EXECUTION
PARTICIPATION AGREEMENT
AMONG
FORETHOUGHT LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
PIMCO EQUITY SERIES VIT
AND
PIMCO INVESTMENTS LLC
THIS AGREEMENT dated and effective as of day of October, 2012, by and among
Forethought Life Insurance Company and an Indiana corporation (the "Company")
and an Indiana life insurance company, on its own behalf and on behalf of each
segregated asset separate 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 and PIMCO Equity Series VIT (each a
"Fund" and together the "Funds"), each a Delaware statutory trust, and PIMCO
Investments LLC (the "Underwriter"), a Delaware limited liability company.
WHEREAS, each 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 Funds and Underwriter
("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Funds are divided into several
separate series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Funds may rely on an order (PIMCO VARIABLE INSURANCE TRUST, ET AL.,
Investment Company Act Rel. Nos. 22994 (Jan. 7, 1998) (Notice) and 23022 (Feb.
9, 1998)(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 Funds 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, each 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 LLC (the "Adviser"), which serves
as investment adviser to the Funds, 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;
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 Funds, 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 of the Financial Industry
Regulatory Authority ("FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase Administrative Class, Institutional Class,
Advisor Class and/or Class M 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
Funds and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Each 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 IX hereof,
the Underwriter agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Portfolios, such purchases to be
effected at net asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, the Board of Trustees of the applicable Fund (the
"Board" and together the "Boards") may suspend or terminate the offering of
Fund's shares of any Designated Portfolio or class thereof, or liquidate 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, suspension, termination or liquidation is necessary
in the best interests of the shareholders of such Designated Portfolio.
1.2. The applicable Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the Company
shall not redeem Fund shares attributable to Contract owners except in the
circumstances permitted in Section 1.3 of this Agreement, and (ii) the Fund may
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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) Each Fund hereby appoints the Company as an agent of such 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 and acceptance 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's statutory prospectus, as such
term is defined in Rule 498 under the 1933 Act (which as of the date of
execution of this Agreement is 4:00 p.m. Eastern Time) shall constitute
receipt and acceptance by the Fund on that same Business Day, provided that
the Fund or its designated agent receives notice of such request by 9:00
a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each Designated Portfolio on the
same day that it notifies the applicable Fund of a purchase request for
such shares. Payment for Designated Portfolio shares shall be made in
federal funds transmitted to the applicable Fund by wire to be received by
the Fund by 4:00 p.m. Eastern Time on the Business Day such Fund is
notified of the purchase request for Designated Portfolio shares (which
request may be net of redemptions of shares). 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 such Fund for
any charges, costs, fees, interest or other expenses incurred by such Fund
in connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by such Fund, as a result of
portfolio transactions effected by such 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 applicable Fund.
(c) Payment for Designated Portfolio shares redeemed by the Account or the
Company shall be made in federal funds transmitted by wire to the Company
or any other designated person on the next Business Day after the Fund is
properly notified of the redemption order of such shares (which order shall
be net of any purchase orders) except that each Fund reserves the right to
redeem Designated Portfolio shares in assets other than cash 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 such Fund as described in the then
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current statutory prospectus and/or statement of additional information
("SAI"). The applicable 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 applicable Fund's
receipt of such request, provided that, in the case of a purchase request,
payment for Fund shares so requested is received by such Fund in federal
funds prior to close of business for determination of such value, as
defined from time to time in the Fund's statutory prospectus.
(e) The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (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"), (iii) upon 45
days prior written notice to the applicable Fund and the Underwriter, as
permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act,
but only if a substitution of other securities for the shares of the
Designated Portfolios is consistent with the terms of the Contracts, or
(iv) as permitted under the terms of the Contracts. Upon request, the
Company will promptly furnish to the applicable Fund reasonable assurance
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 Designated Portfolio that was otherwise available
under the Contracts without first giving the Fund 45 days notice of its
intention to do so.
(f) Notwithstanding anything herein to the contrary, the Company, Fund
and/or Underwriter shall comply with the processing specifications set
forth in Schedule C attached hereto and made a part hereof in respect of
transactions processed through the facilities of the National Securities
Clearing Corporation ("NSCC").
1.4. The applicable Fund shall use its best efforts to make the net asset value
per share for each Designated Portfolio available to the Company by 7:00 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, and shall calculate such net asset value in accordance with such
Fund's statutory prospectus. Neither the Funds, 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 a Fund or the Underwriter.
1.5. The applicable Fund shall furnish notice (by wire or telephone followed by
written confirmation) to the Company as soon as reasonably practicable of any
income dividends or
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capital gain distributions 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 applicable Fund shall notify the Company promptly 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. Share
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.
1.7. (a) 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 2.2(ii) 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 IX, the Company
shall promote the Designated Portfolios on the same overall basis as other
funding vehicles available under the Contracts.
(b) The Company shall not, without prior notice to the Funds (unless otherwise
required by applicable law), take any action to operate the Account as a
management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the applicable Fund (unless
otherwise required by applicable law), induce or encourage Contract owners to
change or modify the Fund or remove or otherwise change the Fund's distributor
or investment adviser.
(d) The Company shall not, without prior notice to the applicable Fund, induce
or encourage Contract owners to vote on any matter submitted for consideration
by the shareholders of the Fund in a manner other than as recommended by the
Board of Trustees of the Fund.
1.8. The Company acknowledges that, pursuant to Form 24F-2, the Fund is not
required to pay fees to the SEC for registration of its shares under the 1933
Act with respect to its shares issued to an Account that is a unit investment
trust that offers interests that are registered under the 1933 Act and on which
a registration fee has been or will be paid to the SEC (a "Registered Account").
The Company agrees to provide the applicable Fund or its agent each year within
60 days of the end of the Fund's fiscal year, or when reasonably requested by
the Fund, information as to the number of shares purchased by a Registered
Account and any other Account the interests of which are not registered under
the 0000 Xxx. The Company acknowledges that the Fund intends to rely on the
information so provided.
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1.9. If adjustments are required to correct an error in the computation of the
net asset value of a class of a Fund's shares, in the distribution rate for a
Fund's shares, or otherwise, the Fund or Underwriter (or their designee)
promptly shall notify the Company upon discovering the need for such adjustments
and shall implement corrections for such errors in accordance with the Funds'
error correction procedures. The Company agrees to comply with reasonable
requests made by the Fund or Underwriter (or their designee) in connection with
its efforts to resolve such errors.
ARTICLE II. Representations and Warranties
2.1. The Funds represents and warrants that (i) such Fund is lawfully organized
and validly existing under the laws of the State of Delaware, (ii) such Fund is
and shall remain registered under the 1940 Act, (iii) Designated Portfolio
shares sold pursuant to this Agreement are registered under the 1933 Act (to the
extent required by that Act) and are duly authorized for issuance, (iv) such
Fund shall amend the registration statement for the shares of the Designated
Portfolios under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of such shares, and (v) such Fund's
Board has elected for each Designated Portfolio to be taxed as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). The Funds makes no representations or warranties as to
whether any aspect of the Designated Portfolios' operations, including, but not
limited to, investment policies, fees and expenses, complies with the insurance
laws and other applicable laws of the various states. The Company agrees to
promptly notify the Fund of any investment restrictions imposed by state
insurance law applicable to the Fund or a Designated Portfolio. The Fund shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Fund
shares or the Fund by the Fund may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the Fund
and shall advise the Fund at such time and in such manner as is necessary to
permit the Fund to comply.
2.2. The Underwriter represents and warrants that shares of the Designated
Portfolios (i) shall be offered and sold in compliance in all material respects
with applicable federal securities laws, (ii) are offered and sold only to
Participating Insurance Companies and their separate accounts and to persons or
plans that communicate to the applicable Fund that they qualify to purchase
shares of the Designated Portfolios under Section 817(h) of the Code and the
regulations thereunder without impairing the ability of the Account to consider
the portfolio investments of the Designated Portfolios as constituting
investments of the Account for the purpose of satisfying the diversification
requirements of Section 817(h) ("Qualified Persons"), and (iii) are registered
and qualified for sale in accordance with the laws of the various states to the
extent required by applicable law.
2.3. Subject to Company's representations and warranties in Sections 2.5 and
2.6, each Fund represents and warrants that it will invest the assets of each
Designated Portfolio 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).
Without limiting the scope of the foregoing, each Fund represents and warrants
that each Designated Portfolio has complied and will continue to comply with
Section 817(h) of the
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Code and Treasury Regulation Section 1.817-5, and any Treasury interpretations
thereof, 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 Regulation. Each Fund
will make every reasonable effort (a) to notify the Company immediately upon
having a reasonable basis for believing that a breach of this Section 2.3 has
occurred, and (b) in the event of such a breach, to adequately diversify the
Designated Portfolio so as to achieve compliance within the grace period
afforded by Treasury Regulation Section 1.817-5.
2.4. Each Fund represents and warrants that each of its Designated Portfolio is
or will be qualified as a Regulated Investment Company under Subchapter M of the
Code, that such Fund will make every reasonable effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that such Fund will notify the Company immediately upon having a reasonable
basis for believing that a Designated Portfolio has ceased to so qualify or that
it might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are, or prior
to issuance will be, registered under the 1933 Act, or (b) are not registered
because they are properly 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 also 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 Connecticut 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
further represents and warrants that (i) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal securities
and state securities and insurance laws, (ii) the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements;
(iii) the information provided pursuant to Section 1.8 shall be accurate in all
material respects; and (iv) it and the Account are Qualified Persons. 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 required by applicable law.
2.6. The Company represents and warrants that the Contracts are currently, and
at the time of issuance shall be, treated as life insurance or annuity
contracts, under applicable provisions of the Code, and that it will make every
reasonable effort to maintain such treatment, and that it will notify the Funds
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. In addition, the Company represents and warrants that each of its
Accounts is a "segregated asset account" and that interests in the Accounts are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. Company will use every reasonable effort to continue to
meet such definitional requirements, and it will notify the Funds and the
Underwriter immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.
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2.7. The Underwriter represents and warrants that it is a member in good
standing of the FINRA and is registered as a broker-dealer with the SEC.
2.8. Each Fund and the Underwriter 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 such 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.
2.9. The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed or controlled by the Company
dealing with the money and/or securities of the Account are covered by a blanket
fidelity bond or similar coverage for the benefit of the Account, in an amount
not less than $5 million. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company agrees to
hold for the benefit of each applicable Fund and to pay to such Fund any amounts
lost from larceny, embezzlement or other events covered by the aforesaid bond to
the extent such amounts properly belong to such Fund pursuant to the terms of
this Agreement. The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agrees to notify the Funds and the Underwriter in the event that such coverage
no longer applies.
2.10. The Company represents and warrants that it shall comply with any
applicable privacy and notice provisions of 15 U.S.C. Section Section 6801-6827
and any applicable regulations promulgated thereunder (including but not limited
to 17 C.F.R. Part 248), and any other applicable federal and state privacy law,
as they may be amended from time to time.
2.11. (a) The Company represents and warrants that it has implemented, and
agrees to maintain an anti-money laundering program reasonably designed to
comply with all applicable anti-money laundering laws and regulations, including
but not limited to the Bank Secrecy Act of 1970 and the USA PATRIOT Act of 2001
(the "USA PATRIOT Act"), each as amended from time to time, and any rules
adopted thereunder and/or any applicable anti-money laundering laws and
regulations of other jurisdictions where the Company conducts business, and any
rules adopted thereunder or guidelines issued, administered or enforced by any
governmental agency (collectively, the "Anti-Money Laundering Laws"). The
Company further represents and warrants that its anti-money laundering program
includes written policies, a designated Compliance Officer, ongoing training for
employees, procedures for detecting and reporting suspicious transactions, and
an independent audit to test the implementation of the program.
(b) The Company represents and warrants that neither it, nor any of its
subsidiaries, nor any director, or officer of them is an individual or entity
("Person") controlled by a Person that is (i) the subject of any sanctions
administered or enforced by the U.S. Department of Treasury's Office of Foreign
Assets Control ("OFAC"), the United
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Nations Security Council ("UNSC"), the European Union ("EU"), Her Majesty's
Treasury ("HMT"), or other relevant sanctions authority (collectively,
"Sanctions"); and (ii) located, organized or resident in a country or territory
that is the subject of Sanctions. Further, the Company will continue to
undertake appropriate due diligence to ensure that neither the Company nor its
customers are subject to Sanctions. The Company acknowledges its ongoing and
continuing obligations to comply with the applicable Sanctions. The Company will
provide reasonable assistance to the other parties hereto in connection with
their respective obligations under the applicable Sanctions.
2.12. The Company represents, warrants, and covenants that (i) its officers,
directors, employees, agents and other representatives (together with the
Company, each a "Relevant Person") are subject to written policies and
procedures relating toethical conduct, including but not limited to anti-bribery
and anti-corruption, and shall not commit, authorize or permit any action that
would cause any Relevant Person to be in violation of any applicable
anti-bribery and corruption laws; (ii) in connection with any services provided
in connection with this Agreement, the Relevant Persons have not taken nor will
they take any actions in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving anything of value to, nor have the
Relevant Persons received, nor will they receive, any payment or anything of
value from, any person (whether directly or indirectly) while knowing that all
or some portion of the money or value will be offered, given, promised or
received by anyone improperly to influence official action, improperly to obtain
or retain business or otherwise secure an illegal advantage; and (iii) it shall
create and maintain accurate books and financial records in connection with the
services performed under this Agreement. The Company shall promptly notify
Underwriter if a Relevant Person becomes aware of any breach of this provision,
and Underwriter may terminate this Agreement with immediate effect in the event
of such breach by any Relevant Person. The Company represents and warrants that
(a) the Company has, and will maintain, policies and procedures reasonably
designed to monitor and prevent market timing or excessive trading activity by
its customers and (b) the Company will provide each Fund or its agent with
assurances regarding the compliance of its handling of orders with respect to
shares of the Designated Portfolios with the requirements of Rule 22c-1 under
the 1940 Act, regulatory interpretations thereof, and such Fund's market timing
and excessive trading policies upon reasonable request. Additionally, the
Company shall comply with provisions of the statutory prospectus and SAI of the
Fund, and with applicable federal and state securities laws. Among other things,
and without limitation of the foregoing, the Company shall be responsible for
reasonably assuring that: (a) only orders to purchase, redeem or exchange
Portfolio shares received by the Company or any Indirect Intermediary (as
defined below) prior to the Valuation Time (as defined below) shall be submitted
directly or indirectly by the Company to the Fund or its transfer agent or other
applicable agent for receipt of a price based on the net asset value per share
calculated for that day in accordance with Rule 22c-1 under the 1940 Act (orders
to purchase, redeem or exchange Portfolio shares received by the Company
subsequent to the Valuation Time on any given day shall receive a price based on
the next determined net asset value per share in accordance with Rule 22c-1
under the 1940 Act.); and (b) the Company shall cause to be imposed and/or
waived applicable redemption fees, if any, only in accordance with the
Portfolio's then current statutory prospectus or SAI and/or as instructed by the
Underwriter. The Company further agrees to make reasonable efforts to assist the
Fund and its service
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providers (including but not limited to the Underwriter) to detect, prevent and
report market timing or excessive short-term trading of Portfolio shares. To the
extent the Company has actual knowledge of violations of Fund's policies (as set
forth in the then current statutory prospectus or SAI) regarding (i) the timing
of purchase, redemption or exchange orders and pricing of Portfolio shares, (ii)
market timing or excessive short-term trading, or (iii) the imposition of
redemption fees, if any, the Company agrees to report such known violations to
the Underwriter. For purposes of this provision, the term "Valuation Time"
refers to the time as of which the shares of a Portfolio are valued on each
business day, currently the close of regular trading on the New York Stock
Exchange (normally, 4:00 p.m., Eastern Time) on each day that the New York Stock
Exchange is open for business.
2.13. The Company agrees to provide promptly to the Underwriter, upon written
request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or other
government-issued identifier ("GII") and the Contract number or participant
account number, if known, of any or all Contract owner(s) (as defined below) of
the Account, the name or other identifier of any investment professional(s)
associated with the Contract owner(s) or account (if known), and the amount,
date and transaction type (purchase, redemption, transfer, or exchange) of every
purchase, redemption, transfer, or exchange of shares held through an account
maintained by the Company during the period covered by the request. Unless
otherwise specifically requested by the Underwriter, the Company shall only be
required to provide information relating to Contract owner-Initiated Transfer
Purchases or Contract owner-Initiated Transfer Redemptions (each, as defined
below).
(a) Period Covered by Request. Requests must set forth a specific period,
not to exceed 180 days from the date of the request, for which transaction
information is sought. The Underwriter may request transaction information
older than 180 days from the date of the request as it deems necessary to
investigate compliance with policies established or utilized by the
applicable Fund or the Underwriter for the purpose of eliminating or
reducing any dilution of the value of the outstanding shares issued by a
Portfolio (as defined below). If requested by the Underwriter, the Company
will provide the information specified in this Section 2.13 for each
trading day.
(b) ..Form and Timing of Response. The Company agrees to provide, promptly
upon request of the Underwriter, the requested information specified in
this Section 2.13. The Company agrees to use its best efforts to determine
promptly whether any specific person about whom it has received the
identification and transaction information specified in this Section 2.13
is itself a "financial intermediary," as that term is defined in Rule 22c-2
under the 1940 Act (an "Indirect Intermediary") and, upon request of the
Underwriter, promptly either (i) provide (or arrange to have provided) the
information set forth in this Section 2.13 for those Contract owner(s) who
hold an account with an Indirect Intermediary or (ii) restrict or prohibit
the Indirect Intermediary from purchasing shares in nominee name on behalf
of other persons. The Company additionally agrees to inform the Underwriter
whether it plans to perform (i) or (ii) above. Responses required by this
paragraph must be communicated in writing and in a format mutually agreed
upon by the parties. To the
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extent practicable, the format for any Contract owner(s) and transaction
information provided to the Underwriter should be consistent with the NSCC
Standardized Data Reporting Format.
(c) Limitations on Use of Information. The Underwriter agrees not to use
the information received under this Section 2.13 for marketing or any other
similar purpose without the prior written consent of the Company; provided,
however, that this provision shall not limit the use of publicly available
information, information already in the possession of the Underwriter, a
Fund or their affiliates at the time the information is received pursuant
to this Section 2.13 or information which comes into the possession of the
Underwriter, a Fund or their affiliates from a third party.
(d) Agreement to Restrict Trading. The Company agrees to execute written
instructions from the Underwriter to restrict or prohibit further purchases
or exchanges of Portfolio shares by a Contract owner that has been
identified by the Underwriter as having engaged in transactions in
Portfolio shares (directly or indirectly through the Company's Account)
that violate policies established or utilized by the applicable Fund or the
Underwriter for the purpose of eliminating or reducing any dilution of the
value of the outstanding shares issued by a Portfolio. Unless otherwise
directed by the Underwriter, any such restrictions or prohibitions shall
only apply to Contract owner-Initiated Transfer Purchases or Contract
owner-Initiated Transfer Redemptions that are effected directly or
indirectly through the Company.
(e) Form of Instructions. Instructions must include the TIN, ITIN or GII
and the specific individual Contract number or participant account number
associated with the Contract owner if known, and the specific
restriction(s) to be executed. If the TIN, ITIN, GII or the specific
individual Contract number or participant account number associated with
the Contractholder is not known, the instructions must include an
equivalent identifying number of the Contractholder(s) or account(s) or
other agreed upon information to which the instruction relates.
(f) Timing of Response. The Company agrees to execute instructions from
the Underwriter as soon as reasonably practicable, but not later than five
(5) business days after receipt of good order instructions by the Company.
(g) Confirmation by the Company. The Company must provide written
confirmation to the Underwriter that the Underwriter's instructions to
restrict or prohibit trading have been executed. The Company agrees to
provide confirmation as soon as reasonably practicable, but not later than
ten (10) business days after the instructions have been executed.
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(h) Definitions. For purposes of this Section 2.13, the following terms
shall have the following meanings, unless a different meaning is clearly
required by the context:
(i) The term "Contract owner" means the holder of interests in a
Contract or a participant in an employee benefit plan with a
beneficial interest in a Contract.
(ii) The term "Contract owner-Initiated Transfer Purchase" means a
transaction that is initiated or directed by a Contract owner that
results in a transfer of assets within a Contract to a Portfolio, but
does not include transactions that are executed: (i) automatically
pursuant to a contractual or systematic program or enrollment such as
a transfer of assets within a Contract to a Portfolio as a result of
"dollar cost averaging" programs, insurance company approved asset
allocation programs, or automatic rebalancing programs; (ii) pursuant
to a Contract death benefit; (iii) as a result of a one-time step-up
in Contract value pursuant to a Contract death benefit; (iv) as a
result of an allocation of assets to a Portfolio through a Contract as
a result of payments such as loan repayments, scheduled contributions,
retirement plan salary reduction contributions, or planned premium
payments to the Contract; or (v) pre-arranged transfers at the
conclusion of a required "free look" period.
(iii) The term "Contract owner-Initiated Transfer Redemption" means a
transaction that is initiated or directed by a Contract owner that
results in a transfer of assets within a Contract out of a Portfolio,
but does not include transactions that are executed: (i) automatically
pursuant to a contractual or systematic program or enrollments such as
transfers of assets within a Contract out of a Portfolio as a result
of annuity payouts, loans, systematic withdrawal programs, insurance
company approved asset allocation programs and automatic rebalancing
programs; (ii) as a result of any deduction of charges or fees under a
Contract; (iii) within a Contract out of a Portfolio as a result of
scheduled withdrawals or surrenders from a Contract; or (iv) as a
result of payment of a death benefit from a Contract.
(iv) The term "Portfolios" shall mean the constituent series of the
Funds, but for purposes of this Section 2.13 shall not include
Portfolios excepted from the requirements of paragraph (a) of Rule
22c-2 by paragraph (b) of Rule 22c-2.
(v) The term "promptly" shall mean as soon as practicable but in no
event later than five (5) business days from the Company's receipt of
the request for information from the Underwriter.
(vi) The term "written" includes electronic writings and facsimile
transmissions.
(vii) In addition, for purposes of this Section 2.13, the term
"purchase" does not include the automatic reinvestment of dividends or
distributions.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of the
Fund's current statutory prospectuses as the Company may reasonably request.
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3.2. The Underwriter (or the applicable Fund) shall provide electronic copies
of the current statutory prospectus, including any supplements, SAI, including
any supplements, and most recent annual and semi-annual reports to shareholders
under Rule 30e-1 of the 1940 Act ("Fund Documents").
3.3. Within three (3) business days of receiving a request for a paper copy or
an electronic copy of any Fund Documents, the Company shall send a paper copy or
electronic copy, respectively, of any requested Fund Document to any person
requesting such copy at no cost to the Contract owner and by U.S. first class
mail or other reasonably prompt means or by email for electronic requests.
3.4. The applicable Fund shall provide the Company with information regarding
the Fund's expenses, 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
substantively in the form provided. 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 material
way without the prior consent of the Fund.
3.5. The applicable Fund shall provide the Company with copies of its proxy
material and other communications to shareholders in such quantity as the
Company shall reasonably require for distributing to Contract owners. The
Company shall deliver such documents to Contract owners in accordance with
applicable laws.
3.6. The Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Fund shares in accordance with instructions received from
Contract owners; and
(c) 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 in accordance with its echo voting procedures, as the
same may be amended from time to time,
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 in
accordance with its echo voting procedures, as the same may be amended from time
to time.
3.7. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required
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by the Shared Funding Exemptive Order and consistent with any reasonable
standards that the Fund may reasonably adopt and provide in writing.
3.8. The expenses and fees related to the foregoing provisions of this Article
III shall be allocated as set forth in Schedule B hereof.
ARTICLE IV. Sales Material and Information
4.1. The Company is hereby granted a non-exclusive, royalty-free, worldwide
license to use, print, broadcast and otherwise display in any print or
electronic medium the Fund's, Distributor's and Adviser's service marks, trade
names and logos in sales literature or other promotional material created and
published by the Company with respect to Contracts, provided such use in print,
broadcast or other display conforms to such written guidelines, if any, provided
by the Fund or Distributor.
4.2. 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; provided, however, that
the Company may begin using such material if the Fund or its designee fails to
review or respond within such period. 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.
4.3. 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
statutory prospectus or SAI for the Fund shares, as such registration statement
and statutory 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. The Company shall comply with all applicable laws, including
Rule 498 under the 1933 Act, when composing, compiling and delivering sales
literature or other promotional material.
4.4. The applicable 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;
provided, however, the Fund and the Underwriter may begin using such material if
the Company or its designee fails to review or respond within such period. The
Company reserves the right to reasonably object to the continued use of any such
sales literature or other promotional material
14
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in which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.5. The applicable 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 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 prior permission of the Company.
4.6. The applicable Fund will provide to the Company at least one complete copy
of all registration statements, statutory 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. The Company shall not
alter any of such documents provided by the Fund without the prior written
consent of the Fund or Underwriter.
4.7. The Company shall provide to the applicable Fund and the Underwriter any
material complaints received from the Contract owners pertaining to the Fund or
the Designated Portfolio.
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, Internet, or tape recording, videotape
display, signs, video streams, computerized media, websites or other public
media), sales literature or other promotional material (i.e., any written
communication distributed or made generally available to key firms, customers or
the public, including brochures, circulars, pitch books, information provided on
a website, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sale literature or other
promotional material), educational or training materials or other communications
distributed or made generally available to some or all agents, wholesalers or
employees.
ARTICLE V. Fees and Expenses
5.1. Except as otherwise provided herein or within another agreement between
the parties and/or Schedule B attached hereto and made a part hereof, no party
to this Agreement shall pay any fee or other compensation to any other party to
this Agreement. Except as otherwise provided herein, all expenses incident to
performance by a party under this Agreement shall be paid by such party.
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
15
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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
statutory prospectuses and registration statement, proxy materials and reports,
setting the statutory prospectuses in type, setting in type and printing the
proxy materials and reports to shareholders, the preparation 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.
5.3. The Company shall bear the expenses of distributing the Fund's statutory
prospectuses to owners of Contracts issued by the Company and of distributing
the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Potential Conflicts
6.1. The parties to this Agreement agree that the conditions or undertakings
required by the Mixed and Shared Funding Exemptive Order that may be imposed on
the Company, the Fund and/or the Underwriter by virtue of such order by the SEC:
(i) shall apply only upon the sale of shares of the Designated Portfolios to
variable life insurance separate accounts (and then only to the extent required
under the 1940 Act); (ii) shall apply and be incorporated herein by reference
only if any of the Company, any Participating Insurance Company, the Fund or the
Adviser relies on the exemptions from Sections 9(a), 13(a), 15(a) or 15(b) of
the 1940 Act granted by the Mixed and Shared Funding Exemptive Order; (iii) will
be incorporated herein by reference; and (iv) such parties agree to comply with
such conditions and undertakings to the extent applicable to each such party
notwithstanding any provision of this Agreement to the contrary.
6.2. 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 parties to this Agreement 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 3.6
and 3.7 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 VII. Indemnification
7.1. Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless the Fund and the
Underwriter and each of its trustees/directors and officers, and each
person, if any, who controls the Fund or Underwriter within the meaning of
Section 15 of the 1933 Act or who is under common control with the
Underwriter (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) 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
16
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reasonable 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:
(i) arise out of or are based upon any untrue statement or alleged
untrue statements of any material fact contained in the registration
statement, prospectus (which shall include a written description of a
Contract that is not registered under the 1933 Act), or SAI for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or 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, SAI, or sales literature of the
Fund not supplied by the Company or persons under its control) or
wrongful conduct of the Company or its agents or persons under the
Company's authorization or control, with respect to the sale 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 a registration statement, prospectus,
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 if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; 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 Section 2.6 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company; as limited by and in accordance with the
provisions of Sections 7.1 (b) and 7.1 (c) hereof.
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(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, fraud, 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 its obligations or
duties under this Agreement.
(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 an Indemnified Party, 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.
(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 Fund shares or the Contracts or the
operation of the Fund.
7.2. Indemnification by the Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 7.2) 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:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the
18
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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 Fund by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or 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, SAI or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund or Underwriter or persons
under their control, with respect to the sale 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 a registration statement, prospectus, SAI
or sales literature covering the Contracts, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, 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
(iv) 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 unintentional
or in good faith or otherwise, to comply with the diversification and
other qualification requirements specified in Sections 2.3 and 2.4 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 7.2(b) and 7.2(c) hereof.
(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, fraud, 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 the Company or the Account, whichever
is applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified
19
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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 Party, 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.
(d) The Company 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
Contracts or the operation of the Account.
7.3. Indemnification By the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.3) 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:
(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 unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Section 2.3 and 2.4 of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
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as limited by and in accordance with the provisions of Sections 7.3(b)
and 7.3(c) hereof. The parties acknowledge that the Fund's
indemnification obligations under this Section 7.3 are subject to
applicable law.
(b) The Fund 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, fraud, 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 the Company, the Fund, the Underwriter or
the Account, whichever is applicable.
(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 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
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the 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 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.
(d) The Company and the Underwriter agree promptly to notify the Fund of
the commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the
sale or acquisition of shares of the Fund.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of California.
8.2. 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
21
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accordance therewith. If, in the future, the Mixed and Shared Funding Exemptive
Order should no longer be necessary under applicable law, then Article VI shall
no longer apply.
ARTICLE IX. Termination
9.1. 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 six (6) months advance written notice delivered
to the other parties; or
(b) termination by the Company by written notice to the applicable Fund and
the Underwriter based upon the Company's determination that shares of such
Fund are not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the applicable 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
(d) termination by the Company by written notice to the applicable 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
requirements specified in Section 2.4 hereof, or if the Company reasonably
believes that such Portfolio may fail to so qualify or comply; or
(e) termination by a Fund or Underwriter by written notice to the Company
in the event that the Contracts fail to meet the qualifications specified
in Section 2.6 hereof; or
(f) termination by the Company by 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; or
(g) termination by the Company upon any substitution of the shares of
another investment company or Designated Portfolios 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
(h) termination by a Fund if the Board has decided to (i) refuse to sell
shares of any Designated Portfolio to the Company and/or any of its
Accounts; (ii) suspend or terminate the offering of shares of any
Designated Portfolio; or (iii) dissolve,
22
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reorganize, liquidate, merge or sell all assets of the Fund or any
Designated Portfolio, subject to the provisions of Section 1.1; or
(i) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict exists as
referred to in Mixed and Shared Funding Exemptive Order and the
conditions thereof incorporated herein by reference in Article VI.
9.2. (a) Notwithstanding any termination of this Agreement, and except as
provided in Section 9.2(b), the applicable Fund(s) and the Underwriter shall, at
the option of the Company, continue, until the one year anniversary from the
date of termination, and from year to year thereafter if deemed appropriate by
such Fund(s) and the Underwriter, to make available additional shares of the
Designated Portfolios 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"). Specifically, based
on instructions from the owners of the Existing Contracts, the Accounts shall be
permitted to reallocate investments in the Designated Portfolios of a Fund and
redeem investments in the Designated Portfolios, and shall be permitted to
invest in the Designated Portfolios in the event that owners of the Existing
Contracts make additional premium payments under the Existing Contracts.
The Company agrees, promptly after any termination of this Agreement, to take
all steps necessary to redeem the investment of the Accounts in the Designated
Portfolios within one year from the date of termination of the Agreement as
provided in Article IX. Such steps shall include, but not be limited to using
its best efforts to seek an order pursuant to Section 26(c) of the 1940 Act to
permit the substitution of other securities for the shares of the Designated
Portfolios. A Fund may, in its discretion, permit the Accounts to continue to
invest in the Designated Portfolios beyond such one year anniversary for an
additional year beginning on the first annual anniversary of the date of
termination, and from year to year thereafter; provided that such Fund agrees in
writing to permit the Accounts to continue to invest in the Designated
Portfolios at the beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to Sections 9.1(e),
9.1(h) or 9.1(i),at the option of the Fund or the Underwriter; or (ii) the one
year anniversary of the termination of the Agreement is reached or, after waiver
as provided in Section 9.2(a), such subsequent anniversary is reached (each of
(i) and (ii) referred to as a "triggering event" and the date of termination as
provided in (i) or the date of such anniversary as provided in (ii) referred to
as the "request date"), the parties agree that such triggering event shall be
considered as a request for immediate redemption of shares of the Designated
Portfolios held by the Accounts, received by the Fund and its agents as of the
request date, and the Fund agrees to process such redemption request in
accordance with the 1940 Act and the regulations thereunder and the Fund's
registration statement.
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(c) The parties agree that this Section 9.2 shall not apply to any terminations
under Article VI and the effect of such Article VI terminations shall be
governed by Article VI of this Agreement. The parties further agree that, to the
extent that all or a portion of the assets of the Accounts continue to be
invested in the Fund or any Designated Portfolio of the Fund, Articles I, II,
VI, VII and VIII will remain in effect after termination.
9.3. Notwithstanding any termination of this Agreement, each party's obligation
under Article VII to indemnify the other parties shall survive.
ARTICLE X. 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 PIMCO Variable Insurance Trust:
PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Legal Department
With a copy to:
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Legal Department
If to PIMCO Equity Series VIT:
PIMCO Equity Series VIT
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Legal Department
With a copy to:
Pacific Investments Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Legal Department
If to the Company:
Forethought Life Insurance Company
000 Xxxxx Xxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, EVP, Chief Investment Officer
24
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If to Underwriter:
PIMCO Investments LLC
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
ARTICLE XI. Miscellaneous
11.1. All persons dealing with a Fund must look solely to the property of such
Fund, and in the case of a series company, the respective applicable 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 such Fund. The parties agree that neither the
Board, officers, agents nor shareholders of such Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
11.2. Any use or disclosure of nonpublic personal information (as defined in
Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 or any successor or federal or
state statute, and the rules and regulations thereunder, all as may be amended
or supplemented from time to time) is specifically and expressly limited to the
use or disclosure that is required or permitted by applicable privacy laws. Each
party shall, as required by applicable privacy laws, implement and maintain
reasonable administrative, technical, and physical safeguards designed to insure
the security and confidentiality of nonpublic personal information; protect
against anticipated threats or hazards to the security or integrity of nonpublic
personal information; and protect against unauthorized access, disclosure, or
use of nonpublic personal information.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. 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.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
FINRA, 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 applicable Insurance Commissioner 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 insurance
contract operations of the Company are being conducted in a manner consistent
with the applicable variable insurance contract laws and regulations and any
other applicable law or regulations.
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11.7. 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.
11.8. 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.
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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.
FORETHOUGHT LIFE INSURANCE COMPANY
By:
--------------------------------------
Name:
Title:
Date:
PIMCO VARIABLE INSURANCE TRUST
By:
--------------------------------------
Name:
Title:
Date:
PIMCO EQUITY SERIES VIT
By:
--------------------------------------
Name:
Title:
Date:
PIMCO INVESTMENTS LLC
By:
--------------------------------------
Name:
Title:
Date:
27
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SCHEDULE A
The term "Designated Portfolios" will include any series of the PIMCO Variable
Insurance Trust or the PIMCO Equity Series VIT that offers Administrative,
Institutional, Advisor and/or M Class Shares and that is operating as of the
date of this Agreement or that thereafter commences operations, other than any
such series that ceases operations.
ACCOUNTS:
Forethought Life Insurance Company Separate Account A
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SCHEDULE B
ALLOCATION OF EXPENSES
ITEM PAID BY THE COMPANY PAID BY THE TRUST OR UNDERWRITER
----------------------------------------------------------------------------------------------------------------
Registration Statements Preparing and filing the Separate Account's Preparing and filing the Trust's
registration statement registration statement
Prospectuses, Text composition and alterations for Separate Text composition and alterations for
Supplements, and Account prospectus, supplements and statements Designated Portfolio prospectuses,
Statements of of additional information supplements and statements of
Additional Information additional information
Printing, processing, mailing and distributing Printing, processing, mailing and
or electronically delivering of Separate distributing and/or electronically
Account prospectuses, supplements and delivering of Designated Portfolios
statements of additional information to new and prospectuses, supplements and
existing Contract owners as required by statements of additional information
applicable law for use with Contract owners with
Printing, processing, mailing and distributing contract value allocated to a
Separate Account and Designated Portfolios Designated Portfolio, including
prospectuses, supplements and statements of Contract owners making an initial
additional information for use with prospective investment in a Designated Portfolios,
Contract owners and existing contract owners as required by applicable law (1)
who do not have contract value allocated to a
Designated Portfolio
Documents and Printing, processing, mailing and
Communications related distributing or electronically
fund to changes delivering Designated Portfolios and
Separate Account supplements and other
communications related to fund
substitutions, fund closings, fund
mergers and other similar fund
transactions (1)
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ITEM PAID BY THE COMPANY PAID BY THE TRUST OR UNDERWRITER
----------------------------------------------------------------------------------------------------------------
Annual and Semi-Annual Text composition of annual and semi-annual Text composition of annual and
Reports reports of the Separate Account semi-annual reports of the Designated
Printing, processing, mailing, and distributing Portfolios
or electronically delivering annual and Printing, processing, mailing, and
semi-annual reports of the Separate Account to distributing or electronically
Contract owners delivering annual and semi-annual
reports of the Designated Portfolios
to Contract owners (1)
Proxies Text composition, printing, processing, Text composition, printing,
mailing, distributing or electronically processing, mailing, distributing or
delivering and tabulation of proxy statements electronically delivering and
and voting instruction solicitation materials tabulation of proxy statements and
to Contract owners with respect to proxies voting instruction solicitation
sponsored by the Separate Accounts materials to Contract owners with
respect to proxies sponsored by a
Designated Portfolios or the Trust (1)
------------
(1) The Company may request that the Trust provide typeset electronic document
files of such documents for use with Contract owners. The Company may
choose to print the Designated Portfolios' prospectus(es), statement of
additional information, and semi-annual and annual reports, or any of such
documents, in combination with such documents of other fund companies; or
may utilize electronic delivery for such fund documents. In this case, the
Trust's share of the total expense for printing, processing, mailing, and
distribution of the combined materials or of electronic delivery of such
materials shall be allocated based upon the methodology deemed reasonable
and appropriate by the Company.
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SCHEDULE C
PROCESSING SPECIFICATIONS
I. NAV AND DIVIDEND INFORMATION
Information regarding NAV and Dividend Distribution shall be provided in such
format as mutually agreed by the parties from time to time.
II. NSCC TRANSACTIONS
The following terms and conditions shall apply with respect to the receipt and
transmission of orders routed through the NSCC in accordance with the NSCC's
Defined Contribution Clearance & Settlement ("DCC&S") platform cycle file:
A. Subject to the terms of the statutory prospectus and SAI, including the right
to reject any order, the Fund will accept orders to purchase shares of the
Designated Portfolios available using the NSCC's Defined Contribution Clearance
& Settlement ("DCC&S") platform. The Fund will also provide the Company with
account positions and activity data using the NSCC's Networking platform. The
Company shall pay for Designated Portfolios shares by federal funds wire using
the NSCC's Fund/ SERV platform in accordance with the rules and regulations of
the NSCC, as the same may be amended from time to time.
B. The Company shall use best efforts to promptly notify the Fund or its
designated transfer agent of its inability to use the NSCC's DCC&S platform by
telephone and/ or facsimile.
C. The Fund will provide the Company with account positions and activity data
using the NSCC's Networking platform (i.e., the NSCC's product that allows the
exchange of account level information electronically).
D. Proceeds in respect of shares in the Designated Portfolios redeemed shall be
effectuated using the NSCC's Fund/SERVplatform.
E. The Distributor shall furnish notice to the Company of any income, dividends
or
capital gain distributions payable on the Designated Portfolios' shares through
the NSCC's Fund/SERV and/or Mutual Fund Profile services, as applicable. F.
III. EXCEPTIONS
If the Company is prevented from transmitting Day 1 Trades to the Fund, or its
designee, through Fund/Serv on Day 2 due to any circumstances (such as computer
system failures experienced by the Company or the NSCC, natural catastrophes, or
other emergencies or human error), provided that the Company notifies the Fund,
or its designee, of such contingency prior to 9:30 a.m. Eastern Time on Day 2,
the Company may:
(a) transmit such Day 1 Trades to the Fund through Fund/SERV prior to 5:00
a.m. Eastern Time on Day 3, and such Day 1 Trades will be effected at the
Net Asset
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Value Per Share calculated as of Market Close on Day 1, provided further
that (i) the Company notifies the Fund, or its designee, of the Day 1 Trade
information prior to 9:00 a.m. Eastern Time on Day 2 and (ii) such
transmission is consistent with the Fund's NSCC Security Profile; or
(b) transmit and settle the Day 1 Trades through means other than Fund/SERV
prior to 9:00 a.m. Eastern Time on Day 2, and such Day 1 Trades will be
effected at the Net Asset Value Share calculated as of Market Close on Day
1.
32