Exhibit 1.8(f)
FORM OF
PARTICIPATION AGREEMENT
Among
DELAWARE GROUP PREMIUM FUND, INC.
And
--------------------------------
And
DELAWARE DISTRIBUTORS, LP
THIS AGREEMENT, made and entered into this ______ of _____, 2000, by
and between DELAWARE GROUP PREMIUM FUND, INC., a corporation organized under
the laws of Maryland (the "Fund"), and __________________, an _________
insurance corporation (the "Company"), on its own behalf and on behalf of
each separate account of the Company named in Schedule 1 to this Agreement as
in effect at the time this Agreement is executed and such other separate
accounts that may be added to Schedule 1 from time to time in accordance with
the provisions of Article XI of this Agreement (each such account referred to
as the "Account"), and DELAWARE DISTRIBUTORS, LP, a Delaware limited
partnership (the "Distributor").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts (collectively referred to
as "Variable Insurance Products," the owners of such products being referred
to as "Product owners") to be offered by insurance companies which have
entered into participation agreements with the Fund ("Participating Insurance
Companies"); and
WHEREAS, the common stock of the Fund (the "Fund shares") consists
of separate series ("Series") issuing separate classes of shares ("Series
shares"), each such class representing an interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund filed with the Securities and Exchange Commission
(the "SEC") and the SEC has declared effective a registration statement
(referred to herein as the "Fund Registration Statement" and the prospectus
contained therein, or filed pursuant to Rule 497 under the 1933 Act, referred
to herein as the "Fund Prospectus") on Form N-lA to register itself as an
open-end management investment company (File No. 811-5162) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund
shares (File No. 33-14363) under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Company has filed a registration statement with the SEC
to register under the 1933 Act certain variable annuity contracts described
in Schedule 2 to this Agreement as in effect at the time this Agreement is
executed and such other variable annuity contracts and variable life
insurance policies which may be added to Schedule 2 from time to time in
accordance with Article XI of this Agreement (such policies and contracts
shall be referred to herein collectively as the "Contracts," each such
registration statement for a class or classes of contracts listed on Schedule
2 being referred to as the "Contracts Registration Statement" and the
prospectus for each such class or classes being referred to herein as the
"Contracts Prospectus," and the owners of the such contracts, as
distinguished from all Product Owners, being referred to as "Contract
Owners"); and
WHEREAS, each Account, a validly existing separate account, duly
authorized by resolution of the Board of Directors of the Company on the date
set forth on Schedule 1, sets aside and invests assets attributable to the
Contracts; and
WHEREAS, the Company has registered or will have registered each
Account with the SEC as a unit investment trust under the 1940 Act before any
Contracts are issued by that Account; and
WHEREAS, the Distributor 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 National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Distributor and the Fund have entered into an agreement
(the "Fund Distribution Agreement") pursuant to which the Distributor will
distribute Fund shares; and
WHEREAS, Delaware Management Company, Inc. (the "Investment
Manager") is registered as an investment adviser under the 1940 Act and any
applicable state securities laws and serves as an investment manager to the
Fund pursuant to an agreement; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Series shares on behalf of each
Account to fund its Contracts and the Distributor is authorized to sell such
Series shares to unit investment trusts such as the Accounts at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Distributor agrees to sell to the Company those Series
shares which the Company orders on behalf of the Account, executing such
orders on a daily basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make the shares of its Series available for
purchase by the Company on behalf of the Account at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, and the Fund shall use its best efforts to calculate such net
asset value by 6:00 p.m., E.S.T., on each such Business Day. Notwithstanding
any other provision in this Agreement to the contrary, the Board of Directors
of the Fund (the "Fund Board") may suspend or terminate the offering of Fund
shares of any Series, if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Fund
Board acting in good faith and in light of its fiduciary duties under Federal
and any applicable state laws, suspension or termination is necessary and in
the best interests of the shareholders of any Series (it being understood
that "shareholders" for this purpose shall mean Product owners).
1.3. The Fund agrees to redeem, at the Company's request, any full
or fractional shares of the Fund held by the Account or the Company,
executing such requests at the net asset value on a daily basis in accordance
with Section 1.4 of this Agreement, the applicable provisions of the 1940 Act
and the then currently effective Fund Prospectus. Notwithstanding the
foregoing, the Fund may delay redemption of Fund shares of any Series to the
extent permitted by the 1940 Act, any rules, regulations or orders
thereunder, or the then currently effective Fund Prospectus.
1.4.
(a) For purposes of Sections 1.1, 1.2 and 1.3, the
Company shall be the agent of the Fund for the limited purpose of receiving
redemption and purchase requests from the Account (but not from the general
account of the Company), and receipt on any Business Day by the Company as
such limited agent of the Fund prior to the time prescribed in the current
Fund Prospectus (which as of the date of execution of this Agreement is 4
p.m., E.S.T.) shall constitute receipt by the Fund on that same Business Day,
provided that the Fund receives notice of such redemption or purchase request
by 11:00 a.m., E.S.T. on the next following Business Day. For purposes of
this Agreement, "Business Day" shall mean any day on which the New York Stock
exchange is open for trading.
(b) The Company shall pay for shares of each
Series on the same day that it places an order with the Fund to purchase
those Series shares for an Account. Payment for Series shares will be made by
the Account or the Company in Federal Funds transmitted to the Fund by wire
to be received by 11:00 a.m., E.S.T. on the day the Fund is properly notified
of the purchase order for Series shares. If Federal Funds are not received on
time, such funds will be invested, and Series shares purchased thereby will
be issued, as soon as practicable.
(c) Payment for Series shares redeemed by the
Account or the Company will be made in Federal Funds transmitted to the
Company by wire on the day the Fund is notified of the redemption order of
Series shares, except that the Fund reserves the right to delay payment of
redemption proceeds, but in no event may such payment be delayed longer than
the period permitted under Section 22(e) of the 1940 Act. Neither the Fund
nor the Distributor shall bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds; the Company alone shall be
responsible for such action.
1.5. Issuance and transfer of Fund shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund
shares will be recorded in an appropriate ledger for the Account or the
appropriate subaccount of the Account.
1.6. The Fund shall furnish notice as soon as reasonably practicable
to the Company of any income dividends or capital gain distributions payable
on any Series 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 Series shares in the form of additional shares of that Series.
The Company reserves the right, on its behalf and on behalf of the Account,
to revoke this election and to receive all such dividends in cash. The Fund
shall notify the Company of the number of Series shares so issued as payment
of such dividends and distributions.
1.7. The Fund shall use its best efforts to make the net asset value
per share for each Series available to the Company by 6 p.m., E.S.T. each
Business Day, and in any event, as soon as reasonably practicable after the
net asset value per share for such Series is calculated, and shall calculate
such net asset value in accordance with the then currently effective Fund
Prospectus. Neither the Fund, any Series, the Distributor, nor the Investment
Manager 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, the Distributor
or the Investment Manager.
1.8.
(a) The Company may withdraw the Account's
investment in the Fund or a Series only: (I) as necessary to facilitate
Contract owner requests; (ii) upon a determination by a majority of the Fund
Board, or a majority of disinterested Fund Board members, that an
irreconcilable material conflict exists among the interests of (x) any
Product Owners or (y) the interests of the Participating Insurance Companies
investing in the Fund; (iii) upon requisite vote of the Contractowners having
an interest in the affected Series to substitute the shares of another
investment company for Series shares in accordance with the terms of the
Contracts; (iv) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application; or (v) at the
Company's sole discretion, pursuant to an order of the SEC under Section
26(b) of the 1940 Act.
(b) The parties hereto acknowledge that the
arrangement contemplated by this Agreement is not exclusive and that the Fund
shares may be sold to other insurance companies (subject to Section 1.9
hereof) and the cash value of the Contracts may be invested in other
investment companies.
(c) The Company shall not, without prior notice to
the Distributor (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under the
0000 Xxx.
1.9. The Fund and the Distributor agree that Fund shares will be
sold only to Participating Insurance Companies and their separate accounts.
The Fund and the Distributor will not sell Fund shares to any insurance
company or separate account unless an agreement complying with Article VII of
this Agreement is in effect to govern such sales. No Fund shares
of any Series will be sold to the general public.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the issuance
thereof, (b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws and (c) that the Company
will require of every person distributing the Contracts that the Contracts be
offered and sold in compliance in all material respects with all applicable
Federal and state laws. The Company further represents and warrants that it
is an insurance company duly organized and validly existing under applicable
law and that it has legally and validly authorized each Account as a separate
account under Section ____ of the __________, and has registered or, prior to
the issuance of any Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve
as a separate account for its Contracts, and that it will maintain such
registrations for so long as any Contracts issued under them are outstanding.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act and duly authorized
for issuance in accordance with applicable law and that the Fund is and shall
remain registered under the 1940 Act for so long as the Fund shares are sold.
The Fund further represents and warrants that it is a corporation duly
organized and in good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies as
a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). The Fund further represents and
warrants that it will make every effort to continue to qualify and to
maintain such qualification (under Subchapter M or any successor or similar
provision), and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Fund represents and warrants that it will comply with
Section 817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and at
the time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code.
The Company shall make every effort to maintain such treatment and shall
notify the Fund and the Distributor immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that
they might not be so treated in the future.
2.6. The Fund represents that the Fund's investment policies, fees
and expenses, and operations are and shall at all times remain in material
compliance with the laws of the state of Maryland, to the extent required to
perform this Agreement; and with any state- mandated investment restrictions
set forth on Schedule 3, as amended from time to time by the Company in
accordance with Section 6.6. The Fund, however, makes no representation as to
whether any
aspect of its operations (including, but not limited to, fees and expenses
and investment policies) otherwise complies with the insurance laws or
regulations of any state. The Company alone shall be responsible for
informing the Fund of any investment restrictions imposed by state insurance
law and applicable to the Fund.
2.7. The Distributor represents and warrants that it is duly
registered as a broker-dealer under the 1934 Act, a member in good standing
of the NASD, and duly registered as a broker-dealer under applicable state
securities laws; its operations are in compliance with applicable law, and it
will distribute the Fund shares according to applicable law.
2.8. The Distributor, on behalf of the Investment Manager,
represents and warrants that the Investment Manager is registered as an
investment adviser under the Investment Advisers Act of 1940 and is in
compliance with applicable federal and state securities laws.
2.9. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. Prospectuses and Proxy Statements; Sales Material and Other
Information
3.1. The Distributor shall provide the Company with as many copies
of the current Fund Prospectus as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund at its expense shall
provide to the Company a camera-ready copy of the current Fund Prospectus
suitable for printing and other assistance as is reasonably necessary in
order for the Company to have a new Contracts Prospectus printed together
with the Fund Prospectus in one document. See Article V for a detailed
explanation of the responsibility for the cost of printing and distributing
Fund prospectuses.
3.2. The Fund Prospectus shall state that the Statement of
Additional Information for the Fund is available from the Distributor (or, in
the Fund's discretion, the Fund Prospectus shall state that such Statement is
available from the Fund), and the Distributor (or the Fund) shall provide
such Statement free of charge to the Company and to any outstanding or
prospective Contract owner who requests such Statement.
3.3.
(a) The Fund at its expense shall provide to the
Company a camera-ready copy of the Fund's shareholder reports and other
communications to shareholders (except proxy material), in each case in a
form suitable for printing. The Fund shall be responsible for the costs of
printing and distributing these materials to Contract owners.
(b) The Fund at its expense shall be responsible
for preparing, printing and distributing its proxy material. The Company will
provide the appropriate Contractowner names and addresses to the Fund for
this purpose.
3.4. The Company shall furnish each piece of sales literature or
other promotional material in which the Fund or the Investment Manager is
named to the Fund or the Distributor prior to its use. No such material shall
be used, except with the prior written permission of the Fund or the
Distributor. The Fund and the Distributor agree to respond to any request for
approval on a prompt and timely basis. Failure of the Fund to respond within
10 days of the request by the Company shall relieve the Company of the
obligation to obtain the prior written permission of the Fund or the
Distributor.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
other than the information or representations contained in the Fund
Registration Statement or Fund Prospectus, as such Registration Statement and
Prospectus may be amended or supplemented from time to time, or in reports or
proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or by the Distributor, except with the prior
written permission of the Fund or the Distributor. The Fund agrees to respond
to any request for permission on a prompt and timely basis. If neither the
Fund nor the Distributor responds within 10 days of a request by the Company,
then the Company shall be relieved of the obligation to obtain the prior
written permission of the Fund.
3.6. The Fund and the Distributor 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 the Contracts Registration Statement or Contracts Prospectus, as
such Registration Statement and Prospectus may be amended or supplemented
from time to time, or in published reports of the Account which are in the
public domain or approved in writing by the Company for distribution to
Contract owners, or in sales literature or other promotional material
approved in writing by the Company, except with the prior written permission
of the Company. The Company agrees to respond to any request for permission
on a prompt and timely basis. If the Company fails to respond within 10 days
of a request by the Fund or the Distributor, then the Fund and the
Distributor are relieved of the obligation to obtain the prior written
permission of the Company.
3.7. The Fund will provide to the Company at least one complete copy
of all Fund Registration Statements, Fund Prospectuses, Statements of
Additional Information, annual and semi-annual reports and other reports,
proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments or supplements to any of the above, that relate to the Fund or
Fund shares, promptly after the filing of such document with the SEC or other
regulatory authorities.
3.8. The Company will provide to the Fund at least one complete copy
of all Contracts Registration Statements, Contracts Prospectuses, Statements
of Additional Information, Annual and Semi-annual Reports, sales literature
and other promotional materials, and all amendments or supplements to any of
the above, that relate to the Contracts, promptly after the filing of such
document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft
versions of any registration
statements, prospectuses, statements of additional information, reports,
proxy statements, solicitations for voting instructions, sales literature and
other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, to
the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted
to a regulatory agency. If a party requests any such information before it
has been filed, the other party will provide the requested information if
then available and in the version then available at the time of such request.
3.10. For purposes of this Article III, the phrase "sales literature
or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use, in a
newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, computer net site, 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, in print or electronically, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or excerpts
of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration
statements, prospectuses, Statements of Additional Information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV. Voting
4.1 Subject to applicable law and the order referred to in Article
VII, the Fund shall solicit voting instructions from Contract owners.
4.2 Subject to applicable law and the order referred to in Article
VII, the Company shall:
(a) vote Fund shares of each Series attributable
to Contract owners in accordance with instructions or proxies received in
timely fashion from such Contract owners;
(b) vote Fund shares of each Series attributable
to Contract owners for which no instructions have been received in the same
proportion as Fund shares of such Series for which instructions have been
received in timely fashion; and
(c) vote Fund shares of each Series held by the
Company on its own behalf or on behalf of the Account that are not
attributable to Contract owners in the same proportion as Fund shares of such
Series for which instructions have been received in timely fashion.
The Company shall be responsible for assuring that voting privileges
for the Accounts are calculated in a manner consistent with the provisions
set forth above.
ARTICLE V. Fees and Expenses
All expenses incident to performance by the Fund under this
Agreement (including expenses expressly assumed by the Fund pursuant to this
Agreement) shall be paid by the Fund to the extent permitted by law. Except
as may otherwise be provided in Section 1.4 and Article VII of this
Agreement, the Company shall not bear any of the expenses for the cost of
registration and qualification of the Fund shares under Federal and any state
securities law, preparation and filing of the Fund Prospectus and Fund
Registration Statement, the preparation of all statements and notices
required by any Federal or state securities law, all taxes on the issuance or
transfer of Fund shares, and any expenses permitted to be paid or assumed by
the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
The Fund is responsible for the cost of printing and distributing
Fund Prospectuses and SAIs to existing Contract owners. (If for this purpose
the Company prints the Fund Prospectuses and SAIs in a booklet containing
disclosure for the Contracts and for underlying funds other than those of the
Fund, then the Fund shall pay only its proportionate share of the total cost
to distribute the booklet to existing Contract owners.)
The Company is responsible for the cost of printing and distributing
Fund prospectuses and SAIs for new sales; and Account Prospectuses and SAIs
for existing Contract owners. The Company shall have the final decision on
choice of printer for all Prospectuses and SAIs.
ARTICLE VI. Compliance Undertakings
6.1. The Fund undertakes to comply with Subchapter M and Section
817(h) of the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration Statements
under the 1933 Act and the Account's Registration Statement under the 1940
Act from time to time as required in order to effect the continuous offering
of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale to the extent
required by applicable securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under the
1933 Act and the 1940 Act from time to time as required in order to effect
for so long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by
applicable securities laws of the various states.
6.4. The Company shall be responsible for assuring that any
prospectus offering a Contract that is a life insurance contract where it is
reasonably possible that such Contract would be deemed a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will
describe the circumstances under which a Contract could be treated as a
modified endowment contract (or policy).
6.5. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of
Directors, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
6.6.
(a) The Company shall amend Schedule 3 when
appropriate in order to inform the Fund of any applicable state-mandated
investment restrictions with which the Fund must comply.
(b) Should the Fund or the Distributor become
aware of any restrictions which may be appropriate for inclusion in Schedule
3, the Company shall be informed immediately of the substance of those
restrictions.
ARTICLE VII. Potential Conflicts
7.1. The Company has reviewed a copy of the order (the "Mixed and
Shared Funding Order") dated November 2, 1987 of the Securities and Exchange
Commission under Section 6(C) of the Act and, in particular, has reviewed the
conditions to the relief set forth in the related Notice. As set forth
therein, the Company agrees to report to the Board of Directors of the Fund
(the "Board") any potential or existing conflicts between the interests of
Product Owners of all separate accounts investing in the Fund, and to assist
the Board in carrying out its responsibilities under the conditions of the
Mixed and Shared Funding Order by providing all information reasonably
necessary for the Board to consider any issues raised, including information
as to a decision to disregard voting instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested
Board Members, determines that a material irreconcilable conflict exists, the
Board shall give prompt notice to all Participating Insurance Companies.
(a) If a majority of the whole Board, after notice
to the Company and a reasonable opportunity for the Company to appear before
it and present its case, determines that the Company is responsible for said
conflict, and if the Company agrees with that determination, the Company
shall, at its sole cost and expense, take whatever steps are necessary to
remedy the irreconcilable material conflict. These steps could include: (a)
withdrawing the assets allocable to some or all of the affected Accounts from
the Fund or any Series and reinvesting such assets in a different investment
vehicle, including another Series of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
Contractowners and, as appropriate, segregating the assets of any particular
group (i.e., variable annuity Contractowners, variable life insurance
policyowners, or variable Contractowners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to
the affected Contractowners the option of making such a change; and (b)
establishing a new registered mutual fund or management separate account, or
taking such other action as is necessary to remedy or eliminate the
irreconcilable material conflict.
(b) If the Company disagrees with the Board's
determination, the Company shall file a written protest with the Board,
reserving its right to dispute the determination as between just the Company
and the Fund. After reserving that right the Company, although disagreeing
with the Board that it (the Company) was responsible for the conflict, shall
take the necessary steps, under protest, to remedy the conflict,
substantially in accordance with paragraph (a) just above, for the protection
of Contractowners.
(c) As between the Company and the Fund, if within
45 days after the Board's determination the Company elects to press the
dispute, it shall so notify the Board in writing. The parties shall then
attempt to resolve the matter amicably through negotiation by individuals
from each party who are authorized to settle the controversy.
If the matter has not been amicably resolved within 60 days from the
date of the Company's notice of its intent to press the dispute, then before
either party shall undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance with the CPR
Rules for Non-Administered Arbitration of Business Disputes, by a sole
arbitrator; provided, however, that if one party has requested the other
party to seek an amicable resolution and the other party has failed to
participate, the requesting party may initiate arbitration before expiration
of the 60-day period set out just above.
If within 45 days of the commencement of the process to select an
arbitrator the parties cannot agree upon the arbitrator, then he or she will
be selected from the CPR Panels of Neutrals. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place
of arbitration shall be __________. The Arbitrator is not empowered to award
damages in excess of compensatory damages.
(d) If the Board shall determine that the Fund or
another insurer was responsible for the conflict, then the Board shall notify
the Company immediately of that determination. The Fund shall assure the
Company that it (the Fund) or that other insurer, as applicable, shall, at
its sole cost and expense, take whatever steps are necessary to eliminate the
conflict.
7.3. If a material irreconcilable conflict arises because of the
Company's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company shall withdraw (without charge or penalty) the Account's
investment in the Fund, if the Fund so elects.
7.4. Subject to the terms of Section 7.2 above, the Company shall
carry out the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict with a view only to the
interests of Contractowners.
7.5. For purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable conflict, but in no event will the
Fund be required to establish a new funding medium for any
variable contract, nor will the Company be required to establish a new
funding medium for any Contract if an offer to do so has been declined by a
vote of a majority of affected Contractowners.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company. The Company agrees to indemnify
and hold harmless the Fund, the Distributor and each person who controls or
is associated with the Fund (other than another Participating Insurance
Company) or the Distributor within the meaning of such terms under the
federal securities laws and any officer, trustee, director, employee or agent
of the foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they or
any of them may become subject under any statute or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales literature or
other promotional material for the Contracts or the Contracts themselves (or
any amendment or supplement to any of the foregoing), or 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 in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such statement
or omission or such alleged statement or alleged omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by the Fund or the Distributor (or a person authorized in writing to
do so on behalf of the Fund or the Distributor) for use in the Contracts
Registration Statement, Contracts Prospectus 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
(b) arise out of or are based upon any untrue
statement or alleged untruestatement of a material fact by or on behalf of
the Company (other than statements or representations contained in the Fund
Registration Statement, Fund Prospectus or sales literature or other
promotional material of the Fund not supplied by the Company or persons under
its control) or wrongful conduct of the Company or persons under its control
with respect to the sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged
untrue statement of a material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional material
of the Fund or any amendment 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 in light
of the circumstances in which they were made, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Fund by or on behalf of the Company; or
(d) arise as a result of any failure by the
Company to provide the services and furnish the materials or to make any
payments under the terms of this Agreement; or
(e) arise out of any material breach by the
Company of this Agreement, including but not limited to any failure to
transmit a request for redemption or purchase of Fund shares on a timely
basis in accordance with the procedures set forth in Article 1; or
(f) arise as a result of the Company's providing
the Fund with inaccurate information, which causes the Fund to calculate its
Net Asset Values incorrectly.
This indemnification will be in addition to any liability which the
Company may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due
to the wilful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the party seeking indemnification.
8.2. Indemnification by the Distributor. The Distributor agrees to
indemnify and hold harmless the Company and each person who controls or is
associated with the Company within the meaning of such terms under the
federal securities laws and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Fund Registration Statement, Fund Prospectus (or any amendment or supplement
thereto) or sales literature or other promotional material 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 necessary to make
the statements therein not misleading in light of the circumstances in which
they were made; provided that this obligation to indemnify shall not apply if
such statement or omission or alleged statement or alleged omission was made
in reliance upon and in conformity with information furnished in writing by
the Company to the Fund or the Distributor for use in the Fund Registration
Statement, Fund Prospectus (or any amendment or supplement thereto) or sales
literature for the Fund or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact made by the
Distributor or the Fund (other than statements or representations contained
in the Fund Registration Statement, Fund Prospectus or sales literature or
other promotional material of the Fund not supplied by the Distributor or the
Fund or persons under their control) or wrongful conduct of the Distributor
or persons under its control with respect to the sale or distribution of the
Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged
untrue statement of a
material fact contained in the Contract's Registration Statement, Contracts
Prospectus or sales literature or other promotional material for the
Contracts (or any amendment 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 in light
of the circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished in writing by the Distributor
or the Fund to the Company (or a person authorized in writing to do so on
behalf of the Fund or the Distributor); or
(d) 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, but not by way of limitation, a failure, whether
unintentional or in good faith or otherwise: (i) to comply with the
diversification requirements specified in Article VI of this Agreement; and
(ii) to provide the Company with accurate information sufficient for it to
calculate its accumulation and/or annuity unit values in timely fashion as
required by law and by the Contracts Prospectuses); or
(e) arise out of any material breach by the
Distributor or the Fund of this Agreement.
This indemnification will be in addition to any liability which the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due
to the wilful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the party seeking indemnification.
8.3. Indemnification Procedures. After receipt by a party entitled
to indemnification ("indemnified party") under this Article VIII of notice of
the commencement of any action, if a claim in respect thereof is to be made
by the indemnified party against any person obligated to provide
indemnification under this Article VIII ("indemnifying party"), such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that the
omission to so notify the indemnifying party will not relieve it from any
liability under this Article VIII, except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give such
notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article
VIII. The indemnification provisions contained in this Article VIII shall
survive any termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the state of _______,
without giving effect to the principles of conflicts of laws.
9.2. 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, and the terms hereof shall be limited, interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon six months
advance written notice to the other parties; or
(b) at the option of the Company if shares of any
Series are not available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of the election to terminate for
such cause shall be furnished by the Company. Termination shall be effective
ten days after the giving of notice by the Company; or
(c) at the option of the Fund upon institution of
formal proceedings against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the Contracts, the
operation of the Account, the administration of the Contracts or the purchase
of Fund shares, or an expected or anticipated ruling, judgment or outcome
which would, in the Fund's reasonable judgment, materially impair the
Company's ability to perform the Company's obligations and duties hereunder;
or
(d) at the option of the Company upon institution
of formal proceedings against the Fund, the Distributor, the Investment
Manager or any Sub-Investment Manager, by the NASD, the SEC, or any state
securities or insurance commission or any other regulatory body regarding the
duties of the Fund or the Distributor under this Agreement, or an expected or
anticipated ruling, judgment or outcome which would, in the Company's
reasonable judgment, materially impair the Fund's or the Distributor's
ability to perform Fund's or Distributor's obligations and duties hereunder;
or
(e) at the option of the Company upon institution
of formal proceedings against the Investment Manager or Sub-investment
Manager by the NASD, the SEC, or any state securities or insurance commission
or any other regulatory body which would, in the good faith opinion of the
Company, result in material harm to the Accounts, the Company, or
Contractowners; or
(f) upon requisite vote of the Contract owners
having an interest in the affected Series (unless otherwise required by
applicable law) and written approval of the Company, to substitute the shares
of another investment company for the corresponding Series shares of the Fund
in accordance with the terms of the Contracts; or
(g) at the option of the Fund in the event any of
the Contracts are not registered, issued or sold in accordance with
applicable Federal and/or state law; or
(h) at the option of the Company or the Fund upon
a determination by a majority of the Fund Board, or a majority of
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) any Product owners or (ii) the interests of
the Participating Insurance Companies investing in the Fund; or
(i) at the option of the Company if the Fund
ceases to qualify as a Regulated Investment Company under Subchapter M of the
Code, or under any successor or similar provision, or if the Company
reasonably believes, based on an opinion of its counsel, that the Fund may
fail to so qualify; or
(j) at the option of the Company if the Fund fails
to meet the diversification requirements specified in Section 817(h) of the
Code and any regulations thereunder; or
(k) at the option of the Fund if the Contracts
cease to qualify as annuity contracts or life insurance policies, as
applicable, under the code, or if the Fund reasonably believes that the
Contracts may fail to so Qualify; or
(l) at the option of either the Fund or the
Distributor if the Fund or the Distributor, respectively, shall determine, in
their sole judgment exercised in good faith, that either (1) the Company
shall have suffered a material adverse change in its business or financial
condition; or
(2) the Company shall have been the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of either the Fund or the Distributor; or
(m) at the option of the Company, if the Company
shall determine, in its sole judgment exercised in good faith, that either:
(1) the Fund and the Distributor, or either of them, shall have suffered a
material adverse change in their respective businesses or financial
condition; or (2) the Fund or the Distributor, or both of them, shall have
been the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the Company; or
(n) upon the assignment of this Agreement
(including, without limitation, any transfer of the Contracts or the Accounts
to another insurance company pursuant to an assumption reinsurance agreement)
unless the non-assigning party consents thereto or unless this Agreement is
assigned to an affiliate of the Distributor.
10.2. Notice Requirement. Except as otherwise provided in Section
10.1, no termination of this Agreement shall be effective unless and until
the party terminating this Agreement gives prior written notice to all other
parties to this Agreement of its intent to terminate which notice shall set
forth the basis for such termination. Furthermore:
(a) In the event that any termination is based
upon the provisions of Article VII or the provisions of Section 10.1(a) of
this Agreement, such prior written notice shall be given in advance of the
effective date of termination as required by such provisions; and
(b) in the event that any termination is based
upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such
prior written notice shall be given at least ninety (90) days before the
effective date of termination, or sooner if required by law or regulation; and
(c) in the event that any termination is based
upon the provisions of Section 10.1(e) of this Agreement, such prior written
notice shall be given at least sixty (60) days before the date of any
proposed vote to replace the Fund's shares.
10.3. Effect of Termination
(a) Notwithstanding any termination of this
Agreement pursuant to Section 10.1 of this Agreement, the Fund and the
Distributor will, at the option of the Company, continue to make available
additional Fund shares for so long after the termination of this Agreement as
the Company desires, pursuant to the terms and conditions of this Agreement
as provided in paragraph (b) below, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, if the Company so
elects to make additional Fund shares available, the owners of the Existing
Contracts or the Company, whichever shall have legal authority to do so,
shall be permitted to reallocate investments in the Fund, redeem investments
in the Fund and/or invest in the Fund upon the making of additional purchase
payments under the Existing Contracts.
(b) In the event of a termination of this
Agreement pursuant to Section 10.1 of this Agreement, the Fund and the
Distributor shall promptly notify the Company whether the Distributor and the
Fund will continue to make Fund shares available after such termination. If
Fund shares continue to be made available after such termination, the
provisions of this Agreement shall remain in effect except for Section
10.1(a) and thereafter either the Fund or the
Company may terminate the Agreement, as so continued pursuant to this Section
10.3, upon prior written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but, if given by the Fund,
need not be for more than six months.
(c) The parties agree that this Section 10.3 shall
not apply to any termination made pursuant to Article VII or any conditions
or undertakings incorporated by reference in Article VII, and the effect of
such Article VII termination shall be governed by the provisions set forth or
incorporated by reference therein.
ARTICLE XI. Applicability to New Accounts and New Contacts
The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts and to add new classes of variable annuity contracts and variable
life insurance policies to be issued by the Company through a Separate
Account investing in the Fund. The provisions of this Agreement shall be
equally applicable to each such class of contracts or policies, unless the
context otherwise requires.
ARTICLE XII. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party(ies) at the address of such party(ies) set
forth below or at such other address as such party(ies) may from time to time
specify in writing to the other party.
If to the Fund:
Delaware Group Premium Fund, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxx
If to the Company:
------------------
------------------
------------------
Attn:
-------------
If to the Distributor:
Delaware Distributors, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
ARTICLE XIII. Miscellaneous
13.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.4. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
SEC, the NASD 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.
13.5. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as
applicable, by such party, and when so executed and delivered this Agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
officer on the date specified below.
DELAWARE GROUP PREMIUM FUND, INC. (Fund)
Date: By:
__/__/00 Name:_____________
--------------------
Title: _____________
--------------------
(Company)
Date: By:
__/__/00 Name:_______________
--------------------
Title: _____________
DELAWARE DISTRIBUTORS, LP (Distributor)
Date: By:
__/__/00 Name:_______________
--------------------
Title: _____________
Schedule 1
----------
Separate Accounts of __________________
Investing in the Fund As of _______, 2000
Schedule 2
----------
Variable Annuity Contracts and Variable Life Insurance Policies
Supported by Separate Accounts Listed on Schedule 1 As of_______, 2000
Schedule 3
----------
State-mandated Investment Restrictions
Applicable to the Fund
As of _______, 2000
The California Department of Insurance has established the following
Guidelines for an underlying portfolio of a Separate Account:
Borrowing. Borrowing limits for any variable contract separate
account portfolio are (1) 10% of net asset value when borrowing for any
general purpose; and (2) 25% of net asset value when borrowing as a temporary
measure to facilitate redemptions. Net asset value of a portfolio is the
market value of all investments or assets owned less outstanding liabilities
of the portfolio at the time that any new or additional borrowing is
undertaken.
Foreign Investments - Diversification.
1. A portfolio will be invested in a minimum of five different
foreign countries at all times. However, this minimum is reduced to four when
foreign investments comprise less than 80% of the portfolio's net asset
value; to three when less than 60% of that value; to two when less than 40%;
and to one when less than 20%.
2. Except as set forth in items 3 and 4 below, a Portfolio will have
no more than 20% of its net asset value invested in securities of issuers
located in any one country.
3. A Portfolio may have an additional 15% of its net asset value
invested in securities of issuers located in any one of the following
countries: Australia, Canada, France, Japan, the United Kingdom or Germany.
4. A Portfolio's investments in United States issuers are not
subject to the foreign country diversification guidelines.
WDC #70095V1