FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is executed as of April 30, 2012, and effective as of May 1,
2012, by and among BLACKROCK VARIABLE SERIES FUNDS, INC. an open-end management
investment company organized as a Maryland corporation (the "Fund"), BLACKROCK
INVESTMENTS, LLC ("BRIL"), a broker-dealer registered as such under the
Securities Exchange Act of 1934, as amended (the "Underwriter"), and RIVERSOURCE
LIFE INSURANCE CO. OF NEW YORK, a life insurance company organized under the
laws of the state of New York (the "Company"), on its own behalf and on behalf
of each separate account of the Company currently in existence or hereinafter
created, as set forth on Schedule A hereto, as may be amended from time to time
(each account hereinafter referred to individually as an "Account" and
collectively as the "Accounts").
WITNESSETH:
WHEREAS, the Fund has filed a registration statement with the Securities
and Exchange Commission ("SEC") to register itself as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and to register the offer and sale of its shares under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Fund and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), is a
member in good standing of the Financial Industry Regulatory Authority ("FINRA")
and acts as principal underwriter of the shares of the Fund; and
WHEREAS, the Underwriter serves as principal underwriter or distributor of
each of the series of shares, ("Shares") of the portfolios of the Fund (each
such portfolio now existing or hereafter existing, a "Portfolio" and
collectively, the "Portfolios"); and
WHEREAS, the shares of the Portfolios offered by the Fund to the Company
and the Accounts are set forth on Schedule B attached hereto; and
WHEREAS, the Fund has received an order from the SEC granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of sections 9(a), 13(a), 15(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
Portfolios to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (the "Shared Funding Exemptive Order"); and
WHEREAS, BlackRock Advisors, LLC ("BAL" or the "Adviser") is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and is the Fund's investment adviser; and
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and/or variable annuity contracts
funded or to be funded through one or more of the Accounts (the "Contracts") and
will sell the Contracts to Contract owners ("Contract owners"); and
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WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Shares in one or more of the
Portfolios on behalf of the Accounts to fund the Contracts, and the Fund intends
to sell such Shares to the relevant Accounts at such Shares' net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE 1
SALE OF THE FUND SHARES
1.1 (a) Subject to Article 7 hereof, the Fund shall make available to the
Company, for purchase on behalf of the Accounts, Shares of the Portfolios
in accordance with this Agreement and the provisions of the then-effective
prospectus and Statement of Additional Information ("SAI") of the Fund
(collectively, "Prospectus"). The Fund hereby appoints the Company as an
agent of the Fund for the limited purpose of receiving and accepting
purchase, exchange and redemption requests on behalf of the Accounts (but
not with respect to any Shares that may be held in the general account of
the Company) for Shares of those Portfolios made available hereunder, based
on allocations of amounts to the Accounts or subaccounts thereof under the
Contracts and other transactions relating to the Contracts or the Accounts.
Receipt of such orders by the Company shall constitute receipt by the Fund.
(b) Shares of a particular Portfolio of the Fund shall be ordered in such
quantities and at such times as determined by the Company to be necessary
to meet the requirements of the Contracts. The Directors of the Fund (the
"Directors") may refuse to sell Shares of any Portfolio to any person
(including the Company and the Accounts), or suspend or terminate the
offering of Shares of any Portfolio, if such action is required by law or
by regulatory authorities having jurisdiction in their sole discretion when
acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, if they deem such actions necessary in the
best interests of the shareholders of such Portfolio (it being understood
that for this purpose shareholders means Contract owners).
(c) The Fund or its designee will compute the closing net asset value and
any dividend, income accrual, and capital gains information for the
Portfolios as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. Eastern Time, the "Close of Trading") on each
day the New York Stock Exchange is open for business (a "Business Day") as
described in the applicable Portfolio's Prospectus. The Fund or its
designee will use its best efforts to communicate to the Company such
information by 7:00 p.m. Eastern Time on each Business Day. In the event an
adjustment is made to the computation of the net asset value of Shares of
the Portfolios as reported to the Company, the Fund or its designee shall
notify the Company promptly after the need for any such adjustment in the
following manner:
(1) Fund/SERV Transactions. If the parties choose to use the National
Securities Clearing Corporation's Mutual Fund Settlement, Entry and
Registration Verification ("Fund/SERV") system, any corrections to a
Portfolio's prices for the prior trade date will be submitted through
the Mutual Fund Profile with the correct prices and applicable date.
If the corrections are dated later than trade date plus one, an
electronic transmission should be sent in addition to the Mutual Fund
Profile submission; or
(2) Manual Transactions. If the parties choose not to use Fund/SERV, if
there are technical problems with Fund/SERV, or if the parties are not
able to transmit or receive information through Fund/SERV, any
corrections to a Portfolio's prices should be communicated by
facsimile or by electronic transmission, and will include for each day
on which an adjustment
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has occurred the incorrect Portfolio price, the correct price, and, to
the extent communicated to Portfolio shareholders, the reason for the
adjustment. The Company may send this notification or a derivation
thereof to Contract owners whose Contracts are affected by the
adjustment.
(3) Pricing Error Corrections. If an adjustment is to be made to correct
an error which has caused an Account to receive an amount different
from that to which it is entitled, the Portfolio shall make all
necessary adjustments to Shares owned in the Account. In the event
that any such material error is the result of negligence of the Fund,
the Underwriter shall be liable for the Company's out-of-pocket
expenses and other direct costs or losses related to adjustments made
as a result of a pricing error in an amount not to exceed $1,000 per
day and not to exceed $5,000 per occurrence.
(d) If the parties choose to use Fund/SERV, the following provisions shall
apply:
The Company and the Fund or its designee will be bound by the rules of the
National Securities Clearing Corporation ("NSCC"). Without limiting the
generality of the following provisions of this section, the Company and the Fund
or its designee each will perform any and all duties, functions, procedures and
responsibilities assigned to it and as otherwise established by the NSCC
applicable to Fund/SERV and the Networking Matrix Level utilized. Any
information transmitted through NSCC's Networking system ("Networking") by any
party to the other and pursuant to this Agreement will be accurate, complete,
and in the format prescribed by the NSCC. Each party will adopt, implement and
maintain procedures reasonably designed to ensure the accuracy of all
transmissions through Networking and to limit the access to, and the inputting
of data into, Networking to persons specifically authorized by such party.
On each Business Day, the Company shall aggregate and calculate the net
purchase and redemption orders for each Account received by the Company prior to
the Close of Trading on each Business Day. The Company shall communicate to the
Fund or its designee for that Business Day, by Fund/SERV, the net aggregate
purchase or redemption orders (if any) for each Account received by the Close of
Trading on such Business Day (the "Trade Date") no later than 7:00 a.m. Eastern
Time on the first Business Day following the Trade Date. The Fund or its
designee shall treat all trades communicated to the Fund or its designee in
accordance with this provision as if received prior to the Close of Trading on
the Trade Date.
All orders are subject to acceptance by the Fund or its designee and become
effective only upon confirmation by the Fund or its designee. Upon confirmation,
the Fund or its designee will verify total purchases and redemptions and the
closing share position for each Account. In the case of delayed settlement, the
Fund or its designee shall make arrangements for the settlement of redemptions
by wire within 5 days or no later than the time permitted for settlement of
redemption orders under certain limited circumstances as set forth in Section 22
and Rule 22 of the Investment Company Act of 1940, as amended (the "1940 Act").
For the avoidance of doubt, the Fund shall not provide the Company with any
preferential liquidity rights, and the Accounts shall be treated on the same
terms as any other redeeming shareholders of a Fund.
Unless otherwise informed in writing, such redemption wires should be sent
to:
Bank: Xxxxx Fargo
ABA#: 000000000
Account Title: RiverSource Life Insurance Company
Account No.: 0000029874
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(e) If the parties choose not to use Fund/SERV, if there are technical problems
with Fund/SERV, or if the parties are not able to transmit or receive
information through Fund/SERV, the following provisions shall apply:
Next Day Transmission of Orders. On each Business Day, the Company
shall aggregate and calculate the net purchase and redemption orders for each
Account received by the Company prior to the Close of Trading on such Business
Day. Prior to 9:00 a.m. Eastern Time (or such other time as may be agreed by the
parties from time to time) on the next following Business Day, the Company shall
communicate to the Fund or its designee by facsimile or, in the Company's
discretion, by telephone or any other method agreed upon by the parties, the net
aggregate purchase or redemption orders (if any) for each Account received by
the Close of Trading on the prior Business Day (the "Trade Date"). All orders
communicated to the Fund or its designee by the 9:00 a.m. deadline (or such
other time as may be agreed by the parties from time to time) shall be treated
by the Fund or its designee as if received prior to the Close of Trading on the
Trade Date.
Purchases. With respect to purchase orders placed by the Company by
9:00 a.m. Eastern Time on the first Business Day following the Trade Date, the
Company will use its best efforts to transmit each purchase order to the Fund or
its designee in accordance with written instructions previously provided by the
Fund or its designee to the Company. The Company will use its best efforts to
initiate by wire transfer to the Fund or its designee purchase amounts by 4:00
p.m. Eastern Time on the next Business Day following the Trade Date.
Redemptions. With respect to redemption orders placed by the Company
by 9:00 a.m. Eastern Time on the first Business Day following the Trade Date,
the Fund or its designee will use its best efforts to initiate by wire transfer
to the Company proceeds of such redemptions by 4:00 p.m. Eastern Time on the
next Business Day following the Trade Date.
Unless otherwise informed in writing, such redemption wires should be
sent to:
Bank: Xxxxx Fargo
ABA#: 000000000
Account Title: RiverSource Life Insurance Company
Account No.: 0000029874
1.2 Subject to Section 1.3, the Fund will redeem any full or fractional
shares of any Portfolio when requested by the Company on behalf of an Account at
the most recent net asset value provided to the Company prior to receipt by the
Fund (or the Fund's transfer agent) of the request for redemption, as
established in accordance with the operational procedures mutually agreed to by
the Fund and the Company from time to time and the provisions of the then
current prospectus of the Portfolios. The Fund shall make payment for such
shares in accordance with Section 1.4, but in no event shall payment be delayed
for a greater period than is permitted by the 1940 Act (including any Rule or
order of the SEC thereunder).
1.3 (a) The Company will not aggregate orders received from its Contract
owners after the Close of Trading (typically 4:00 p.m. Eastern Time) with orders
received before the Close of Trading, and warrants that its internal control
structure concerning the processing and transmission of orders is suitably
designed to prevent or detect on a timely basis orders received after the Close
of Trading from being aggregated with orders received before the Close of
Trading and to minimize errors that could result in late transmission of orders.
Orders received by Company before the Close of Trading will receive that day's
net asset value and Orders received by Company after the Close of Trading will
receive the next day's net asset value.
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(b) The Fund shall accept purchase and redemption orders resulting from
investment in and payments under the Contracts on each Business Day,
provided that such orders are received prior to 9:00 a.m. Eastern Time and
reflect instructions received by the Company from Contract holders in good
order prior to the time the net asset value of each Portfolio is priced in
accordance with the preceding paragraph and the Fund's Prospectus on the
prior Business Day. Purchase and redemption orders shall be provided by the
Company in such written or electronic form (including, without limitation,
facsimile) as may be mutually acceptable to the Company and the Fund. The
Fund may reject purchase and redemption orders which are not in the form
prescribed in the Fund's Prospectus. In the event that the Company and the
Fund agree to use a form of written or electronic communication which is
not capable of recording the time, date and recipient of any communication
and confirming good transmission, the Company agrees that it shall be
responsible for confirming that any communication sent by the Company was
in fact received by the Fund or its designee, in proper form and in
accordance with the terms of this Agreement. The Fund and its agents or
designees shall be entitled to rely upon, and shall be fully protected from
all liability in acting upon, the instructions of the authorized
individuals.
1.4 With respect to purchase orders that are transmitted to the Fund or its
designee in accordance with Section 1.1, the Company shall pay for Portfolio
Shares on the next Business Day following the Trade Date. Payments shall be made
in federal funds transmitted by wire. In the event that the Company shall fail
to pay in a timely manner for any purchase order validly received by the Fund or
its designee pursuant to Section 1.3, the Company shall hold the Fund or its
designee harmless from any losses reasonably sustained by the Fund or its
designee as the result of acting in reliance on such purchase order. Redemption
orders that are transmitted to the Fund or its designee in accordance with
Section 1.1 shall be paid for no later than the end of the Business Day after
the Fund receives notice of the order. Payments shall be made in federal funds
transmitted by wire. In the event that the Fund or its designee shall fail to
pay in a timely manner for any redemption order pursuant to Section 1.1, the
Fund or its designee shall hold the Company harmless from any losses reasonably
sustained by the Company as the result of acting in reliance on such redemption
order.
1.5 Issuance and transfer of Shares of the Portfolios will be by book entry
only. Share certificates will not be issued to the Company or the Account.
Shares ordered from the Fund will be recorded in the appropriate title for each
Account or the appropriate sub-account of each Account.
1.6 The Fund or its designee shall furnish prompt written notice to the
Company of any income, dividends or capital gain distribution payable on Shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's Shares in additional Shares of
that Portfolio. The Fund shall notify the Company in writing of the number of
Shares so issued as payment of such dividends and distributions.
1.7 The Fund agrees that its Shares will be sold only to Participating
Insurance Companies and their separate accounts. No Shares of any Portfolio will
be sold directly to the general public. The Company agrees that Shares will be
used only for the purposes of funding the Contracts under the Accounts listed in
Schedule A, as amended from time to time.
1.8 The Fund agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding conflicts of interest
corresponding to those contained in Article 4 of this Agreement.
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1.9 The Fund reserves the right to reject any purchase orders, including
exchanges for any reason, including if the Fund, in its sole opinion, believes
the Company's Contract owner(s) is/are engaging in short-term or excessive
trading into and out of a Portfolio or otherwise engaging in trading that may be
disruptive to a Portfolio ("Market Timing"). The Company agrees to cooperate
with the Underwriter and the Fund to monitor for Market Timing by its Contract
owners, to provide such relevant information about Market Timers to the Fund as
it may reasonably request, including but not limited to such Contract owner's
identity, and to prevent Market Timing from occurring by or because of Contract
owners. Failure of the Fund to reject any purchase orders that might be deemed
to be Market Timing shall not constitute a waiver of the Fund's rights under
this section. Pursuant to Rule 22c-2 of the 1940 Act, on behalf of the Fund, the
Underwriter and the Company agree to comply with the terms included in the
attached Schedule C as of the effective date of this Agreement.
ARTICLE 2
OBLIGATIONS OF THE PARTIES
2.1 Costs Borne by the Fund Resulting from Fund Disclosure Requirements
(a) Periodic Fund Disclosure. The Fund will bear, or arrange for others to
bear, the usual, customary and reasonable costs of preparing and filing with the
SEC the Fund Prospectus, periodic reports to shareholders and other shareholder
communications required to be produced and distributed as determined by the Fund
as a result of periodic disclosure requirements to which the Fund is subject
(collectively, "Periodic Fund Disclosure Materials").
The usual, customary and reasonable costs of printing and distributing any
Periodic Fund Disclosure Materials shall be allocated as described in Schedule E
hereto.
The Fund will provide to the Company in a timely fashion the information
reasonably needed to distribute printed Periodic Fund Disclosure Materials or to
make Periodic Fund Disclosure Materials available electronically.
(b) Non-periodic Fund Disclosure Resulting from Fund-Driven Events. The
Fund will bear, or arrange for others to bear, the usual, customary and
reasonable costs of preparing and filing with the SEC the Fund Prospectus and
any amendments or supplements thereto, fund proxy and similar materials such as
voting solicitation instructions, and other shareholder communications required
to be produced and distributed as determined by the Fund as a result of Fund
changes driven by the Fund including, but not limited to, a liquidation of the
assets and termination of its existence or other reorganization, or merger of
the Fund; a change in the name, fund fees, investment strategy or objective or
an investment adviser of the Fund; and any other Fund change not otherwise
itemized herein (collectively "Fund-Driven Event Fund Disclosure Material").
The usual, customary and reasonable costs of printing and distributing any
Fund-Driven Event Fund Disclosure Materials shall be allocated as described in
Schedule E hereto.
The Fund will provide to the Company in a timely fashion the information
reasonably needed to distribute printed Fund-Driven Event Fund Disclosure
Materials or make such Fund-Driven Event Fund Disclosure Materials available
electronically.
The Fund will bear, or arrange for others to bear, the usual, customary and
reasonable costs of proxy voting including, but not limited to, vote assembly,
postage, processing, tabulation and project management.
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2.2 Costs Borne by the Company Resulting from Account Disclosure
Requirements - Periodic Account Disclosure.
The Company will bear, or arrange for others to bear, the usual, customary
and reasonable costs of preparing and filing with the SEC the Account
Prospectus, periodic reports to shareholders and other shareholder
communications required to be produced and distributed as determined by the
Company as a result of periodic disclosure requirements to which the Account is
subject (collectively "Periodic Account Disclosure Materials").
The Company will bear, or arrange for others (not including the Fund
Parties) to bear, the usual, customary and reasonable costs of printing any
Periodic Account Disclosure Materials; distributing any printed Periodic Account
Disclosure Materials to Participants and prospective Contract owners, annuitants
or participants (as appropriate) under the Contracts (collectively, "Prospects")
including postage costs of mailing printed Periodic Account Disclosure Materials
and making Periodic Account Disclosure Materials available electronically. At
its option, the Company will, as appropriate:
(a) set for printing and print as many copies of the Periodic Account
Disclosure Materials as the Company may reasonably need for distribution to
Participants or Prospects, and mail such materials; and
(b) prepare the Periodic Account Disclosure Materials in electronic format,
and make such materials available electronically.
2.3 The Company shall furnish, or cause to be furnished, to the Fund or its
designee, a copy of language that would be used in any prospectus for the
Contracts or SAI for the Contracts in which the Fund or the Underwriter or BAL
("Fund Parties") is named prior to the filing of such document with the SEC.
2.4 The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund (which shall include any Portfolio thereof for purposes of this
section, Underwriter or BAL or any entity with BlackRock in its name) is named
("Company Materials"), at least fifteen Business Days prior to its use. No such
Company Materials shall be used if any of the Fund Parties reasonably objects to
such use within fifteen Business Days after receipt of such material. The Fund
or its designee reserves the right to review Company Materials at any time upon
request made by the Fund or its designee to the Company and may reasonably
object to the continued use of any Company Materials. No Company Materials shall
be used if the Fund or its designee so objects. Notwithstanding the foregoing,
the Company need not furnish, or cause to be furnished, to the Fund or its
designee revisions to Company Materials previously approved by the Fund or its
designee ("Updated Company Materials") unless the Company Materials on which
they are based have been materially changed. The Fund or its designee also
reserves the right to review Updated Company Materials at any time upon request
made by the Fund or its designee to the Company. The Fund or its designee may
reasonably object to the continued use of any Updated Company Materials. No
Updated Company Materials shall be used if the Fund or its designee so objects.
2.5 At the reasonable request of the Fund or its designee, the Company
shall furnish, or shall cause to be furnished, as soon as practical, to the Fund
or its designee copies of the following reports:
(a) the Company's annual financial report (prepared under generally
accepted accounting principles ("GAAP", if any);
(b) the Company's quarterly statements, if any;
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(c) any financial statement, proxy statement, notice or report of the
Company sent to policyholders; and
(d) any registration statement (without exhibits) and financial reports
of the Company filed with any state insurance regulator.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Fund, Underwriter or BAL, or concerning the Fund,
the Underwriter or BAL in connection with the Contracts other than information
or representations contained in the registration statement or prospectus for the
Shares (as such registration statement and prospectus may be amended or
supplemented from time to time), reports of the Fund, Fund-sponsored proxy
statements, or in sales literature or other promotional material approved by the
Fund or Underwriter or the designee of either, except with the written
permission of the Fund or Underwriter.
2.7 The Fund or its designee shall furnish, or shall cause to be furnished,
to the Company, each piece of sales literature or other promotional material in
which the Company and/or the Account(s) is named ("Fund Materials") at least
fifteen Business Days prior to its use. No such Fund Materials shall be used if
the Company reasonably objects to such use within fifteen Business Days after
receipt of such material. The Company reserves the right to review Fund
Materials at any time upon request made by the Company to the Fund or its
designee and may reasonably object to the continued use of any Fund Materials.
No Fund Materials shall be used if the Company so objects. Notwithstanding the
foregoing, the Fund or its designee need not furnish, or cause to be furnished,
to the Company, revisions to Fund Materials previously approved by the Company
("Updated Fund Materials") unless the Fund Materials on which they are based
have been materially changed. The Company also reserves the right to review
Updated Fund Materials at any time, upon request, made by the Company to the
Fund or its designee. The Company may reasonably object to the continued use of
any Updated Fund Materials. No Updated Fund Materials shall be used if the
Company so objects.
2.8 Neither the Fund nor the Underwriter shall give any information or make
any representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in the registration statements or Contract prospectuses (as such
registration statements or Contract prospectuses may by amended or supplemented
from time to time), except with the written permission of the Company.
2.9 The Fund or its designee will provide the Company with at least one
complete copy of all prospectuses, SAIs, annual reports, semi-annual reports,
proxy statements, and all amendments to any of the above, that relate to the
Fund or its shares, promptly after the filing of such document(s) with the SEC
or other regulatory authorities.
2.10 The Company will provide the Fund with at least one complete copy of
all prospectuses, SAIs, annual reports, semi-annual reports, proxy statements,
and all amendments to any of the above, that relate to the Contracts or each
Account, promptly after the filing of such document(s) with the SEC or other
regulatory authorities or, if a Contract and its associated Account are exempt
from registration, at the time such documents are first published.
2.11 For purposes of this Article II, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following:
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 the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement,
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sales literature, or published article), educational or training materials or
other communications distributed or made generally available to the public, and
registration statements, SAIs, shareholder reports, and proxy materials.
2.12 If the Fund, Underwriter and Company agree to distribute Fund summary
prospectuses to Contract owners pursuant to Rule 498 of the 1933 Act, as set
forth in Schedule D of this Agreement, then each party to the Agreement
represents and warrants that it complies with the requirements of Rule 498 and
applicable SEC guidance regarding the Rule in connection therewith, and that it
maintains policies and procedures reasonably designed to ensure that it can meet
its obligations in connection with Fund summary prospectuses. The parties agree
to comply with the terms included in the attached Schedule D as of the effective
date of this Agreement.
2.13 Solely with respect to Contracts and Accounts that are subject to the
1940 Act, so long as, and to the extent that the SEC interprets the 1940 Act to
require pass-through voting privileges for variable Contract owners: (a) the
Company will provide pass-through voting privileges to owners of Contracts whose
cash values are invested, through the Accounts, in Shares of the Fund; (b) the
Fund shall require all Participating Insurance Companies to calculate voting
privileges in the same manner and the Company shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by the
Fund; and (c) with respect to each Account, the Company will vote Shares of the
Fund held by the Account and for which no timely voting instructions from
Contract owners are received, as well as Shares held by the Account that are
owned by the Company for their general accounts, in the same proportion as the
Company votes Shares held by the Account for which timely voting instructions
are received from Contract owners. The Company reserves the right to vote Shares
of the Fund held in any segregated asset account in its own right, to the extent
permitted by law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New York,
with full power, authority and legal right to execute, deliver and perform its
duties and comply with its obligations under this Agreement and has established
each Account as a separate account under such law and the Accounts comply in all
material respects with all applicable federal and state laws and regulations.
3.2 The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
separate account for the Contracts. The Company further represents and warrants
that the Contracts will be registered under the 1933 Act prior to any issuance
or sale of the Contracts; the Contracts will be issued in compliance in all
material respects with all applicable federal and state laws.
3.3 The Fund represents and warrants that it is duly organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the applicable provisions of the 0000 Xxx.
3.4 The Fund represents and warrants that the Fund Shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act, shall be duly
authorized for issuance in compliance in all materials respects with all
applicable federal and state securities laws, and that the Fund is registered
under the 0000 Xxx. The Fund shall amend its registration statement under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. If the Fund determines that notice filings
are appropriate, the Fund shall use its best efforts to make such notice filings
in accordance with the laws of such jurisdictions reasonably requested by the
Company.
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3.5 The Fund has adopted a Distribution Plan (the "Plan") with regard to
the Class II and Class III shares of each Portfolio, pursuant to Rule 12b-1
under the Investment Company Act. The Fund represents and warrants that it has a
board of directors, a majority of whom are not interested persons of the Fund,
which has formulated and approved the Plan to finance distribution expenses of
the Fund and that any changes to the Fund's Plan will be approved by a similarly
constituted board of directors.
3.6 The Underwriter represents and warrants that it is a member in good
standing of FINRA and is registered as a broker-dealer with the SEC.
3.7 The Underwriter represents and warrants that BAL is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that BAL shall perform its obligations for the Fund in
compliance in all material respects with any applicable state and federal
securities laws.
3.8 The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Internal Revenue Code of 1986, as amended ("Code") and the regulations
issued thereunder. Without limiting the scope of the foregoing, the Fund will at
all times comply and maintain each Portfolio's compliance with the
diversification requirements set forth in Section 817(h) of the Code and Section
1.817-5 of the regulations under the Code. The Fund will notify the Company
immediately upon having a reasonable basis for believing that a Portfolio has
ceased to so comply or that a Portfolio might not so comply in the future. In
the event of a breach of this Section 3.8 by the Fund, it will take all
reasonable steps to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
3.9 The Fund represents and warrants that each Portfolio is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Code, and represents that it will use its best efforts to qualify and to
maintain such qualification (under Subchapter M or any successor or similar
provision) of each Portfolio as a RIC. The Fund will notify the Company
immediately in writing upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
3.10 Subject to the Fund's compliance with Section 817(h) of the Code, the
Company represents and warrants 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 Internal
Revenue Code of 1986, as amended ("Code"). The Company will use its best efforts
to maintain such treatment and shall notify the Fund and the Underwriter
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.
3.11 The Company agrees to comply with its obligations under applicable
anti-money laundering ("AML") laws, rules and regulations, including but not
limited to its obligations under the United States Bank Secrecy Act of 1970, as
amended (by the USA PATRIOT Act of 2001 and other laws), and the rules,
regulations and official guidance issued thereunder (collectively, the "BSA").
(a) The Company agrees to undertake inquiry and due diligence
regarding the customers to whom the Company offers and/or sells
Portfolio shares or on whose behalf the Company purchases
Portfolio shares and that the inquiry and due diligence is
reasonably designed to determine that the Company is not
prohibited from dealing with any such customer by (i) any
sanction administered by the Office of Foreign
10
Assets Control ("OFAC") of the U.S. Department of the Treasury
(collectively, the "Sanctions"); or (ii) any of the Special
Measures.
(b) The Company hereby represents, covenants and warrants to the
Fund and the Underwriter that:
(1) None of the Company's employees who are authorized in
connection with their employment to transact business with
the Fund or Underwriter in accounts in the Company's name,
in any nominee name maintained for the Company, or for which
the Company serves as financial institution of record, are
designated or targeted under any of the Sanctions or Special
Measures and that no transactions placed in any such
accounts by any of the Company's authorized employees will
contravene any of the Sanctions or Special Measures;
(2) As the Sanctions or Special Measures are updated, the
Company shall periodically review them to confirm that none
of the Company's employees that are authorized to transact
business with the Fund or Underwriter are designated or
targeted under any of the Sanctions or Special Measures; and
(3) The Company, including any of the Company's affiliates,
does not maintain offices in any country or territory to
which any of the Sanctions or Special Measures prohibit the
export of services or other dealings.
The Company agrees to notify the Fund and the Underwriter or the
Portfolios' transfer agent promptly when and if it learns that the establishment
or maintenance of any account holding, or transaction in or relationship with a
holder of, Portfolio shares pursuant to this Agreement violates or appears to
violate any applicable AML laws, rules, or regulations, or any of the Sanctions
or Special Measures.
3.12 The Company acknowledges and agrees that it is the responsibility of
the Company to determine investment restrictions under state insurance law
applicable to any Portfolio, and that the Fund shall bear no responsibility to
the Company, for any such determination or the correctness of such
determination. The Company has determined that the investment restrictions set
forth in the current Fund Prospectus are sufficient to comply with all
investment restrictions under state insurance laws that are currently applicable
to the Portfolios as a result of the Accounts' investment therein. The Company
shall inform the Fund of any additional investment restrictions imposed by state
insurance law after the date of this Agreement that may become applicable to the
Fund or any Portfolio from time to time as a result of the Accounts' investment
therein. Upon receipt of any such information from the Company, the Fund shall
determine whether it is in the best interests of shareholders to comply with any
such restrictions. If the Fund determines that it is not in the best interests
of shareholders to comply with a restriction determined to be applicable by the
Company, the Fund shall so inform the Company, and the Fund and the Company
shall discuss alternative accommodations in the circumstances.
3.13 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal 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.
3.14 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are
11
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. 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 Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE 4
POTENTIAL CONFLICTS
4.1 The parties acknowledge that the Fund's Shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Directors of the Fund will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Directors shall promptly inform the Company in writing if they
determine that an irreconcilable material conflict exists and the implications
thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. The Company will assist the
Directors in carrying out their responsibilities under the Shared Fund Exemptive
Order by providing the Directors with all information reasonably necessary for
them to consider any issues raised including, but not limited to, information as
to a decision by the Company to disregard Contract owner voting instructions.
4.3 If it is determined by a majority of the Directors, or a majority of
the Fund's Directors who are not affiliated with the Adviser or the Underwriter
(the "Disinterested Directors"), that a material irreconcilable conflict exists
that affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as determined
by the Directors) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Fund or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question of whether
or not such segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
12
4.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the Disinterested Directors. Any such withdrawal
and termination must take place within 30 days after the Fund gives written
notice that this provision is being implemented, subject to applicable law but
in any event consistent with the terms of the Shared Fund Exemptive Order. Until
the end of such 30 day period, the Fund shall continue to accept and implement
orders by the Company for the purchase and redemption of Shares.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within 30 days after the Fund informs the Company in writing that
it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the Disinterested Directors. Until the end of
such 30 day period, the Fund shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Fund.
4.6 For purposes of section 4.3 through 4.6 of this Agreement, a majority
of the Disinterested Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within 30 days
after the Directors inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Disinterested Directors.
4.7 Upon request, the Company shall submit to the Directors such reports,
materials or data as the Directors may reasonably request so that the Directors
may fully carry out the duties imposed upon them by the Shared Fund Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Directors.
4.8 If and to the extent that (a) 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 application for the Shared Fund Exemptive Order) on
terms and conditions materially different from those contained in the
application for the Shared Fund Exemptive Order, or (b) the Shared Fund
Exemptive Order is granted on terms and conditions that differ from those set
forth in this Article 4, then the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary (a) 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, or (b) to conform this Article 4 to the
terms and conditions contained in the Shared Fund Exemptive Order, as the case
may be.
13
ARTICLE 5
INDEMNIFICATION
5.1 The Company agrees to indemnify and hold harmless the Fund Parties and
each of their respective Directors, officers, employees and agents and each
person, if any, who controls a Fund Party within the meaning of Section 15 of
the 1933 Act (collectively the "Indemnified Parties" for purposes of this
Article 5) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any loss, claim,
damage, liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or common law or otherwise,
insofar as such Losses:
(a) arise out of or are based upon any untrue statements of any
material fact contained in the registration statement or prospectuses for
the Contracts or in the Contracts themselves or in sales literature or
other promotional material generated or approved by the Company on behalf
of the Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article 5), or arise out of or are based upon the omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Fund or Underwriter for use in Company
Documents or otherwise for use in connection with the sale of the Contracts
or Shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in Fund Documents as defined
in Section 5.2(a)) or wrongful conduct of the Company or persons under its
control, with respect to the sale or acquisition of the Contracts or
Shares; or
(c) arise out of or result from any untrue statement of a material
fact contained in Fund Documents as defined in Section 5.2(a) or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Fund or Underwriter by or on behalf of the
Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) 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.
5.2 The Underwriter and the Fund agree severally to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
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
Article 5) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund Parties) or
expenses (including the reasonable costs of investigating or defending any loss,
claim, damage liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
14
(a) arise out of or are based upon any untrue statements of any
material fact contained in the registration statement or prospectus or
sales literature or other promotional material for the Fund (or any
amendment or supplement thereto) (collectively, "Fund Documents" for the
purposes of this Article 5), or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this indemnity
shall not apply as to any Indemnified Party if such statement or omission
was made in reliance upon and in conformity with written information
furnished to the Fund Parties by or on behalf of the Company for use in
Fund Documents or otherwise for use in connection with the sale of the
Contracts or Shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in Company Documents) or
wrongful conduct of the Fund, Underwriter or Adviser or persons under their
respective control, with respect to the sale or acquisition of the
Contracts or Shares; or
(c) arise out of or result from any untrue statement of a material
fact contained in Company Documents or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Fund, Underwriter or Adviser; or
(d) arise out of or result from any failure by the Underwriter or the
Fund to provide the services or 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 Section 3.8 of this Agreement); or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the Fund in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Underwriter or the Fund.
5.3 Neither the Company, the Underwriter nor the Fund shall be liable under
the indemnification provisions of Section 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against any Indemnified Party to the
extent such Losses arise out of or result from 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 or duties under this Agreement.
5.4 Neither the Company, the Underwriter nor the Fund shall be liable under
the indemnification provisions of Section 5.1 or 5.2, as applicable, with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the other party in writing within a reasonable time
after the summons, or other first written notification, giving information of
the nature of the claim shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim shall not relieve that party from any liability which it may have to the
Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party
15
also shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in such action. After notice from the
indemnifying party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be liable
to the Indemnified 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.
ARTICLE 6
TERMINATION
6.1 This Agreement may be terminated by either party for any reason by
sixty (60) days' advance written notice delivered to the other party.
6.2 This Agreement may be terminated at the option of either the
Underwriter or the Fund upon institution of formal proceedings against the
Company by FINRA, 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 Accounts, the administration
of the Contracts or the purchase of the Shares which would, in the Fund's or the
Underwriter's respective reasonable judgment, materially impair the Company's
ability to meet and perform the Company's obligations and duties hereunder.
6.3 This Agreement may be terminated at the option of the Company upon
institution of formal proceedings against the Fund, Underwriter or Adviser by
FINRA, the SEC, the insurance commission of any state or any other regulatory
body regarding the duties of the Fund or Underwriter under this Agreement or
related to the sale of Shares, the operation of the Fund or the administration
of the Fund, which would, in the Company's reasonable judgment, materially
impair the Fund's or Underwriter's ability to meet and perform their obligations
and duties hereunder.
6.4 This Agreement may be terminated at the option of the Fund or the
Underwriter if the Internal Revenue Service determines that the Contracts cease
to qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Fund or Underwriter reasonably believes that the Contracts
may fail to so qualify or if interests in an Account under the Contracts are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law.
6.5 This Agreement may be terminated by the Fund or the Underwriter, at
either's option, if either the Fund or the Underwriter shall determine, in its
sole judgment exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial condition, (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 Underwriter, or (3) the Company breaches any obligation
under this Agreement in a material respect and such breach shall continue
unremedied for thirty (30) days after receipt by the Company of notice in
writing from the Fund or Underwriter of such breach.
6.6 This Agreement may be terminated by the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that either (1) the
Fund, Underwriter or BAL have suffered a material adverse change in its business
or financial condition, (2) the Fund, Underwriter or BAL 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 the Account(s), or (3)
the Fund or Underwriter breaches any obligation
16
under this Agreement in a material respect and such breach shall continue
unremedied for thirty (30) days after receipt by the Fund or Underwriter, as
applicable, of notice in writing from the Company of such breach.
6.7 This Agreement may be terminated by the Company by written notice to
the Fund and the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts.
6.8 This Agreement may be terminated by the Company by written notice to
the Fund and the Underwriter with respect to any Portfolio in the event any of
the Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to be issued by
the Company.
6.9 This Agreement may be terminated by the Company by written notice to
the Fund and the Underwriter with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so qualify.
6.10 This Agreement may be terminated by the Company by written notice to
the Fund and the Underwriter with respect to any Portfolio in the event that
such Portfolio fails to meet the diversification requirements specified in
Section 3.8 of this Agreement.
6.11 Notwithstanding any termination of this Agreement, the Fund and the
Underwriter will, upon the mutual agreement of the parties, continue to make
available additional Shares of the Portfolios of the Fund pursuant to the terms
and conditions of this Agreement for up to two years, 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
Fund and Underwriter so agree to make additional Shares available, the owners of
the Existing Contracts will be permitted to reallocate investments in the Fund
(as in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts.
6.12 The provisions of Articles 5 (Indemnification), 7 (Applicable Law), 8
(Notices), 9 (Miscellaneous) and Section 14 of Schedule C shall survive
termination of this Agreement. In addition, all other applicable provisions of
this Agreement shall survive termination as long as Shares are held on behalf of
Contract owners in accordance with section 6.11, except that the Fund and
Underwriter shall have no further obligation to make Shares available in
Contracts issued after termination.
ARTICLE 7
APPLICABLE LAW
7.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
7.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, applicable insurance law and regulations, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
17
ARTICLE 8
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.
To the Fund: With a copy to:
BlackRock Variable Series Funds, Inc. BlackRock, Inc.
Attention: Xxxx Xxxx Attn: General Counsel
Managing Director, U.S. Retail 00 Xxxx 00xx Xxxxxx
Business Analytics Xxx Xxxx, XX 00000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
To the Underwriter: With a copy to:
BlackRock Investments, LLC BlackRock Investments, LLC
Attn: Xxxxx Xxxxxxxx Attn: Xxxx Xxxxx, CCO
00 Xxxx 00xx Xxxxxx Xxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxxx, XX 00000
If to the Company: With a copy to:
RiverSource Life Insurance Co. RiverSource Life Insurance Co. of
of New York New York
1765 Ameriprise Financial Center 00000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx Xxxxxx, Attn: General Counsel
Vice President - National Sales Manager
and Fund Management
ARTICLE 9
MISCELLANEOUS
9.1 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.
9.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
9.3 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.
9.4 The parties to this Agreement acknowledge and agree that the Fund is a
Maryland corporation, and that all liabilities of the Fund arising, directly or
indirectly, under this Agreement, of any and every nature whatsoever, shall be
satisfied solely out of the assets of the relevant Portfolio(s) of the Fund and
that no Director, officer, agent or holder of Shares of the Fund shall be
personally liable for any such liabilities.
9.5 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, FINRA and state
insurance regulators) and shall permit
18
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.
9.6 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, to which the parties hereto are entitled under state and
federal laws.
9.7 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
9.8 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other
parties.
9.9 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by all
parties.
9.10 This Agreement constitutes the entire agreement among the parties with
respect to the subject matter contained herein, and supersedes all prior and
contemporaneous understandings and agreements, both written and oral, with
respect to such subject matter.
19
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
BLACKROCK VARIABLE SERIES FUNDS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
BLACKROCK INVESTMENTS, LLC
By:_____________________________________
Name: __________________________________
Title:__________________________________
RIVERSOURCE LIFE INSURANCE CO. OF NEW YORK
By:_____________________________________
Name:___________________________________
Title:__________________________________
20
SCHEDULE A
SEPARATE ACCOUNTS OF RIVERSOURCE LIFE INSURANCE CO. OF NEW YORK
RiverSource of New York Variable Annuity Account
RiverSource of New York Account 4
RiverSource of New York Variable Annuity Account 2
RiverSource of New York Account 8
SCHEDULE B
PORTFOLIOS AND CLASSES OF BLACKROCK VARIABLE SERIES FUNDS, INC. OFFERED TO
SEPARATE ACCOUNTS OF RIVERSOURCE LIFE INSURANCE CO. OF NEW YORK
Available share classes of:
FUND NAME
EQUITY FUNDS CLASS CUSIP TICKER
BlackRock Balanced Capital V.I. Fund I 00000X000 AMBLI
BlackRock Basic Value V.I. Fund I 00000X000 XXXXX
BlackRock Basic Value V.I. Fund II 00000X000 BAVII
BlackRock Basic Value V.I. Fund III 00000X000 BVIII
BlackRock Capital Appreciation V.I. Fund I 00000X000 FDGRI
BlackRock Capital Appreciation X.X. Xxxx XXX 00000X000 XXXXX
BlackRock Equity Dividend V.I. Fund I 00000X000 UTTLI
BlackRock Equity Dividend V.I. Fund III 00000X000 UTIII
BlackRock Global Allocation V.I. Fund I 00000X000 GLALI
BlackRock Global Allocation X.X. Xxxx XX 00000X000 XXXXX
BlackRock Global Allocation V.I. Fund III 00000X000 GAIII
BlackRock Global Opportunities V.I. Fund I 00000X000 GLGRI
BlackRock Global Opportunities V.I. Fund III 00000X000 GGIII
BlackRock International V.I. Fund I 00000X000 IVVVI
BlackRock Large Cap Core V.I. Fund I 00000X000 LGCCI
BlackRock Large Cap Core V.I. Fund II 00000X000 LGCII
BlackRock Large Cap Core X.X. Xxxx XXX 00000X000 LCIII
BlackRock Large Cap Growth V.I. Fund I 00000X000 LGGGI
BlackRock Large Cap Growth X.X. Xxxx XXX 00000X000 XXXXX
BlackRock Large Cap Value V.I. Fund I 00000X000 LCATT
BlackRock Large Cap Value V.I. Fund II 00000X000 LCBTT
BlackRock Large Cap Value V.I. Fund III 00000X000 LVIII
BlackRock Value Opportunities V.I. Fund I 00000X000 SMCPI
BlackRock Value Opportunities V.I. Fund II 00000X000 SMCII
BlackRock Value Opportunities V.I. Fund III 00000X000 SCIII
FIXED INCOME FUNDS
BlackRock High Yield V.I. Fund I 00000X000 HICUI
BlackRock Total Return V.I. Fund I 00000X000 CRBDI
BlackRock Total Return V.I. Fund III 00000X000 CBIII
BlackRock U.S. Government Bond V.I. Fund I 00000X000 GVBDI
INDEX FUND
BlackRock S&P 500 Index V.I. Fund I 00000X000 IDXVI
BlackRock S&P 500 Index X.X. Xxxx XX 00000X000 IXVII
MONEY MARKET FUND
BlackRock Money Market V.I. Fund * I 00000X000 DMMKI
-------------
* NO FEES SHALL BE PAID FOR THE BLACKROCK MONEY MARKET V.I. FUND
SCHEDULE C
SHAREHOLDER INFORMATION
Shareholder Information Schedule entered into by and between BlackRock Variable
Series Funds, Inc. (the "Fund"), BlackRock Investments, LLC and its successors,
assigns and designees ("BRIL") and RiverSource Life Insurance Co. of New York
(the "Insurer"), a New York Life Insurance Company.
For Schedule C, the following terms shall have the following meanings, unless a
different meaning is clearly required by the contexts:
The term "Good Cause" means an instance where the Fund has experienced unusual
levels or patterns of purchase or redemption activity and the Fund reasonably
believes such activity is an indication that trading activity in an account is
inconsistent with Fund policies, thereby requiring additional Shareholder
information to investigate compliance with Fund policies.
The term "Shares" means the interests of Shareholders corresponding to the
redeemable securities of record issued by the Fund under the Investment Company
Act of 1940 that are held by the Insurer on behalf of its separate accounts.
The term "Shareholder" means the holder of interests in a variable annuity or
variable life insurance contract issued by the Insurer ("Contract"), or a
participant in an employee benefit plan with a beneficial interest in a
Contract.
The term "Shareholder-Initiated Transfer Purchase" means a transaction that is
initiated or directed by a Shareholder that results in a transfer of assets
within a Contract to a Fund, but does not include the following: (i)
transactions that are executed automatically pursuant to a contractual or
systematic program or enrollment such as transfer of assets within a Contract to
a Fund as a result of "dollar cost averaging" programs, insurance company
approved asset allocation programs, or automatic rebalancing programs; (ii)
transactions that are executed pursuant to a Contract death benefit; (iii)
step-up in Contract value pursuant to a Contract death benefit; (iv) allocation
of assets to a Fund through a Contract as a result of payments such as loan
repayments, scheduled contributions, retirement plan salary reduction
contributions, employer matching contributions, or planned premium payments to
the Contract; or (v) prearranged transfers at the conclusion of a required free
look period.
The term "Shareholder-Initiated Transfer Redemption" means a transaction that is
initiated or directed by a Shareholder that results in a transfer of assets
within a Contract out of a Fund, but does not include transactions that are
executed: (i) automatically pursuant to a contractual or systematic program or
enrollments such as transfers of assets within a Contract out of a Fund as a
result of annuity payouts, loans, systematic withdrawal programs, dollar-cost
averaging programs, insurance company approved asset allocation programs or
automatic rebalancing programs; (ii) as a result of any deduction of charges or
fees under a Contract; (iii) within a Contract out of a Fund as a result of
scheduled withdrawals or surrenders from a Contract; (iv) as a result of payment
of a death benefit from a Contract; or (v) as a result of loans.
The Fund, BRIL and the Insurer hereby agree as follows:
SHAREHOLDER INFORMATION
1. AGREEMENT TO PROVIDE INFORMATION. The Insurer agrees to provide the Fund
or its designee, upon written request of BRIL or the Fund, the taxpayer
identification number ("TIN"), the Individual/International Taxpayer
Identification Number ("ITIN"), or other government issued identifier
("GII") and the Contract owner number or participant account number
associated with the Shareholder, if known, of any or all Shareholder(s) of
the
account, and the amount, date, name or other identifier of any investment
professional(s) associated with the Shareholder(s) or the account (if
known) and transaction type (purchase, redemption, transfer, or exchange)
of every purchase, redemption, transfer, or exchange of Shares held through
an account for Shareholder maintained by the Insurer during the period
covered by the request. Unless otherwise specifically requested by the Fund
for Good Cause, the Insurer shall only be required to provide information
relating to Shareholder-Initiated Transfer Purchases or
Shareholder-Initiated Transfer Redemptions.
2. PERIOD COVERED BY REQUEST. Requests must set forth a specific period, which
generally will not exceed 90 days from the date of the request, for which
transaction information is sought. BRIL and/or the Fund may request transaction
information older than 90 days from the date of the request as they deem
necessary to investigate compliance with policies established by the Fund for
the purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by the Fund.
3. TIMING OF REQUESTS. The Fund requests for Shareholder information shall be
made no more frequently than quarterly except as the Fund has Good Cause that a
more frequent request is necessary to enforce the Fund's restrictions on market
timing and similar abusive transactions.
4. FORM AND TIMING OF RESPONSE.
(a) The Insurer agrees to provide the requested information specified in Section
1 that is on its books and records, promptly, but in any event not later than
seven (7) business days after receipt of a request from the Fund, BRIL or their
designee. If requested by the Fund, BRIL or their designee, the Insurer agrees
to use its best efforts to determine promptly, but in any event not later than
seven (7) business days after receipt of a request, whether any specific person
about whom it has received the identification and transaction information
specified in Section 1 is itself a financial intermediary (as defined in Rule
22c-2) ("indirect intermediary") and, upon further request of the Fund, BRIL or
its designee, promptly, but in any event not later than seven (7) business days
after receipt of a request, either (i) provide (or arrange to have provided) the
information set forth in Section 1 for those Shareholders who hold an account
with an indirect intermediary or (ii) restrict or prohibit the indirect
intermediary from purchasing, in nominee name on behalf of other persons,
securities issued by the Fund. The Insurer additionally agrees to inform the
Fund whether it plans to perform (i) or (ii). (b) Responses required by this
paragraph must be communicated in writing and in a format mutually agreed upon
by the Fund, BRIL or their designee and the Insurer; and (c) To the extent
practicable, the format for any transaction information provided to the Fund,
BRIL or their designee should be consistent with the NSCC Standardized Data
Reporting Format.
5. LIMITATIONS ON USE OF INFORMATION. BRIL and the Fund agree not to use the
information received pursuant to this Agreement for any purpose other than as
necessary to comply with the provisions of Rule 22c-2 or to fulfill other
regulatory requests or legal requirements subject to the privacy provisions of
Title V of the Xxxxx-Xxxxx-Xxxxxx Act (Public Law 106-102) and comparable state
laws. BRIL and the Fund further agree to protect the information provided
pursuant to this Agreement, whether provided to BRIL or the Fund or their
designee, with at least the same degree of care that is used to protect its own
confidential and personally identifiable information, but in no event less than
is required for compliance with all applicable laws.
6. BREACH OF SECURITY. The Fund has established and maintains procedures for the
notification of affected persons in the event of a breach of security involving
confidential information. BRIL and the Fund agree to notify the Insurer promptly
following the discovery or notification of any material breach of security
involving information provided to the Fund or its designee by the Insurer
pursuant to this Schedule X. XXXX and the Fund agree to reimburse the Insurer,
its affiliated entities, and all other entities acting on behalf of any of them
against direct losses relating to such breach of security, including: (i) direct
costs for the notification of any Shareholders whose information was subject to
the breach of security; and (ii) any other direct costs that may be incurred,
including, but not limited to, any fine, penalties, judgment or other losses,
each to the extent relating to a breach of security involving information
provided to the Fund or its designee pursuant to this Schedule C.
7. AGREEMENT TO RESTRICT TRADING. The Insurer agrees to execute written
instructions from BRIL or the Fund to restrict or prohibit further purchases or
exchanges of Shares by a Shareholder that has been identified by BRIL or the
Fund as having engaged in transactions of the Fund's Shares (directly or
indirectly through Insurer's separate account) that violate policies established
by the Fund for the purpose of eliminating or reducing any dilution of the value
of the outstanding Shares issued by the Fund. Unless otherwise directed by the
Fund, any such restrictions or prohibitions shall only apply to
Shareholder-Initiated Transfer Purchases that are effected directly or
indirectly through the Insurer. In no event shall such restrictions or
prohibitions prohibit redemptions from the Fund. Instructions must be received
by the Insurer at the following address, or such other address that the Insurer
may communicate to BRIL or the Fund in writing from time to time, including, if
applicable, an e-mail and/or facsimile telephone number:
RiverSource Life Insurance Co. of New York
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
xxxxxxxx.x.xxxx@xxxx.xxx
FAX: 000-000-0000
8. FORM OF INSTRUCTIONS. Instructions to restrict or prohibit trading must
include the TIN, ITIN, or GII and the specific individual Contract owner number
or participant account number associated with the Shareholder, if known, and the
specific restriction(s) to be executed, including how long the restriction(s)
is(are) to remain in place. If the TIN, ITIN, GII or the specific individual
Contract owner number or participant account number associated with the
Shareholder is not known, the instructions must include an equivalent
identifying number of the Shareholder(s) or account(s) or other agreed upon
information to which the instruction relates. Upon request of the Insurer, the
Fund agrees to provide to the Insurer, along with any written instructions to
prohibit further purchases or exchanges of Shares by Shareholder, information
regarding those trades of the Contract owner that violated the Fund's policies
relating to eliminating or reducing any dilution of the value of the Fund's
outstanding Shares.
9. TIMING OF RESPONSE. The Insurer agrees to execute instructions to restrict or
prohibit trading as soon as reasonably practicable, but not later than five (5)
business days after receipt of the instructions by Insurer.
10. CONFIRMATION BY INSURER. The Insurer must provide written confirmation to
BRIL and the Fund that instructions to restrict or prohibit trading have been
executed. The Insurer agrees to provide confirmation as soon as reasonably
practicable, but not later than ten (10) business days after the instructions
have been executed.
11. FORCE MAJEURE. Notwithstanding any other provisions of this Schedule C to
the contrary, neither Insurer, the Fund nor BRIL shall be liable for any delay
(not to exceed fifteen (15) business days) in performance or non-performance, in
whole or in part, resulting from such party's failure or inability to perform
under this Schedule C because of acts of God, acts of governmental or military
authority, national emergencies, insurrection, war, riots, equipment failure or
damage beyond its reasonable control, or other causes beyond its reasonable
control. This section 11 shall not excuse any party from any liability which
results from failure to have in place reasonable disaster recovery and
safeguarding plans adequate for protection of all data which each party to this
Schedule C is responsible for maintaining.
12. MONITORING REQUIREMENT. Nothing in this Schedule C shall be construed as, or
infer that Insurer has, undertaken any duty or obligation, whether express or
implied, at law or in equity, to separately monitor for and detect trading
activities inconsistent with or in violation of the Fund's policies and/or
procedures on limiting the dilution of value of outstanding securities of the
Fund.
13. CONSTRUCTION OF THE SCHEDULE; FUND PARTICIPATION AGREEMENT. This Schedule C
supplements the Fund Participation Agreement. To the extent the terms of this
Schedule C conflict with the terms of the Fund Participation Agreement, the
terms of this Schedule C shall control.
14. TERMINATION. This Schedule C will terminate upon the termination of the Fund
Participation Agreement (except for obligations arising from trading activities
that occurred prior to such termination).
15. APPLICABLE LAW. This Schedule C shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of laws.
SCHEDULE D
SUMMARY FUND PROSPECTUS
All capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to such term in the Agreement.
1. For purposes of this Schedule D, the terms Summary Prospectus and
Statutory Prospectus shall have the same meaning as set forth in Rule 498.
2. The Fund shall provide the Company with copies of the Summary Prospectuses
and any supplements thereto in the same manner and at the same times as the
Agreement requires that the Fund provide the Company with Statutory
Prospectuses.
3. The Fund and Underwriter represent and warrant that the Summary
Prospectuses and the web site hosting of such Summary Prospectuses will
comply with the requirements of Rule 498 applicable to the Fund and its
Portfolios. The Fund and Underwriter further represent and warrant that it
has appropriate policies and procedures in place to ensure that such web
site continuously complies with Rule 498.
4. The Fund agrees that the URL indicated on each Summary Prospectus will
lead Contract owners directly to the web page used for hosting Summary
Prospectuses and that such web page will host the current Fund documents
required to be posted in compliance with Rule 498.
5. The Fund and Underwriter represent and warrant that each will be
responsible for compliance with the provisions of Rule 498(f)(i) involving
Contract owner requests for additional Fund documents made directly to the
Fund or the Underwriter, or one of their affiliates. The Fund and
Underwriter further represent and warrant that any information obtained
about Contract owners pursuant to this provision will be used solely for
the purposes of responding to requests for additional Fund documents.
6. The Company represents and warrants that it will respond to requests for
additional Fund documents made by Contract owners directly to the Company
or one of its affiliates.
7. The Company represents and warrants that any bundling of Summary
Prospectuses and Statutory Prospectuses will be done in compliance with
Rule 498.
8. At the Company's request, the Fund will provide the Company with URLs to
the current Fund documents for use with Company's electronic delivery of
Fund documents or on the Company's website. The Fund and Underwriter will
each be responsible for ensuring the integrity of the URLs and for
maintaining the Fund's current documents on the site to which such URLs
originally navigate.
9. If the Fund determines that it will end its use of the Summary Prospectus
delivery option, the Fund will provide the Company with at least 60 days'
advance notice of its intent so that the Company can arrange to deliver a
Statutory Prospectus in place of a Summary Prospectus. In order to comply
with Rule 498(e)(1), the Fund shall continue to maintain its website in
compliance with the requirements of this Agreement and Rule 498 for a
minimum of 90 days after the termination of any such notice period.
10. The parties agree that all other provisions of the Agreement, including
the Indemnification provisions, will apply to the terms of this Schedule D
as applicable.
11. The parties agree that the Company is not required to distribute Summary
Prospectuses to its Contract owners, but rather use of the Summary
Prospectus will be at the discretion of the Company; provided that if the
Company does not deliver the Summary Prospectus, it must deliver the
Statutory Prospectus instead. The Company agrees that it will give the Fund
sufficient notice of its intended use of the Summary Prospectuses or the
Statutory Prospectus.
SCHEDULE E
EXPENSES
The Fund or its designee and the Company will coordinate the functions and
pay the costs of completing these functions based upon an allocation of costs in
the tables below. The term "Current" in this Schedule is defined as an existing
Contract owner with value allocated to one or more Portfolios. The term
"Prospective" in this Schedule is defined as a potential new Contract owner.
The term "Fund" in the column titled "Party Responsible for Expense" in this
Schedule means the Fund and/or its designee (not including the Company).
ITEM FUNCTION PARTY RESPONSIBLE FOR EXPENSE
-------------------- -------------------------------------- -------------------------------------------
STATUTORY PROSPECTUS Printing Current: the Fund (the Company will
choose to do the printing at Fund's expense
subject to Article 2 and acknowledges that
the Fund will provide Company with a PDF
and will not be required to print these
documents, and the Fund will pay a
proportionate amount of the Company's
reasonable printing costs if there is a
Combined Prospectus)*
Prospective: the Company
Distribution (including Current: the Fund, provided that the Fund
postage) shall pay a proportionate amount of the
Company's reasonable distribution costs if
there is a Combined Prospectus**
Prospective: the Company
STATUTORY PROSPECTUS Printing Current: the Fund (the Company will
SUPPLEMENT choose to do the printing at Fund's expense
subject to Article 2 and acknowledges that
the Fund will provide the Company with a
PDF and will not be required to print these
documents, and the Fund will pay a
proportionate amount of the Company's
reasonable printing costs if there is a
Combined Prospectus)*
Prospective: the Company
Distribution (including Current: the Fund, provided that the Fund
postage) shall pay a proportionate amount of the
Company's reasonable distribution costs if
there is a Combined Prospectus**
Prospective: Company
FUND SAI AND FUND SAI Printing The Company
SUPPLEMENTS
Distribution (including The Company
postage)
ITEM FUNCTION PARTY RESPONSIBLE FOR EXPENSE
----------------------- ----------------------------------------- --------------------------------------------
PROXY MATERIAL FOR FUND Printing, Distribution to The Fund
Current (including postage),
tabulation, solicitation
FUND ANNUAL & Printing Current: the Fund (The Company may
SEMI-ANNUAL REPORT choose to do the printing at Fund's expense
subject to Article 2, and the Fund will pay a
proportionate amount of the Company's
reasonable printing costs if there is a
Combined Report )*
Prospective: the Company
Distribution (including Current: the Fund, provided that the Fund
postage) shall pay a proportionate amount of the
Company's reasonable distribution costs if
there is a Combined Report**
Prospective: the Company
CONTRACT PROSPECTUS Printing and Distribution the Company
(including postage)
CONTRACT PROSPECTUS AND Printing and Distribution the Company
SAI SUPPLEMENTS (including postage)
CONTRACT SAI Printing and Distribution the Company
(including postage)
OTHER COMMUNICATION TO Printing and Distribution If Required by Law to be provided by the
PROSPECTIVE AND CURRENT (including postage) Fund or if required by the Fund - the Fund
If Required by the Company - the
Company
OPERATIONS OF THE FUND All operations and related The Fund
expenses, including the cost of
registration and qualification of
Shares, taxes on the issuance or
transfer of Shares, cost of
management of the business
affairs of the Fund, and
expenses paid or assumed by
the Fund pursuant to any Rule
12b-1 plan
OPERATIONS OF THE Federal registration of units of the Company
ACCOUNTS separate account (24f-2 fees)
* Printing:
Combined Prospectus/Prospectus Supplement ("Combined Prospectus"): The Fund
will pay the reasonable expenses of such printing to be proportionally borne by
the Fund by applying the following formula: [A/B] x C where "A" equals the
number of pages in the Combined Prospectus that is attributable to the Fund's
prospectus, "B" equals the total number of pages of the Combined Prospectus, and
"C" represents the total reasonable costs of printing the Combined Prospectus.
The Company will provide the Fund with supporting documentation which is
sufficient in the reasonable opinion of the Fund to enable the Fund or its
designee to verify the expenses for which the Company requests reimbursement
pursuant to the formula described above. For clarity, the Fund will only pay the
costs described above with respect to printing the materials described above for
existing Contract owners who own shares of the Fund and will not pay any costs
in connection with printing such materials for prospective Contract owners. The
Company agrees to use its best efforts to minimize any such expenses. If the
Company prints such documents, Company agrees that any printer it selects shall
be a reputable printer within the industry.
Combined Fund Annual and Semi-annual Report (the "Combined Report"): The
Fund will pay the reasonable expenses of such printing to be proportionally
borne by the Fund by applying the following formula: [A/B] x C where "A" equals
the number of pages in the Combined Report that is attributable to the Fund's
Report, "B" equals the total number of pages of the Combined Report and "C"
represents the total reasonable costs of printing the Combined Report. The
Company will provide the Fund with supporting documentation which is sufficient
in the reasonable opinion of the Fund to enable the Fund to verify the expenses
for which the Company requests reimbursement pursuant to the formula described
above. For clarity, the Fund will only pay the costs described above with
respect to providing the materials described above to existing Contract owners
who own shares of the Fund and will not pay any costs in connection with
providing such materials to prospective Contract owners. The Company agrees to
use its best efforts to minimize any such expenses. If the Company prints such
documents, Company agrees that any printer it selects shall be a reputable
printer within the industry.
** Distribution:
The Fund shall bear the reasonable expenses of distributing the Combined
Prospectus and the Combined Report to Contract owners. The Fund will pay the
reasonable expenses of postage and mailing expenses to be proportionally borne
by the Fund by applying the following formula: [A/B] x C where "A" equals the
aggregate number of prospectus/report in the Combined Prospectus/Combined Report
that is distributed on behalf of the Fund, "B" equals the total number of
prospectuses/reports in the Combined Prospectus/Report and "C" represents the
total reasonable costs of distributing the Combined Prospectus/Report. The
Company agrees to provide the Fund with such information as may reasonably be
requested by the Fund to insure that the Fund's postage and mailing expenses do
not include the cost of distributing the Combined Prospectus or Combined Report
other than to existing Contract owners and do not include the cost of
distributing materials to Contract owners who do not own shares of the Fund. The
Company will provide the Fund with supporting documentation which is sufficient
in the reasonable opinion of the Fund to enable the Fund to verify the expenses
for which the Company requests reimbursement pursuant to the formula described
above. For clarity, the Fund will only pay the costs described above with
respect to providing the materials described above to existing Contract owners
who own shares of the Fund and will not pay any costs in connection with
providing such materials to prospective Contract owners. The Company agrees to
use its best efforts to minimize any such expenses.
