Exhibit 8(b)(2)
FORM OF ASSIGNMENT AND MODIFICATION AGREEMENT
This Agreement is made by and between Xxxxxxxxx & Xxxxxx Advisers
Management Trust ("Trust"), a Massachusetts business trust, Xxxxxxxxx & Xxxxxx
Management Incorporated ("N&B Management"), a New York corporation, Xxxxxxxxx &
Xxxxxx Advisers Management Trust ("Successor Trust"), a Delaware business trust,
Advisers Managers Trust ("Managers Trust") and The Penn Mutual Life Insurance
Company ("Life Company"), a life insurance company organized under the laws of
the State of Pennsylvania.
WHEREAS, the Life Company has previously entered into a Sales Agreement
dated April 5, 1993 (the "Sales Agreement") with the Trust regarding the
purchase of shares of the Trust by Life Company; and
WHEREAS, as part of the reorganization into a "master-feeder" fund
structure (the "Reorganization"), the Trust will be converted into the Successor
Trust, a Delaware business trust; and
WHEREAS, as part of the Reorganization, each Portfolio of the Trust will
transfer all of its assets to the corresponding Portfolio of the Successor Trust
("Successor Portfolio") and each Successor Portfolio will invest all of its net
investable assets in a corresponding series of Managers Trusts; and
WHEREAS, as part of the Reorganization, an Order under Section 6(c) of the
Investment Company Act of 1940 ("40 Act") is expected to be issued by the
Securities and Exchange Commission ("SEC") granting exemptions from Sections
9(a), 13(a), 15(a) and 15(b) of the `40 Act and Rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder; and
WHEREAS, the Order is expected to require that certain conditions (the
"Conditions") as set forth in the Notice (Investment Company Act Release No.
21003 (April 12, 1995)) be made a part of the Sales Agreement; and
WHEREAS, the parties hereto desire to assign the Sales Agreement from the
Trust to the Successor Trust, to modify the Sales Agreement to include the
Conditions and Indemnification and to rename the Sales Agreement; and
WHEREAS, N&B Management and Managers Trust will become parties to the Sales
Agreement as modified hereby, due to and for purposes of their obligations under
the Conditions and N&B Management's obligations under the Indemnification
provision.
NOW, THEREFORE, in consideration of their mutual promises, Trust, N&B
Management, Successor Trust, Managers Trust and Life Company agree as follows:
1. The Sales Agreement is hereby assigned by the Trust to the Successor
Trust.
2. Pursuant to such assignment, the Successor Trustee hereby accepts all
rights and benefits of the Trust under the Sales Agreement and agrees to perform
all duties and obligations of the Trust under the Sales Agreement. Upon the
effectiveness of this Assignment and Modification Agreement, the Trust will be
released from all obligations and duties under the Sales Agreement.
3. The Sales Agreement is hereby modified to include the Conditions as
follows:
Sections 12 and 13 of the Sales Agreement are replaced by the following:
12. a) The Board of Trustees of each of the Successor Trust and Managers
Trust (the "Boards") will monitor the Successor Trust and Managers Trust,
respectively, (collectively the "Funds") for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
insurance company separate accounts investing in the Funds. A material
irreconcilable conflict may arise for a variety of reasons, including: (a)
state insurance regulatory authority action; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, 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 the Funds are
being managed; (e) a difference in voting instructions given by variable annuity
and variable life insurance contract owners or by contract owners of different
participating insurance companies; or (f) a decision by a participating
insurance company to disregard voting instructions of contract owners.
b) Life Company will report any potential or existing conflicts to
the Boards. Life Company will be responsible for assisting the appropriate Board
in carrying out its responsibilities under the Conditions set forth in the
notice issued by the SEC for the Funds on April 12, 1995 (the "Notice") by
providing the Board with all information reasonably necessary for it to consider
any issues raised. This responsibility includes, but is not limited to, an
obligation by Life Company to inform the Board whenever variable contract owner
voting instructions are disregarded by Life Company. These responsibilities
will be carried out with a view only to the interests of the contract owners.
c) If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material irreconcilable
conflict exists, affecting the Life Company, Life Company, at its expense and to
the extent reasonably practicable (as determined by a majority of disinterested
trustees or directors), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including: (a) withdrawing the assets
allocable to some or all of the separate accounts from the Funds or any series
thereof and reinvesting those assets in a different investment medium, which may
include another series of the Successor Trust or Managers Trust, or another
investment company or submitting the question as to whether such segregation
should be implemented to a vote of all affected variable contract owners and, as
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appropriate, segregating the assets of any appropriate group (i.e., variable
annuity or variable life contract owners of one or more Participants) that votes
in favor of such segregation, or offering to the affected variable contract
owners the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. If a material
irreconcilable conflict arises because of Life Company's decision to disregard
contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, the Life Company may be required, at
the election of the relevant Fund, to withdraw its separate account's investment
in such Fund, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried
out with a view only to the interests of the contract owners.
For the purposes of Condition (c), a majority of the
disinterested members of the applicable Board shall determine whether or not any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the relevant Fund or N&B Management (or any other investment
advisor of the Funds) be required to establish a new funding medium for any
variable contract. Further, Life Company shall not be required by this condition
(c) to establish a new funding medium for any variable contract if any offer to
do so has been declined by a vote of a majority of contract owners materially
affected by the irreconcilable material conflict.
d) Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to all Participants.
13. a) Life Company will provide pass-through voting privileges to
all contract owners so long as the SEC continues to interpret the `40 Act as
requiring pass-through voting privileges for variable contract owners. This
condition will apply to UIT-separate accounts investing in the Successor Trust
and to managed separated accounts investing in Managers Trust to the extent a
vote is required with respect to matters relating to Managers Trust.
Accordingly, Life Company, where applicable, will vote shares of a Fund held in
its separate accounts in a manner consistent with voting instructions timely
received from its variable contract owners. Life Company will be responsible
for assuring that each of its separate accounts that participates in the Funds
calculates voting privileges in a manner consistent with other Participants as
defined in the Conditions set forth in the Notice. Each Participant will vote
shares for which is has not received timely voting instructions, as well as
shares it owns, in the same proportion as its votes those shares for which it
has received voting instructions. Funds hereby confirm that the manner in which
Life Company currently calculates voting privileges is consistent with the
manner in which other Participants so calculate voting privileges. Funds will
notify Life Company if Funds become aware that another participant has changed
the manner in which it so calculates voting privileges.
b) If and to the extent 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 `40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any
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exemptions granted in the Order, then the Successor Trust, Managers Trust and/or
the Participants, as appropriate, shall take such steps as may be necessary to
comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such Rules are applicable.
c) No less than annually, the Participants shall submit to the
Boards such reports, materials or data as such Boards may reasonably request so
that the Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data shall be submitted more frequently
if deemed appropriate by the applicable Boards.
4. The Sales Agreement is hereby modified to include indemnification as
follows:
22. (a) Except as limited by and in accordance with the provisions of
Sections 22(b) and 22(c) hereof, N&B MANAGEMENT agrees to indemnify and hold
harmless LIFE COMPANY and each of its directors and officers and each person, if
any, who controls LIFE COMPANY within the meaning of Section 15 of the `33 Act
(collectively the "Indemnified Parties") against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of N&B MANAGEMENT, which consent shall not be unreasonably withheld) or
litigation expenses (including attorney's fees, legal and other expenses) to
which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of, or investment in, TRUST's share or the
variable contracts or the exercise of any ownership rights with respect to such
shares or contracts, and arise as a result of a failure by Trust to comply with
the diversification requirements of Section 817(h) of the Code.
(b) N&B MANAGEMENT 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 LIFE COMPANY.
(c) N&B MANAGEMENT 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 N&B MANAGEMENT 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 N&B MANAGEMENT of any such claim shall not
relieve N&B MANAGEMENT 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
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case any such action is brought against the Indemnified Parties,
N&B MANAGEMENT shall be entitled to participate at its own
expense in the defense thereof. N&B MANAGEMENT also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from N&B
MANAGEMENT to such party of N&B MANAGEMENT'S election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and N&B
MANAGEMENT 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.
5. The Sales Agreement shall be renamed Fund Participation Agreement.
6. This Assignment and Modification Agreement shall be effective on May
1, 1995, the closing date of the conversion. In the event of a conflict between
the terms of this Assignment and Modification Agreement and the terms of the
Sales Agreement, the terms of this Assignment and Modification Agreement shall
control.
7. All other terms and conditions of the Sales Agreement remain in full
force and effect.
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Executed this ______ day of _____________________, 1995.
Xxxxxxxxx & Xxxxxx Advisers
Management Trust
(a Massachusetts business trust)
Attest: ___________________ By: ____________________________
Xxxxxxx Xxxxxx, Chairman
Xxxxxxxxx & Xxxxxx Advisers
Management Trust
(a Delaware business trust)
Attest: ___________________ By: ____________________________
Xxxxxxx Xxxxxx, Chairman
Advisers Managers Trust
Attest: ___________________ By: ____________________________
Xxxxxxxxx & Xxxxxx Management
Incorporated
Attest: ___________________ By: ____________________________
The Penn Mutual Life Insurance Company
Attest: ___________________ By: ____________________________
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