PARTICIPATION AGREEMENT
Among
FT DEFINED PORTFOLIOS LLC
AND
NIKE SECURITIES L.P.
AND
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
THIS AGREEMENT, made and entered into as of this 5th day of January, 2001 by
and among Allmerica Financial Life Insurance and Annuity Company (hereinafter
referred to as, "the Company"), a Delaware insurance company, on its own
behalf and on behalf of each segregated asset account of the Company
(hereinafter referred to as "the Accounts"), FT Defined Portfolios LLC, a
limited liability company organized under the laws of Delaware (hereinafter
referred to as "the Fund"), Nike Securities L.P, the underwriter of the Fund
(hereinafter "the Distributor"), an Illinois limited partnership.
WHEREAS, the Fund is engaged in business as an open-end management investment
company and wishes to act as the investment vehicle for the separate account
established for variable annuity contracts (collectively referred to as
"Variable Annuity Contracts" and the owners of such products being referred
to as "Contract Owners") to be offered by the Company; and
WHEREAS, the shares of the Fund (the "Fund shares") consist of separate
classes or series of shares, each designated a "Portfolio" and each series of
shares ("Portfolio shares") representing an interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund has filed a registration statement (referred to herein as
the "Fund Registration Statement" and the prospectus contained therein,
referred to herein as the "Fund Prospectus") with the Securities and Exchange
Commission (the "SEC") on Form N-lA to register itself as an open-end
management investment company (File No. 811-10015) under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the Fund shares (File
No. 333-46062) under the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Account of the Company is a validly existing separate account
duly authorized and
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established by resolution of the Board of Directors of the Company, and sets
aside and invests assets attributable to the Contracts, and the Company has
registered or will have registered each Account with the SEC as a unit
investment trust under the 1940 Act before any Contracts are issued by the
Account unless such Accounts are exempt from registration; and
WHEREAS, the Company has filed or will file registration statements with the
SEC to register under the 1933 Act certain Variable Annuity Contracts unless
such contracts are exempt from registration, each such registration statement
for a class or classes of contracts being referred to as the "Contracts
Registration Statement," and the prospectus for each such class or classes
being referred to herein as the "Contracts Prospectus," and the owners of
such contracts; and,
WHEREAS, First Trust Advisors L.P. (the "Investment Manager") is registered
as an investment adviser under the Investment Advisers Act of 1940 and any
applicable state securities laws and serves as overall manager to the Fund;
and
WHEREAS, the Distributor 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, the Distributor and the Fund have entered into a Distribution
Agreement (the "Fund Distribution Agreement") dated December 11, 2000
pursuant to which the Distributor will distribute Fund shares, and to the
extent permitted by applicable insurance laws and regulations, the Company
intends to purchase Portfolio shares on behalf of the Accounts to fund the
Contracts and the Distributor is authorized to sell such shares to unit
investment trusts such as the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Distributor agree as follows:
ARTICLE I. TRANSACTIONS IN FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the Fund which
the Company orders on behalf of the Accounts, executing such orders on a
daily basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make the shares of its Portfolios available for
purchase by the Company on behalf of the Accounts at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, and the Fund shall use reasonable efforts to calculate such net
asset value on each such Business Day. Notwithstanding any other provision in
this Agreement to the contrary, the Board of Directors of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any
Portfolio, 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 in the best interests
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of the shareholders of any Portfolio.
1.3. The Fund agrees to redeem, upon request, any full or fractional shares
of the Fund held by the Accounts or the Company, executing such requests at
net asset value on a daily basis in accordance with Section 1.4 of this
Agreement and applicable provisions of the 1940 Act. Notwithstanding the
foregoing, the Fund may delay redemption of Fund shares to the extent
permitted by the 1940 Act, or any rules, regulations or orders thereunder.
1.4. (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be the
agent of the Fund for the limited purpose of receiving redemption and
purchase requests from the Account (but not from the general accounts of the
Company), and receipt on any Business Day by the Company as such limited
agent of the Fund by the time prescribed in the current Contracts Prospectus
(which as of the date of execution of this Agreement is expected to be 4
p.m.). shall constitute receipt by the Fund on that same Business Day,
provided that the Fund receives notice of such redemption or purchase request
by 11:00 a.m. Eastern Time on the next following Business Day. For purposes
of this Agreement, "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading or as otherwise provided in the Fund's
then currently effective Fund Prospectus.
(b) The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of business on the
next business day after the Fund receives the purchase order. Payment shall
be made in federal funds transmitted by wire to the Fund or its designated
custodian. If Federal funds are not received on time, such funds will be
invested, and Portfolio shares purchased thereby will be issued, as soon as
practicable.
(c) Payment for Portfolio shares redeemed by the Accounts or the Company
will be made in Federal funds transmitted to the Company by wire on the day
the Fund is notified of the redemption order of Fund shares (unless
redemption proceeds are applied to the purchase of shares of other
Portfolios).
1.5. Issuance and transfer of Fund shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. Purchase and
redemption orders for Fund shares will be recorded in an appropriate ledger
for the Account or the appropriate Sub-Account of the Account.
1.6. The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income dividends or capital gain distributions payable on Fund
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on any Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such dividends in cash. The Fund shall
notify the Company of the number of Portfolio shares so issued as payment of
such dividends and distributions.
1.7. The Fund shall make the net asset value per share for each Portfolio
available to the Company by 6 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 series is calculated, and shall calculate such net asset value in
accordance with the then currently effective Fund Prospectus.
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1.8. The Fund and the Distributor agree that Fund shares will be sold only to
the Account.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants:
(a) that the Contracts are registered under the 1933 Act, will be so
registered before the issuance thereof or are exempt from registration;
(b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws;
(c) that the Company will require of every person distributing the
Contracts (i) that the Contracts be offered and sold in compliance in all
material respects with all applicable Federal and state laws and (ii) that at
the time it is issued each Contract is a suitable purchase for the applicant
therefor under applicable state insurance laws;
(d) that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly authorized each of
its Accounts as a separate account under the insurance law of its state of
domicile, and has registered or, prior to the issuance of any Contracts, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act to serve as separate accounts for the Contracts,
and that such registration will be maintained for as long as any Contracts
are outstanding, unless such Accounts are exempt from registration; and
(e) that the Contracts are currently and at the time of issuance will be
treated as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code. The Company shall make
every effort to maintain such treatment and shall notify the Fund and the
Distributor 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.
2.2. The Fund represents and warrants:
(a) that Fund shares sold pursuant to this Agreement shall be registered
under the 1933 Act and duly authorized for issuance in accordance with
applicable law and that the Fund is a business trust duly organized and in
good standing under the laws of Massachusetts;
(b) that each series currently complies with and will make every effort
to continue to comply with the diversification requirements of Section 817(h)
(or any successor or similar provision) of the Code, and all regulations
issued thereunder, and that the Fund 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; and
(c) that the Fund's investment policies, fees and expenses and
operations are and shall at all
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times remain in material compliance with the laws of Delaware, to the extent
required to perform this Agreement. The Fund, however, makes no
representation as to whether any aspect of its operations (including, but not
limited to, fees and expenses and investment policies) otherwise complies
with the insurance laws or regulations of any states.
2.3. The Distributor represents and warrants that the Distributor is duly
registered as a broker-dealer under the 1934 Act, is a member in good
standing with the NASD, and is duly registered as a broker-dealer under
applicable state securities laws; its operations are in compliance with
applicable law, and it will distribute the Fund shares according to
applicable law.
2.4. The Distributor, on behalf of the Investment Manager, represents and
warrants that the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940 and is in compliance with
applicable federal and state securities laws.
ARTICLE III. PROSPECTUSES, PROXY STATEMENTS AND SALES MATERIAL
3.1 At lease annually, the Fund or its designee shall provide the Company,
free of charge, with "camera ready" copy of the new prospectus as set in
type, or, at the request of the Company, as a diskette in the form sent to a
financial printer, and other assistance as is reasonably necessary in order
for the parties hereto once each year (or more frequently if the prospectus
for the Fund is supplemented or amended) to have the prospectus for the
Contracts and the prospectus for the shares printed together in one document.
The Fund or its designee shall bear the cost of printing and mailing the
Fund's prospectus portion of such document for distribution to Contract
owners of existing Contracts, and the Company shall bear the expenses of
printing and mailing the portion of such document relating to the Accounts;
provided, however, that the Company shall bear all printing expenses of such
combined document where used for distribution to prospective purchasers.
3.2 The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available from the Distributor
(or, in the Fund's discretion, from the Fund),and the Distributor (or the
Fund) at its expense, shall print, or otherwise reproduce, and provide a copy
of such SAI free of charge to the Company for itself and for any Contract
owner who requests such SAI.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners. The Fund or its designee shall bear the cost
of printing, duplicating, and mailing of these documents to current Contract
owners, and the Company shall bear the cost for such documents used for
purposes other than distribution to current Contract owners.
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3.4. The Company shall furnish each piece of sales literature or other
promotional material in which the Fund or the Investment Manager or the
Distributor is named to the Fund and the Distributor prior to its use. No
such material shall be used, except with the prior written permission of the
Fund and the Distributor. The Fund and the Distributor agree to respond to
any request for approval on a prompt and timely basis. Failure to respond
shall not relieve the Company of the obligation to obtain the prior written
permission of the Fund or the Distributor.
3.5. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund other than the
information or representations contained in the Fund Registration Statement
or Fund Prospectus, 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 by the Distributor, except with the prior written permission
of the Fund or the Distributor. The Fund and the Distributor agree to respond
to any request for permission on a prompt and timely basis. Failure to
respond shall not relieve the Company of the obligation to obtain the prior
written permission of the Fund or the Distributor.
3.6. The Fund and the Distributor shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than the information or representations
contained in the Contracts Registration Statement or Contracts Prospectus, as
such Registration Statement and Prospectus may be amended or supplemented
from time to time, or in published reports of the Account which are in the
public domain or approved in writing by the Company for distribution to
Contract Owners, or in sales literature or other promotional material
approved in writing by the Company, except with the prior written permission
of the Company. The Company agrees to respond to any request for permission
on a prompt and timely basis. Failure to respond shall not relieve the Fund
or the Distributor of the obligation to obtain the prior written permission
of the Company.
3.7. Each party will provide to the other party copies of draft versions of
any registration statements, prospectuses, statements of additional
information, reports, proxy statements, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments or
supplements to any of the above, to the extent that the other party
reasonably needs such information for purposes of preparing a report or other
filing to be filed with or submitted to a regulatory agency. If a party
requests any such information before it has been filed, the other party will
provide the requested information if then available and in the version then
available at the time of such request.
3.8. 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, or reprints or
excerpts
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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, registration
statements, prospectuses, Statements of Additional Information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV. VOTING
4.1. Subject to applicable law, the Company shall:
(a) solicit voting instructions from Contract Owners;
(b) vote Fund shares of each Portfolio attributable to Contract Owners
in accordance with instructions or proxies timely received from such Contract
Owners;
(c) vote Fund shares of each Portfolio attributable to Contract Owners
for which no instructions have been received in the same proportion as Fund
shares of such Portfolio for which instructions have been timely received; and
(d) vote Fund shares of each Portfolio held by the Company on its own
behalf or on behalf of the Account that are not attributable to Contract
Owners in the same proportion as Fund shares of such Portfolio for which
instructions have been timely received.
The Company shall be responsible for assuring that voting privileges for the
Account are calculated in a manner consistent with the provisions set forth
above. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
4.2. 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 Shared Funding Exemptive
Order and consistent with any reasonable standards that the Fund may adopt.
4.3. 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 or 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 SEC may promulgate with respect thereto.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Distributor shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-l under the 1940 Act to finance
distribution expenses, then the Distributor may make payments to the Company
in amounts agreed to by the Company and the Distributor in writing. Nothing
herein shall prevent the parties from otherwise agreeing to perform, and
arranging for appropriate compensation for, other services relating to the
Fund and/or the Accounts.
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5.2. All expenses incident to performance by the Fund under this Agreement
(including expenses expressly assumed by the Fund pursuant to this Agreement)
shall be paid by the Fund to the extent permitted by law. Except as may
otherwise be provided in Sections 1.4 and 3.1 of this Agreement (or Article
VII, as it may be amended), the Company shall not bear any of the expenses
for the cost of registration and qualification of the Fund shares under
Federal and any state securities law, preparation and filing of the Fund
Prospectus and Fund Registration Statement, Fund proxy materials and reports,
setting the Fund Prospectus in type, setting in type and printing and
distributing the Fund 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
securities law, all taxes on the issuance or transfer of Fund shares, and any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if
any, under Rule 12b-l under the 1940 Act.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
6.1. The Fund undertakes to comply with the diversification requirements
of Section 817(h) of the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration Statement under the
1933 Act and the Account's Registration Statement under the 1940 Act from
time to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company
shall register and qualify the Contracts for sale to the extent required by
applicable securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect for so long
as Fund shares are sold the continuous offering of Fund shares as described
in the then currently effective Fund Prospectus. The Fund shall register and
qualify Fund shares for sale to the extent required by applicable securities
laws of the various states.
6.4. The Company shall be responsible for assuring that any prospectus
offering a Contract that is a life insurance contract where it is reasonably
probable that such Contract would be a "modified endowment contract," as that
term is defined in Section 7702A of the Code, will identify such Contract as
a modified endowment contract (or policy).
6.5. To the extent that it decides to finance distribution expenses pursuant
to Rule 12b-l, the Fund undertakes to have a Board of Trustees, a majority of
whom are not interested persons of the Fund, formulate and approve any plan
under Rule 12b-l to finance distribution expenses.
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ARTICLE VII. INDEMNIFICATION
7.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Fund, the Distributor
and each person who controls or is associated with the Fund or the
Distributor within the meaning of such terms under the Federal securities
laws and any officer, trustee, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts Registration
Statement, Contracts Prospectus, sales literature for the Contracts or the
Contracts themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission or such alleged
statement or alleged omission was made in reliance upon and in conformity
with information furnished in writing to the Company by the Fund or the
Distributor (or a person authorized in writing to do so on behalf of the Fund
or the Distributor) for use in the Contracts Registration Statement,
Contracts Prospectus 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
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by or on behalf of the Company (other
than statements or representations contained in the Fund Registration
Statement, Fund Prospectus or sales literature of the Fund 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
Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Fund Registration Statement, Fund 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 in light of the circumstances in which they were made; or
(d) arise out of any material breach by the Company to provide the
services and furnish the materials required under the terms of this
Agreement, including but not limited to any failure to transmit a request for
redemption or purchase of Fund shares on a timely basis in accordance with
the procedures set forth in Article I.
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This indemnification will be in addition to any liability which the Company
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the
willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
7.2. Indemnification by the Distributor
The Distributor agrees to indemnify and hold harmless the Company and each
person who controls or is associated with the Company within the meaning of
such terms under the Federal securities laws and any officer, director,
employee or agent of the foregoing, against any and all losses, claims,
damages or liabilities, joint or several (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted),
to which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund Registration
Statement, Fund Prospectus (or any amendment or supplement thereto) or sales
literature of the Fund, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances in which they were made; provided that this obligation
to indemnify shall not apply if such statement or omission or alleged
statement or alleged omission was made in reliance upon and in conformity
with information furnished in writing by the Company to the Fund or the
Distributor for use in the Fund Registration Statement, Fund Prospectus (or
any amendment or supplement thereto) or sales literature for the Fund or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by the Distributor or the Fund (other
than statements or representations contained in the Fund Registration
Statement, Fund Prospectus or sales literature of the Fund not supplied by
the Distributor or the Fund or persons under their control) or wrongful
conduct of the Distributor or persons under its control with respect to the
sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature for the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
were made, if such statement or omission was made in reliance upon
information furnished in writing by the Distributor of the Fund to the
Company (or a person authorized in writing to do so on behalf of the Fund or
the Distributor); or
(d) arise as a result of any material breach by the Distributor or the
Fund to provide the services and furnish the materials required under the
terms of this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement).
This indemnification will be in addition to any liability which the
Distributor or the Fund may otherwise have; provided, however, that no party
shall be entitled to indemnification if such loss, claim, damage or liability
is due to the willful misfeasance, bad faith, gross negligence or reckless
disregard of duty by the party seeking indemnification.
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7.3. Indemnification by the Fund
The Fund agrees to indemnify and hold harmless the Company and each person
who controls or is associated with the Company within the meaning of such
terms under the Federal securities laws and any officer, director, employee
or agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund Registration
Statement, Fund Prospectus (or any amendment or supplement thereto) or sales
literature of the Fund, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances in which they were made; provided that this obligation
to indemnify shall not apply if such statement or omission or alleged
statement or alleged omission was made in reliance upon and in conformity
with information furnished in writing by the Company to the Fund or the
Distributor for use in the Fund Registration Statement, Fund Prospectus (or
any amendment or supplement thereto) or sales literature for the Fund or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by the Distributor or the Fund (other
than statements or representations contained in the Fund Registration
Statement, Fund Prospectus or sales literature of the Fund not supplied by
the Distributor or the Fund or persons under their control) or wrongful
conduct of the Distributor or persons under its control with respect to the
sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contracts Registration Statement, Contracts
Prospectus or sales literature for the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
were made, if such statement or omission was made in reliance upon
information furnished in writing by the Distributor of the Fund to the
Company (or a person authorized in writing to do so on behalf of the Fund or
the Distributor); or
(d) arise as a result of any material breach by the Distributor or the
Fund to provide the services and furnish the materials required under the
terms of this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement).
This indemnification will be in addition to any liability which the
Distributor or the Fund may otherwise have; provided, however, that no party
shall be entitled to indemnification if such loss, claim, damage or liability
is due to the willful misfeasance, bad faith, gross negligence or reckless
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disregard of duty by the party seeking indemnification.
7.4 Indemnification Procedures
After receipt by a party entitled to indemnification ("indemnified party")
under this Article VII of notice of the commencement of any action, if a
claim in respect thereof is to be made against any person obligated to
provide indemnification under this Article VII ("indemnifying party"), such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that the
omission to so notify the indemnifying party will not relieve it from any
liability under this Article VII, except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give such
notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
A successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article VII. The
indemnification provisions contained in this Article VII shall survive any
termination of this Agreement.
7.5. Limitation of Liability
Notwithstanding anything to the contrary above, Company and its respective
officers, directors, employees and agents shall not be responsible for, and
the Fund and the Distributor shall indemnify and hold harmless the Company
from and against any and all losses, damages, charges, costs, reasonable
attorney's fees, payments, expenses and liabilities arising out of or
attributable to the reasonable reliance on information, records or documents
furnished by or on behalf of the Distributor or the Fund. Without limiting
the generality of the foregoing, the Company shall not be liable for any
error, delay, or failures to provide services under this Agreement
attributable, in whole or in part, to the error, delay, or failure of the
Distributor, the Fund or their agents in making the daily net asset value per
share of the Portfolios available to the Company.
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ARTICLE VIII. APPLICABLE LAW
8.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the state of Massachusetts, without
giving effect to the principles of conflicts of laws.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant, and the terms hereof shall be limited, interpreted and construed in
accordance therewith.
ARTICLE IX. TERMINATION
9.1. This Agreement shall terminate:
(a) at the option of any party upon six months advance written notice to
the other parties, such termination to be effective no earlier than one year
following the date on which the first Contract is issued to the public; or
(b) at the option of the Company if shares of any or all Portfolios are
not reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of the election to terminate for
such cause shall be furnished by the Company, said termination to be
effective ten days after receipt of notice unless the Fund makes available a
sufficient number of Fund shares to meet the requirements of the Contracts
within said ten-day period; or
(c) at the option of the Fund upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission 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 the
Account, the administration of the Contracts or the purchase of Fund shares,
or an expected or anticipated ruling, judgment or outcome which would, in the
Fund's reasonable judgment, materially impair the Company's ability to meet
and perform the Company's obligations and duties hereunder; or
(d) at the option of the Company upon institution of formal proceedings
against the Fund by the NASD, the SEC, or any state securities or insurance
commission or any other regulatory body which would, in the Company's
reasonable judgment, materially impair the Fund's ability to meet and perform
the Fund's obligations and duties hereunder; or
(e) upon requisite vote of the Contract Owners having an interest in the
affected Portfolio and the written approval of the Distributor (unless
otherwise required by applicable law), to substitute the shares of another
investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts; or
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(f) at the option of the Fund in the event any of the Contracts are not
registered, issued or sold in accordance with applicable Federal and/or state
law; or
(g) by either the Company or the Fund upon a determination by a majority
of the Board, or a majority of disinterested Board members, that an
irreconcilable material conflict exists among the interests of (i) all
Product owners or (ii) the interests of the Participating Insurance Companies
investing in the Fund; or
(h) at the option of the Company if any series of the Fund or the Fund
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 based on an opinion of counsel satisfactory to the Fund
that the series or Fund may fail to so qualify and the Fund does not take
reasonable steps to ensure qualification; or
(i) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(j) at the option of the Fund if the Contracts cease to qualify as
annuity contracts or life insurance policies, as applicable, under the Code,
or if the Fund reasonably believes that the Contracts may fail to so qualify;
or
(k) at the option of either the Fund or the Distributor if the Fund or
the Distributor, respectively, shall determine, in their sole judgment
exercised in good faith, that either (1) the Company shall have suffered a
material adverse change in its business or financial condition or (2) the
Company shall have been the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and operations of
either the Fund or the Distributor; or
(l) at the option of the Company, if (1) the Company shall determine, in
its sole judgment exercised in good faith, that the Fund or the Distributor
shall have been the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the
Company; or (2) the Company shall have notified the Fund in writing of such
determination and the basis therefore, and (3) after sixty (60) days after
notice the Company again makes the same determination;
(m) upon the assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another insurance
company pursuant to an assumption reinsurance agreement) unless the
non-assigning party consents thereto or unless this Agreement is assigned to
an affiliate of the Distributor; or
(n) at the option of Company, as one party, or the Fund and the
Distributor, as one party, upon the other party's material breach of any
provision of this Agreement.
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9.2. Notice Requirement
Except as otherwise provided in Section 9.1, 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 provisions of Section 9.1(a) 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 9.1(c) or 9.1(d) of this Agreement, such prior written notice shall
be given at least ninety (90) days before the effective date of termination;
and
(c) in the event that any termination is based upon the provisions of
Section 9.1(e) of this Agreement, such prior written notice shall be given at
least sixty (60) days before the date of any proposed vote to replace the
Fund's shares.
9.3. Except as necessary to implement Contract Owner initiated transactions,
or as required by state insurance laws or regulations, the Company shall not
redeem Fund shares attributable to the Contracts (as opposed to Fund shares
attributable to the Company's assets held in an Account).
9.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 9.1 of this Agreement, the Fund and the Distributor will, at the
option of the Company, continue to make available additional Fund shares for
so long after the termination of this Agreement as the Company desires for
all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, if the Company so elects to continue to make additional
Fund shares available, the owners of the Existing Contracts or the Company,
whichever shall have legal authority to do so, shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts.
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ARTICLE X. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing to
the other party.
If to the Fund:
First Defined Portfolios LLC
0000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
If to the Distributor:
Nike Securities L.P.
0000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attn: General Counsel
If to Allmerica Financial Life Insurance and Annuity Company:
Xxxxxxx X. Xxxxxx
President
Allmerica Financial Life Insurance and Annuity Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ARTICLE XI. MISCELLANEOUS
11.1. All persons dealing with the Fund must look solely to the property of
such Fund, and in the case of a series company, the respective Designated
Portfolio as though such Designated Portfolio had separately contracted with
the Company and the Underwriter for the enforcement of any claims against the
Fund. The parties agree that neither the Board, officers, agents or
shareholders of the Fund assume any personal liability or responsibility for
obligations entered into by or on behalf of the Fund.
11.2. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written
consent of the affected party until such time as such information may come
into the public domain.
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11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
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 Delaware 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 the Company are being conducted in
a manner consistent with variable annuity laws and regulations and any other
applicable law or regulations.
11.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
11.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
11.9. This Agreement is executed or made by or on behalf of the Fund by its
member, Trustees or officers and not individually. The obligations of this
Agreement are not binding upon any member, Trustee, officer or Interest
holder of the Fund individually and are binding only upon the assets and
property of the Fund.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
COMPANY: ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
By:
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Title:
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Date:
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FUND: FT DEFINED PORTFOLIOS LLC
By:
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Title:
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Date:
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DISTRIBUTOR: NIKE SECURITIES L.P.
By:
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Title:
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Date:
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