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EXHIBIT 8(q)
AGENCY AGREEMENT
THIS AGREEMENT dated as of November 1, 2000 is made by and among MAS
Funds (the "Fund," which hereinafter refers to MAS Funds or its duly appointed
designee), MAS Fund Distribution, Inc. ("Distributor"), Miller Anderson &
Sherrerd, LLP ("Adviser") and The Variable Annuity Life Insurance Company (the
"Company"), a Texas corporation.
WITNESSETH:
WHEREAS, the Company has agreed to provide contract owner accounting,
record-keeping and administrative services for the segregated variable asset
account identified on Exhibit A (collectively, the "Separate Account"); and
WHEREAS, the Fund, an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), employs a
transfer agent to provide services as its transfer agent and dividend
disbursement agent (herein, the "Transfer Agent") with respect to, among others,
each series of the Fund identified on Exhibit A (each, a "Portfolio"); and
WHEREAS, it is intended that the Separate Account will purchase shares
of the Portfolio(s) to fund certain variable insurance products offered by the
Company (each a "Contract"); and
WHEREAS, it is intended that the Transfer Agent will establish a master
account (an "Account") on its mutual fund shareholder accounting system
reflecting the aggregate ownership by the Separate Account of shares of a
Portfolio and all shareholder transactions by the Separate Account involving
such shares (all references herein to "shares" of a Portfolio shall mean the
class or classes of shares specifically identified on Exhibit A); and
WHEREAS, it is intended that the Company will establish individual
accounts on its record-keeping system reflecting all transactions by or on
behalf of the Separate Account's beneficial owners (collectively, the "Contract
Owners") which result in purchases or redemptions by the Separate Account of
shares of a Portfolio; and
WHEREAS, it is intended that the Company will act as agent of the Fund,
for purposes of Rule 22c-1 under the 1940 Act ("Rule 22c-1"), solely for the
limited purpose of receiving orders by the Separate Account for purchases and
redemptions of shares of a Portfolio resulting from
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transactions by or on behalf of the Contract Owners and recording such purchases
and redemptions and making and maintaining records concerning the Contract
Owners' interests in a Portfolio on the Company's record-keeping system; and
WHEREAS, it is intended that the Fund will provide to the Company, upon
request, prospectuses, shareholder reports and other information as required
with respect to a Portfolio which the Company will furnish to Contract Owners.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the parties hereto, intending to be legally bound, hereby agree
and declare as follows:
Section 1. Appointment as Agent. The Company is hereby appointed as
agent for the Fund solely for the limited purpose of receiving orders, in
accordance with the operating procedures outlined in Exhibit B (the
"Procedures"), for purchases and redemptions by the Separate Account of shares
of a Portfolio. Such purchases and redemptions will be based on Contract
Owner-level transactions made by or on behalf of Contract Owners that are
recorded on the Company's record-keeping system. For purposes of this Agreement,
"Contract Owner-level transactions" will include:
(a) Any authorized direction to invest contributions by or on
behalf of any Contract Owner in a Portfolio in accordance with the
terms and conditions established by the Separate Account and the Fund's
prospectus relating to the Portfolio (the "Prospectus");
(b) Any authorized direction to transfer or exchange existing
amounts held on behalf of any Contract Owner by the Separate Account to
a Portfolio in accordance with the terms and conditions established by
the Separate Account and the Prospectus;
(c) Any authorized direction to transfer or exchange existing
amounts invested in a Portfolio on behalf of any Contract Owner by the
Separate Account to any other investment option offered by the Separate
Account, including exchanges between Portfolios, in accordance with the
terms and conditions established by the Separate Account and the
Prospectus; and
(d) Any authorized direction to pay loan, withdrawal or
distribution proceeds from the Separate Account to a Contract Owner
which results in a redemption of shares of a Portfolio in accordance
with the terms and conditions established by the Separate Account and
the Prospectus.
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The Company will maintain records for the Separate Account and for the
Contract Owners reflecting all shares of a Portfolio purchased and redeemed by
the Separate Account based on Contract Owner-level transactions (including the
date and price for all transactions and share balances) and all reinvestments by
the Separate Account of dividends and capital gains distributions paid by a
Portfolio. The Company will reconcile on each day on which the New York Stock
Exchange, Inc. is open for business (a "Business Day"): (i) all transactions by
the Separate Account involving shares of a Portfolio (including purchases,
redemptions and reinvestments of dividends and capital gains distributions) with
the corresponding Contract Owner-level transactions on the Company's
record-keeping system; and (ii) the aggregate position for the Separate Account
of all Contract Owners on the Company's record-keeping system with the
corresponding balance in the Account as reflected in statements provided by the
Transfer Agent for that Business Day. The Company will immediately advise the
Transfer Agent in writing of any discrepancies between the Company's records and
the balances in the Account. Notwithstanding the Company's appointment under
this Agreement as the agent of the Fund to receive orders for the purchases and
redemptions by the Separate Account of shares of a Portfolio, the Company will
have no authority under this Agreement or otherwise to act as agent for the Fund
in respect of or in connection with the distribution of shares of any Portfolio.
For purposes of complying with Rule 22c-1, the Company, as agent of the
Fund, agrees as follows: (i) all Contract Owner orders for a Business Day with
respect to a Portfolio received by the Company prior to the time as of which the
net asset value is determined for the Portfolio as specified in the Prospectus
("Close of Trading") will be processed at that day's share price and transmitted
to the Transfer Agent no later than the next following Business Day in
accordance with the Procedures (as defined below); and (ii) the Company will
maintain controls and procedures with regard to the processing of Contract Owner
trades.
Section 2. Procedures. The operating procedures governing the parties'
responsibilities under this Agreement with respect to instructions for the
purchase or redemption of shares of a Portfolio ("Instructions") and price
communication are set forth in Exhibit B of this Agreement. (All terms defined
in Exhibit B will have the same meaning when used in this Agreement.) The
Procedures will be consistent in all material respects with the terms of the
Prospectus, applicable requirements of the 1940 Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and any other applicable laws and
regulations.
Section 3. Representations and Warranties.
(a) Representations and Warranties of the Fund. The Fund
represents and warrants that: (i) entry into this Agreement has been
duly authorized by the Board of
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Trustees of the Fund and, when executed and delivered, will constitute
the valid, legal and binding obligation of the Fund, enforceable in
accordance with its terms; (ii) the Fund only conducts business on days
on which the New York Stock Exchange, Inc. is open for business; (iii)
the shares of each Portfolio are registered or otherwise authorized for
issuance and sale in the jurisdictions set forth on Exhibit C; (iv) the
Separate Account may place Instructions on each and every Business Day
without regard to the number or market value of transactions executed
in any prior time periods; (v) it will promptly notify the Company in
the event that the Fund is for any reason unable to perform any of its
obligations under this Agreement; and (vi) it is currently qualified as
a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will use its
reasonable efforts to maintain such qualification (under Subchapter M
or any successor or similar provision).
(b) Representations and Warranties of the Company. The Company
represents and warrants that: (i) entry into this Agreement has been
duly authorized by the Company and, when executed and delivered, will
constitute the valid, legal and binding obligation of the Company,
enforceable in accordance with its terms; (ii) it has duly informed the
Separate Account that shares of the Fund and the Portfolio(s) may be
sold to the general public and are not restricted for sale to separate
accounts of insurance companies or qualified plans under the Code;
(iii) it has duly informed the Separate Account that neither the Fund
nor any Portfolio has agreed to comply with Section 817(h) of the Code
or Treasury Regulation 1.817-5, as each may be amended from time to
time, relating to the diversification requirements for variable
annuity, endowment or life insurance contracts; (iv) the Contracts will
be issued and sold in compliance in all material respects with all
applicable federal and state laws; (v) the sale of the Contracts shall
comply in all material respects with state insurance suitability
requirements; and (vi) it will promptly notify the Fund and the
Transfer Agent in the event that the Company is for any reason unable
to perform any of its obligations under this Agreement.
Section 4. Instructions. All Instructions communicated by the Company
to the Transfer Agent with respect to the Separate Account on any Business Day
will be based on Instructions that the Company received and accepted as being in
good order from persons authorized to give such Instructions for or on behalf of
the Separate Account no later than the Close of Trading on the trade date.
Receipt of such communication by the Company will be deemed to be receipt of the
same by the Fund. Under no circumstances will the Company change, alter or
manipulate any Instructions received by it in good order.
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Section 5. Covenants. The Company covenants that it: (i) will not make
shares of a Portfolio available in those states in which such shares are not
registered or otherwise authorized for sale (as set forth on Exhibit C); (ii)
will communicate Instructions for a Business Day to the Transfer Agent which
reflect only Contract Owner-level transactions received and accepted as being in
good order by the Company before the Close of Trading for that Business Day;
(iii) will promptly verify all statements provided to it by the Transfer Agent
and will immediately notify the Transfer Agent in writing of any discrepancies
between the records it maintains and those pertaining to the Account as
reflected in statements provided by the Transfer Agent; (iv) is and will be
responsible for reporting, whether daily, periodic, year-end, annual or special,
to the Separate Account, and will assist the Separate Account in reporting to
Contract Owners and to applicable federal and state regulatory authorities; and
(v) is and will be solely responsible for the actual delivery to the Separate
Account for delivery to Contract Owners of the proceeds of, and the collection
of all required withholding of taxes from, all redemptions and the payment of
all sums withheld from such redemptions to the applicable federal or state
taxation authorities.
Section 6. Payment for Orders.
(a) Payment for Net Purchases. Payment for net purchases of
shares of a Portfolio will be wired by the Company to a custodial
account designated by the Fund in accordance with the Procedures
described in Exhibit B.
(b) Payment for Net Redemptions. Payment for net redemptions
of shares of a Portfolio will be wired from the Fund's custodial
account to the Company in accordance with the Procedures described in
Exhibit B.
Section 7. Communication Materials.
(a) Fund Communications. The Fund or its agents will supply or
cause to be supplied to the Company the following materials and
information with respect to a Portfolio, which the Company will furnish
or make available to Contract Owners, where appropriate and as required
by applicable law:
(i) Fund Prospectuses, Shareholder Reports, Proxy
Materials and Related Materials. The Company will be
responsible for the timely delivery of all Prospectuses,
shareholder reports, proxy materials and related materials to
the Contract Owners to the extent required by applicable law,
or as specifically required by the Separate Account or
reasonably requested by the fiduciaries for the Separate
Account.
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(ii) Notice of Dividends and Other Distributions;
Reports. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company or
its designee notice of any dividends or other distributions
payable on the shares of each Portfolio. Dividends and
distributions with respect to a Portfolio will be
automatically reinvested in additional shares of the Portfolio
held by the Separate Account and the Fund shall notify the
Company or its designee as to the number of shares so issued.
The Company may, in the alternative, elect to receive all
dividends and distributions in cash from an Account that has
been specifically established with the Fund for the purpose of
paying out all such dividends and distributions (a "Cash
Account").
(iii) Monthly Statements by the Transfer Agent. The
Fund will cause the Transfer Agent to deliver to the Company a
statement for the preceding calendar month reflecting the
shares of each Portfolio held by the Separate Account as of
the end of such preceding month and all purchases and
redemptions by the Separate Account of shares of a Portfolio
during such preceding month.
(b) Review of Communication Materials. The Company may prepare
communication ,disclosure or marketing materials, based on the current
Prospectus and information supplied by the Fund under Section 7(a)
above, for Contract Owners, which describe the Fund, a Portfolio or a
Portfolio's investment adviser or sub-adviser in the same format as
that used for the other investment options offered by the Separate
Account. The Company will supply the Fund with copies of such materials
within a reasonable period of time in advance of their intended
distribution to Contract Owners. The Company agrees not to use any such
materials without the prior written approval of the Fund and will be
responsible for filing such materials with, and obtaining any necessary
approvals from, all appropriate regulatory authorities in connection
with such use.
Section 8. Records of the Company.
(a) Maintenance of Records. The Company will maintain records
sufficient to identify the date and time of receipt of all Contract
Owner-level transactions involving a Portfolio.
(b) Access to Records. At the request of the Fund, the Company
will make available copies of all records of Contract Owner-level
transactions maintained by the Company as may be reasonably requested
by the Fund or the Transfer Agent to ensure compliance with applicable
law. The Company agrees that such records will be made
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available to the Securities and Exchange Commission in accordance with
the requirements of Rule 17Ad-7(g) under the Exchange Act. At the
request of the Company, and subject to any confidentiality obligations
of the Fund or the Transfer Agent, the Fund will cause the Transfer
Agent to make available copies of records maintained by the Transfer
Agent relating to investments in a Portfolio by the Separate Account as
may be reasonably requested by the Company to ensure compliance with
applicable law.
Section 9. Expenses. The Company shall be responsible for paying any
expenses it incurs in connection with the performance of its obligations under
this Agreement. The costs will include, but are not limited to, transaction
processing and any requested and required corrections thereto. The costs of
distributing to the Contract Owners Prospectuses, shareholder reports, proxy
materials and other materials that are provided to the Company pursuant to
Section 7 of this Agreement, will be paid by the Company or the Separate
Account.
Section 10. Indemnification of Parties.
(a) Indemnification by the Company. The Fund, its affiliates,
and their respective officers, directors, trustees, employees, agents,
and persons, if any, who control them within the meaning of the
Securities Act of 1933, as amended, (the "MSDW Indemnified Persons")
will not be held responsible, and the Company will indemnify and hold
the MSDW Indemnified Persons harmless from and against any and all
reasonable losses, damages, costs, charges, counsel fees, payments,
expenses, and liabilities directly or indirectly arising out of or
relating to: (i) the Company's lack of good faith, gross negligence, or
willful misconduct in carrying out its duties and responsibilities
under this Agreement; (ii) any breach of this Agreement or violation of
law by the Company; (iii) any breach by the Company of any obligation
to the Separate Account or the Contract Owners; (iv) any failure by the
Company to communicate Instructions within the time period set forth in
the Procedures; (v) any communication of Instructions by the Company
which has not been, or is claimed not to have been, authorized by or on
behalf of the Separate Account; (vi) any error or omission in, or
cancellation of, any Instruction communicated by the Company to the
Fund or the Transfer Agent; (vii) any material misstatement, or
material omission of a material fact necessary to make the information
not misleading or untrue, contained in any registration statement or
prospectus for the Contracts or contained in any Contract or sales
literature for the Contracts (or any amendment or supplement to any of
the foregoing), provided that this agreement to indemnify shall not
apply if such misstatement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the
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Fund for use in such documents or otherwise for use in connection with
the sale of the Contracts or Portfolio shares; (viii) any statements or
representations (other than statements or representations contained in
the registration statement, prospectus or sales literature of the Fund
not supplied by the Company or persons under its control and other than
statements or representations authorized by the Fund) or unlawful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Portfolio shares; or (ix)
any material misstatement, or material omission of a material fact
necessary to make the information not misleading or untrue, contained
in any registration statement, prospectus, or sales literature of the
Fund (or any amendment thereof or supplement thereto) if such
misstatement or omission was made in reliance upon and in conformity
with information furnished to the Fund by or on behalf of the Company.
(b) Indemnification by the Fund. The Company, its affiliates,
and their respective officers, directors, employees, and agents (the
"Company Indemnified Persons") will not be held responsible and the
Fund will indemnify and hold the Company Indemnified Persons harmless
from and against any and all reasonable losses, damages, costs,
charges, counsel fees, payments, expenses, and liabilities directly or
indirectly arising out of or attributable to: (i) the Fund's lack of
good faith, gross negligence, or willful misconduct in carrying out its
duties and responsibilities under this Agreement; (ii) any breach of
this Agreement or violation of law by the Fund; (iii) any breach by the
Fund of any obligation to the Separate Account or the Contract Owners;
or (iv) any material misstatement, or material omission of a material
fact necessary to make the information not misleading or untrue,
contained in any Portfolio Prospectus.
(c) Indemnification by the Adviser. The Company Indemnified
Persons will not be held responsible and the Adviser will indemnify and
hold the Company Indemnified Persons harmless from and against any and
all reasonable losses, damages, costs, charges, counsel fees, payments,
expenses, and liabilities directly or indirectly arising out of or
attributable to: (i) any material misstatement, or material omission of
a material fact necessary to make the information not misleading or
untrue, contained in any registration statement, prospectus or sales
literature for the Fund (or any amendment or supplement to any of the
foregoing), provided that this agreement to indemnify shall not apply
if such misstatement or omission was made in reliance upon and in
conformity with information furnished to the Fund or the Adviser by or
on behalf of the Company for use in such documents or otherwise for use
in connection with the sale of the Contracts or Portfolio shares;
(viii) any statements or representations (other than statements or
representations contained in the registration statement, prospectus or
sales literature for
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the Contracts not supplied by the Fund or persons under its control and
other than statements or representations authorized by the Company) or
unlawful conduct of the Fund or Adviser or persons under their control,
with respect to the sale or distribution of the Contracts or Portfolio
shares; or (ix) any material misstatement, or material omission of a
material fact necessary to make the information not misleading or
untrue, contained in any registration statement, prospectus, or sales
literature for the Contracts (or any amendment thereof or supplement
thereto) if such misstatement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on behalf
of the Fund.
Section 11. Confidentiality. All information, books, records, and data
supplied by one party to another party in connection with the negotiation or
carrying out of this Agreement are and will remain the property of the party
supplying such material and will be kept confidential by the receiving party
except as may be required by law, as authorized in writing by the party
supplying such material, or in the event such material is otherwise made
available to the public.
Section 12. Insurance.
(a) The Company agrees to maintain appropriate insurance
coverage as shall be reasonably necessary in light of its obligations
under this Agreement.
(b) The Fund agrees to maintain such insurance coverage as is
required under Rule 17g-1 of the 1940 Act or related provisions as may
be promulgated from time to time.
Section 13. Compensation. The Fund shall pay no fee or other
compensation to the Company under this Agreement.
Section 14. Governing Law. This Agreement will be governed exclusively
by the laws of the State of New York.
Section 15. Notices. Every notice required by this Agreement will be
deemed given when sent in accordance with the Procedures or, as to any matter
not addressed by the Procedures, the next Business Day if sent by a nationally
recognized overnight courier service that provides evidence of receipt or the
same Business Day if sent by 3:00 p.m. (receiving party's time) by facsimile
transmission and confirmed by a telephone call, otherwise, the next Business
Day, in each case to such address or to such facsimile number as will be
designated from time to time by each party pursuant to a written notice
(reference Exhibit D).
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Section 16. Assignment. No party will assign any of its rights, powers
or duties under this Agreement without the other parties' written consent and
any purported assignment in violation of this Agreement shall be void.
Section 17. Amendment or Termination of Agreement.
(a) The parties to this Agreement may agree in writing to
amend this Agreement at any time in whole or in part.
(b) Any party may terminate this Agreement at any time on
sixty (60) days' written notice to the other parties (which notice may
be waived by such other parties).
(c) Notwithstanding the sixty day notice requirement of
paragraph (b) of this section, any party may terminate this Agreement
effective immediately on written notice to the other parties in the
event of any violation or breach of any of the provisions of this
Agreement by another party (the "Breaching Party") which is not cured
within thirty (30) days after written notice has been given to the
Breaching Party specifying the nature of the violation or breach.
(d) Notwithstanding the sixty day notice requirement of
paragraph (b) of this section, the Company may terminate this Agreement
with respect to any Portfolio effective immediately on written notice
to the Fund and the Adviser: (i) based upon the Company's determination
that shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; (ii) in the event any of the 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 (iii) in the event that such Portfolio ceases
to qualify as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify.
(e) This Agreement will automatically terminate: (i) upon the
discontinuance of the Fund as an investment option offered by the
Separate Account; (ii) if, at any time, the authorizations, licenses,
qualifications or registrations required to be maintained by any of the
parties to this Agreement in connection with the performance of its
respective duties under this Agreement lapse or cease to remain in full
force and effect; or (iii) if, due to changes in the laws or for other
reasons, any action to be taken or service to be provided under this
Agreement should become unlawful.
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(f) Notwithstanding any termination of this Agreement, the
Fund shall at the option of the Company, continue to make available
additional shares of the Portfolio(s) pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (the "Existing
Contracts"), unless, with respect to a Portfolio, such further sale of
Portfolio shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the
Portfolio following termination of this Agreement is in the best
interests of the Portfolio. Specifically, subject to the foregoing,
Contract Owners that own Existing Contracts shall be permitted to
redeem shares of the Portfolio(s) and/or purchase shares of the
Portfolio(s) upon the making of additional purchase payments under the
Existing Contracts. In such event, the Company shall continue to serve
as an agent of the Fund for the limited purpose of receiving such
purchase and redemption orders in accordance with the Procedures.
Section 18. Severability. If any provision of this Agreement is or
becomes inconsistent with any applicable law or rule, the provision will be
deemed rescinded or modified to the extent necessary to comply with such law or
rule. In all other respects this Agreement will continue in full force and
effect.
Section 19. Waiver. No term of this Agreement may be waived or changed
except in writing signed by each party. Failure to insist on strict compliance
with this Agreement or with any of its terms or any continued conduct will not
be considered a waiver by any party of its rights under the Agreement. This
Agreement contains the entire understanding between the parties.
Section 20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be an original and all of which together will
be deemed one and the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers as of the day and
year first above written.
Attest: THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:
---------------------------------- --------------------------------
Title:
-----------------------------
Attest: MAS FUNDS
By:
---------------------------------- --------------------------------
Title:
-----------------------------
Attest: MAS FUND DISTRIBUTION, INC.
By:
---------------------------------- --------------------------------
Title:
-----------------------------
Attest: MILLER ANDERSON & SHERRERD, LLP
By:
---------------------------------- --------------------------------
Title:
-----------------------------
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EXHIBIT A
SEPARATE ACCOUNTS/CONTRACT(S)/PORTFOLIOS
<TABLE>
<CAPTION>
SEPARATE ACCOUNTS: FORM NUMBER AND NAME OF CONTRACT(S)
----------------- -----------------------------------
<S> <C>
The Variable Annuity Life Insurance [INSERT]
Company Separate Account A
PORTFOLIOS:
-----------
MAS Funds Mid Cap Growth Portfolio
Adviser Class shares
</TABLE>
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EXHIBIT B
OPERATING PROCEDURES
Unless otherwise defined below, all capitalized terms have the meanings
specified in the Agency Agreement of which this Exhibit is a part.
A. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each Portfolio, the
Fund will provide the Company with (i) the net asset value per share of the
Portfolio determined as of the Close of Trading (the "Share Price") on each
Business Day; (ii) dividend and capital gains distribution information on
ex-date, but no later than the first Business Day following each ex-date
established for the payment of dividends or capital gains distributions by the
Portfolio; and (iii) in the case of fixed income and money market Portfolios
which declare dividends daily, the daily accrual interest rate factor. The Fund
will use its best efforts to communicate such information to the Company or its
designee by 6:30 p.m. Eastern Time each Business Day; however, the Fund reserves
the right to communicate the Share Price at a time later than 6:30 p.m. Eastern
Time due to extraordinary or unforeseen circumstances.
B. TRANSMITTAL OF INSTRUCTIONS. The Company agrees that, unless otherwise agreed
to in writing with the Fund, Instructions derived from Contract Owner-level
transactions received by the Company prior to the Close of Trading on any
Business Day ("Day 1") will be transmitted to the Transfer Agent by facsimile no
later than 10:00 a.m. Eastern Time on the following Business Day ("Day 2") (such
Instructions are referred to as "Day 1 Trades"). Each transmission by the
Company of a net purchase and redemption order relating to a Business Day will
constitute a representation by the Company that such net order was based on
Contract Owner-level transactions received and accepted by the Company in good
order prior to the Close of Trading on that Business Day, and that the net order
included all such Contract Owner-level transactions so received by the Company.
All Instructions transmitted to the Transfer Agent will be communicated in U.S.
dollars and will indicate the date of the transaction. On Business Days where
there are no Instructions, or where the net dollar amount for purchases and
redemptions for the Separate Account equals zero, the communication will so
indicate. The Company acknowledges that certain cash flows may be known on or
before a trade date, and the Company agrees to use its reasonable efforts to
notify the Transfer Agent of such cash flows before such trade date.
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C. PRICING OF ORDERS. Day 1 Trades communicated to the Transfer Agent by 10:00
a.m. Eastern Time on Day 2 will be effected at the Share Price for the
applicable Portfolio on Day 1.
D. SETTLEMENT.
1. PURCHASE ORDERS. In the case of Day 1 Trades that constitute a net
purchase order, the Company will arrange for a federal funds wire
transfer of the net purchase amount to a custodial account designated
by the Fund by 5:00 p.m. Eastern Time on Day 2.
2. REDEMPTION ORDERS. In the case of Day 1 Trades that constitute a net
redemption order, the Fund will arrange for a federal funds wire
transfer of the net redemption amount to a custodial account designated
by the Company by 5:00 p.m. Eastern Time on Day 2, or in no instance
later than the time provided for in the applicable Portfolio's
Prospectus.
3. GENERALLY. Settlements will be in U.S. dollars. On any Business Day
when the Federal Reserve Wire Transfer System is closed, all
communication and processing rules for the settlement of Instructions
stated herein will be suspended. Instructions will be settled on the
next Business Day on which the Federal Reserve Wire Transfer System is
open. Transactions that are the subject of such Instructions will be
processed at the Share Price for the applicable Portfolio on the
Business Day to which the Instructions originally relate.
E. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund will furnish the Company or its
designee same day notice of any dividends or other distributions payable on the
shares of each Portfolio. Dividends and distributions with respect to a
Portfolio will be automatically reinvested in additional shares of the Portfolio
held by the Separate Account, and the Fund will notify the Company or its
designee as to the number of shares so issued, provided however, that if the
Company has established a Cash Account (for the shares held by the Separate
Account), all dividends and distributions with respect to a Portfolio will be
paid in cash by the Fund to the Company.
F. CONFIRMATION AND VERIFICATION. The Fund will cause the Transfer Agent to
deliver to the Company: (i) confirmations of Instructions received from the
Company, and (ii) a statement for the preceding calendar month reflecting the
shares of each Portfolio held by the Separate Account as of the end of such
preceding month and all purchases and redemptions by the Separate Account of
shares of a Portfolio during such preceding month. The Company will promptly on
receipt of any confirmation or statement concerning an Account verify the
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information contained therein against the information contained on the Company's
record-keeping system and immediately advise the Transfer Agent in writing of
any discrepancies between such information. The Fund and the Company will
cooperate to resolve any such discrepancies as soon as reasonably practicable.
G. ERRORS AND ADJUSTMENTS.
Correcting Net Asset Value Errors. If the Fund provides materially
incorrect net asset value information with regard to the Portfolio(s) through no
fault of the Company, the Company shall be entitled to an adjustment with
respect to shares of the Portfolio(s) purchased or redeemed to reflect the
correct net asset value per share. The determination of the materiality of any
net asset value pricing error shall be based on the Security and Exchange
Commission's (the "SEC") recommended guidelines regarding such errors. The
correction to any such errors shall be made at the Account level and shall be
made pursuant to the SEC's recommended guidelines. Any material error in the
calculation or reporting of net asset value per share, dividend or capital gain
information shall be reported promptly to the Company.
Processing Adjustments. In the event of any error or delay with respect
to these Procedures that is caused by the Fund or the Transfer Agent, the Fund
will make any adjustments on its (or the Transfer Agent's) accounting system
necessary to correct such error or delay. In the event of any error or delay
with respect to these Procedures that is caused by the Company, upon written
notice from the Company, the Fund will make any adjustments on its (or the
Transfer Agent's) accounting system necessary to correct such error or delay.
The Company will make the corresponding adjustments on its record-keeping
system. The Company and the Fund will each provide the other with prompt notice
of any errors or delays of the type referred to in these Procedures.
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EXHIBIT C
The shares of each Portfolio identified on Exhibit A are registered or
otherwise authorized for sale in all states.
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EXHIBIT D
Notices required by the Agreement should be sent as follows:
If to the Company: The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019
Attn.: General Counsel
Phone: (713) 526-5251/Fax: (713) 831-1106
If to the Fund: MAS Funds
One Tower Bridge
West Conshohocken, PA 19428-2899
Attn.: MAS Funds President
Phone: (610) 940-5065/Fax: (610) 940-0652
If to the Distributor: MAS Fund Distribution, Inc.
One Tower Bridge
West Conshohocken, PA 19428
Attn: President of MASDI
Phone: (610) 940-5065/Fax: (610) 940-0652
If to the Adviser: Miller Anderson & Sherrerd, LLP
One Tower Bridge
West Conshohocken, PA 19428
Attn: Lorraine Truten,
Phone: (610) 940-565/Fax: (610) 940-0652
with a copy to: Morgan Stanley Dean Witter Investment
Management
Attention: General Counsel
1221 Avenue of the Americas
New York, NY 10020
If to the Transfer Agent: Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attn: MAS Funds Team
Phone: (800) 548-7786/Fax: (617) 557-8697
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