PARTICIPATION AGREEMENT
AMONG
EQUITABLE LIFE ASSURANCE SOCIETY THE U.S.
PIMCO VARIABLE INSURANCE TRUST,
AND
PIMCO FUNDS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the 3rd day of July, 2002, by and among Equitable
Life Assurance Society of the United States (the "Company"), a New York life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each account hereinafter referred to as the "Account"), PIMCO
Variable Insurance Trust (the "Fund"), a Delaware business trust, and PIMCO
Funds Distributors LLC (the "Underwriter"), a Delaware limited liability
company.
WHEREAS, the 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 and variable annuity contracts (the
"Variable Insurance Products") to be offered by insurance companies which have
entered into participation agreements with the Fund and Underwriter (The Company
and such other insurance companies being "Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC") 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, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company (the "Adviser"), which serves as
investment adviser to the Fund, is duly registered as an investment adviser
under the federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life insurance
and/or variable annuity contracts supported wholly or partially by the Account
(the "Contracts"), and said Contracts are listed in Schedule A hereto, as it
may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated asset
account, duly established by the Company, on the date shown for such Account on
Schedule A hereto, to set aside and invest assets attributable to the aforesaid
Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is registered
as a broker dealer with the SEC under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase Administrative Class shares in the Portfolios
listed in Schedule A hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolios") on behalf of the Account to fund
the aforesaid Contracts, and the Underwriter is authorized to sell such shares
to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so
instructed, the Underwriter to make available to the Company for purchase on
behalf of the Account Fund shares of those Designated Portfolios selected by
the Underwriter. Pursuant to such authority and instructions, and subject to
Article X hereof, the Underwriter agrees to make available to the Company for
purchase on behalf of the Account, shares of those Designated Portfolios listed
on Schedule A to this Agreement, such purchases to be effected at net asset
value in accordance with Section 1.3 of this Agreement. Notwithstanding the
foregoing, (i) Fund series (other than those listed on Schedule A) in existence
now or that may be established in the future will be made available to the
Company only as the Underwriter may so provide, and (ii) the Board of Trustees
of the Fund (the "Board") may suspend or terminate the offering of Fund shares
of any Designated Portfolio or class thereof, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole discretion
of the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, suspension or termination is necessary
in the best interests of the shareholders of such Designated Portfolio. If the
Board refuses to sell Shares to the Company, the Company shall have the right
to terminate this agreement in accordance with section 10.1(b) of this
Agreement.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on behalf of the
Account, on the next business day where such redemptions to be effected at net
asset value in accordance with Section 1.3 of this Agreement. Notwithstanding
the foregoing, the Fund may delay redemption of Fund shares of any Designated
Portfolio to the extent permitted by the 1940 Act, and any rules, regulations
or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for
the limited purpose of receiving purchase and redemption requests on
behalf of the Account (but not with respect to any Fund shares that may be
held in the general account of the Company) for shares of those Designated
Portfolios made available hereunder, based on allocations of amounts to
the Account or subaccounts thereof under the Contracts and other
transactions relating to the Contracts or the Account. Receipt of any such
request (or relevant transactional information therefor) on any day the
New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the SEC (a
"Business Day") by the Company as such limited agent of the Fund prior to
the time that the Fund ordinarily calculates its net asset value as
described from time to time in the Fund Prospectus (which as of the date
of execution of this Agreement is 4:00 p.m. Eastern Time) shall constitute
receipt by the Fund on that same Business Day, provided that the Fund
receives notice of such request by 9:30 a.m. Eastern Time on the next
following Business Day or such later time as permitted by Section 1.4
hereof.
(b) The Company shall pay for shares of each Designated Portfolio on
the same day that it notifies the Fund of a purchase request for such
shares. Payment for Designated Portfolio shares shall be made in
federal funds transmitted to the Fund by wire to be received by
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the Fund by 4:00 p.m. Eastern Time on the day the Fund is notified
of the purchase request for Designated Portfolio shares (unless the Fund
determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Designated Portfolios
effected pursuant to redemption requests tendered by the Company on behalf
of the Account). If federal funds are not received on time, such funds
will be invested, and Designated Portfolio shares purchased thereby will
be issued, as soon as practicable and the Company shall promptly, upon the
Fund's request, reimburse the Fund for any reasonable charges, costs,
fees, interest or other expenses incurred by the Fund in connection with
any advances to, or borrowing or overdrafts by, the Fund, or any similar
expenses incurred by the Fund, as a result of portfolio transactions
effected by the Fund based upon such purchase request. Upon receipt of
federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
(c) Payment for Designated Portfolio shares redeemed by the Account
or the Company shall be made in federal funds transmitted to the
Company or any other designated person by wire to be received by the
Company or such designated person by 4:00 p.m. Eastern Time on the next
Business Day after the Fund is properly notified of the redemption order
of such shares (unless redemption proceeds are to be applied to the
purchase of shares of other Designated Portfolios in accordance with
Section 1.3(b) of this Agreement) in accordance with the timing set forth
in Section 1.2 above, except that the Fund reserves the right to redeem
Designated Portfolio shares in assets other than cash for redemption
requests higher than $5,000,000_and to delay payment of redemption
proceeds to the extent permitted under Section 22(e) of the 1940 Act and
any Rules thereunder, and in accordance with the procedures and policies
of the Fund as described in the then current prospectus. Upon receipt of
federal funds so wired, such funds shall cease to be the responsibility of
the Fund and shall become the responsibility of the Company The Fund shall
not bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company; the Company alone shall
be responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio
shares held or to be held in the Company's general account shall be
effected at the net asset value per share next determined after the Fund's
receipt of such request, provided that, in the case of a purchase request,
payment for Fund shares so requested is received by the Fund in federal
funds prior to close of business for determination of such value, as
defined from time to time in the Fund Prospectus.
1.4. The Fund shall use its best efforts to make the net asset value
per share and daily accrual factors for each Designated Portfolio available to
the Company by 6:30 p.m. Eastern Time each Business Day, and in any event as
soon as reasonably practicable after the net asset value per share for such
Designated Portfolio is calculated shall calculate such net asset value in
accordance with the Fund's Prospectus. In the event that the Fund is unable to
meet the 6:00 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of shares. Such
additional time shall be equal to the additional time which the Fund takes to
make the net asset value available to the Company. In the event of an error in
a Designated Portfolio's net asset value per share which, in accordance with
procedures adopted by the Fund's Board of Trustees, requires adjustment to
transactions previously effected on behalf of the Account (a "Pricing Error"),
the Adviser shall notify the Company as soon as possible after discovery of the
Pricing Error. Such notification may be oral, but shall be confirmed promptly
in writing within two business days. Any Pricing Error shall be resolved in
accordance with the Fund's procedures. If, as a result of the Pricing Error,
the Company has paid out to a Contract owner or beneficiary, or a Contract
owner has transferred to a different option under the Contract, an amount in
excess of what that person should have received, the Fund shall reimburse the
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Company for the excess amount upon receipt from the Company of an invoice or
other statement documenting such excess payments. In addition, in the event
that the Pricing Error causes the Company to incur any costs for re-processing
values under Contracts, such as preparing and mailing revised statements to
Contract owners, the Fund shall reimburse the Company for all such reasonable
costs and expenses upon receipt from the Company of an invoice. Notwithstanding
the foregoing, neither the Fund, any Designated Portfolio, , the Underwriter,
nor any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company or any other Participating Insurance
Company to the Fund, or the Underwriter.
1.5. The Fund shall furnish notice (by telephone discussion with a
person followed by written confirmation or by e-mail) to the Company as soon as
reasonably practicable, but no later than two business days prior to any
described action, that an income dividend or capital gain distribution is
payable on any Designated Portfolio shares. The Company, on its behalf and on
behalf of the Account, hereby elects to receive all such dividends and
distributions as are payable on any Designated Portfolio shares in the form of
additional shares of that Designated Portfolio. The Company reserves the right,
on its behalf and on behalf of the Account, to revoke this election and to
receive all such dividends and capital gain distributions in cash. The Fund
shall notify the Company promptly (by telephone discussion with a person
followed by written confirmation), but in no event later than 4:00 p.m. on the
next business day, of the number of Designated Portfolio shares so issued as
payment of such dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only.
Stock certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Fund shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account. The Fund
shall notify the Company by 4:00 p.m. on the next business day of the number of
Shares of the Designated Portfolio that are held under the Contracts.
1.7. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.8 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however,
that until this Agreement is terminated pursuant to Article X, the Company
shall promote the Designated Portfolios on a similar basis as other funding
vehicles available under the Contracts.
1.8. The Underwriter and the Fund shall sell Fund shares only to
Participating Insurance Companies and their separate accounts (" and to persons
or plans ("Qualified Persons") that communicate to the Underwriter and the Fund
that they qualify to purchase shares of the Fund under Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Fund as constituting investments of the Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Underwriter and the Fund shall not sell Fund shares to any
insurance company or separate account unless an agreement complying with
Article VII of this Agreement is in effect to govern such sales, to the extent
required. The Company hereby represents and warrants that it and the Account
are Qualified Persons. The Fund reserves the right to cease offering shares of
any Designated Portfolio in the discretion of the Fund. If the Fund ceases to
so offer such shares, the Company shall be entitled to terminate this Agreement
in accordance with Section 10.1(b).
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that interests in the
Account(a) are, or prior to issuance will be, registered under the 1933 Act, or
(b) are not registered because they are properly
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exempt from registration under the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under the 1933 Act. The
Company further represents and warrants that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal
securities and state securities and insurance 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, that it has legally and validly established the Account prior to any
issuance or sale thereof as a segregated asset account under New York insurance
laws, and that it (a) has registered or, prior to any issuance or sale of the
Contracts, will register the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts, or alternatively (b) has not registered the Account in
proper reliance upon an exclusion from registration under the 1940 Act. The
Company shall register and qualify the Contracts or interests therein as
securities in accordance with the laws of the various states only if and to the
extent deemed advisable by the Company.
2.2. The Adviser and the Fund each represents and warrants that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold in compliance with applicable state and
federal securities laws and that the Fund is and shall remain registered under
the 0000 Xxx. The Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents and warrants that it is lawfully organized and
will continue to be validly existing under the laws of the State of Delaware
and that it does and will comply in all material respects with the 1940 Act.
and any applicable regulations thereunder and applicable federal and state laws
(other than state insurance laws).
2.4. 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 Fund
shares in accordance with any applicable state and federal securities laws.
The Fund and the Underwriter each represent and warrant that all of their
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum 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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
copies of the Fund's current prospectus (describing only the Designated
Portfolios listed on Schedule A) or, to the extent permitted, the Fund's
profiles, (which term as used in this Agreement shall also include any
supplements thereto) as the Company may reasonably request on a timely basis
such that Company can satisfy its obligation to provide the prospectus to
existing contractowners or participants as required by law. The Company shall
bear the expense of printing copies of the current prospectus profiles, and
supplements thereto for the Contracts that will be distributed to existing
Contract owners, and the Company shall bear the expense of printing copies of
the Fund's prospectus profiles and any supplements thereto that are used
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in connection with offering the Contracts issued by the Company. The Fund shall
bear the expense of printing and mailing copies of the current prospectus, any
supplemental prospectus documents and profiles for the Fund that will be
distributed to Contract owners who have allocated Contract value to a
Designated Portfolio. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new prospectus,
prospectus profile or supplements thereto on diskette at the Fund's expense)
and other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus for the Fund is amended) to
have the prospectus. prospectus profile or supplements thereto for the
Contracts and the Fund's prospectus, profile or prospectus supplement printed
together in one document. The expenses of such printing to be apportioned
between (a) the Company and (b) the Fund or its designee in proportion to the
number of pages of the Contract and Designated Portfolios' prospectuses, taking
account of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; the Fund or its designee to bear the cost
of printing the Designated Portfolios' prospectus portion of such document for
distribution to Contract owners who have allocated Contract value to a
Designated Portfolio and the Company to bear the expenses of printing the
portion of such document relating to the Accounts provided, however, that the
Company shall bear all printing expenses of such combined documents where used
for distribution to prospective purchasers. In the event that the Company
requests that the Fund or its designee provides the Fund's prospectus, profile
prospectus or supplements thereto in a "camera ready" or diskette format, the
Fund shall be responsible for providing such document in the format in which it
is accustomed to formatting such documents and shall bear the expense of
providing such documents in such format (e.g., typesetting expenses), and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses.
3.2. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the Underwriter
(or the Fund), at its expense, shall provide a reasonable number of copies of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
3.3. The Fund shall provide the Company with information regarding the
Fund's expenses, (including information that is legally required to be included
in the prospectus for the Account) which information may include a table of
fees and related narrative disclosure for use in any prospectus or other
descriptive document relating to a Contract. The Company agrees that it will
use such information in the form provided, (which in the case of the prospectus
fee table, will be in a form requested by the Company of the Fund and shall be
provided to the Company upon request, but no later than March 15 of each
calendar year for the prior calendar year). The Company shall provide prior
written notice of any proposed modification of such information, which notice
will describe in detail the manner in which the Company proposes to modify the
information, and agrees that it may not modify such information in any way
without the prior consent of the Fund.
3.4. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
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(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
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 or to
the extent otherwise required by law. The Company will vote Fund shares held in
any segregated asset account in the same proportion as Fund shares of such
portfolio for which voting instructions have been received from Contract
owners, to the extent permitted by law. The Company reserves the right to vote
Fund shares held in any segregated asset account in its own right, to the
extent permitted by law.
3.6 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Mixed and Shared Funding
Exemptive Order and consistent with any reasonable standards that the Fund may
adopt and provide in writing, provided, however, that the Company shall be free
to vote Designated Portfolio shares attributable to any Account in any manner
permitted by applicable law, to the extent that the Mixed and Shared Funding
Exemptive Order is superseded by SEC regulation or administrative practice. The
Fund will notify the Company of any changes of interpretations or amendments to
the Mixed and Shared Funding Exemptive Order or standards adopted by the Fund.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter is named. No such material
shall be used until approved by the Fund or its designee, and the Fund will use
its best efforts for it or its designee to review such sales literature or
promotional material within ten Business Days after receipt of such material.
The Fund or its designee reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named, and no such material shall be used if the Fund or its
designee so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or prospectus or SAI for the Fund shares, as such registration
statement and prospectus or SAI may be amended or supplemented from time to
time, or in reports or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either which shall be either been given or refused within 10
Business days after request for such permission is made.
4.3. The Fund and the Underwriter, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the
Company, and the Company will use its best efforts to review such sales
literature or promotional material within ten Business Days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
the Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall
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include an offering memorandum, if any, if the Contracts issued by the Company
or interests therein are not registered under the 1933 Act), or SAI for the
Contracts, as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the Account 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 which
shall be either been given or refused within 10 Business days after request for
such permission is made.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, 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 Fund or its shares, promptly after the filing of such document(s)
with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, 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 the Contracts' investment in the Fund , promptly
after the filing of such document(s) with the SEC or other regulatory
authorities. The Company shall provide to the Fund and the Underwriter any
complaints received from the Contract owners pertaining to the Fund or the
Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable (but at least 60 days)of any proxy solicitation for any
Designated Portfolio, and of any material change in the Fund's registration
statement, particularly any change resulting in a change to the registration
statement or prospectus for any Account. The Fund will work with the Company so
as to enable the Company to solicit voting instructions from Contract owners,
or to make changes to its prospectus or registration statement, in an orderly
manner. The Fund will make reasonable efforts to attempt to have changes
affecting Contract prospectuses become effective simultaneously with the annual
updates for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund or
any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Fund or Underwriter may make payments to the
Company or to the underwriter for the Contracts 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
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Underwriter, past profits of the Underwriter, or other resources available to
the Underwriter. Currently, no such other payments are contemplated In
addition, nothing herein shall prevent the parties hereto from otherwise
agreeing to perform, and arranging for appropriate compensation for, other
services relating to the Fund and/or to the Accounts.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type (and
printing and mailing, to the extent described in 3.1 above), setting in type
printing and mailing the proxy materials and reports to shareholders including
the costs of printing a prospectus that constitutes an annual report), the
preparation, printing and mailing of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
ARTICLE VI. Diversification and Qualification
6.1. The Fund and the Adviser each represents and warrants that each
Designated Portfolio of the Fund will invest its assets in such a manner as to
ensure that the Contracts will be treated as annuity or life insurance
contracts, whichever is appropriate, under the Code and the regulations issued
thereunder (or any successor provisions).The Adviser and the Fund each
represents and warrants that , each Designated Portfolio has complied and will
continue to comply with Section 817(h) of the Code and Treasury Regulation
ss.1.817-5, and any Treasury interpretations thereof, (and any revenue rulings,
revenue procedures, notices and other published announcements of the Internal
Revenue Service interpreting these sections) relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts, and
any amendments or other modifications or successor provisions to such Section
or Regulations as if those requirements applied separately to each such
Portfolio. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify the Company of such breach and (b) If
the breach is of a type that can be cured within the grace period, to
adequately diversify the Designated Portfolio so as to achieve compliance
within the grace period afforded by Regulation 1.817-5.
6.2. Without limiting the scope of Section 6.1, the Fund represents and
warrants that it is or will be qualified as a Regulated Investment Company
under Subchapter M of the Code, and that it will operate such Regulated
Investment Company in such a way as to avoid the imposition of any material
Federal taxes at the corporate level, and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provisions) 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.
6.3 The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as 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 Fund and the Underwriter immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future.
ARTICLE VII. Potential Conflicts
-9-
The following provisions shall apply only upon issuance of the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts, and then only to the extent required under the 0000 Xxx.
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever Contract owner voting instructions
are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a
vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., 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 may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement with respect to each
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six (6) months after
the Fund gives written notice that this provision is being implemented, and
until the end of that six month period the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the 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 investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company
in writing that it has determined that such decision has 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 Board. Until the
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end of the foregoing six month period, the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but
in no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contract if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemption Order
or any amendment thereto contains terms and conditions different from Sections
3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with the Mixed and Shared Funding Exemptive
Order, and Sections 3.4, 3.5, 3.6, 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 the Mixed and Shared
Funding Exemptive Order or any amendment thereto. 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 Mixed and
Shared Funding Exemptive Order) on terms and conditions materially different
from those contained in the Mixed and Shared Funding Exemptive Order, then (a)
the 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 3.5, 3.6, 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
Fund, the Underwriter, their parents and subsidiaries and other affiliates and
each of their trustees/directors and officers, employees or agents and each
person, if any, who controls or is associated with the Fund or Underwriter
within the meaning of the Federal securities laws (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties may become subject under
any statute 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, holding, acquisition or distribution of
the Designated Portfolios or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
Account registration statement, Account prospectus (which shall
include a written description of a Contract that is not registered
under the 1933 Act), or Account SAI or contained in the Account's
or Contract's sales literature (or any amendment or supplement to
any
-11-
of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they were
made, provided that this agreement to indemnify and hold harmless
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 any indemnified party, or approved for
use by or on behalf of any indemnified party for use in the
Account registration statement, Account prospectus or Account SAI
or in the Account's or Contract's sales literature (or any
amendment or supplement to any of the foregoing) or otherwise for
use in connection with the sale, holding, acquisition or
distribution of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations or wrongful conduct of the Company or its persons
under its Company's authorization or control authorized to act on
its behalf with regard to this agreement, with respect to the
sale, holding, acquisition or distribution of the Contracts or
Fund Shares provided that this agreement to indemnify and hold
harmless 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 any indemnified party, or
approved for use by or on behalf of any indemnified party for use
in the Account registration statement, Account prospectus or
Account SAI or in the Contract's or Account's sales literature or
other promotional material (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the
sale, holding, acquisition or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration
statement, Fund prospectus, Fund SAI, or sales literature of the
Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made if such statement or omission was made in reliance upon
and in conformity with information furnished to the Fund by or on
behalf of the Company or persons under its control authorized to
act on its behalf with regard to this Agreement; or
(iv) arise as a result of any material failure by the Company
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 qualification
requirements specified in Article VI, Section 6.3, of this
Agreement); or
(v) arise out of or result from any material breach of any
covenant, representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other material
breach by the Company of this Agreement; or
(vi) as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof. This indemnification shall be
in addition to any liability which the Company may otherwise have.
-12-
8.1(b). No indemnified party shall be entitled to indemnification
if such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, or gross negligence or reckless disregard of duty by
the party seeking indemnification or due to the breach of any representation,
warranty, and/or covenant made by the indemnified party.
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 except to the
extent that the failure to notify results in the failure of actual notice to
the Company and the Company is damaged solely as a result of failure to give
such notice. In case any such action is brought against an Indemnified Party,
the Company will be required to assume, at its own expense, the defense
thereof.. After the Company assumes the defense of any claim or proceeding
brought against any Indemnified Party., 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 of any action or proceeding brought against any Indemnified Party
unless (i) the Company and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
8.1(d). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceeding against them in connection
with the issuance, sale, holding, acquisition or distribution of the Fund
shares or the Contracts or the operation of the Fund for which indemnification
may be sought under this Section 8.1.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold
harmless the Company, its parents and subsidiaries and other affiliates and
each of their directors and officers, employees or agents and each person, if
any, who controls the Company within the meaning of such terms under the
Federal securities laws and the Fund (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 Underwriter) or litigation (including 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, holding, acquisition or distribution of the Designated Portfolios or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained
in the Fund registration statement or Fund prospectus or
Fund SAI or sales literature of the Fund or the Underwriter
(or any amendment or supplement to any of the foregoing),or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made, provided that this agreement to indemnify and
hold harmless 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 Fund by or on
behalf of the Company for use in the Fund registration
statement, Fund prospectus or Fund SAI or in sales
literature (or any amendment or supplement) or otherwise for
use in connection
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with the sale, acquisition, holding or distribution of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations or wrongful conduct of the Fund or
Underwriter or persons under their control authorized to act
on their behalf with regard to this Agreement, with respect
to the sale, holding, acquisition or distribution of the
Contracts or Fund shares provided that this agreement to
indemnify and hold harmless 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
by or in the Underwriter's sales literature or other
promotional material (or any amendment or supplement to
same) or on behalf of any indemnified party for use in
connection with the sale, holding, acquisition or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in an Account
registration statement, Account prospectus, Account SAI or
sales literature covering the Contracts or Account (or any
amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or
statements therein not misleading, in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished to
the Company by or on behalf of the Fund or the Underwriter
or persons under their control authorized to act on their
behalf with regard to this Agreement; or
(vii) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the
materials under the terms of this Agreement (including a
failure of the Fund, whether intentional or in good faith or
otherwise, to comply with the requirements and procedures
related thereto specified in Section 1.8 and/or Article VI,
Sections 6.1 and 6.2, of this Agreement; or
(viii) arise out of or result from any material breach
of any covenant, representation and/or warranty made by the
Fund or the Underwriter in this Agreement or arise out of or
result from any other material breach of this Agreement by
the Fund or the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification shall be in addition to any liability which
the Underwriter may otherwise have.
8.2(b). No Indemnified Party shall be entitled to
indemnification if such loss, claim, damage, liability or litigation is due to
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations and duties by the party seeking indemnification or is due to breach
of any representation, warranty, and/or covenant made by the Indemnified Party.
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 except to
the extent that the failure to notify results in the failure of actual notice
to the Underwriter and the Underwriter is damaged solely as a
-14-
result of failure to give such. In case any such action is brought against the
Indemnified Party, the Underwriter will be required to assume, at its own
expense, the defense thereof. After the Underwriter assumes the defense of any
action or proceeding brought against any Indemnified Party, 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 unless (i) the Underwriter and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Underwriter and the indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them.
The Underwriter shall not be liable for any settlement (other than as
specified in Section 8.3(a)(iv) of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Underwriter agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
8.2 (d) The Indemnified Parties will promptly notify
the Underwriter of the commencement of any litigation or proceedings against
them in connection with the issuance, holding, acquisition, distribution or sale
of the Fund Shares, the Contracts or the operation of the Account for which the
indemnification may be sought under this Section 8.3.
8.3 Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold
harmless the Company, its parents and subsidiaries and other affiliates and each
of their directors, officers employees and agents and each person, if any, who
controls or is associated with the Company within the meaning of such terms
under the federal securities laws (collectively, the "Indemnified Parties" for
purposes of this Section 8.4) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation (including legal and other expenses) to which
the Indemnified Parties may be required to pay or may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, expenses, damages, liabilities or expenses (or actions in respect
thereof) or settlements, are related to the operations of the Fund and are
related to the sale, holding, acquisition or distribution of the Designated
Portfolios or the Contracts and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether intentional or in good faith or otherwise, to
comply with the requirements specified in Article VI,
Sections 6.1 and 6.2, of this Agreement; or
(ii) arise out of or result from any material
breach of any covenant, representation and/or
warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of
this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof. . This indemnification shall be in addition to any liability
which the Fund may otherwise have.
8.3(b). No indemnified party shall be entitled to
indemnification if such loss, claim, damage, liability or litigation is due to
the willful misfeasance, bad faith, or gross negligence or reckless disregard of
obligations and duties under this Agreement or is due to the breach of any
representation, warranty, and/or covenant made by the Indemnified Party.
8.3(c). The 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 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
-15-
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought except to the extent that the failure to notify results
in the failure of actual notice to the Fund and the Fund is damaged solely as a
result of failure to give such notice. In case any such action is brought
against the Indemnified Parties, the Fund will be required to assume, at its
own expense, the defense thereof. After the Fund assumes the defense of any
action or proceeding brought against any Indemnified Party, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it, and the 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 unless (i) the Fund and the Indemnified Party shall
have mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the Fund
and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The Fund shall not be liable for any settlement (other than as
specified in Section 8.4(a)(iv)) of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Fund agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
8.3(d). The Indemnified Parties will promptly to
notify the Fund of the commencement of any litigation or proceeding against
them in connection with the issuance, sale, holding acquisition or distribution
of the Contracts, the operation of the Account, or shares of the Fund for which
indemnification may be sought under this Section 8.3
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 New York.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, any Mixed and Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith. If, in the future, the Mixed and Shared Funding Exemptive
Order should no longer be necessary under applicable law, then Article VII
shall no longer apply.
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 with respect to
some or all Designated Portfolios, by three (3) months
advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the Fund
and the Underwriter based upon the Company's determin-
ation that shares of the Fund are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the
Fund and the Underwriter in the event any of the
Designated 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
-16-
(d) termination by the Fund or Underwriter upon 90 days'
advanced written notice in the event that formal
administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner
or like official of any state or any other regulatory
body regarding the Company's duties under this Agreement
or related to the sale of the Contracts, , or the
purchase of the Fund's shares; provided, however, that
the Fund or Underwriter determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Company to perform its obligations under
this Agreement; or
(e) termination by the Company upon 90 days' advanced
written notice in the event that formal administrative
proceedings are instituted against the Fund, or
Underwriter by the NASD, the SEC, or any state
securities or insurance department or any other
regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund or
Underwriter to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Designated
Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under
Subchapter M or fails to comply with the Section 817(h)
diversification and other requirements specified in
Article VI hereof, or if the Company reasonably believes
that such Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written
notice to the Company in the event that the Contracts
fail to meet the qualifications specified in Article VI,
Section 6.3, hereof; or
(h) termination by either the Fund or the Underwriter by
90 days' advanced written notice to the Company, if
either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment
exercised in good faith, that the Company 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 such that the Fund or Underwriter's customers
would suffer adverse consequences.; or
(i) termination by the Company by 90 days' advanced
written notice to the Fund and the Underwriter, if the
Company shall determine, in its sole judgment exercised
in good faith, that the Fund, Adviser, or the
Underwriter 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 such that the
Company's customers would suffer adverse consequences or
the Company would suffer adverse impact to its business
operations as it relates to the selling, administration,
maintenance of the Contracts; or
(j) termination by the Company upon any substitution of
the shares of another investment company or series
thereof for shares of a Designated Portfolio of the Fund
in accordance with the terms of the Contracts, provided
that the Company has given at least 45 days prior
written notice to the Fund and Underwriter of the date
of substitution; or
-17-
(k) termination by any party in the event that the
Fund's Board of Trustees determines that a material
irreconcilable conflict exists as provided in Article
VII.
10.2. Notwithstanding any termination of this Agreement, the
Fund and the Underwriter shall, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"), unless the Underwriter requests that the Company seek an order
pursuant to Section 26(b) of the 1940 Act to permit the substitution of other
securities for the shares of the Designated Portfolios. The Underwriter agrees
to split the cost of seeking such an order, and the Company agrees that it
shall reasonably cooperate with the Underwriter and seek such an order upon
request. Specifically, the owners of the Existing Contracts may be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts (subject to any such election by the Underwriter). 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. The parties further agree that this Section
10.2 shall not apply to any terminations under Section 10.1(g) of this
Agreement.
10.3. Notwithstanding any termination of this Agreement, each
party's obligation under Article VI and VIII shall survive.
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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 Fund: PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
If to the Company: Xxxxxx Xxxxx
Senior Vice President
Funds Management Group
Equitable Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 000000
cc: Xxxxxxxxx Xxxxxxxx
Vice President
Controllers
Equitable Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 000000
If to Underwriter: PIMCO Funds Distributors LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to
the property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such
Designated Portfolio had separately contracted with the Company and the
Underwriter for the enforcement of any claims against the Fund. The parties
agree that neither the Board, officers, agents or shareholders of the Fund
assume any personal liability or responsibility for obligations entered into by
or on behalf of the 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 without the express
written consent of the affected party until such time as such information has
come into the public domain.
12.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
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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 the appropriate state Insurance
Commissioners with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the variable annuity operations of the Company are being
conducted in a manner consistent with such state's variable annuity laws and
regulations and any other applicable law 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.
12.9. The Company shall furnish, or shall cause to be
furnished, to the 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) filed with any
state or federal regulatory body or otherwise made
available to the public, as soon as practicable and in
any event within 90 days after the end of each fiscal
year; and
(b) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state insurance
regulatory, as soon as practicable after the filing
thereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
Equitable Life Assurance Society of the United States:
By its authorized officer
By: --------------------------------------------
Name: --------------------------------------------
Title: --------------------------------------------
Date: --------------------------------------------
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
BY: --------------------------------------------
Name: --------------------------------------------
Title: --------------------------------------------
Date: --------------------------------------------
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
BY: --------------------------------------------
Name: --------------------------------------------
Title: --------------------------------------------
Date: --------------------------------------------
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Schedule A
PIMCO VARIABLE INSURANCE TRUST PORTFOLIOS:
Total Return Portfolio, Administrative Class
Segregated Asset Accounts:
Separate Account FP of the Equitable Life Assurance Society of the United States
4/19/85 Contract:
Paramount Life
Dated July 3, 2002.
