EXHIBIT 1A(8)(c)
Agreement between ▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds,
▇▇▇▇▇▇▇▇▇▇▇ Management Corporation, and The Life
Insurance Company of Virginia.
AGREEMENT BETWEEN ▇▇▇▇▇▇▇▇▇▇▇ VARIABLE ACCOUNT FUNDS, ▇▇▇▇▇▇▇▇▇▇▇
MANAGEMENT CORPORATION AND THE LIFE INSURANCE COMPANY OF VIRGINIA
AGREEMENT DATED as of May 27, 1987 between ▇▇▇▇▇▇▇▇▇▇▇
VARIABLE ACCOUNT FUNDS (the "Fund"), ▇▇▇▇▇▇▇▇▇▇▇ MANAGEMENT CORPORATION (OMC),
and THE LIFE INSURANCE COMPANY OF VIRGINIA (LOV).
WHEREAS, the Fund represents and warrants that it is and will remain an
open-end diversified investment company registered as such under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act of 1933;
WHEREAS, the Funds represents and warrants that its shares, which currently
are issued with respect to six (6) separate series, are offered only for
purchase by separate accounts of life insurance companies as an investment
medium for variable life or variable annuity policies;
WHEREAS, the Fund and OMC represent and warrant that shares of the Fund shall
be sold only to insurance companies that are purchasing those shares for
separate accounts established for variable life insurance and variable annuity
policies ("participating insurance companies");
WHEREAS, LOV desires to utilize shares of the Fund as one of the funding
media of Life of Virginia Separate Account II, which will support variable
life insurance policies (the "policies") to be issued by LOV;
WHEREAS, LOV represents and warrants that it has or will register the
Policies under the Securities Act of 1933;
WHEREAS, LOV represents and warrants that life of Virginia Separate Account
II has or will register as a unit investment trust under the Investment Company
Act of 1940;
WHEREAS, the Fund represents and warrants that it has obtained an order from
the Securities and Exchange Commission granting participating insurance
companies and variable life insurance and variable annuity separate accounts
exemptions from the provisions o Sections 9(a), 15(b) of the Investment
Company Act of 1940, as amended, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder to the extent necessary to permit shares of the funds to be
sold to and held by variable annuity and variable life separate accounts of
both affiliated and unaffiliated life insurance companies (the "Order");
Now, therefore, in consideration of the premises and the mutual promises
and covenants hereinafter set forth, the Fund, OMC and LOV agree as follows:
1. The Fund shall make its shares available for purchase at net asset value
by one or more separate accounts of LOV to support policies to be issued by
LOV. Orders for such shares shall be executed on a daily basis at the net
asset value next computed after receipt by the Fund of the order.
2. The Fund agrees to redeem for cash, on LOV's request, any full or
fractional shares of the Fund held by LOV, executing such requests on a daily
basis at the net asset value next computed after receipt by the Fund of
the request for redemption.
3. LOV shall pay for Fund shares on the next Business Day after an order
to purchase Fund shares is made in accordance with provisions of Section 1.
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4. The Fund shall furnish same day notice by telecopier to LOV of any
income dividends or capital gains distributions payable on the Fund's shares.
LOV will receive all such income dividends or capital gains distributions
payable with respect to a series in additional shares attributable to that
series. The Fund shall notify LOV of the number of shares issued as
payment of such income dividends or capital gains distributions.
5. The Fund shall make the net asset value per share of each series available
to LOV on a daily basis as soon as reasonably possible after the net asset
value per share is calculated and shall use its best efforts to make such
net asset value per share available to LOV by 5:30 pm New York time.
6. LOV shall pay for the reasonable costs of printing and mailing
all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials) of the Fund that are
required by the federal securities laws to be sent to owners of policies
issued by LOV. Lov shall also pay the reasonable costs of printing and
distributing the Fund's prospectuses and statements of additional
information to owners of and applicants applying for policies for which
the Fund is serving or is to serve as an investment vehicle.
7. The Fund shall prepare and be responsible for filing with the Securities
and Exchange Commission and any state securities regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar
materials such as voting instruction solicitation materials), prospectuses
and statements of additional information of the Fund.
8. The Fund agrees that the investment portfolios of each series of the
Fund will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended.
9. In the event this agreement is terminated, the Fund agrees that, as long
as shares of the Fund are available for purchase by separate accounts of any
other insurance companies, it will permit LOV to continue to purchase shares
of the Fund for the account of its policyholders then funding policies, in
whole or in part, with shares of the Fund, provided LOV continues to pay the
costs described in Section 6 above.
10. LOV shall not give any information or make any representations or
statements on behalf of or concerning the Fund or OMC in connection with
the sale of the policies other than the information or representations
contained in the registration statement or prospectus for the Fund shares,
as such registration statements and prospectus may be amended from time to
time, or in reports or proxy statements for the Fund, or in sales literature
approved by the Fund or OMC, except as required by legal process or
regulatory authorities or with permission of the Fund and OMC.
11. The Fund and OMC shall not give any information or make any
representation on behalf of or concerning LOV, the separate account(s) of LOV,
or the policies, other than the information or representations contained
in a registration statement or prospectus for the policies, as such
registration statement and prospectus may be amended from time to time, or in
materials approves by LOV for distribution, including sales literature or
promotional materials, except as required by legal process or regulatory or
with permission of LOV.
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12. The Fund shall bear the cost of registration and qualifications of
the Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports (including al documents
related to the solicitation of voting instructions from owners of the
policies), the preparation of all statements and notices relating to
the Fund that may be required by any federal or state low, and all taxes
to which an issuer is subject on the issuance and transfer of the Fund's
shares.
13.1 The Board of Trustees of the Fund will monitor the Fund for any
material irreconcilable conflicts between the interests of the owners of
all policies whose cash values are held in separate accounts investing
in the Fund ("Policyowners") and will promptly report to the fund's board
any potential or existing material irreconcilable conflict between the
Policyowners. LOV and OMC will assist the Board in carrying out its
responsibilities in monitoring such conflicts, by providing the Board in
a timely manner with all information reasonably necessary for the Board
to consider any issues raised, including information as to a decision by
LOV to disregard voting instructions of Policyowners. This includes, but
is not limited to, reporting to the Board on all matters referred to in the
Order and in the application for the Order. The responsibility to report
such information and conflicts and to assist the Board will be carried out
with a view only to the interests of policyowners.
13.2 If it is determined by either a majority of the Board of Trustees of
the Fund or a majority of its disinterested trustees, that a material
irreconcilable conflict exists, LOV shall, at its expense and to the
extent reasonably practicable (as determined by the majority of the Fund's
disinterested trustees) take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, up to and including:
(a) withdrawing the assets allocable to Life of Virginia Separate Account
III from the Fund (or any series of the Fund) and reinvesting such
assets in a different investment medium, including another series of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected policyowners and, as appropriate,
segregating the assets of any group voting in favor of segregation, or
offering to affected policyowners the option of making such a change; and
(b) establishing and registered management investment company or
managed separate account.
These responsibilities will be carried out with a view only to the interest
of Policyowners. No penalty will be imposed by the Fund on LOV for
withdrawing assets from the Fund (or any series of the Fund) in the event
of a material irreconcilable conflict.
For purposes of this Section 13.2 a majority of the disinterested trustees
shall determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Fund or OMC be
required to establish a new funding medium for any variable contract.
LOV shall not be required by this Section 13.2 to establish new funding
medium for any variable contract if an offer to do so has been declined by
vote of a majority of the Policyowners materially adversely affected by the
material irreconcilable conflict. LOV will recommend to its Policyowners
that they decline an offer to establish a new funding medium only if the
company believes it in the best interest of the Policyowners.
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13.3 So long as, and to the extent that the Securities and Exchange
Commission interprets the Investment Company Act of 1940 to require
pass-through voting privileges for variable policyowners, LOV will
provide pass-through voting privileges to owners of policies whose cash
values are invested, through LOV Separate Account III, in shares of the
Fund. LOV shall be responsible for assuring that Life of Virginia Separate
Account III calculates voting privileges in a manner consistent with all other
separate accounts investing in the Fund. LOV will vote shares of the Fund
held in Life of Virginia Separate Account III for which no timely voting
instructions from Policyowners are received, as well as shares it owns, in
the same proportion as those shares for which voting instructions are
received.
13.4 The Fund and LOV shall comply with Rule 6e-2, 6e-3(T) or, if adopted,
6e-3 of the Securities and Exchange Commission, if and to the extent they are
amended to provide exemptive relief with respect to mixed or shared funding.
13.5 OMC and LOV shall at least annually submit to the Fund's board of
Trustees such reports, materials or data as the Trustees may reasonably
request so that the Trustees may fully carry out the obligations imposed upon
them by the Order, and said reports, materials and data shall be submitted
more frequently if deemed appropriate by the Trustees.
13.6 The Fund hereby represents and warrants that it has not and will not
sell Fund shares to any insurance company or separate account unless an
agreement containing provisions substantially the same as Sections 13.1
through 13.5 of this agreement is in effect to govern such sales.
13.7 Each of the undertakings in this Section 13 will survive termination
of this Agreement and will remain in effect for as long as shares of the
Fund are held by LOV for the account of its Policyowners.
14. LOV agrees to indemnify and hold harmless the Fund and OMC, each member
of their Board of Trustees or Board of Directors, each of their officers, and
each person who controls the Fund within the meaning of Section 15 of The
Securities Act of 1933 against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
LOV), or any expenses of litigation (including court costs and reasonable
attorney's fees), to which the indemnified parties ▇▇▇ become subject under
statute or regulation or at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares
and;
(a) arise out of any untrue or allegedly untrue statements of any material
fact contained in the registration statement or prospectus for the
policies, in the policies themselves or in sales literature created or
approved by LOV for the policies, or arise out of or are based upon the
omission or alleged omission to state therein any material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that such statements or omissions were not made in
reliance upon and in conformity with information furnished by LOV by or on
behalf of the Fund or OMC; or
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(b) arise out of or as a result of statements or representations or
wrongful conduct of LOV or persons under its controls, with respect
to sale or distribution of the policies, provided any such statement or
representation or wrongful conduct was not made in reliance upon and
in conformity with information furnished to LOV or on behalf of the Fund
or OMC; or
(c) arise out of any untrue or allegedly untrue statement of a material
fact contained in the Fund's registration statement, prospectus or sales
literature or 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 mission was made in reliance upon
information furnished to the Fund or OMC by LOV, or
(d) arise as a result of a breach of this agreement or a breach of
any misrepresentation and/or warranty made by LOV in this agreement.
15.1. The Fund agrees to indemnify and hold harmless LOV, each member of its
Board of Directors, each of its officers, and any person that controls
LOV within the meaning of Section 15 of the Securities Act of 1933 against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with written consent of the Fund), or expenses of litigation
(including court costs and reasonable attorney's fees) to which the
indemnified parties may become subject under any statute or regulation or
at common law or otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares or the policies and;
(a) arise out of any untrue or allegedly untrue statement of any material
fact contained in the registration statement or prospectus or sales
literature for the Fund, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make statements therein not misleading, provided
that such statements or omissions were not made in reliance upon and in
conformity with information furnished to the Fund by or on behalf of LOV;
or
(b) arise out of or as a result of statements or representations or
wrongful conduct of the Fund, or persons under the control of the Fund,
with respect to sale or distribution of the policies, provided any
such statement or representation or wrongful conduct was not made in
reliance upon and in conformity with information furnished to the Fund by
or on behalf of LOV; or
(c) arise out of any untrue or allegedly untrue statement of any material
fact contained in the registration statement or prospectus for the
policies, or the omission or the alleged omission to state therein not
misleading if such statement or omission was made in reliance upon
information furnished to LOV by the Funds; or
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(d) arise as a result of a breach of this agreement or a breach of
any representation and/or warranty made by the Fund in this agreement.
15.2 OMC agrees to indemnify and hold harmless LOV, each member of its Board
of Directors, each of its officers and any person that controls LOV
within the meaning of Section 15 of The Securities Act of 1933 against any
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of OMC), or expenses of litigation
(including court costs and reasonable attorney's fees) to which the
indemnified parties may become subject under any statute or regulation or at
common law or otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the policies
and;
(a) arise out of any untrue or allegedly untrue statement of any material
fact contained in the registration statement or prospectus or sales
literature for the Fund, or arise out of or are based upon 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,
provided that such statements or omissions were not made in reliance
upon and in conformity with information furnished to OMC by or on behalf
of LOV; or
(b) arise out of or as a result of statements or representations or
wrongful conduct of OMC or persons under the control of OMC, with
respect to sale or distribution of the policies, provided any such
statement, or representation or wrongful conduct was not made in
reliance upon and in conformity with information furnished to OMC by or
on behalf of LOV; or
(c) arise out of any untrue or allegedly untrue statement of any material
fact contained in the registration statement, prospectus or sales
literature for the policies, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statement therein not misleading if such statement or omission was
made in reliance upon information furnished to LOV by OMC; or
(d) arise as a result of a breach of this agreement or a breach of
any representation and/or warranty made by OMC in this agreement.
16. The indemnification provided under Sections 14, 15.1 and 15.2 shall not
be available to an indemnified party if the loss, claim, damages,
liability or litigation for which indemnification is sought resulted from
such indemnified party's willful misfeasance, bad faith or gross negligence
in the performance of such indemnified party's duties or by reason of
such indemnified party's reckless disregard of obligations and duties under
this agreement.
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17. No indemnification shall be available under Sections 14, 15.1 or 15.2
unless the indemnified party gave written notice of the nature of the claim
for which indemnification is sought to the party from whom indemnification is
sought. Said notice must be given within a reasonable time after the summons
or other initial legal process giving information as to the nature of the
claim is served upon the indemnified party. However, failure to notify
the party against whom indemnification is sought shall not relieve that
party of any liability which it might have in the absence of Sections 14,
15.1 and 15.2 of this agreement
18. In the event that an action is brought against a party indemnified
under Sections 14, 15.1 or 15.2, the party owning the obligation to
indemnify (the "indemnifying party") may participate, at its own
expense in the defense thereof. The indemnifying party may also assume the
defense of any such action, with counsel satisfactory to the indemnified
party. After the indemnifying party notifies the indemnified party of its
intention to assume the defense of an action, the indemnified party shall
bear the expenses of any additional counsel obtained by it, and the
indemnifying party shall not be liable to the indemnified party for any
legal or other expenses subsequently incurred by the indemnified party
independently in connection with the defense thereof.
19. Subject to the requirements of legal process and regulatory
authorities, each party to this agreement shall treat as confidential the
names and addresses of the owners of the policies.
20. Each party to this agreement shall cooperate with the other parties and
with all governmental authorities (including without limitation, the
Securities and Exchange Commission, the NASD and the state insurance and
securities regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this agreement or the transactions contemplated hereby.
21. This agreement may be terminated by any party upon six month's
advance written notice to the other parties.
22. OMC and LOV each understands that the obligations of the Fund under
this Agreement are not binding upon any shareholder or Trustee of
the Fund personally, but bind only the Fund and the Fund's property; OMC
and LOV each represent that it has notice of the provisions of the
Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
IN WITNESS WHEREOF, LOV, the Fund and OMC has caused this agreement to
be duly executed as of the day and year first above written.
The Life Insurance Company of Virginia
by:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Senior Vice President
▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds
by:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Vice President
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▇▇▇▇▇▇▇▇▇▇▇ Management Corporation
by: /s/ ▇▇▇▇▇▇ ▇.▇▇▇▇▇
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Executive Vice President
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