PARTICIPATION AGREEMENT
-----------------------
By and Among
▇▇▇▇▇▇▇▇▇▇▇ VARIABLE ACCOUNT FUNDS,
-----------------------------------
CHUBB LIFE INSURANCE COMPANY OF AMERICA
---------------------------------------
and
OPPENHEIMERFUNDS, INC.
---------------------
THIS AGREEMENT, made and entered into this 26th day of December ,1997
by and among Chubb Life Insurance Company of America, a New Hampshire
Corporation (hereinafter the "Company") on its own behalf and on behalf of each
separate account of the Company named in Schedule I to this Agreement, as may be
amended from time to time by mutual consent (each account referred to as the
"Accounts"), ▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds, an open-end diversified
management investment company organized under the laws of the State of
Massachusetts (hereinafter the "Fund") and ▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc., a Colorado
Corporation (hereinafter the "Adviser").
WHEREAS, the Fund engages 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 to be offered by insurance companies
(hereinafter "Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio (collectively the "Portfolios") of securities and other assets (the
Portfolios covered by this Agreement are specified in Schedule 2 attached hereto
as may be amended from time to time by mutual consent); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (alternatively referred to as the "SEC" or the
"Commission"), dated July 16, 1986 (File No. 812-6234), granting Participating
Insurance Companies and variable annuity and variable life insurance
separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a),
and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the
"1940 Act") and Rules 6e-2(b)(1 5) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and serves as the investment adviser to the
Fund;
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts (hereinafter "Contracts") under the 1933
Act (unless an exemption from registration is available); and
WHEREAS, the Accounts are duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of New Hampshire, to set aside and
invest assets attributable to the Contracts. (The Contract(s) and the Account(s)
covered by the Agreement are specified in Schedule 2 attached hereto, as may be
amended from time to time by mutual consent); and
WHEREAS, the Company has registered the Accounts as unit investment
trusts under the 1940 Act (unless an exemption from registration is available);
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios named in
Schedule 2 on behalf of the Accounts to fund the Contracts named in Schedule 3
and the Fund is authorized to sell such shares to unit investment trusts such as
the Accounts at net asset value;
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NOW, THEREFORE, in consideration of their mutual promises, the Fund,
the Adviser and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
--------------------
1.1. The Fund agrees to sell to the Company those shares of the
Fund which the Company orders on behalf of the Accounts, executing such orders
on a daily basis at the net asset value next computed after receipt by the Fund
or its designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company shall be the designee of the Fund for receipt of such
orders from each of the Accounts and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives written (or facsimile)
notice of such order by 9:30 am. New York time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value pursuant
to the rules of the SEC.
1.2. The Company shall pay for Fund shares on the next Business Day
after it places an order to purchase Fund shares in accordance with Section 1.1
hereof. Payment shall be in federal funds transmitted by wire or by a credit for
any shares redeemed.
1.3. The Fund agrees to make an indefinite number of Fund shares
available for purchase at the applicable net asset value per share by the
Company for their separate Accounts listed in Schedule 2, on those days on which
the Fund calculates its net asset value pursuant to rules of the SEC; provided,
however, that the Board of Trustees of the Fund (hereinafter the "Trustees") may
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 light of their fiduciary duties under
federal and any applicable state laws, in the best interests of the shareholders
of any Portfolio.
1.4. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, qualified pension
and retirement plans or such other
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persons as are permitted under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), and regulations
promulgated thereunder, the sale of which will not impair the tax treatment
currently afforded the contracts.
1.5. The Fund shall not sell Fund shares to any insurance company or
separate account unless a contractual obligation is in effect with respect to
such sales to abide by the conditions of the Mixed and Shared Funding Exemptive
Order that are addressed in Section 3.4 and Article VII of this Agreement.
1.6. The Fund agrees to redeem for cash, upon the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.6, the Company shall be the designee of the Fund for receipt of
requests for redemption and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives written (or facsimile) notice of such
request for redemption by 9:30 am. New York time on the next following Business
Day. Payment shall be made within the time period specified in the Fund's
prospectus or statement of additional information, in federal funds transmitted
by wire to the Company's account as designated by the Company in writing from
time to time.
1.7. The Company shall pay for the Fund shares on the next Business
Day after an order to purchase shares is made in accordance with the provisions
of Section 1.6 hereof Payment shall be in federal funds transmitted by wire
pursuant to the instructions of the Fund's treasurer or by a credit for any
shares redeemed.
1.8. The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule 2 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
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Company shall not permit any person other than a Contract owner to give
instructions to the Company which would require the Company to redeem or
exchange shares of the Fund.
1.9. Issuance and transfer of the Funds' shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each of the Accounts or the appropriate subaccount of each
of the Accounts.
1.10. The Fund shall furnish notice as soon as reasonably
practicable to the Company of any income, dividends or capital gain
distributions payable on the Portfolio's shares. The Company hereby elects to
receive all such dividends and distributions as are payable on the Portfolio
shares in additional shares of that Portfolio. The Company reserves the right to
revoke this election on 10 business days notice and thereafter to receive all
such dividends and distributions in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and distributions.
1.11. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:30 p.m. New
York time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act (unless an exemption from registration is
available) and, that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that the sale
of the Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable state
law and that it has registered the Accounts as a unit investment
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trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts, and that it will maintain such
registration for so long as any Contracts are outstanding. The Company shall
amend the registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Accounts 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 in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. Subject to Article VI hereof, the Company represents that it
believes that the Contracts are currently and at the time of issuance will be
treated as annuity contracts under applicable provisions of the Internal Revenue
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Adviser immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future.
2.3. 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 take
all reasonable steps to remain, registered under the 1940 Act for as long as the
Fund shares are sold. The Fund shall amend the registration statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Fund shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund.
2.4. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code and
that it will make every effort 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.
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2.5. If the Fund considers the adoption of one or more plans under
Rule 12b-1 under the 1940 Act to finance distribution expenses (a "12b-1 Plan"),
the Company agrees to provide the Trustees any information as may be reasonably
necessary for the Trustees to determine whether to adopt a 12b-1 Plan or Plans.
The Fund shall notify the Company upon commencing to finance distribution
expenses pursuant to Rule 12b-1.
2.6. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and intends to continue to comply with applicable provisions of the ▇▇▇▇ ▇▇▇.
2.7. The Adviser represents and warrants that it is and intends to
remain duly registered under all applicable federal and state securities laws
and that it shall perform its obligations for the Fund in compliance with any
applicable state and federal securities laws.
2.8. The Fund and Adviser each represent and warrant that all of its
respective Directors, Trustees, officers, employees, investment advisers, and
transfer agent of the Fund are and shall continue to be at all times covered by
a blanket fidelity bond (which may, at the Fund's election, be in the form of a
joint insured bond) or similar coverage for the benefit of the Fund in an amount
not less than the minimal coverage as required currently by Section 17(g) and
Rule 17g-1 of the 1940 Act or related provisions as may be promulgated from time
to time. The aforesaid Bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable insurance company.
2.9. The Company represents and warrants that all of its directors,
officers, employees, agents, investment advisers, and other individuals and
entities dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage in an amount not less than $3 million.
The aforesaid includes coverage for larceny and embezzlement and is issued by a
reputable insurance company. The Company agrees that any amount received under
such bond in connection with claims that derive from arrangements described in
this Agreement will be paid by the Company for the
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benefit of the Fund. The Company agrees to make all reasonable efforts to see
that this bond or another bond containing these provisions is always in effect,
and agrees to notify the Fund and the Adviser in the event that such coverage no
longer applies.
ARTICLE III. Prospectus and Proxy Statements: Voting
---------------------------------------
3.1. The Fund or the Adviser, at its expense, shall provide a
typewritten copy of the Fund's current prospectus and other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). Upon request, the
Adviser shall be permitted to review and approve the typeset form of the Fund's
prospectus prior to such printing.
3.2. The Fund's prospectus shall state that the statement of
additional information for the Fund is available from the Fund (or its transfer
agent) and shall print and provide such Statement to the Company and to any
owner of a Contract or prospective owner who requests such Statement at the
Fund's expense.
3.3. The Fund or the Adviser, at its expense, shall provide the
Company with a typewritten copy of the Fund's communications to shareholders for
printing and distributing to Contract owners and with copies of the Fund's proxy
material and semi-annual and annual reports to shareholders (or may, at the Fund
or the Advisers option, reimburse the Company for the pro rata cost of printing
such reports) in such quantities as the Company shall reasonably require, for
distributing to Contract owners at the Company's expense. Upon request, the
Adviser shall be permitted to review and approve the typeset form of such proxy
material, communications and shareholder reports prior to such printing.
3.4. If and to the extent required by law (or the Mixed and Shared
Funding Exemptive Order) the Company shall:
(i) solicit voting instructions from Contract owners;
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(ii) vote the Fund shares in accordance with instructions
received from Contract owners or participants; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Portfolio for which instructions have been received
from the Company's Contract owners;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable Contract owners. The Company
reserves the right to vote Fund shares held in any of the Accounts in their own
right, to the extent permitted by law.
3.5. The Fund will comply with all applicable provisions of the
1940 Act requiring voting by shareholders.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least fifteen business
days prior to its use. No such material shall be used if the Fund or its
***designee reasonably objects in writing to such use within fifteen business
days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or the Adviser concerning
either of them in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus for the Fund shares, 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
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other promotional material approved by the Fund or its designee, except with the
permission of the Fund. The Fund agrees to respond to any request for approval
in a prompt and timely basis.
4.3. The Adviser or Fund shall furnish or cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material which the Adviser or Fund prepared or caused to be prepared, in which
the Company or its separate account is named, at least fifteen business days
prior to its use. No such material shall be used if the Company or its designee
reasonably objects in writing to such use within fifteen business days after
receipt of such material.
4.4. The Adviser and the Fund shall not give any information or make
any representations on behalf of the Company or concerning the Company, each of
the Accounts, or the Contracts, other than information or representations
contained in (i) the registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented from
time to time, (ii) reports for the Accounts which are in the public domain or
approved by the Company for distribution to Contract owners or participants, or
(iii) sales literature or other promotional material approved by the Company or
its designee, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials in which the Company or its separate account is named, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to any Portfolio or its shares, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
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action letters, and all amendments to any of the above, that relate to the
Contracts or each of the Accounts, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, 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, signs or billboards, motion pictures, electronic media, or other public
media), sales literature (i.e., any written communication distributed or made
---
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees of the Adviser,
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 ▇▇▇▇ ▇▇▇.
4.8. The Company agrees and acknowledges that the Adviser is the
sole owner of the ▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc. clasped hands ▇▇▇▇ and that all use of
any designation comprised in whole or part of such ▇▇▇▇ under this Agreement
shall inure to the benefit of the Adviser or the Fund. The Company shall not use
such ▇▇▇▇ on its own behalf or on behalf of each of the Accounts in connection
with marketing the Contracts without prior written consent of the Adviser, which
consent shall not be unreasonably withheld, delayed or conditioned. Upon
termination of this Agreement for any reason, the Company shall cease all use of
any such ▇▇▇▇.
ARTICLE V. Fees and Expenses
-----------------
5.1. 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 or in any other
written agreement.
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5.2. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party. The Fund
shall see to it that all its shares are registered and authorized for issuance
in accordance with applicable federal law and, if and to the extent advisable by
the Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, the preparation of all statements and
notices required by any federal or state law, and all applicable taxes on the
issuance and transfer of the Fund's shares to the Company.
5.3. The Company shall bear the expenses of typesetting, printing
and distributing the Fund's prospectus to Contract owners and prospective
Contract owners issued by the Company and of distributing the Fund's proxy
materials, communications and reports to such Contract owners.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Internal Revenue Code and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund will comply with Section
817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5, relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.
ARTICLE VII.Potential Conflicts
-------------------
7.1. The Board of Trustees of the Fund (the "Board") will monitor
the Fund for the existence of any material irreconcilable conflict between the
interests of the Contract owners of all separate
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accounts investing in the Fund. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by Participating Insurance Companies or by variable annuity contract and
variable life insurance Contract owners; or (f) a decision by an insurer to
disregard the voting instructions of Contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2. The Company has reviewed a copy of the Mixed and Shared
Funding Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. The Company agrees to be bound by the
responsibilities of a participating insurance company as set forth in the Mixed
and Shared Funding Exemptive Order, including without limitation the requirement
that the Company report any potential or existing conflicts of which it is aware
to the Board. The Company agrees to assist the Board in carrying out its
responsibilities in monitoring such conflicts under the Mixed and Shared Funding
Exemptive Order, by providing the Board in a timely manner 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
Contract owner voting instructions are disregarded and by confirming in writing,
at the Fund's request, that the Company is unaware of any such potential or
existing material irreconcilable conflicts.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested Trustees, that a material irreconcilable conflict exists,
the Company and the relevant Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
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the disinterested Trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., variable annuity Contract owners or life insurance
Contract owners, of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could
conflict with the majority of Contract owners voting instructions, and if the
Company and/or the Fund and the Adviser reasonably determine that a material
irreconcilable conflict (as set forth in the Mixed and Shared Funding Exemptive
Order) may arise as a result, then the Company may be required, at the Fund's
election, to withdraw any of the Accounts' investment in the Fund and terminate
this Agreement. Any such withdrawal and termination must take place within six
(6) months after the Fund gives written notice that this provision is being
implemented. Until such withdrawal and termination is implemented, the Fund
shall continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Fund. 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.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw any of the Accounts' investment in the Fund and terminate this
Agreement within six (6) months after the Fund informs the Company in writing
that it has determined that such decision has created an irreconcilable material
conflict. Until such withdrawal and termination is
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implemented, the Fund shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Fund, subject to
applicable regulatory limitation. 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.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether 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 the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw any of the Accounts' investment in the
Fund and terminate this Agreement within six (6) months after the Board informs
the Company in writing of the foregoing determination, provided, however, that
such withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. Upon request, the Company shall at least annually submit to
the Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out the duties imposed upon it as delineated in
the Mixed and Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if deemed appropriate by the Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder. with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, the (a) the Fund and/or the Participating Insurance
Companies (including the Company),
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as appropriate, shall take such reasonable steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4 and
7.5 of this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
--------------- -- -----------
(a). The Company agrees to indemnify and hold harmless
the Fund and the Adviser, each member of their Board of Trustees or Board of
Directors, each of their officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including reasonable legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) 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 statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances which they were made; provided that
this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or
omission or such alleged statement or omission was
made in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Fund or the Adviser for
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use in the registration statement, prospectus or
statement of additional information for the
Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for
use in connection with the sale of the Con tracts
or Fund shares; or
(ii) arise out of or as a result of statements or
representations 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,
provided any such statement or representation or
such wrongful conduct was not made in reliance
upon and in conformity with information furnished
to the Company by or on behalf of the Advisor or
the Fund; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, Fund prospectus,
statement of additional information 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
information furnished to the Fund or the Adviser
by or on behalf of the Company or persons under
its control; or
(iv) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Company.
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance
-17-
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
8.2. Indemnification by Adviser and Fund
-----------------------------------
8.2(a)(1). The Adviser agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement,
prospectus, statement of additional information or
sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances m which they were made; provided that
this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission
or such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Adviser or the Fund by or on
behalf of the Company for use in the Contracts, the
Contract or Fund registration statement, prospectus
or statement of additional information, or sales
literature or other promotional material for the
Contracts or of the Fund; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in
the Contract or Fund registration statement, the
Contract or Fund prospectus, statement of
additional information, or sales literature or
other promotional material for the Contracts or of
the Fund not supplied by the Adviser or the Fund or
persons under the control of the Adviser or the
-18-
Fund respectively) or wrongful conduct of the
Adviser or persons under its control, with respect
to the sale or distribution of the Contracts,
provided any such statement or representation or
such wrongful conduct was not made in reliance upon
and in conformity with information furnished to the
Adviser or the Fund by or on behalf of the Company;
or
(iii) arise out of any untrue statement or allegedly
untrue statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature covering
the Contracts (or any amendment thereof or
-------
supplement thereto), or the omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statement or statements therein not misleading in
light of the circumstances in which they were made,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund or persons under the control of
the Adviser; or
(iv) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Adviser;
except to the extent provided in Sections 8.2(b) and 8.2(c) hereof. This
indemnification shall be in addition to any liability which the Adviser may
otherwise have.
8.2(a)(2) The Fund agrees to indemnify and hold harmless the
Indemnified Parties [as defined in Section 8.2(a)(1)] against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including reasonable legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the operations of the Fund and:
(i) arise out of or are based upon (a) any untrue statement
or alleged untrue statement of any material fact or (b)
the omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements made therein, in light
of the circumstances in which they were made, not
misleading, if such fact, statement or omission is
contained in the Contracts, or in the registration
statement for the Fund or the Contracts, or in the
-19-
prospectus or statement of additional information for
the Contracts or the Fund, or in any amendment to any
of the foregoing, or in sales literature or other
promotional material for the Contracts or of the Fund,
provided, however, that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement, fact or omission or such alleged statement,
fact or omission was made in reliance upon and in
conformity with information furnished to the Adviser or
the Fund by or on behalf of the Indemnified Party; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statement, the Contract
or Fund prospectus, statement of additional
information, or sales literature or other promotional
material for the Contracts or of the Fund not supplied
by the Adviser or the Fund or persons under the control
of the Adviser or the Fund respectively) or wrongful
conduct of the Fund or persons under its control with
respect to the sale or distribution of Contracts,
provided any such statement or representation or such
wrongful conduct was not made in reliance upon and in
conformity with information furnished to the Adviser or
the Fund by or on behalf of the Company; or
(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of o r result from any other
material breach of this Agreement by the F u n d
(including a failure, whether unintentional or in good
faith or otherwise. to comply with the diversification
requirements specified in Article VI of this
Agreement);
except to the extent provided in Section 8.2(b) and 8.3 hereof. This
indemnification shall be in additional to any liability which the Fund may
otherwise have.
(b). The Fund and Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.
-20-
8.3 Indemnification Procedure
-------------------------
Any person obligated to provide indemnification under this Article
VIII ("indemnifying party" for the purpose of this Section 8.3) shall not be
liable under the indemnification provisions of this Article VIII with respect to
any claim made against a party entitled to indemnification under this Article
VIII ("indemnified party" for the purpose of this Section 8.3) unless such
indemnified party shall have notified the indemnifying party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provisions of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, 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
-21-
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 New York.
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 (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
-----------
10.1 This Agreement shall terminate:
(a) at the option of any party upon six month's advance
written notice to the other parties unless otherwise agreed in a separate
written agreement among the parties; or
(b) at the option of the Company to the extent that shares
of Portfolios are not reasonably available to meet the requirements of the
Contracts as determined by the Company reasonably and in good faith; or
(c) at the option of the Fund or the Adviser 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 administration of the Contracts, the operation of the Accounts, or the
purchase of the Fund
-22-
shares, which would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, which would
have a material adverse effect on the Adviser's or the Fund's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals or the vote of the Contract owners having an
interest in any of the Accounts (or any subaccount) to substitute the shares of
another investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media The Company will give
45 days prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Board, or a majority of the disinterested
Board members, that an irreconcilable material conflict exists among the
interests of (i) all Contract owners of variable insurance products of all
separate accounts or (ii) the interests of the Participating Insurance Companies
investing in the Fund as delineated in Article VII of this Agreement; or
(g) at the option of the Company if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet
the diversification requirements specified in Article VI hereof or if the
Company reasonably believes that the Fund will fall to meet such requirements;
or
-23-
(i) at the option of any party to this Agreement, upon
another party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines
in its sole judgment exercised in good faith, that either the Fund or the
Adviser has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company; or
(k) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Fund or the Adviser; or
(l) subject to the Fund's compliance with Article VI hereof,
at the option of the Fund in the event any of the Contracts are not issued or
sold in accordance with applicable requirements of federal and/or state law.
Termination shall be effective immediately upon notice by the Fund to terminate
the Agreement.
10.2 Notice Requirement.
------------------
(a) In the event that any termination of this Agreement is
based upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the non-terminating parties,
with said termination to be effective upon receipt of such notice by the non-
terminating parties.
-24-
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3 It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination.
----------------------
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement and subject to Section 1.3 of this
Agreement, the Company may require the Fund to continue to make available
additional shares of the Fund 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, the owners of the
Existing Contracts 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. The parties agree
that this Section 10.4 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10.1(a) and thereafter
the Fund, the Adviser, or the Company may terminate the Agreement, as so
continued pursuant to this Section 10.4, upon written notice to the other party,
such notice to be for a period that is reasonable under the circumstances but
need not be for more than 90 days.
-25-
10.5 Except as necessary to implement Contract owner initiated or
approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Accounts), and the Company shall not prevent Contract owners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
90 days after the Company shall have notified the Fund or the Adviser of its
intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be deemed duly given only if sent by hand,
evidenced by written receipt or by certified mail, return receipt requested, to
the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party. All notices shall be deemed given on the date received or rejected by the
addressee.
If to the Fund:
▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Vice President, Secretary & Treasurer
If to the Adviser:
▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Executive Vice President and General Counsel
If to the Company:
Chubb Life Insurance Company of America
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Assistant Counsel
-26-
ARTICLE XII. Miscellaneous
-------------
12.1. The Company and the Adviser each understand and agree that
the obligations of the Fund under this Agreement are not binding upon any
shareholder or Trustee of the Fund personally, but bind only the Fund and the
Fund's property; the Company and the Adviser each represent that it has notice
of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Fund
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential and all information
reasonably identified as confidential in writing by any other party hereto
(including without limitation the names and addresses of the owners of the
Contracts) and, except as contemplated by this Agreement, shall not disclose,
disseminate or utilize such confidential information until such time as it may
come into the public domain without the express written consent of the affected
party.
12.3. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. 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.
12.8. 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.
-27-
12.9. Except as may otherwise be required under Article VII, the
rights, remedies and obligations contained in this Agreement are cumulative and
are in addition to any and all rights, remedies and obligations, at law or in
equity, which the parties hereto are entitled to under state and federal laws.
12.10. It is understood by the parties that this Agreement is not
an exclusive arrangement in any respect.
12.11. The foregoing constitutes the entire Agreement between the
parties hereto, and shall not be modified, amended or assigned except by an
Agreement in writing signed by an authorized representative of each such party.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date specified
below.
CHUBB LIFE INSURANCE COMPANY OF AMERICA
By its authorized officer,
By: /s/[SIGNATURE ILLEGIBLE]
--------------------------
Title: Executive Vice President
--------------------------
DATE: December 26, 1997
--------------------------
▇▇▇▇▇▇▇▇▇▇▇ VARIABLE ACCOUNT FUNDS
By its authorized officer,
By: /s/[SIGNATURE ILLEGIBLE]
--------------------------
Title: Vice President & Secretary
--------------------------
Date: January 8, 1998
--------------------------
▇▇▇▇▇▇▇▇▇▇▇ FUNDS, INC.
By its authorized officer
By: /s/[SIGNATURE ILLEGIBLE]
--------------------------
Title: Vice President
--------------------------
Date: January 2, 1998
--------------------------
-28-
SCHEDULE 1
Chubb Separate Account A
-29-
SCHEDULE 2
Portfolios of ▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds:
▇▇▇▇▇▇▇▇▇▇▇ Bond Fund (1/1/98)
▇▇▇▇▇▇▇▇▇▇▇ Strategic Bond Fund (1/1/98)
-30-
SCHEDULE 3
Chubb Ensemble II Variable Universal Life Policy
-31-
