Exhibit 99.8(o)
PARTICIPATION AGREEMENT
BETWEEN
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
AND
BISYS FUND SERVICES LP
AND
CHOICE INVESTMENT MANAGEMENT, LLC
AND
VARIABLE INSURANCE FUNDS
THIS AGREEMENT, made and entered into this ________day of ________, 2004 by and
between The American Life Insurance Company of New York (the "Company"), a New
York stock life insurance company, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto, as may
be amended from time to time (each account hereinafter referred to as the
"Account"), BISYS Fund Services, LP (the "Distributor"), Choice Investment
Management, LLC (the "Adviser") and Variable Insurance Funds (the "Trust").
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 and variable annuity contracts (the
"Variable Insurance Products") to be offered by insurance companies
("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Trust are divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets;
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act") and shares
of the Portfolio are registered under the Securities Act of 1933, as amended
(the "1933 Act");
WHEREAS, the Trust has obtained an order (VARIABLE INSURANCE FUNDS, ET AL.,
Investment Company Act Rel. No. 23594 (Dec. 10, 1998)) from the Securities and
Exchange Commission ("SEC") granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a) and
15(b) of 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 and certain qualified
pension and retirement plans, among others (the "Exemptive Order"), the terms of
which qualify, in its entirety, the terms of this Agreement;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated asset
account by the Company to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios managed by the Adviser
and listed in Schedule A hereto, as it may be amended from time to time by
mutual written agreement (the "Designated Portfolios"), on behalf of the Account
to fund the aforesaid Contracts;
WHEREAS, the Adviser serves as investment adviser to the Designated Portfolios;
and
WHEREAS, the Distributor serves as the distributor of the shares of each
Designated Portfolio and is authorized to sell such shares to the Company on
behalf of the Account at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Distributor, and the Adviser agree as follows:
ARTICLE I. SALE AND REDEMPTION OF TRUST SHARES
1.1. The Trust has granted to the Distributor authority to distribute
the Trust's shares, and has agreed to instruct, and has so instructed, the
Distributor to make available to the Company, for purchase on behalf of any
Account, Trust shares of the Designated Portfolios. Pursuant to such authority
and instructions, the Distributor agrees to make available to the Company for
purchase on behalf of the Account, shares of the Designated Portfolios, such
purchases to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, (i) Portfolios (other than those
listed on Schedule A) in existence now or that may be established in the future
will be made available to the Company only as the Trust may so provide, and (ii)
the Board of Trustees of the Trust (the "Board") may suspend or terminate the
offering of shares of any Designated Portfolio or class thereof, if such action
is required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Board acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, suspension or
termination is necessary in the best interests of the shareholders of such
Designated Portfolio. The Trust reserves the right, upon prior written notice to
the Company (given at the earliest practicable time), to take all actions,
including but not limited to, the dissolution, reorganization, liquidation,
merger or sale of all assets of the Trust or any Portfolio upon the sole
authorization of the Board, acting in good faith.
1.2. The Trust shall accept for redemption, at the Company's request,
any full or fractional Designated Portfolio shares held by the Company on behalf
of the Account, such redemptions to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Trust shares attributable to Contract owners except in
the circumstances permitted in Section 10.3 of this Agreement, and (ii) the
Trust may delay redemption of such shares of any Designated Portfolio to the
extent permitted by the 1940 Act and any rules, regulations or orders
thereunder.
1.3. Purchase and Redemption Procedures
(a) For purposes of Sections 1.1 and 1.2, the Company shall be
an agent of the Trust for the limited purpose of receiving and accepting
purchase and redemption requests on behalf of the Account (but not with respect
to any Trust shares that may be held in the general account of the Company) for
shares of those Designated Portfolios made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the Contracts
and other transactions relating to the Contracts or the Account. Receipt and
acceptance of any such request (or relevant transactional information therefor)
on any day the New York Stock Exchange, Inc. is open for trading and on which a
Designated Portfolio calculates its net
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asset value (a "Business Day") pursuant to the rules of the SEC by the Company
as such limited agent of the Trust prior to the time that the Trust ordinarily
calculates its net asset value as described from time to time in each Designated
Portfolio's prospectus shall constitute receipt and acceptance by the Designated
Portfolio on that same Business Day, provided that the Trust or its agent
receives notice of such request by 8:30 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same day that it notifies the Trust or its agent of a purchase
request for such shares. Payment for Designated Portfolio shares shall be made
in federal funds transmitted to the Trust or other designated person by wire to
be received by 2:00 p.m. Eastern Time on the day the Trust is notified of the
purchase request for Designated Portfolio shares (which request may be net of
redemptions of shares). If federal funds are not received on time, such funds
will be invested, and Designated Portfolio shares purchased thereby will be
issued, as soon as practicable and the Company shall promptly, upon the Trust's
request, reimburse the Trust or the Distributor, as appropriate, for any
charges, costs, fees, interest or other expenses incurred by the Trust or the
Distributor in connection with any advances to, or borrowing or overdrafts by,
the Trust, or any similar expenses incurred by the Trust, as a result of
portfolio transactions effected by the Trust based upon such purchase request.
Upon receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Trust.
(c) Payment for Designated Portfolio shares redeemed by the
Account or the Company shall be made in federal funds
transmitted by wire to the Company or any other
designated person on the next Business Day after the
Trust or its agent is properly notified of the redemption
order of such shares (which order shall be net of any
purchase orders), except that the Trust may redeem
Designated Portfolio shares in assets other than cash and
delay payment of redemption proceeds to the extent
permitted under Section 22(e) of the 1940 Act and any
rules thereunder, and in accordance with the procedures
and policies of the Trust as described in the then
current prospectus and/or statement of additional
information ("SAI"). The Trust shall not bear any
responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company, the
Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio
shares held or to be held in the Company's general
account shall be effected at the net asset value per
share next determined after the receipt and acceptance of
such request by the Trust or its agent, provided that, in
the case of a purchase request, payment for Trust shares
so requested is received by the Trust in federal funds
prior to close of business for determination of such
value, as defined from time to time in each Designated
Portfolio's prospectus.
(e) The Company shall not redeem Trust shares attributable to
the Contracts (as opposed to Trust shares attributable to
the Company's assets held in the Account) except (i) as
necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or
federal laws or regulations or judicial or other legal
precedent of
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general application (hereinafter referred to as a
"Legally Required Redemption"), (iii) upon 45 days prior
written notice to the Trust and Adviser, as permitted by
an order of the SEC pursuant to Section 26(c) of the 1940
Act, but only if a substitution of other securities for
the shares of the Designated Portfolios is consistent
with the terms of the Contracts, or (iv) as permitted
under the terms of the Contract. Upon request, the
Company will promptly furnish to the Trust reasonable
assurance that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract owners
from allocating payments to a Designated Portfolio that
was otherwise available under the Contracts without first
giving the Trust 45 days notice of its intention to do
so.
1.4. The Trust shall use its best efforts to make the net asset
value per share for each Designated Portfolio available
to the Company by 6:30 p.m. Eastern Time each Business
Day, and in any event, as soon as reasonably practicable
after the net asset value per share for such Designated
Portfolio is calculated, and the Trust shall calculate
such net asset value in accordance with the Trust's
prospectus. Neither the Trust, any Designated Portfolio,
the Distributor, the Adviser, nor any of their affiliates
shall be liable for any information provided to the
Company pursuant to this Agreement, or any loss resulting
from such information, if such information is based on
incorrect information supplied by the Company or any
other Participating Insurance Company to the Trust, the
Distributor or the Adviser.
1.5. The Trust or its agent shall furnish notice (by wire or
telephone followed by written confirmation) to the
Company as soon as reasonably practicable of any income
dividends or capital gain distributions payable on any
Designated Portfolio shares. The Company, on its behalf
and on behalf of the Account, hereby elects to receive
all such dividends and distributions as are payable on
any Designated Portfolio shares in the form of additional
shares of that Designated Portfolio. The Company reserves
the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends
and capital gain distributions in cash. The Trust or its
agent shall notify the Company promptly of the number of
Designated Portfolio shares so issued as payment of such
dividends and distributions.
1.6. Issuance and transfer of Trust shares shall be by book entry
only. Share certificates will not be issued to the
Company or the Account. Purchase and redemption orders
for Trust shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of
the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Trust's shares may be sold
to other insurance companies (subject to
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Section 1.8 hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is terminated
pursuant to Article X, the Company shall promote the Designated Portfolios on
the same basis as other funding vehicles available under the Contracts. Unless
otherwise agreed between the Company and the Adviser, funding vehicles other
than those listed on Schedule A to this Agreement may be available for the
investment of the cash value of the Contracts, provided, however, (i) any such
vehicle or series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of the
Designated Portfolios available hereunder; (ii) the Company gives the Adviser 45
days written notice of its intention to make such other investment vehicle
available as a funding vehicle for the Contracts; and (iii) unless such other
investment company was available as a funding vehicle for the Contracts prior to
the date of this Agreement and the Company has so informed the Adviser prior to
their signing this Agreement, the Adviser consents in writing to the use of such
other vehicle, such consent not to be unreasonably withheld.
(b) The Company shall not, without prior notice to the
Trust (unless otherwise required by applicable law), take any action to operate
the Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the
Adviser and the Trust (unless otherwise required by applicable law), induce
Contract owners to change or modify the Trust or change the Trust's investment
adviser.
(d) The Company shall not, without prior notice to the
Trust, induce Contract owners to vote on any matter submitted for consideration
by the shareholders of the Trust in a manner other than as recommended by the
Board.
1.8. The Company acknowledges that, pursuant to Form 24F-2, the Trust
is not required to pay fees to the SEC for registration of its shares under the
1933 Act with respect to its shares issued to an Account that is a unit
investment trust that offers interests that are registered under the 1933 Act
and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The Company agrees to provide the Trust each year within
60 days of the end of the Trust's fiscal year, or when reasonably requested by
the Trust, information as to the number of shares purchased by a Registered
Account and any other Account the interests of which are not registered under
the 0000 Xxx. The Company acknowledges that the Trust intends to rely on the
information so provided and represents and warrants that such information shall
be accurate.
1.9 If the Fund provides the Company with materially incorrect share
net asset value information, the Separate Account(s) shall be entitled to an
adjustment to the number of shares purchased or redeemed to reflect the correct
share net asset value. Any material error in the calculation of the net asset
value per share, dividend or capital gain information shall be reported promptly
upon discovery to the Company. Non-material errors will be corrected in the net
asset value of the next Business Day after discovery.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Trust represents and warrants that (i) the Trust is lawfully
organized and validly existing under the laws of the Commonwealth of
Massachusetts, (ii) the Trust is and shall remain registered under the 1940 Act,
(iii) the Trust does and will comply in all material respects with the 1940 Act,
(iv) Designated Portfolio shares sold pursuant to this Agreement are registered
under the 1933 Act (to the extent required by that Act) and are duly authorized
for issuance, (v) the Trust shall amend the
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registration statement for the shares of the Designated Portfolios under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of such shares, (vi) the Board has elected for each
Designated Portfolio to be taxed as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
(v) shares of the Designated Portfolios will be sold only to Participating
Insurance Companies and their separate accounts and to persons or plans that
communicate to the Trust that they qualify to purchase shares of the Designated
Portfolios under Section 817(h) of the Code and the regulations thereunder
without impairing the ability of the Account to consider the portfolio
investments of the Designated Portfolios as constituting investments of the
Account for the purpose of satisfying the diversification requirements of
Section 817(h) ("Qualified Persons"). The Trust makes no representations or
warranties as to whether any aspect of the Designated Portfolios' operations,
including, but not limited to, investment policies, fees and expenses, complies
with the insurance laws and other applicable laws of the various states.
2.2. The Distributor represents and warrants that shares of the
Designated Portfolios will be sold only to Participating Insurance Companies and
their separate accounts and to persons or plans that the Trust informs the
Distributor qualify to purchase shares of the Designated Portfolios under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of the Account to consider the portfolio investments of the Designated
Portfolios as constituting investments of the Account for the purpose of
satisfying the diversification requirements of Section 817(h) ("Qualified
Persons").
2.3. Subject to Company's representations and warranties in Sections
2.5 and 2.6, the Adviser represents and warrants that it will invest the assets
of each Designated Portfolio in such a manner as to ensure that the Contracts
will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, the Adviser
represents and warrants that each Designated Portfolio has complied and will
continue to comply with Section 817(h) of the Code and Treasury Regulation
Section1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, and any amendments or other modifications or successor provisions to
such Section or Regulation. The Adviser will make every reasonable effort (a) to
notify the Company immediately upon having a reasonable basis for believing that
a breach of this Section 2.3 has occurred, and (b) in the event of such a
breach, to adequately diversify the Designated Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation
Section 1.817-5.
2.4. The Adviser represents and warrants that each Designated
Portfolio is or will be qualified as a Regulated Investment Company under
Subchapter M of the Code, that the Adviser will make every reasonable effort to
maintain such qualification (under Subchapter M or any successor or similar
provisions) and that the Adviser will notify the Company immediately upon having
a reasonable basis for believing that a Designated Portfolio has ceased to so
qualify or that it might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are,
or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an
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insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account prior to any issuance or sale
thereof as a segregated asset account under Texas insurance laws, and that it
(a) has registered or, prior to any issuance or sale of the Contracts, will
register the Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act. The Company
also represents and warrants that it and the Account are Qualified Persons. The
Company shall register and qualify the Contracts or interests therein as
securities in accordance with the laws of the various states only if and to the
extent required by applicable law.
2.6. The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity contracts, under applicable provisions of the Code, and that it will
make every reasonable effort to maintain such treatment, and that it will notify
the Distributor and the Adviser immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, Company represents and warrants that each
of its Accounts is a "segregated asset account" and that interests in the
Accounts are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. Company will use every reasonable effort to
continue to meet such definitional requirements, and it will notify the Trust
and the Adviser immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
2.7. The Distributor represents and warrants that it is registered as
a broker-dealer with the SEC and that it is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"). The Distributor
further represents and warrants that it will sell shares of the Designated
Portfolios in accordance with applicable state and federal laws in all material
respects.
2.8. The Adviser represents and warrants that it is registered as
an investment adviser with the SEC.
2.9. The Trust represents and warrants that all of its trustees,
officers, employees, and other individuals or entities dealing with the money
and/or securities 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 the minimum coverage as required currently by Rule 17g-1
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Trust and to pay to the Trust any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Trust pursuant to the
terms of this Agreement. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Adviser in the event that such
coverage no longer applies.
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2.11. The Company represents and warrants that it shall comply with any
applicable privacy and notice provisions of 15 U.S.C. Sections 6801-6827 and any
applicable regulations promulgated thereunder (including but not limited to 17
C.F.R. Part 248) as they may be amended.
2.12. The Company represents and warrants that it has in place an
anti-money laundering program ("AML program") that does now and will continue to
comply with applicable laws and regulations, including the relevant provisions
of the USA PATRIOT Act (Pub. L. No. 107-56 (2001)) and the Bank Secrecy Act, and
the regulations issued under either of the foregoing. The Company agrees to
cooperate with Distributor to satisfy Distributor's due diligence policies,
which may include annual AML compliance certifications, periodic AML due
diligence reviews and/or other requests deemed necessary to ensure the Company's
compliance with the AML regulations.
2.13. The Company represents and warrants that (a) all transactions
submitted with respect to a Business Day in accordance with Article I will be
received in good order by the Company prior to calculation of the NAV on that
Business Day and will be processed by the Company in compliance with Rule 22c-1
under the 1940 Act; and (b) the Company will provide the Designated Portfolios
or its agent with assurances regarding the compliance of its order handling with
the requirements of Rule 22c-1 upon reasonable request.
ARTICLE III. VOTING
3.1. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote Trust shares in accordance with instructions
received from Contract owners; and
(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such
portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Trust shares held in any
segregated asset account in the same proportion as Trust shares of such
Designated Portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
3.2. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in a Designated
Portfolio calculates voting privileges as required by the Exemptive Order and
consistent with any reasonable standards that the Trust may adopt and provide in
writing.
ARTICLE IV. PROSPECTUSES AND PROXY STATEMENTS
4.1. The Trust or its agent shall provide the Company with as many
copies of the Trust's current prospectus (describing only the Designated
Portfolios listed on Schedule A), any supplements thereto or, to the extent
permitted and requested by Company, the Trust's profiles as the Company may
reasonably request. If requested by the Company in lieu thereof, the Trust or
its agent shall provide such documentation (including a "camera ready" final
copy of such documentation on diskette or electronically in .pdf format) and
other assistance as is reasonably necessary in order for the Company once each
year
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(or more frequently if the prospectus for the Trust is amended) to have the
prospectus for the Contracts and the Trust's prospectus or profile printed
together in one or more documents. The Trust agrees to cooperate with Company to
provide the documents on a timely basis to meet Company's reasonable deadline
requirements for production.
4.2. The Trust or its agent shall provide the Company with information
regarding the Designated Portfolios' expenses, which information may include a
table of fees and related narrative disclosure for use in any prospectus or
other descriptive document relating to a Contract. The Company shall provide
prior written notice of any proposed modification of such information, which
notice will describe in detail the manner in which the Company proposes to
modify the information, agrees to provide the Trust or its agent with an
opportunity to review such proposed modification prior to its use by the
Company, and agrees not to use the proposed modification without the consent of
the Trust or its agent, which consent shall not be unreasonably withheld.
4.3. The Trust or its agent shall provide the Company with copies of
the Designated Portfolios' proxy material, reports to shareholders (describing
only the Designated Portfolios listed on Schedule A), and other communications
to shareholders (each, a "Shareholder Communication") in such quantity as the
Company shall reasonably require for distributing to Contract owners. If
requested by the Company in lieu thereof, the Trust or its agent shall provide
Shareholder Communications in "camera ready" format on diskette or
electronically in .pdf format. The Trust agrees to cooperate with Company to
provide such Shareholder Communications on a timely basis to meet Company's
reasonable deadline requirements for production and delivery.
ARTICLE V. SALES MATERIAL AND INFORMATION
5.1. The Company shall furnish, or shall cause to be furnished, to the
Distributor and the Adviser each piece of sales literature or other promotional
material that the Company develops and in which the Trust (or a Designated
Portfolio thereof), the Distributor or the Adviser is named. No such material
shall be used until prior written approval by the Distributor and the Adviser,
and the Distributor and the Adviser will use their reasonable best efforts to
review such sales literature or promotional material within ten Business Days
after receipt of such material. The Distributor and the Adviser reserve the
right to reasonably object to the continued use of any such sales literature or
other promotional material in which the Trust (or a Designated Portfolio
thereof), the Distributor or the Adviser is named, and no such material shall be
used if the Distributor or the Adviser so objects.
5.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or the Distributor or
concerning the Trust or the Adviser or the Distributor in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus or SAI for the Trust shares, as such
registration statement and prospectus or SAI may be amended or supplemented from
time to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Distributor and the
Adviser, except with the permission of the Trust or its designee.
5.3. Each of the Distributor, the Trust or the Adviser or its
respective designee, shall furnish, or cause to be furnished, to the Company,
each piece of sales literature or other promotional material that it develops
and in which the Company, and/or its Account, is named. No such material shall
be used until approved by the Company, and the Company will use its best efforts
to review such sales
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literature or promotional material within ten Business Days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
5.4. The Distributor and the Trust shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
5.5. 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 exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios or their shares, promptly after the filing
of such document(s) with the SEC or other regulatory authorities.
5.6. The Company will provide to the Distributor and the Trust at
least one complete copy of all registration statements, prospectuses (which
shall include an offering memorandum, if any, if the Contracts issued by the
Company or interests therein are not registered under the 1933 Act), SAIs,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
the Account, promptly after the filing of such document(s) with the SEC or other
regulatory authorities. The Company shall provide to the Distributor, the
Adviser and the Trust any complaints received from the Contract owners
pertaining to the Trust or a Designated Portfolio.
5.7. For purposes of this Article V, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Trust, any Designated Portfolio or any affiliate of
the Trust: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, and registration
statements, prospectuses, SAIs, shareholder reports, proxy materials, and any
other Shareholder Communications distributed or made generally available with
regard to the Trust.
ARTICLE VI. FEES AND EXPENSES
6.1. Except as otherwise provided herein, no party to this Agreement
shall pay any fee or other compensation to any other party to this Agreement.
Except as otherwise provided herein, all expenses incident to performance by a
party under this Agreement shall be paid by such party.
10
6.2. The Trust or its agent will pay the expenses associated with the
following: setting the prospectus and profiles in type; printing copies of the
prospectus and profiles to be delivered to existing Contract owners investing in
the Designated Portfolios; providing a reasonable number of copies of the SAI to
the Company for itself and for any current owner of a Contract who requests such
SAI; setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes an
annual report); and the preparation of all statements and notices required by
any federal or state law.
6.3. Unless otherwise agreed, the Company shall bear the expenses of
printing copies of the current prospectus and profiles for the Contracts;
printing copies of the Trust's prospectus and profiles that are used in
connection with offering the Contracts; distributing the Trust's prospectus to
owners of Contracts issued by the Company; and of distributing the Trust's proxy
materials and reports to such Contract owners. If the prospectus for the
Contracts and the Trust's prospectus are printed together in one or more
documents, printing costs shall be allocated to reflect the Trust's share,
pursuant to Section 6.2, of the total costs for printing the Trust's
prospectus(es) to be delivered to existing Contract owners investing in the
Designated Portfolio(s), determined according to the number of pages of the
Trust's respective portions of the documents.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The parties to this Agreement agree that the conditions
or undertakings required by the Exemptive Order that may be imposed on the
Company, the Trust, the Distributor and/or the Adviser by virtue of such order
by the SEC: (i) shall apply only upon the sale of shares of the Designated
Portfolios to variable life insurance separate accounts (and then only to the
extent required under the 1940 Act); (ii) will be incorporated herein by
reference; and (iii) such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party notwithstanding any
provision of this Agreement to the contrary.
7.2. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then (a) the parties to
this Agreement shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.1 and 3.2 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
(a) The Company agrees to indemnify and hold harmless each of
the Trust, the Distributor, and the Adviser and each of their trustees/directors
and officers, and each person, if any, who controls the Trust, the Distributor,
or the Adviser within the meaning of Section 15 of the 1933 Act or who is under
common control with the Trust, the Distributor, or the Adviser (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
11
(including legal and other reasonable expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement
or alleged untrue statements of any material fact contained
in the registration statement, prospectus (which shall
include a written description of a Contract that is not
registered under the 1933 Act), or SAI for the Contracts or
contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party to the extent that such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Company by
or on behalf of the Trust for use in the registration
statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the Trust not supplied by the Company or
persons under its control) or wrongful conduct of the
Company or its agents or persons under the Company's
authorization or control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the 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 and in conformity with
information furnished to the Trust by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the
Company to provide the services and furnish the materials
required under the terms of this Agreement (including a
material failure, whether unintentional or in good faith or
otherwise, to comply with the qualification requirements
specified in Section 2.6 of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company; or
(vi) arise out of information provided to the Company
pursuant to this Agreement, or to any other Participating
Insurance Company pursuant to another participation
agreement, which information is based
12
on incorrect information supplied by the Company to the
Trust, Distributor or Adviser.
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(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 gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation, unless
such Indemnified Party's interests in such legal process are materially adverse
to those of the Company and indemnification is otherwise appropriate under this
Section 8.1, PROVIDED that the Company shall be liable for the costs and
expenses of different counsel for separate Indemnified Parties for related
claims or actions only to the extent that such Indemnified Parties' interest in
such legal process are materially adverse to each other. The Company shall not
settle or compromise any action of which it assumes the defense without the
consent of the affected Indemnified Parties unless the Indemnified Parties are
thereby released of all liability, fault and obligation.
(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 Distributor
(a) The Distributor agrees to indemnify and hold
harmless the Company and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
(including legal and other reasonable expenses) to which the Indemnified Parties
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(i) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement,
13
prospectus, SAI or sales literature or other
promotional material for the Contracts not
supplied by or approved by the Trust or the
Distributor) or wrongful conduct of the Distributor
with respect to the sale or distribution of the
Contracts or Trust shares; or
(ii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon and in conformity with information furnished to
the Company by or on behalf of the Distributor; or
(iii) arise as a result of any material failure by the
Distributor to provide the services and furnish the
materials required under the terms of this
Agreement;
(iv) arise out of or result from any material breach of
any representation and/or warranty made by the
Distributor in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Distributor;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
(b) The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Distributor 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 Distributor 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 Distributor of
any such claim shall not relieve the Distributor 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 one or more Indemnified Parties, the Distributor will be entitled to
participate, at its own expense, in the defense thereof. The Distributor also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor'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 Distributor 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, unless such Indemnified Party's interests in such action are
materially adverse to those of Distributor and indemnification is otherwise
appropriate under this Section 8.2, PROVIDED that in no event will Distributor
be liable for the costs and expenses of more than one counsel for all
Indemnified Parties for related claims or actions. Distributor shall not settle
or compromise any action of which it assumes the defense without the consent of
the affected Indemnified Parties unless the Indemnified Parties are thereby
released of all liability, fault and obligation.
14
(d) The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3. Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 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 reasonable expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material
fact contained in the registration statement or
prospectus or SAI or sales literature of the Trust (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 to the extent that such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Adviser or Trust by or on behalf of the
Company for use in the registration statement, prospectus
or SAI for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI
or sales literature for the Contracts not supplied by the
Trust or the Adviser) or wrongful conduct of the Trust or
Adviser with respect to the sale or distribution of the
Contracts 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, SAI or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of
the Trust or the Adviser; or
(iv) arise as a result of any material failure by the
Adviser to provide the services and furnish the materials
required under the terms of this Agreement (including a
material failure, whether unintentional or in good faith
or otherwise, to comply with the diversification and
other qualification requirements specified in Sections
2.3 and 2.4 of this Agreement); or
15
(v) arise out of or result from any material breach of
any representation and/or warranty made by the 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.
(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 gross negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
(c) The 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. In case any such action is brought
against the Indemnified Party, 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, unless such Indemnified
Party's interests in such legal process are materially adverse to those of the
Adviser and indemnification is otherwise appropriate under this Section 8.3,
PROVIDED that in no event will the Adviser be liable for the costs and expenses
of more than one counsel for all Indemnified Parties for related claims or
actions. The Adviser shall not settle or compromise any action of which it
assumes the defense without the consent of the affected Indemnified Parties
unless the Indemnified Parties are thereby released of all liability, fault and
obligation.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.4. Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or litigation (including legal
and other reasonable 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:
16
(i) arise as a result of any material failure by the
Trust to provide the services and furnish the materials
required under the terms 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 8.4(b) and
8.4(c) hereof. The parties acknowledge that the Trust's indemnification
obligations under this Section 8.4 are subject to applicable law. The Company
agrees that, in the event an obligation to indemnify exists pursuant to Section
8.4 as well as Section 8.2 or Section 8.3 hereof, it will seek satisfaction
under the indemnification provisions of Section 8.2 or Section 8.3 before
seeking indemnification under this Section 8.4.
(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 be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement
or to the Company or the Account, whichever is
applicable.
(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
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 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 or its agent will be entitled to participate,
at its own expense, in the defense thereof. The Trust or
its agent 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 (or its agent'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 Trust or its agent 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, unless such
Indemnified Party's interests in such legal process are
materially adverse to those of the Trust and
indemnification is otherwise appropriate under this
Section 8.4, PROVIDED that in no event will the Trust be
liable for the costs
17
and expenses of more than one counsel for all Indemnified
Parties for related claims or actions.
(d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it or any of its respective
officers or directors in connection with the Agreement, the issuance or sale of
the Contracts, the operation of the Account, or the sale or acquisition of
shares of the 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 State of New York.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Exemptive Order) and the terms
hereof shall be interpreted and construed in accordance therewith. If, in the
future, the Exemptive Order should no longer be necessary under applicable law,
then Article VII shall no longer apply.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party, for any reason with
respect to some or all Designated Portfolios, by three
(3) months advance written notice delivered to the other
parties; or
(a) termination by the Company by written notice to the
Distributor, the Adviser and the Trust based upon the
Company's determination that shares of the Trust are not
reasonably available to meet the requirements of the
Contracts; or
(b) termination by the Company by written notice to the
Distributor, the Adviser and the Trust in the event any
of the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(c) termination by the Distributor, the Adviser or the
Trust in the event that formal administrative proceedings
are instituted against the Company by the NASD, the SEC,
an insurance commissioner or like official of any state
or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase
of the Designated Portfolios' shares; provided, however,
that the Distributor or the Adviser determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its
obligations under this Agreement; or
(d) termination by the Company in the event that formal
administrative proceedings are instituted against the
Trust, the Distributor or the Adviser by the SEC or any
state securities or insurance department or any other
regulatory body; provided, however, that the Company
determines in its sole judgment exercised
18
in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of,
the Distributor, the Adviser or the Trust to perform its
obligations under this Agreement; or
(e) termination by the Company by written notice to the
Distributor, the Adviser and the Trust with respect to
any Designated Portfolio in the event that such
Designated Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to comply
with the Section 817(h) diversification requirements
specified in Section 2.3 hereof, or if the Company
reasonably believes that such Designated Portfolio may
fail to so qualify or comply; or
(f) termination by the Distributor, the Adviser or the
Trust by written notice to the Company in the event that
the Contracts fail to meet the qualifications specified
in Section 2.6 hereof; or
(g) termination by the Distributor, the Adviser or the
Trust by written notice to the Company, if the
Distributor or the Adviser, shall determine, in its sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition, or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Company by written notice to the
Distributor, the Adviser and the Trust, if the Company
shall determine, in its sole judgment exercised in good
faith, that the Distributor, the Adviser or the Trust has
suffered a material adverse change in its business,
operations, financial condition or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(i) termination by the Adviser or the Trust by written
notice to the Company, if the Company gives the Adviser
the written notice specified in Section 1.7(a)(ii) 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(j) shall be effective forty-five days
after the notice was given; or
(b) termination by the Trust if the Board has decided to
(i) refuse to sell shares of any Designated Portfolio to
the Company and/or any of its Accounts; (ii) suspend or
terminate the offering of shares of any Designated
Portfolio; or (iii) dissolve, reorganize, liquidate,
merge or sell all assets of the Trust or any Designated
Portfolio, subject to the provisions of Section 1.1; or
(j) termination by the Company upon any substitution of
the shares of another investment company or series
thereof for shares of a Designated Portfolio of the Trust
in accordance with the terms of the Contracts, provided
that the Company has given at least 45 days prior written
notice to the Adviser and the Trust of the date of
substitution;
(k) termination by any party in the event that the Board
determines that a material irreconcilable conflict exists
as provided in Article VII; or
(l) termination with respect to the Distributor
automatically upon termination of the Distribution
Agreement between Distributor and the Trust.
10.2. (a) Notwithstanding any termination of this Agreement, and
except as provided in Section 10.2(b), the Trust and the Distributor shall, at
the option of the Company, continue, until the one year anniversary from the
date of termination, and from year to year thereafter if deemed appropriate by
19
the Trust and the Distributor, to make available additional shares of the
Designated Portfolios pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, based on instructions from the owners of the
Existing Contracts, the Accounts shall be permitted to reallocate investments in
the Designated Portfolios of the Trust and redeem investments in the Designated
Portfolios, and shall be permitted to invest in the Designated Portfolios in the
event that owners of the Existing Contracts make additional premium payments
under the Existing Contracts.
Company agrees, promptly after any termination of this Agreement,
to take all steps necessary to redeem the investment of the Accounts in the
Designated Portfolios within one year from the date of termination of the
Agreement as provided in Article X. Such steps shall include, but not be limited
to, obtaining an order pursuant to Section 26(c) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
The Trust may, in its discretion, permit the Accounts to continue to invest in
the Designated Portfolios beyond such one year anniversary for an additional
year beginning on the first annual anniversary of the date of termination, and
from year to year thereafter; provided that the Trust agrees in writing to
permit the Accounts to continue to invest in the Designated Portfolios at the
beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to
Sections 10.1(g) or 10.1(m), at the option of the Trust, the Distributor or the
Adviser; or (ii) the one year anniversary of the termination of the Agreement is
reached or, after waiver as provided in Section 10.2(a), such subsequent
anniversary is reached (each of (i) and (ii) referred to as a "triggering event"
and the date of termination as provided in (i) or the date of such anniversary
as provided in (ii) referred to as the "request date"), the parties agree that
such triggering event shall be considered as a request for immediate redemption
of shares of the Designated Portfolios held by the Accounts, received by the
Trust and its agents as of the request date, and the Trust agrees to process
such redemption request in accordance with the 1940 Act and the regulations
thereunder and the Trust's registration statement.
(c) The parties agree that this Section 10.2 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement. The parties
further agree that, to the extent that all or a portion of the assets of the
Accounts continue to be invested in the Trust or any Designated Portfolio of the
Trust, Articles I, II, VII, VIII and IX will remain in effect after termination.
10.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
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 Company: The American Life Insurance Company of New York
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
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If to Distributor BISYS Fund Services, LP
c/o BISYS Fund Services, Inc.
000 Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxx XX 00000
Attn: Broker Dealer Compliance
If to Adviser:
-----------------------------
-----------------------------
-----------------------------
If to the Trust: Variable Insurance Funds
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: President
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 has come into the
public domain.
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 SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Texas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable insurance
operations of the Company are being conducted in a manner consistent with the
Texas insurance laws and regulations and any other applicable law or
regulations.
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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 and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Adviser may assign this
Agreement or any rights or obligations hereunder to any affiliate or company
under common control with the Adviser, if such assignee is duly licensed and
registered to perform services under this Agreement. The Company shall promptly
notify the Trust, the Distributor and the Adviser of any change in control of
the Company.
12.8. All persons dealing with the Trust must look solely to the
property of the respective Designated Portfolios listed on Schedule A hereto as
though each such Designated Portfolio had separately contracted with such party
for the enforcement of any claims against the Trust. The parties agree that
neither the Board, officers, agents or shareholders of the Trust assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Trust. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but bind only the trust property
of the Trust as provided in the Trust's Declaration of Trust. The provisions of
this section 12.8 shall survive termination of the Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
as of the date specified below.
The American Life Insurance Company of New York: By its authorized officer
By:
Title:
Date:
Choice Investment Management, By its authorized officer
LLC:
By:
Title:
Date:
BISYS Fund Services, L P: By its authorized officer:
By:
Title:
Date:
Variable Insurance Funds: By its authorized officer:
By:
Title:
Date:
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SCHEDULE A
ACCOUNTS, CONTRACTS AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
AS OF __________, 2004
NAME OF SEPARATE ACCOUNT AND DATE
ESTABLISHED BY BOARD OF CONTRACTS FUNDED BY SEPARATE
DIRECTORS ACCOUNT PORTFOLIOS AVAILABLE TO CONTRACTS
------------------------------------------------------------------------------------------------------------------
The American Separate Account 5, Direct annuity Contract 3805-FPA-AX
established May 4, 2001
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