FUND PARTICIPATION AGREEMENT
BETWEEN
PORTFOLIO PARTNERS, INC.,
GOLDEN AMERICAN LIFE INSURANCE COMPANY
AND
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Golden American Life Insurance Company (the "Company"), Portfolio
Partners, Inc. (the "Fund") and Aetna Life Insurance and Annuity Company (the
"Adviser") hereby agree to an arrangement whereby the Fund shall be made
available to serve as underlying investment media for Variable Annuity or
Variable Life Contracts ("Contracts") to be issued by the Company.
1. Establishment of Accounts; Availability of Fund.
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(a) The Company represents that it has established Separate Account B and
may establish such other accounts as may be set forth in Schedule A attached
hereto and as may be amended from time to time with the mutual consent of the
parties hereto (the "Accounts"), each of which is a separate account under
Delaware Insurance law, and has registered or will register each of the Accounts
(except for such Accounts for which no such registration is required) as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act"), to
serve as an investment vehicle for the Contracts. Each Contract provides for the
allocation of net amounts received by the Company to an Account for investment
in the shares of one of more specified open-end management investment companies
available through that Account as underlying investment media. Selection of a
particular investment management company and changes therein from time to time
are made by the participant or Contract owner, as applicable under a particular
Contract.
(b) The Fund and the Adviser represent and warrant that the
investments of the series of the Fund (each designated a "Portfolio") specified
in Schedule B attached hereto (as may be amended from time to time with the
mutual consent of the parties hereto) will at all times be adequately
diversified within the meaning of Section 817(h) of the Internal Revenue Service
Code of 1986, as amended (the "Code"), and the Regulations thereunder, and that
at all times while this agreement is in effect, all beneficial interests will be
owned by one or more insurance companies
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or by any other party permitted under Section 1.817-5(f)(3) of the Regulations
promulgated under the Code or by the successor thereto, or by any other party
permitted under a Revenue Ruling or private letter ruling granted by the
Internal Revenue Service.
2. Pricing Information; Orders; Settlement.
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(a) The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on behalf of each
Account at the net asset value applicable to each order on those days on which
the Fund calculates its net asset value (a "Business Day"). Fund shares shall be
purchased and redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those Contracts for which
the Fund serve as underlying investment media, provided, however, that the Board
of Trustees of the Fund (hereinafter the "Trustees") may upon reasonable notice
to the Company, refuse to sell shares of any Portfolio to any person, or suspend
or terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Trustees, acting in good faith and in the best interests of
the shareholders of any Portfolio and is acting in compliance with their
fiduciary obligations under federal and/or any applicable state laws.
(b) The Fund will provide to the Company closing net asset value,
dividend and capital gain information at the close of trading each day that the
New York Stock Exchange (the "Exchange" is open (each such day a "Business
Day"), and in no event later than 7:00 p.m. Eastern Standard time on such
Business Day. The Company will send via facsimile or electronic transmission to
the Fund or its specified agent orders to purchase and/or redeem Fund shares by
10:00 a.m. Eastern Standard Time the following business day. Payment for net
purchases will be wired by the Company to an account designated by the Fund to
coincide with the order for shares of the Fund.
(c) The Fund hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund shares relating to
the Contracts from Contract owners or participants. Orders from Contract owners
or participants received from any distributor of the Contracts (including
affiliates of the Company) by the Company, acting as agent for the Fund, prior
to the close of the Exchange on any given
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business day will be executed by the Fund at the net asset value determined as
of the close of the Exchange on such Business Day, provided that the Fund
receives written (or facsimile) notice of such order by 10 a.m. Eastern Standard
Time on the next following Business Day. Any orders received by the Company
acting as agent on such day but after the close of the Exchange will be executed
by the Fund at the net asset value determined as of the close of the Exchange on
the next business day following the day of receipt of such order, provided that
the Fund receives written (or facsimile) notice of such order by 10 a.m. Eastern
Standard Time within two days following the day of receipt of such order.
(d) Payments for net redemptions of shares of the Fund will be wired
by the Fund to an account designated by the Company. Payments for net purchases
of the Fund will be wired by the Company to an account designated by the Fund on
the same Business Day the Company places an order to purchase Fund shares.
Payments shall be in federal funds transmitted by wire.
(e) In lieu of applicable provisions set forth in paragraphs 2(a)
through 2(d) above, the parties may agree to provide pricing information,
execute orders and wire payments for purchases and redemptions through National
Securities Clearing Corporation's Fund/SERV system in which case such activities
will be governed by the provisions set forth in an Exhibit to this Agreement.
(f) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other party), and shall
not be liable in the event that an error is a result of any misinformation
supplied by the other party.
(g) The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule B offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information. The
Company shall not permit any person other than a Contract owner or Participant
to give instructions to the Company which would require the Company to redeem or
exchange shares of the Fund. This provision shall not be construed to prohibit
the Company from substituting shares of another fund, as permitted by law.
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3. Expenses.
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(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by the Fund under this Agreement shall be paid by
the Fund, including the cost of registration of Fund shares with the Securities
and Exchange Commission (the "SEC") and in states where required. The Fund and
Adviser shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Fund or
Adviser, except as provided herein and in Schedule C attached hereto and made a
part of this Agreement as may be amended from time to time with the mutual
consent of the parties hereto. All expenses incident to performance by each
party of its respective duties under this Agreement shall be paid by that party,
unless otherwise specified in this Agreement.
(b) The Fund or the Adviser shall provide to the Company Post Script files
of periodic fund reports to shareholders and other materials that are required
by law to be sent to Contract owners. In addition, the Fund or the Adviser shall
provide the Company with a sufficient quantity of its prospectuses, statements
of additional information and any supplements to any of these materials, to be
used in connection with the offerings and transactions contemplated by this
Agreement. In addition, the Fund shall provide the Company with a sufficient
quantity of its proxy material that is required to be sent to Contract owners.
The Adviser shall be permitted to review and approve the typeset form of such
material prior to such printing provided such material has been provided by the
Adviser to the Company within a reasonable period of time prior to typesetting.
(c) In lieu of the Fund's or Adviser's providing printed copies of
prospectuses, statements of additional information and any supplements to any of
these materials, and periodic fund reports to shareholders, the Company shall
have the right to request that the Fund transmit a copy of such materials in an
electronic format (Post Script files), which the Company may use to have such
materials printed together with similar materials of other Account funding media
that the Company or any distributor will distribute to existing or prospective
Contract owners or participants.
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4. Representations.
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(a) The Company agrees that it and its agents shall not, without the
written consent of the Fund or the Adviser, make representations concerning the
Fund, or its shares except those contained in the then current prospectuses and
in current printed sales literature approved by or deemed approved by the Fund
or the Adviser.
(b) The Fund and Adviser represent and warrant that (i) they have
examined and tested their systems and made reasonable inquiry of their business
partners and other entities with whom they conduct business with respect to Year
2000 problems and (ii) their ability to perform their obligations under this
Agreement will not be interrupted or disrupted as a result of any business
interruptions or other business problems relating to specific dates or days
before, during and after the Year 2000.
5. Termination.
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This agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of either the Company, the Adviser or the Fund, upon
sixty days advance written notice to the other parties;
(b) at the option of the Company, upon one week advance written notice
to the Adviser and the Fund, if Fund shares are not available for any reason to
meet the requirement of Contracts as determined by the Company. Reasonable
advance notice of election to terminate shall be furnished by Company;
(c) at the option of either the Company, the Adviser or the Fund,
immediately upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, the Company, the Fund or
the Adviser by the National Association of Securities Dealers, Inc. (the
"NASD"), the SEC or any other regulatory body;
(d) upon the determination of the Accounts to substitute for the
Fund's shares the shares of another investment company in accordance with the
terms of the applicable Contracts. The Company will give 60 days
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written notice to the Fund and the Adviser of any decision to replace the
Fund's' shares;
(e) upon assignment of this Agreement, unless made with the written consent
of all other parties hereto;
(f) if Fund shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as an underlying
investment medium for Contracts issued or to be issued by the Company. Prompt
notice shall be given by the appropriate party should such situation occur.
6. Continuation of Agreement.
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Termination as the result of any cause listed in Section 5 shall not affect
the Fund's obligation to furnish its shares to Contracts then in force for which
its shares serve or may serve as the underlying medium unless such further sale
of Fund shares is prohibited by law or the SEC or other regulatory body, or is
determined by the Fund's Board to be necessary to remedy or eliminate an
irreconcilable conflict pursuant to Section 10 hereof.
7. Advertising Materials; Filed Documents.
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(a) Advertising and sales literature with respect to the Fund prepared
by the Company or its agents for use in marketing its Contracts will be
submitted to the Fund or its designee for review before such material is
submitted to any regulatory body for review. No such material shall be used if
the Fund or its designee reasonably object to such use in writing, transmitted
by facsimile within two business days after receipt of such material.
(b) The Fund will provide additional copies of its financials as soon as
available to the Company and at least one complete copy of all registration
statements, prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements and all amendments or supplements to any
of the above that relate to the Fund promptly after the filing of such document
with the SEC or other regulatory authorities. At the Adviser's request, the
Company will provide to the Adviser at least one complete copy of all
registration statements, prospectuses, statements of additional information,
annual and semi-annual reports, proxy statements, and all amendments or
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supplements to any of the above that relate to the Account promptly after the
filing of such document with the SEC or other regulatory authority.
(c) The Fund or the Adviser will provide via Excel spreadsheet
diskette format or in electronic transmission to the Company at least quarterly
portfolio information necessary to update Fund profiles with seven business days
following the end of each quarter.
(d) The Fund will reimburse the Company for any incorrect information
provided to the Company under this Section as provided for in Schedule C.
8. Proxy Voting.
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(a) The Company shall provide pass-through voting privileges on Fund
shares held by registered separate accounts to all Contract owners and
participants to the extent the SEC continues to interpret the 1940 Act as
requiring such privileges. The Company shall provide pass-through voting
privileges on Fund shares held by unregistered separate accounts to all Contract
owners.
(b) The Company will distribute to Contract owners and participants,
as appropriate, all proxy material furnished by the Fund and will vote Fund
shares in accordance with instructions received from such Contract owners and
participants. If and to the extent required by law, the Company, with respect to
each group Contract and in each Account, shall vote Fund shares for which no
instructions have been received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners and participants.
9. Indemnification.
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(a) The Company agrees to indemnify and hold harmless the Fund and the
Adviser, and its directors, officers, employees, agents and each person, if any,
who controls the Fund or its Adviser within the meaning of the Securities Act of
1933 (the "1933 Act") against any losses, claims, damages or
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liabilities to which the Fund or any such director, officer, employee, agent, or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, prospectus or
sales literature of the Company 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, or arise out
of or as a result of conduct, statements or representations (other than
statements or representations contained in the prospectuses or sales literature
of the Fund) of the Company or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are the underlying investment.
The Company will reimburse any legal or other expenses reasonably incurred by
the Fund or any such director, officer, employee, agent, investment adviser, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus in conformity
with written materials furnished to the Company by the Fund specifically for use
therein or (ii) the willful misfeasance, bad faith, or gross negligence by the
Fund or Adviser in the performance of its duties or the Fund's or Adviser's
reckless disregard of obligations or duties under this Agreement or to the
Company, whichever is applicable. This indemnity agreement will be in addition
to any liability which Company may otherwise have.
(b) The Fund and the Adviser agree to indemnify and hold harmless the
Company and its directors, officers, employees, agents and each person, if any,
who controls the Company within the meaning of the 1933 Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, prospectuses or sales literature of the Fund 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 material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Fund will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, employee, agent, or controlling
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person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Fund will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or omission or alleged
omission made in such Registration Statement or prospectuses which are in
conformity with written materials furnished to the Fund by the Company
specifically for use therein.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 10. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
10. Potential Conflicts.
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(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by the Fund on and with the SEC and the order issued by the
SEC dated December 21, 1998 (File No. 812-11196) in response thereto (the "Mixed
and Shared Funding Exemptive Order"). The Company has reviewed the conditions to
the requested relief set forth in such application for exemptive relief. As set
forth in such application, the Board of Directors of Fund (the "Board") will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contractholders of all separate accounts
("Participating Companies") investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
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private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contractholders and variable life
insurance contractholders; or (vi) a decision by an insurer to disregard the
voting instructions of contractholders. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contractholder voting instructions are
disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contractholder investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Account from the Fund and
reinvesting such assets in a different investment medium or submitting the
question of whether such segregation should be implemented to a vote of all
affected contractholders and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to the affected contractholders
the option of making such a change; and/or
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(ii)establishing a new registered management investment company or managed
separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contractholder voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contractholders having an interest in the Fund, the Company at its
sole cost, may be required, at the Board's election, to withdraw an Account's
investment in the Fund and terminate this Agreement; provided, however, that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For the purpose of this Section 10, a majority of the
disinterested Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for any Contract. The
Company shall not be required by this Section 11 to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners or participants materially adversely affected by
the irreconcilable material conflict.
11. Miscellaneous.
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(a) Amendment and Waiver. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all parties hereto.
(b) Notices. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopier or registered or certified mail, postage prepaid, return receipt
requested, or recognized overnight courier service to the party or parties to
whom they are directed at the following addresses, or at such other addresses as
may be designated by notice from such party to all other parties.
To the Company:
Golden American Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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To the Fund:
Portfolio Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Counsel
Any notice, demand or other communication given in a manner prescribed in
this subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
(e) Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreement and
understandings relating to the subject matter hereof.
(g) Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Connecticut.
(h) It is understood by the parties that this Agreement is not an exclusive
arrangement in any respect.
(i) The terms of this Agreement and the Schedules thereto will be held
confidential by each party except to the extent that either party or its counsel
may deem it necessary to disclose such terms.
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12. Limitation on Liability of Directors, etc.
------------------------------------------
This agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his or her capacity as an officer of the Fund. The
obligations of this agreement shall be binding upon the assets and property of
the Fund only and shall not be binding on any Director, officer or shareholder
of the Fund individually.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the 13th day of July, 2001.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
PORTFOLIO PARTNERS, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
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SCHEDULE A
(For any future separate accounts - See Section 1(a)
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SCHEDULE B
(List of portfolios available--See Section 1(b))
PPI MFS Capital Opportunities Portfolio - Service Class
Effective 12/31/01:
PPI ▇▇▇▇▇ Aggressive Growth - Service Class
PPI ▇▇▇▇▇ Growth Portfolio - Service Class
PPI ▇▇▇▇▇▇▇ Tactical Asset Allocation Portfolio - Service
Class PPI ▇▇▇▇▇▇▇ Sachs(R) Capital Growth Portfolio - Service
Class PPI MFS Research Growth Portfolio - Service Class PPI
OpCap Balanced Value Portoflio - Service Class PPI Salomon
Brothers Capital Portfolio - Service Class PPI Salomon
Brothers Investors Value Portfolio - Service Class PPI ▇▇▇▇▇▇▇
International Growth Portfolio - Service Class PPI ▇.▇▇▇▇
Price Growth Equity Portfolio - Service Class
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SCHEDULE C
The following costs, expenses and reimbursements will be paid by the party
indicated:
1. For purposes of Sections 2 and 7, the Fund or the Adviser shall be
liable to the Company for any amount the Company is required to pay to Contract
owners or participants due to (i) an incorrect calculation of a Fund's daily net
asset value, dividend rate, or capital gain distribution rate or (ii) incorrect
or late reporting of the daily net asset value, capital gain distribution rate
of a Fund, upon written notification by the Company, with supporting data, to
the Adviser. In addition, the Fund or the Adviser shall be liable to the Company
for systems and out of pocket costs incurred by the Company in making a Contract
owner's or a participant's account whole, if such costs or expenses are a result
of the Fund's failure to provide timely or correct net asset values, dividend
and capital gains or financial information and if such information is not
corrected by 4pm EST of the next business day after releasing such incorrect
information provided the incorrect NAV as well as the correct NAV for each day
that the error occurred is provided. If a mistake is caused in supplying such
information or confirmations, which results in a reconciliation with incorrect
information, the amount required to make a Contract owner's or a Participant's
account whole shall be borne by the party providing the incorrect information,
regardless of when the error is corrected.
2. For purposes of Section 3, the Fund or the Adviser shall pay for
the cost of typesetting and printing periodic fund reports to existing
shareholders, prospectuses, prospectus supplements, statements of additional
information and other materials that are required by law to be sent to existing
Contract owners or participants, as well as the cost of distributing such
materials. The Company shall pay for the cost of prospectuses and statements of
additional information and the distribution thereof for prospective Contract
owners or participants. Each party shall be provided with such supporting data
as may reasonably be requested for determining expenses under Section 3.
3. The Fund shall pay all expenses in connection with the provision
to the Company of a sufficient quantity of its proxy material under Section 3.
The cost associated with proxy preparation, group authorization letters,
programming for tabulation and necessary materials (including postage) will be
paid by the Fund.
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NSCC EXHIBIT
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PROCEDURES FOR PRICING AND ORDER/SETTLEMENT THROUGH NATIONAL SECURITIES CLEARING
CORPORATION'S MUTUAL FUND PROFILE SYSTEM AND MUTUAL FUND SETTLEMENT, ENTRY AND
REGISTRATION VERIFICATION SYSTEM
As provided in Section 2(e) of the Participation Agreement, the parties hereby
agree to provide pricing information, execute orders and wire payments for
purchases and redemptions of Fund shares through National Securities Clearing
Corporation ("NSCC") and its subsidiary systems as follows:
Distributor or the Funds will furnish to the Company or its affiliate through
NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset value
information for each Fund, (2) a schedule of anticipated dividend and
distribution payment dates for each Fund, which is subject to change without
prior notice, ordinary income and capital gain dividend rates on the Fund's
ex-date, and (4) in the case of fixed income funds that declare daily dividends,
the daily accrual or the interest rate factor. All such information shall be
furnished to the Company or its affiliate by 6:30 p.m. Eastern Time on each
business day that the Fund is open for business (each a "Business Day") or at
such other time as that information becomes available. Changes in pricing
information will be communicated to both NSCC and the Company or its affiliate.
Upon receipt of Fund purchase, exchange and redemption instructions for
acceptance as of the time at which a Fund's net asset value is calculated as
specified in such Fund's prospectus ("Close of Trading") on each Business Day
("Instructions"), and upon its determination that there are good funds with
respect to Instructions involving the purchase of Shares, the Company or its
affiliate will calculate the net purchase or redemption order for each Fund.
Orders for net purchases or net redemptions derived from Instructions received
by the Company or its affiliate prior to the Close of Trading on any given
Business Day will be sent to the Defined Contribution Interface of NSCC's Mutual
Fund Settlement, Entry and Registration Verification System ("Fund/SERV") by
5:00 a.m. Eastern Time on the next Business Day. Subject to the Company's or its
affiliate's compliance with the foregoing, the Company or its affiliate will be
considered the agent of the Distributor and the Funds, and the Business Day on
which Instructions are received by the Company or its affiliate in proper form
prior to the Close of Trading will be the date as of which shares of the Funds
are deemed purchased, exchanged or redeemed pursuant to such Instructions.
Instructions received in proper form by the Company or its affiliate after the
Close of Trading on any given Business Day will be treated as if received on the
next following Business Day. Dividends and capital
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gains distributions will be automatically reinvested at net asset value in
accordance with the Fund's then current prospectuses.
The Company or its affiliate will wire payment for net purchase orders by the
Fund's NSCC Firm Number, in immediately available funds, to an NSCC settling
bank account designated by the Company or its affiliate no later than 5:00 p.m.
Eastern time on the same Business Day such purchase orders are communicated to
NSCC. For purchases of shares of daily dividend accrual funds, those shares will
not begin to accrue dividends until the day the payment for those shares is
received.
NSCC will wire payment for net redemption orders by Fund, in immediately
available funds, to an NSCC settling bank account designated by the Company or
its affiliate, by 5:00 p.m. Eastern Time on the Business Day such redemption
orders are communicated to NSCC, except as provided in a Fund's prospectus and
statement of additional information.
With respect to (c) or (d) above, if Distributor does not send a confirmation of
the Company's or its affiliate's purchase or redemption order to NSCC by the
applicable deadline to be included in that Business Day's payment cycle, payment
for such purchases or redemptions will be made the following Business Day.
If on any day the Company or its affiliate or Distributor is unable to meet the
NSCC deadline for the transmission of purchase or redemption orders, it may at
its option transmit such orders and make such payments for purchases and
redemptions directly to Distributor or to the Company or its affiliate, as
applicable, as is otherwise provided in the Agreement.
These procedures are subject to any additional terms in each Fund's prospectus
and the requirements of applicable law. The Funds reserve the right, at their
discretion and without notice, to suspend the sale of shares or withdraw the
sale of shares of any Fund.
2. The Company or its affiliate, Distributor and clearing agents (if
applicable) are each required to have entered into membership agreements with
NSCC and met all requirements to participate in the MFPS and Fund/SERV systems
before these procedures may be utilized. Each party will be bound by the terms
of their membership agreement with NSCC and will perform any and all duties,
functions, procedures and responsibilities assigned to it and as otherwise
established by NSCC applicable to the MFPS and Fund/SERV system and the
Networking Matrix Level utilized.
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3. Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect. Unless otherwise indicated
herein, the terms defined in the Agreement shall have the same meaning as in
this Exhibit.
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