-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHXjU2q/otBrNApjKLOkfZ33LgvbqjNJ4mcdSfCzLh6YZC0YFSKj3qFI2CIujkLH M8mqPI9gSr1+gAJtC+Gr+A== 0000815425-98-000006.txt : 19980528 0000815425-98-000006.hdr.sgml : 19980528 ACCESSION NUMBER: 0000815425-98-000006 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19980527 EFFECTIVENESS DATE: 19980527 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEINROE VARIABLE INVESTMENT TRUST CENTRAL INDEX KEY: 0000815425 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-14954 FILM NUMBER: 98632018 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05199 FILM NUMBER: 98632019 BUSINESS ADDRESS: STREET 1: ONE SOUTH WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123687842 MAIL ADDRESS: STREET 1: ONE SOUTH WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: STEINROE VARIABLE INVESTMENT FUND DATE OF NAME CHANGE: 19890327 485BPOS 1 File No. 33-14954 File No. 811-5199 - ---------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ PRE-EFFECTIVE AMENDMENT NO. / / POST-EFFECTIVE AMENDMENT NO. 14 /X/ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ AMENDMENT NO. 16 /X/ (check appropriate box or boxes) STEINROE VARIABLE INVESTMENT TRUST (Exact Name of Registrant as Specified in Charter) Federal Reserve Plaza, 600 Atlantic Avenue, Boston, Massachusetts 02210 (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (617) 722-6000 It is proposed that this filing become effective (check appropriate box) [X] immediately upon filing pursuant to paragraph (b) of Rule 485 [ ] on [date] pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485 [ ] on [date] pursuant to paragraph (a)(i) of Rule 485 [ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485 [ ] on [date]pursuant to paragraph (a)(ii) of Rule 485 JOHN A. BENNING, ESQ. Senior Vice President and General Counsel Liberty Financial Companies, Inc. Federal Reserve Plaza 600 Atlantic Avenue Boston, MA 02210 (Name and Address of Agent for Service) The Registrant has registered an indefinite number of shares of beneficial interest of all existing and subsequently created Series of the Trust under the Securities Act of 1933 pursuant to Rule 24f-2. STEINROE VARIABLE INVESTMENT TRUST CROSS REFERENCE SHEET (as required by Rule 481(a)) PART A FORM N-1A LOCATION 1. Cover Page Cover Page 2. Synopsis The Trust 3. Condensed Financial Financial Highlights; Information Investment Return 4. General Description of Cover Page; The Trust; How Registrant the Funds Invest; Investment Techniques and Restrictions; Portfolio Turnover; How the Funds are Managed; Organization and Description of Shares; Appendix A: Investment Techniques and Securities 5. Management of the Fund How the Funds are Managed 5A. Management's Discussion of Information required by Fund Performance Item 5A is included in the Registrant's Annual Report for the year ended December 31, 1997. As required by said Item 5A, the Registrant undertakes under "Financial Highlights" in the Prospectuses to provide free of charge a copy of said Annual Report to persons requesting the same. 6. Capital Stock and Other The Trust; Purchases and Securities Redemptions; Net Asset Value; Taxes; Dividends and Distributions; Shareholder Communications; Organization and Description of Shares; Appendix A: Investment Techniques and Securities 7. Purchase of Securities How the Funds are Managed; Being Offered Purchases and Redemptions; Net Asset Value 8. Redemption or Repurchase Purchases and Redemptions 9. Pending Legal Proceedings Not Applicable PART B FORM N-1A LOCATION 10. Cover Page Cover Page 11. Table of Contents Table of Contents 12. General Information and Commencement of Operations; Mixed History and Shared Funding 13. Investment Objectives and Investment Restrictions; Appendix Policies A: Investment Techniques and Securities 14. Management of the Fund Trustees and Officers; Management Arrangements 15. Control Persons and Record Shareholders Principal Holders of Securities 16. Investment Advisory and Management Arrangements; Other Services Custodian; Independent Auditors and Financial Statements 17. Brokerage Allocation and Portfolio Transactions other Practices 18. Capital Stock and Other Investment Restrictions; Securities Purchases and Redemptions; Net Asset Value; Appendix A: Investment Techniques and Securities 19. Purchase, Redemption and Investment Restrictions; Pricing of Securities Purchases and Redemptions; Net Being Offered Asset Value; Investment Performance 20. Tax Status Taxes (Part A) 21. Underwriters Purchases and Redemptions (Part A) 22. Calculation of Investment Performance Performance Data 23. Financial Statements The financial statements required by Item 23 are incorporated by reference from the Registrant's Annual Report for the year ended December 31, 1997 and are included in Part B. PART C Information required to be set forth in Part C is set forth under the appropriate item, so numbered, in Part C of the Registration Statement. The prospectuses and statements of additional information relating to the series of SteinRoe Variable Investment Trust (Stein Roe Special Venture Fund, Variable Series; Stein Roe Growth Stock Fund, Variable Series; Stein Roe Balanced Fund, Variable Series; Stein Roe Mortgage Securities Fund, Variable Series; and Stein Roe Money Market Fund, Variable Series Fund) are not affected by the filing of this Post-Effective Amendment No. 14. PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Index to Financial Statements and Supporting Schedules: The following financial statements for each of the Funds in the Trust are included below in this Part C: Independent Auditors' Report Schedules of Investments as of December 31, 1997 Statements of Assets and Liabilities as of December 31, 1997 Statements of Operations for the year ended December 31, 1997 Statements of Changes in Net Assets for each of the years in the two-year period ended December 31, 1997 Financial Highlights for each of the years in the five-year period ended December 31, 1997 Said financial statements are included incorporated by reference into this filing as part of Part B. (b) Exhibits: 1. Agreement and Declaration of Trust as amended on September 9, 1988 and October 5, 1988 (3) 2. Amended and Restated By-Laws (3) 3. None 4. Not applicable. 5. (a) Fund Advisory Agreement, dated May 1, 1993, between the Trust on behalf of the Capital Appreciation Fund (now named Stein Roe Special Venture Fund, Variable Series) and Stein Roe & Farnham Incorporated (3) (b) Fund Advisory Agreement, dated May 1, 1993, between the Trust on behalf of the Managed Growth Stock Fund (now named Stein Roe Growth Stock Fund, Variable Series) and Stein Roe & Farnham Incorporated (3) (c) Fund Advisory Agreement, dated May 1, 1993, between the Trust on behalf of the Managed Assets Fund (now named Stein Roe Balanced Fund, Variable Series) and Stein Roe & Farnham Incorporated (3) (d) Fund Advisory Agreement, dated May 1, 1993, between the Trust on behalf of the Mortgage Securities Income Fund (now named SteinRoe Mortgage Securities Fund, Variable Series) and Stein Roe & Farnham Incorporated (3) (e) Fund Advisory Agreement, dated December 9, 1988, between the Trust on behalf of the Cash Income Fund (now named Stein Roe Money Market Fund, Variable Series) and Stein Roe & Farnham Incorporated (3) 6. Underwriting Agreement dated December 9, 1988 between Keystone Provident Financial Services Corp. (now Keyport Financial Services Corp.) and the Trust; and Amendment to Underwriting Agreement dated as of April 1, 1994 between Keyport Financial Services Corp. and the Trust (3) 7. None 8. (a) Custodian Contract dated December 31, 1988 between State Street Bank and Trust Company and SteinRoe Variable Investment Trust (b) First Amendment to Custodian Contract dated February 23, 1989 (c) Second Amendment to Custodian Contract dated January 23, 1993 9. (a) Administration Agreement dated as of January 3, 1995 between the Trust, on behalf of each of its Funds, and Stein Roe & Farnham Incorporated (b) Transfer Agency Agreement dated as of January 3, 1995 between the Trust, on behalf of each of its Funds, and Stein Roe & Farnham Incorporated (c) Amended and Restated Participation Agreement dated April 3, 1998 among the Trust, Keyport Life Insurance Company and Keyport Financial Services Corp. (3) (d) Participation Agreement dated as of October 1, 1993 among the Trust, Keyport Financial Services Corp. and Independence Life Annuity Company (formerly "Crown America Life Insurance Company") (e) Participation Agreement dated as of April 15, 1994 among the Trust, on behalf of the Capital Appreciation Fund, Transamerica Occidental Life Insurance Company, Stein Roe & Farnham Incorporated and Charles Schwab & Co., Inc. (f) Participation Agreement dated as of December 1, 1994 among the Trust, on behalf of the Capital Appreciation Fund, First Transamerica Life Insurance Company, Stein Roe & Farnham Incorporated and Charles Schwab & Co., Inc. (g) Accounting and Bookkeeping Agreement dated as of January 3, 1995 between the Trust, on behalf of each of its Funds, and Stein Roe Farnham Incorporated (h) Participation Agreement among the Trust, on behalf of the Capital Appreciation Fund, Great-West Life & Annuity Insurance Company, Stein Roe & Farnham Incorporated and Charles Schwab & Co., Inc. (2) (i) Participation Agreement among the Trust, on behalf of the Capital Appreciation Fund, Providian Life and Health Insurance Company and Stein Roe & Farnham Incorporated. (2) (j) Participation Agreement dated May 8, 1998 among the Trust, Keyport Benefit Life Insurance Company, and Keyport Financial Services Corp. 10. Opinion and consent of counsel as to the legality of the securities being registered (3) 11. None 12. Not applicable 13. Not applicable 14. Not applicable 15. Not applicable 16. Calculation of Yields and Total Returns (1) 17. Financial Data Schedules 18. Not applicable 19. (a) Power of Attorney executed by each Trustee of the Trust pertaining to this Registration Statement (3) (b) Power of Attorney executed by Gary A. Anetsberger and Sharon R. Robertson pertaining to this Registration Statement (3) _________________ (1) Incorporated by Reference to Post-Effective Amendment No. 11 to this Registration Statement, filed April, 1996. (2) Incorporated by References to Post-Effective Amendment No. 12 to this Registration Statement, filed April, 1997. (3) Incorporated by Reference to Post-Effective Amendment No. 13 to this Registration Statement, filed April, 1998. Item 25. Persons Controlled by or Under Common Control with Registrant. Shares of the Trust registered pursuant to this Registration Statement will be offered and sold to Keyport Life Insurance Company ("Keyport"), a stock life insurance company organized under the laws of Rhode Island, and to certain of its separate investment accounts and the respective separate investment accounts of Liberty Life Assurance Company of Boston ("Liberty Life"), a stock life insurance company organized as a Massachusetts corporation, Independence Life & Annuity Company, a stock life insurance company organized under the laws of Rhode Island ("Independence") and American Benefit Life Insurance Company, a stock life insurance company organized under the laws of New York. As described below, Keyport, Liberty Life, Independence and American Benefit are under common control. The purchasers of insurance contracts and policies issued in connection with such accounts will have the right to instruct Keyport, Liberty Life, Independence and American Benefit with respect to the voting of the Registrant's shares held by their respective separate accounts. Subject to such voting instruction rights, Keyport, Liberty Life, Independence, American Benefit and their respective separate accounts directly control the Registrant. In addition, shares of Stein Roe Special Venture Fund, Variable Series currently are sold to certain separate accounts of four insurance companies not affiliated with Keyport, and shares of any of the Funds may in the future be sold to separate accounts of other unaffiliated insurance companies. Keyport Financial Services Corp. ("KFSC"), the Trust's principal underwriter, Stein Roe & Farnham Incorporated, the Trust's investment manager (the "Adviser"), Keyport, Independence are and American Benefit each wholly owned indirect subsidiaries of Liberty Financial Companies, Inc. ("LFC"), Boston, Massachusetts. As of March 31, 1997, Liberty Mutual Insurance Company ("LMIC"), Boston, Massachusetts, owned, indirectly, approximately 72.3% of the combined voting power of the outstanding voting stock LFC (with the balance being publicly- held). Liberty Life is a 90%-owned subsidiary of LMIC. Item 26. Number of Holders of Securities As of March 31, 1998 the number of record holders of shares of beneficial interest of each series ("Fund") of the Trust was as follows: Title of Class Number of Record Shares of Beneficial Interest of Holders - ---------------------------------------------- --------------- Stein Roe Special Venture Fund, Variable Series 11 Stein Roe Growth Stock Fund, Variable Series 5 Stein Roe Balanced Fund, Variable Series 4 Stein Roe Mortgage Securities Fund, Variable Series 5 Stein Roe Money Market Fund, Variable Series 7 Item 27. Indemnification Article Tenth of the Agreement and Declaration of Trust of Registrant (Exhibit 1), which Article is incorporated herein by reference, provides that Registrant shall provide indemnification of its trustees and officers (including each person who serves or has served at Registrant's request as director, officer, or trustee of another organization in which Registrant has any interest as a shareholder, creditor or otherwise) ("Covered Persons") under specified circumstances. Section 17(h) of the Investment Company Act of 1940 ("1940 Act") provides that neither the Agreement and Declaration of Trust nor the By-Laws of Registrant, nor any other instrument pursuant to which Registrant is organized or administered, shall contain any provision which protects or purports to protect any trustee or officer of Registrant against any liability to Registrant or its shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. In accordance with Section 17(h) of the 1940 Act, Article Tenth shall not protect any person against any liability to Registrant or its shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. To the extent required under the 1940 Act, (i) Article Tenth does not protect any person against any liability to Registrant or to its shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office; (ii) in the absence of a final decision on the merits by a court or other body before whom a proceeding was brought that a Covered Person was not liable by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office, no indemnification is permitted under Article Tenth unless a determination that such person was not so liable is made on behalf of Registrant by (a) the vote of a majority of the trustees who are neither "interested persons" of Registrant as defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding ("disinterested, non-party trustees"), or (b) an independent legal counsel as expressed in a written opinion; and (iii) Registrant will not advance attorneys' fees or other expenses incurred by a Covered Person in connection with a civil or criminal action, suit or proceeding unless Registrant receives an undertaking by or on behalf of the Covered person to repay the advance (unless it is ultimately determined that he is entitled to indemnification) and (a) the Covered Person provides security for his undertaking, or (b) Registrant is insured against losses arising by reason of any lawful advance, or (c) a majority of the disinterested, non-party trustees of Registrant or an independent legal counsel as expressed in a written opinion, determine, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the Covered Person ultimately will be found entitled to indemnification. Any approval of indemnification pursuant to Article Tenth does not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with Article Tenth as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in, or not opposed to, the best interests of Registrant or to have been liable to Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of such Covered Person's office. Article Tenth also provides that its indemnification provisions are not exclusive. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer, or controlling person of Registrant in the successful defense of any action, suit, or proceeding) is asserted by such trustee, officer, or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. Registrant, its trustees and officers, its investment adviser, the other investment companies advised by the adviser, and persons affiliated with them are insured against certain expenses in connection with the defense of actions, suits, or proceedings, and certain liabilities that might be imposed as a result of such actions, suits, or proceedings. Registrant will not pay any portion of the premiums for coverage under such insurance that would (1) protect any trustee or officer against any liability to Registrant or its shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office or (2) protect its investment adviser or principal underwriter, if any, against any liability to Registrant or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence, in the performance of its duties, or by reason of its reckless disregard of its duties and obligations under its contract or agreement with the Registrant; for this purpose the Registrant will rely on an allocation of premiums determined by the insurance company. In addition, the investment adviser maintains investment advisory professional liability insurance to insure it, for the benefit of the Trust and its non-interested trustees, against loss arising out of any error, omission, or breach of any duty owed to the Trust or the Fund by the investment advisor. Item 28. Business and Other Connections of Investment Adviser. The Adviser is a direct wholly owned subsidiary of SteinRoe Services Inc. ("SSI"), which in turn, is a direct wholly owned subsidiary of LFC. LFC, as stated in Item 25 above, is an indirect majority owned subsidiary of LMIC. The Adviser acts as investment adviser to individuals, trustees, pension and profit- sharing plans, charitable organizations, and other investors. In addition to the Registrant, it also acts as investment adviser to other no-load companies having different investment policies. For a two-year business history of officers and directors of the Adviser, please refer to the Form ADV of Stein Roe & Farnham Incorporated and to the section of the Statement of Additional Information (Part B) entitled "Investment Advisory Services." Certain directors and officers of the Adviser also serve and have during the past two years served in various capacities as officers, directors or trustees of the Registrant (as reflected in the Statement of Additional Information (Part B)) or other investment companies managed by the Adviser. Item 29. Principal Underwriters (a) The Registrant's principal underwriter, Keyport Financial Services Corp. ("KFSC"), is a wholly owned subsidiary of Keyport Life Insurance Company, which in turn is a direct wholly owned indirect subsidiary of SSI, which in turn is a direct wholly owned subsidiary of LFC. KFSC acts on a "best efforts" basis and receives no fee or commission for its underwriting and distribution services. KFSC does not act as underwriter with respect to shares issued to Participating Insurance Companies which are not affiliates of Keyport or LMIC. (b) Set forth below is information concerning the directors and officers of KFSC: Positions and Offices Positions and Offices Name with Underwriter with Registrant John S. Rosensteel Chairman and President None William L. Dixon Vice President--Compliance None Francis E. Reinhart Vice President--Administration None and Director James J. Klopper Clerk None Donald A. Truman Assistant Clerk None The business address of each of the directors and officers of KFSC is 125 High Street, Boston, Massachusetts 02110. (c) Not applicable. Item 30. Location of Accounts and Records Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder include Registrant's Secretary, John A. Benning; Registrant's investment adviser, administrator and transfer and dividend disbursing agent, Stein Roe & Farnham Incorporated; Registrant's principal underwriter, Keyport Financial Services Corp.; and Registrant's custodian, State Street Bank and Trust Company. The address of the Secretary is 600 Atlantic Avenue, Boston, MA 02210-2214; the address of Stein Roe & Farnham Incorporated is One South Wacker Drive, Chicago, IL 60606; the address of Keyport Financial Services, Inc., is 125 High Street, Boston, MA 02110; and the address of State Street Bank and Trust Company is 225 Franklin Street, Boston, MA 02110. Item 31. Management Services Pursuant to an Administration Agreement with the Registrant on behalf of all the Funds dated as of January 3, 1995, the Adviser provides each of the Funds with administrative services. These services include the provision of office space and equipment and facilities in connection with the maintenance of the Registrant's headquarters, preparation and filing of required reports, arrangements for meetings, maintenance of the Registrant's corporate books and records, communication with shareholders, and oversight of custodial, accounting and other services provided to the Funds by others. The Adviser pays all compensation of the Registrant's trustees, officers and employees who are employees of the Adviser. The Adviser may, in its discretion, arrange for such services to be provided by LFC or any of its subsidiaries. Under separate agreements, the Adviser also acts as the agent of the Funds for the transfer of shares, disbursement of dividends and maintenance of shareholder account records and for pricing and bookkeeping services. Item 32. Undertakings (a) Not applicable. (b) Not applicable. (c) The Registrant hereby undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and the Commonwealth of Massachusetts, on the 27th day of May , 1998. The Registrant hereby certifies, in accordance with Rule 485(b)(4) under the Securities Act of 1933, that this amendment meets the requirements for effectiveness under Rule 485(b) thereunder. STEINROE VARIABLE INVESTMENT TRUST By: /s/ Richard R. Christensen* Richard R. Christensen, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form N-1A has been signed below by the following persons in the capacities and on the dates indicated. (Signature) (Title and Capacity) (Date) /s/ Richard R. Christensen* President; Principal May 27, 1998 Richard R. Christensen Executive Officer; Trustee /s/ Gary A. Anetsberger* Treasurer; Principal May 27, 1998 Gary A. Anetsberger Financial Officer /s/ Sharon R. Robertson* Controller; Principal May 27, 1998 Sharon R. Robertson Accounting Officer /s/ John A. Bacon Jr.* Trustee May 27, 1998 John A. Bacon Jr. /s/ Salvatore Macera * Trustee May 27, 1998 Salvatore Macera /s/ Thomas E. Stitzel* Trustee May 27, 1998 Thomas E. Stitzel *By KEVIN M. CAROME Kevin M. Carome Attorney-in-fact EXHIBIT LIST Exhibit Description 8(a) Custodian Contract dated December 31, 1988 8(b) First Amendment to Custodian Contract dated February 23, 1989 8(c) Second Amendment to Custodian Contract dated January 23, 1993 9(a) Administration Agreement dated as of January 3, 1995 9(b) Transfer Agency Agreement dated as of January 3, 1995 9(d) Participation Agreement dated as of October 1, 1993 9(e) Participation Agreement dated as of April 15, 1994 9(f) Participation Agreement dated as of December 1, 1994 9(g) Accounting and Bookkeeping Agreement dated as of January 3, 1995 9(j) Participation Agreement dated May 8, 1998 17 Financial Data Schedules EX-99 2 EX-99.B8A CUST CONTR CUSTODIAN CONTRACT Between STEINROE VARIABLE INVESTMENT TRUST and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS 1. Employment Of Custodian and Property to be Held By It ............................................2 2. Duties of the Custodian with Respect to Property of the Fund Held by the Custodian......................3 2.1 Holding Securities...............................3 2.2 Delivery of Securities ..........................3 2.3 Registration of Securities ......................8 2.4 Bank Accounts ...................................9 2.5 Payment for Shares .............................10 2.6 Availability of Federal Funds ..................10 2.7 Collection of Income ...........................11 2.8 Payment of Fund Monies .........................12 2.9 Liability for Payment in Advance of Receipt of Securities Purchased ................15 2.10 Payments for Repurchases or Redemptions of Shares of the Fund ..........................15 2.11 Appointment of Agents ..........................16 2.12 Deposit of Fund Assets in Securities System ....16 2.12A Fund Assets Held in the Custodian's Direct Paper System....................................20 2.13 Segregated Account .............................21 2.14 Ownership Certificates for Tax Purposes ........23 2.15 Proxies ........................................23 2.16 Communications Relating to Portfolio Securities ...........................23 2.17 Authorized Persons .............................24 2.18 Proper Instructions ............................25 2.19 Actions Permitted Without Express Authority ....26 2.20 Evidence of Authority ..........................26 2.21 Affiliation Between Fund and Custodian..........27 2.22 Persons Having Access to Assets of the Portfolios .....................................28 3. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value and Net Income .........................................29 4. Records ..............................................29 5. Opinion of Fund's Independent Accountants ............30 6. Reports to Fund by Independent Public Accountants ....30 7. Compensation of Custodian ............................31 8. Responsibility of Custodian ......................... 31 9. Effective Period, Termination and Amendment ..........33 10. Successor Custodian ..................................34 11. Interpretive and Additional Provisions ...............36 12. Additional Funds .....................................36 13. Massachusetts Law to Apply ...........................37 14. Prior Contracts ......................................37 CUSTODIAN CONTRACT This Contract between SteinRoe Variable Investment Trust, a business trust organized and existing under the laws of the Commonwealth of Massachusetts and having its principal office at 600 Atlantic Avenue, Boston, Massachusetts, hereinafter called the "Fund", and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110, hereinafter called the "Custodian", WITNESSETH: WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in the thirteen separate series listed in Appendix A hereto (such series together with all other series subsequently established by the Fund and made subject to this Contract in accordance with paragraph 12, being herein referred to as the "Portfolio(s)"); WHEREAS, the Custodian is qualified to act as Custodian for registered investment companies under the Investment Company Act of 1940 and the applicable rules hereunder; NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It The Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund pursuant to the provisions of the Declaration of Trust of the Fund and subject to the provisions hereof. The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of beneficial interest in the Fund representing interests in the Portfolios ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Fund and not delivered to the Custodian. Upon receipt of "Proper Instructions" (within the meaning of Section 2.18), the Custodian shall on behalf of the applicable Portfolio(s) from time to time employ one or more sub-custodians, but only in accordance with an applicable vote by the Board of Trustees of the Fund on behalf of the applicable Portfolio(s), and provided that the Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian. 2. Duties of the Custodian with Respect to Property of the Fund Held by the Custodian 2.1 Holding Securities. The Custodian shall hold and physically segregate for the separate account of each Portfolio all non-cash property, including all securities, owned by such Portfolio other than (a) securities which are maintained pursuant to Section 2.12 in a clearing agency which acts as a securities depository or in a book- entry system authorized by the U.S. Department of the Treasury, collectively referred to herein as "Securities System," and (b) (subject to prior receipt of Proper Instructions) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian pursuant to Section 2.12A. 2.2 Delivery of Securities. The Custodian shall release and deliver securities owned by a Portfolio held by the Custodian or in a Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: (1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor; (2) Upon repurchase of securities held by the Portfolio, subject to a repurchase agreement after receipt by the Custodian, as Custodian and not as the other party to the repurchase agreement, of payment for such securities in accordance with the terms of the repurchase agreement; (3) In the case of a sale effected through a Securities System, in accordance with the provisions of Section 2.12 hereof; (4) To the depository agent in connection with tender or other similar offers for portfolio securities of the Portfolio; (5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; (6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.11 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; (7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; (8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization, or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; (9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; (10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral; (11) For delivery as security in connection with any borrowings by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed; (12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of the National Association of Securities Dealers ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of Fund; (13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund; (14) Upon receipt of instructions from the transfer agent ("Transfer Agent") for the Fund, for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information, related to the Portfolio ("Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and (15) For any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities of the Portfolio to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom delivery of such securities shall be made. 2.3 Registration of Securities. Securities held by the Custodian for the account of a Portfolio (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.11 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by the Custodian on behalf of the Portfolio under the terms of this Contract shall be in "street name" or other good delivery form. 2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the name of each Portfolio of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act of 1940 and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board of Trustees of the Fund. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.5 Payments for Shares. The Custodian shall receive from the distributor for the Shares and deposit into the account of the applicable Portfolio such payments as are received for Shares of that Portfolio issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio. 2.6 Availability of Federal Funds. Upon mutual agreement between the Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from the Fund on behalf of a Portfolio, make federal funds available to such Portfolio as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Portfolio which are deposited into the Portfolio's account. 2.7 Collection of Income. The Custodian shall collect on a timely basis, whether upon maturity, call, redemption or retirement prior thereto, all income, principal and other payments with respect to registered securities held hereunder to which the Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis, whether upon maturity, call, redemption or retirement prior thereto, all income, principal and other payments with respect to bearer securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent, and shall credit such income, principal and other payments as collected, to such Portfolio's account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest and principal when due on securities held hereunder. Income due the Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled. 2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, from the Fund on behalf of the applicable Portfolio which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only: (1) Upon the purchase of securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities, or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 2.12 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.12A; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker- dealer, or a broker-dealer which is a member of the NASD, upon (i) receipt by the Custodian, as Custodian and not as the other party to the repurchase agreement, of written evidence in form satisfactory to the Fund of the obligation of the Custodian or other bank or broker-dealer to repurchase the underlying securities from the Portfolio; (ii) receipt of the underlying securities if not already held by the Custodian (or appropriate notice from the Securities System that the underlying securities have been transferred to the Custodian's account with the Securities System); (iii) recordation on the Custodian's records of the Portfolio's interest in the underlying securities; and (iv) transmission of a written notice to the Fund that the Custodian, as Custodian and not as the other party to the repurchase agreement is holding the underlying securities on the Portfolio's behalf pursuant to the terms of the repurchase agreement, or (e) for transfer to a time deposit account of the Fund in any bank whether domestic or foreign; if authorized by Proper Instructions, such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Section 2.18; (2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof; (3) For the redemption or repurchase of Shares issued by the Portfolio as set forth in Section 2.10 hereof; (4) For the payment of any expense or liability of or allocable to the Portfolio, including but not limited to the following interest, taxes, management, administrative, accounting, custodial, transfer agent, legal fees, and other operating expenses whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; (5) For the payment of any dividends on Shares of the Portfolio declared pursuant to the governing documents of the Fund; (6) For payment of the amount of dividends received in respect of securities sold short; (7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.9 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of securities for the account of a Portfolio is made by the Custodian in advance of receipt of the securities purchased, in the absence of specific written instructions from the Fund on behalf of such Portfolio to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian. 2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such funds as may be available for the purpose, but subject to the limitations of the Declaration of Trust and any applicable votes of the Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. 2.11 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the Investment Company Act of 1940, as amended, to act as a custodian for a registered investment company, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. 2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit and/or maintain securities owned by a Portfolio in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies, collectively referred to herein as "Securities System" in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: (1) The Custodian may keep securities of the Portfolio in a Securities System provided that such securities are held in an account ("Account") of the Custodian in the Securities System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; (2) The records of the Custodian with respect to securities of the Portfolio which are maintained in a Securities System shall identify by book-entry those securities belonging to the Portfolio; (3) The Custodian shall pay for securities purchased for the account of the Portfolio which are to be held in a Securities System upon (i) receipt of advice from the Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Portfolio. Subject to the other requirements of Section 2.2, the Custodian shall transfer securities sold for the account of the Portfolio which are to be held in a Securities System upon (i) receipt of advice from the Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Portfolio. (4) The Custodian shall provide the Fund for the Portfolio with any report obtained by the Custodian on the Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the Securities System; (5) The Custodian shall have received from the Fund on behalf of the Portfolio the initial or annual certificate, as the case may be, required by Article 9 hereof; (6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage. 2.12A Fund Assets Held in the Custodian's Direct Paper System. The Custodian may deposit and/or maintain securities owned by a Portfolio in the Direct Paper System of the Custodian subject to the following provisions: (1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the Fund on behalf of the Portfolio; (2) The Custodian may keep securities of the Portfolio in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian, or otherwise for customers; (3) The records of the Custodian with respect to securities of the Portfolio which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Portfolio; (4) The Custodian shall pay for securities purchased for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Portfolio; (5) The Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Portfolio; and (6) The Custodian shall provide the Fund on behalf of the Portfolio with any report on its system of internal accounting controls as the Fund may reasonably request from time to time. 2.13 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.12 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other proper corporate purposes, but only, in the case of clause (iv), upon receipt of, in addition to Proper Instructions from the Fund on behalf of the Portfolio, a certified copy of a resolution of the Board of Trustees or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes. 2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to securities of each Portfolio held by it and in connection with transfers of securities. 2.15 Proxies. The Custodian shall, with respect to the securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities. 2.16 Communications Relating to Portfolio Securities. The Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar transaction requiring action on the part of the Portfolio, the Portfolio shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 2.17 Authorized Persons. (a) Authorized Persons shall be deemed to include the President, any Vice President, the Secretary, and the Treasurer of the Fund, or any other person, whether or not any such person is an officer or employee of the Fund, duly authorized by the Board of Trustees of the Fund to give oral instructions and written instructions on behalf of the Fund and listed in the certification annexed hereto as Appendix B or such other certification as may be received by the Custodian from time to time. (b) Annexed hereto as Appendix B is a certification signed by two of the present officers of the Fund setting forth the names and the signatures of the present Authorized Persons. The Fund agrees to furnish to the Custodian a new certification in similar form in the event that any such present Authorized Person ceased to be such an Authorized Person or in the event that other or additional Authorized Persons are elected or appointed. Until such new certification shall be received, the Custodian shall be fully protected in acting upon the provisions of this Contract upon oral instructions or signatures of the present Authorized Persons as set forth in the last delivered certification. 2.18 Proper Instructions. Proper Instructions as used throughout this Article 2 means a writing signed or initialed by one or more Authorized Persons. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by an Authorized Person to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by the Board of Trustees of the Fund accompanied by a detailed description of procedures approved by the Board of Trustees, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Board of Trustees and the Custodian are satisfied that such procedures afford adequate safeguards for the Portfolio's assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three- party agreement which requires a segregated asset account in accordance with Section 2.13. 2.19 Actions Permitted Without Express Authority. The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Portfolio: (1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund on behalf of the Portfolio; (2) surrender securities in temporary form for securities in definitive form; (3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and (4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the Board of Trustees of the Fund. 2.20 Evidence of Authority. The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a vote of the Board of Trustees of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Trustees pursuant to the Declaration of Trust as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 2.21 Affiliation Between the Fund and Custodian. It is understood that the Trustees, officers, employees, agents and shareholders of the Fund, and the officers, directors, employees, agents and shareholders of the Fund's investment advisor, are or may be interested in the Custodian as directors, officers, employees, agents, stockholders, or otherwise, and that the directors, officers, employees, agents or stockholders of the Custodian may interested in the Fund as Trustees, officers, employees, agents, shareholders, or otherwise, or in the investment advisor as officers, directors, employees, agents, shareholders or otherwise. 2.22 Persons Having Access to Assets of the Portfolios. (a) No Trustee, officer, employee or agent of the Fund shall have physical access to the assets of the Fund held by the Custodian or be authorized or permitted to withdraw any investments of the Fund, nor shall the Custodian deliver any assets of the Fund to any such person. No officer or director, employee or agent of the Custodian who holds any similar position with the Fund or the Advisor or Administrator shall have access to the assets of the Fund. (b) Only officers and employees of the Custodian shall have access to the assets of the Fund. Such officers and employees shall be identified by certification signed by a duly authorized officer of the Custodian from time to time. The Custodian shall advise the Fund of any change in the individuals authorized to have access to the assets of the Fund by written notice to the Fund. (c) Nothing in this Section 2.22 shall prohibit any officer, employee or agent of the Fund, or any officer, director, employee or agent of the Advisor or Administrator, from giving oral instructions or written instructions to the Custodian or executing a Certificate so long as it does not result in the delivery of or access to the assets of the Fund prohibited by paragraph (a) of this Section 2.22. 3. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income. The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Trustees of the Fund to keep the books of account of each Portfolio and/or compute the net asset value per share of the outstanding shares of each Portfolio or, if directed in writing to do so by the Fund on behalf of the Portfolio, shall itself keep such books of account and/or compute such net asset value per share. If so directed, the Custodian shall also calculate daily the net income of the Portfolio as described in the Fund's currently effective prospectus related to such Portfolio and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer for the Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of a each Portfolio shall be made in accordance with the valuation procedures and methodology and at the time or times described from time to time in the Fund's currently effective prospectus related to such Portfolio. 4. Records. The Custodian shall create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the Investment Company Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and state tax laws and any other law or administrative rules and procedures which may be applicable to the Fund. All such records shall be the property of the Fund and shall at times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund, Auditors employed by the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 5. Opinion of Fund's Independent Accountant. The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund 's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund 's Form N-1A, and Form N- SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 6. Reports to Fund by Independent Public Accountants. The Custodian shall provide the Fund, on behalf of each of the Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Custodian under this Contract; such reports, which shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund, to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 7. Compensation of Custodian. The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund on behalf of each applicable Portfolio and the Custodian. 8. Responsibility of Custodian. So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties including any futures commission merchant acting pursuant to the terms of a three- party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Notwithstanding the foregoing, the responsibility of the Custodian with respect to redemptions effected by check shall be in accordance with a separate Agreement entered into between the Custodian and the Fund. If the Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money (other than Fund assets) or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund on behalf of the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund or the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian to advance cash or securities for any purpose for the benefit of a Portfolio or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement. 9. Effective Period, Termination and Amendment. This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not with respect to a Portfolio act under Section 2.12 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Trustees of the Fund has approved the initial use of a particular Securities System by such Portfolio and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Trustees has reviewed the use by such Portfolio of such Securities System, as required in each case by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the Custodian shall not with respect to a Portfolio act under Section 2.12A hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Trustees has approved the initial use of the Direct Paper System by such Portfolio and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Trustees has reviewed the use by such Portfolio of the Direct Paper System; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Declaration of Trust, and further provided, that the Fund on behalf of one or more of the Portfolios may at any time by action of its Board of Trustees (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. 10. Successor Custodian. If a successor custodian for the Fund or one or more of the Portfolios shall be appointed by the Board of Trustees of the Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Board of Trustees of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board of Trustees shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act of 1940, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Portfolio and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of vote referred to or of the Board of Trustees to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 11. Interpretive and Additional Provisions. In connection with the operation of this Contract, the Custodian and the Fund on behalf of each Portfolio, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Declaration of Trust of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 12. Additional Funds In the event that the Fund establishes one or more series of Shares in addition to those listed on Appendix A with respect to which it desires to have Custodian render services as Custodian under the terms hereof, it shall so notify Custodian in writing, and if Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 13. Massachusetts Law to Apply. This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 14. Prior Contracts. This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund on behalf of each of the Portfolios and the Custodian relating to the custody of the Fund's assets. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the 31st day of December, 1987. STEINROE VARIABLE INVESTMENT TRUST BY: ERNST E. DUNBAR Attest: JOHN L. DAVENPORT STATE STREET BANK AND TRUST COMPANY BY: GUY R. STURGEON Attest: Vice President Assistant Secretary APPENDIX A Aggressive Stock Fund Cash Income Fund Government Guaranteed Securities Fund Government Securities Zero Coupon Fund Matched Maturity Series 1991 Government Securities Zero Coupon Fund Matched Maturity Series 1993 Government Securities Zero Coupon Fund Matched Maturity Series 1996 Government Securities Zero Coupon Fund Matched Maturity Series 1998 Government Securities Zero Coupon Fund Matched Maturity Series 2001 High Income Bond Fund Investment Grade Bond Fund Managed Assets Fund Managed Growth Stock Fund Mortgage Securities Income Fund EX-99 3 EX-99.B8B CUST CONTR AMENDMENT TO THE CUSTODIAN CONTRACT AGREEMENT made by and between State Street Bank and Trust Company (the "Custodian") and SteinRoe Variable Investment Trust (the "Fund"). WHEREAS, the Custodian and the Fund are parties to a custodian contract dated December 31, 1998 (the "Custodian Contract") governing the terms and conditions under which the Custodian maintains custody of the securities and other assets of the thirteen then authorized separate series("Portfolios") of the Fund; and WHEREAS, the Custodian and the Fund desire to amend the Custodian Contract(i) to add two additional Portfolios, International Stock Fund and Aggressive Managed Assets Fund, and (ii) to provide for the maintenance of the foreign securities of those Portfolios which are permitted to invest the assets (or a portion thereof) in foreign securities, and cash incidental to transactions in such securities, in the custody of certain foreign banking institutions and foreign securities depositories acting as sub-custodians in conformity with the requirements of Rule 17f-5 under the Investment Company Act of 1940; NOW THEREFORE, in consideration of the premises and covenants contained herein, the Custodian and the Fund hereby amend the Custodian Contract by the addition of the following terms and conditions: 1. ADDITION OF PORTFOLIOS The Custodian shall provide services pursuant to the Custodian Contract as amended hereby to the two new Portfolios referred to above, and Appendix A to the Custodian Contract is hereby amended to read in its entirety as attached hereto. 2. APPOINTMENT OF FOREIGN SUB-CUSTODIANS The Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the securities and other assets of the nine Portfolios indicated by an asterisk on Appendix A hereto (the "International Portfolios") maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule B hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 2.18 of the Custodian Contract, together with a certified resolution of the Fund's Board of Directors, the Custodian and the Fund may agree to amend Schedule B hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub- custodian. Upon receipt of Proper Instructions, the Fund may instruct the Custodian to cease the employment of any one or more of such sub- custodians for maintaining custody of the assets of any one or more of the International Portfolios. 3. ASSETS TO BE HELD The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, and (b) cash and cash equivalents in such amounts as the Custodian or the Fund may determine to be reasonably necessary to effect the Fund's foreign securities transactions. 4. FOREIGN SECURITIES DEPOSITORIES Except as may otherwise be agreed upon in writing by the Custodian and the Fund, assets of the International Portfolios shall be maintained in foreign securities depositories only through arrangements implemented by the foreign banking institutions serving as sub- custodians pursuant to the terms hereof. Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 5 hereof. 5. SEGREGATION OF SECURITIES The Custodian shall identify on its books as belonging to each International Portfolio, the foreign securities of that International Portfolio held by each foreign sub-custodian. Each agreement pursuant to which the Custodian employees a foreign banking institution shall require that such institution establish a custody account for the Custodian on behalf of each International Portfolio and physically segregate in that account, securities and other assets of that International Portfolio, and, in the event that such institution deposits that International Portfolio's securities in a foreign securities depository, that it shall identify on its books as belonging to the Custodian, as agent for that International Portfolio, the securities so deposited. 6. AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS Each agreement with a foreign banking institution shall be substantially in the form set forth in Exhibit 1 hereto and shall provide that: (a) each International Portfolio's assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the foreign banking institution or its creditors or agents, except a claim of payment for their safe custody or administration; (b) beneficial ownership of each International Portfolio's assets will be freely transferable without the payment of money or value other than for custody or administration; (c) adequate records will be maintained identifying the assets as belonging to that International Portfolio; (d) officers of or auditors employed by, or other representatives of the Custodian, including to the extent permitted under applicable law the independent public accountants for the Fund, will be given access to the books and records of the foreign banking institution relating to its actions under its agreement with the Custodian; and (e) assets of the International Portfolios held by the foreign sub-custodian will be subject only to the instructions of the Custodian or its agents. 7. ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND Upon request of the Fund, the Custodian will use its best efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian. 8. REPORTS BY CUSTODIAN The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the International Portfolios held by foreign sub-custodians, including but not limited to an identification of entities having possession of each International Portfolio's securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of the International Portfolio, indicating, as to the securities acquired for the International Portfolio, the identity of the entity having physical possession of such securities. 9. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT (a) Except as otherwise provided in paragraph (b) of this Section 8, the provisions of Sections 2.2 and 2.8 of the Custodian Contract shall apply, mutatis mutandis to the foreign securities of the International Portfolio held outside the United States by foreign sub- custodians. (b) Notwithstanding any provision of the Custodian Contract to the contrary, settlement and payment for securities received for the account of an International Portfolio and delivery of securities maintained for the account of an International portfolio may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. (c) Securities maintained in the custody of a foreign sub- custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of the Custodian Contract, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities. 10. LIABILITY OF FOREIGN SUB-CUSTODIANS Each agreement pursuant to which the Custodian employs a foreign banking institution as a foreign sub-custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and the Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. 11. LIABILITY OF CUSTODIAN The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in the Custodian Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 13 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub-custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 11, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or (b) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care. 12. REIMBURSEMENT FOR ADVANCES If the Fund requires the Custodian to advance cash or securities for any purpose including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments claims or liabilities in connection with the performance of this Contract, except such as may arise form its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the Fund shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of the Fund assets to the extent necessary to obtain reimbursement. 13. MONITORING RESPONSIBILITIES The Custodian shall furnish annually to the Fund, during the month of June, information concerning the foreign sub-custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the initial approval of this amendment to the Custodian Contract. In addition, the Custodian will promptly inform the Fund in the event that the Custodian leans of a material adverse change in the financial condition of a foreign sub-custodian or any material loss of the assets of any International Portfolio or in the case of any foreign sub-custodian not the subject of an exemptive order from the Securities and Exchange Commission is notified by any foreign sub-custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles). 14. BRANCHES OF U.S. BANKS (a) Except as otherwise set forth in this amendment to the Custodian Contract, the provisions hereof shall not apply where the custody of the Fund assets is maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the qualification set forth in Section 26(a) of said Act. The appointment of any such branch as sub-custodian shall be governed by paragraph 1 of the Custodian Contract. (b) Cash held for the Fund in the United Kingdom shall be maintained in an interest bearing account established for the Fund with the Custodian's London Branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both. 15. APPLICABILITY OF CUSTODIAN CONTRACT Except as specifically superseded or modified herein, the terms and provisions of the Custodian Contract shall continue to apply with full force and effect. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the 23rd day of February, 1989. STEINROE VARIABLE INVESTMENT TRUST By: RICHARD R. CHRISTENSEN Attest: (Title) President ______________ (Title) STATE STREET BANK AND TRUST COMPANY By: [SIGNATURE] Vice President Attest: [SIGNATURE] Assistant Secretary APPENDIX A Aggressive Managed Assets Fund* Aggressive Stock Fund* Cash Income Fund* Government Guaranteed Securities Fund Government Securities Zero Coupon Fund Matched Maturity Series 1991 Government Securities Zero Coupon Fund Matched Maturity Series 1993 Government Securities Zero Coupon Fund Matched Maturity Series 1996 Government Securities Zero Coupon Fund Matched Maturity Series 1998 Government Securities Zero Coupon Fund Matched Maturity Series 2001 High Yield Bond Fund* International Stock Fund* Investment Grade Bond Fund* Managed Assets Fund* Managed Growth Stock Fund* Mortgage Securities Income Fund* __________ *May invest in foreign securities. SCHEDULE B The following foreign banking institutions and foreign securities depositories have been approved by the Board of Directors of SteinRoe Variable Investment Trust for use as sub-custodians for the Fund's securities and other assets. Country Bank - ------- ----- Australia ANZ Banking Group Ltd. Austria Girozentrale Und Bank Der Osterreichischen Belgium Banque Bruxelles Lambert Canada Canada Trust Company Denmark Den Danske Bank Finland Kansallis-Osake Pankki France Credit Commercial de France Germany Berliner Handels Und Frankfurter Bank Hong Kong Standard Chartered Bank Italy Credito Italiano Japan Sumitomo Trust & Banking Company Limited Netherlands Bank Mees & Hope, N.V. New Zealand Westpac Banking Corp. Norway Christiania Bank Og Kreditkasse Singapore DPS Bank Spain Banco Hispano Americano Sweden Skandinaviska Enskilda Banken Switzerland Union Bank of Switzerland United Kingdom State Street London Limited DEPOSITORIES Austria Oesterreichischen Kontrollbank AG Wertpapiersammelbank beider (OeKB-WSB) Belgium Caisse Interprofessionelle de Depots et de Virements de Titres S.A. (C.I.K.) Denmark Vaerdipapircentralen (VP-Centralen) France Societe Interprofessionnelle pour la Compensation des Valeurs Mibilieres (SICOVAM) Germany Kassenverein Italy Monte Titoli, SpA Netherlands Netherlands Clearing Institute for Giro Securities Deliveries (NECIGEF) Switzerland Schweizerische Effekten Giro A.G.(SEGA) - -------------------------- EuroClear (Brussels, Belgium) Cedel (Luxembourg) EX-99 4 EX-99.B8C CUST CONTR LIBERTY FINANCIAL Liberty Investment Services, Inc. Federal Reserve Plaza 600 Atlantic Avenue Boston, MA 02210-2214 617-722-6000 January 22, 1993 State Street Bank & Trust Co. Attn: R. H. La Fleur Fiduciary Control A2N 1776 Heritage Drive N. Quincy, MA 02171 RE: SteinRoe Variable Investment Trust Dear Mr. La Fleur: This is to advise you that SteinRoe Variable Investment Trust has established a new series of shares to be known as Managed Income Fund. In accordance with the Additional Funds provision in Section 12 of the Custodian Contract dated December 31, 1988 between the Fund and State Street Bank and Trust Company, the Fund hereby requests that you act as Custodian for Managed Income Fund and render to the Series such services as Custodian as are provided under the terms of the Contract. Please acknowledge your agreement to the foregoing by executing two copies of this letter, returning one to the Fund and retaining one copy for your records. SteinRoe Variable Investment Trust By: ERNST E. DUNBAR Agreed to this 3rd day of February, 1993 State Street Bank and Trust Company By: THERESA MC GUIRE Vice President ADK/emj: 3189 [LOGO] STATE STREET STATE STREET BANK AND TRUST COMPANY CUSTODIAN FEE SCHEDULE ADDENDUM STEINROE VARIABLE INVESTMENT TRUST This addendum will be effective on April 1, 1993 - ---------------------------------------------------------------------- Global Custody - Services provided include: Cash movements, Foreign Communication, Foreign Exchange (local currency settlements). Fund Net Assets Annual Fees - --------------- ------------- First $50 Million 22 Basis Points Over $50 Million 20 Basis Points Minimum Per Client $5,000.00 Annually Global Trades - For each item processed $25.00 STEIN ROE VARIABLE INVESTMENT STATE STREET BANK & TRUST COMPANY TRUST BY: THOMAS J. SIMPSON BY: CHARLES R. WITTEMORE, JR. TITLE: Controller TITLE: Vice President DATE: 4/14/93 DATE: 3/29/93 [LOGO] STATE STREET STATE STREET BANK AND TRUST COMPANY Custodian Fee Schedule STEINROE VARIABLE INVESTMENT TRUST MANAGED INCOME FUND - ---------------------------------------------------------------------- I. Administration Custody, Portfolio and Fund Accounting Service - Maintain custody of fund assets Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Maintain investment ledgers, provide select portfolio transactions, position and income reports. Maintain general ledger and capital stock accounts. Prepare daily trial balance. Calculate net asset value daily. Provide selected general ledger reports. Securities yield or market value quotations will be provided to State Street by the fund. The administration fee shown below is an annual charge, billed and payable monthly, based on average monthly net assets. ANNUAL FEES PER PORTFOLIO Fund Net Assets Custody, Portfolio & Fund Acct. --------------- ------------------------------- First $20 Million 1/15 of 1% Next $80 Million 1/30 of 1% Excess 1/100 of 1% Minimum Monthly Charges $3,000 II. Global Custody - Services provided include: Cash Movements, Foreign Communication, Foreign Exchange (local currency settlements). Fund Net Assets Annual Fees --------------- ----------- First $50 Million 22 Basis Points Over $50 Million 20 Basis Points Minimum Per Client $5,000.00 Annually III. Portfolio Trades - For each line item processed State Street Bank Repos $ 7.00 DTC or Fed Book Entry $12.00 New York Physical Settlements $25.00 Maturity Collections $ 8.00 All other trades $20.00 IV. Options Option charge for each option written or closing contract, per issue, per broker $25.00 Option expiration charge, per issue, per broker $15.00 Option exercised charge, per issue, per broker $15.00 V. Lending of Securities Deliver loaned securities versus cash collateral $20.00 Deliver loaned securities versus securities collateral $30.00 Receive/deliver additional cash collateral $ 6.00 Substitutions of securities collateral $30.00 Deliver cash collateral versus receipt of loaned securities $15.00 Deliver securities collateral versus receipt of loaned securities $25.00 Loan administration - mark-to-market per day, per loan $ 3.00 VI. Interest Rate Futures Transactions - no security movement $ 8.00 VII. Holdings Charge For each issue maintained - monthly charge $ 5.00 VIII. Principal Reduction Payments Per paydown $10.00 IX. Dividend Charges (For items held at the Request of Traders over record date in street form) $50.00 X. Special Services Fees for activities of a non-recurring nature such as fund consolidations or reorganizations, extraordinary security shipments and the preparation of special reports will be subject to negotiation. Fees for tax accounting/recordkeeping for options, financial futures, and other special items will be negotiated separately. XI. Earnings Credit A balance credit equal to 75% of the 90-day Treasury Bill rate in effect the last business day of each month will be applied to the Custodian Demand Deposit Account Balance, net of check redemption service overdrafts, on a pro-rated basis against the Fund's Custodian Fees, excluding out-of-pocket expenses. The balance credit will be cumulative and carried forward each month. Any excess credit remaining at year-end (December 31) will not be carried forward. XII. Out-of-Pocket Expenses A billing for the recovery of applicable out-of-pocket expenses will be made as of the end of each month. Out-of-pocket expenses include, but are not limited to the following: Telephone Wire Charges ($5.25 per wire in and $5.00 out) Postage and Insurance Courier Service Duplicating Legal Fees Supplies Related to Fund Records Rush Transfer - $800 Each Transfer Fees Sub-Custodian Charges Price Waterhouse Audit Letter Federal Reserve Fee for Return Check items over $2,500 - $4.25 GNMA Transfer - $15 each XIII. Payment The above fees will be charged against the fund's custodian checking account five (5) days after the invoice is mailed to the fund's offices. STEINROE VARIABLE INVESTMENT TRUST STATE STREET BANK MANAGED INCOME FUND & TRUST CO. BY: THOMAS J. SIMPSON BY: CHARLES R. WITTEMORE, JR. TITLE: Controller TITLE: Vice President DATE: May 13, 1993 DATE: May 3, 1993 STATE STREET BANK AND TRUST COMPANY Fee Information for Automated Pricing This service provides securities pricing on request. Services and fees are based on the schedule below. Reports can be generated at State Street or on a remote basis via PC. Reporting has both up load and down load capabilities. Customized reports may require programming fees. - ------------------------------------------------------------------------- Monthly charges for the State Street Bank Automated Pricing System are determined by: 1. Mix of security positions. 2. The number of positions that are priced during the month. Monthly Base Fee $375.00 Monthly Quote Charge: - - Municipal Bonds via Muller Data $ 21.00 - - Municipal Bonds via Kenney Information Systems $ 16.00 - - Government, Corporate and Convertible Bonds via Muller Data $ 11.00 - - Corporate and Government Bonds via Standard & Poor's $ 11.00 - - Options, Futures and Private Placements $ 6.00 - - Foreign Equities and Bonds via Extel Ltd. $ 6.00 - - Listed Equities, OTC Equities, and Bonds $ 6.00 - - Corporate, Municipal, Convertible and Government Bonds, Adjustable Rate Preferred Stocks via IDSI $ 6.00 For billing purposes, the monthly quote charge will be based on the average number of positions in the portfolio. STEINROE VARIABLE INVESTMENT TRUST STATE STREET BANK MANAGED INCOME FUND & TRUST CO. BY: THOMAS J. SIMPSON BY: CHARLES R. WITTEMORE, JR. TITLE: Controller TITLE: Vice President DATE: May 13, 1993 DATE: May 3, 1993 EX-99 5 EX-99.B9A OTH CONTRCT STEINROE VARIABLE INVESTMENT TRUST ADMINISTRATION AGREEMENT ADMINISTRATION AGREEMENT dated as of January 3, 1995 between STEINROE VARIABLE INVESTMENT TRUST, a business trust organized under the laws of the Commonwealth of Massachusetts (the "Trust"), on behalf of each of its separate series funds listed on Schedule A hereto (each individually a "Fund" and, collectively, the "Funds"), and STEIN ROE & FARNHAM INCORPORATED, a corporation organized under the laws of the State of Delaware (the "Administrator"). WHEREAS, the Trust has been organized as an open-end management investment company registered as such under the Investment Company Act of 1940, as amended ("Investment Company Act"), and has authorized the issuance of shares of beneficial interest in one or more separate series each representing interests in a separate portfolio of securities and other assets, which shares are to be issued and sold to and held by various separate accounts of Keyport Life Insurance Company ("Keyport") or separate accounts of other insurance companies that are affiliated or are not affiliated with Keyport ("Participating Insurance Company"); WHEREAS, the Trust, on behalf of each Fund, has entered into a separate Fund Advisory Agreement with the Administrator (each individually a "Fund Advisory Agreement" and, collectively, the "Fund Advisory Agreements") providing for investment management; and WHEREAS, the Trust desires the Administrator to render administrative services to the Funds in the manner and on the terms and conditions hereinafter set forth (it being understood that the Administrator will act as a transfer agent for the shares of the Funds pursuant to a separate agreement); NOW, THEREFORE, the Trust, on behalf of the Funds, and the Administrator agree as follows: 1. EMPLOYMENT OF THE ADMINISTRATOR. The Trust hereby engages the Administrator to provide administrative and oversight services for the period, in the manner, and on the terms hereinafter set forth. The Administrator hereby accepts such engagement and agrees during such period to render the services and to assume the obligations herein set forth. The Administrator shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized (whether herein or otherwise), have no authority to act for or represent the Trust or any of the Funds in any way or otherwise be deemed an agent of the Trust or any of the Funds. 2. ADMINISTRATIVE SERVICES. (a) The Administrator will provide hereunder general administrative services and oversee the operations of the Trust and the Funds ("Administrative Services"), all subject to the direction and overall control of the Board of Trustees of the Trust. Such Administrative Services shall not include investment advisory, custodian, underwriting and distribution, transfer agency or pricing and bookkeeping services, but shall include, without limitation, (i) the provision of office space, equipment and facilities necessary in connection with the maintenance of the headquarters of the Trust; (ii) the maintenance of the corporate books and records of the Trust, other than its accounting books and records and those of its records maintained by the Investment Adviser, the transfer agent and the custodian of the Trust, and making arrangements for meetings of the Trustees of the Trust; (iii) preparation and filing of proxy materials and making arrangements for meetings of shareholders or beneficial owners of the Funds;(iv) preparation and filing of all required reports and all updating and other amendments to the Trust's registration statement under the Investment Company Act, the Securities Act of 1933 and the rules and regulations thereunder; (v) calculation of distributions required or advisable under the Internal Revenue Code of 1986; (vi) periodic computation and reporting to the Investment Adviser of the Funds' compliance with diversification and other portfolio requirements of the Investment Company Act and the Internal Revenue Code; (vii) development and implementation of general shareholder and beneficial owner correspondence and communications relating to the Funds, including the preparation and filing of shareholder and beneficial owner reports as are required or deemed advisable; and (viii) general oversight of the custodial, net asset value computation, portfolio accounting, financial statement preparation, legal, tax and accounting services performed for the Trust or the Funds by others (including, without limitation, by others pursuant to paragraph (e) of this Section 2). (b) The Administrator will preserve for the Trust all records it maintains for the Trust as prescribed by the rules and regulations of the Securities and Exchange Commission (the "SEC") in the manner and for the time periods prescribed by such rules. The Administrator agrees that all such records shall be the property and under the control of the Trust and shall be made available, within five business days of any request therefor, to the Trust's Board of Trustees or auditors during regular business hours at the Administrator's offices. In the event of termination of this Agreement for any reason, all such records shall be returned, without charge, promptly to the Trust, free from any and all claim or retention of rights by the Administrator, except that the Administrator may retain copies of such records. (c) The Administrator will report to the Trustees of the Trust any potential or existing material irreconcilable conflict among the interests of shareholders (the separate accounts of insurance companies investing in the Trust) of which it is aware. The Administrator will assist the Trustees in carrying out their responsibilities under an Order from the SEC, dated July 1, 1988, granting 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 and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of insurance companies affiliated and unaffiliated with each other. The Investment shall provide the Trustees with all information reasonably necessary for the Trustees to consider any issues raised. (d) The Administrator will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized herein, and will keep confidential any information obtained pursuant to this Agreement, and disclose such information only if the Trust has authorized such disclosure, or it such disclosure is expressly required by applicable federal or state regulatory authorities. (e) The Administrator may, in its discretion, arrange for Administrative Services and related services subject to this Agreement to be provided to the Trust by the Administrator's affiliate, Liberty Financial Companies, Inc. ("LFC"), or by any of LFC's majority or greater owned subsidiaries. 3. EXPENSES BORNE BY ADMINISTRATOR. To the extent necessary to perform its obligations under this Agreement, the Administrator, at its own expense, shall furnish executive and other personnel and office space, equipment and facilities, and shall pay any other expenses incurred by it, in connection with the performance of its duties hereunder, except that the Trust or the Funds, as appropriate, shall reimburse the Administrator for its out-of pocket costs, including telephone, postage and supplies, incurred by it in connection with communications with shareholders and beneficial owners of the Funds. The Administrator shall pay all salaries, fees and expenses of Trustees or officers of the Trust who are employees of the Administrator. The Administrator shall not be obliged to bear any other expenses incidental to the operations and business of the Trust. The Administrator shall not be required to pay or provide any credit for services provided by the Trust's custodian, transfer agent or other agents, including the Investment Adviser. 4. EXPENSES BORNE BY THE TRUST. The Trust or one or more of the Funds, as appropriate, shall pay all expenses incidental to the operations and business of the Trust and the Funds not specifically assumed or agreed to be paid by the Administrator pursuant to the Fund Advisory Agreements or this Agreement (as the case may be), or by Keyport or any Participating Insurance Company, including, without limitation: (a) the fees of the Administrator as provided in Section 5 of this Agreement and of the Administrator in its capacity as investment adviser under the Fund Advisory Agreements (in such capacity, the "Investment Advisor"); (b) fees payable pursuant to any plan adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act; (c) all fees and charges of depositories, custodians and other agencies for the safekeeping and servicing of the cash, securities, and other property of the Trust or the Funds; (d) all fees and charges of transfer, shareholder servicing, shareholder record keeping and dividend disbursing agents and all other expenses relating to the issuance and redemption of shares of the Trust and the maintenance and servicing of shareholder accounts; (e) all charges for equipment or services used for obtaining price quotations or for communication among the Administrator, any sub-adviser appointed by the Trust, the Trust, Keyport or any Participating Insurance Company, the custodian or any sub- custodian, transfer agent or any other agent selected by the Trust; (f) all expenses incurred in periodic calculations of the net asset value of the shares of the Funds; (g) all charges for bookkeeping, accounting and tax information services provided to the Trust by the custodian or any subcustodian; (h) all charges for services of the Trust's independent auditors; (i) all charges and expenses of outside legal counsel for the Trust and for the Trustees of the Trust in connection with legal matters relating to the Trust or the Funds; (j) all compensation of the Trustees of the Trust other than those Trustees who are interested persons of the Trust including, without limitation, Trustees who are interested persons of LFC, the Administrator, Keyport or any Participating Insurance Company, or the principal underwriter of the Trust, and all expenses (including expenses incident to Trustees' meetings), incurred in connection with their services to the Trust; (k) all expenses of preparation, printing and mailing of notices and proxy solicitation material and of reports and other communications to shareholders and beneficial owners of the Funds and all other expenses (including proxy solicitation expenses) incidental to meetings of the shareholders of the Funds: (l) all expenses of preparation (including type setting) and printing of annual or more frequent revisions of the Trust's prospectuses and statements of additional information and supplements thereto, of supplying each then-existing holder or beneficial owner of shares of the Funds or purchaser thereof with a copy of such revised prospectus or supplements, and of supplying copies of such statements of additional information to persons requesting the same; (m) all expenses, if any, related to preparing, printing and engraving and transmitting certificates representing shares of the Trust; (n) all expenses of bond and insurance coverage required by law or deemed advisable by the Board of Trustees; (o) all brokers' commissions and other normal charges incident to the purchase and sale of portfolio securities; (p) costs, including interest expense, of borrowing money; (q) all taxes and corporate fees payable to federal, state or other governmental agencies, domestic or foreign, and all costs and expenses incident to the maintenance of the Trust's legal existence; (r) all expenses of registering and maintaining the registration of the Trust under the Investment Company Act and the shares of the Trust under the Securities Act of 1933, and all expenses, if any, of qualifying and maintaining the qualification of the shares of the Trust for sale under securities laws of various states or other jurisdictions and of registration and qualification of the Trust under all other laws applicable to the Trust or its business activities; (s) all fees, dues, and other expenses incurred by the Trust in connection with its membership in any trade association or other investment organization; and (t) all miscellaneous business expenses. The Trust or one or more of the Funds, as appropriate, shall also bear all extraordinary, non-recurring expenses as may arise, including but not limited to expenses incurred in connection with litigation, proceedings and claims and expenses incurred in connection with any obligation of the Trust or the Funds to indemnify any person. Expenses which are directly charged to or attributable to any particular Fund shall be borne by that Fund and expenses which are not solely attributable to any one Fund shall be allocated among the Funds on a basis that the Trustees of the Trust deem fair and equitable. 5. ADMINISTRATION FEE. For the services to be rendered by the Administrator hereunder, the Trust, for the benefit of each Fund, shall pay the Administrator out of the assets of such Fund an annual fee in the amount described in Schedule B attached hereto and made a part hereof. 6. NON-EXCLUSIVITY. The services of the Administrator to the Trust hereunder are not to be deemed exclusive and the Administrator shall be free to render similar services to others. 7. STANDARD OF CARE. Neither the Administrator, nor any of its directors, officers or stockholders, agents or employees shall be liable or responsible to the Trust or the Funds or their shareholders (or the beneficial owners of their shares) for any error of judgment, mistake of law or any loss arising out of any act or omission in the performance by the Administrator of its duties under this Agreement, except for liability resulting from willful misfeasance, bad faith or gross negligence on the Administrator's part or from reckless disregard by the Administrator of its obligations and duties under this Agreement. 8. AMENDMENT. This Agreement may be amended at any time by a written agreement executed by both parties hereto, provided that with respect to amendments of substance such execution on behalf of the Trust shall have been approved by the vote of a majority of those Trustees who are not interested persons of the Trust, the Administrator, the Investment Adviser, Keyport or a Participating Insurance Company. 9. TERM AND TERMINATION. This Agreement shall begin on the date first written above, and may be terminated at any time, without payment of any penalty, by the Board of Trustees of the Trust, or by the vote of a majority of the outstanding voting securities of the Trust, upon sixty (60) days' written notice to the Administrator. This Agreement may be terminated by the Administrator at any time upon sixty (60) days' written notice to the Trust. 10. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. As provided in the Declaration of Trust of the Trust, a copy of which is on file with the Secretary of State of The Commonwealth of Massachusetts, any obligation of the Trust or the Funds hereunder shall be binding only upon the assets and property of the Trust or the applicable Funds, as the case may be, and shall not be binding upon any Trustee, officer, employee, agent or shareholder (or beneficial owner of shares) of the Trust, including, without limitation, the officer of the Trust executing this Agreement on its behalf. Neither the authorization of any action by the Trustees or shareholders (or beneficial owners of shares) of the Trust nor the execution of this Agreement on behalf of the Trust shall impose any liability upon any Trustee or any shareholder (or beneficial owner of shares). 11. HEADINGS. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this Agreement. 12. INTERPRETATION; GOVERNING LAW. This Agreement shall be interpreted under, and the performance of the Administrator under this Agreement shall be consistent with, the provisions of the Agreement and Declaration of Trust and the By-Laws of the Trust, each as in effect from time to time, the terms of the Investment Company Act, other applicable laws and regulations thereunder (including any amendments hereafter adopted), the Internal Revenue Code of 1986, as amended, and regulations thereunder, and the Trust's prospectus and statement of additional information, as from time to time in effect. The provisions of this Agreement shall be construed and interpreted in accordance with the domestic substantive laws of The Commonwealth of Massachusetts, without giving effect to any conflicts or choice of laws rule or provision that would result in the application of the domestic substantive laws of any other jurisdiction; provided, however, that if such law or any of the provisions of this Agreement conflict with the applicable provisions of the Investment Company Act, the latter shall control. 13. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, a statute, a rule, or otherwise, the remainder of this Agreement shall not be affected thereby. 14. EFFECTIVE DATE. This Administration Agreement shall become effective as of its date. 15. JOINDER AND REMOVAL OF FUNDS. In the event that the Trust creates additional series funds, the Trust and the Administrator may jointly amend Schedules A and B hereto with respect to such new series fund, in which case such new series fund shall thereupon be deemed to be a "Fund" for all purposes of this Agreement. In the event that any Fund ceases to exist as a separate series fund of the Trust, whether as a result of merger, substitution or otherwise, from and after such event, such Fund shall no longer be subject to this Agreement, and the Trust and the Administrator may, if they desire, jointly amend Schedule A hereto to reflect such event. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of the date first above written. STEINROE VARIABLE INVESTMENT TRUST by ______________________________ Name: Title: STEIN ROE & FARNHAM INCORPORATED by ______________________________ Name: Title: Schedule A Administration Agreement Funds as of January 3, 1995 Capital Appreciation Fund Managed Growth Stock Fund Strategic Managed Assets Fund Managed Assets Fund Managed Income Fund Mortgage Securities Income Fund Cash Income Fund Schedule B Administration Agreement Fee Schedule The annual administration fee referred to in paragraph 5 of this Agreement for each Fund shall be 0.15% of the net asset value of such Fund. The applicable fee shall be accrued for each calendar day and the sum of the daily fee accruals shall be paid monthly on or before the tenth day of the following calendar month. The daily accruals of the fee for such Fund will be computed by (i) multiplying the annual percentage rate referred to above by the fraction the numerator of which is one and the denominator of which is the number of calendar days in the year, and (ii) multiplying such product by the net asset value of such Fund as determined in accordance with the Fund's prospectus as of the previous business day on which the Fund was open for business. The foregoing fee shall be prorated for any month during which this Agreement is in effect for only a portion of the month. EX-99 6 EX-99.B9B OTH CONTRCT STEINROE VARIABLE INVESTMENT TRUST Joinder And Release Agreement With Respect To Transfer Agency Agreement AGREEMENT, made as of January 3, 1995, among STEINROE VARIABLE INVESTMENT TRUST, a business trust organized under the laws of The Commonwealth of Massachusetts (the "Trust"), LIBERTY INVESTMENT SERVICES, INC., a Massachusetts corporation ("LIS"), and STEINROE SERVICES, INC., a Massachusetts corporation ("SSI"). 1. Reference is made to the Transfer Agency Agreement dated December 8, 1988 between the Trust and LIS (as amended and in effect on the date hereof, the "Transfer Agency Agreement"). A complete and correct composite copy of the Transfer Agency Agreement is attached hereto as Annex A. 2. Each of the parties hereby agrees that, from and after the date hereof, (i) SSI shall become a party to the Transfer Agency Agreement in place and stead of LIS, and shall thereupon become the "Transfer Agent" for all purposes thereof, and (ii) LIS shall be released from its obligations as Transfer Agent under the Transfer Agency Agreement for all periods following the effectiveness of this Agreement. IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed and delivered this Agreement as of the date first written above. STEINROE VARIABLE INVESTMENT TRUST by RICHARD R. CHRISTENSEN Name: Title: STEINROE SERVICES, INC. by JILAINE HUMMEL BAUER Name: Title: Vice President LIBERTY INVESTMENT SERVICES, INC. by ERNST E. DUNBAR Name: Title: ANNEX A COMPOSITE COPY OF TRANSFER AGENCY AGREEMENT STEINROE VARIABLE INVESTMENT TRUST TRANSFER AGENCY AGREEMENT TRANSFER AGENCY AGREEMENT dated December 9, 1988 between STEINROE VARIABLE INVESTMENT TRUST, a business trust organized under the laws of the Commonwealth of Massachusetts (the "Trust"), and LIBERTY INVESTMENT SERVICES, INC., a corporation organized under the laws of the Commonwealth of Massachusetts (the "Transfer Agent"). WHEREAS, the Trust has been organized as an open-end management investment company registered as such under the Investment Company Act of 1940 ("Investment Company Act") and has authorized the issuance of shares of beneficial interest in the thirteen separate series listed on Schedule A attached hereto (such series being hereinafter collectively referred to as the "Funds"), each Fund representing interests in a separate portfolio of securities and other assets, which shares are to be issued and sold to and held by various separate accounts of Keystone Provident Life Insurance Company ("Keystone") or separate accounts of other insurance companies that are affiliated or are not affiliated with Keystone ("Participating Insurance Company") pursuant to a Participation Agreement among the Trust, its principal underwriter and the Participating Insurance Company ("Participation Agreement); WHEREAS, the Trust desires the Transfer Agent to Act as transfer and dividend disbursing agent for the shares of the Funds in the manner and on the terms and conditions hereinafter set forth (it being understood that Liberty Investment Services, Inc. will also act as administrator of the Trust pursuant to a separate agreement). NOW THEREFORE, the Trust and the Transfer Agent agree as follows: 1. Employment of the Transfer Agent. The Trust hereby appoints the Transfer Agent as the transfer agent and the dividend disbursing agent for the shares of the Funds for the period and on the terms hereinafter set forth. The Transfer Agent hereby accepts such appointment and agrees during such period to render the services and to assume the obligations herein set forth. 2. Representations and Agreements of the Trust. The Trust represents that the number of authorized shares of each Fund is unlimited, and agrees to furnish to the Transfer Agent such certificates and documents as the Transfer Agent may reasonably request in connection the performance of its duties hereunder. The Trust will be responsible for compliance with the Investment Company Act, the Securities Act of 1933 and all other applicable federal and state laws in connection with the offering, issuance and sale and the redemption or repurchase of shares of the Funds and the payment of dividends and distributions thereon, and the Transfer Agent will have no responsibility, liability or obligation thereunder. 3. Services to be provided. The Transfer Agent will perform the services set forth on Schedule B hereto. It is understood that the shares of the Funds will be held of record only by separate accounts ("Separate Accounts") of Keystone or other Participating Insurance Companies for the benefit of the holders of variable annuity contracts ("VA contracts") and variable life insurance policies ("VLI policies") offered and sold by the Separate Accounts, and that the Transfer Agent's obligations, duties and responsibilities hereunder shall relate only to the record Fund shareholder accounts of the Separate Accounts, and not to the accounts of the holders of the VA contracts and VLI policies. The Transfer Agent shall maintain all records relating to the accounts of record holders of the Funds which the Trust is required to maintain pursuant to Rule 31a-1 under the Investment Company Act and shall preserve such records for the periods prescribed by Rule 31a-2 thereunder. All such records are and shall remain the property and under the control of the Trust and shall upon request be made available during reasonable business hours to the Trust's Board of Trustees or auditors at the Transfer Agent's offices. 4. Standard of Care. The Transfer Agent will at all times act in good faith in the performance of its duties and obligations hereunder, but assumes no responsibility and shall not be liable for loss or damage unless caused by the negligence, bad faith or willful or wanton misconduct of the Transfer Agent or its employees. The Transfer Agent shall be entitled to act, and shall have no responsibility or liability for actions taken without negligence or willful or wanton misconduct, upon any instruction believed by it to have been authorized by the Trust or any Fund. The Transfer Agent shall in no event be liable for consequential damages, lost profits or other special damages, even if informed of the possibility of such damage or loss. 5. Uncontrollable Events. The Transfer Agent shall not be liable for damage, delays or errors occurring by reason of circumstances beyond its control, including but not limited to acts of civil or military authority, national emergencies, fires, flood or catastrophe, acts of God, insurrection, war, riots or failure of transportation, communication or power supply. However, the Transfer Agent shall use reasonable care to minimize the likelihood of damage, delays and errors resulting from an uncontrollable event, and should such damage, delays or errors occur, shall use its best efforts to mitigate the effects of such occurrence. 6. Indemnification. The Trust shall indemnify and hold the Transfer Agent, its employees and agents harmless against any losses, claims, damages, judgments, liabilities or expenses (including reasonable counsel fees and expenses) resulting from action taken by the Transfer Agent in good faith with due care and without negligence pursuant hereto or in accordance with instructions believed by it to have been authorized by the Trust or any Fund. 7. Fees and Charges. For services rendered by the Transfer Agent pursuant hereto, the Trust for the benefit of the Funds, shall pay the Transfer Agent a fee in the amount shown in Schedule C hereto. 8. Term. This Agreement shall begin on the date first written above and shall continue until terminated by either party hereto upon not less than 120 days' prior written notice to the other party. 9. Non-Liability of Trustees and Shareholders. As provided in the Declaration of Trust of the Trust, a copy of which is on file with the Secretary of the Commonwealth of Massachusetts, any obligation of the Trust or the Funds hereunder shall be binding only upon the assets and property of the Trust or the Funds, as the case may be, and shall not be binding upon any Trustee, officer, employee, agent or shareholder (or beneficial owner of shares) of the Trust, including without limitation, the officer of the Trust executing this Agreement on its behalf. Neither the authorization of any action by the Trustees or shareholders (or beneficial owners of shares) of the Trust shall impose any liability upon any Trustee or any shareholder (or beneficial owner of shares). 10. Interpretation; Governing Law. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of Massachusetts, without giving effect to the conflict of laws provisions thereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have duly executed this agreement on the date first above written. STEINROE VARIABLE INVESTMENT TRUST By ERNST E. DUNBAR Treasurer LIBERTY INVESTMENT SERVICES, INC. By RICHARD R. CHRISTENSEN President Schedule A ---------- Transfer Agency Agreement Cash Income Fund Mortgage Securities Income Fund Managed Assets Fund Managed Growth Stock Fund Capital Appreciation Fund Strategic Managed Assets Fund Managed Income Fund Schedule B Transfer Agency Agreement ------------------------- The services to be performed by the Transfer Agent with respect to the shares of each Fund pursuant to paragraph 2 are as follows: 1. Establishing and maintaining shareholder accounts as instructed and reporting thereon. 2. Processing the issuance, transfer and redemption of shares in certificate form, and recording and controlling shares outstanding in certificate and non- certificate form. Acting as the designee of the Trust to receive orders for the purchase of shares of the Funds from the Participating Insurance Company pursuant to Section 1.1 of the Participation Agreement. 3. Reporting the number of outstanding Fund shares to the Trust and the Trust's custodian on a daily basis. 4. Passing upon the adequacy of documents submitted by or on behalf of a shareholder to transfer ownership or redeem shares. 5. Transferring ownership of shares upon the books of the appropriate Fund. 6. Redeeming shares and authorizing payment of the proceeds as instructed. Acting as the designee of the Trust to receive requests for redemption of shares of the Funds from the Participating Insurance Company pursuant to Section 1.5 of the Participation Agreement. 7. Preparing and mailing account statements to the shareholder whenever transaction activity effecting share balances are posted to a Fund account that is of the type that should receive such statement. 8. Maintaining and updating a stop transfer file. 9. Balancing outstanding shares of record with the custodian prior to each distribution and processing the reinvestment of dividends and distributions as instructed. 10. Processing exchanges of shares of one Fund for another. 11. Reporting to the Trust and its custodian daily the capital stock activities and dollar amount of transactions. 12. Maintaining and safeguarding an inventory of unissued blank stock certificates, checks and other Trust records. 13. Providing such assistance as may be required to enable the Trust and its properly authorized auditors, examiners and other designated by the Trust to properly understand and examine all books, records, computer files, microfilm and other items maintained pursuant to this Agreement, and to assist as required in such examination. 14. Maintaining information, performing the necessary research and producing reports required to comply with all applicable state escheat or abandoned property laws. 15. Furnishing the Participating Company with notices of dividends and distributions declared by the Funds. The transfer agent will produce reports as requested by the Trust including, but not limited to the following: Shareholder Account Confirmation As required Certificates When requested Proxy When required 1099 Annually 1042-S Annually Transaction journals Daily Record date position control Daily Daily and (monthly) cash proof Daily Daily (monthly) share proof Daily Daily master control Daily Account information reports When requested (Monthly) Cumulative transaction Monthly Shareholder master list When requested Activities statistics Monthly Distribution journals As required Schedule C ---------- Transfer Agency Agreement The Transfer Agency fee referred to in paragraph 7 of this Agreement for each Fund shall be in the amount of $625 per month. The foregoing fee shall be prorated for any month during which this Agreement is in effect for only a portion of the month. EX-99 7 EX-99.B9D OTH CONTRCT PARTICIPATION AGREEMENT AMONG STEINROE VARIABLE INVESTMENT TRUST, KEYPORT FINANCIAL SERVICES CORP., and CROWN AMERICA LIFE INSURANCE COMPANY This Agreement, made and entered into as of this lst day of October, 1993 by and among Crown America Life Insurance Company (the "Company"), on its own behalf and on behalf of its Separate Accounts, each of which is a segregated asset account of one the Company, SteinRoe Variable Investment Trust (the "Trust"), and Keyport Financial Services Corp. ("KFSC"). WHEREAS, the Trust engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements substantially identical to this Agreement (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Trust is divided into several series of shares (such series being hereinafter referred to individually as a "Series" or collectively as the "Series"); and WHEREAS, the Trust relies on an order from the Securities and Exchange Commission ("SEC"), dated July 1, 1988 (File No. 812-7044), granting life 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 to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Trust is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, Stein Roe & Farnham Incorporated ("SR&F") is duly registered as an investment adviser under the federal Investment Advisers Act of 1940 ("Advisers Act") and applicable state securities laws; and WHEREAS, Liberty Investment Services, Inc. ("LIS") provides certain administrative services to the Trust and serves as transfer agent to the Trust; and WHEREAS, the Company has registered or will register certain Variable Insurance Products under the 1933 Act; and WHEREAS, the Company has established duly organized, validly existing segregated asset accounts (the "Separate Accounts") by resolution of its Board of Directors; and WHEREAS, the Company has registered or will register certain Separate Accounts as unit investment trusts under the 1940 Act; and WHEREAS, the Company relies on certain provisions of the 1940 and 1933 Acts that exempt certain Separate Accounts and Variable Insurance Products from the registration requirements of the Acts in connection with the sale of Variable Insurance Products under certain tax-advantaged retirement programs, described in Article II., Section 2.12. and as provided for by Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, KFSC is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of the Trust on behalf of each Separate Account to fund certain Variable Insurance Products and KFSC is authorized to sell such shares to unit investment trusts such as each Separate Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust and KFSC agree as follows: ARTICLE I. Sale of Fund Shares 1.1. KFSC will sell to the Company those shares of the Trust which each Separate Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Separate Accounts of purchase payments or for the business day on which transactions under Variable Insurance Products are effected by the Separate Accounts. For purposes of this Section 1.1., LIS shall be the designee of the Trust for receipt of such orders from each Separate Account and receipt by such designee shall constitute receipt by the Trust. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and any other day on which the Trust calculates its net asset value pursuant to the rules of the SEC. 1.2. The Trust will make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and their Separate Accounts on those days on which the Trust calculates its net asset value pursuant to rules of the SEC and the Trust shall use reasonable efforts to calculate such net asset value on each Business Day. Notwithstanding the foregoing, the Board of Trustees of the Trust (the "Trustees") may refuse to sell shares of any Series to any person, or suspend or terminate the offering of shares of any Series if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Trustees, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Series. 1.3. The Trust and KFSC agree that shares of the Trust will be sold only to Participating Insurance Companies and their Separate Accounts. No shares of any Series will be sold to the general public. 1.4. The Trust and KFSC will not sell Trust shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I., III., V., VII. and Sections 2.5. and 2.12. and 2.13. of Article II. of this Agreement is in effect to govern such sales. 1.5. The Trust will redeem for cash, at the Company's request, any full or fractional shares of the Trust held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Separate Accounts of redemption requests or for the Business Day on which transactions under Variable Insurance Products are effected by the Separate Accounts. For purposes of this Section 1.5., LIS shall be the designee of the Trust for receipt of requests for redemption for each Separate Account. Subject to the applicable rules and regulations, if any, of the SEC, the Trust may pay the redemption price for shares of any Series in whole or in part by a distribution in kind of securities from the portfolio of the Trust allocated to such Series in lieu of money, valuing such securities at their value employed for determining net asset value governing such redemption price, and selecting such securities in a manner the Trustees may determine in good faith to be fair and equitable. 1.6. The Trust may suspend the redemption of any full or fractional shares of the Trust (1) for any period (a) during which the New York Stock Exchange is closed (other than customary weekend and holiday closings) or (b) during which trading on the New York Stock Exchange is restricted; (2) for any period during which an emergency exists as a result of which (a) disposal by the Trust of securities owned by it is not reasonably practicable or (b) it is not reasonably practicable for the Trust fairly to determine the value of its net assets; or (3) for such other periods as the SEC may by order permit for the protection of shareholders of the Trust. 1.7. The Company will purchase and redeem the shares of each Series offered by the then current prospectus of the Trust and in accordance with the provisions of such prospectus and statement of additional information (the "SAI") (collectively referred to as "Prospectus," unless otherwise provided). The Company agrees that all net amounts available under the Variable Insurance Products with the form number(s) which are listed on Schedule A attached hereto and incorporated herein by this reference, as such Schedule A may be amended from time to time hereafter by mutual written agreement of all the parties hereto (the "Contracts"), shall be invested in the Trust, in such other trusts advised by SR&F as may be mutually agreed to in writing by the parties hereto, or in the Company's general account, provided that such amounts may also be invested in an investment company other than the Trust if (a) such other investment company, or series thereof, has investment objectives or policies that are substantially different from the investment objectives and policies of each of the Series of the Trust; or (b) the Company gives the Trust and KFSC forty-five (45) days written notice of its intention to make such other investment company available as a funding vehicle for the Contracts; or (c) such other investment company was available as a funding vehicle for the Contracts prior to the date of this Agreement and the Company so informs the Trust and KFSC prior to their signing this Agreement; or (d) the Trust or KFSC consents to the use of such other investment company. 1.8. The Company shall pay for Trust shares on the next Business Day after an order to purchase Trust shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire, or may otherwise be provided by separate agreement. 1.9. Issuance and transfer of the Trust's shares will be by book entry only. Stock certificates will not be issued to either the Company or the Separate Accounts. Shares ordered from the Trust will be recorded in an appropriate title for each Separate Account or the appropriate subaccount of each Separate Account. 1.10. The Trust, through its designee LIS, shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income dividends or capital gain distributions payable on the shares of any Series. The Company hereby elects to receive all such income, dividends and capital gain distributions as are payable on the shares of each Series in additional shares of that Series. The Company reserves the right to revoke this election and to receive all such income, dividends and capital gain distributions in cash. The Trust shall notify the Company through its designee, LIS, of the number of shares so issued as payment of such income, dividends and distributions. 1.11. The Trust shall make the net asset value per share for each Series available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7 p.m., Boston time. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act to the extent required by the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that prior to any issuance or sale of any Contract it has legally and validly established each Separate Account as a segregated asset account under the applicable state insurance laws and have registered or, prior to any issuance or sale of the Contracts, will register each Separate 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, to the extent required by the 1940 Act. 2.2. The Trust represents and warrants that Trust shares sold pursuant to this Agreement shall be registered under the 1933 Act to the extent required by the 1933 Act, duly authorized for issuance and sold in compliance with the laws of The Commonwealth of Massachusetts and all applicable federal and any state securities laws and that the Trust is and shall remain registered under the 1940 Act to the extent required by the 1940 Act. The Trust shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Trust shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust or KFSC. 2.3. The Trust represents that it intends to qualify as a Regulated Investment Company under Subchapter M of the Code and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as endowment, annuity or life insurance contracts under applicable provisions of the Code and that they will make every effort to maintain such treatment and that they will notify the Trust and KFSC immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. The Trust currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future consistent with applicable law. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Trust undertakes to have its Trustees, a majority of whom are not interested persons of the Trust, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. 2.6. The Trust makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Trust represents that it is currently in compliance and shall at all times remain in compliance with the applicable insurance laws of the domiciliary states of the Participating Insurance Companies to the extent that the Participating Insurance Company advises the Trust, in writing, of such laws or any changes in such laws. 2.7. KFSC represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. KFSC further represents that it will sell and distribute the Trust shares in accordance with the laws of The Commonwealth of Massachusetts and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 2.8. The Trust represents that it is lawfully organized and validly existing under the laws of The Commonwealth of Massachusetts and that it does and will comply in all material aspects with the 1940 Act. 2.9. The Trust represents and warrants that SR&F is and shall remain duly registered as an investment adviser in all material aspects under all applicable federal and state securities laws and that SR&F shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of The Commonwealth of Massachusetts and any applicable state and federal securities laws. 2.10. The Trust represents and warrants that all of its trustees, officers, employees, investment advisers, and other individuals/entities having access to securities or funds of the Trust are and shall continue to be at all times covered by a joint fidelity bond in an amount not less than three million seven hundred fifty thousand dollars ($3,750,000) with no deductible amount. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable fidelity insurance company. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities having access to securities or funds of the Trust are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust, in an amount not less than ten million dollars ($10,000,000) with no deductible amount. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable fidelity insurance company. 2.12. The Company represents and warrants that it will not, without the prior written consent of KFSC, purchase Trust shares with Separate Account assets derived from the sale of Contracts to individuals or entities which qualify under current or future state or federal law for any type of tax advantage (whether by a reduction or deferral of, deduction or exemption from, or credit against income or otherwise). Examples of such types of funds under current law include: any tax-advantaged retirement program, whether maintained by an individual, employer, employee association or otherwise (including, without limitation, retirement programs which qualify under Sections 401(a), 401(k), 403(a), 403(b), 408 and 457 of the Code), and any retirement programs maintained for employees of the Government of the United States or by the government of any state or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. 2.13. The Company represents and warrants that it will not transfer or otherwise convey shares of the Trust, without the prior written consent of KFSC. ARTICLE III. Prospectus and Proxy Statements; Voting 3.1. KFSC shall provide the Company with as many copies of the Trust's current prospectus, excluding the SAI, as the Company may reasonably request in connection with delivery of the prospectus, excluding the SAI, to shareholders and purchasers of Variable Insurance Products. If requested by the Company in lieu thereof, the Trust shall provide such documentation (including a final copy of the new prospectus, excluding the SAI, as set in type at the Trust's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Trust is amended) to have the prospectus for the Contracts and the Trust's prospectus, excluding the SAI, printed together in one document (such printing to be at the Company's expense). 3.2. The Trust's prospectus shall state that the SAI for the Trust is available from KFSC and the Trust, at its expense, shall provide final copy of such SAI to KFSC for duplication and provision to any prospective owner who requests the SAI and to any owner of a Variable Insurance Product ("Owners"). 3.3. The Trust, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the Company shall reasonably require for distribution to Owners. 3.4. If and to the extent required by law, the Company and, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for Owners, the Trust shall: (i) solicit voting instructions from Owners; (ii) vote the Trust shares in accordance with instructions received from Owners; and (iii) vote Trust shares for which no instructions have been received in the same proportion as Trust shares of such Series for which instructions have been received; The Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their Separate Accounts participating in the Trust calculates voting privileges in a manner consistent with the standards to be provided in writing to the Participating Insurance Companies. 3.5. The Trust will comply with all provisions of the 1940 Act requiring voting by shareholders. The Trust reserves the right to take all actions, including but not limited to, the dissolution, merger, and sale of all assets of the Trust upon the sole authorization of its Trustees, to the extent permitted by the laws of The Commonwealth of Massachusetts and the 1940 Act. ARTICLE IV. Sales Material and Information 4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee, each piece of sales literature or other promotional material in which the Trust or SR&F, or any sub-adviser, or KFSC is named, at least fifteen (15) days prior to its use. No such material shall be used if the Trust or its designee object to such use within fifteen (15) days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust in connection with the sale of the Contracts other than the information or representations contained in the registration statement or Prospectus for the Trust shares, as such registration statement and Prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee or by KFSC, except with the permission of the Trust or KFSC or the designee of either. 4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to the Company or its designees, each piece of sales literature or other promotional material in which the Company and/or its Separate Account(s), are named at least fifteen (15) days prior to its use. No such material shall be used if the Company or its designee object to such use within fifteen (15) days after receipt of such material. 4.4. The Trust and KFSC shall not give any information or make any representations or statements on behalf of the Company or concerning the Company, any Separate Account, or the Variable Insurance Products other than the information or representations contained in a registration statement or prospectus for such Variable Insurance Products, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for such Separate Account which are in the public domain or approved by the Company for distribution to Owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5. The Trust will provide to the Company at least one complete copy of all registration statements, prospectuses, SAIs, reports, proxy statements, sales literature and other promotional materials, applications for exemption, requests for no-action letters, and all amendments to any of the above, that relate to the Trust or its shares, contemporaneously with the filing of such document with the SEC or other regulatory authorities. 4.6. The Company will provide to the Trust at least one complete copy of all registration statements, prospectuses, SAIs, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemption, requests for no-action letters, and all amendments to any of the above, that relate to the Variable Insurance Products or any Separate Account, contemporaneously with the filing of such document with the SEC. 4.7. For purposes of this Article IV., the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, SAIs, shareholder reports, and proxy materials. ARTICLE V. Fees and Expenses 5.1. The Trust and KFSC shall pay no fee or other compensation to the Company under this Agreement, except that if the Trust or any Series adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then KFSC may make payments to the Company or to the underwriter for the Variable Insurance Products if and in amounts agreed to by KFSC in writing and such payments will be made out of existing fees payable to KFSC by the Trust for this purpose. No such payments shall be made directly by the Trust. Currently, no such plan pursuant to Rule 12b-1 or payments are contemplated. 5.2. All expenses incident to performance by the Trust under this Agreement shall be paid by the Trust. The Trust shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Trust, in accordance with applicable state laws prior to their sale. The Trust shall bear the expenses of registration and qualification of the Trust's shares, preparation and filing of the Trust's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Trust's shares. 5.3. The Company shall bear the expenses of distributing the Trust's proxy materials and reports to Owners. ARTICLE VI. Diversification 6.1. The Trust will at all times invest money from the Variable Insurance Products in such a manner as to ensure that, insofar as such investment is required to assure such treatment, the Variable Insurance Products will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Trust will at all times comply with Section 817(h) of the Code and the Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. ARTICLE VII. Potential Conflicts 7.1. The Trustees will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Owners of separate accounts of the Participating Insurance Companies investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Series are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance policy owners; or (f) a decision by an insurer to disregard the voting instructions of Owners. The Trustees shall promptly inform the Company if they determine that a material irreconcilable conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts (including the occurrence of any event specified in paragraph 7.1. which may give rise to such a conflict) of which they are aware to the Trustees. The Company will assist the Trustees in carrying out their responsibilities under the Shared Funding Exemptive Order, by providing the Trustees with all information reasonably necessary for the Trustees to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Trustees whenever Owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Trustees, or a majority of its disinterested Trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested Trustees), take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts of Participating Insurance Companies from the Trust or any Series and reinvesting such assets in a different investment medium, including (but not limited to) another Series of the Trust, or submitting the question whether such segregation should be implemented to a vote of all affected Owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Owners the option of making such a change; (2), establishing a new registered management investment company or managed separate account; and (3) obtaining SEC approval. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard Owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the affected Separate Account's investment in the Trust and terminate this Agreement; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six (6) month period KFSC and Trust shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Separate Account's investment in the Trust and terminate this Agreement within six (6) months after the Trustees inform the Company in writing that they have determined that such decision has created a material irreconcilable conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Until the end of the foregoing six (6) month period, KFSC and Trust shall continue to accept and implement orders the Company for the purchase (and redemption) of shares of the Trust. 7.6. For purposes of Sections 7.3. through 7.6. of this Agreement, a majority of the disinterested Trustees shall determine whether any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for the Variable Insurance Products. The Company shall not be required by Section 7.3. to establish a new funding medium for the Variable Insurance Products if an offer to do so has been declined by vote of a majority of Owners materially adversely affected by the material irreconcilable conflict. In the event that the Trustees determine that any proposed action does not adequately remedy any material irreconcilable conflict, then the Company will withdraw the affected Separate Account's investment in the Trust and terminate this Agreement within six (6) months after the Trustees inform the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested Trustees. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) or terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4., 3.5., 7.1., 7.2., 7.3., 7.4., and 7.5. of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By The Company 8.1.(a). The Company will indemnify and hold harmless the Trust and each of its Trustees and Officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1.) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust's shares or the Variable Insurance Products and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus for the Variable Insurance Products or contained in the sales literature for the Variable Insurance Products (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 in writing to the Company by or on behalf of the Trust for use in the registration statement or prospectus for the Variable Insurance Products or in the Variable Insurance Products or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Insurance Products or Trust shares; or (ii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, Prospectus or sales literature of the Trust not supplied by the Company, or persons under their control) or wrongful conduct of one or both of the Company or persons under their control, with respect to the sale or distribution of the Variable Insurance Products or Trust shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, Prospectus, or sales literature of the Trust 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 in writing to the Trust by or on behalf of the Company; or (iv) arise out of or result from any failure by the Company to provide the services and furnish the materials contemplated by 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. 8.1.(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, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable. 8.1.(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which they may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the election of the Company to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1.(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Trust shares or the Contracts or the operation of the Trust. 8.2. Indemnification By the Trust 8.2.(a). The Trust will indemnify and hold harmless the Company, and each of their 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 8.2.) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Trustees or any member thereof, are related to the operations of the Trust and: (i) arise as a result of any failure by the Trust to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI. of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust; as limited by and in accordance with the provisions of Sections 8.2.(b). and 8.2.(c). hereof. 8.2.(b). The Trust 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 by subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Trust, KFSC or each Separate Account, whichever is applicable. 8.2.(c). The Trust 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 Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have 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 Trust of any such claim shall not relieve the Trust 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 Trust will be entitled to participate, at its own expense, in the defense thereof. The Trust also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Trust to such party of the Trust'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 Trustees will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2.(d). The Company and KFSC agree promptly to notify the Trust of the commencement of any litigation or proceedings against them or any of their respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of any Separate Account, or the sale or acquisition of shares of the Trust. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts; provided, however, that if such laws or any of the provisions of this Agreement conflict with applicable provisions of the 1940 Act, the latter shall control. 9.2. This Agreement shall be made subject to the provisions of the 1933, 1934, and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party upon one (1) year advance written notice to the other parties; provided, however such notice shall not be given earlier than one (1) year following the date of this Agreement; or (b) at the option the Company to the extent that shares of Series are not reasonably available to meet the requirements of the Variable Insurance Products as determined by Company; provided however, that such termination shall apply only to the Series not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Trust in the event that formal administrative proceedings are instituted against the Company or KFSC by the NASD, the SEC, the Insurance Commissioner of the domiciliary state of the Company or any other regulatory body regarding the duties of the Company under this Agreement or related to the sale of the Variable Insurance Products, with respect to the operation of a Separate Account, or the purchase of the Trust shares; provided, however, that the Trust determines in its sole judgement exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement or of KFSC to perform its obligations under its underwriting agreement with the Trust; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Trust by the NASD, the SEC, or any state securities or insurance department or any other regulatory body; provided, however, that the Company determines in its sole judgement exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Trust to perform its obligations under this Agreement; or (e) with respect to a Separate Account, upon requisite authority to substitute the shares of another investment company for shares of the corresponding Series of the Trust in accordance with the terms of the Variable Insurance Products for which those Series shares had been selected to serve as the underlying investment media. The Company will give thirty (30) days' prior written notice to the Trust of the date of any proposed action to replace the Trust shares; or (f) at the option of the Company, in the event any of the Trust's shares are not registered, issued or sold in accordance with applicable federal and any state law or such law precludes the use of such shares as the underlying investment media of the Variable Insurance Products issued or to be issued by the Company; or (g) at the option of the Company, if the Trust 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 Trust may fail to so qualify; or (h) at the option of the Company, if the Trust fails to meet the diversification requirements specified in Article VI. hereof; or (i) at the option of either the Trust or KFSC, if (1) the Trust or KFSC, respectively, shall determine, in their sole judgement reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse publicity will have a material adverse impact upon the business and operations of either the Trust or KFSC, (2) the Trust or KFSC shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Trust or KFSC shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth (60th) day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that either the Trust or KFSC has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Trust and KFSC in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Trust and/or KFSC and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth (60th) day shall be the effective date of termination; or (k) at the option of either the Trust or KFSC, if the Company gives the Trust and KFSC the written notice specified in Section 10.3.(a). hereof and at the time such notice was given there was no notice of termination outstanding under any other provision of this Agreement; provided, however any termination under this Section 10.1.(k). shall be effective forty-five (45) days after the notice specified in 10.3.(a). was given. 10.2. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1.(a). may be exercised for any reason or for no reason. 10.3. Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such termination. Furthermore, (a) in the event that any termination is based upon the provisions of Article VII., or the provision of Section 10.1.(a)., 10.1.(i)., 10.1.(j). or 10.1.(k). of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and (b) in the event that any termination is based upon the provisions of Section 10.1.(c). or 10.1.(d). of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4. Effect of Termination. Notwithstanding any termination of this Agreement, the Trust and KFSC shall at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Variable Insurance Products in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Products"). Specifically, without limitation, the Owners of the Existing Products shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Products. The parties agree that this Section 10.4. shall not apply to any terminations under Article VII. and the effect of such Article VII. terminations shall be governed by Article VII. of this Agreement. 10.5. The Company shall not redeem Trust shares attributable to the Variable Insurance Products (as opposed to Trust shares attributable to the Company's assets held in a Separate Account) except (i) as necessary to implement Owner initiated transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption"). Upon request, the Company will promptly furnish to the Trust and KFSC the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Trust and KFSC) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Variable Insurance Products, the Company shall not prevent Owners from allocating payments to a Series that was otherwise available under the Variable Insurance Products without first giving the Trustee or KFSC ninety (90) days notice of their intention to do so. ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Trust: c/o Liberty Investment Services, Inc. 600 Atlantic Avenue Boston, Massachusetts 02210 Attention: Secretary If to the Company: c/o Keyport Life Insurance Company 125 High Street Oliver Street Tower Thirteenth Floor Boston, MA 02110 Attention: General Counsel If to KFSC: Keyport Financial Services, Corp. 125 High Street Boston, Massachusetts 02110 Attention: Secretary ARTICLE XII. Miscellaneous 12.1. All persons dealing with Trust must look solely to the property of the Trust for the enforcement of any claims against the Trust hereunder and otherwise understand that neither the Trustees, officers, agents or shareholders of the Trust have any personal liability for any obligations entered into by or on behalf of the Trust. 12.2. Subject to the requirements of legal process and regulatory authority, each Party hereto shall treat as confidential the names and addresses of the Owners and all information reasonably identified as confidential in writing be any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be effected thereby. 12.6. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD, the Internal Revenue Service 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. 12.7. The Trust and KFSC agree that to the extent any advisory or other fees received by the Trust, KFSC, or SR&F are determined to be unlawful in appropriate legal or administrative proceedings, the Trust shall indemnify and reimburse the Company for any out of pocket expenses and actual damages the Company has incurred as a result of any such proceeding; provided however that the provision of Section 8.2.(b). of this and 8.2.(c). shall apply to such indemnification and reimbursement obligation. Such indemnification and reimbursement obligation shall be in addition to any other indemnification and reimbursement obligations of the Trust under this Agreement. 12.8. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligation, at law or in equity, which the parties hereto are entitled to under state and federal laws. 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. CROWN AMERICA LIFE INSURANCE COMPANY By its authorized officer, By: [SIGNATURE] Title: Senior Vice President Date: October 1, 1993 STEINROE VARIABLE INVESTMENT TRUST By its authorized officer, By: ERNST E. DUNBAR Title: Treasurer Date: October 1, 1993 KEYPORT FINANCIAL SERVICES CORP. By its authorized officer, By: Title: President Date: October 1, 1993 Schedule A 1. Variable Life Insurance Policy CAL-2 and any various thereof issued in particular states. 2. Variable Annuity Contract CAL-3 and any variations thereof issued in particular states. EX-99 8 EX-99.B9E OTH CONTRCT PARTICIPATION AGREEMENT AMONG STEINROE VARIABLE INVESTMENT TRUST STEIN ROE & FARNHAM INCORPORATED TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY and CHARLES SCHWAB & CO., INC. This Agreement, made and entered into as of this l5th day of April, 1994 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (hereinafter "Transamerica"), a California life insurance company, on its own behalf and on behalf of its Separate Account VA-5 (the "Account"); STEINROE VARIABLE INVESTMENT TRUST, a business trust organized under the laws of Massachusetts (hereinafter the "Fund"); STEIN ROE & FARNHAM INCORPORATED hereinafter the "Adviser"), a Delaware corporation; and CHARLES SCHWAB & CO., INC., a California corporation (hereinafter "Schwab"). WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and/or variable annuity contracts (collectively, the "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements similar to this Agreement (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a "Portfolio" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission (hereinafter the "SEC"), dated July 1, 1988 (File No. 812-7044), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of life insurance companies that may or may not be affiliated with one another (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolio(s) are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Adviser is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities laws; and WHEREAS, Transamerica has registered or will register certain variable annuity contracts supported wholly or partially by the Account (the "Contracts") under the 1933 Act and said Contracts are listed in Schedule A hereto, as it may be amended form time to time by mutual written agreement; and WHEREAS, the Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of Transamerica on September 28, 1993, to set aside and invest assets attributable to the Contracts; and WHEREAS, Transamerica has registered or will register the Account as a unit investment trust under the 1940 Act; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, Transamerica intends to purchase shares in the Portfolio(s) listed in Schedule B hereto, as it may be amended from time to time by mutual written agreement (the "Designated Portfolio(s)"), on behalf of the Account to fund the aforesaid Contracts, and the Fund is authorized to sell such shares to unit investment trusts such as the Account at net asset value; and WHEREAS, Schwab will perform certain services for the Fund and Adviser in connection with the Contracts; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Account also intends to purchase shares in other open- end investment companies or series thereof not affiliated with the Trust (the "Unaffiliated Funds") on behalf of the Account to fund the Contracts; and NOW, THEREFORE, in consideration of their mutual promises, Transamerica, Schwab, the Fund and the Adviser agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to Transamerica those shares of the Designated Portfolio(s) which the Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Portfolios. For purposes of this Section 1.1, Transamerica shall be the designee of the Fund for receipt of such orders and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of the applicable order by 9:30 a.m. Eastern time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Fund agrees to make shares of the Designated Portfolio(s) available for purchase at the applicable net asset value per share by Transamerica and the Account on those days on which the Fund calculates its Designated Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund will not sell shares of the Designated Portfolio(s) to any insurance company or separate account unless an agreement containing provisions substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article VII of this Agreement is in effect to govern such sales. 1.4. The Fund agrees to redeem for cash, on Transamerica's request, any full or fractional shares of the Fund held by Transamerica, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. Request for redemption identified by Transamerica, or its agent, as being in connection with surrenders, annuitizations, or death benefits under the Contracts, upon prior written notice, may be executed within seven (7) calendar days after receipt by the Fund or its designee of the requests for redemption. If permitted by an order of the SEC under Section 22(e) of the 1940 Act, the Fund shall be permitted to delay sending redemption proceeds to Transamerica beyond the foregoing deadlines, provided, however, that the Account receives similar relief to defer paying proceeds to contract Owners, and further, that the Account is treated no less favorably than the other shareholders of the Designated Portfolios. This Section 1.4 may be amended, in writing, by the parties consistent with the requirements of the 1940 Act and interpretations thereof. For purposes of this Section 1.4, Transamerica shall be the designee of the Fund for receipt of requests for redemption and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of the applicable request for redemption by 9:30 a.m. Eastern time on the next following Business Day. 1.5 The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund's shares may be sold to other insurance companies (subject to Section 1.3 and Article VI hereof) and the cash value of the Contracts may be invested in Unaffiliated Funds. 1.6. Transamerica shall pay for Fund shares by 11:00 a.m. Eastern time on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire and/or by a credit for any shares redeemed the same day as the purchase. 1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund shares by 11:00 a.m. Eastern time on the next Business Day after a redemption order is received in accordance with Section 1.4 hereof. Payment shall be in federal funds transmitted by wire and/or a credit for any shares purchased the same day as the redemption. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to Transamerica or the Account. Shares ordered from the Fund will be recorded in an appropriate title for the Account or the appropriate sub-account of the Account. 1.9. The Fund or its designee shall furnish same day notice (by wire or telephone, followed by written confirmation) to Transamerica of any income dividends or capital gain distributions payable on the Designated Portfolio(s)' shares. Transamerica hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. Transamerica reserves the right to revoke this election and to receive all such income, dividends and capital gain distributions in cash. The Fund or its designee shall notify Transamerica by the end of the next following Business Day of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Designated Portfolio available to Transamerica on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 6:00 p.m. Eastern time. The Fund or its designee shall notify Transamerica by 5:45 p.m. Eastern time in the event that the Fund cannot meet such 6:00 p.m. deadline. In such event the Fund shall use its best efforts to make such value available as soon thereafter as is practicable. If the Fund provides incorrect share net asset value information, Transamerica shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct net asset value per share (and, if and to the extent necessary, Transamerica shall make adjustments to the number of units credited and/or unit values for the Contracts for the periods affected). Any error in the calculation or reporting of net asset value per share, dividend or capital gains information shall be reported promptly upon discovery to Transamerica. Any error of a an amount less than $0.01 per share shall be corrected in the next Business Day's net asset value per share. ARTICLE II. Representations and Warranties 2.1. Transamerica represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. Transamerica further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established the Account prior to any issuance or sale thereof as a segregated asset account under applicable law (Section 10506 of the California Insurance Law) and has registered 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. 2.2. The Fund represents and warrants that Designated Portfolio shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with all applicable federal securities laws including without limitation the 1933 Act, the 1934 Act, and the 1940 Act and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. 2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1 under the 1940 Act and to impose an asset-based or other charge to finance distribution expenses as permitted by applicable law and regulation. In any event, the Fund and Adviser agree to comply with applicable provisions and SEC staff interpretations of the 1940 Act to assure that the investment advisory or management fees paid to the Adviser by the Fund are legitimate and not excessive. To the extent that the Fund decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses. 2.4. The Fund represents and warrants that the investment policies, fees and expenses of the Designated Portfolio(s) are and shall at all times remain in compliance with the insurance and other applicable laws of the State of California and any other applicable state to the extent required to perform this Agreement. The Fund further represents and warrants that Designated Portfolio shares will be sold in compliance with the insurance laws of the State of California and all applicable state insurance and securities laws. Transamerica will advise the Fund of any applicable changes in California insurance law that affect the Designated Portfolios, and the Fund will be deemed to be in compliance with this Section 2.4 so long as the Fund complies with such advice of Transamerica. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund with the concurrence of Transamerica. Without limiting the generality of the foregoing, the Fund represents and warrants that it is and shall at all times remain in compliance with the policies and restrictions enumerated in Schedule C hereto, except as to those items disclosed to and not objected to by the Department of Insurance of the State of California. 2.5. The Fund represents and warrants that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material aspects with the 1940 Act. 2.6. The Adviser represents and warrants that it is and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of Delaware and any applicable state and federal securities laws. 2.7. The Fund and the Adviser represent and warrant that all of their officers, employees, investment advisers, and other individuals or entities dealing with money and/or securities of the Fund are, and shall continue to be at all times, covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage required by Section 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. 2.8. Schwab represents and warrants that it has completed, obtained and performed, in all material respects, all registrations, filings, approvals, and authorizations, consents and examinations required by any government or governmental authority as may be necessary to perform this Agreement. Schwab does and will comply, in all material respects, with all applicable laws, rules and regulations in the performance of its obligations under this Agreement. 2.9. The Fund will provide Transamerica with as much advance notice as is reasonably practicable of any material change affecting the Designated Portfolio(s) (including, but not limited to, any material change in its registration statement or prospectus affecting the Designated Portfolio(s) and any proxy solicitation affecting the Designated Portfolio(s) and consult with Transamerica in order to implement any such change in an orderly manner, recognizing the expenses of changes and attempting to minimize such expenses by implementing them in conjunction with regular annual updates of the prospectus for the Contracts. The Fund or Adviser agree to share equitably in expenses incurred by Transamerica as a result of actions taken by the Fund, consistent with the allocation of expenses contained in Schedule F. 2.10. The Insurance Company represents, assuming that the Fund complies with Article VI of this Agreement, that the Contracts are currently treated as annuity contracts under applicable provisions of the Internal Revenue Code of 1986 (the "Code"), as amended, and that it will make every effort to maintain such treatment and that it will notify the Fund immediately upon having a reasonably basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.11. Transamerica represents and warrants that it will not purchase Fund shares with assets derived from tax-qualified retirement plans except indirectly, through Contracts purchased in connection with such plans. 2.12. Transamerica represents and warrants that it will not transfer or otherwise convey shares of any Designated Portfolio, without the prior written consent of the Fund, which consent shall not be unreasonably withheld. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1. At least annually, the Fund or the Adviser shall provide Transamerica and Schwab with as many copies of the Fund's current prospectus for the Designated Portfolio(s) as Transamerica and Schwab may reasonably request for marketing purposes (including distribution to Contract owners with respect to new sales of a Contract). If requested by Transamerica in lieu thereof, the Adviser or Fund shall provide such documentation (including a final copy of the new prospectus for the Designated Portfolio(s)) and other assistance as is reasonably necessary in order for Transamerica once each year (or more frequently if the prospectus for the Designated Portfolio are amended) to have the prospectus for the Contracts and the Fund's prospectus for the Designated Portfolio(s) printed together in one document. The Fund and Adviser agree that the prospectus, and semi- annual and annual reports for the Designated Portfolio(s) provided pursuant to this Section 3.1 will described only the Designated Portfolio(s) and will not name or describe any other portfolios or series that may be in the Fund unless required by law. 3.2. If applicable state or Federal laws or regulations require that the Statement of Additional Information ("SAI") for the Fund be distributed to all Contract purchasers, then the Adviser or the Fund shall provide Transamerica with the Fund's SAI or documentation thereof in such quantities and/or with expenses to be borne in accordance with Schedule F hereof. 3.3. The Fund or the Adviser shall provide Transamerica and Schwab with as many copies of the Fund's SAI as each of them may reasonably request. The Fund or the Adviser shall also provide such SAI to any owner of a Contract or prospective owner who requests such SAI (although it is anticipated that such requests will be made to Schwab). 3.4. The Fund shall provide Transamerica with copies of its prospectus, SAI, proxy material, reports to stockholders and other communications to stockholders for the Designated Portfolio(s) in such quantity as Transamerica shall reasonably require for distributing to Contract owners. 3.5. It is understood and agreed that, except with respect to information regarding Transamerica or Schwab provided in writing by that party, neither Transamerica nor Schwab are responsible for the content of the prospectus or SAI for the Designated Portfolio(s). It is also understood and agreed that, except with respect to information regarding the Fund, Adviser or the Designated Portfolio(s) provided in writing by the Fund or the Adviser, neither the Fund nor Adviser are responsible for the content of the prospectus or SAI for the Contracts. 3.6. If and to the extent required by law, Transamerica shall: (i) solicit voting instructions from Contract owners; (ii) vote the Designated Portfolio shares in accordance with instructions from Contract owners; and (iii) vote Designated Portfolio shares for which no instructions have been received in the same proportion as Designated Portfolio shares for instructions have been received from Contract owners, 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. Transamerica reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. 3.7. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts holding shares of a Designated Portfolio calculates voting privileges in the manner required by the Shared Funding Exemptive Order. Transamerica's procedures currently are in compliance with such requirements, as described in Schedule G. The Fund agrees to promptly notify Transamerica of any changes of interpretations or amendments of the Shared Funding Exemptive Order. 3.8. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends, comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of directors or trustees and with whatever rules the Commission may promulgate with respect thereto. The Fund reserves the right, upon 45 days prior written notice to Transamerica and Schwab, to take all actions, including but not limited to, the dissolution, merger, and sale of all assets of the Fund or any Designated Portfolio upon the sole authorization of the Board, to the extent permitted by the laws of The Commonwealth of Massachusetts and the 1940 Act. ARTICLE IV. Sales Material and Information 4.1. Transamerica and Schwab shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material that Transamerica or Schwab, respectively, develops or proposes to use and in which the Fund (or a Portfolio thereof), its investment adviser or one of its sub-advisers or the underwriter for the Fund shares is named in connection with the Contracts, at least 10 (ten) Business Days prior to its use. No such material shall be used if the Fund or its designee objects to such use within 5 (five) Business Days after receipt of such material. 4.2. Transamerica and Schwab shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Adviser, except with the permission of the Fund or the Adviser. 4.3. The Fund or Adviser shall furnish, or shall cause to be furnished, to Transamerica and Schwab, a copy of each piece of sales literature or other promotional material in which Transamerica and/or its separate account(s), or Schwab is named at least 10 (ten) Business Days prior to its use. No such material shall be used if Transamerica or Schwab objects to such use within 5 (five) Business Days after receipt of such material. 4.4. The Fund and the Adviser shall not give any information or make any representations on behalf of Transamerica or concerning Transamerica, the Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports for the Account, or in sales literature or other promotional material approved by Transamerica or its designee, except with the permission of Transamerica. 4.5. The Fund and Adviser shall not give any information or make any representations on behalf of or concerning Schwab, or use Schwab's name except with permission of Schwab. 4.6. The Fund will provide to Transamerica and Schwab at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, 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 Designated Portfolio(s), contemporaneously with the filing of such document(s) with the SEC or NASD or other regulatory authorities. 4.7. Transamerica or Schwab will provide to the Fund at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Account, contemporaneously with the filing of such document(s) with the SEC, NASD, or other regulatory authority. 4.8. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials. 4.9. At the request of any party to this Agreement, each other party will make available to the other party's independent auditors and/or representative of the appropriate regulatory agencies, all records, data and access to operating procedures that may be reasonably requested in connection with compliance and regulatory requirements related to this Agreement or any party's obligations under this Agreement. ARTICLE V. Fees and Expenses 5.1. The Fund and the Adviser shall pay no fee or other compensation to Transamerica under this Agreement, and Transamerica shall pay no fee or other compensation to the Fund or Adviser under this Agreement, although the parties hereto will bear certain expenses in accordance with Schedule F, Articles III, V, and other provisions of this Agreement. 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund, as further provided in Schedule F. The Fund shall see to it that all shares of the Designated Portfolio(s) are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. 5.3. The parties shall bear the expenses of routine annual distribution (mailing costs) of the Fund's prospectus and distribution (mailing costs) of the Fund's proxy materials and reports to owners of Contracts offered by Transamerica, as provided in Schedule F. 5.4. The Fund and Adviser acknowledge that a principal feature of the Contracts is the Contract owner's ability to choose from a number of unaffiliated mutual funds (and portfolios or series thereof), including the Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the Contract's cash value between funds and portfolios. The Fund and Adviser agree to cooperate with Transamerica and Schwab in facilitating the operation of the Account and the Contracts as intended, including but not limited to cooperation in facilitating transfers between Unaffiliated Funds. 5.5. Schwab agrees to provide certain administrative services, specified in Schedule D hereto, in connection with the arrangements contemplated by this Agreement. The parties acknowledge and agree that the services referred to in this Section 5.5 are recordkeeping, shareholder communications, and other transaction facilitation and processing, and related administrative services only and are not the services of an underwriter or a principal underwriter of the Fund and that Schwab is not an underwriter for the shares of the Designated Portfolio(s), within the meaning of the 1933 Act or the 1940 Act. 5.6. As compensation for the services specified in Schedule D hereto, the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on the percentage per annum on Schedule D hereto applied to the average daily value of the shares of the Designated Portfolio(s) held in the Account with respect to Contracts sold by Schwab. This monthly Administrative Service Fee is due and payable before the 15th (fifteenth) day following the last day of the month to which it relates. ARTICLE VI. Diversification and Qualification 6.1. The Fund and Adviser represent and warrant that the Fund will at all times sell its shares and invest its assets in such a manner as to ensure that the Contracts will be treated as annuity contracts under the Code, and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund and Adviser represent and warrant that the Fund and each Designated Portfolio thereof will at all times comply with Section 817(h) of the Code and Treasury Regulation [Section] 1.817- 5, as amended from time to time, 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 Regulations. The Fund and the Adviser agree that shares of the Designated Portfolio(s) will be sold only to Participating Insurance Companies and their separate accounts. 6.2. No shares of any series or portfolio of the Fund will be sold to the general public. 6.3. The Fund and Adviser represent and warrant that the Fund and each Designated Portfolio is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will maintain such qualification (under Subchapter M or any successor or similar provisions) as long as this Agreement is in effect. 6.4. The Fund or Adviser will notify Transamerica immediately upon having a reasonable basis for believing that the Fund or any Portfolio has ceased to comply with the aforesaid Section 817(h) diversification or Subchapter M qualification requirements or might not so comply in the future. 6.5. The Fund and Adviser acknowledge that full compliance with the requirements referred to in Sections 6.1, 6.2, and 6.3 hereof is absolutely essential because any failure to meet those requirements would result in the Contracts not being treated as annuity contracts for federal income tax purposes, which would have adverse tax consequences for Contract owners and could also adversely affect Transamerica's corporate tax liability. The Fund and Adviser also acknowledge that it is solely within their power and control to meet those requirements. Accordingly, without in any way limiting the effect of Section 8.3 hereof and without in any way limiting or restricting any other remedies available to Transamerica, the Adviser will pay all costs associated with or arising out of any failure, or any anticipated or reasonably foreseeable failure, of the Fund or any Designated Portfolio to comply with Sections 6.1, 6.2 or 6.3 hereof, including all costs associated with reasonable and appropriate corrections or responses to any such failure; such costs may include, but are not limited to, the costs involved in creating, organizing, and registering a new investment company as a funding medium for the Contracts and/or the costs of obtaining whatever regulatory authorizations are required to substitute shares of another investment company for those of the failed Portfolio (including but not limited to an order pursuant to Section 26(b) of the 1940 Act); such costs are to include, but are not limited to, fees and expenses of legal counsel and other advisors to Transamerica and any federal income taxes or tax penalties (or "toll charges" or exactments or amounts paid in settlement) incurred by Transamerica with respect to itself or owners of its Contracts in connection with any such failure or anticipated or reasonably foreseeable failure. 6.6. The Fund shall provide Transamerica or its designee with reports certifying compliance with the aforesaid Section 817(h) diversification and Subchapter M qualification requirements, at the times provided for and substantially in the form attached hereto as Schedule E; provided, however, that providing such reports does not relieve the Fund or Adviser of their responsibility for such compliance or of their liability for non-compliance. ARTICLE VII. Potential Conflicts and Compliance With Shared Funding Exemptive Order 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Designated Portfolio(s) are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners. The Board shall promptly inform Transamerica if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. Transamerica will report any potential or existing conflicts of which it is aware to the Board. Transamerica will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by Transamerica to inform the Board whenever contract owner voting instructions are disregarded. Such responsibilities (other than the duty to report, which is unqualified) shall be carried out by Transamerica with a view only to the interests of its Contract Owners. 7.3. If it is determined by a majority of the Board, or a majority of its directors who are not interested persons of the Fund, the Adviser or any sub-adviser to any of the Portfolios (the "Independent Directors"), that a material irreconcilable conflict exists, Transamerica and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the Independent Directors), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Designated Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Designated Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by Transamerica to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, Transamerica may be required, at the Fund's election, to withdraw the Account's investment in the Fund and terminate this Agreement; provided, however; that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the Independent Directors. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of the effective date of such termination the Fund shall continue to accept and implement orders by Transamerica for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to Transamerica conflicts with the majority of other state regulators, then Transamerica will withdraw the Account's investment in the Fund and terminate this Agreement within six months after the Board informs Transamerica in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the effective date of such termination, the Fund shall continue to accept and implement orders by Transamerica for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the Independent Trustees shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. Transamerica shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then Transamerica will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs Transamerica in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the Independent Trustees. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) or terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By Transamerica 8.1(a). Transamerica agrees to indemnify and hold harmless the Fund and its officers and each member of its Board and the Adviser (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of Transamerica) 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, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus 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 in writing to Transamerica or Schwab by or on behalf of the Adviser or Fund for use in the registration statement or prospectus 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 are based upon any untrue statements or alleged untrue statements of any material fact contained in any Registration Statement, prospectus, or statement or additional information for any Unaffiliated Fund, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, or otherwise pertain to or arise in connection with the availability of any Unaffiliated Funds as an underlying funding vehicle in respect of the Contracts; or (iii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by Transamerica or persons under its control) or wrongful conduct of Transamerica or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iv) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, 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 in writing to the Fund by or on behalf of Transamerica; or (v) arise as a result of any failure by Transamerica to provide the services and furnish the materials under the terms of this Agreement; or (vi) arise out of or result from any material breach of any representation and/or warranty made by Transamerica in this Agreement or arise out of or result from any other material breach of this Agreement by Transamerica, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). Transamerica shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.1(c). Transamerica 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 Transamerica 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 Transamerica of any such claim shall not relieve Transamerica 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, except to the extent that Transamerica has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, Transamerica shall be entitled to participate, at its own expense, in the defense of such action. Transamerica also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from Transamerica to such party of Transamerica's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and Transamerica will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify Transamerica 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. 8.2. Indemnification By Schwab 8.2(a). Schwab agrees to indemnify and hold harmless the Fund and its officers and each member of its Board and the Adviser (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of Schwab) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon Schwab's dissemination of information regarding the Fund that is both (A) materially incorrect and (B) that was not either contained in the Fund's registration statement or sales literature or provided in writing to Schwab, or approved in writing, by or on behalf of the Fund or the Adviser; or (ii) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the sales literature for the Contracts 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 in writing to Transamerica or Schwab by or on behalf of the Adviser or Fund for use in the registration statement or prospectus 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 (iii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by Schwab or persons under its control) or wrongful conduct of Schwab or persons under its control, with respect to the sale or distribution of the Contracts; or (iv) arise as a result of any failure by Schwab to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by Schwab in this Agreement or arise out of or result from any other material breach of this Agreement by Schwab; or (vi) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in any Registration Statements, prospectus, or statement of additional information for any Unaffiliated Fund, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, or otherwise pertain to or arise in connection with the availability of any Unaffiliated Funds as an underlying funding vehicle in respect of the Contract; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). Schwab shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.2(c). Schwab 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 Schwab 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 Schwab of any such claim shall not relieve Schwab 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, except to the extent that Schwab has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, Schwab shall be entitled to participate, at its own expense, in the defense of such action. Schwab also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from Schwab to such party of Schwab's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and Schwab will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Indemnified Parties will promptly notify Schwab 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. 8.3. Indemnification by the Adviser 8.3(a). The Adviser agrees to indemnify and hold harmless Transamerica and Schwab and each of their directors and officers and each person, if any, who controls Transamerica or Schwab within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature for the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished in writing to the Adviser or Fund by or on behalf of Transamerica or Schwab for use in the Registration Statement or prospectus 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 are based upon statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Fund or Adviser or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, 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 in writing to Transamerica or Schwab by or on behalf of the Adviser or Fund; or (iv) arise as a result of any failure by the Fund or Adviser 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 Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Fund or Adviser in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. This indemnification is in addition to and apart from the responsibilities and obligations of the Adviser specified in Article VI hereof. 8.3(b). The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to Transamerica or to Schwab or the Account, whichever is applicable. 8.3(c). The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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, except to the extent that the Adviser has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, the Adviser will be entitled to participate, at its own expense, in the defense thereof. The Adviser also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser to such party of the Adviser'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 Adviser will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). Transamerica and Schwab agree promptly to notify the Adviser of the commencement of any litigation or proceedings against it or any of its officers and directors in connection with the issuance or sale of the Contracts or the operation of the Account. 8.4. Indemnification By the Fund 8.4(a). The Fund agrees to indemnify and hold harmless Transamerica and Schwab, and each of their directors and officers and each person, if any, who controls Transamerica or Schwab within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.4) against any and all losses, claims, 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 Article VI 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; or (iii) arise out of or result from the incorrect or untimely calculation or reporting of the daily net asset value per share or dividend or capital gain distribution rate; as limited by and in accordance with the provisions of Sections 8.4(b) and 8.4(c) hereof. 8.4(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 by subject by reason of such Indemnified Party's willful misfeasance, bad faith, or 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 Transamerica, Schwab, the Fund, the Adviser or the Account, whichever is applicable. 8.4(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 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, except to the extent that the Fund has been prejudiced by such failure to give notice. 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. 8.4(d). Transamerica and Schwab each agree promptly to notify the Fund of the commencement of any litigation or proceedings against itself or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of State of California, except the California conflict of laws provisions. 9.2. This Agreement shall be made 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 Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party, with or without cause, with respect to some or all Designated Portfolios, upon one (1) year advance written notice delivered to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of Transamerica by written notice to the other parties with respect to any Designated Portfolio based upon Transamerica's reasonable and good faith determination that shares of such Designated Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) at the option of Transamerica by written notice to the other parties with respect to any Designated Portfolio 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 Transamerica; or (d) at the option of the Fund in the event that formal administrative proceedings are instituted against Transamerica or Schwab by the NASD, the SEC, the Insurance Commissioner of like official of any state or any other regulatory body regarding Transamerica's or Schwab's duties under this Agreement or related to the sale of the Contracts, the operation of any Account, or the purchase of the Fund shares or the shares or sponsor of any Unaffiliated Fund, provided, however, that the Fund determines in its sole judgement exercised reasonably and in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of Transamerica or Schwab to perform its obligations under this Agreement or would have a material adverse impact upon the Fund; or (e) at the option of Transamerica in the event that formal administrative proceedings are instituted against the Fund or Adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, provided, however, that Transamerica determines in its sole judgement exercised reasonably and in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund or Adviser to perform its obligations under this Agreement; or (f) at the option of Transamerica by written notice to the Fund and the Adviser with respect to any Portfolio if Transamerica reasonably and in good faith believes that the Portfolio will fail to meet the Section 817(h) diversification requirements or Subchapter M qualifications specified in Article VI hereof; or (g) at the option of either the Fund or Adviser, if (i) the Fund or Adviser, respectively, shall determine, in their sole judgement reasonably exercised in good faith, that either Transamerica or Schwab has suffered a material adverse change in their business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact on Transamerica's or Schwab's ability to perform its obligations under this Agreement, (ii) the Fund or Adviser notifies Transamerica or Schwab, as appropriate, of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by Transamerica or Schwab and any other changes in circumstances since the giving of such notice, the determination of the Fund or Adviser shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (h) at the option of either Transamerica or Schwab, if (i) Transamerica or Schwab, respectively, shall determine, in its sole judgment reasonably exercised in good faith, that either the Fund or Adviser have suffered a material adverse change in their business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact upon the Fund's or Adviser's ability to perform its obligations under this Agreement, (ii) Transamerica or Schwab notifies the Fund or Adviser, as appropriate, of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by the Fund or Adviser and any other changes in circumstances since the giving of such notice, the determination of Transamerica or Schwab shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (i) termination at the option of Transamerica in the event that formal administrative proceedings are instituted against Schwab by the NASD, the Securities and Exchange Commission, or any state securities or insurance department or any regulatory body regarding Schwab's duties under this Agreement or related to the sale of the Fund's shares or the Contracts, the operation of any Account, or the purchase of Fund shares, provided, however, that Transamerica determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of Schwab to perform its obligations related to the Contracts. 10.2. Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice shall set forth the basis for such termination. 10.3. Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Adviser, shall, at the option of Transamerica, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Designated Portfolio(s) (as in effect on such date), redeem investments in such Designated Portfolios(s) and/or invest in such Designated Portfolios(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.3 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.4. Surviving Provisions. Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties shall survive and not be affected by any termination of this Agreement. In addition, with respect to Existing Contracts, all provisions of this Agreement shall also survive and not be affected by any termination of this Agreement. 10.5. Survival of Agreement. A termination by Schwab shall terminate this Agreement only as to that party, and this Agreement shall remain in effect as to the other parties; provided, however, that in the event of a termination by Schwab the other parties shall have the option to terminate this Agreement upon 60 (sixty) days notice, rather than the one (1) year specified in Section 10.1(a). ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: SteinRoe Variable Investment Trust c/o Liberty Investment Services, Inc. 600 Atlantic Avenue Boston, Massachusetts 02210 Attention: Secretary If to Transamerica: Transamerica Occidental Life Insurance Company 115 South Olive Los Angeles, CA 90015 Attention: President, Living Benefits Division If to the Adviser: Stein Roe & Farnham Incorporated One South Wacker Drive Chicago, IL 60606 Attention: Secretary If to Schwab: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94014 Attention: General Counsel ARTICLE XII. Miscellaneous 12.1. Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as such information may come into the public domain. Without limiting the foregoing, no party hereto shall disclose any information designated as proprietary by another party. 12.2. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.3. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.4. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.5. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the Securities and Exchange Commission, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the California 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 annuity operations of Transamerica are being conducted in a manner consistent with the California Variable Annuity Regulations and any other applicable law or regulations. 12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.7. This Agreement or any of the rights or obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto. 12.8. All persons dealing with the Fund and any Designated Portfolio shall look solely to the assets of such Designated Portfolio for the enforcement of any claims against the Fund hereunder. Each other party acknowledges and agrees that none of the Trustees, officers or shareholders of the Fund shall have any personal liability for any obligations entered into by or on behalf of the Fund. 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. Transamerica: TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY By its authorized officer, By: [SIGNATURE] Title: President, Living Benefits Division Date: 4/12/94 Fund: STEIN ROE & FARNHAM INCORPORATED By its authorized officer, By: TIMOTHY H. ARMOUR Title: President Date: 4/4/94 Adviser: STEINROE VARIABLE INVESTMENT TRUST on behalf of the Designated Portfolio By its authorized officer, By: RICHARD R. CHRISTENSEN Title: President Date: 4/7/94 Schwab: CHARLES SCHWAB & CO., INC. By its authorized officer, By: [SIGNATURE] Title: Vice President Date: April 4, 1994 SCHWAB INVESTMENT ADVANTAGE, A VARIABLE ANNUITY SCHEDULE A ---------- Contracts Form Numbers - --------- ------------ Transamerica Occidental Life Insurance Company - ---------------------------------------------- Group Annuity Contract Form No. GNP-215-193 Dollar Cost Averaging Endorsement Form No. GPM-020-193 Automatic Payout Option Endorsement Form No. GPM-021-193 Systematic Withdrawal Option Endorsement Form No. GPM-022-193 Acceptance of Group Annuity Contract Form No. GNA-212-193 Variable Annuity Application Form No. GNA-213-193 Certificate of Participation Form No. GNC-37-193 IRA Endorsement Form No. GCE-020-193 Benefit Distribution Endorsement Form No. GCE-021-193 Dollar Cost Averaging Endorsement Form No. GCE-022-193 Automatic Payout Option Endorsement Form No. GCE-923-193 Systematic Withdrawal Option Endorsement Form No. GCE-024-193 First Transamerica Life Insurance Company - ----------------------------------------- Group Annuity Contract Form No. FTGP-501-193 Dollar Cost Averaging Endorsement Form No. FTGE-003-193 Automatic Payout Option Endorsement Form No. FTGE-004-193 Systematic Withdrawal Option Endorsement Form No. FTGE-005-193 Acceptance of Group Annuity Contract Form No. FTGA-003-193 Variable Annuity Application Form No. FTGA-004-193 Certificate of Participation Form No. FTCG-101-193 IRA Endorsement Form No. FTCE-005-193 Benefit Distribution Endorsement Form No. FTCE-006-193 Dollar Cost Averaging Endorsement Form No. FTCE-007-193 Automatic Payout Option Endorsement Form No. FTCE-008-193 Systematic Withdrawal Option Endorsement Form No. FTCE-009-193 Annuity Rate Table Endorsement Form No. FTCE-010-193 SCHEDULE B ---------- Designated Portfolios - --------------------- Capital Appreciation Fund SCHEDULE C ---------- Certain Investment Policies and Restrictions Imposed by the California Department of Insurance Pursuant to Section 2.4 hereof, the Fund represents and warrants that it is and shall at all times remain in compliance with the following investment policies and restrictions. THESE ARE IN ADDITION TO other related obligations of the Fund, including the general obligation to comply with all applicable laws and regulation, including but not limited to California insurance laws and regulations, the Investment Company Act of 1940, and other applicable insurance and securities laws. [Note: The following are derived from a questionnaire used by the California Department of Insurance as part of an insurance company's application for qualification to transact a variable annuity business. The parenthetical references below are to question numbers in that questionnaire.] The Fund represents and warrants that: 1. All repurchase agreements will be transacted only with entities meeting specific credit and solvency standards administered and verified by the Adviser (46(a)). 2. All repurchase transactions will be executed pursuant to a comprehensive master repurchase agreement setting forth the terms and conditions of the transaction, and having the incidents of a valid promissory note in favor of the Fund (46(b)). 3. A valid, binding security interest in favor of the Fund or portfolio thereof will be created and perfected in all collateral securing such repurchase agreements (46(c)). 4. All such repurchase agreements will be secured at all times by collateral consisting of liquid assets having a market value of not less than 102% of the cash or assets transferred to the other party (46(d)). 5. All securities lending activities will be entered into only with entities meeting specific credit and solvency standards administered and verified by the Adviser (47). 6. All investments in instruments or certificates of any sort issued by the U.S. Office of a bank or other savings institution domiciled in a foreign nation, or a foreign branch of a U.S. savings institution, will be instruments or certificates payable in the United States and in U.S. dollars (48). 7. All investments of the Fund which possess a readily-available market value will be valued either at their market value on the date of valuation, or at amortized cost if it approximates market value within the limits and constraints imposed by the U.S. Securities and Exchange Commission (49). 8. All investments of the Fund which lack a readily-available market will be valued according to specific, objective methods or procedures set forth in writing (50). 9. The investment manager of each portfolio or series of the Fund possesses substantial expertise and experience as an investment manager or advisor of a portfolio consisting of asset and investments of the same type as he or she will manage in regard to the portfolio or series. (If experience is less than three years, please provide resume of investment manager; note that in this case, the Company must provide notarized certifications that it has fully investigated and is satisfied with the qualifications, background, and expertise of the investment manager.) (52). 10. At no time during the past ten years have the managers of any portfolio or series resigned to avoid dismissal or been dismissed or requested to resign from any position involving investment duties, on account of violation of any law, rule or ethical standard relating to insurance, annuities, or securities (53). 11. The investment advisory agreements concerning the Fund's operations provide in substance that notwithstanding any other provisions of the agreement, it is understood and agreed that the Fund shall retain the ultimate responsibility for and control of all investments made pursuant to the agreement, and reserve the right to direct, approve or disapprove any action taken on its behalf by the investment advisor (54). 12. Every custodian holding securities or other assets of the Fund is an institution permitted to serve in such capacity by the Investment Company Act of 1940 and/or reviewed and approved for such purposes by the U.S. Securities and Exchange Commission (55). 13. The Fund refuses to employ in any material connection with the handling of assets of the Fund, any person who: (a) In the last 10 years has been convicted of any felony or misdemeanor arising out of conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving violations of Title 18, United States Code [Sections] 1341, 1342, or 1343 (58(a)). (b) Within the last 10 years has been found by any state regulatory authority to have violated or has acknowledged violation of, any provision of any state insurance law involving fraud, deceit or knowing misrepresentation (59(b)). (c) Within the last 10 years has been found by any federal or state regulatory authorities to have violated, or have acknowledged violation of, any provisions of federal or state securities laws involving fraud, deceit, or knowing misrepresentation (58(c)). 14. The Fund will make inquiries and attempt to determine that no persons, firms, or employees of firms which supply consulting, investment, administrative, custodial or other services affecting the administration of the Company's variable annuity business (including such services for the Fund), have been subject to the sanctions described in the preceding representation (59). 15. The Fund will seek to prevent its officers and Board members, and officers, directors and portfolio managers of the investment advisor, from receiving, directly or indirectly, any commission, or any other compensation with respect to the purchase or sale of assets of the Fund (61). 16. No officer, director, trustee, or member of any governing board or body of the Fund will receive directly or indirectly any commissions or any other compensation contingent upon the writing, issuance, sale, procurement of application for, or renewal, of any variable annuity contract (62). 17. All service agreements affecting the administration of the Fund allow the Fund to terminate such contracts without payment of any penalty, forfeiture, compulsory buyout amount, or performance of any other obligation which could deter termination (65). 18. All service agreements affecting the administration of the Fund afford the Fund a right to cancel the contract and discharge the servicing entity or person in the event such entity of person fails to perform in a satisfactory manner (66). 19. All service agreements affecting the administration of the Fund provide that the Fund shall own and control all the pertinent records pertaining to its operations (67). 20. All service agreements affecting the administration of the Fund provide that the Fund shall have the right to inspect, audit and copy all records pertaining to performance of services under the agreement (68). SCHEDULE D ---------- ADMINISTRATIVE SERVICES ----------------------- To be performed by Charles Schwab & Co., Inc. A. Schwab will provide the properly registered and licensed personnel and systems needed for all customer servicing support - for both fund and annuity information and questions - including: delivery of prospectus - both fund and annuity; entry of initial and subsequent orders; transfer of cash to insurance company and/or funds; explanations of fund objectives and characteristics; entry of transfers between funds; fund balance and allocation inquiries; mail fund prospectus; B. Schwab will calculate on a daily basis for each fund the number of shares and the asset balance on which the fee is to be paid pursuant to this agreement. Also provided will be a monthly summary of the reports, expressed in both shares and dollar amounts. C. Schwab will communicate all purchase, withdrawal, and exchange orders it receives from its customers to Transamerica who will retransmit them to each fund. D. For its services, Schwab shall receive a fee of 0.20% per annum applied to the average daily value of the shares of the fund held by Schwab's customers, payable by the Adviser directly to Schwab, such payments being due and payable within 15 (fifteen) days after the last day of the month to which such payment relates. SCHEDULE E ---------- Reports per Section 6.6 ----------------------- With regard to the reports relating to the quarterly testing of compliance with the requirement of Section 817(h) and Subchapter M under the Internal Revenue Code (the "Code") and the regulations thereunder, the Fund shall provide within twenty (20) Business Days of the close of the calendar quarter a report in the attached form regarding the status under such sections of the Code of the Designated Portfolio(s), and if necessary, identification of any remedial action to be taken to remedy non-compliance. With regard to the reports relating to the year-end testing of compliance with the requirements of Subchapter M of the Code, referred to hereinafter as "RIC status," the Fund will provide the reports on the following basis: the year-end report in the attached form will be provided 45 days after the end of the calendar year, but prior thereto, the Fund will provide the additional interim and supplemental reports, described below. The additional reports are as follows: 1. A report in the usual reporting format and content, as of November 30, of each future fiscal year. The report will be provided under cover of a letter from the Adviser stating that the Fund is in full compliance with the requirements of Section 817(h) and Subchapter M of the Code. Assuming such satisfactory report, the Fund will not provide any additional interim reports. The report will be delivered by facsimile by the twentieth day of December. 2. In the alternative, if a problem, as defined below, is identified in the November report or its accompanying transmittal letter, additional interim reports, on a weekly basis, starting on the 15th of December and through the 30th of December, also will be supplied ("additional interim reports"). The additional interim reports will not follow the format of the regular reports, but will specifically address the problem identified in the November 30 report. If any interim report, thereafter, memorializes the cure of the problem, subsequent additional reports will not be required. With regard to the delivery of the additional reports, they will be transmitted by facsimile on the next Business Day, subject to the following schedule of special dates: if the 15th of December is a Saturday, the required report date will be accelerated to the 14th of December; if the 15th of December is a Sunday, the report will be transmitted on the 16th of December. 3. A problem with regard to RIC status is defined as any violation of the following standards, as referenced to the applicable sections of the Code: (a) Less than ninety-five percent of gross income is derived from sources of income specified in Section 851(b)(2); (b) Twenty-five percent or greater gross income is derived from the sale or disposition of assets specified in Section 851(b)(3); (c) Fifty-five percent or less of the value of total assets consists of assets specified in Sections 851(b)(4)(A); and (d) Twenty percent or more of the value of total assets is invested in the securities of one issuer, as that requirement is set forth in Section 851(b)(4)(B). STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: Liberty Investment Services, Inc. Requirements for Regulated Investment Companies and Specific Investment Restrictions Source: AICPA Audit and Accounting Guide - Audits of Investment Companies To qualify as a regulated investment company for tax purposes, an investment company generally must: a) Derive at least 90 percent of its gross income RIC 3,4 RIC 3,4 RIC 3,4 RIC 3, 4 from dividends, interest, income from securities on loan, and gains (without including losses) from the sale or other disposition of securities. (Perform monthly.) b) Derive less than 30 percent of its gross income 10.68% 13.29% 22.10% 13.74% from gains (without including losses) on the sale or other disposition of securities held for less than three months (short-short test). (Perform monthly.) c) Distribute at least 90 percent of its investment DONE @Y/E DONE @Y/E DONE @Y/E Y company taxable income for the taxable year. (Perform quarterly.) To meet the diversification requirements at the RIC RIC RIC RIC end of each quarter of the taxable year, at least WORKSHEET WORKSHEET WORKSHEET WORKSHEET 50 percent of the value of the company's total 5 C 5 C 5 C 5 C assets must be represented by cash and cash equivalents, U.S. government securities, securities PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLO of other regulated investment companies, and other MANAGER MANAGER MANAGER MANAGER securities. For that purpose, other securities do CHECKLIST CHECKLIST CHECKLIST CHECKLIST not include investments in the securities of any 3, 33 3, 33 3, 33 3, 33 one issuer that represent more than 5 percent of the value of the investment company's total assets or more than 10 percent of the issuer's outstanding voting securities. The diversification requirements further prohibit an investment company from investing more than 25 percent of its total assets in the securities of any one issuer, except for the securities of the U.S. government or other regulated investment companies. The requirements also prohibit investing more than 25 percent of the company's total assets in two or more issuers controlled by the investment company that are engaged in the same (or similar) or related trade or business. For that purpose, the company controls the issuers if it has 20 percent or more of the combined voting power. the investment company should keep a record of those quarterly computations. (Perform monthly.) Municipal Bond Funds A dividend qualifies as an exempt-interest dividend only if both of the following conditions are met: a) At least 50 percent of the value of the total N/A N/A N/A N/A assets of the regulated investment company at the close of each quarter of its taxable year consists of certain tax-exempt government obligations. b) The dividend is designated by the regulated N/A N/A N/A N/A investment company as an exempt-interest dividend in a written notice mailed to shareholders not later than sixty days after the end of its taxable year.
Page 1 of 6 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: CAPITAL APPRECIATION FUND Source: Prospectus dated May 1, 1992 Investment Techniques 1) The Capital Appreciation Fund may invest up to PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO 25% of its total assets in securities of foreign MG CHECK- MG CHECK- MG CHECK- MG CHECK- issuers that are not publicly traded in the U.S. LIST 24 LIST 24 LIST 24 LIST 24 (foreign securities). 2) The Fund may enter into forward contracts to sell NOTED NOTED NOTED NOTED an amount of foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in such foreign currency. The Fund may also enter into forward foreign currency contracts to protect against loss between Trade and Settlement dates resulting from changes in foreign currency exchange rates. 3) The Fund may invest in securities purchased on a NOTED NOTED NOTED NOTED when-issued or delayed-delivery basis. 4) The Fund may invest in securities purchased on a NOTED NOTED NOTED NOTED standby commitment basis. NOTE: The Fund may receive a commitment fee in consideration for its standby commitment. NOTE: When the adviser deems a temporary defensive position advisable, the Fund may invest, without limitation, in high-quality fixed-income securities, or hold assets in cash or cash equivalents. 5) The Fund may not: a) with respect not 75% of the value of its SEE RIC SEE RIC SEE RIC SEE RIC total assets, invest more than 5% of its total WORKSHEET WORKSHEET WORKSHEET WORKSHEET assets in the securities of any one issuer (except that this restriction does not apply to U.S. Government Securities); b) invest more than 25% of its total assets (at PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO market) in the securities of issuers in any MGR CHKLIST MGR CHKLIST MGR CHKLIST MGR CHKLIST particular industry (except for U.S. Government 3 3 3 3 Securities); c) acquire more than 10% of the outstanding voting 33 33 33 33 securities of any one issuer; d) borrow money except as a temporary measure for PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO extraordinary or emergency purposes, and then MGR CHKLIST MGR CHKLIST MGR CHKLIST MGR CHKLIST the aggregate borrowings at any one time may 14 14 14 14 not exceed 33 1/3% of its assets at market. The fund will not purchase additional securities if the fund's borrowings less proceeds receivable exceeds 5% of total assets; e) invest more than 15% of its total assets (at PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO market) in repurchase agreements maturing in MGR CHKLIST MGR CHKLIST MGR CHKLIST MGR CHKLIST more than seven days or other illiquid 13 13 13 13 securities.
NOTE: THE SEC HAS ISSUED A POLICY STATEMENT EFFECTIVE MARCH 20, 1992, WHICH WOULD ALLOW THE FUND TO INVEST UP TO 15% IN ILLIQUID SECURITIES. A SHAREHOLDER MEETING HELD IN APRIL 1993 APPROVED THE NECESSARY CHANGE TO A FUNDAMENTAL POLICY. Note: In each case, if a percentage limit is satisfied at the time of investment investment or borrowing, a later increase or decrease resulting from a change in the value of a security or decrease in a Fund's assets will not constitute a violation of the limit. Page 2 of 6 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: Source: Statement of Additional Information dated 5/1/92 Investment Restrictions - Fundamental (Required shareholder vote to amend) The Fund may not: 1) with respect to 75% of the value of the total RIC RIC RIC RIC assets of the Fund, invest more than 5% of the WORKSHEET WORKSHEET WORKSHEET WORKSHEET value of its total assets, taken at market value at the time of a particular purchase, in the securities of any one issuer, except securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities; 2) purchase securities of any one issuer if more CHECKLIST CHECKLIST CHECKLIST CHECKLIST than 10% of the outstanding voting securities 33 33 33 33 of such issuer would at the time be held by the Fund; 3) act as an underwriter of securities, except 1 1 1 1 insofar as it may be deemed an underwriter for purposes of the Securities Act of 1933 on disposition of securities acquired subject to legal or contractual restrictions on resale; 4) invest in a security if more than 25% of its 3 3 3 3 total assets (taken at market value at the time of a particular purchase) would be invested in the securities of issuers in any particular industry, except that this restriction does not apply to securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities; 5) purchase or sell real estate (although it may 2 2 2 2 purchase securities secured by real estate or interests therein, and securities issued by companies which invest in real estate or interests therein), commodities or commodity contracts, except that it may enter into (a) futures and options on futures and (b) forward contracts; 6) purchase securities on margin (except for use 4, 5, 22 4, 5, 22 4, 5, 22 4, 5, 22 of short-term credits as are necessary for the clearance of transactions), make short sales of securities, or participate on a joint or a joint and several basis in any trading account in securities, except in connection with transactions in options, futures, and options on futures; 7) make loans, but this restriction shall not 6, 7, 8 6, 7, 8 6, 7, 8 6, 7, 8 prevent a Fund from (a) buying a part of an issue of bonds, debentures, or other obligations which are publicly distributed, or from investing up to an aggregate of 15% of its total assets (taken at market value at the time of each purchase) in parts of issues of bonds, debentures or other obligations of a type privately placed with financial institutions, (b) investing in repurchase agreements, or (c) lending portfolio securities, provided that it may not lend securities if, as a result, the aggregate value of all securities loaned would exceed 15% of its total assets (taken at market value at the time of such loan); or
Page 3 of 6 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: 8) Invest more than 15% of the Fund's net assets 13 13 13 13 (taken at market value at the time of each purchase) in illiquid securities including repurchase agreements maturing in more than seven days; NOTE: THE SEC HAS ISSUED A POLICY STATEMENT EFFECTIVE MARCH 20, 1992, WHICH WOULD ALLOW THE FUND TO INVEST UP TO 15% IN ILLIQUID SECURITIES. A SHAREHOLDER MEETING HELD IN APRIL 1993 APPROVED THE NECESSARY CHANGE TO A FUNDAMENTAL POLICY. 9) borrow, except that it may (a) borrow up to 14 14 14 14 33 1/3% of its total assets from banks, taken at market value at the time of such borrowing, as a temporary measure for extraordinary or emergency purposes, but not to increase portfolio income (the total of reverse repurchase agreements and such borrowings will not exceed 33 1/3% of its total assets, and the Fund will not purchase additional securities when its borrowings, less proceeds receivable from sales of portfolio securities, exceed 5% of its total assets) and (b) enter into transactions in options, futures, and options on futures. 10) invest in companies for the purpose of 9 9 9 9 exercising control or management; 11) purchase more than 3% of the stock of another 10,11,12 10,11,12 10,11,12 10,11,12 investment company or purchase stock of other investment companies equal to more than 5% of the Fund's total assets (valued at time of purchase) in the case of any one other investment company and 10% of such assets (valued at the time of purchase) in the case of all other investment companies in the aggregate; any such purchases are to be made in the open market where no profit to a sponsor or dealer results from the purchase, other than the customary broker's commission, except for securities acquired as part of a merger, consolidation or acquisition of assets; 12) mortgage, pledge, hypothecate or in any 15 15 15 15 manner transfer, as security for indebtedness, any securities owned or held by it, except as may be necessary in connection with (a) permitted borrowings and (b) options, futures and options on futures; 13) issue senior securities, except to the extent 16 16 16 16 permitted by the Investment Company Act of 1940 (including permitted borrowings); 14) purchase portfolio securities for the Fund from, 17 17 17 17 or sell portfolio securities to, any of the officers and directors or Trustees of the Trust or of its investment adviser; 15) invest more than 5% of its net assets (valued at 18, 19 18, 19 18, 19 18, 19 time of purchase) in warrants, nor more than 2% of its net assets in warrants that are not listed on the New York or American Stock Exchanges; 16) write an option on a security unless the option 25 25 25 25 is issued by the Options Clearing Corporation, an exchange or similar entity;
Page 4 of 6 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: 17) buy or sell an option on a security, a futures 26 26 26 26 contract or an option on a futures contract unless the option, the futures contract, or the option on the futures contract is offered through the facilities of a recognized securities association or listed on a recognized exchange or similar entity; 18) purchase a put or call option if the aggregate 27 27 27 27 premiums paid for all put and call options exceed 20% of its net assets (less the amount by which any such positions are in-the-money), excluding put and call options purchased as closing transactions.
Note: If a percentage limit is satisfied at the time of investment or borrowing, a later increase or decrease in a Fund's assets will not constitute a violation of the limit. Page 5 of 6 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND CAFQTRLY QUARTERLY COMPLIANCE REVIEW MDA YEAR ENDING DECEMBER 31, 1993 03/31/94
03/31/93 06/30/93 09/30/93 12/31/93 Prepared By: DAR DAR MDA MDA Reviewed By: Source: Portfolio Management Handbook dated December 20, 1988 (Updated for subsequent events) 1) The Fund may, up to a minimum of 15% of the CHECKLIST CHECKLIST CHECKLIST CHECKLIST value of its total assets, loan its portfolio 8 8 8 8 securities to broker-dealer firms or other institutional investors to generate additional income. 2) The Fund is permitted to enter into repos with 20 20 20 20 member banks of the Federal Reserve System which have at least $1 billion in deposits, primary dealers in U.S. government securities or other financial institutions believed by SteinRoe to be creditworthy. The Fund may enter into repos only with 20 20 20 20 financial institutions which, in SteinRoe's judgment, meet the creditworthiness standards adopted by the Board of Trustees of the Trust. At present, the following institutions have been approved: a) State Street Bank and Trust Company b) Daiwa Securities of America, Inc. c) Goldman Sachs Money Markets, Inc. d) Morgan Stanley, Inc. e) Salomon Brothers Not more than 15% of the Fund's net assets may 13 13 13 13 be invested in illiquid securities, specifically including repos maturing in more than 7 days. 3) The Fund may not purchase any securities (debt 34 37 37 37 or equity) issued by persons in the securities or investment banking business except as permitted by rule 12-d3-1 of the 1940 Act (i.e., broker-dealer firms, underwriters, advisers of investment companies or other investment advisory firms). 4) The Fund and other investment companies advised 22 22 22 22 by Stein Roe & Farn. are prohibited by the 1940 Act from engaging in joint transactions with one another. Accordingly, the Fund and other investment companies for which combined purchases or sales are made should be obligated to deliver or make payment for only the portion of the combined purchase or sale being made by it. 5) No portfolio transaction for the Fund should be 23 23 23 23 placed with broker-dealer firms affiliated with Stein Roe & Farnham. The following lists all such broker-dealer firms: a) Liberty Securities Corporation b) Keyport Financial Services Corp. In addition, no portfolio transactions should be placed with New England Securities Corporation.
Page 6 of 6 CAFQTR MDA 03/31/94 STEINROE VARIABLE INVESTMENT TRUST CAPITAL APPRECIATION FUND REGULATED INVESTMENT COMPANY QUARTERLY COMPLIANCE CHECKLIST FISCAL YEAR END DECEMBER 31, 1993 Requirements for qualification - ------------------------------ To qualify as a regulated investment company for tax purposes, set forth more fully in the Code, an investment company generally must:
Prepared By: DAR DAR MDA MDA Reviewed By: QUALIFIES (Y/N) QTR 1 QTR 2 QTR 3 QTR 4 1. Be a domestic corporation, other than a personal Y Y Y Y holding company, registered at all times during the taxable year under the 1940 Act. 2. Elect to be taxed as a regulated investment Y Y Y Y company or have previously made such election. 3. Derive at least 90 percent of its gross income Y Y Y Y from dividends, interest, and gains (disregarding losses) from the sale or other disposition of securities. (See attached worksheet) 4. Derive less than 30 percent of its gross income Y Y Y Y from gains (disregarding losses) on the sale or other disposition of securities held for less than three months. (See attached worksheet) 5. Meet certain requirements as to diversification Y Y Y Y of its total assets at the close of each quarter of the taxable year. (See attached worksheet) 6. Pay out at least 90 percent of its investment done @ done @ done @ Y company taxable income (as defined) for the year end year end year end taxable year. (See attached worksheet) 7. Comply with certain record-keeping and Y Y Y Y notification (to shareholders) requirements in addition to the records required of an ordinary corporation.
INTERNAL REVENUE CODE WORKSHEET CAPITAL APPRECIATION FUND FISCAL YEAR ENDED DECEMBER 31, 1993
Prepared By: DAR DAR MDA MDA Reviewed By: QTR 1 QTR 2 QTR 3 QTR 4 1. Total assets (gross assets) at the end of each fiscal quarter. $61,076,549 $70,834,462 $84,520,930 $98,402,768 2. 5% of total assets. 3,053,827 3,541,723 4,226,047 4,920,138 3. Portfolio securities at value in None None None None excess of the 5% test.
SECURITY NAME - ------------- QTR 1. QTR 2. QTR 3. QTR 4. Grupo Radio Centro SA If there was any purchase of the securities named in line 3 above, during the quarter under review, it must be determined if that acquisition caused an investment of more than 5% of the company's total assets as follows: NOTES: QTR 1. QTR 2. QTR 3. QTR 4. No purchases since July 2, 1993, increase due to market appreciation. QTR 1 QTR 2 QTR 3 QTR 4 Total assets at quarter end prior to acquisition date. - --------------------------------------------------------------------- For securities listed above:
(1) (2) (3) Value of Add: purchases Less: sales of Value of Percent of value security of security at security at prior security of security at prior cost including quarter end acquired acquired to total Security quarter end latest acquisition value (1+2-3) assets* -------- ----------- ------------------ ----------------- -------- ----------------- QTR 1. 0.00% 0.00% QTR 2. 0.00% 0.00% QTR 3. 0.00% 0.00% QTR 4. 0.00% 0.00% *If greater than 5%, security cannot be included in line B-2 of quarterly compliance requirement 5.
INTERNAL REVENUE CODE WORKSHEET CAPITAL APPRECIATION FUND FISCAL YEAR ENDED DECEMBER 31, 1993 Prepared By: MDA Reviewed By: _________ Requirements 3 and 4: (4th quarter computation) Income (for the taxable year to date): Net gain on securities sold (tax basis) $19,052,047 Add back capital losses on sale of investments 1,731,678 Interest and dividends from invest- ments (net of taxes) 662,360 Other Income (income equalization) 10,277 Net exchange gains 0 ----------- D. TOTAL $21,456,362 ----------- E. 10 Percent of Line D $2,145,636 ----------- F. 30 Percent of Line D $6,436,909 ----------- Other Income (income other than dividends, interest and gains on securities) cannot exceed Line E. 10,277 0.05% ---------- ------ Gains on securities held less than three months must be less than line F 2,9468,664 13.74% ---------- ------ Requirement 5: Assets A. Cash, receivables, securities, and total other assets $98,402,768 ----------- B-1 Cash, receivables, government securities, and securities of other regulated investment companies 3,557,882 B-2 Other securities not in- cluding either (a) securities of any one issuer having a value in excess of 5 percent of line (A) or (b) securities repre- senting more than 10 percent of the outstanding voting securities of any one issuer. 89,007,242 ---------- B-3 (B-1 plus B-2) $92,565,124 ----------- C. 25 percent of line A $24,600,692 Line B-3 must be at least 50 percent of line A 94.07% ------ No one issuer other than government securities or securities of other regulated investment investment companies can exceed Line C. 0.00% ------ ISSUER: Grupo Radio Centro Corp. 5.92% CAFCOMP Liberty Investment Services MDA Section 817(h) Diversification Compliance Review SRVIT Capital Appreciation Fund 31-Mar-94 Period Ended: 31-Dec-93 Total Assets: $98,402,768 ----------- 5% 4,920,138 ----------- Safe Harbor Review 1. List the amounts of the following investment classifications and their percentage relationship to total assets: A) Cash, cash items* and receivables 3,557,882 3.62% B) U.S. Government Securities 0 C) Securities of other RIC's --------- ----- Total: 3,557,882 3.62% (must be no more than 55%) --------- ----- Applying the Section 817(h) definition of investment, list the following: 1. All securities of the same issuer: 0 ----- (see detail) 2. All securities of a particular gov't 0 ----- agency: (see detail) 3. All direct obligations of the U.S. 0 ----- Treasury, including cash in excess of FDIC-insured bank accounts 4. $100,000 of each certificate of deposit 16,540 0.02% and FDIC-insured bank accounts (include in Safe Harbor Review as a U.S. Government Security (see detail): 5. All other securities (securities which 89,007,242 90.45% individually represent less than 5% of total assets) (# of investments 82 largest inv. 4.57% Countrywide Funding 6. Securities which represent 5% or more 5,827,500 5.92% of total assets (see detail) Groupo Radio Centro Corp. NOTE: No more than 55% of the value of total assets may be represented by any 1 investment 5.92% (single largest investment) Groupo Radio Centro Corp. No more than 70% of the value of total assets may be represented by any 2 investments 10.49% (two largest investments) Countrywide Funding 4.57% No more than 80% of the value of total assets may be represented by any 3 investments 14.55% (three largest investments) Fundex Corp. 4.06% No more than 90% of the value of total assets may be represented by any 4 investments 18.61% (four largest investments) Southland Corp. 4.06% CAFCOMP MDA SRVIT Capital Appreciation Fund Detail Sheet Period Ended: 31-Dec-93 Securities of the Same Issuer: Corp. 0 0.00% ------- ------- Total 0 0.00% Govt. 0 0.00% ------- 0.00% ------- 0.00% 0 0.00% ------- ------ Sub-Total 0 0.00% ------- 0.00% Total 0 0.00% Definition of "investment" under Section 817(h). A) All securities of the same issuer, regardless of the type or class, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. B) All securities of a particular agency or instrumentality of the U.S. Government, regardless of whether or not backed by the full faith credit of the U.S. Treasury, are treated as a single investment. C) All direct obligations of the U.S. Treasury, including cash in excess of FDIC-insured bank accounts are treated as a single investment. D) To the extent insured by the FDIC, all certificates of deposit and other FDIC-insured accounts are considered as a security of the FDIC (i.e., $100,000 of each certificate of deposit. CAFCOMP Liberty Investment Services MDA Monthly Compliance Review SRVIT Capital Appreciation Fund 31-Mar-94 Period Ended: 3/15/94 Total Assets: $113,025,435 Net Assets: $110,215,399 5%: 5,651,272 1. List the amounts of the following investment classifications and their percentage relationship to total assets: A) Cash, cash items* and receivables 90,942 0.1% B) U.S. Government Securities ----------- ----- C) Securities of other RIC's ----------- ----- D) Other securities (exclude any securities above 5% of assets) 112,925,222 99.9% Subtotal (> or = 75%) 113,016,164 100.0% Total Assets 113,025,435 100.0% E) Municipal Obligations (> or = 50%) ----------- ------ 2. List the three largest holdings and their percentage of total assets (excluding Govt. Sec) A) *Ford Motor Cr. Co. 4,999,089 4.4% B) *Dayton Hudson Corp. 4,947,195 4.4% C) *Merrill Lynch + Co., Inc. 4,700,000 4.2% *Includes commercial paper 3. Depending on the type of fund, list the appropriate amount for the largest: A) Industry classification (< or = 25%) --------- ---- B) Issues located in the same state --------- ---- 4. List the following sources of gross income: A) Interest Income 154,331 2.6% B) Dividend Income (net of taxes) 80,379 1.4% C) Securities Gains (see detail) 5,692,314 96.0% D) Income from securities on loan --------- ----- E) Other sources (< or = 10%) 304 0.0% F) Gross income 5,927,328 100.0% 5. Determine the percentage of short-short income to gross income: A) Gross income 5,927,328 B) Short-short gains (< or = 30%) 1,813,927 C) Short-short percentage 30.6% *Cash items do not include certificates of deposit, bank obligations or commercial paper. A repurchase agreement should be treated as the security of the bank or broker-dealer, not as cash or a U.S. Government Security. CAFCOMP Liberty Investment Services MDA Section 817(h) Diversification Compliance Review SRVIT Capital Appreciation Fund 31-Mar-94 Period Ended: 3/15/94 Total Assets: $113,025,435 5%: 5,651,272 Safe Harbor Review 1. List the amount of the following investment classifications and their percentage relationship to total assets: A) Cash, cash items* and receivables 90,942 0.1% B) U.S. Government Securities ------ 0.0% C) Securities of other RIC's ------ ---- Total: 90,942 0.1% (must be no more than 55%) Applying the Section 817(h) definition of investment, list the following: 1. All securities of the same issuer: -------- ----- (see detail) 2. All securities of a particular gov't ------- ----- agency: (see detail) 3. All direct obligations of the U.S. ------- ----- Treasury, including cash in excess of FDIC-insured bank accounts 4. $100,000 of each certificate of deposit 42,762 0.0% and FDIC-insured bank accounts (include in Safe Harbor Review as a U.S. Government Security (see detail): 5. All other securities (securities which 112,925,222 99.9% individually represent less than 5% of total assets) (# of investments 92 largest inv. 4.4%) *Ford Motor Cr. Co. 6. Securities which represent 5% or more None ---- of total assets (see detail) NOTE: No more than 55% of the value of total assets may be represented by any 1 investment 4.4% (single largest investment) *Ford Motor Cr. Co. No more than 70% of the value of total assets may be represented by any 2 investments 8.8% (two largest investments) *Dayton Hudson Corp. 4.4% No more than 80% of the value of total assets may be represented by any 3 investments 13.0% (three largest investments) *Merrill Lynch + Co., Inc. 4.2% No more than 90% of the value of total assets may be represented by any 4 investments 16.7% (four largest investments) Grupo Radio Centro SA 3.7% CAFCOMP MDA SRVIT Capital Appreciation Fund Detail Sheet Period Ended: 3/15/94 Security Gains gross gains net gains net gains gains (from G/L rep) (from G/L rep) 3/15/94 -------------- ------------- --------- ------- Long term 1,600,411 1,583,507 1,998,860 415,353 Short term 1,807,066 1,382,483 1,438,040 55,557 Short 3 1,747,837 1,747,837 1,813,927 66,090 --------- --------- --------- ------- Total 5,155,313 4,713,826 5,250,827 537,001 Add: gains 1/1 - 1/15 537,001 --------- security gains for period 5,692,314 ========= Securities of the Same Issuer: Govt: FNMA -------------- ----------- FHLMC -------------- ----------- GNMA -------------- ----------- SLMA -------------- ----------- Sub-Total -------------- ----------- U.S. Treasury -------------- ----------- Total Govt -------------- ----------- Corp. -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- -------------- ----------- Total -------------- ----------- A) All securities of the same issuer, regardless of the type or class, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. B) All securities of a particular agency or instrumentality of the U.S. Government, regardless of whether or not backed by the full faith credit of the U.S. Treasury, are treated as a single investment. C) All direct obligations of the U.S. Treasury, including cash in excess of FDIC-insured bank accounts are treated as a single investment. D) To the extent insured by the FDIC, all certificates of deposit and other FDIC-insured accounts are considered as a security of the FDIC (i.e., $100,000 of each certificate of deposit. SCHEDULE F EXPENSES 1. The Fund and Transamerica will pay the costs of printing and/or distributing copies of the documents based upon an allocation of costs that reflects the Fund's share of total costs determined according to the number of pages of the parties' and other funds' respective portions of the documents. 2. The Adviser and Transamerica will pay the costs of printing and/or distributing copies of the documents based upon an allocation of the costs that reflects the Adviser's share of the total costs determined according to the number of pages of the parties' and other funds' respective portions of the documents. RESPONSIBLE ITEM FUNCTION PARTY PROSPECTUS Annual Update Printing 1 Distribution 1 New Sales: Marketing (supply and distribution of 2 prospectuses to persons who have not yet invested in a Designated Portfolio) Delivery of prospectuses to satisfy legal 1 prospectus delivery requirements (e.g., copies sent with confirmations of sales) Existing Supply quantities described in Section 3.4 1 Owners: Distribution 1 Interim Updates New Sales: Marketing (supply and distribution of 2 prospectuses to persons who have not yet invested in a Designated Portfolio) Delivery of prospectuses to satisfy legal 1 prospectus delivery requirements (e.g., copies sent with confirmations of sales If required by Participating Insurance Company (PIC) PIC If required by Schwab Schwab Existing If required by Fund or Adviser: Fund Owners: If required by PIC: PIC If required by Schwab: Schwab STATEMENTS Same as Prospectus Same OF ADDITIONAL INFORMATION PROXY Printing Fund MATERIALS Distribution OF THE FUND (a) If required by law: Fund (b) If required by participating insurance company: PIC (c) If required by Schwab: Schwab ANNUAL Printing Fund REPORTS Distribution 1 & OTHER COMMUNICATIONS WITH SHAREHOLDERS OF THE FUND OPERATIONS All operations and related expenses, including Fund OF FUND the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, the preparation of all statements and notices required by any federal or state law and all taxes on the issuance of the Fund's shares, and all costs of management of the business affairs of the Fund. * Schwab will advise the Adviser and the Fund of the allocation of the foregoing expenses among the parties as soon as possible after such allocations are determined. SCHEDULE G PROXY VOTING PROCEDURE The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund, the Fund and Transamerica. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "Transamerica" shall also include the department or third party assigned by Transamerica to perform the steps delineated below. 1. The number of proxy proposals is given to Transamerica by the Fund as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Fund will inform Transamerica of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before the meeting. 2. Promptly after the Record Date, Transamerica will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contractowner/policyholder (the "Contract Owners") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Contract Owners' accounts of the Record Date. Note: The number of proxy statements is determined by the activities described in Step #2. Transamerica will use its best efforts to call in the number of Contract Owners to the Adviser, as soon as possible, but no later than one week after the Record Date. 3. The Fund's Annual Report must be sent to each Contract Owner by Transamerica either before or together with the Contract Owner's receipt of a proxy statement. The Fund will provide at least one copy of the last Annual Report to Transamerica. 4. The text and format for the Voting Instructions Card ("Cards" or "Card") is provided to Transamerica by the Fund. Transamerica shall produce and personalize the Voting Instruction cards. The Fund's Administrator, Liberty Investment Services, Inc. must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: a. name (legal name as found on account registration) b. address c. Fund or account number d. coding to state number of units e. individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 5. During this time, the Fund's Administrator will develop and produce the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to Transamerica for insertion into envelopes (envelopes and return envelopes are provided and paid for by Transamerica). Contents of envelope sent to Contract Owners by Transamerica will include: a. Voting Instruction Card(s) b. One proxy notice and statement (one document) c. Return envelope (postage pre-paid) addressed to Transamerica or its tabulation agent d. "Urge buckslip" - optional, but recommended. (This is a small single sheet of paper that requests Contract Owners to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund.) e. Cover letter - optional, supplied by Transamerica and reviewed and approved in advance by the Fund's Administrator. 6. The above contents should be received by Transamerica approximately 3-5 business days before mail date. Individual in charge at Transamerica reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to the Fund's Administrator. 7. Package mailed by Transamerica. * The Fund must allow at least a 15-day solicitation time to Transamerica as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, counting backwards. 8. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on the process used. An often used procedure is to sort cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure. 9. If cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to the Contract Owner with an explanatory letter, a new Card and return envelope. The mutilated or illegible Card is disregarded and considered to be not received for purposes of vote tabulation. Such mutilated or illegible Cards are "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 10. There are various control procedures used to ensure proper tabulation of votes and accuracy of the tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do no coincide, then an internal audit of that vote should occur. This may entail a recount. 11. The actual tabulation of votes is done in units which are then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) The Fund's Administrator must review and approve tabulation format. 12. Final tabulation in shares is verbally given by Transamerica to the Fund's Administrator on the morning of the meeting not later than 10:00 a.m. Denver time. The Fund's Administrator may request an earlier deadline if required to calculate the votes in time for the meeting. 13. A Certificate of Mailing and Authorization to Vote Shares will be required from Transamerica as well as an original copy of the final vote. The Fund's Administrator will provide a standard form for each Certification. 14. Transamerica will be required to box and archive the Cards received from the Contract Owners. In the event that any vote is challenged or is otherwise necessary for legal, regulatory, or accounting purposes, the Fund's Administrator will be permitted reasonable access to such Cards. 15. All approvals and "signing-off" may be done orally, but must always be followed up in writing. EX-99 9 EX-99.B9F OTH CONTRCT PARTICIPATION AGREEMENT AMONG STEINROE VARIABLE INVESTMENT TRUST STEIN ROE & FARNHAM INCORPORATED FIRST TRANSAMERICA LIFE INSURANCE COMPANY and CHARLES SCHWAB & CO., INC. This Agreement, made and entered into as of this lst day of December, 1994 by and among FIRST TRANSAMERICA LIFE INSURANCE COMPANY (hereinafter "First Transamerica"), a New York life insurance company, on its own behalf and on behalf of its Separate Account VA-5 NLNY(the "Account"); STEINROE VARIABLE INVESTMENT TRUST, a business trust organized under the laws of Massachusetts (hereinafter the "Fund"); STEIN ROE & FARNHAM INCORPORATED hereinafter the "Adviser"), a Delaware corporation; and CHARLES SCHWAB & CO., INC., a New York corporation (hereinafter "Schwab"). WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and/or variable annuity contracts (collectively, the "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements similar to this Agreement (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a "Portfolio" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission (hereinafter the "SEC"), dated July 1, 1988 (File No. 812-7044), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of life insurance companies that may or may not be affiliated with one another (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolio(s) are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Adviser is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities laws; and WHEREAS, First Transamerica has registered or will register certain variable annuity contracts supported wholly or partially by the Account (the "Contracts") under the 1933 Act and said Contracts are listed in Schedule A hereto, as it may be amended form time to time by mutual written agreement; and WHEREAS, the Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of First Transamerica on September 28, 1993, to set aside and invest assets attributable to the Contracts; and WHEREAS, First Transamerica has registered or will register the Account as a unit investment trust under the 1940 Act; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, First Transamerica intends to purchase shares in the Portfolio(s) listed in Schedule B hereto, as it may be amended from time to time by mutual written agreement (the "Designated Portfolio(s)"), on behalf of the Account to fund the aforesaid Contracts, and the Fund is authorized to sell such shares to unit investment trusts such as the Account at net asset value; and WHEREAS, Schwab will perform certain services for the Fund and Adviser in connection with the Contracts; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Account also intends to purchase shares in other open- end investment companies or series thereof not affiliated with the Trust (the "Unaffiliated Funds") on behalf of the Account to fund the Contracts; and NOW, THEREFORE, in consideration of their mutual promises, First Transamerica, Schwab, the Fund and the Adviser agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to First Transamerica those shares of the Designated Portfolio(s) which the Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Portfolios. For purposes of this Section 1.1, First Transamerica shall be the designee of the Fund for receipt of such orders and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of the applicable order by 9:30 a.m. Eastern time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Fund agrees to make shares of the Designated Portfolio(s) available for purchase at the applicable net asset value per share by First Transamerica and the Account on those days on which the Fund calculates its Designated Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund will not sell shares of the Designated Portfolio(s) to any insurance company or separate account unless an agreement containing provisions substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article VII of this Agreement is in effect to govern such sales. 1.4. The Fund agrees to redeem for cash, on First Transamerica's request, any full or fractional shares of the Fund held by First Transamerica, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. Request for redemption identified by First Transamerica, or its agent, as being in connection with surrenders, annuitizations, or death benefits under the Contracts, upon prior written notice, may be executed within seven (7) calendar days after receipt by the Fund or its designee of the requests for redemption. If permitted by an order of the SEC under Section 22(e) of the 1940 Act, the Fund shall be permitted to delay sending redemption proceeds to First Transamerica beyond the foregoing deadlines, provided, however, that the Account receives similar relief to defer paying proceeds to contract Owners, and further, that the Account is treated no less favorably than the other shareholders of the Designated Portfolios. This Section 1.4 may be amended, in writing, by the parties consistent with the requirements of the 1940 Act and interpretations thereof. For purposes of this Section 1.4, First Transamerica shall be the designee of the Fund for receipt of requests for redemption and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of the applicable request for redemption by 9:30 a.m. Eastern time on the next following Business Day. 1.5 The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund's shares may be sold to other insurance companies (subject to Section 1.3 and Article VI hereof) and the cash value of the Contracts may be invested in Unaffiliated Funds. 1.6. First Transamerica shall pay for Fund shares by 11:00 a.m. Eastern time on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire and/or by a credit for any shares redeemed the same day as the purchase. 1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund shares by 11:00 a.m. Eastern time on the next Business Day after a redemption order is received in accordance with Section 1.4 hereof. Payment shall be in federal funds transmitted by wire and/or a credit for any shares purchased the same day as the redemption. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to First Transamerica or the Account. Shares ordered from the Fund will be recorded in an appropriate title for the Account or the appropriate sub-account of the Account. 1.9. The Fund or its designee shall furnish same day notice (by wire or telephone, followed by written confirmation) to First Transamerica of any income dividends or capital gain distributions payable on the Designated Portfolio(s)' shares. First Transamerica hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. First Transamerica reserves the right to revoke this election and to receive all such income, dividends and capital gain distributions in cash. The Fund or its designee shall notify First Transamerica by the end of the next following Business Day of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Designated Portfolio available to First Transamerica on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 6:00 p.m. Eastern time. The Fund or its designee shall notify First Transamerica by 5:45 p.m. Eastern time in the event that the Fund cannot meet such 6:00 p.m. deadline. In such event the Fund shall use its best efforts to make such value available as soon thereafter as is practicable. If the Fund provides incorrect share net asset value information, First Transamerica shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct net asset value per share (and, if and to the extent necessary, First Transamerica shall make adjustments to the number of units credited and/or unit values for the Contracts for the periods affected). Any error in the calculation or reporting of net asset value per share, dividend or capital gains information shall be reported promptly upon discovery to First Transamerica. Any error of a an amount less than $0.01 per share shall be corrected in the next Business Day's net asset value per share. ARTICLE II. Representations and Warranties 2.1. First Transamerica represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. First Transamerica further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established the Account prior to any issuance or sale thereof as a segregated asset account under applicable law (New York Insurance Law) and has registered 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. 2.2. The Fund represents and warrants that Designated Portfolio shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with all applicable federal securities laws including without limitation the 1933 Act, the 1934 Act, and the 1940 Act and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. 2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1 under the 1940 Act and to impose an asset-based or other charge to finance distribution expenses as permitted by applicable law and regulation. In any event, the Fund and Adviser agree to comply with applicable provisions and SEC staff interpretations of the 1940 Act to assure that the investment advisory or management fees paid to the Adviser by the Fund are legitimate and not excessive. To the extent that the Fund decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses. 2.4. The Fund represents and warrants that the investment policies, fees and expenses of the Designated Portfolio(s) are and shall at all times remain in compliance with the insurance and other applicable laws of the State of New York and any other applicable state to the extent required to perform this Agreement. The Fund further represents and warrants that Designated Portfolio shares will be sold in compliance with the insurance laws of the State of New York and all applicable state insurance and securities laws. First Transamerica will advise the Fund of any applicable changes in New York insurance law that affect the Designated Portfolios, and the Fund will be deemed to be in compliance with this Section 2.4 so long as the Fund complies with such advice of First Transamerica. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund with the concurrence of First Transamerica. Without limiting the generality of the foregoing, the Fund represents and warrants that it is and shall at all times remain in compliance with the investment objectives, policies and restrictions and the operation of the Fund enumerated in Schedule C hereto, except as to those items disclosed with prior notice to First Transamerica and not objected to by the Department of Insurance of the State of New York. 2.5. The Fund represents and warrants that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material aspects with the 1940 Act. 2.6. The Adviser represents and warrants that it is and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of Delaware and any applicable state and federal securities laws. 2.7. The Fund and the Adviser represent and warrant that all of their officers, employees, investment advisers, and other individuals or entities dealing with money and/or securities of the Fund are, and shall continue to be at all times, covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage required by Section 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. 2.8. Schwab represents and warrants that it has completed, obtained and performed, in all material respects, all registrations, filings, approvals, and authorizations, consents and examinations required by any government or governmental authority as may be necessary to perform this Agreement. Schwab does and will comply, in all material respects, with all applicable laws, rules and regulations in the performance of its obligations under this Agreement. 2.9. The Fund will provide First Transamerica with as much advance notice as is reasonably practicable of any material change affecting the Designated Portfolio(s) (including, but not limited to, any material change in its registration statement or prospectus affecting the Designated Portfolio(s) and any proxy solicitation affecting the Designated Portfolio(s) and consult with First Transamerica in order to implement any such change in an orderly manner, recognizing the expenses of changes and attempting to minimize such expenses by implementing them in conjunction with regular annual updates of the prospectus for the Contracts. The Fund or Adviser agree to share equitably in expenses incurred by First Transamerica as a result of actions taken by the Fund, consistent with the allocation of expenses contained in Schedule F. 2.10. The Insurance Company represents, assuming that the Fund complies with Article VI of this Agreement, that the Contracts are currently treated as annuity contracts under applicable provisions of the Internal Revenue Code of 1986 (the "Code"), as amended, and that it will make every effort to maintain such treatment and that it will notify the Fund immediately upon having a reasonably basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.11. First Transamerica represents and warrants that it will not purchase Fund shares with assets derived from tax-qualified retirement plans except indirectly, through Contracts purchased in connection with such plans. 2.12. First Transamerica represents and warrants that it will not transfer or otherwise convey shares of any Designated Portfolio, without the prior written consent of the Fund, which consent shall not be unreasonably withheld. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1. At least annually, the Fund or the Adviser shall provide First Transamerica and Schwab with as many copies of the Fund's current prospectus for the Designated Portfolio(s) as First Transamerica and Schwab may reasonably request for marketing purposes (including distribution to Contract owners with respect to new sales of a Contract). If requested by First Transamerica in lieu thereof, the Adviser or Fund shall provide such documentation (including a final copy of the new prospectus for the Designated Portfolio(s)) and other assistance as is reasonably necessary in order for First Transamerica once each year (or more frequently if the prospectus for the Designated Portfolio are amended) to have the prospectus for the Contracts and the Fund's prospectus for the Designated Portfolio(s) printed together in one document. The Fund and Adviser agree that the prospectus, and semi- annual and annual reports for the Designated Portfolio(s) provided pursuant to this Section 3.1 will described only the Designated Portfolio(s) and will not name or describe any other portfolios or series that may be in the Fund unless required by law. 3.2. If applicable state or Federal laws or regulations require that the Statement of Additional Information ("SAI") for the Fund be distributed to all Contract purchasers, then the Adviser or the Fund shall provide First Transamerica with the Fund's SAI or documentation thereof in such quantities and/or with expenses to be borne in accordance with Schedule F hereof. 3.3. The Fund or the Adviser shall provide First Transamerica and Schwab with as many copies of the Fund's SAI as each of them may reasonably request. The Fund or the Adviser shall also provide such SAI to any owner of a Contract or prospective owner who requests such SAI (although it is anticipated that such requests will be made to Schwab). 3.4. The Fund shall provide First Transamerica with copies of its prospectus, SAI, proxy material, reports to stockholders and other communications to stockholders for the Designated Portfolio(s) in such quantity as First Transamerica shall reasonably require for distributing to Contract owners. 3.5. It is understood and agreed that, except with respect to information regarding First Transamerica or Schwab provided in writing by that party, neither First Transamerica nor Schwab are responsible for the content of the prospectus or SAI for the Designated Portfolio(s). It is also understood and agreed that, except with respect to information regarding the Fund, Adviser or the Designated Portfolio(s) provided in writing by the Fund or the Adviser, neither the Fund nor Adviser are responsible for the content of the prospectus or SAI for the Contracts. 3.6. If and to the extent required by law, First Transamerica shall: (i) solicit voting instructions from Contract owners; (ii) vote the Designated Portfolio shares in accordance with instructions from Contract owners; and (iii) vote Designated Portfolio shares for which no instructions have been received in the same proportion as Designated Portfolio shares for instructions have been received from Contract owners, 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. First Transamerica reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. 3.7. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts holding shares of a Designated Portfolio calculates voting privileges in the manner required by the Shared Funding Exemptive Order. First Transamerica's procedures currently are in compliance with such requirements, as described in Schedule G. The Fund agrees to promptly notify First Transamerica of any changes of interpretations or amendments of the Shared Funding Exemptive Order. 3.8. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends, comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of directors or trustees and with whatever rules the Commission may promulgate with respect thereto. The Fund reserves the right, upon 45 days prior written notice to First Transamerica and Schwab, to take all actions, including but not limited to, the dissolution, merger, and sale of all assets of the Fund or any Designated Portfolio upon the sole authorization of the Board, to the extent permitted by the laws of The Commonwealth of Massachusetts and the 1940 Act. ARTICLE IV. Sales Material and Information 4.1. First Transamerica and Schwab shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material that First Transamerica or Schwab, respectively, develops or proposes to use and in which the Fund (or a Portfolio thereof), its investment adviser or one of its sub- advisers or the underwriter for the Fund shares is named in connection with the Contracts, at least 10 (ten) Business Days prior to its use. No such material shall be used if the Fund or its designee objects to such use within 5 (five) Business Days after receipt of such material. 4.2. First Transamerica and Schwab shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Adviser, except with the permission of the Fund or the Adviser. 4.3. The Fund or Adviser shall furnish, or shall cause to be furnished, to First Transamerica and Schwab, a copy of each piece of sales literature or other promotional material in which First Transamerica and/or its separate account(s), or Schwab is named at least 10 (ten) Business Days prior to its use. No such material shall be used if First Transamerica or Schwab objects to such use within 5 (five) Business Days after receipt of such material. 4.4. The Fund and the Adviser shall not give any information or make any representations on behalf of First Transamerica or concerning First Transamerica, the Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports for the Account, or in sales literature or other promotional material approved by First Transamerica or its designee, except with the permission of First Transamerica. 4.5. The Fund and Adviser shall not give any information or make any representations on behalf of or concerning Schwab, or use Schwab's name except with permission of Schwab. 4.6. The Fund will provide to First Transamerica and Schwab at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, 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 Designated Portfolio(s), contemporaneously with the filing of such document(s) with the SEC or NASD or other regulatory authorities. 4.7. First Transamerica or Schwab will provide to the Fund at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Account, contemporaneously with the filing of such document(s) with the SEC, NASD, or other regulatory authority. 4.8. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials. 4.9. At the request of any party to this Agreement, each other party will make available to the other party's independent auditors and/or representative of the appropriate regulatory agencies, all records, data and access to operating procedures that may be reasonably requested in connection with compliance and regulatory requirements related to this Agreement or any party's obligations under this Agreement. ARTICLE V. Fees and Expenses 5.1. The Fund and the Adviser shall pay no fee or other compensation to First Transamerica under this Agreement, and First Transamerica shall pay no fee or other compensation to the Fund or Adviser under this Agreement, although the parties hereto will bear certain expenses in accordance with Schedule F, Articles III, V, and other provisions of this Agreement. 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund, as further provided in Schedule F. The Fund shall see to it that all shares of the Designated Portfolio(s) are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. 5.3. The parties shall bear the expenses of routine annual distribution (mailing costs) of the Fund's prospectus and distribution (mailing costs) of the Fund's proxy materials and reports to owners of Contracts offered by First Transamerica, as provided in Schedule F. 5.4. The Fund and Adviser acknowledge that a principal feature of the Contracts is the Contract owner's ability to choose from a number of unaffiliated mutual funds (and portfolios or series thereof), including the Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the Contract's cash value between funds and portfolios. The Fund and Adviser agree to cooperate with First Transamerica and Schwab in facilitating the operation of the Account and the Contracts as intended, including but not limited to cooperation in facilitating transfers between Unaffiliated Funds. 5.5. Schwab agrees to provide certain administrative services, specified in Schedule D hereto, in connection with the arrangements contemplated by this Agreement. The parties acknowledge and agree that the services referred to in this Section 5.5 are recordkeeping, shareholder communications, and other transaction facilitation and processing, and related administrative services only and are not the services of an underwriter or a principal underwriter of the Fund and that Schwab is not an underwriter for the shares of the Designated Portfolio(s), within the meaning of the 1933 Act or the 1940 Act. 5.6. As compensation for the services specified in Schedule D hereto, the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on the percentage per annum on Schedule D hereto applied to the average daily value of the shares of the Designated Portfolio(s) held in the Account with respect to Contracts sold by Schwab. This monthly Administrative Service Fee is due and payable before the 15th (fifteenth) day following the last day of the month to which it relates. ARTICLE VI. Diversification and Qualification 6.1. The Fund and Adviser represent and warrant that the Fund will at all times sell its shares and invest its assets in such a manner as to ensure that the Contracts will be treated as annuity contracts under the Code, and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund and Adviser represent and warrant that the Fund and each Designated Portfolio thereof will at all times comply with Section 817(h) of the Code and Treasury Regulation [Section] 1.817- 5, as amended from time to time, 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 Regulations. The Fund and the Adviser agree that shares of the Designated Portfolio(s) will be sold only to Participating Insurance Companies and their separate accounts. 6.2. No shares of any series or portfolio of the Fund will be sold to the general public. 6.3. The Fund and Adviser represent and warrant that the Fund and each Designated Portfolio is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will maintain such qualification (under Subchapter M or any successor or similar provisions) as long as this Agreement is in effect. 6.4. The Fund or Adviser will notify First Transamerica immediately upon having a reasonable basis for believing that the Fund or any Portfolio has ceased to comply with the aforesaid Section 817(h) diversification or Subchapter M qualification requirements or might not so comply in the future. 6.5. The Fund and Adviser acknowledge that full compliance with the requirements referred to in Sections 6.1, 6.2, and 6.3 hereof is absolutely essential because any failure to meet those requirements would result in the Contracts not being treated as annuity contracts for federal income tax purposes, which would have adverse tax consequences for Contract owners and could also adversely affect First Transamerica's corporate tax liability. The Fund and Adviser also acknowledge that it is solely within their power and control to meet those requirements. Accordingly, without in any way limiting the effect of Section 8.3 hereof and without in any way limiting or restricting any other remedies available to First Transamerica, the Adviser will pay all costs associated with or arising out of any failure, or any anticipated or reasonably foreseeable failure, of the Fund or any Designated Portfolio to comply with Sections 6.1, 6.2 or 6.3 hereof, including all costs associated with reasonable and appropriate corrections or responses to any such failure; such costs may include, but are not limited to, the costs involved in creating, organizing, and registering a new investment company as a funding medium for the Contracts and/or the costs of obtaining whatever regulatory authorizations are required to substitute shares of another investment company for those of the failed Portfolio (including but not limited to an order pursuant to Section 26(b) of the 1940 Act); such costs are to include, but are not limited to, fees and expenses of legal counsel and other advisors to First Transamerica and any federal income taxes or tax penalties (or "toll charges" or exactments or amounts paid in settlement) incurred by First Transamerica with respect to itself or owners of its Contracts in connection with any such failure or anticipated or reasonably foreseeable failure. 6.6. The Fund shall provide First Transamerica or its designee with reports certifying compliance with the aforesaid Section 817(h) diversification and Subchapter M qualification requirements, at the times provided for and substantially in the form attached hereto as Schedule E; provided, however, that providing such reports does not relieve the Fund or Adviser of their responsibility for such compliance or of their liability for non-compliance. ARTICLE VII. Potential Conflicts and Compliance With Shared Funding Exemptive Order 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Designated Portfolio(s) are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners. The Board shall promptly inform First Transamerica if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. First Transamerica will report any potential or existing conflicts of which it is aware to the Board. First Transamerica will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by First Transamerica to inform the Board whenever contract owner voting instructions are disregarded. Such responsibilities (other than the duty to report, which is unqualified) shall be carried out by First Transamerica with a view only to the interests of its Contract Owners. 7.3. If it is determined by a majority of the Board, or a majority of its directors who are not interested persons of the Fund, the Adviser or any sub-adviser to any of the Portfolios (the "Independent Directors"), that a material irreconcilable conflict exists, First Transamerica and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the Independent Directors), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Designated Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Designated Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by First Transamerica to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, First Transamerica may be required, at the Fund's election, to withdraw the Account's investment in the Fund and terminate this Agreement; provided, however; that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the Independent Directors. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of the effective date of such termination the Fund shall continue to accept and implement orders by First Transamerica for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to First Transamerica conflicts with the majority of other state regulators, then First Transamerica will withdraw the Account's investment in the Fund and terminate this Agreement within six months after the Board informs First Transamerica in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the effective date of such termination, the Fund shall continue to accept and implement orders by First Transamerica for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the Independent Trustees shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. First Transamerica shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then First Transamerica will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs First Transamerica in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the Independent Trustees. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) or terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By First Transamerica 8.1(a). First Transamerica agrees to indemnify and hold harmless the Fund and its officers and each member of its Board and the Adviser (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of First Transamerica) 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, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus 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 in writing to First Transamerica or Schwab by or on behalf of the Adviser or Fund for use in the registration statement or prospectus 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 are based upon any untrue statements or alleged untrue statements of any material fact contained in any Registration Statement, prospectus, or statement or additional information for any Unaffiliated Fund, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, or otherwise pertain to or arise in connection with the availability of any Unaffiliated Funds as an underlying funding vehicle in respect of the Contracts; or (iii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by First Transamerica or persons under its control) or wrongful conduct of First Transamerica or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iv) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, 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 in writing to the Fund by or on behalf of First Transamerica; or (v) arise as a result of any failure by First Transamerica to provide the services and furnish the materials under the terms of this Agreement; or (vi) arise out of or result from any material breach of any representation and/or warranty made by First Transamerica in this Agreement or arise out of or result from any other material breach of this Agreement by First Transamerica, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). First Transamerica shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.1(c). First Transamerica 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 First Transamerica 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 First Transamerica of any such claim shall not relieve First Transamerica 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, except to the extent that First Transamerica has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, First Transamerica shall be entitled to participate, at its own expense, in the defense of such action. First Transamerica also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from First Transamerica to such party of First Transamerica's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and First Transamerica will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify First Transamerica 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. 8.2. Indemnification By Schwab 8.2(a). Schwab agrees to indemnify and hold harmless the Fund and its officers and each member of its Board and the Adviser (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of Schwab) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon Schwab's dissemination of information regarding the Fund that is both (A) materially incorrect and (B) that was not either contained in the Fund's registration statement or sales literature or provided in writing to Schwab, or approved in writing, by or on behalf of the Fund or the Adviser; or (ii) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the sales literature for the Contracts 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 in writing to First Transamerica or Schwab by or on behalf of the Adviser or Fund for use in the registration statement or prospectus 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 (iii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by Schwab or persons under its control) or wrongful conduct of Schwab or persons under its control, with respect to the sale or distribution of the Contracts; or (iv) arise as a result of any failure by Schwab to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by Schwab in this Agreement or arise out of or result from any other material breach of this Agreement by Schwab; or (vi) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in any Registration Statements, prospectus, or statement of additional information for any Unaffiliated Fund, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, or otherwise pertain to or arise in connection with the availability of any Unaffiliated Funds as an underlying funding vehicle in respect of the Contract; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). Schwab shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.2(c). Schwab 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 Schwab 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 Schwab of any such claim shall not relieve Schwab 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, except to the extent that Schwab has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, Schwab shall be entitled to participate, at its own expense, in the defense of such action. Schwab also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from Schwab to such party of Schwab's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and Schwab will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Indemnified Parties will promptly notify Schwab 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. 8.3. Indemnification by the Adviser 8.3(a). The Adviser agrees to indemnify and hold harmless First Transamerica and Schwab and each of their directors and officers and each person, if any, who controls First Transamerica or Schwab within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature for the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished in writing to the Adviser or Fund by or on behalf of First Transamerica or Schwab for use in the Registration Statement or prospectus 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 are based upon statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Fund or Adviser or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, 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 in writing to First Transamerica or Schwab by or on behalf of the Adviser or Fund; or (iv) arise as a result of any failure by the Fund or Adviser 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 Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Fund or Adviser in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. This indemnification is in addition to and apart from the responsibilities and obligations of the Adviser specified in Article VI hereof. 8.3(b). The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to First Transamerica or to Schwab or the Account, whichever is applicable. 8.3(c). The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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, except to the extent that the Adviser has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, the Adviser will be entitled to participate, at its own expense, in the defense thereof. The Adviser also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser to such party of the Adviser'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 Adviser will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). First Transamerica and Schwab agree promptly to notify the Adviser of the commencement of any litigation or proceedings against it or any of its officers and directors in connection with the issuance or sale of the Contracts or the operation of the Account. 8.4. Indemnification By the Fund 8.4(a). The Fund agrees to indemnify and hold harmless First Transamerica and Schwab, and each of their directors and officers and each person, if any, who controls First Transamerica or Schwab within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.4) against any and all losses, claims, 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 Article VI 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; or (iii) arise out of or result from the incorrect or untimely calculation or reporting of the daily net asset value per share or dividend or capital gain distribution rate; as limited by and in accordance with the provisions of Sections 8.4(b) and 8.4(c) hereof. 8.4(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 by subject by reason of such Indemnified Party's willful misfeasance, bad faith, or 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 First Transamerica, Schwab, the Fund, the Adviser or the Account, whichever is applicable. 8.4(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 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, except to the extent that the Fund has been prejudiced by such failure to give notice. 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. 8.4(d). First Transamerica and Schwab each agree promptly to notify the Fund of the commencement of any litigation or proceedings against itself or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of State of New York. 9.2. This Agreement shall be made 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 Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party, with or without cause, with respect to some or all Designated Portfolios, upon one (1) year advance written notice delivered to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of First Transamerica by written notice to the other parties with respect to any Designated Portfolio based upon First Transamerica's reasonable and good faith determination that shares of such Designated Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) at the option of First Transamerica by written notice to the other parties with respect to any Designated Portfolio 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 First Transamerica; or (d) at the option of the Fund in the event that formal administrative proceedings are instituted against First Transamerica or Schwab by the NASD, the SEC, the Insurance Commissioner of like official of any state or any other regulatory body regarding First Transamerica's or Schwab's duties under this Agreement or related to the sale of the Contracts, the operation of any Account, or the purchase of the Fund shares or the shares or sponsor of any Unaffiliated Fund, provided, however, that the Fund determines in its sole judgement exercised reasonably and in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of First Transamerica or Schwab to perform its obligations under this Agreement or would have a material adverse impact upon the Fund; or (e) at the option of First Transamerica in the event that formal administrative proceedings are instituted against the Fund or Adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, provided, however, that First Transamerica determines in its sole judgement exercised reasonably and in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund or Adviser to perform its obligations under this Agreement; or (f) at the option of First Transamerica by written notice to the Fund and the Adviser with respect to any Portfolio if First Transamerica reasonably and in good faith believes that the Portfolio will fail to meet the Section 817(h) diversification requirements or Subchapter M qualifications specified in Article VI hereof; or (g) at the option of either the Fund or Adviser, if (i) the Fund or Adviser, respectively, shall determine, in their sole judgement reasonably exercised in good faith, that either First Transamerica or Schwab has suffered a material adverse change in their business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact on First Transamerica's or Schwab's ability to perform its obligations under this Agreement, (ii) the Fund or Adviser notifies First Transamerica or Schwab, as appropriate, of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by First Transamerica or Schwab and any other changes in circumstances since the giving of such notice, the determination of the Fund or Adviser shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (h) at the option of either First Transamerica or Schwab, if (i) First Transamerica or Schwab, respectively, shall determine, in its sole judgment reasonably exercised in good faith, that either the Fund or Adviser have suffered a material adverse change in their business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact upon the Fund's or Adviser's ability to perform its obligations under this Agreement, (ii) First Transamerica or Schwab notifies the Fund or Adviser, as appropriate, of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by the Fund or Adviser and any other changes in circumstances since the giving of such notice, the determination of First Transamerica or Schwab shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (i) termination at the option of First Transamerica in the event that formal administrative proceedings are instituted against Schwab by the NASD, the Securities and Exchange Commission, or any state securities or insurance department or any regulatory body regarding Schwab's duties under this Agreement or related to the sale of the Fund's shares or the Contracts, the operation of any Account, or the purchase of Fund shares, provided, however, that First Transamerica determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of Schwab to perform its obligations related to the Contracts. 10.2. Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice shall set forth the basis for such termination. 10.3. Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Adviser, shall, at the option of First Transamerica, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Designated Portfolio(s) (as in effect on such date), redeem investments in such Designated Portfolios(s) and/or invest in such Designated Portfolios(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.3 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.4. Surviving Provisions. Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties shall survive and not be affected by any termination of this Agreement. In addition, with respect to Existing Contracts, all provisions of this Agreement shall also survive and not be affected by any termination of this Agreement. 10.5. Survival of Agreement. A termination by Schwab shall terminate this Agreement only as to that party, and this Agreement shall remain in effect as to the other parties; provided, however, that in the event of a termination by Schwab the other parties shall have the option to terminate this Agreement upon 60 (sixty) days notice, rather than the one (1) year specified in Section 10.1(a). ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: SteinRoe Variable Investment Trust c/o Liberty Investment Services, Inc. 600 Atlantic Avenue Boston, Massachusetts 02210 Attention: Secretary If to First Transamerica: First Transamerica Life Insurance Company 575 Fifth Avenue New York, NY 10017-2422 Attention: President If to the Adviser: Stein Roe & Farnham Incorporated One South Wacker Drive Chicago, IL 60606 Attention: Secretary If to Schwab: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94014 Attention: General Counsel ARTICLE XII. Miscellaneous 12.1. Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as such information may come into the public domain. Without limiting the foregoing, no party hereto shall disclose any information designated as proprietary by another party. 12.2. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.3. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.4. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.5. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the Securities and Exchange Commission, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the California 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 annuity operations of First Transamerica are being conducted in a manner consistent with the California Variable Annuity Regulations and any other applicable law or regulations. 12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.7. This Agreement or any of the rights or obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto. 12.8. All persons dealing with the Fund and any Designated Portfolio shall look solely to the assets of such Designated Portfolio for the enforcement of any claims against the Fund hereunder. Each other party acknowledges and agrees that none of the Trustees, officers or shareholders of the Fund shall have any personal liability for any obligations entered into by or on behalf of the Fund. 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. First Transamerica: FIRST TRANSAMERICA LIFE INSURANCE COMPANY By its authorized officer, By: [SIGNATURE] Title: Chairman Gen. Coun. & Sec. Date: Jan 95 Fund: STEINROE VARIABLE INVESTMENT TRUST on behalf of the Designated Portfolio By its authorized officer, By: RICHARD R. CHRISTENSEN Title: President Date: 1/9/95 Adviser: STEIN ROE & FARNHAM INCORPORATED By its authorized officer, By: JILAINE HUMMEL BAUER Title: Senior Vice President Date: 11/10/94 Schwab: CHARLES SCHWAB & CO., INC. By its authorized officer, By: [SIGNATURE] Title: Vice President Date: ________ SCHWAB INVESTMENT ADVANTAGE, A VARIABLE ANNUITY SCHEDULE A ---------- Contracts Form Numbers - --------- ------------ First Transamerica Life Insurance Company - ----------------------------------------- Group Annuity Contract Form No. FTGP-501-193 Dollar Cost Averaging Endorsement Form No. FTGE-003-193 Automatic Payout Option Endorsement Form No. FTGE-004-193 Systematic Withdrawal Option Endorsement Form No. FTGE-005-193 Acceptance of Group Annuity Contract Form No. FTGA-003-193 Modification of Allocation of Net Purchase Payments Provision Form No. FTGE-007-194 Variable Annuity Application Form No. FTGA-004-193 Certificate of Participation Form No. FTCG-101-193 IRA Endorsement Form No. FTCE-005-193 Benefit Distribution Endorsement Form No. FTCE-006-193 Dollar Cost Averaging Endorsement Form No. FTCE-007-193 Automatic Payout Option Endorsement Form No. FTCE-008-193 Systematic Withdrawal Option Endorsement Form No. FTCE-009-193 Annuity Rate Table Endorsement Form No. FTCE-010-193 Unisex Annuity Rate Tables Endorsement Form No. FTCE-010-193 Modification of Allocation of Net Purchase Payments Provision Form No. FTCE-011-194 SCHEDULE B ---------- Designated Portfolios - --------------------- Capital Appreciation Fund SCHEDULE C ---------- Stein Roe Capital Appreciation Fund (the "Fund") The Fund is one of the seven Funds that comprise the Stein Roe Variable Investment Trust (the "Trust"), an open-end diversified management investment company. The Trust issues shares of beneficial interest in each Fund that represent interests in a separate portfolio of securities and other assets. The Trust is the funding vehicle for variable annuity contracts ("VA contracts") and variable life insurance policies("VLI policies") offered by the separate accounts of life insurance companies ("Participating Insurance Companies"). The shares of the Fund currently are sole only to Keyport Life Insurance Company ("Keyport") and Liberty Life Assurance Company of Boston ("Liberty Mutual"). The Participating Insurance Companies and their separate accounts are the shareholders or investors ("shareholders") of the Fund. Owners of VA contracts or owners of VLI policies invest in sub-accounts of separate accounts of the Participating Insurance Companies that, in turn, invest in the Funds. The investment portfolio of the Fund is managed, subject to the direction of the Board of Trustees, and by Stein Roe & Farnham Incorporated (the "Adviser"), One South Wacker Drive, Chicago, Illinois 60606, pursuant to an Advisory Agreement dated December 9, 1988 with the Fund. The Adviser was organized in 1986 to succeed to the business of Stein Roe & Farnham ("SRF"), a partnership that had been providing investment advisory and administrative services since 1932. The Adviser is a wholly owned indirect subsidiary of Liberty Mutual. As of December 21, 1992, the Adviser had assets under management of approximately $28.9 billion. The Adviser places orders for the purchase and sale of securities and options for each Fund. In doing so, the Adviser seeks to obtain the best combination of price and execution, which involves a number of judgmental factors. Liberty Investment Services, Inc. the "Administrator", Federal Reserve Plaza, 600 Atlantic Avenue, Boston, Massachusetts 02210, provides the Fund with management and administrative services pursuant to an Administration Agreement with the Trust on behalf of the Fund. These services include the provision of office space and equipment and facilities in connection with the maintenance of the Trust's headquarters, preparation and filing of required reports, arrangements for meetings, maintenance of the Trust's corporate books and records, communication with shareholders, and oversight of custodial, accounting and other services provided to the Fund by others. The Administrator pays all compensation of the Trust's Trustees, officers and employees who are employees of the Administrator. Under a separate agreement, the Administrator also acts as the agent of the Fund for the transfer of shares, disbursement of dividends and maintenance of shareholder account records. The Administrator was organized in 1983 and commenced active operations in 1987. It became an indirect wholly owned subsidiary of Liberty Mutual in 1985. Liberty Mutual is an international multi-line insurance writer and, with its affiliates, is currently the fifth largest writer of property- casualty insurance in the United Sates. Its headquarters are in Boston, Massachusetts, and it employs approximately 23,000 people in over 250 offices across North America. At December 31, 1992, Liberty Mutual and its affiliates had total assets of approximately $31.4 billion. Keyport Financial Services Corp. (the "Underwriter") serves as the Underwriter of the Trust, and is a wholly owned indirect subsidiary of Liberty Mutual. The Fund intends to declare and distribute, as dividends or capital gains distributions, at least annually, substantially all of its net investment income and net profits realized from the sale of portfolio securities, if any, to its shareholders (Participating Insurance Companies' separate accounts). Income dividends will be declared and distributed annually. All dividends and distributions are reinvested in additional shares of the Fund at net asset value, as of the record date for the distributions. The Trust's custodian, State Street Bank and Trust Company, determines net asset value per share of the Fund as of the close or regular trading on the New York Stock Exchange (currently 4:00 p.m., Boston time). Net asset value per share is calculated for the Fund by dividing the current market value (amortized cost value in the case of the Cash Income Fund) of total portfolio assets, less all liabilities (including accrued expenses), by the total number of shares outstanding. Net asset value is determined on each day when the Exchange is open, except on such days in which no order to purchase or redeem shares is received. Investment Objectives & Policies The Fund seeks to provide shareholders with growth of capital. It pursues this objective by investing primarily in common stocks, securities convertible into common stocks and securities having common stock characteristics, including rights and warrants, selected primarily for prospective capital growth. Investments in newer and smaller companies (those having a market capitalization of less than $500,000,000), particularly those believed to be in the earlier phases of growth, are emphasized. The Fund may also invest in securities of larger, more established companies that the Adviser believes possess some of the same characteristics as smaller companies. While income is not an objective, securities appearing to offer attractive possibilities for future growth of income may be included in the Fund's portfolio. The type of securities in which Capital Appreciation Fund invests may be expected to experience wide fluctuations in price in both rising and declining markets. The Fund may be expected to experience a greater degree of market and financial risk than other equity portfolios. The Fund's portfolio may include securities that are not widely traded or new issues of securities. The Fund may invest up to 25% of its total assets in securities of foreign issuers that are not publicly traded in the U.S., which for this purpose do not include securities represented by American Depository Receipts ("ADRs") and securities guaranteed by a U.S. person. While investment in foreign securities is intended to reduce risk by providing further diversification, such investments involve sovereign risk in addition to the credit and market risks normally associated with domestic securities. Foreign investments may be affected favorably or unfavorably by changes in currency rates and exchange control regulations. There may be less publicly available information about a foreign company than about a U.S. company, and foreign companies may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those applicable to U.S. companies. Securities of some foreign companies are less liquid or more volatile than securities of U.S. companies, and foreign brokerage commissions and custodian fees are generally higher than in the U.S. Investments in foreign securities may also be subject to other risks different from those affecting U.S. investments, including local political or economic developments, expropriation or nationalization of assets, imposition of withholding taxes on dividend or interest payments, currency blockage(which would prevent cash from being brought back to the U.S.), and sometimes less advantageous legal, operational, and financial protection applicable to foreign subcustodial arrangements. These risks are carefully considered by the Adviser prior to the purchase of these securities. When the Adviser believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may cause the Fund to enter into forward contracts to sell an amount of foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in such foreign currency. The Adviser may also cause the Fund to enter into forward foreign currency contracts to protect against loss between trade and settlement dates resulting from changes in foreign currency exchange rates. Such contracts will also have the effect of limiting any gains to the Fund that would have resulted from advantageous changes in such rates. When the Adviser deems a temporary defensive position advisable The Fund may invest, without limitation, in high-quality fixed-income securities, or hold assets in cash or cash equivalents. The Fund may invest in securities purchased on a when-issued or delayed-delivery basis. Although the payment terms of these securities are established at the time the Fund enters into the commitment, the securities may be delivered and paid for a month or more after the date of purchase, when their value may have changed and the yields then available in the market may be greater. The Fund will make such commitments only with the intention of actually acquiring the securities, but may sell the securities before settlement date if it is deemed advisable for investment reasons. The Fund may also invest in securities purchased on a standby commitment basis, which is a delayed delivery agreement in which the Fund binds itself to accept delivery of a security at the option of the other party to the agreement. The Fund usually receives a commitment fee in consideration for its standby commitment. The Fund, may purchase and write both call options and put options on securities and on indexes, and enter into interest rate and index futures contracts and options on such futures contracts in order to provide additional revenue, or to hedge against changes in security prices or interest rates. If other types of options, future contracts, or options on future contracts are traded in the future, the Fund may also use those investment vehicles, provided the Board of Trustees determines that their use is consistent with the Fund's investment objective. Investment Restrictions The Fund operates under the investment restrictions listed below. Restrictions numbered (i) through (ix) are fundamental policies which may not be changed for the Fund without approval of a majority of the outstanding voting shares of the Fund, defined as the lesser of the vote of (a) 67% of the shares of the Fund at a meeting where more than 50% of the outstanding shares are present in person or by proxy or (b) more than 50% of the outstanding shares of the Fund. Other restrictions are not fundamental policies and may be changed with respect to the Fund by the Trustees without shareholder approval. The following investment restrictions apply to the Fund. The Fund may not: (i) with respect to 75% of the value of its total assets, invest more than 5% of the value of its total assets, taken at market value at the time of a particular purchase, in the securities of any one issuer, except (a) securities issued or guaranteed by the U.S. government or its agencies or instrumentalities and (b) [with respect to Cash Income Fund only] certificates of deposit, bankers' acceptances and repurchase agreements; (ii) purchase securities of any one issuer if more than 10% of the outstanding voting securities of such issuer would at the time beheld by the Fund; (iii) act as an underwriter of securities, except insofar as it may be deemed an underwriter for purposes of the Securities Act of 1933 on disposition of securities acquired subject to legal or contractual restrictions on resale; (iv) invest in a security if more than 25% of its total assets (taken at market value at the time of a particular purchase) would be invested in the securities of issuers in any particular industry, except that this restriction does not apply to (i) securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities; (v) purchase or sell real estate (although it may purchase securities secured by real estate or interests therein, and securities issued by companies which invest in real estate or interests therein), commodities, or commodity contracts, except that it may enter into (a) futures and options on futures and (b) forward contracts; (vi) purchase securities on margin (except for use of short- term credits as are necessary for the clearance of transactions), make short sales of securities, or participate on a joint or a joint and several basis in any trading account in securities, except in connection with transactions in options, futures, and options on futures; (vii) make loans, but this restriction shall not prevent the Fund from (a) buying a part of an issue of bonds, debentures, or other obligations which are publicly distributed, or from investing up to an aggregate of 15% of its total assets (taken at market value at the time of each purchase) in parts of issues of bonds, debentures or other obligations of a type privately placed with financial institutions, (b) investing in repurchase agreements, or (c) lending portfolio securities, provided that it may not lend securities if, as a result, the aggregate value of all securities loaned would exceed 15% of its total assets (taken at market value at the time of such loan); (viii) borrow, except that it may (a) borrow up to 33-1/3% of its total assets from banks, taken at market value at the time of such borrowing, as a temporary measure for extraordinary or emergency purposes, but not to increase portfolio income (the total of reverse repurchase agreements and such borrowings will not exceed 33-1/3% of its total assets, and the Fund will not purchase additional securities when its borrowings, less proceeds receivable from sales of portfolio securities, exceed 5% of its total assets and (b) enter into transactions in options, futures, and options on futures. The Fund is also subject to the following restrictions and policies, which are not fundamental and may be changed by the Trustees without shareholder approval. The Fund may not: (a) invest in companies for the purpose of exercising control or management; (b) purchase more than 3% of the stock of another investment company; or purchase stock of other investment companies equal to more than 5% of the Fund's total assets (valued at time of purchase) in the case of any one other investment company and 10% of such assets (valued at the time of purchase) in the case of all other investment companies in the aggregate; any such purchases are to be made in the open market where no profit to a sponsor or dealer results from the purchase, other than the customary broker's commission, except for securities acquired as part of a merger, consolidation or acquisition of assets; (c) mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by it, except as may be necessary in connection with (i) permitted borrowings and (ii) options, futures and options on futures; (d) issue senior securities, except to the extent permitted by the Investment Company Act of 1940, including permitted borrowings; (e) purchase portfolio securities for the Fund from, or sell portfolio securities to, any of the officers and directors or Trustees of the Trust or of its Adviser; (f) invest more than 5% of its net assets (valued at time of purchase) in warrants that are not listed on the New York or American Stock Exchange; (g) write an option on a security unless the option is issued by the Options Clearing Corporation, an exchange, or similar entity; (h) buy or sell an option on a security, a futures contract, or an option on a futures contract unless the option, the futures contract, or the option on the futures contract is offered through the facilities of a recognized securities association or listed on a recognized exchange or similar entity; (i) purchase a put or call option if the aggregate premiums paid for all put and call potions exceed 20% of its net assets (less the amount by which any such positions are in-the-money), excluding put and call options purchased as closing transactions; (j) investment more than 15% of the Fund's net assets (taken at market value at the time of each purchase) in illiquid securities including repurchase agreements maturing in more than seven days. SCHEDULE D ---------- ADMINISTRATIVE SERVICES ----------------------- To be performed by Charles Schwab & Co., Inc. A. Schwab will provide the properly registered and licensed personnel and systems needed for all customer servicing support - for both fund and annuity information and questions - including: delivery of prospectus - both fund and annuity; entry of initial and subsequent orders; transfer of cash to insurance company and/or funds; explanations of fund objectives and characteristics; entry of transfers between funds; fund balance and allocation inquiries; mail fund prospectus; B. Schwab will calculate on a daily basis for each fund the number of shares and the asset balance on which the fee is to be paid pursuant to this agreement. Also provided will be a monthly summary of the reports, expressed in both shares and dollar amounts. C. Schwab will communicate all purchase, withdrawal, and exchange orders it receives from its customers to First Transamerica who will retransmit them to each fund. D. For its services, Schwab shall receive a fee of 0.20% per annum applied to the average daily value of the shares of the fund held by Schwab's customers, payable by the Adviser directly to Schwab, such payments being due and payable within 15 (fifteen) days after the last day of the month to which such payment relates. SCHEDULE E ---------- Reports per Section 6.6 - ----------------------- With regard to the reports relating to the quarterly testing of compliance with the requirement of Section 817(h) and Subchapter M under the Internal Revenue Code (the "Code") and the regulations thereunder, the Fund shall provide within twenty (20) Business Days of the close of the calendar quarter a report in the attached form regarding the status under such sections of the Code of the Designated Portfolio(s), and if necessary, identification of any remedial action to be taken to remedy non-compliance. With regard to the reports relating to the year-end testing of compliance with the requirements of Subchapter M of the Code, referred to hereinafter as "RIC status," the Fund will provide the reports on the following basis: the year-end report in the attached form will be provided 45 days after the end of the calendar year, but prior thereto, the Fund will provide the additional interim and supplemental reports, described below. The additional reports are as follows: 1. A report in the usual reporting format and content, as of November 30, of each future fiscal year. The report will be provided under cover of a letter from the Adviser stating that the Fund is in full compliance with the requirements of Section 817(h) and Subchapter M of the Code. Assuming such satisfactory report, the Fund will not provide any additional interim reports. The report will be delivered by facsimile by the twentieth day of December. 2. In the alternative, if a problem, as defined below, is identified in the November report or its accompanying transmittal letter, additional interim reports, on a weekly basis, starting on the 15th of December and through the 30th of December, also will be supplied ("additional interim reports"). The additional interim reports will not follow the format of the regular reports, but will specifically address the problem identified in the November 30 report. If any interim report, thereafter, memorializes the cure of the problem, subsequent additional reports will not be required. With regard to the delivery of the additional reports, they will be transmitted by facsimile on the next Business Day, subject to the following schedule of special dates: if the 15th of December is a Saturday, the required report date will be accelerated to the 14th of December; if the 15th of December is a Sunday, the report will be transmitted on the 16th of December. 3. A problem with regard to RIC status is defined as any violation of the following standards, as referenced to the applicable sections of the Code: (a) Less than ninety-five percent of gross income is derived from sources of income specified in Section 851(b)(2); (b) Twenty-five percent or greater gross income is derived from the sale or disposition of assets specified in Section 851(b)(3); (c) Fifty-five percent or less of the value of total assets consists of assets specified in Sections 851(b)(4)(A); and (d) Twenty percent or more of the value of total assets is invested in the securities of one issuer, as that requirement is set forth in Section 851(b)(4)(B). SCHEDULE F EXPENSES 1. The Fund and First Transamerica will pay the costs of printing and/or distributing copies of the documents based upon an allocation of costs that reflects the Fund's share of total costs determined according to the number of pages of the parties' and other funds' respective portions of the documents. 2. The Adviser and First Transamerica will pay the costs of printing and/or distributing copies of the documents based upon an allocation of the costs that reflects the Adviser's share of the total costs determined according to the number of pages of the parties' and other funds' respective portions of the documents. RESPONSIBLE ITEM FUNCTION PARTY PROSPECTUS Annual Update Printing 1 Distribution 1 New Sales: Marketing (supply and distribution of 2 prospectuses to persons who have not yet invested in a Designated Portfolio) Delivery of prospectuses to satisfy legal 1 prospectus delivery requirements (e.g., copies sent with confirmations of sales) Existing Supply quantities described in Section 3.4 1 Owners: Distribution 1 Interim Updates New Sales: Marketing (supply and distribution of 2 prospectuses to persons who have not yet invested in a Designated Portfolio) Delivery of prospectuses to satisfy legal 1 prospectus delivery requirements (e.g., copies sent with confirmations of sales If required by Participating Insurance Company (PIC) PIC If required by Schwab Schwab Existing If required by Fund or Adviser: Fund Owners: If required by PIC: PIC If required by Schwab: Schwab STATEMENTS Same as Prospectus Same OF ADDITIONAL INFORMATION PROXY Printing Fund MATERIALS Distribution OF THE FUND (a) If required by law: Fund (b) If required by participating insurance company: PIC (c) If required by Schwab: Schwab ANNUAL Printing Fund REPORTS Distribution 1 & OTHER COMMUNICATIONS WITH SHAREHOLDERS OF THE FUND OPERATIONS All operations and related expenses, including Fund OF FUND the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, the preparation of all statements and notices required by any federal or state law and all taxes on the issuance of the Fund's shares, and all costs of management of the business affairs of the Fund. * Schwab will advise the Adviser and the Fund of the allocation of the foregoing expenses among the parties as soon as possible after such allocations are determined. SCHEDULE G PROXY VOTING PROCEDURE The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund by the Adviser, the Fund and First Transamerica. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "First Transamerica" shall also include the department or third party assigned by First Transamerica to perform the steps delineated below. 1. The number of proxy proposals is given to First Transamerica by the Adviser as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Adviser will inform First Transamerica of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before the meeting. 2. Promptly after the Record Date, First Transamerica will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contractowner/policyholder (the "Contract Owners") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Contract Owners' accounts of the Record Date. Note: The number of proxy statements is determined by the activities described in Step #2. First Transamerica will use its best efforts to call in the number of Contract Owners to the Adviser, as soon as possible, but no later than one week after the Record Date. 3. The Fund's Annual Report must be sent to each Contract Owner by First Transamerica either before or together with the Contract Owner's receipt of a proxy statement. The Adviser will provide at least one copy of the last Annual Report to First Transamerica. 4. The text and format for the Voting Instructions Card ("Cards" or "Card") is provided to First Transamerica by the Fund. First Transamerica shall produce and personalize the Voting Instruction cards. The legal department of the Adviser ("Adviser Legal") must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: a. name (legal name as found on account registration) b. address c. Fund or account number d. coding to state number of units e. individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 5. During this time, Adviser Legal will develop and produce the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to First Transamerica for insertion into envelopes (envelopes and return envelopes are provided and paid for by First Transamerica). Contents of envelope sent to Contract Owners by First Transamerica will include: a. Voting Instruction Card(s) b. One proxy notice and statement (one document) c. Return envelope (postage pre-paid) addressed to First Transamerica or its tabulation agent d. "Urge buckslip" - optional, but recommended. (This is a small single sheet of paper that requests Contract Owners to vote as quickly as possible and that t their vote is important. One copy will be supplied by the Fund.) e. Cover letter - optional, supplied by First Transamerica and reviewed and approved in advance by Adviser Legal. 6. The above contents should be received by First Transamerica approximately 3-5 business days before mail date. Individual in charge at First Transamerica reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to Adviser Legal. 7. Package mailed by First Transamerica. * The Fund must allow at least a 15-day solicitation time to First Transamerica as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, counting backwards. 8. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on the process used. An often used procedure is to sort cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure. 9. If cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to the Contract Owner with an explanatory letter, a new Card and return envelope. The mutilated or illegible Card is disregarded and considered to be not received for purposes of vote tabulation. Such mutilated or illegible Cards are "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 10. There are various control procedures used to ensure proper tabulation of votes and accuracy of the tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do no coincide, then an internal audit of that vote should occur. This may entail a recount. 11. The actual tabulation of votes is done in units which are then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) Adviser Legal must review and approve tabulation format. 12. Final tabulation in shares is verbally given by First Transamerica to Adviser Legal on the morning of the meeting not later than 10:00 a.m. Denver time. Adviser Legal may request an earlier deadline if required to calculate the votes in time for the meeting. 13. A Certificate of Mailing and Authorization to Vote Shares will be required from First Transamerica as well as an original copy of the final vote. Adviser Legal will provide a standard form for each Certification. 14. First Transamerica will be required to box and archive the Cards received from the Contract Owners. In the event that any vote is challenged or is otherwise necessary for legal, regulatory, or accounting purposes, Adviser Legal will be permitted reasonable access to such Cards. 15. All approvals and "signing-off" may be done orally, but must always be followed up in writing. EX-99 10 EX-99.B9G OTH CONTRCT STEINROE VARIABLE INVESTMENT TRUST ACCOUNTING AND BOOKKEEPING AGREEMENT (date) This Agreement is made this ___ day of ______, 19__, by and between SteinRoe Variable Investment Trust, a Massachusetts business trust, (hereinafter referred to as the "Trust") and Stein Roe & Farnham Incorporated ("SteinRoe"), a Delaware corporation. 1. Appointment. Each Trust hereby appoints SteinRoe to act as its agent to perform the services described herein with respect to each series of shares of the Trust (the "Series") identified in and beginning on the date specified on Appendix I to this Agreement, as may be amended from time to time. SteinRoe hereby accepts appointment as each Trust's agent and agrees to perform the services described herein. 2. Accounting. (a) Pricing. For each Series of the Trust, SteinRoe shall value all securities and other assets of the Series, and compute the net asset value per share of such Series, at such times and dates and in the manner and by such methodology as is specified in the then currently effective prospectus and statement of additional information for such Series, and pursuant to such other written procedures or instructions furnished to SteinRoe by the Trust. To the extent procedures or instructions used to value securities or other assets of a Series under this Agreement are at any time inconsistent with any applicable law or regulation, the Trust shall provide SteinRoe with written instructions for valuing such securities or assets in a manner which the Trust represents to be consistent with applicable law and regulation. (b) Net Income. SteinRoe shall calculate with such frequency as the Trust shall direct, the net income of each Series of the Trust for dividend purposes and on a per share basis. Such calculation shall be at such times and dates and in such manner as the Trust shall instruct SteinRoe in writing. For purposes of such calculation, SteinRoe shall not be responsible for determining whether any dividend or interest accruable to the Trust is or will be actually paid, but will accrue such dividend and interest unless otherwise instructed by the Trust. (c) Capital Gains and Losses. SteinRoe shall calculate gains or losses of each Series of the Trust from the sale or other disposition of assets of that Series as the Trust shall direct. (d) Yields. At the request of the Trust, SteinRoe shall compute yields for each Series of the Trust for such periods and using such formula as shall be instructed by the Trust. (e) Communication of Information. SteinRoe shall provide the Trust, the Trust's transfer agent and such other parties as directed by the Trust with the net asset value per share, the net income per share and yields for each Series of the Trust at such time and in such manner and format and with such frequency as the parties mutually agree. (f) Information Furnished by the Trust. The Trust shall furnish SteinRoe with any and all instructions, explanations, information, specifications and documentation deemed necessary by SteinRoe in the performance of its duties hereunder, including, without limitation, the amounts and/or written formula for calculating the amounts, and times of accrual of liabilities and expenses of each Series of the Trust. The Trust shall also at any time and from time to time furnish SteinRoe with bid, offer and/or market values of securities owned by the Trust if the same are not available to SteinRoe from a pricing or similar service designated by the Trust for use by SteinRoe to value securities or other assets. SteinRoe shall at no time be required to commence or maintain any utilization of, or subscriptions to, any such service which shall be the sole responsibility and expense of the Trust. 3. Recordkeeping. (a) SteinRoe shall, as agent for the Trust, maintain and keep current and preserve the general ledger and other accounts, books, and financial records of the Trust relating to activities and obligations under this Agreement in accordance with the applicable provisions of Section 31(a) of the General Rules and Regulations under the Investment Company Act of 1940, as amended (the "Rules"). (b) All records maintained and preserved by SteinRoe pursuant to this Agreement which the Trust is required to maintain and preserve in accordance with the Rules shall be and remain the property of the Trust and shall be surrendered to the Trust promptly upon request in the form in which such records have been maintained and preserved. (c) SteinRoe shall make available on its premises during regular business hours all records of a Trust for reasonable audit, use and inspection by the Trust, its agents and any regulatory agency having authority over the Trusts. 4. Instructions, Opinion of Counsel, and Signatures. (a) At any time Stein Roe may apply to a duly authorized agent of the Trust for instructions regarding the Trust, and may consult counsel for such Trust or its own counsel, in respect of any matter arising in connection with this Agreement, and it shall not be liable for any action taken or omitted by it in good faith in accordance with such instructions or with the advice or opinion of such counsel. SteinRoe shall be protected in acting upon any such instruction, advice, or opinion and upon any other paper or document delivered by the Trust or such counsel believed by SteinRoe to be genuine and to have been signed by the proper person or persons and shall not be held to have notice of any change of authority of any officer or agent of the Trust, until receipt of written notice thereof from such Trust. (b) SteinRoe may receive and accept a certified copy of a vote of the Board of Trustees of the Trust as conclusive evidence of (i) the authority of any person to act in accordance with such vote or (ii) any determination or any action by the Board of Trustees pursuant to its Agreement and Declaration of Trust as described in such vote, and such vote may be considered as in full force and effect until receipt by SteinRoe of written notice to the contrary. 5. Compensation. The Trust shall reimburse SteinRoe from the assets of the respective applicable Series of the Trust, for any and all out-of-pocket expenses and charges in performing services under this Agreement and such compensation as is provided in Appendix II to this Agreement, as amended from time to time. SteinRoe shall invoice the Trust as soon as practicable after the end of each calendar month, with allocation among the respective Series and full detail, and the Trust shall promptly pay SteinRoe the invoiced amount. 6. Confidentiality of Records. SteinRoe agrees not to disclose any information received from the Trust to any other client of SteinRoe or to any other person except its employees and agents, and shall use its best efforts to maintain such information as confidential. Upon termination of this Agreement, SteinRoe shall return to each Trust all records in the possession and control of SteinRoe related to such Trust's activities, other than SteinRoe's own business records, it being also understood and agreed that any programs and systems used by SteinRoe to provide the services rendered hereunder will not be given to any Trust. 7. Liability and Indemnification. (a) SteinRoe shall not be liable to any Trust for any action taken or thing done by it or its employees or agents on behalf of the Trust in carrying out the terms and provisions of this Agreement if done in good faith and without negligence or misconduct on the part of SteinRoe, its employees or agents. (b) Each Trust shall indemnify and hold SteinRoe, and its controlling persons, if any, harmless from any and all claims, actions, suits, losses, costs, damages, and expenses, including reasonable expenses for counsel, incurred by it in connection with its acceptance of this Agreement, in connection with any action or omission by it or its employees or agents in the performance of its duties hereunder to the Trust, or as a result of acting upon instructions believed by it to have been executed by a duly authorized agent of the Trust or as a result of acting upon information provided by the Trust in form and under policies agreed to by SteinRoe and the Trust, provided that: (i) to the extent such claims, actions, suits, losses, costs, damages, or expenses relate solely to one or more Series, such indemnification shall be only out of the assets of that Series or group of Series; (ii) this indemnification shall not apply to actions or omissions constituting negligence or misconduct on the part of SteinRoe or its employees or agents, including but not limited to willful misfeasance, bad faith, or gross negligence in the performance of their duties, or reckless disregard of their obligations and duties under this Agreement; and (iii) SteinRoe shall give the Trust prompt notice and reasonable opportunity to defend against any such claim or action in its own name or in the name of SteinRoe. (c) SteinRoe shall indemnify and hold harmless each Trust from and against any and all claims, demands, expenses and liabilities which such Trust may sustain or incur arising out of, or incurred because of, the negligence or misconduct of SteinRoe or its agents or contractors, or the breach by SteinRoe of its obligations under this Agreement, provided that: (i) this indemnification shall not apply to actions or omissions constituting negligence or misconduct on the part of such Trust or its other agents or contractors and (ii) such Trust shall give SteinRoe prompt notice and reasonable opportunity to defend against any such claim or action in its own name or in the name of such Trust. 8. Further Assurances. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. 9. Dual Interests. It is understood and agreed that some person or persons may be trustees, officers, or shareholders of both the Trusts and SteinRoe, and that the existence of any such dual interest shall not affect the validity hereof or of any transactions hereunder except as otherwise provided by specific provision of applicable law. 10. Amendment and Termination. This Agreement may be modified or amended from time to time, or terminated, by mutual agreement between the parties hereto and may be terminated by at least one hundred eighty (180) days' written notice given by one party to the other. Upon termination hereof, each Trust shall pay to SteinRoe such compensation as may be due from it as of the date of such termination, and shall reimburse SteinRoe for its costs, expenses, and disbursements payable under this Agreement to such date. In the event that, in connection with termination, a successor to any of the duties or responsibilities of SteinRoe hereunder is designated by a Trust by written notice to SteinRoe, SteinRoe shall promptly upon such termination and at the expense of such Trust, deliver to such successor all relevant books, records, and data established or maintained by SteinRoe under this Agreement and shall cooperate in the transfer of such duties and responsibilities, including provision, at the expense of such Trust, for assistance from SteinRoe personnel in the establishment of books, records, and other data by such successor. 11. Assignment. Any interest of SteinRoe under this Agreement shall not be assigned or transferred either voluntarily or involuntarily, by operation of law or otherwise, without prior written notice to each Trust. 12. Notice. Any notice under this Agreement shall be in writing, addressed and delivered or sent by registered mail, postage prepaid to the other party at such address as such other party may designate for the receipt of such notices. Until further notice to the other parties, it is agreed that the address of each Trust and SteinRoe is One South Wacker Drive, Chicago, Illinois 60606, Attention: Secretary. 13. Non-Liability of Trustees and Shareholders. Any obligation of the Trust hereunder shall be binding only upon the assets of that Trust (or the applicable Series thereof), as provided in the Agreement and Declaration of Trust of that Trust, and shall not be binding upon any Trustee, officer, employee, agent or shareholder of the Trust or upon any other Trust. Neither the authorization of any action by the Trustees or the shareholders of the Trust, nor the execution of this Agreement on behalf of the Trust shall impose any liability upon any Trustee or any shareholder. Nothing in this Agreement shall protect any Trustee against any liability to which such Trustee would otherwise be subject by willful misfeasance, bad faith or gross negligence in the performance of his duties, or reckless disregard of his obligations and duties under this Agreement. In connection with the discharge and satisfaction of any claim made by SteinRoe against the Trust involving more than one Series, the Trust shall have the exclusive right to determine the appropriate allocations of liability for any such claim between or among the Series. 14. References and Headings. In this Agreement and in any such amendment, references to this Agreement and all expressions such as "herein," "hereof," and "hereunder," shall be deemed to refer to this Agreement as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as part hereof or control or affect the meaning, construction or effect of this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 15. Governing Law. This Agreement shall be governed by the laws of the State of Illinois. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. STEINROE VARIABLE INVESTMENT TRUST By: RICHARD R. CHRISTENSEN Chairman Attest: KEVIN M. CAROME Secretary STEIN ROE & FARNHAM INCORPORATED By: TIMOTHY K. ARMOUR President - Fund Division Attest: JILAINE HUMMEL BAUER Assistant Secretary APPENDIX I FUND EFFECTIVE DATE - --------- -------------- STEINROE VARIABLE INVESTMENT TRUST Cash Income Fund Investment Grade Bond Fund Mortgage Securities Income Fund High Yield Bond Fund Managed Income Fund Managed Assets Fund Managed Growth Stock Fund Capital Appreciation Fund Strategic Managed Assets Fund APPENDIX II For the services provided under the Accounting Agreement (the "Agreement"), the Trust shall pay SteinRoe an annual fee with respect to each Fund, calculated and paid monthly, equal to $25,000 plus .0025 percent per annum of the average daily net assets of the Fund in excess of $50 million. Such fee shall be paid within thirty days after receipt of monthly invoice. EX-99 11 EX-99.B9J OTH CONTRCT PARTICIPATION AGREEMENT AMONG KEYPORT BENEFIT LIFE INSURANCE COMPANY, KEYPORT FINANCIAL SERVICES CORP., and STEINROE VARIABLE INVESTMENT TRUST This Agreement, made and entered into as of this 8th day of May, 1998 by and among Keyport Benefit Life Insurance Company (the "Company"), on its own behalf and on behalf of its Separate Account(s), each of which is a segregated asset account of the Company, SteinRoe Variable Investment Trust (the "Trust"), and Keyport Financial Services Corp. ("KFSC"). WHEREAS, the Trust engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements substantially identical to this Agreement (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Trust is divided into several series of shares (such series being hereinafter referred to individually as a "Series" or collectively as the "Series"); and WHEREAS, the Trust relies on an order from the Securities and Exchange Commission ("SEC"), dated July 1, 1988 (File No. 812-7044), granting life 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 to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Trust is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, Stein Roe & Farnham Incorporated. ("Stein Roe") is duly registered as an investment adviser under the Advisers Act and applicable state securities laws; and provides certain administrative services; and WHEREAS, Liberty Investment Services, Inc. ("LIS") serves as transfer agent to the Trust; and WHEREAS, the Company has registered or will register certain Variable Insurance Products under the 1933 Act; and WHEREAS, the Company has established duly organized, validly existing segregated asset accounts (the "Separate Accounts") by resolution of the Board of Directors of the Company; and WHEREAS, the Company has registered or will register certain Separate Accounts as unit investment trusts under the 1940 Act; and WHEREAS, the Company relies on certain provisions of the 1940 and 1933 Acts that exempt certain Separate Accounts and Variable Insurance Products from the registration requirements of the Acts in connection with the sale of Variable Insurance Products under certain tax-advantaged retirement programs, described in Article II., Section 2.12. and as provided for by Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, KFSC is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of the Trust on behalf of each Separate Account to fund certain Variable Insurance Products and KFSC is authorized to sell such shares to unit investment trusts such as each Separate Account at net asset value; and NOW, THEREFORE, in consideration of their mutual promises, the Company, KFSC and the Trust agree as follows: ARTICLE I. Sale of Fund Shares 1.1. KFSC will sell to the Company those shares of the Trust which each Separate Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Separate Accounts of purchase payments or for the business day on which transactions under Variable Insurance Products are effected by the Separate Accounts. For purposes of this Section 1.1., LIS shall be the designee of the Trust for receipt of such orders from each Separate Account and receipt by such designee shall constitute receipt by the Trust. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and any other day on which the Trust calculates its net asset value pursuant to the rules of the SEC. 1.2. The Trust will make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Separate Accounts on those days on which the Trust calculates its net asset value pursuant to rules of the SEC and the Trust shall use reasonable efforts to calculate such net asset value on each Business Day. Notwithstanding the foregoing, the Board of Trustees of the Trust (the "Trustees") may refuse to sell shares of any Series to any person, or suspend or terminate the offering of shares of any Series if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Trustees, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Series. 1.3. The Trust and KFSC agree that shares of the Trust will be sold only to Participating Insurance Companies and their Separate Accounts. No shares of any Series will be sold to the general public. 1.4. The Trust and KFSC will not sell Trust shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I., III., V., VII. and Sections 2.5. and 2.12. of Article II. of this Agreement is in effect to govern such sales. 1.5. The Trust will redeem for cash, at the Company's request, any full or fractional shares of the Trust held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Separate Accounts of redemption requests or for the Business Day on which transactions under Variable Insurance Products are effected by the Separate Accounts. For purposes of this Section 1.5., Stein Roe shall be the designee of the Trust for receipt of requests for redemption for each Separate Account. Subject to the applicable rules and regulations, if any, of the SEC, the Trust may pay the redemption price for shares of any Series in whole or in part by a distribution in kind of securities from the portfolio of the Trust allocated to such Series in lieu of money, valuing such securities at their value employed for determining net asset value governing such redemption price, and selecting such securities in a manner the Trustees may determine in good faith to be fair and equitable. 1.6. The Trust may suspend the redemption of any full or fractional shares of the Trust (1) for any period (a) during which the New York Stock Exchange is closed (other than customary weekend and holiday closings) or (b) during which trading on the New York Stock Exchange is restricted; (2) for any period during which an emergency exists as a result of which (a) disposal by the Trust of securities owned by it is not reasonably practicable or (b) it is not reasonably practicable for the Trust fairly to determine the value of its net assets; or (3) for such other periods as the SEC may by order permit for the protection of shareholders of the Trust. 1.7. The Company will purchase and redeem the shares of each Series offered by the then current prospectus of the Trust and in accordance with the provisions of such prospectus and statement of additional information (the "SAI") (collectively referred to as "Prospectus," unless otherwise provided). The Company agrees that all net amounts available under the Variable Insurance Products with the form number(s) which are listed on Schedule A attached hereto and incorporated herein by this reference, as such Schedule A may be amended from time to time hereafter by mutual written agreement of all the parties hereto (the "Contracts"), shall be invested in the Trust, in such other trusts advised by Stein Roe as may be mutually agreed to in writing by the parties hereto, or in the Company's general accounts, provided that such amounts may also be invested in an investment company other than the Trust if (a) such other investment company, or series thereof, has investment objectives or policies that are substantially different from the investment objectives and policies of each of the Series of the Trust; or (b) the Company gives the Trust and KFSC forty-five (45) days written notice of its intention to make such other investment company available as a funding vehicle for the Contracts; or (c) such other investment company was available as a funding vehicle for the Contracts prior to the date of this Agreement and the Company so informs the Trust and KFSC prior to its signing this Agreement; or (d) the Trust or KFSC consents to the use of such other investment company. 1.8. The Company shall pay for Trust shares on the next Business Day after an order to purchase Trust shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire, or may otherwise be provided by separate agreement. 1.9. Issuance and transfer of the Trusts' shares will be by book entry only. Stock certificates will not be issued to either the Company or the Separate Accounts. Shares ordered from the Trust will be recorded in an appropriate title for each Separate Account or the appropriate subaccount of each Separate Account. 1.10. The Trust, through its designee LIS, shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income dividends or capital gain distributions payable on the shares of any Series. The Company hereby elects to receive all such income, dividends and capital gain distributions as are payable on the shares of each Series in additional shares of that Series. The Company reserves the right to revoke this election and to receive all such income, dividends and capital gain distributions in cash. The Trust shall notify the Company through its designee, LIS, of the number of shares so issued as payment of such income, dividends and distributions. 1.11. The Trust shall make the net asset value per share for each Series available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7 p.m., Boston time. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act to the extent required by the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that prior to any issuance or sale of any Contract it has legally and validly established each Separate Account as a segregated asset account under the applicable state insurance laws and has registered or, prior to any issuance or sale of the Contracts, will register each Separate 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, to the extent required by the 1940 Act. 2.2. The Trust represents and warrants that Trust shares sold pursuant to this Agreement shall be registered under the 1933 Act to the extent required by the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the Commonwealth of Massachusetts and all applicable federal and any state securities laws and that the Trust is and shall remain registered under the 1940 Act to the extent required by the 1940 Act. The Trust shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Trust shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust or KFSC. 2.3. The Trust represents that it intends to qualify as a Regulated Investment Company under Subchapter M of the Code and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as endowment, annuity or life insurance contracts under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Trust and KFSC immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. The Trust currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future consistent with applicable law. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Trust undertakes to have its Trustees, a majority of whom are not interested persons of the Trust, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. 2.6. The Trust makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Trust represents that it is currently in compliance and shall at all times remain in compliance with the applicable insurance laws of the domiciliary states of the Participating Insurance Companies to the extent that the Participating Insurance Company advises the Trust, in writing, of such laws or any changes in such laws. 2.7. KFSC represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. KFSC further represents that it will sell and distribute the Trust shares in accordance with the laws of the Commonwealth of Massachusetts and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 2.8. The Trust represents that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material aspects with the 1940 Act. 2.9. The Trust represents and warrants that Stein Roe is and shall remain duly registered as an investment adviser in all material aspects under all applicable federal and state securities laws and that Stein Roe shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the Commonwealth of Massachusetts and any applicable state and federal securities laws. 2.10. The Trust represents and warrants that all of its trustees, officers, employees, investment advisers, and other individuals/entities having access to securities or funds of the Trust are and shall continue to be at all times covered by a joint fidelity bond in an amount not less than three million seven hundred fifty thousand dollars ($3,750,000) with no deductible amount. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable fidelity insurance company. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities having access to securities or funds of the Trust are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust, in an amount not less than ten million dollars ($10,000,000) with no deductible amount. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable fidelity insurance company. 2.12. The Company represents and warrants that it will not, without the prior written consent of KFSC, purchase Trust shares with Separate Account assets derived from the sale of Contracts to individuals or entities which qualify under current or future state or federal law for any type of tax advantage (whether by a reduction or deferral of, deduction or exemption from, or credit against income or otherwise). Examples of such types of funds under current law include: any tax-advantaged retirement program, whether maintained by an individual, employer, employee association or otherwise (including, without limitation, retirement programs which qualify under Sections 401(a), 401(k), 403(a), 403(b), 408 and 457 of the Code), and any retirement programs maintained for employees of the Government of the United States or by the government of any state or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. 2.13. The Company represents and warrants that it will not transfer or otherwise convey shares of the Trust, without the prior written consent of KFSC. ARTICLE III. Prospectus and Proxy Statements; Voting 3.1. KFSC shall provide the Company with as many copies of the Trust's current prospectus, excluding the SAI, as the Company may reasonably request in connection with delivery of the prospectus, excluding the SAI, to shareholders and purchasers of Variable Insurance Products. If requested by the Company in lieu thereof, the Trust shall provide such documentation (including a final copy of the new prospectus, excluding the SAI, as set in type at the Trust's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Trust is amended) to have the prospectus for the Contracts and the Trust's prospectus, excluding the SAI, printed together in one document (such printing to be at the Company's expense). 3.2. The Trust's prospectus shall state that the SAI for the Trust is available from KFSC and the Trust, at its expense, shall provide final copy of such SAI to KFSC for duplication and provision to any prospective owner who requests the SAI and to any owner of a Variable Insurance Product ("Owners"). 3.3. The Trust, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the Company shall reasonably require for distribution to Owners. 3.4. If and to the extent required by law, the Company and, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for Owners, the Trust shall: (i) solicit voting instructions from Owners; (ii) vote the Trust shares in accordance with instructions received from Owners; and (iii) vote Trust shares for which no instructions have been received in the same proportion as Trust shares of such Series for which instructions have been received; The Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their Separate Accounts participating in the Trust calculates voting privileges in a manner consistent with the standards to be provided in writing to the Participating Insurance Companies. 3.5. The Trust will comply with all provisions of the 1940 Act requiring voting by shareholders. The Trust reserves the right to take all actions, including but not limited to, the dissolution, merger, and sale of all assets of the Trust upon the sole authorization of its Trustees, to the extent permitted by the laws of the Commonwealth of Massachusetts and the 1940 Act. ARTICLE IV. Sales Material and Information 4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee, each piece of sales literature or other promotional material in which the Trust or Stein Roe, or any sub-adviser ("Sub- Adviser"), or KFSC is named, at least fifteen (15) days prior to its use. No such material shall be used if the Trust or its designee object to such use within fifteen (15) days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust in connection with the sale of the Contracts other than the information or representations contained in the registration statement or Prospectus for the Trust shares, as such registration statement and Prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee or by KFSC, except with the permission of the Trust or KFSC or the designee of either. 4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to the Company or its designees, each piece of sales literature or other promotional material in which the Company and/or its Separate Account(s), are named at least fifteen (15) days prior to its use. No such material shall be used if the Company or its designee object to such use within fifteen (15) days after receipt of such material. 4.4. The Trust and KFSC shall not give any information or make any representations or statements on behalf of the Company or concerning the Company, any Separate Account, or the Variable Insurance Products other than the information or representations contained in a registration statement or prospectus for such Variable Insurance Products, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for such Separate Account which are in the public domain or approved by the Company for distribution to Owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5. The Trust will provide to the Company at least one complete copy of all registration statements, prospectuses, SAIs, reports, proxy statements, sales literature and other promotional materials, applications for exemption, requests for no-action letters, and all amendments to any of the above, that relate to the Trust or its shares, contemporaneously with the filing of such document with the SEC or other regulatory authorities. 4.6. The Company will provide to the Trust at least one complete copy of all registration statements, prospectuses, SAIs, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemption, requests for no-action letters, and all amendments to any of the above, that relate to the Variable Insurance Products or any Separate Account, contemporaneously with the filing of such document with the SEC. 4.7. For purposes of this Article IV., the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, SAIs, shareholder reports, and proxy materials. ARTICLE V. Fees and Expenses 5.1. The Trust and KFSC shall pay no fee or other compensation to the Company under this Agreement, except that if the Trust or any Series adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then KFSC may make payments to the Company or to the underwriter for the Variable Insurance Products if and in amounts agreed to by KFSC in writing and such payments will be made out of existing fees payable to KFSC by the Trust for this purpose. No such payments shall be made directly by the Trust. Currently, no such plan pursuant to Rule 12b-1 or payments are contemplated. 5.2. All expenses incident to performance by the Trust under this Agreement shall be paid by the Trust. The Trust shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Trust, in accordance with applicable state laws prior to their sale. The Trust shall bear the expenses of registration and qualification of the Trust's shares, preparation and filing of the Trust's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Trust's shares. 5.3. The Company shall bear the expenses of distributing the Trust's proxy materials and reports to Owners. ARTICLE VI. Diversification 6.1. The Trust will at all times invest money from the Variable Insurance Products in such a manner as to ensure that, insofar as such investment is required to assure such treatment, the Variable Insurance Products will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Trust will at all times comply with Section 817(h) of the Code and the Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. ARTICLE VII. Potential Conflicts 7.1. The Trustees will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Owners of separate accounts of the Company investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Series are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance policy owners; or (f) a decision by an insurer to disregard the voting instructions of Owners. The Trustees shall promptly inform the Company if they determine that a material irreconcilable conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts (including the occurrence of any event specified in paragraph 7.1. which may give rise to such a conflict) of which it is aware to the Trustees. The Company will assist the Trustees in carrying out their responsibilities under the Shared Funding Exemptive Order, by providing the Trustees with all information reasonably necessary for the Trustees to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Trustees whenever Owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Trustees, or a majority of its disinterested Trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested Trustees), take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts of Participating Insurance Companies from the Trust or any Series and reinvesting such assets in a different investment medium, including (but not limited to) another Series of the Trust, or submitting the question whether such segregation should be implemented to a vote of all affected Owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Owners the option of making such a change; (2), establishing a new registered management investment company or managed separate account; and (3) obtaining SEC approval. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard Owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the affected Separate Account's investment in the Trust and terminate this Agreement; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six (6) month period KFSC and Trust shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Separate Account's investment in the Trust and terminate this Agreement within six (6) months after the Trustees inform the Company in writing that they have determined that such decision has created a material irreconcilable conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Until the end of the foregoing six (6) month period, KFSC and Trust shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust. 7.6. For purposes of Sections 7.3. through 7.6. of this Agreement, a majority of the disinterested Trustees shall determine whether any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for the Variable Insurance Products. The Company shall not be required by Section 7.3. to establish a new funding medium for the Variable Insurance Products if an offer to do so has been declined by vote of a majority of Owners materially adversely affected by the material irreconcilable conflict. In the event that the Trustees determine that any proposed action does not adequately remedy any material irreconcilable conflict, then the Company will withdraw the affected Separate Account's investment in the Trust and terminate this Agreement within six (6) months after the Trustees inform the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested Trustees. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) or terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4., 3.5., 7.1., 7.2., 7.3., 7.4., and 7.5. of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By The Company 8.1.(a). The Company will indemnify and hold harmless the Trust and each of its Trustees and Officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1.) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust's shares or the Variable Insurance Products and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus for the Variable Insurance Products or contained in the sales literature for the Variable Insurance Products (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 in writing to the Company by or on behalf of the Trust for use in the registration statement or prospectus for the Variable Insurance Products or in the Variable Insurance Products or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Insurance Products or Trust shares; or (ii) arise out of or are based upon statements or representations (other than statements or representations contained in the registration statement, Prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Variable Insurance Products or Trust shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, Prospectus, or sales literature of the Trust 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 in writing to the Trust by or on behalf of the Company; or (iv) arise out of or result from any failure by the Company to provide the services and furnish the materials contemplated by 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. 8.1.(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, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable. 8.1.(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which they may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the election of the Company to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1.(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Trust shares or the Contracts or the operation of the Trust. 8.2. Indemnification By the Trust 8.2.(a). The Trust will 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 8.2.) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Trustees or any member thereof, are related to the operations of the Trust and: (i) arise as a result of any failure by the Trust to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI. of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust; as limited by and in accordance with the provisions of Sections 8.2.(b). and 8.2.(c). hereof. 8.2.(b). The Trust 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 by subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Trust, KFSC or each Separate Account, whichever is applicable. 8.2.(c). The Trust 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 Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have 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 Trust of any such claim shall not relieve the Trust 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 Trust will be entitled to participate, at its own expense, in the defense thereof. The Trust also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Trust to such party of the Trust'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 Trustees 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 cases of investigations. 8.2.(d). The Company and KFSC agree promptly to notify the Trust of the commencement of any litigation or proceedings against them or any of their respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Trust. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts provided, however, that if such laws or any of the provisions of this Agreement conflict with applicable provisions of the 1940 Act, the latter shall control. 9.2. This Agreement shall be made subject to the provisions of the 1933, 1934, and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party upon one (1) year advance written notice to the other parties; provided, however such notice shall not be given earlier than one (1) year following the date of this Agreement; or (b) at the option of the Company to the extent that shares of Series are not reasonably available to meet the requirements of the Variable Insurance Products as determined by the Company, provided however, that such termination shall apply only to the Series not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Trust in the event that formal administrative proceedings are instituted against the Company or KFSC by the NASD, the SEC, the Insurance Commissioner or any other regulatory body regarding the duties of the Company under this Agreement or related to the sale of the Variable Insurance Products, with respect to the operation of a Separate Account, or the purchase of the Trust shares, provided, however, that the Trust determines in its sole judgement exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement or of KFSC to perform its obligations under its underwriting agreement with the Trust; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Trust by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, provided, however, that the Company determine in its sole judgement exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Trust to perform its obligations under this Agreement; or (e) with respect to a Separate Account, upon requisite authority to substitute the shares of another investment company for shares of the corresponding Series of the Trust in accordance with the terms of the Variable Insurance Products for which those Series shares had been selected to serve as the underlying investment media. The Company will give thirty (30) days' prior written notice to the Trust of the date of any proposed action to replace the Trust shares; or (f) at the option of the Company, in the event any of the Trust's shares are not registered, issued or sold in accordance with applicable federal and any state law or such law precludes the use of such shares as the underlying investment media of the Variable Insurance Products issued or to be issued by the Company; or (g) at the option of the Company, if the Trust 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 Trust may fail to so qualify; or (h) at the option of the Company, if the Trust fails to meet the diversification requirements specified in Article VI. hereof; or (i) at the option of either the Trust or KFSC, if (1) the Trust or KFSC, respectively, shall determine, in their sole judgement reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse publicity will have a material adverse impact upon the business and operations of either the Trust or KFSC, (2) the Trust or KFSC shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Trust or KFSC shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth (60th) day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that either the Trust or KFSC has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Trust and KFSC in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Trust and/or KFSC and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth (60th) day shall be the effective date of termination; or (k) at the option of either the Trust or KFSC, if the Company gives the Trust and KFSC the written notice specified in Section 10.3.(a). hereof and at the time such notice was given there was no notice of termination outstanding under any other provision of this Agreement; provided, however any termination under this Section 10.1.(k). shall be effective forty-five (45) days after the notice specified in 10.3.(a). was given. 10.2. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1.(a). may be exercised for any reason or for no reason. 10.3. Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such termination. Furthermore, (a) in the event that any termination is based upon the provisions of Article VII., or the provision of Section 10.1.(a)., 10.1.(i)., 10.1.(j). or 10.1.(k). of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and (b) in the event that any termination is based upon the provisions of Section 10.1.(c). or 10.1.(d). of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4. Effect of Termination. Notwithstanding any termination of this Agreement, the Trust and KFSC shall at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Variable Insurance Products in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Products"). Specifically, without limitation, the Owners of the Existing Products shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Products. The parties agree that this Section 10.4. shall not apply to any terminations under Article VII. and the effect of such Article VII. terminations shall be governed by Article VII. of this Agreement. 10.5. The Company shall not redeem Trust shares attributable to the Variable Insurance Products (as opposed to Trust shares attributable to the Company's assets held in a Separate Account) except (i) as necessary to implement Owner initiated transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption"). Upon request, the Company will promptly furnish to the Trust and KFSC the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Trust and KFSC) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Variable Insurance Products, the Company shall not prevent Owners from allocating payments to a Series that was otherwise available under the Variable Insurance Products without first giving the Trustee or KFSC ninety (90) days notice of their intention to do so. ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Trust: c/o Liberty Investment Services, Inc. 600 Atlantic Avenue Boston, Massachusetts 02210 Attention: Secretary If to the Company: Keyport Benefit Life Insurance Company Service Office 125 High Street Boston, MA 02110 Attention: General Counsel If to KFSC: Keyport Financial Services, Corp. 125 High Street Boston, Massachusetts 02110 Attention: Secretary ARTICLE XII. Miscellaneous 12.1. All persons dealing with Trust must look solely to the property of the Trust for the enforcement of any claims against the Trust hereunder and otherwise understand that neither the Trustees, officers, agents or shareholders of the Trust have any personal liability for any obligations entered into by or on behalf of the Trust. 12.2. Subject to the requirements of legal process and regulatory authority, each Party hereto shall treat as confidential the names and addresses of the Owners and all information reasonably identified as confidential in writing be any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be effected thereby. 12.6. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD, the Internal Revenue Service 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. 12.7. The Trust and KFSC agree that to the extent any advisory or other fees received by the Trust, KFSC, or Stein Roe are determined to be unlawful in appropriate legal or administrative proceedings, the Trust shall indemnify and reimburse the Company for any out of pocket expenses and actual damages the Company has incurred as a result of any such proceeding, provided however that the provision of Section 8.2.(b). of this and 8.2.(c). shall apply to such indemnification and reimbursement obligation. Such indemnification and reimbursement obligation shall be in addition to any other indemnification and reimbursement obligations of the Trust under this Agreement. 12.8. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligation, at law or in equity, which the parties hereto are entitled to under state and federal laws. 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. KEYPORT BENEFIT LIFE INSURANCE COMPANY By its authorized officer, By: /s/STEPHEN B. BONNER Title: Senior Vice President Date: 5-11-98 KEYPORT FINANCIAL SERVICES CORP. By its authorized officer, By: /s/JAMES J. KLOPPER Title: Clerk Date: 5-11-98 STEINROE VARIABLE INVESTMENT TRUST By its authorized officer, By: Title: Date: Schedule A Individual and group variable annuity contracts and certificates. Individual variable life contracts. EX-27 12 EX-27.1 SPECIAL VENTURE FUND
6 1 STEIN ROE SPECIAL VENTURE FUND, VARIABLE SERIES YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 187,478 201,186 1,305 70 0 202,561 1,721 0 250 1,971 0 169,976 11,145 9,464 51 0 16,856 0 13,708 200,590 721 826 0 1,463 84 16,867 (2,574) 14,377 0 265 36,940 0 3,129 3,703 2,256 4,371 263 36,897 0 0 1,002 0 1,463 200,328 20.73 .01 1.25 .03 3.96 0 18.00 .73 0 0
EX-27 13 EX-27.2 GROWTH STOCK FUND
6 2 STEIN ROE GROWTH STOCK FUND, VARIABLE SERIES YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 115,208 213,726 162 63 0 213,951 0 0 552 552 0 101,690 5,906 5,658 589 0 12,602 0 98,518 213,399 1,538 429 0 1,357 611 12,626 39,258 52,494 0 710 7,500 0 1,105 1,131 274 51,520 689 7,746 0 0 959 0 1,357 191,875 28.61 .10 8.84 .12 1.30 0 36.13 .71 0 0
EX-27 14 EX-27.4 BALANCED FUND
6 4 STEIN ROE BALANCED FUND, VARIABLE SERIES YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 265,584 323,169 3,420 57 0 326,646 269 0 1,344 1,613 0 236,151 19,334 18,379 9,886 0 21,411 0 57,585 325,033 3,022 9,283 0 2,072 10,233 21,484 17,141 48,858 0 10,262 25,340 0 1,917 3,350 2,388 25,848 10,358 25,081 0 0 1,417 0 2,072 314,922 16.28 .53 1.96 .56 1.40 0 16.81 .66 0 0
EX-27 15 EX-27.8 MORTGAGE SECURITIES FUND
6 8 STEIN ROE MORTGAGE SECURITIES FUND, VARIABLE SERIES YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 75,321 77,207 1,071 61 0 78,339 1,010 0 156 1,166 0 73,734 7,195 7,724 4,579 0 (3,026) 0 1,886 77,173 0 5,410 0 519 4,891 3 1,495 6,389 0 0 0 0 929 1,459 0 1,164 0 (3,042) (299) 0 297 0 519 74,191 9.84 0.68 0.21 0 0 0 10.73 0.70 0 0
EX-27 16 EX-27.10 MNY MARKET
6 10 STEIN ROE MONEY MARKET FUND, VARIABLE SERIES YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 66,592 66,592 890 60 0 67,542 0 0 405 405 0 67,137 67,137 65,461 0 0 0 0 0 67,137 0 3,857 0 438 3,419 0 0 3,419 0 3,149 0 0 67,656 69,400 3,419 1,675 0 0 0 0 238 0 438 67,857 1.00 0.050 0 0.050 0 0 1.00 0.65 0 0
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