxxxx Enhanced U.S. Equity
Variable Account
-----------------------------------------------------------------------------------------------------------------
Business Opportunity Value
Variable Account
=================================================================================================================
-28-
Effective as of January 8, 2003, the following separate accounts of the Company
are hereby added to this Schedule 1 and made subject to the Agreement:
IN WITNESS WHEREOF, the Fund, the Adviser, the Distributor and the Company
hereby amend this Schedule 1 in accordance with Article XI of the Agreement.
M FUND, INC. PACIFIC LIFE INSURANCE COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
M FINANCIAL INVESTMENT ADVISERS, INC. PACIFIC LIFE & ANNUITY COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Title: President Title: Executive Vice President
M HOLDINGS SECURITIES, INC. M LIFE INSURANCE COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxx X'Xxxxxx Name: Xxxxx X'Xxxxxx
Title: President Title: Senior VP
-29-
Schedule 2
----------
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
=============================================================================================================
Policy Marketing Name SEC 1933 Act Name of Supporting Account Annuity or Life
Registration Number
(if applicable)
=============================================================================================================
Pacific Select Exec 33-21754 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Choice 33-57908 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Preserver 333-01717 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Preserver II 333-20355 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Maximizer 333-14005 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
M's Versatile Product 333-61135 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Custom COLI Pacific COLI Life
-------------------------------------------------------------------------------------------------------------
Custom COLI Rider Pacific COLI Life
-------------------------------------------------------------------------------------------------------------
Custom COLI II Pacific COLI II Life
-------------------------------------------------------------------------------------------------------------
Custom COLI III Pacific COLI III Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Preserver III 333-01713 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Preserver IV 333-20355 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Pacific Select Estate Preserver V 333-65458 Pacific Select Exec Life
-------------------------------------------------------------------------------------------------------------
Magnastar PL&A Separate Account II Life
=============================================================================================================
-30-
Effective as of January 8, 2003, the following classes of Contracts are hereby
added to this Schedule 2 and made subject to the Agreement:
============================================================================================================
Policy Marketing Name SEC 1933 Act Registration Name of Supporting Account Annuity or Life
Number
(if applicable)
============================================================================================================
33-
------------------------------------------------------------------------------------------------------------
33-
------------------------------------------------------------------------------------------------------------
33-
============================================================================================================
IN WITNESS WHEREOF, the Fund, the Adviser, the Distributor and the Company
hereby amend this Schedule 2 in accordance with Article XI of the Agreement.
M FUND, INC. PACIFIC LIFE INSURANCE COMPANY
By: ________________________________ By: __________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
M FINANCIAL INVESTMENT ADVISERS, INC. PACIFIC LIFE & ANNUITY COMPANY
By: ________________________________ By: __________________________________
Name: Xxxxxx X. Xxxxx Name: Names X. Xxxxxx
Title: President Title: Executive Vice President
M HOLDINGS SECURITIES, INC. M LIFE INSURANCE COMPANY
By: ________________________________ By: __________________________________
Name: Xxxxx X'Xxxxxx Name: Xxxxx X'Xxxxxx
Title: President Title: Senior VP
-31-
Schedule 3
----------
Fund Series and Other Funding
Vehicles Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Fund Series
and other Funding Vehicles are available under the Contracts:
===============================================================================================
Contract Marketing Name Fund Series Other Funding Vehicles
-----------------------------------------------------------------------------------------------
M Fund Xxxxxxx International Equity Fund Pacific Select Fund
-----------------------------------------------------------------------------------------------
M Fund Xxxxxx Core Growth Fund Pacific Select Fund
-----------------------------------------------------------------------------------------------
M Fund Frontier Capital Appreciation Fund Pacific Select Fund
-----------------------------------------------------------------------------------------------
M Fund Enhanced U.S. Equity Fund Pacific Select Fund
-----------------------------------------------------------------------------------------------
M Fund Business Opportunity Value Fund Pacific Select Fund
===============================================================================================
-32-
Effective as of January 2, 2002, this Schedule 3 is hereby amended to reflect
the following changes in Fund Series and other funding vehicles:
================================================================================================
Contract Marketing Name Fund Series Other Funding Vehicles
------------------------------------------------------------------------------------------------
M Fund Xxxxxxx International Equity Fund Pacific Select Fund
------------------------------------------------------------------------------------------------
M Fund Xxxxxx Core Growth Fund Pacific Select Fund
------------------------------------------------------------------------------------------------
M Fund Frontier Capital Appreciation Fund Pacific Select Fund
------------------------------------------------------------------------------------------------
M Fund Xxxxxxx Enhanced U.S. Equity Fund Pacific Select Fund
------------------------------------------------------------------------------------------------
M Fund Business Opportunity Value Fund Pacific Select Fund
================================================================================================
IN WITNESS WHEREOF, the Fund, the Adviser, the Distributor and the Company
hereby amend this Schedule 3 in accordance with Article XI of the Agreement.
M FUND, INC. PACIFIC LIFE INSURANCE COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
M FINANCIAL INVESTMENT ADVISERS, INC. PACIFIC LIFE & ANNUITY COMPANY
By: ________________________________ By: ____________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Title: President Title: Executive Vice President
M HOLDINGS SECURITIES, INC. M LIFE INSURANCE COMPANY
By: ________________________________ By: ____________________________________
Name: Xxxxx X'Xxxxxx Name: Xxxxx X' Xxxxxx
Title: President Title: Senior VP
-33-
Schedule 4
----------
Investment Restrictions
Applicable to the Fund
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Fund:
Foreign Country Diversification Guidelines to be followed by each portfolio of a
Separate Account are as follows:
An International or Global Portfolio will invest in the securities of issuers
domiciled or primarily traded in at least three different foreign countries at
all times, and may not invest more than 50% of the Portfolio's assets in any one
second tier country or more than 25% of the Portfolio's assets in any one third
tier country. First tier countries are: Australia, Canada, France, Germany,
Japan, the United Kingdom, and the United States. Second tier countries are all
countries not in the first or third tier. Third tier countries are countries
identified as "emerging" or "developing" by the International Bank for
Reconstruction and Development ("World Bank") or International Finance
Corporation. The Portfolio is not subject to any limit upon investment in
issuers domiciled or primarily traded in the United States.
Borrowed Guidelines to be followed by each portfolio of a Separate Account are
as follows:
A Portfolio may leverage its assets by borrowing amounts equivalent to no more
than 33?% of its total assets. For purposes of this limitation, entering into a
reverse repurchase agreement shall be considered a "borrowing".
-34-
Effective as of January 8, 2003, this Schedule 4 is hereby amended to reflect
the following changes:
IN WITNESS WHEREOF, the Fund, the Adviser, the Distributor and the Company
hereby amend this Schedule 4 in accordance with Article XI of the Agreement.
M FUND, INC. PACIFIC LIFE INSURANCE COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
M FINANCIAL INVESTMENT ADVISERS, INC. PACIFIC LIFE & ANNUITY COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Title: Executive Vice President Title: President
M HOLDINGS SECURITIES, INC. M LIFE INSURANCE COMPANY
By: ________________________________ By: ___________________________________
Name: Xxxxx X'Xxxxxx Name: Xxxxx X'Xxxxxx
Title: President Title: Senior VP
-35-
Effective as of February 21, 2003, the following classes of Contracts are hereby
-----------------
added to this Schedule 2 and made subject to the Agreement:
=============================== =========================== =========================== ============================
Policy Marketing Name SEC 1933 Act Name of Supporting Annuity or Life
Registration Number Account
(if applicable)
=============================== =========================== =========================== ============================
Pacific Select Performer 500 333-102902 Pacific Select Exec Life
------------------------------- --------------------------- --------------------------- ----------------------------
33-
------------------------------- --------------------------- --------------------------- ----------------------------
33-
=============================== =========================== =========================== ============================
IN WITNESS WHEREOF, the Fund, the Adviser, the Distributor and the Company
hereby amend this Schedule 2 in accordance with Article XI of the Agreement.
M FUND, INC. PACIFIC LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------ -----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
M FINANCIAL INVESTMENT ADVISERS, INC. PACIFIC LIFE & ANNUITY COMPANY
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------ ----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Title: President Title: Executive Vice President
M HOLDINGS SECURITIES, INC. M LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx XxXxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ----------------------------
Name: Xxxxxxx XxXxxxxx Name: Xxxxxx X. Xxxxx
Title: President Title: Senior VP
