Exhibit 99.8(D)
PARTICIPATION AGREEMENT
AMONG
NATIONAL INTEGRITY LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
AND
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the __ day of ________, 2008 by and among
National Integrity Life Insurance Company, (the "Company"), an New York life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each account hereinafter referred to as the "Account"), PIMCO
Variable Insurance Trust (the "Fund"), a Delaware statutory trust, and Allianz
Global Investors Distributors LLC (the "Underwriter"), a Delaware limited
liability company.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order (PIMCO Variable Insurance
Trust, et al., Investment Company Act Rel. Nos. 22994 (Jan. 7, 1998) (Notice)
and 23022 (Feb. 9, 1998)(Order)) from the Securities and Exchange Commission
(the "SEC") granting Participating Insurance Companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
if and to the extent necessary to permit shares of the Fund to be sold to and
held by variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (the "Mixed and Shared
Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company LLC (the "Adviser"),
which serves as investment adviser to the Fund, is duly registered as an
investment adviser under the federal Investment Advisers Act of 1940, as
amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
Financial Industry Regulatory Authority ("FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Advisor Class shares in the
Portfolios listed in Schedule A hereto, as it may be amended from time to time
by mutual written agreement (the "Designated Portfolios") on behalf of the
Account to fund the aforesaid Contracts, and the Underwriter is authorized to
sell such shares to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so instructed,
the Underwriter to make available to the Company for purchase on behalf of the
Account Fund shares of those Designated Portfolios selected by the Underwriter.
Pursuant to such authority and instructions, and subject to Article IX hereof,
the Underwriter agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Portfolios listed on Schedule A to
this Agreement, such purchases to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Fund
series (other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the
Underwriter may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, or liquidate any Designated Portfolio or class
thereof, if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good faith,
suspension, termination or liquidation is necessary in the best interests of the
shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, the Fund may delay
redemption of Fund shares of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving purchase and redemption requests on behalf of the
Account (but not with respect to any Fund shares that may be held in the general
account of the Company) for shares of those Designated Portfolios made available
hereunder, based on allocations of amounts to the Account or subaccounts thereof
under the Contracts and other transactions relating to the Contracts or the
Account. Receipt and acceptance of any such request (or relevant transactional
information therefor) on any day the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the SEC (a "Business Day") by the Company as such limited agent of the Fund
prior to the time that the Fund ordinarily calculates its net asset value as
described from time to time in the Fund Prospectus (which as of the date of
execution of this Agreement is 4:00 p.m. Eastern Time) shall constitute receipt
and acceptance by the Fund on that same Business Day, provided that the Fund or
its designated agent receives notice of such request by 9:00 a.m. Eastern Time
on the next following Business Day.
(b) The Company shall pay for shares of each Designated Portfolio on the
same day that it notifies the Fund of a purchase request for such shares.
Payment for Designated Portfolio shares shall be made in federal funds
transmitted to the Fund by wire to be received by the Fund by 4:00 p.m. Eastern
Time on the Business Day the Fund is notified of the purchase request for
Designated Portfolio shares (which request may be net of redemptions of shares).
If federal funds are not received on time, such funds will be invested, and
Designated Portfolio shares purchased thereby will be issued, as soon as
practicable and the Company shall promptly, upon the Fund's request, reimburse
the Fund for any charges, costs, fees, interest or other expenses incurred by
the Fund in connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. Upon receipt
of federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
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(c) Payment for Designated Portfolio shares redeemed by the Account or the
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 such shares (which order shall be net of any
purchase orders) except that the Fund reserves the right to redeem Designated
Portfolio shares in assets other than cash and to delay payment of redemption
proceeds to the extent permitted under Section 22(e) of the 1940 Act and any
Rules thereunder, and in accordance with the procedures and policies of the Fund
as described in the then current prospectus and/or SAI. The Fund shall not bear
any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be responsible for
such action.
(d) Any purchase or redemption request for Designated Portfolio shares held
or to be held in the Company's general 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 net 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.
(e) The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 30 days
prior written notice to the Fund and the Underwriter, as permitted by an order
of the SEC pursuant to Section 26(c) of the 1940 Act, but only if a substitution
of other securities for the shares of the Designated Portfolios is consistent
with the terms of the Contracts, or (iv) as permitted under the terms of the
Contracts. Upon request, the Company will promptly furnish to the Fund
reasonable assurance that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, except in cases where permitted under
the terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Designated Portfolio that was otherwise available under
the Contracts without first giving the Fund 30 days notice of its intention to
do so.
1.4. The Fund shall use its best efforts to make the net asset value per
share for each Designated Portfolio available to the Company by 7:00 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 Designated Portfolio is
calculated, and shall calculate such net asset value in accordance with the
Fund's Prospectus. Neither the Fund, any Designated Portfolio, the Underwriter,
nor any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company to the Fund or the Underwriter. If the Fund
provides the company with materially incorrect share net asset value
information, the Fund shall make an adjustment to the number of shares purchase
or redeemed for the Accounts to reflect the correct net asset value per share.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon discovery
to the Company.
1.5. The Fund shall furnish notice (by wire or telephone followed by
written confirmation) to the Company as soon as reasonably practicable of any
income dividends or capital gain distributions payable on any Designated
Portfolio shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Designated Portfolio shares in the form of additional shares of that
Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company
promptly of the number of Designated Portfolio shares so issued as payment of
such dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only.
Share certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Fund shares shall be recorded in an appropriate ledger
for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.8 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however, that
until this Agreement is terminated pursuant to Article IX, the Company shall
promote the Designated Portfolios on the same basis as other funding vehicles
available under the Contracts.
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(b) The Company shall not, without prior notice to the Fund (unless
otherwise required by applicable law), take any action to operate the Account as
a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Fund (unless
otherwise required by applicable law), induce Contract owners to change or
modify the Fund or change the Fund's distributor or investment adviser.
(d) The Company shall not, without prior notice to the Fund, induce
Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the Board of
Trustees of the Fund.
1.8. The Company acknowledges that, pursuant to Form 24F-2, the Fund is not
required to pay fees to the SEC for registration of its shares under the 1933
Act with respect to its shares issued to an Account that is a unit investment
trust that offers interests that are registered under the 1933 Act and on which
a registration fee has been or will be paid to the SEC (a "Registered Account").
The Company agrees to provide the Fund or its agent each year within 60 days of
the end of the Fund's fiscal year, or when reasonably requested by the Fund,
information as to the number of shares purchased by a Registered Account and any
other Account the interests of which are not registered under the ▇▇▇▇ ▇▇▇. The
Company acknowledges that the Fund intends to rely on the information so
provided.
ARTICLE II. Representations and Warranties
2.1. The Fund represents and warrants that (i) the Fund is lawfully
organized and validly existing under the laws of the State of Delaware, (ii) the
Fund is and shall remain registered under the 1940 Act, (iii) the Fund does and
will comply in all material respects with the 1940 Act, (iv) Designated
Portfolio shares sold pursuant to this Agreement are registered under the 1933
Act (to the extent required by that Act) and are duly authorized for issuance,
(v) the Fund shall amend the registration statement for the shares of the
Designated Portfolios under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of such shares, and (vi) the
Board has elected for each Designated Portfolio to be taxed as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund makes no representations or warranties as to
whether any aspect of the Designated Portfolios' operations, including, but not
limited to, investment policies, fees and expenses, complies with the insurance
laws and other applicable laws of the various states.
2.2. The Underwriter represents and warrants that shares of the Designated
Portfolios (i) shall be offered and sold in compliance with applicable state and
federal securities laws, (ii) are offered and sold only to Participating
Insurance Companies and their separate accounts and to persons or plans that
communicate to the Fund that they qualify to purchase shares of the Designated
Portfolios under Section 817(h) of the Code and the regulations thereunder
without impairing the ability of the Account to consider the portfolio
investments of the Designated Portfolios as constituting investments of the
Account for the purpose of satisfying the diversification requirements of
Section 817(h) ("Qualified Persons"), and (iii) are registered and qualified for
sale in accordance with the laws of the various states to the extent required by
applicable law.
2.3. Subject to Company's representations and warranties in Sections 2.5
and 2.6, the Fund represents and warrants that it will invest the assets of each
Designated Portfolio in such a manner as to ensure that the Contracts will be
treated as annuity or life insurance contracts, whichever is appropriate, under
the Code and the regulations issued thereunder (or any successor provisions).
Without limiting the scope of the foregoing, the Fund represents and warrants
that each Designated Portfolio has complied and will continue to comply with
Section 817(h) of the Code and Treasury Regulation ss.1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulation. The
Fund will make every reasonable effort (a) to notify the Company immediately
upon having a reasonable basis for believing that a breach of this Section 2.3
has occurred, and (b) in the event of such a breach, to adequately diversify the
Designated Portfolio so as to achieve compliance within the grace period
afforded by Treasury Regulation ss.1.817-5.
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2.4. The Fund represents and warrants that each Designated Portfolio is or
will be qualified as a Regulated Investment Company under Subchapter M of the
Code, that the Fund will make every reasonable effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that the Fund will notify the Company immediately upon having a reasonable basis
for believing that a Designated Portfolio has ceased to so qualify or that it
might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company also represents and warrants that
it is an insurance company duly organized and in good standing under applicable
law, that it has legally and validly established the Account prior to any
issuance or sale thereof as a segregated asset account under New York insurance
laws, and that it (a) has registered or, prior to any issuance or sale of the
Contracts, will register the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act. The Company
further represents and warrants that (i) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal securities
and state securities and insurance laws, (ii) the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements;
(iii) the information provided pursuant to Section 1.8 shall be accurate in all
material respects; and (iv) it and the Account are Qualified Persons. The
Company shall register and qualify the Contracts or interests therein as
securities in accordance with the laws of the various states only if and to the
extent required by applicable law.
2.6. The Company represents and warrants that the Contracts are currently,
and at the time of issuance shall be, treated as life insurance or annuity
contracts, under applicable provisions of the Code, and that it will make every
reasonable effort to maintain such treatment, and that it will notify the Fund
and the Underwriter immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future. In addition, the Company represents and warrants that each of its
Accounts is a "segregated asset account" and that interests in the Accounts are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. Company will use every reasonable effort to continue to
meet such definitional requirements, and it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the FINRA and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.8. The Fund and the Underwriter represent and warrant that all of their
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum 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.
2.9. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Fund and to pay to the Fund any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Fund pursuant to the
terms of this Agreement. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies.
2.10. The Company represents and warrants that it shall comply with any
applicable privacy and notice provisions of 15 U.S.C. ▇▇.▇▇. 6801-6827 and any
applicable regulations promulgated thereunder (including but not limited to 17
C.F.R. Part 248) as they may be amended.
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2.11. The Company represents and warrants that it has in place an
anti-money laundering program ("AML program") that does now and will continue to
comply with applicable laws and regulations, including the relevant provisions
of the USA PATRIOT Act (Pub. L. No. 107-56 (2001)) and the regulations issued
thereunder.
2.12. The Company represents and warrants that (a) the Company has, and will
maintain, policies and procedures reasonably designed to monitor and prevent
market timing or excessive trading activity by its customers and (b) the Company
will provide the Fund or its agent with assurances regarding the compliance of
its handling of orders with respect to shares of the Designated Portfolios with
the requirements of Rule 22c-1, and regulatory interpretations thereof, and the
Fund's market timing and excessive trading policies upon reasonable request.
Additionally, the Company shall comply with provisions of the prospectuses and
statement of additional information ("SAI") of the Fund, and with applicable
federal and state securities laws. Among other things, the Company shall be
responsible for reasonably assuring that: (a) only orders to purchase, redeem or
exchange Shares received by the Company or any Indirect Intermediary (as defined
below) prior to the Valuation Time (as defined below) shall be submitted
directly or indirectly by the Company to the Fund or its transfer agent or other
applicable agent for receipt of a price based on the net asset value per share
calculated for that day in accordance with Rule 22c-1 under the 1940 Act (Orders
to purchase, redeem or exchange Fund shares received by the Company subsequent
to the Valuation Time on any given day shall receive a price based on the next
determined net asset value per share in accordance with Rule 22c-1 under the
1940 Act.); and (b) the Company shall cause to be imposed and/or waived
applicable redemption fees, if any, only in accordance with the Fund's then
current prospectuses or SAI and/or as instructed by the Underwriter. The Company
further agrees to make reasonable efforts to assist the Fund and its service
providers (including but not limited to the Underwriter) to detect, prevent and
report market timing or excessive short-term trading of shares. To the extent
the Company has actual knowledge of violations of Fund policies (as set forth in
the Fund's then current prospectuses or SAI) regarding (i) the timing of
purchase, redemption or exchange orders and pricing of shares, (ii) market
timing or excessive short-term trading, or (iii) the imposition of redemption
fees, if any, the Company agrees to report such known violations to the
Underwriter. For purposes of this provision, the term "Valuation Time" refers to
the time as of which the shares are valued on each business day, currently the
close of regular trading on the New York Stock Exchange (normally, 4:00 p.m.,
Eastern Time) on each day that the New York Stock Exchange is open for business.
2.13. 2.13 The Company agrees to provide the Underwriter, upon written
request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or other
government-issued identifier ("GII") and the Contract owner number or
participant account number, if known, of any or all Contractholder(s) of the
account, the name or other identifier of any investment professional(s)
associated with the Contractholder(s) or account (if known), and the amount,
date and transaction type (purchase, redemption, transfer, or exchange) of every
purchase, redemption, transfer, or exchange of shares held through an account
maintained by the Company during the period covered by the request. Unless
otherwise specifically requested by the Underwriter, the Company shall only be
required to provide information relating to Contractholder-Initiated Transfer
Purchases or Contractholder-Initiated Transfer Redemptions.
Period Covered by Request. Requests must set forth a specific period, not
to exceed 90 days from the date of the request, for which transaction
information is sought. The Underwriter may request transaction information older
than 90 days from the date of the request as it deems necessary to investigate
compliance with policies established or utilized by the Fund or the Underwriter
for the purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by a Portfolio. If requested by the Underwriter, the
Company will provide the information specified in this Section 2.13 for each
trading day.
(a) Requests for Shareholder information shall be made no more frequently than
quarterly except as the Underwriter or Fund deems necessary to investigate
compliance with policies established by the Fund for the purpose of eliminating
or reducing any dilution of the value of the outstanding shares issued by the
Fund.
(b) Form and Timing of Response. The Company agrees to provide, promptly upon
request of the Underwriter, the requested information specified in this Section
2.13. The Company agrees to use its best efforts to determine promptly whether
any specific person about whom it has received the identification and
transaction information specified in this Section 2.13 is itself a "financial
intermediary," as that term is defined in Rule 22c-2 under the 1940 Act (an
"Indirect Intermediary") and, upon request of the Underwriter, promptly either
(i) provide (or arrange to have provided) the information set forth in this
Section 2.13 for those Contractholders who hold an account with an
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Indirect Intermediary or (ii) restrict or prohibit the Indirect Intermediary
from purchasing shares in nominee name on behalf of other persons. The Company
additionally agrees to inform the Underwriter whether it plans to perform (i) or
(ii) above. Responses required by this paragraph must be communicated in writing
and in a format mutually agreed upon by the parties. To the extent practicable,
the format for any Contractholder and transaction information provided to the
Underwriter should be consistent with the NSCC Standardized Data Reporting
Format.
(c) Limitations on Use of Information. The Underwriter agrees not to use the
information received under this Section 2.13 for marketing or any other similar
purpose without the prior written consent of the Company; provided, however,
that this provision shall not limit the use of publicly available information,
or information which comes into the possession of the Underwriter, the Fund or
their affiliates from a third party.
(d) Agreement to Restrict Trading. The Company agrees to execute written
instructions from the Underwriter to restrict or prohibit further purchases or
exchanges of shares by a Contractholder that has been identified by the
Underwriter as having engaged in transactions in shares (directly or indirectly
through the Company's account) that violate policies established or utilized by
the Fund or the Underwriter for the purpose of eliminating or reducing any
dilution of the value of the outstanding shares issued by a Portfolio. Unless
otherwise directed by the Underwriter, any such restrictions or prohibitions
shall only apply to Contractholder-Initiated Transfer Purchases or
Contractholder-Initiated Transfer Redemptions that are affected directly or
indirectly through the Company.
(e) Form of Instructions. Instructions must include the TIN, ITIN or GII and the
specific individual Contract owner number or participant account number
associated with the Contractholder, if known, and the specific restriction(s) to
be executed. If the TIN, ITIN, GII or the specific individual Contract owner
number or participant account number associated with the Contractholder is not
known, the instructions must include an equivalent identifying number of the
Contractholder(s) or account(s) or other agreed upon information to which the
instruction relates.
(f) Timing of Response. The Company agrees to execute instructions from the
Underwriter as soon as reasonably practicable, but not later than five (5)
business days after receipt of the instructions by the Company.
(g) Confirmation by the Company. The Company must provide written confirmation
to the Underwriter that the Underwriter's instructions to restrict or prohibit
trading have been executed. The Company agrees to provide confirmation as soon
as reasonably practicable, but not later than ten (10) business days after the
instructions have been executed.
(h) Definitions. For purposes of this Section 2.13, the following terms shall
have the following meanings, unless a different meaning is clearly required by
the context:
(i) The term "Contractholder" means the holder of interests in a Contract
or a participant in an employee benefit plan with a beneficial interest in
a Contract.
(ii) The term "Contractholder-Initiated Transfer Purchase" means a
transaction that is initiated or directed by a Contractholder that results
in a transfer of assets within a Contract to a Fund, but does not include
transactions that are executed: (i) automatically pursuant to a contractual
or systematic program or enrollment such as a transfer of assets within a
Contract to a Portfolio as a result of "dollar cost averaging" programs,
insurance company approved asset allocation programs, or automatic
rebalancing programs; (ii) pursuant to a Contract death benefit; (iii) as a
result of a one-time step-up in Contract value pursuant to a Contract death
benefit; (iv) as a result of an allocation of assets to a Portfolio through
a Contract as a result of payments such as loan repayments, scheduled
contributions, retirement plan salary reduction contributions, or planned
premium payments to the Contract; or (v) pre-arranged transfers at the
conclusion of a required "free look" period.
(iii) The term "Contractholder-Initiated Transfer Redemption" means a
transaction that is initiated or directed by a Contractholder that results
in a transfer of assets within a Contract out of a Portfolio, but does not
include transactions that are executed: (i) automatically pursuant to a
contractual or systematic program or enrollments such as
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transfers of assets within a Contract out of a Portfolio as a result of
annuity payouts, loans, systematic withdrawal programs, insurance company
approved asset allocation programs and automatic rebalancing programs; (ii)
as a result of any deduction of charges or fees under a Contract; (iii)
within a Contract out of a Portfolio as a result of scheduled withdrawals
or surrenders from a Contract; or (iv) as a result of payment of a death
benefit from a Contract.
(iv) The term "Portfolios" shall mean the constituent series of the Trust,
but for purposes of this Section 2.13 shall not include Portfolios excepted
from the requirements of paragraph (a) of Rule 22c-2 by paragraph (b) of
Rule 22c-2.
(v) The term "promptly" shall mean as soon as practicable but in no event
later than ten (10) business days from the Company's receipt of the request
for information from the Underwriter.
(vi) The term "written" includes electronic writings and facsimile
transmissions.
(vii) In addition, for purposes of this Section 2.13, the term "purchase"
does not include the automatic reinvestment of dividends or distributions.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of the
Fund's current prospectus as the Company may reasonably request. The Underwriter
shall bear the expense of printing copies of the current prospectus for the
Contracts that will be distributed to existing Contract owners, and the Company
shall bear the expense of printing copies of the Fund's prospectus that are used
in connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus in electronic format at the Fund's
expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document (such printing to be at the Company's expense).
3.2. The Underwriter (or the Fund), at its expense, shall provide a
reasonable number of copies of the current SAI for the Fund free of charge to
the Company for itself and for any owner of a Contract who requests such SAI.
3.3. The Fund shall provide the Company with information regarding the
Fund's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract. The Company agrees that it will use such information in
the form provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
the manner in which the Company proposes to modify the information, and agrees
that it may not modify such information in any way without the prior consent of
the Fund.
3.4. The Fund, at its expense, or at the expense of its designee, shall
provide the Company with copies of its proxy material, reports to shareholders,
and other communications to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio for which
instructions have been received,
8
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Fund shares held in any
segregated asset account in the same proportion as Fund shares of such portfolio
for which voting instructions have been received from Contract owners, to the
extent permitted by law.
3.6 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt and provide
in writing.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
that the Company develops and in which the Fund (or a Designated Portfolio
thereof) or the Adviser or the Underwriter is named. No such material shall be
used until approved by the Fund or its designee, and the Fund will use its best
efforts for it or its designee to review such sales literature or promotional
material within ten Business Days after receipt of such material. If the Fund or
its designee does not comment or disapprove such material within 10 days of
receipt of such material, the material will be deemed approved. The Fund or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named, and no
such material shall be used if the Fund or its designee so object.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund or the Adviser or the
Underwriter in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI 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 by the Fund or its designee or by the Underwriter,
except with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund and the Underwriter, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the Company,
and the Company will use its best efforts to review such sales literature or
promotional material within ten Business Days after receipt of such material. If
the Company does not comment or disapprove such material within 10 days within
10 days of receipt of such material, the material will be deemed approved. The
Company reserves the right to reasonably object to the continued use of any such
sales literature or other promotional material in which the Company and/or its
Account is named, and no such material shall be used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, promptly after the filing of such document(s)
with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action
9
letters, and all amendments to any of the above, that relate to the Contracts or
the Account, promptly after the filing of such document(s) with the SEC or other
regulatory authorities. The Company shall provide to the Fund and the
Underwriter any complaints received from the Contract owners pertaining to the
Fund or the Designated Portfolio.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. Except as otherwise provided herein, or in a separate written
agreement, no party to this Agreement shall pay any fee or other compensation to
any other party to this Agreement. Except as otherwise provided herein, all
expenses incident to performance by a party under this Agreement shall be paid
by such party.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Potential Conflicts
6.1. The parties to this Agreement agree that the conditions or
undertakings required by the Mixed and Shared Funding Exemptive Order that may
be imposed on the Company, the Fund and/or the Underwriter by virtue of such
order by the SEC: (i) shall apply only upon the sale of shares of the Designated
Portfolios to variable life insurance separate accounts (and then only to the
extent required under the 1940 Act); (ii) will be incorporated herein by
reference; and (iii) such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party notwithstanding any
provision of this Agreement to the contrary.
6.2. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the parties to this Agreement shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5 and 3.6 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 VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund and the
Underwriter and each of its trustees/directors and officers, and each person, if
any, who controls the Fund or
10
Underwriter within the meaning of Section 15 of the 1933 Act or who is under
common control with the Underwriter (collectively, the "Indemnified Parties" for
purposes of this Section 7.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue
statements of any material fact contained in the registration statement,
prospectus (which shall include a written description of a Contract that is
not registered under the 1933 Act), or SAI for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund for use in
the registration statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus, SAI, or sales literature of the Fund not supplied by the
Company or persons under its control) or wrongful conduct of the Company or
its agents or persons under the Company's authorization or control, with
respect to the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI, or
sales literature of the Fund or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise,
to comply with the qualification requirements specified in Section 2.6 of
this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall
11
not relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or who is under common
control with the Company (collectively, the "Indemnified Parties" for purposes
of this Section 7.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or SAI or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Fund by or on behalf of the
Company for use in the registration statement, prospectus or SAI for the
Fund or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus, SAI or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the Fund
or Underwriter or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by
or on behalf of the Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter to
provide the services and furnish the materials under the terms of this
Agreement (including a failure of the Fund, whether unintentional or in
good faith or otherwise, to comply with the diversification and other
qualification requirements specified in Sections 2.3 and 2.4 of this
Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out of
or result from any
12
other material breach of this Agreement by the Underwriter; as limited by
and in accordance with the provisions of Sections 7.2(b) and 7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or 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 or to
the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
7.3. Indemnification By the Fund
7.3(a). The Fund agrees to indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or who is under common control
with the Company (collectively, the "Indemnified Parties" for purposes of this
Section 7.3) against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may be required to pay or may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or settlements, are
related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification and other qualification requirements specified in
Section 2.3 and 2.4 of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof. The parties acknowledge that the Fund's indemnification
obligations under this Section 7.3 are subject to applicable law.
7.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such
13
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Company, the
Fund, the Underwriter or the Account, whichever is applicable.
7.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
7.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of California.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
If, in the future, the Mixed and Shared Funding Exemptive Order should no longer
be necessary under applicable law, then Article VI shall no longer apply.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to some or
all Designated Portfolios, by three (3) months advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter based upon the Company's determination that shares of
the Fund are not reasonably available to meet the requirements of
the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter in the event any of the Designated Portfolio's shares
are not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by
the FINRA, the SEC, the Insurance Commissioner or like official
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 any Account, or the purchase of the
Fund's shares; provided, however, that the Fund or Underwriter
determines in its sole judgment exercised in good faith, that any
14
such administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the FINRA, the SEC, or any state securities or
insurance department or any other regulatory body; provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund
or Underwriter to perform its obligations under this Agreement;
or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event
that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M or fails to comply with the Section
817(h) diversification requirements specified in Section 2.4
hereof, or if the Company reasonably believes that such Portfolio
may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Section 2.6 hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition,
or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(i) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund, Adviser, or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(j) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares of a
Designated Portfolio of the Fund in accordance with the terms of
the Contracts, provided that the Company has given at least 45
days prior written notice to the Fund and Underwriter of the date
of substitution; or
(k) termination by the Fund if the Board has decided to (i) refuse to
sell shares of any Designated Portfolio to the Company and/or any
of its Accounts; (ii) suspend or terminate the offering of shares
of any Designated Portfolio; or (iii) dissolve, reorganize,
liquidate, merge or sell all assets of the Fund or any Designated
Portfolio, subject to the provisions of Section 1.1; or
(l) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict
exists as provided in Article VI.
9.2. Notwithstanding any termination of this Agreement and except as
provided in Section 9.2(b), the Fund and the Underwriter shall, at the option of
the Company, continue, until the one year anniversary from the date of
termination, and from year to year thereafter if deemed appropriate by the Fund
and the Underwriter, to make available additional shares of the Designated
Portfolios pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, based on
instructions from the owners of the Existing Contracts, the Accounts shall be
permitted to reallocate investments in the Designated Portfolios of the Fund and
redeem investments in the Designated Portfolios, and shall be permitted to
invest in the Designated Portfolios in the event that owners of the Existing
Contracts make additional premium payments under the Existing Contracts.
The Company agrees, promptly after any termination of this Agreement, to
take all steps necessary to redeem the investment of the Accounts in the
Designated Portfolios within one year from the
15
date of termination of the Agreement as provided in Article IX. Such steps shall
include, but not be limited to, obtaining an order pursuant to Section 26(c) of
the 1940 Act to permit the substitution of other securities for the shares of
the Designated Portfolios. The Fund may, in its discretion, permit the Accounts
to continue to invest in the Designated Portfolios beyond such one year
anniversary for an additional year beginning on the first annual anniversary of
the date of termination, and from year to year thereafter; provided that the
Fund agrees in writing to permit the Accounts to continue to invest in the
Designated Portfolios at the beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to Sections
9.1(g) or 9.1(l), at the option of the Fund or the Underwriter; or (ii) the one
year anniversary of the termination of the Agreement is reached or, after waiver
as provided in Section 9.2(a), such subsequent anniversary is reached (each of
(i) and (ii) referred to as a "triggering event" and the date of termination as
provided in (i) or the date of such anniversary as provided in (ii) referred to
as the "request date"), the parties agree that such triggering event shall be
considered as a request for immediate redemption of shares of the Designated
Portfolios held by the Accounts, received by the Fund and its agents as of the
request date, and the Fund agrees to process such redemption request in
accordance with the 1940 Act and the regulations thereunder and the Fund's
registration statement.
(c) The parties agree that this Section 9.2 shall not apply to any
terminations under Article VI and the effect of such Article VI terminations
shall be governed by Article VI of this Agreement. The parties further agree
that, to the extent that all or a portion of the assets of the Accounts continue
to be invested in the Fund or any Designated Portfolio of the Fund, Articles I,
II, VI, VII and VIII will remain in effect after termination.
9.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund: PIMCO Variable Insurance Trust
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company: National Integrity Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, SVP and General Counsel
If to Underwriter: Allianz Global Investors Distributors LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the property of
the Fund, and in the case of a series company, the respective Designated
Portfolios listed on Schedule A hereto as though each such Designated Portfolio
had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, the Fund and Underwriter shall treat as confidential the names and
addresses of the owners of the Contracts and each party shall treat as
Confidential 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
16
confidential information without the express written consent of the affected
party until such time as such information has come into the public domain.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
FINRA, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with the
New York variable annuity laws and regulations and any other applicable law or
regulations.
11.7. 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.
11.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
11.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and, if applicable, the Company's annual report (prepared under
generally accepted accounting principles) filed with any state or federal
regulatory body or otherwise made available to the public, as soon as
practicable and in any event within 90 days after the end of each fiscal
year; and
(b) any registration statement (without exhibits) and financial reports of the
Company filed with the Securities and Exchange Commission or any state
insurance regulatory, as soon as practicable after the filing thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
NATIONAL INTEGRITY LIFE
INSURANCE COMPANY: By its authorized officer
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: ________________________________
PIMCO VARIABLE INSURANCE TRUST: By its authorized officer
By: _________________________________
Name: _________________________________
Title: _________________________________
Date: _________________________________
ALLIANZ GLOBAL INVESTORS
DISTRIBUTORS LLC
By its authorized officer
By: _________________________________
17
Name: _________________________________
Title: _________________________________
Date: _________________________________
18
SCHEDULE A
The term "Designated Portfolio" of the Fund will include any currently offered
class of any Portfolio of the Fund (as listed below) as well as any Portfolio of
the Fund or any share class of any Portfolio (now existing or hereafter created)
created subsequent to the date hereof.
DESIGNATED PORTFOLIOS/CLASSES:
Advisor Class Shares
All Asset Portfolio
CommodityRealReturn Strategy Portfolio
Low Duration Portfolio
Real Return Portfolio
Total Return Portfolio
SEGREGATED ASSET ACCOUNTS:
Separate Account I of National Integrity Life Insurance Company AnnuiChoice variable annuity
Established May 19, 1986 Grand Master flex variable annuity
IQ3 variable annuity
IQ Advisor variable annuity
Pinnacle Plus variable annuity
Separate Account II of National Integrity Life Insurance Company Pinnacle variable annuity
Established May 21, 1992