PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUNDS,
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FIDELITY DISTRIBUTORS CORPORATION,
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ING PARTNERS, INC.,
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ING LIFE INSURANCE AND ANNUITY COMPANY,
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ING USA ANNUITY AND LIFE INSURANCE COMPANY,
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ING INSURANCE COMPANY OF AMERICA,
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RELIASTAR LIFE INSURANCE COMPANY,
---------------------------------
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK,
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and
SECURITY LIFE OF DENVER INSURANCE COMPANY
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THIS AGREEMENT, made and entered into as of the 11th day of November, 2004
by and among ING LIFE INSURANCE AND ANNUITY COMPANY, an insurance corporation
organized and existing under the laws of the State of Connecticut, ING USA
ANNUITY AND LIFE INSURANCE COMPANY, a life insurance company organized under the
laws of the State of Delaware, ING INSURANCE COMPANY OF AMERICA, a life
insurance company organized under the laws of the State of Florida, RELIASTAR
LIFE INSURANCE COMPANY, a life insurance company organized under the laws of the
State of Minnesota, RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK, a life
insurance company organized under the laws of the State of New York, and
SECURITY LIFE OF DENVER INSURANCE COMPANY, a life insurance company organized
under the laws of the State of Colorado, (each referred to hereinafter as the
"Company"), each on behalf of itself and certain of its segregated asset
accounts set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"); and ING Partners,
Inc. ("ING Partners"), an open-end management investment company organized under
the laws of the State of Maryland, on behalf of its series set forth on Schedule
A, as such schedule may be amended from time to time; and FIDELITY DISTRIBUTORS
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CORPORATION (hereinafter the "Underwriter"), a Massachusetts corporation; and
each of VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VARIABLE INSURANCE PRODUCTS FUND III, and VARIABLE INSURANCE PRODUCTS FUND IV,
each an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts (each referred to hereinafter as the "VIP Fund").
RECITALS
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WHEREAS, each VIP Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the VIP Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in each VIP Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"VIP Portfolio"); and
WHEREAS, each VIP Fund has obtained an order from the Securities and
Exchange Commission ("SEC"), dated October 15, 1985 (File No. 812-6102) or
September 17, 1986 (File No. 812-6422), 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) (15) and 6e-3(T) (b) (15) thereunder, to the extent necessary to
permit shares of the VIP 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 "VIP Shared Funding Exemptive Order");
and
WHEREAS, each VIP 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, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the variable life insurance and/or variable annuity products
identified on Schedule A hereto ("Contracts") have been or will be registered by
the
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Company under the 1933 Act, unless such Contracts are exempt from registration
thereunder; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act, unless such Account is exempt from
registration thereunder; and
WHEREAS, the Company has registered or will register certain variable life
insurance and/or variable annuity contracts ("Contracts") under the 1933 Act,
unless such Contracts are exempt from registration thereunder, supported wholly
or partially by the Accounts; and
WHEREAS, ING Partners is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the 1933 Act; and
WHEREAS, ING Partners has obtained an order from the Securities and
Exchange Commission, dated December 12, 1998 (File No. 812-11196) 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 1940 Act and Rules 6e-2(b) (15) and 6e-3(T) (b)
(15) thereunder, to the extent necessary to permit shares of ING Partners,
including shares of each Feeder Portfolio, to be sold to and held by variable
annuity and variable life insurance separate accounts, and by other types of
investors eligible to purchase insurance-dedicated funds under section 817 of
the Internal Revenue Code (hereinafter the "Feeder's Shared Funding Exemptive
Order");
WHEREAS, the shares of common stock of ING Partners are divided into
several series of shares, each representing the interest in a particular
portfolio of securities and other assets, and each series is comprised of one or
more classes of shares currently consisting of the Initial Class, Adviser Class
and Service Class, and each invests in securities in accordance with its
investment objectives and policies, as described in the registration statement
for its Portfolios; and
WHEREAS, each series of ING Partners listed on Schedule A (each, a "Feeder
Portfolio") has adopted an investment policy of holding as its only investment
security shares of a corresponding VIP Portfolio as specified on Schedule A, and
each such Feeder Portfolio has adopted the same investment objectives and
fundamental investment policies as the corresponding VIP Portfolio; and
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WHEREAS, each Feeder Portfolio is managed and distributed by the Company or
its affiliate(s), and is made available only to act as an investment vehicle for
separate accounts established for Contracts to be offered by the Company, and
may be offered to the Feeder Portfolios' investment advisers or their affiliates
solely for purposes of making an initial investment to "seed" the Feeder
Portfolio in order to enable the Feeder Portfolio to commence operations; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company desires to purchase shares in the Feeder Portfolios
(which will in turn purchase shares of the corresponding VIP Portfolios) on
behalf of each Account to fund certain of the aforesaid Contracts; and
WHEREAS, the Underwriter is authorized to sell shares of the VIP Portfolios
to each Feeder Portfolio at net asset value;
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AGREEMENT
---------
NOW, THEREFORE, in consideration of their mutual promises, the Company, ING
Partners, the Underwriter and each VIP Fund agree as follows:
ARTICLE A. Form of Agreement
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Although the parties have executed this Agreement in the form of a Master
Participation Agreement for administrative convenience, this Agreement shall
create a separate participation agreement for each VIP Fund and each Company, as
though each Company, ING Partners and the Distributor had executed a separate,
identical form of participation agreement with each VIP Fund, and each VIP Fund,
ING Partners and the Distributor had executed a separate, identical form of
participation agreement with each Company. No rights, responsibilities or
liabilities of any VIP Fund shall be attributed to any other VIP Fund; no
rights, responsibilities or liabilities of any Company shall be attributed to
any other Company.
ARTICLE I. Sale of VIP Fund Shares
-----------------------
1.1. The Underwriter agrees to sell to the respective Feeder Portfolio
those shares of the VIP Fund which the Company orders on behalf of each Feeder
Portfolio, executing such orders on a daily basis at the net asset value next
computed after receipt by the VIP Fund or its designee of the order for the
shares of the VIP Fund. For purposes of this Section 1.1, the Company shall be
the designee of the VIP Fund and of ING Partners for receipt of such orders
attributable to the Contracts and receipt by such designee in accordance with
section 1.6 shall constitute receipt by the VIP Fund and ING Partners; provided
that (a) the Company places such orders electronically in accordance with a
mutually acceptable electronic trading agreement ("ETA"), or (b) solely in the
event of the unavailability of the electronic trading system designated in the
ETA, the VIP Fund receives notice of such order by 9:00 a.m. Boston 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 VIP Fund and ING
Partners calculates portfolio net asset values pursuant to the rules of the
Securities and Exchange Commission.
1.2. The VIP Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the ING Partners on
those days on which the VIP Fund calculates its net asset value pursuant to
rules of the SEC and the VIP Fund shall use reasonable efforts to calculate such
net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board of Trustees of the VIP Fund
(hereinafter the "Board") may refuse to sell shares of any VIP Portfolio to any
person, or suspend or terminate the offering of shares of any VIP Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary
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duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such VIP Portfolio.
1.3. The VIP Fund and the Underwriter agree that shares of the VIP Fund
will be sold directly or indirectly only to Participating Insurance Companies
and their separate accounts, or to other types of investors eligible to purchase
insurance-dedicated funds under section 817 of the Internal Revenue Code,
including insurance-dedicated feeder funds or similar arrangements. No shares of
any Portfolio will be sold to the general public.
1.4. The VIP Fund and the Underwriter will not sell VIP Fund shares
directly or indirectly to any Participating Insurance Company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, VII and Section 2.7 of Article II of this Agreement is in
effect to govern such sales.
1.5. The VIP Fund agrees to redeem for cash, on ING Partners' request, any
full or fractional shares of the VIP Fund held by ING Partners, executing such
requests on a daily basis at the net asset value next computed after receipt by
the VIP Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the VIP Fund and of ING
Partners for receipt of requests for redemption attributable to the Contracts,
and receipt by such designee in accordance with section 1.6 shall constitute
receipt by the VIP Fund and ING Partners; provided that the VIP Fund receives
notice of such request for redemption in accordance with the procedures in
section 1.1. Redemptions may be made in kind only with the written consent of
all parties hereto. This section shall not apply to VIP Fund shares or share
classes that are subject to redemption fees; however, ING Partners shall not
purchase or redeem VIP Fund shares that are subject to redemption fees in the
absence of an additional written agreement signed by all parties.
1.6. The Company and ING Partners agree that purchases and redemptions of
VIP Fund shares offered by the then current prospectus of the VIP Fund shall be
made in accordance with the provisions of such prospectus. Without limiting the
foregoing, the Company represents and warrants that all purchase and redemption
orders it provides to ING Partners under sections 1.1 and 1.5, shall result
solely from Contract Owner transactions fully received and recorded by the
Company before the time as of which each applicable VIP Portfolio net asset
value was calculated or from redemptions permitted under Section 10.4 of this
Agreement; and ING Partners represents and warrants that all purchase and
redemption orders it provides to the VIP Fund shall reflect orders placed by the
Company in accordance with this section.
1.7. ING Partners shall pay for VIP Fund shares on the next Business Day
after an order to purchase VIP Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Sections 2.12 and 2.13, upon receipt by the VIP Fund of
the federal funds so wired, such
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funds shall cease to be the responsibility of ING Partners and shall become the
responsibility of the VIP Fund.
1.8. Issuance and transfer of the VIP Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or ING Partners.
Shares ordered from the VIP Fund will be recorded in an appropriate title for
each ING Partners Feeder Portfolio.
1.9. The VIP Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to ING Partners, of any income, dividends or
capital gain distributions payable on the VIP Fund's shares. ING Partners, on
behalf of each Feeder Portfolio, hereby elects to receive all such income
dividends and capital gain distributions as are payable on each VIP Portfolio
shares in additional shares of that VIP Portfolio. ING Partners, on behalf of
each Feeder Portfolio, reserves the right to revoke this election and to receive
all such income dividends and capital gain distributions in cash. The VIP Fund
shall notify ING Partners of the number of shares so issued as payment of such
dividends and distributions.
1.10. The VIP Fund shall make the net asset value per share for each VIP
Portfolio available to ING Partners on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston 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 or are exempt from registration thereunder; 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 law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated asset account under applicable state insurance
laws and that each Account is either registered or exempt from registration as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
2.2. The VIP Fund represents and warrants that VIP Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
Marylandand all applicable federal and state securities laws and that the VIP
Fund is and shall remain registered under the 1940 Act. The VIP 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 VIP Fund shall register and qualify the shares for
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sale in accordance with the laws of the various states only if and to the extent
deemed advisable by the VIP Fund or the Underwriter.
2.3. The VIP Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "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.
2.4. ING Partners represents and warrants that (a) Feeder Portfolio shares
shall be registered under the 1933 Act, duly authorized for issuance and sold in
compliance with the laws of the State of Maryland and all applicable federal and
state securities laws and that ING Partners is and shall remain registered under
the 1940 Act; (b) it 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; (c) it 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 ING Partners, its investment adviser or
principal underwriter; and (d) it is lawfully organized and validly existing
under the laws of Maryland, and it does and will comply in all material respects
with the 1940 Act. ING Partners further represents and warrants that each Feeder
Portfolio listed on Schedule A has adopted an investment policy of holding as
its only investment security shares of a corresponding VIP Portfolio as
specified on Schedule A, and that each such Feeder Portfolio has adopted the
same investment objectives as, and fundamental investment policies no more
restrictive than, those of the corresponding VIP Portfolio. ING Partners further
represents and warrants that its principal underwriter (if any) is a
broker-dealer registered under the 1934 Act.
2.5. ING Partners represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the 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 VIP Fund and the Underwriter
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. ING Partners further
represents and warrants that its shares will be sold directly or indirectly only
to the Company and to the Accounts to fund Contracts, or to the Feeder
Portfolios' investment advisers or their affiliates solely for purposes of
making an initial investment to "seed" the Feeder Portfolio in order to enable
the Feeder Portfolio to commence operations. No shares of any Feeder Portfolio
will be sold to the general public.
2.6. The Company represents that the Contracts are currently treated as
endowment, life insurance or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the VIP Fund and the Underwriter immediately
upon having a reasonable basis for
8
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.7. (a) With respect to Initial Class shares, the VIP Fund currently does
not intend to make any payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments
in the future. The VIP Fund has adopted a "no fee" or "defensive" Rule 12b-1
Plan under which it makes no payments for distribution expenses. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the VIP
Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the VIP Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(b) With respect to Service Class shares and Service Class 2 shares, the
VIP Fund has adopted Rule 12b-1 Plans under which it makes payments to finance
distribution expenses. The VIP Fund represents and warrants that it has a board
of trustees, a majority of whom are not interested persons of the VIP Fund,
which has formulated and approved each of its Rule 12b-1 Plans to finance
distribution expenses of the VIP Fund and that any changes to the VIP Fund's
Rule 12b-1 Plans will be approved by a similarly constituted board of trustees.
2.8. The VIP Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the VIP Fund represents that the VIP Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the State of Maryland and the VIP Fund and the Underwriter represent that
their respective 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.
2.9. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the VIP Fund
shares in accordance with the laws of the Commonwealth of Massachusetts and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 0000 Xxx.
2.10. The VIP Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 0000 Xxx.
2.11. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
VIP Fund in compliance in all material respects with the laws of the
Commonwealth of Massachusetts and any applicable state and federal securities
laws.
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2.12. The VIP Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the VIP Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the VIP Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.13. The Company and ING Partners each represents and warrants that all of
its respective directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the VIP Fund
are covered by a blanket fidelity bond or similar coverage for the benefit of
ING Partners, in an amount not less than the minimal coverage as required
currently by Rule 17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.14. The Company represents and warrants that it will use its best efforts
to discourage market timing and other excessive or disruptive trading activity
by third parties with power to act on behalf of multiple contract owners and by
individual contract owners. The Company further represents and warrants that any
annuity contract forms or variable life insurance policy forms not in use at the
time of execution of this Agreement, but added to in the future via amendment of
Schedule A hereto, will contain language reserving to the Company the right to
refuse to accept instructions from persons that engage in market timing or other
excessive or disruptive trading activity.
ARTICLE III. Prospectuses; Proxy Statements; Voting
--------------------------------------
3.1. The Underwriter shall provide the Company with as many printed copies
of the VIP Fund's current prospectus and Statement of Additional Information as
the Company may reasonably request. If requested by the Company in lieu thereof,
the Fund shall provide camera-ready film or an electronic file in a mutually
agreeable format containing the VIP Fund's prospectus and Statement of
Additional Information, and such other assistance as is reasonably necessary in
order for the Company once each year (or more frequently if the prospectus
and/or Statement of Additional Information for the VIP Fund is amended during
the year) to have the prospectus, private offering memorandum or other
Disclosure Document (as defined in section 4.7, below) for the Contracts, the
Feeder Portfolio's prospectus and the VIP Fund's prospectus printed together in
one document, and to have the Statements of Additional Information for the VIP
Fund, Feeder Portfolio and the Contracts printed together in one document.
Alternatively, the Company may print the VIP Fund's prospectus and/or its
Statement of Additional Information in combination with other fund companies'
prospectuses and statements of additional information. Except as provided in the
following three sentences, all expenses
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of printing and distributing VIP Fund prospectuses and Statements of Additional
Information shall be the expense of the Company. For VIP Fund prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure annually as required by the
1933 Act and/or the 1940 Act, the cost of printing shall be borne by the VIP
Fund. If the Company or ING Partners chooses to receive camera-ready film or an
electronic file in lieu of receiving printed copies of the VIP Fund's
prospectus, the VIP Fund will reimburse the Company or ING Partners (but not
both) in an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the VIP Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the VIP Fund's Statement of Additional
Information.
The Company or ING Partners agrees to provide the VIP Fund or its designee
with such information as may be reasonably requested by the Fund to assure that
the VIP Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts.
3.2. The VIP Fund's prospectus shall state that the Statement of Additional
Information for the VIP Fund is available from the Underwriter or the Company
(or in the VIP Fund's discretion, the Prospectus shall state that such Statement
is available from the VIP Fund).
3.3. The VIP Fund, at its expense, shall provide the Company with printable
electronic copies of its reports to shareholders as soon as practicable after
the financial statements are approved, to enable the Feeder Portfolio and
Company to distribute these reports to Contract owners or other Feeder Portfolio
shareholders.
3.4. If and to the extent required by law the Company and Feeder Portfolio
shall: (i) solicit voting instructions for VIP Fund proxy statements from
Contract owners;
(ii) vote the VIP Fund shares in accordance with instructions received
from Contract owners; and (iii) vote VIP Fund shares for which no
instructions have been received in a particular separate account in the
same proportion as VIP Fund shares of such portfolio for which instructions
have been received in that separate account, 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. To the extent permitted by
law, ING Partners reserves the right to vote: (a) VIP Fund shares held for
the benefit of Feeder Portfolio shareholders other than the Accounts in
accordance with voting instructions provided by such shareholder; and (b)
VIP Fund shares held for the benefit of
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a Company's segregated asset account in accordance with the Company's
voting instructions, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of their
separate accounts participating in the VIP Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule
B attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance
Companies.
3.5. The VIP Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the VIP Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the VIP
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the VIP Fund
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the SEC may promulgate with respect thereto.
3.6. ING Partners will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular ING Partners will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the VIP
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, ING Partners
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Disclosure Documents, Sales Material and Information
----------------------------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the VIP
Fund or its designee, each Disclosure Document and each piece of sales
literature or other promotional material (as defined in section 4.7) in which
the VIP Fund or its investment adviser or the Underwriter is named, at least
fifteen (15) Business Days prior to its use. No such material shall be used if
the VIP Fund or its designee reasonably objects to such use within five (5)
Business Days after receipt of such material.
4.2. The Company and ING Partners shall not give any information or make
any representations or statements on behalf of the VIP Fund or concerning the
VIP Fund in connection with the sale of the Contracts or any investment in the
Feeder Portfolio shares other than the information or representations contained
in the registration statement or prospectus for the VIP 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 VIP Fund, or in sales
literature or other promotional material approved by the VIP Fund or its
designee or by the Underwriter, except with the permission of the VIP Fund or
the Underwriter or the designee of either.
4.3. The VIP Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other
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promotional material in which the Company and/or its separate account(s) and/or
ING Partners, is named at least fifteen (15) Business Days prior to its use. No
such material shall be used if the Company or ING Partners or their designee
reasonably objects to such use within five (5) Business Days after receipt of
such material.
4.4. The VIP Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, the Contracts, ING Partners or a Feeder Portfolio other than the
information or representations contained in a Disclosure Document for the
Contracts or such Feeder Portfolio, as such Disclosure Document(s) may be
amended or supplemented from time to time, or in published reports for each
Account or for the Feeder Portfolios which are in the public domain or approved
by the Company for distribution to Contract owners, or in sales literature or
other promotional material approved by the Company or its designee, except with
the permission of the Company.
4.5. The VIP Fund will provide to the Company at least one complete copy of
all Disclosure Documents, shareholder reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the VIP Fund or its shares, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
4.6. The Company and ING Partners will provide to the VIP Fund at least one
complete copy of all Disclosure Documents, shareholder or Contract Owner
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to or affect any
Feeder Portfolio, the Contracts or each Account, contemporaneously with the
filing of such document with the SEC or other regulatory authorities or, if a
Contract and its associated Account are exempt from registration, at the time
such documents are first published.
4.7. "Disclosure Documents" refers to any SEC registration statement,
including any prospectus or Statement of Additional Information, and any private
offering memorandum or other disclosure document used by the Company, ING
Partners or the VIP Fund to solicit investors. The phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Company, a Contract, a Feeder Portfolio, a VIP Fund
or any of their affiliates: 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, telephone directories (other than routine listings) 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, performance reports or summaries,
form letters, telemarketing scripts, seminar texts, reprints or excerpts of any
other advertisement, sales literature, -------or published article),
13
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, shareholder reports and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The VIP Fund and Underwriter shall pay no fee or other compensation to
the Company or ING Partners under this agreement, except that if the VIP Fund or
any VIP Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts or ING Partners if and in amounts agreed to
by the Underwriter in writing and such payments will be made out of existing
fees otherwise payable to the Underwriter, past profits of the Underwriter or
other resources available to the Underwriter. No such payments shall be made
directly by the VIP Fund.
5.2. All expenses incident to performance by the VIP Fund under this
Agreement shall be paid by the VIP Fund. The VIP Fund shall see to it that all
its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the VIP
Fund, in accordance with applicable state laws prior to their sale. The VIP Fund
shall bear the expenses for the cost of registration and qualification of the
VIP Fund's shares, preparation and filing of the VIP Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus in
type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes an
annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the VIP
Fund's shares. The VIP Fund shall not be responsible for the costs of printing
or distributing any materials to Contract Owners, except as provided in section
5.3 below.
5.3. The Company shall bear the expenses of distributing all Disclosure
Documents (including without limitation the VIP Fund Disclosure Documents) and
the VIP Fund's shareholder reports, to owners of Contracts issued by the
Company, to the extent such distribution is required by applicable law, provided
that the Underwriter shall provide printed copies of materials to the extent
required under Section 3.1. The VIP Fund shall bear the costs of soliciting VIP
Fund proxy voting instructions from Contract owners with assets allocated to VIP
Funds as of the record date, including the costs of mailing proxy materials and
tabulating proxy voting instructions, not to exceed the costs charged by any
service provider engaged by the VIP Fund for this purpose. The VIP Fund and the
Underwriter shall not be responsible for the costs of any proxy solicitations
other than proxies sponsored by the VIP Fund.
5.4. All expenses incident to performance by ING Partners under this
Agreement shall be paid by ING Partners or its Feeder Portfolios, as ING
Partners deems appropriate. ING Partners shall see to it that all Feeder
Portfolio shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by ING
Partners, in accordance with applicable state laws prior to their
14
sale. ING Partners or each Feeder Portfolio shall bear the expenses for the cost
of registration and qualification of the Feeder Portfolio's shares, preparation
and filing of the Feeder Portfolios' prospectuses and registration statements,
proxy materials and reports, setting the prospectus in type, setting in type and
printing the proxy materials and reports to shareholders (including the costs of
printing a prospectus that constitutes an annual report), the preparation of all
statements and notices required by any federal or state law, and all taxes on
the issuance or transfer of the Feeder Portfolios' shares.
ARTICLE VI. Diversification
---------------
6.1. The VIP Fund will at all times invest money from the Contracts and the
Feeder Portfolios in such a manner as to enable the Contracts to be treated as
variable contracts under the Code and the regulations issued thereunder,
assuming that the Company and ING Partners comply with section 6.2 below.
Without limiting the scope of the foregoing, the VIP Fund will at all times
comply with Section 817(h) of the Code and Treasury Regulation 1.817-5 and any
amendments or modifications thereto, all of which relate to the investment
diversification requirements for variable annuity, endowment, or life insurance
contracts and to parties eligible to own VIP Fund shares. In the event of a
breach of this Section 6.1 by the VIP Fund, it will take all reasonable steps
(a) to notify Company of such breach and (b) to adequately diversify the VIP
Fund so as to achieve compliance within the grace period afforded by Regulation
1.817-5.
6.2 The Company and ING Partners will at all times ensure that the
Contracts and Accounts remain eligible to "look-through" the Accounts and the
Feeder Portfolios, respectively, to the VIP Fund investment portfolio for
purposes of investment diversification under Section 817(h) of the Code and
Regulation 1.817-5 thereunder. In the event of a breach of this Section 6.2, the
Company and ING Partners will take all reasonable steps (a) to notify VIP Fund
of such breach and (b) to remedy the breach so as to achieve compliance within
the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The VIP Fund Board will monitor the VIP Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing directly or indirectly in the VIP 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 VIP Portfolio are being managed; (e) a
difference in voting instructions given 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 VIP Fund Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
15
7.2. The Company will report any potential or existing conflicts of which
it is aware to the VIP Fund Board. The Company will assist the VIP Fund Board in
carrying out its responsibilities under the VIP Shared Funding Exemptive Order,
by providing the VIP Fund Board with all information reasonably necessary for
the VIP Fund Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the VIP Fund Board whenever
contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the VIP Fund Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and ING Partners, and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as determined by a
majority of 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 VIP Fund or any VIP Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another VIP
Portfolio of the VIP 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., annuity
contract owners, life insurance contract owners, or variable 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 a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
and ING Partners may be required, at the VIP Fund's election, to withdraw the
affected Account's and Feeder Portfolio's investment in the VIP Fund and
terminate this Agreement with respect to such Account, ING Partners and/or such
Feeder Portfolio; provided, however that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the VIP
Fund Board. Any such withdrawal and termination must take place within six (6)
months after the VIP Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Underwriter and VIP
Fund shall continue to accept and implement orders by the Company, on behalf of
the Feeder Portfolio, for the purchase (and redemption) of shares of the VIP
Fund.
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 the
affected Account's, or ING Partners' or Feeder Portfolio's, investment in the
VIP Fund and terminate this Agreement with respect to such Account or Feeder
Portfolio within six months after the VIP Fund Board informs the Company in
writing that it has determined that such decision has
16
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the VIP Fund Board. Until the end of the foregoing six
month period, the Underwriter and VIP Fund shall continue to accept and
implement orders by the Company, on behalf of the Feeder Portfolio, for the
purchase (and redemption) of shares of the VIP Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the VIP Fund Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the VIP 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 VIP Fund Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the Account's,
and/or ING Partners' or Feeder Portfolio's, investment in the VIP Fund and
terminate this Agreement within six (6) months after the VIP Fund 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 VIP Fund Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the VIP Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the VIP Shared Funding Exemptive
Order, then (a) the VIP Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 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
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the VIP Fund,
each trustee of the VIP Fund Board, and VIP Fund officers and each person, if
any, who controls the VIP 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
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise,
17
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of, or
investment in, the VIP Fund's shares or any Feeder Portfolio's shares through
the Accounts or the Contracts, or to the sale or acquisition of, or investment
in the Contracts, and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Disclosure Documents
for the Contracts or any Feeder Portfolio, or contained in the
Contracts or sales literature or other promotional material for the
Contracts or any Feeder Portfolio (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of the VIP Fund for use in any Disclosure Document relating to the
Contracts or any Feeder Portfolio or in the Contracts or sales
literature or other promotional material (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts, Feeder Portfolio shares or VIP Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature of the VIP Fund not supplied
by the Company, or persons under its control) or wrongful conduct of
ING Partners, the Company or persons under its control, with respect
to the sale or distribution of the Contracts, Feeder Portfolio shares
or VIP Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Disclosure Document or sales literature
of the VIP Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon
and in conformity with information furnished to the VIP Fund by or on
behalf of the Company or ING Partners; or
(iv) arise as a result of any failure by the Company or ING Partners to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company or ING Partners in this Agreement
or
18
arise out of or result from any other material breach of this
Agreement by the Company or ING Partners, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any party to this Agreement, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the VIP Fund shares, Feeder Portfolio shares or the
Contracts or the operation of the VIP Fund, ING Partners or the Accounts.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless ING Partners,
the Company and each of their respective directors/trustees and officers and
each person, if any, who controls the Company or the Feeder Portfolios 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 Underwriter) or
19
litigation (including 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, or investment
in, the VIP Fund's shares or any Feeder Portfolio's shares through the Accounts
or the Contracts, or to the sale or acquisition of, or investment in 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 Disclosure Documents
or prospectus or sales literature or other promotional material of the
VIP Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Underwriter or VIP Fund by or on behalf of the
Company or ING Partners for use in the registration statement or
prospectus for the VIP Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the
Contracts, Feeder Portfolio shares or VIP Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Disclosure
Documents or sales literature or other promotional material for the
Contracts or for the Feeder Portfolios not supplied by the Underwriter
or persons under its control) or wrongful conduct of the VIP Fund,
Adviser or Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts, Feeder Portfolio shares or
VIP Fund shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Disclosure Document or sales literature
or other promotional material covering the Contracts or the Feeder
Portfolios, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company or ING Partners by or on behalf of the VIP Fund; or
20
(iv) arise as a result of any failure by the VIP Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
any party under this Agreement, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company and ING Partners each agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
VIP Fund shares, Feeder Portfolio shares or the Contracts or the operation of
the VIP Fund, ING Partners or the Accounts.
21
8.3. Indemnification By the VIP Fund
-------------------------------
8.3(a). The VIP Fund agrees to indemnify and hold harmless ING Partners,
the Company, and each of their directors/trustees 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 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the VIP Fund) or litigation (including
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
result from the gross negligence, bad faith or willful misconduct of the VIP
Fund Board or any member thereof, are related to the operations of the VIP Fund
and:
(i) arise as a result of any failure by the VIP Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Section 6.1 of this Agreement);or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the VIP Fund in this Agreement or arise out of
or result from any other material breach of this Agreement by the VIP
Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The VIP Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
any party under this Agreement, whichever is applicable.
8.3(c). The VIP Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the VIP Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the VIP Fund of any
such claim shall not relieve the VIP Fund from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the VIP Fund will be entitled to participate,
at its
22
own expense, in the defense thereof. The VIP Fund also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the VIP Fund to such party of the VIP Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the VIP Fund
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(d). The Company, ING Partners and the Underwriter agree promptly to
notify the VIP Fund of the commencement of any litigation or proceedings against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the VIP Fund shares, Feeder Portfolio shares
or the Contracts or the operation of the VIP Fund, ING Partners or the Accounts.
8.4. Indemnification By ING Partners
-------------------------------
8.4 (a). ING Partners agrees to indemnify and hold harmless the VIP Fund
and each of its directors and officers and each person, if any, who controls the
VIP Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.4) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of ING Partners) or litigation (including 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 result from the gross
negligence, bad faith or willful misconduct of the ING Partners Board or any
member thereof, are related to the operations of ING Partners and:
(i) arise as a result of any failure by ING Partners to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Section 6.2 of this Agreement);or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by ING Partners in this Agreement or arise out of
or result from any other material breach of this Agreement by the ING
Partners';
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). ING Partners shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations
23
and duties under this Agreement or to any party under this Agreement, whichever
is applicable.
8.4(c). ING Partners shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified ING Partners in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the ING Partners'
of any such claim shall not relieve ING Partners from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, ING Partners will be entitled to participate,
at its own expense, in the defense thereof. ING Partners also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from ING Partners to such party of ING Partners'
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and ING Partners
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.
8.4(d). The Company, the VIP Fund and the Underwriter agree promptly to
notify ING Partners of the commencement of any litigation or proceedings against
it or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the VIP Fund shares, Feeder Portfolio shares
or the Contracts or the operation of the VIP Fund, ING Partners or the Accounts.
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 Commonwealth of
Massachusetts.
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 VIP Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
24
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by four (4) months' advance
written notice delivered to the other parties, or such other time as
the parties may mutually agree; or
(b) termination by the Company or ING Partners by written notice to the
VIP Fund and the Underwriter with respect to any VIP Portfolio based
upon the Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company or ING Partners by written notice to the
VIP Fund and the Underwriter with respect to any VIP Portfolio in the
event any of such Portfolio's shares are not registered, issued or
sold in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Company or ING Partners by written notice to the
VIP Fund and the Underwriter with respect to any VIP Portfolio in the
event that such Portfolio 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 that the VIP
Fund may fail to so qualify; or
(e) termination by the Company or ING Partners by written notice to the
VIP Fund and the Underwriter with respect to any VIP Portfolio in the
event that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the VIP Fund or the Underwriter by written
notice to the Company and ING Partners, if either one or both of the
VIP Fund or the Underwriter respectively, shall determine, in their
sole judgment exercised in good faith, that ING Partners, the Company
and/or its affiliated companies has suffered a material adverse change
in its business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company or ING Partners by written notice to the
VIP Fund and the Underwriter, if the Company or ING Partners' shall
determine, in its sole judgment exercised in good faith, that either
the VIP Fund or the Underwriter has suffered a material adverse change
in
25
its business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Underwriter or VIP Fund by written notice to the
Company and ING Partners with respect to any Feeder Portfolio in the
event that such Portfolio fails to meet the diversification
requirements specified in Section 6.2 hereof;
(i) termination by the Underwriter or VIP Fund by written notice to the
Company and ING Partners in the event ING Partners has breached its
representations or warranties under Article II of this Agreement,
EXCEPT any action changing a Feeder Portfolio's policy of investing
exclusively in a VIP Portfolio, which shall be handled in accordance
with section 10.5 below.
10.2. Notwithstanding any termination of this Agreement under section 10.1,
the VIP Fund and the Underwriter shall at the option of the Company or ING
Partners, continue to make available additional shares of the VIP Fund pursuant
to the terms and conditions of this Agreement, to the extent necessary to fund
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, through the
Feeder Portfolio, to reallocate investments in the VIP Fund, redeem investments
in the VIP Fund and/or invest in the VIP Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 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.
10.3. The provisions of Articles II (Representations and Warranties), VIII
(Indemnification), IX (Applicable Law) and XII (Miscellaneous) shall survive
termination of this Agreement. In addition, all other applicable provisions of
this Agreement shall survive termination as long as shares of the VIP Fund are
held by the Feeder Portfolio and on behalf of Contract owners in accordance with
section 10.2, except that the VIP Fund and Underwriter shall have no further
obligation to make VIP Fund shares available to the ING Partners' to fund
Contracts issued after termination.
10.4. The Company and ING Partners, on behalf of the Feeder Portfolios,
shall not redeem VIP Fund shares attributable to the Contracts (as opposed to
VIP Fund shares attributable to the Company's assets held in the Account) except
(i) as necessary to implement Contract Owner initiated or approved transactions,
or (ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption") or (iii) as necessary to effect a separate
account transaction that is permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act or (iv) in connection with an action of the ING Partners
Board or shareholders of ING Partners or a Feeder Portfolio, as appropriate, to
change a Feeder Portfolio's investment policy of investing exclusively in a VIP
Portfolio.
26
Upon request, the Company will promptly furnish to the VIP Fund and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the VIP Fund and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Feeder Portfolio that invests exclusively in a VIP Portfolio that was otherwise
available under the Contracts without first giving the VIP Fund or the
Underwriter 90 days notice of its intention to do so.
10.5 In the event of any change in a Feeder Portfolio's policy of investing
exclusively in a VIP Portfolio, any party shall have the right to terminate this
Agreement as to such Feeder Portfolio and VIP Portfolio immediately upon the
effective date of such change. No such change shall be made effective until all
parties have received at least sixty (60) days advance written notice. Upon the
effective date of such change, the Distributor and VIP Fund may decline any
order for the purchase of additional shares of the affected VIP Portfolio, and
any party may require the redemption of all VIP Portfolio shares held by the
Feeder Portfolio.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the VIP Fund:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
If to ING Partners:
0000 X. Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
If to a Company:
ING Life Insurance and Annuity Company
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx
Reliastar Life Insurance Company
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel
27
ING USA Annuity and Life Insurance Company
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Counsel
Reliastar Life Insurance Company of New York
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel
ING Insurance Company of America
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel
Security Life of Denver Insurance Company
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel
If to the Underwriter:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
12.1 All persons dealing with the VIP Fund must look solely to the property
of the VIP Fund for the enforcement of any claims against the VIP Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the VIP Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other 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.
28
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 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish a state or federal regulator with appropriate jurisdiction,
with any information or reports in connection with services provided under this
Agreement which such regulator may request in order to ascertain whether the
insurance operations of the Company are being conducted in a manner consistent
with applicable laws or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement. The Company
shall promptly notify the VIP Fund and the Underwriter of any change in control
of the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the VIP
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any), as
soon as practical and in any event within 45 days after the end of
each quarterly period:
29
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
30
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.
ING LIFE INSURANCE AND ANNUITY RELIASTAR LIFE INSURANCE COMPANY
COMPANY
By: /s/Xxxxx X. Xxxxxxxx By:
-------------------- ------------------------
Name: Xxxxx X. Xxxxxxxx Name:
-------------------- ---------------------
Its: Its:
------------------- ----------------------
ING USA ANNUITY AND LIFE INSURANCE RELIASTAR LIFE INSURANCE COMPANY
COMPANY OF NEW YORK
By: By:
--------------------- ------------------------
Name: Name:
------------------- ----------------------
Its: Its:
--------------------------- ----------------------
ING INSURANCE COMPANY OF AMERICA SECURITY LIFE OF DENVER INSURANCE COMPANY
By: By:
------------------- -----------------------
Name: Name:
------------------- ---------------------
Its: Its:
------------------- ----------------------
ING PARTNERS, INC.
By: /s/Xxxxx X. Xxxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxxx
----------------------
Its:
----------------------
31
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.
ING LIFE INSURANCE AND ANNUITY RELIASTAR LIFE INSURANCE COMPANY
COMPANY
By: By:/s/Xxxxx X. Xxxxxxx
-------------------- ------------------------
Name: Name: Xxxxx X. Xxxxxxx
-------------------- ---------------------
Its: Its: Senior Vice President
------------------- ---------------------
ING USA ANNUITY AND LIFE INSURANCE RELIASTAR LIFE INSURANCE COMPANY
COMPANY OF NEW YORK
By: By:/s/Xxxxx X. Xxxxxxx
--------------------- ------------------------
Name: Name: Xxxxx X. Xxxxxxx
------------------- ----------------------
Its: Its: Senior Vice President
--------------------------- ----------------------
ING INSURANCE COMPANY OF AMERICA SECURITY LIFE OF DENVER INSURANCE COMPANY
By: /s/Xxxxx X. Xxxxxxx By:
------------------- -----------------------
Name: Xxxxx X. Xxxxxxx Name:
------------------- ---------------------
Its: Senior Vice President Its:
--------------------- ----------------------
ING PARTNERS, INC.
By:
----------------------
Name:
----------------------
Its:
----------------------
32
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.
ING LIFE INSURANCE AND ANNUITY RELIASTAR LIFE INSURANCE COMPANY
COMPANY
By: By:
------------------- ------------------------
Name: Name:
------------------- ----------------------
Its: Its:
------------------- ----------------------
ING USA ANNUITY AND LIFE INSURANCE RELIASTAR LIFE INSURANCE COMPANY
COMPANY OF NEW YORK
By: /s/Xxxxxxxx X. Xxxxxx By:
--------------------- ------------------------
Name: Xxxxxxxx X. Xxxxxx Name:
------------------- ----------------------
Its: Vice President and Actuary Its:
--------------------------- ----------------------
ING INSURANCE COMPANY OF AMERICA SECURITY LIFE OF DENVER INSURANCE COMPANY
By: By:/s/Xxxxxxxx X. Xxxxxx
------------------- -----------------------
Name: Name:Xxxxxxxx X. Xxxxxx
------------------- ---------------------
Its: Its: Vice President and Actuary
------------------- --------------------------
ING PARTNERS, INC.
By:
----------------------
Name:
----------------------
Its:
----------------------
33
VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II,
VARIABLE INSURANCE PRODUCTS FUND III, and
FIDELITY DISTRIBUTORS CORPORATION VARIABLE INSURANCE PRODUCTS FUND IV
By: /s/D Holborn By: /s/Xxxxxxxxx Xxxxxxx
------------ ---------------------
Name: D Holborn Name: Xxxxxxxxx Xxxxxxx
------------ ---------------------
Its: Its:
------------ ---------------------
34
Schedule A
----------
Life Insurance Company
----------------------
---- -------------------- --------------------------- --------------------------
VIP Portfolio Name Feeder Portfolio Using VIP Separate Accounts Using
Portfolio Feeder Portfolio
---- -------------------- --------------------------- --------------------------
1.
---- -------------------- --------------------------- --------------------------
2.
---- -------------------- --------------------------- --------------------------
3.
---- -------------------- --------------------------- --------------------------
4.
---- -------------------- --------------------------- --------------------------
Life Insurance Company
----------------------
---- -------------------- --------------------------- --------------------------
VIP Portfolio Name Feeder Portfolio Using VIP Separate Accounts Using
Portfolio Feeder Portfolio
---- -------------------- --------------------------- --------------------------
1.
---- -------------------- --------------------------- --------------------------
2.
---- -------------------- --------------------------- --------------------------
3.
---- -------------------- --------------------------- --------------------------
4.
---- -------------------- --------------------------- --------------------------
35
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the VIP Fund by the Underwriter, the VIP Fund,
the ING Partners and the Company. The defined terms herein shall have the
meanings assigned in the Participation Agreement except that the term "Company"
shall also include (a) the department or third party assigned by the Insurance
Company to perform the steps delineated below, and (b) the ING Partners, which
is obligated to provide information and vote VIP Fund shares in accordance with
the Company's voting instructions.
1. The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the VIP Fund
for the shareholder meeting to facilitate the establishment of
tabulation procedures. At this time the Underwriter will inform the
Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for
account adjustments made after this date that could affect the status
of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to
call in the number of Customers to Fidelity, as soon as possible,
but no later than two weeks after the Record Date.
3. The VIP Fund's Annual Report no longer needs to be sent to each
Customer by the Company either before or together with the Customers'
receipt of a proxy statement. Underwriter will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the VIP Fund. The Company shall
produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4
business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. VIP Fund or account number
d. coding to state number of units
36
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the VIP Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the VIP
Fund will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Insurance Company). Contents of
envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the VIP Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company
reviews and approves the contents of the mailing package to ensure
correctness and completeness. Copy of this approval sent to Fidelity
Legal.
7. Package mailed by the Company.
* The VIP Fund must allow at least a 15-day solicitation time to
the Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
37
Note: For Example, If the account registration is under "Xxxxxxx X.
Xxxxx, Trustee," then that is the exact legal name to be printed on
the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to
sort the Cards as they first arrive into categories depending upon
their vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the VIP Fund receives
the tabulations stated in terms of a percentage and the number of
shares.) Fidelity Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to
Fidelity Legal on the morning of the meeting not later than 10:00 a.m.
Boston time. Fidelity Legal may request an earlier deadline if
required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. Fidelity Legal will provide a standard form for each
Certification.
15. The Company will be required to box and archive the Cards received
from the Customers. In the event that any vote is challenged or if
otherwise necessary for legal, regulatory, or accounting purposes,
Fidelity Legal will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
38
