FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the day of March, 2002, among New York
Life Insurance and Annuity Corporation, ("Insurance Company"), a life
insurance company organized under the laws of the State of Delaware, Lord
Xxxxxx Series Fund, Inc. ("Fund"), a Maryland corporation, on its behalf and
on behalf of each separate investment series thereof, whether existing as of
the date above or established subsequent thereto, Lord, Xxxxxx & Co., (the
"Adviser"), a New York general partnership and Lord Xxxxxx Distributor LLC
("Distributor"), a New York limited liability corporation (each a "party," and
collectively, the "parties").
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may
be, of a Fund, which has the responsibility for management and control
of the Fund.
1.3 "Business Day" shall mean any day on which the New York Stock Exchange
is open for regular trading and on which the Fund calculates its net
asset value per share pursuant to the Rules of the Commission.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract
issued by Insurance Company that uses any Participating Fund (as
defined below) as an underlying investment medium. Individuals who
participate under a group Contract are "Participants." The Contracts
are listed in Schedule A hereto, as the parties may amend from time to
time by mutual written consent of each party (hereinafter referred to
as "Schedule A").
1.6 "Contractholder" shall mean any person that is a party to a Contract
with a Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of
a Fund that are not deemed to be "interested persons" of the Fund, as
defined by the Act.
1.8 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an
agreement with one or more of the Funds.
1.9 "Participating Fund" shall mean the Fund, including, as applicable,
any separate investment series thereof, specified in Schedule A, the
Shares of which are available to serve as the underlying investment
medium for the Contracts.
1.10 "Shares" shall mean the shares of the Participating Fund (including
series or classes thereof) as set out on Schedule A.
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1.11 "Prospectus" shall mean the current prospectus and statement of
additional information of a Fund or, as the case may be, with respect
to a Contract, and any amendments or supplements thereto, all, as most
recently filed with the Commission.
1.12 "Separate Account" shall mean the separate account or accounts
established by Insurance Company in accordance with applicable state
law, delineated on Schedule A.
1.13 "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.15 "Plans" shall mean any qualified pension and retirement plans outside
the separate account context (including, without limitation, those
trusts, plans, accounts contracts or annuities described in Sections
401(a), 403(a), 403(b), 408(a), 408(b), 414(d), 457(b), 408(k),
501(c)(18) of the Code) and any other trust, plan, account that is
determined to be within the scope of Treasury Regulation Section
1.817.5(f)(3)(iii).
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b)
it has legally and validly established the Separate Account pursuant
to applicable insurance law and regulation for the purpose of offering
to the public certain individual and group variable annuity and life
insurance contracts; (c) it has registered the Separate Account as a
unit investment trust under the Act (unless exempt therefrom) to serve
as the segregated investment account for the Contracts; and (d) the
Separate Account is eligible to invest in Shares of each Participating
Fund without such investment disqualifying any Participating Fund as
an investment medium for insurance company separate accounts
supporting variable annuity contracts or variable life insurance
contracts.
2.2 Insurance Company represents and warrants that (a) the interests under
the Contracts will be registered under the Securities Act of 1933, as
amended ("1933 Act") to the extent required thereby; (b) the Contracts
will be issued and sold in compliance in all material respects with
all applicable federal and state laws; and (c) the sale of the
Contracts shall comply in all material respects with state insurance
law requirements. Insurance Company agrees to notify each
Participating Fund promptly of any investment restrictions imposed by
state insurance law and applicable to the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be
credited to or charged against such Separate Account without regard to
other income, gains or losses from assets allocated to any other
accounts of Insurance Company. Insurance Company represents and
warrants that the assets of the
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Separate Account are and will be kept separate from Insurance
Company's General Account and any other separate accounts Insurance
Company may have, and will not be charged with liabilities from any
business that Insurance Company may conduct or the liabilities of any
companies affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is lawfully organized and
validly existing under the laws of the state of its domicile, that it
is registered with the Commission under the Act as an open-end,
management investment company, that it shall comply with the Act, and
that it possesses and shall maintain all legal and regulatory
licenses, approvals, consents and/or exemptions required for the
Participating Fund to operate and offer its Shares as an underlying
investment medium for Participating Companies.
2.5 Each Participating Fund, together with the Adviser, represents and
warrants that each series of the Participating Fund is and at all
times since its inception has been qualified as a regulated investment
company under Subchapter M of the Code, that each series of the
Participating Fund will at all times invest money from the Contracts
in such a manner and take such other actions as necessary to qualify
as a regulated investment company under Subchapter M (or any successor
or similar provision), and that the Participating Fund and the Adviser
will make every effort to maintain such qualification and will notify
Insurance Company immediately upon having a reasonable basis for
believing that the Participating Fund (or series thereof) has ceased
to so qualify or that it might not so qualify in the future.
2.6 Each Participating Fund, together with the Adviser and Distributor,
represents and warrants that such Participating Fund Shares sold
pursuant to this Agreement shall be registered under the 1933 Act to
the extent required thereby, duly authorized for issuance and sold in
compliance with this Agreement and, in all material respects, all
applicable federal and state laws and that the Participating Fund is
and shall remain registered under the Act. Each Participating Fund
shall amend the registration statement for its Shares under the 1933
Act and the Act from time to time as required in order to effect the
continuous offering of its Shares.
2.7 Insurance Company represents and agrees that the Contracts are
currently, and at the time of issuance will be, treated as life
insurance policies, endowments or annuity contracts, under applicable
provisions of the Code, and that it will make every effort to maintain
such treatment and that it will notify each Participating Fund and
Adviser 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. Insurance Company agrees that any prospectus
offering a Contract that in all cases will be a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will
identify such Contract as a modified endowment contract (or policy).
2.8 Each Participating Fund, together with the Adviser, represents and
warrants that (a) such Participating 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 Code and the
regulations issued thereunder (or any successor provisions); and (b)
the Participating Fund has since its inception complied and will
continue to comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, and any Treasury interpretations thereof, relating
to
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the diversification requirements for variable annuity, endowment, or
life insurance contracts, and any amendments or other modifications or
successor provisions to such Section or Regulation. In the event of a
breach of this Section 2.8 by a Participating Fund, it will take all
steps necessary to: (a) notify Insurance Company of such breach, and
(b) adequately diversify the Participating Fund so as to achieve
compliance within the 30-day grace period afforded by Regulation
1.817-5.
2.9 Each Participating Fund together with the Adviser and Distributor,
shall use its best efforts to ensure that no other Participating
Insurance Company has or will purchase, and shall not knowingly sell,
Shares of any series of such Participating Fund for any purpose or
under any circumstances that would preclude Insurance Company from
"looking through" to the investments of each series of the
Participating Fund in which it invests, pursuant to the "look-through"
rules found in Treasury Regulation 1.817-5.
2.10 Each Participating Fund, together with the Adviser, represents and
warrants that all of its directors, trustees, officers, employees, and
other individuals/entities who deal with the money and/or securities
of the Participating Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit
of the Participating Fund in an amount not less than that required by
Rule 17g-1 under the Act. The aforesaid Bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable
bonding company. The Participating Fund and the Adviser each shall
make all reasonable efforts to see that this bond or another bond
containing these same provisions is always in effect, and each agrees
to notify the Insurance Company in the event such coverage no longer
applies.
2.11 Insurance Company represents and warrants that all of its employees
and agents who deal with the money and/or securities of each
Participating Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage in an amount not less
than that required to be maintained by entities subject to the
requirements of Rule 17g-1 of the Act . The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. The Insurance Company shall make all
reasonable efforts to see that this bond or another bond containing
these same provisions is always in effect, and agrees to notify the
Participating Fund and the Adviser in the event such coverage no
longer applies.
2.12 The Adviser and the Distributor each represents and warrants that (a)
it is lawfully organized and validly existing under the laws of its
state of organization; (b) in the case of the Adviser, it is
registered as an investment adviser under the Investment Advisers Act
of 1940 and, in the case of the Distributor, it is registered as a
broker-dealer under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc.; and (c) it is
and will remain duly registered and licensed in all material respects
under all applicable federal and state laws and shall perform its
obligations hereunder in compliance in all material respects with all
applicable federal and state laws.
2.13 Each party to this Agreement represents and warrants that (a) it has
full power and authority to enter into and perform its obligations
under this Agreement; (b) it has duly taken all necessary steps to
authorize the person signing this Agreement on its behalf to do so and
to
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authorize the performance of its obligations under this Agreement; and
(c) assuming the accuracy of and compliance with this representation
and warranty by all other parties, this Agreement will be valid,
binding on, and enforceable against such party in accordance with its
terms, subject only to such limitations as apply generally to the
rights of creditors, such as, but not limited to, bankruptcy laws,
laws governing the insolvency of insurance companies and other
entities, and principles of equity.
ARTICLE III
FUND SHARES
3.1 The Company intends to purchase Shares of the Participating Fund on
behalf of the Separate Account to fund the Contracts in accordance
with the provisions of this Agreement.
3.2 Each Participating Fund agrees to make its Shares available for
purchase indefinitely at the then applicable net asset value per Share
by Insurance Company on behalf of the Separate Account on each
Business Day pursuant to rules of the Commission. Notwithstanding the
foregoing, the Board of Trustees of the Participating Fund may suspend
or terminate the offering of Shares to any person, or suspend or
terminate the offering of its Shares, if such action is required by
law or by regulatory authorities having jurisdiction or is, in the
sole discretion of its Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws to
Participating Fund shareholders including Insurance Company and the
Separate Account, necessary and in the best interests of the
Participating Fund's shareholders.
3.3 Each Participating Fund agrees that Shares of the Participating Fund
will be sold only to Participating Companies and their separate
accounts and to persons or Plans (collectively, "Qualified Persons")
that represent and warrant to the Participating Fund that they qualify
to purchase Shares of the Participating Fund under Section 817(h) of
the Code, and the regulations thereunder without impairing the ability
of the Separate Account to consider the portfolio investments of the
Participating Fund as constituting investments of the Separate Account
for the purpose of satisfying the diversification requirements of
Section 817(h). Except as otherwise set forth in this Section 3.3, no
Shares of any Participating Fund will be sold to the general public.
The Participating Fund shall not sell Participating Fund Shares to any
insurance company or separate account unless an agreement
substantially complying with Articles V, VI, VII and Sections 2.1,
2.3, 2.7, 3.6 and 9.1 of this Agreement is in effect to govern such
sales, to the extent required. Insurance Company hereby represents and
warrants that it and the Separate Account are Qualified Persons.
3.4 Each Participating Fund shall redeem for cash, at the Insurance
Company's request, any full or fractional Shares held by the Insurance
Company on behalf of the Separate Account, such redemptions to be
effected on each Business Day at net asset value in accordance with
Section 3.8 of this Agreement.
3.5 Each Participating Fund shall make the net asset value per Share
available to the Insurance Company on each Business Day as soon as
reasonably practicable after the net asset value per Share is
calculated in a manner required or permitted by applicable law, but
shall use its
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best efforts to provide closing net asset value, dividend and capital
gain information on a per-share basis to Insurance Company by 6:30
p.m. Eastern time on each Business Day. In the event the Participating
Fund is unable to meet the 6:30 p.m. time stated herein, the
Participating Fund shall, on the next Business Day, provide additional
time under Sections 3.7 and 3.8 below for the Insurance Company to
place orders for the purchase and redemption of Shares equal to the
time it takes the Fund to make the net asset values available to the
Insurance Company, provided the Participating Fund receives estimates
of trade orders ("trade estimates") from Insurance Company within the
time frames identified in 3.7 and 3.8 below (i.e., 9:30 a.m. Eastern
time). When computing trade estimates of purchases or redemptions for
any given Business Day, Insurance Company shall use the prior Business
Day's net asset values for the relevant Participating Funds' Shares.
If the Insurance Company places its purchase or redemption order
within the time afforded by any such extension, the Insurance Company,
on behalf of the Separate Account, shall be entitled to the net asset
value per Share computed as of the close of the prior Business Day
(the "effective trade date," as that term is used in Section 3.8
below) regardless of whether the Participating Fund is able to process
those orders within its regular daily processing cycle for such prior
Business Day. Any material errors in the calculation of net asset
value, dividend and capital gain information shall be reported to
Insurance Company immediately upon discovery.
3.6 (a) Should a material miscalculation or materially incorrect reporting
of a net asset value by a Participating Fund or its agents result in a
net loss to a Participating Fund, Insurance Company or its Separate
Accounts (including on behalf of accounts of Contractholders or
Participants), the Adviser shall make such person whole.
Should a material miscalcuation or materially incorrect reporting of a
net asset value by a Participating Fund or its agents result in a net
gain (including any underpayment by either Insurance Company or its
Separate Account, or overpayment by the Participating Fund), to the
Insurance Company, its Separate Account and/or the accounts of
Contractholders or Participants, as the case may be, upon written
request by the Participating Fund or its agents, Insurance Company
shall make appropriate adjustment of full or fractional shares of the
applicable Separate Accounts and/or accounts of Contractholders or
Participants, as the case may be, and provide such reasonable
assistance as requested by the Participating Fund or its agents to
recover the net gain for the appropriate series of the Participating
Fund.
In the event of any miscalculation or incorrect / erroneous reporting
of net purchase or redemption orders submitted to the Participating
Fund by or on behalf of Insurance Company or its Separate Account
(other than a miscalculation or incorrect / erroneous reporting due to
a material miscalculation or materially incorrect reporting of a net
asset value by or on behalf of a Participating Fund), Insurance
Company shall make the Participating Fund whole for losses resulting
from or otherwise incurred in connection with the correction of such
miscalculation or incorrect / erroneous reporting, which correction
shall be performed only after: (1) the Insurance Company makes a
written request to adjust the number of shares owned by the Insurance
Company or Separate Account to reflect the correct net purchase or
redemption order; and (2) the parties agree to the adjustment.
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(b) The parties agree to negotiate in good faith the appropriate
standard of materiality to be applied to any error in net asset value
under Section 3.6. In the event the parties cannot, in good faith,
agree upon the appropriate standard of materiality, the Participating
Fund's policy on materiality of pricing, as then in effect, shall
apply. Participating Fund shall furnish the Insurance Company with a
copy of its policies on materiality of pricing and shall promptly
notify Insurance Company in writing of any changes thereto.
(c) Except as otherwise provided herein, the parties agree that each
will compensate the other for the reasonable costs of any reprocessing
necessary to adjust its respective accounting and/or record keeping
systems as a result of the other party's material error in reporting a
net asset value or miscalculation or incorrect reporting of net
purchase or net redemption orders. The parties agree that any
reimbursements for costs under this Section 3.6(c) shall be limited to
necessary and reasonable expenses and the maximum amount any party
shall be required to pay under this Section 3.6(c) shall be $5,000 per
reprocessing occurrence.
3.7 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.5 to calculate the unit
values of the Separate Account for the day. Using this unit value,
Insurance Company will process the day's Separate Account transactions
received by it by the close of regular trading on the floor of the New
York Stock Exchange (currently 4:00 p.m. Eastern time) to determine
the net dollar amount of each Participating Fund's Shares that will be
purchased or redeemed at that day's closing net asset value per share.
The net purchase or redemption orders will be transmitted to each
Participating Fund by Insurance Company by 9:30 a.m. Eastern time on
the Business Day next following Insurance Company's receipt of that
information. Subject to Sections 3.8 and 3.9, all purchase and
redemption orders for Insurance Company's General Accounts shall be
effected at the net asset value per Share of each Participating Fund
next calculated after receipt of the order by the Participating Fund
or its Transfer Agent.
3.8 Each Participating Fund appoints Insurance Company as its agent for
the limited purpose of accepting orders for the purchase and
redemption of Participating Fund Shares on behalf of the Separate
Account (but not with respect to any Shares that may be held in the
Insurance Company's General Account). Each Participating Fund will
execute orders at the applicable net asset value per Share determined
as of the close of trading on the day of receipt of such orders by
Insurance Company acting as agent ("effective trade date"), provided
that the Participating Fund receives notice of such orders by 9:30
a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund Shares, the
conditions specified in Section 3.9, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.9, as applicable, will be effected at
the net asset value per Share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied in accordance with the requirements of this
Section and Section 3.9. Insurance Company represents and warrants
that all orders submitted by the Insurance Company for execution on
the effective trade date shall be solely for the purpose of, and in an
amount reasonably necessary to adjust its ownership of, a
Participating Fund's Shares to properly support the portion of its
Contract liabilities and obligations that are attributable to that
Participating Fund and that such adjustments will be made solely to
reflect one or more
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of the following: (a) bona fide specific or standing orders or
instructions received from Contractholders or Participants prior to
the close of regular trading on the New York Stock Exchange on the
effective trade date (the "effective time"), (b) the deduction of
charges as of said effective time under the terms of the Contracts
from amounts allocated to that Participating Fund, and (c) payment of
annuity benefits or death benefits based on that Participating Fund's
net asset value as of said effective time.
3.9 In the event of net purchases of a Participating Fund's Shares,
Insurance Company will pay for such purchases by wiring Federal Funds
to the Participating Fund or its designated custodial account on the
day the order is transmitted. Insurance Company shall make all
reasonable efforts to transmit to the applicable Participating Fund
payment in Federal Funds by 12:00 p.m. Eastern time on the Business
Day the Participating Fund receives the notice of the order pursuant
to Sections 3.7 and 3.8. Each applicable Participating Fund will
execute such orders at the applicable net asset value per Share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Sections 3.7 and 3.8.
3.10 In the event of net redemptions, the Participating Fund shall use its
best efforts to pay the Insurance Company for Shares of each series of
the Participating Fund redeemed by 12:00 p.m. Eastern time on the next
Business Day after it receives the redemption request from the
Insurance Company pursuant to Sections 3.7 and 3.8 above, or such
longer period as permitted by the Act or the rules or regulations
thereunder, it being understood that the time for computing such
period shall commence with the Insurance Company's receipt of the
redemption order on behalf of the Participating Fund. Fund shall
notify Insurance Company or its agent of any delay by 12:00 p.m.
Eastern time on the next Business Day after it receives the redemption
request from the Insurance Company pursuant to Sections 3.7 and 3.8
above. Payment of redemption proceeds shall be made in federal funds
transmitted by wire to an account designated by the Insurance Company.
3.11 Each Participating Fund has the obligation to ensure that its Shares
are registered with applicable federal agencies at all times.
3.12 Each Participating Fund will confirm each purchase or redemption order
made by Insurance Company. Issuance and transfer of Participating Fund
Shares will be by book entry only. No Share certificates will be
issued to Insurance Company. Insurance Company will record Shares
ordered from a Participating Fund in an appropriate ledger for the
corresponding account.
3.13 Each Participating Fund shall credit Insurance Company with the
appropriate number of Shares.
3.14 On each ex-dividend date of a Participating Fund or, if not a Business
Day, on the first Business Day thereafter, each Participating Fund
shall communicate by wire or telephone followed by written
confirmation to Insurance Company the amount of dividend and capital
gain, if any, per share. The Insurance Company hereby elects to
receive all such dividends and distributions as are payable on any
Shares in the form of additional Shares. The
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Insurance Company reserves the right, on its behalf and on behalf of
the Separate Account, to revoke this election at any time and to
receive all dividends and capital gains distributions in cash. Each
Participating Fund shall, on the day after the ex-dividend date or, if
not a Business Day, on the first Business Day thereafter, notify
Insurance Company of the number of Shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as
of the end of each month for all of Insurance Company's accounts by
the fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund or its designee, shall timely distribute to
Insurance Company printed copies of the Participating Fund's then
current Prospectuses, proxy materials, notices, periodic reports and
other printed materials (which the Participating Fund customarily
provides to its shareholders) in quantities as Insurance Company may
from time to time request for distribution to each Contractholder and
Participant. Insurance Company may elect to print the Participating
Fund's prospectus and/or its statement of additional information in
combination with other fund companies' prospectuses and statements of
additional information, which are also offered in Insurance Company's
insurance product. In such case, the Fund shall pay, pursuant to
Schedule B hereto (as the parties may amend in writing from time to
time, hereinafter "Schedule B"), its pro-rata share of the printing
costs (excluding any non-printing costs such as composition and
document layout costs) of the combined prospectus and statement of
additional information. If requested by Insurance Company, the
Participating Fund shall provide such documents (including a
"camera-ready" copy of such documents as set in type, a diskette in
the form sent to the financial printer, and an electronic copy of the
documents in a format suitable for posting on the Insurance Company's
website, all as Insurance Company may reasonably request) and such
other assistance as is reasonably necessary in order for Insurance
Company to once each year (or more frequently if such documents are
amended) have Prospectuses, Statements of Additional Information,
supplements, proxy statements, and annual / semi-annual reports for
the Contracts and the current Fund Prospectus for the Participating
Funds printed together in a single document or posted on Insurance
Company's website. Fund, Adviser, and Distributor agree that the
prospectus for the Participating Fund(s) provided to the Insurance
Company will describe only the Participating Fund(s) and will not name
or describe any other Funds or Fund series unless required by law.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports,
proxy statements, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the
Participating Fund or its Shares, promptly after the filing of such
document with the Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at least one
copy of all registration statements, Prospectuses, reports, proxy
statements, applications for exemptions,
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requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Separate Account, promptly
after the filing of such document with the Commission.
4.5 Insurance Company will provide Participating Funds on a semi-annual
basis, or more frequently as reasonably requested by the Participating
Funds, with a current tabulation of the number of existing
Contractholders of Insurance Company whose Contract values are
invested in the Participating Funds. This tabulation will be sent to
Participating Funds in the form of a letter signed by a duly
authorized officer of the Insurance Company attesting to the accuracy
of the information contained in the letter.
ARTICLE V
EXPENSES
5.1 Except as otherwise expressly provided in this Agreement, each party
agrees to bear all expenses incident to performance by the party under
this Agreement.
5.2 Expenses associated with the preparation, filing and distribution of
registration statements, prospectuses, supplements, annual and
semi-annual reports, proxy statements and voting instructions and
specified sales material and other material listed in Schedule B shall
be paid for in accordance with the cost allocations set forth in
Schedule B.
5.3 Notwithstanding anything herein to the contrary, Participating Fund,
Adviser or their designee shall reimburse the Insurance Company for
the reasonable costs associated with substituting the securities of a
registered investment company for the Shares of the Participating Fund
where due to the acts of the Participating Fund, its distributor or
Adviser: (i) the Participating Fund either offers its Shares at public
sale, ceases to qualify as a regulated investment company under
Subchapter M of the Code (or any successor or similar provision), or
fails to comply with the diversification requirements of Section
817(h) of the Code (or any successor or similar provision), and as a
result the Participating Fund no longer qualifies to serve as a
funding vehicle for the Contracts, or (ii) there is a material change
in a fundamental investment objective of the Participating Fund
requiring shareholder approval which results in the reclassification
of the investment style of the Participating Fund by a nationally
recognized mutual fund ranking organization, and the Insurance Company
furnishes the Participating Fund or Adviser with written notice of its
objection to such change prior to shareholder approval of such change.
The costs of such substitution shall include, without limitation,
reasonable legal fees for obtaining any required Commission order
approving such substitution, and expenses for printing and
distributing any prospectus supplement or other disclosure of the
substitution or elimination of the Participating Fund as an investment
vehicle under the Contracts. The parties agree that any reimbursements
for costs under this Section 5.3 shall be limited to necessary and
reasonable expenses and the maximum combined amount the Participating
Fund, Adviser or their designee shall be required to pay under this
Section 5.3 shall be $10,000 per substitution.
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ARTICLE VI
EXEMPTIVE RELIEF
6.1 The parties acknowledge that Fund filed an application with the
Commission requesting an order granting relief from various provisions
of the Act and the rules thereunder to the extent necessary to permit
Fund Shares to be sold to and held by variable annuity and variable
life insurance separate accounts of Participating Companies and to
Plans. It is anticipated that such exemptive order (the "Mixed and
Shared Funding Exemptive Order"), when and if issued, shall require
Fund and each Participating Company and Plan to comply with conditions
and undertakings substantially as provided in this Article. If the
Mixed and Shared Funding Exemptive Order imposes conditions materially
different from those provided for in this Article, the conditions and
undertakings imposed by the Mixed and Shared Funding Exemptive Order
shall govern this Agreement and the parties hereto agree to amend this
Agreement consistent with the Mixed and Shared Funding Exemptive
Order.
6.2 The Fund's Board will monitor the Fund for the existence of any
material irreconcilable conflict between and among the interests of
the Contractholders of all Participating Companies and of Plan
participants and Plans investing in the Fund, and determine what
action, if any, should be taken in response to such conflicts. An
irreconcilable material conflict may arise for a variety of reasons,
which may include: (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 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
Fund are being managed; (e) a difference in voting instructions given
by variable annuity and variable life insurance contract owners; (f) a
decision by a Participating Company to disregard the voting
instructions of Contractholders and (g) if applicable, a decision by a
Plan to disregard the voting instructions of Plan participants.
6.3 The Insurance Company will report any potential or existing conflicts
to the Board. The Insurance Company will be responsible for assisting
the Board in carrying out its duties and responsibilities under the
Mixed and Shared Funding Exemptive Order by providing the Board with
all information reasonably necessary for the Board to consider any
issues raised. The responsibility includes, but is not limited to, an
obligation by the Insurance Company to inform the Board whenever it
has determined to disregard Contractholder voting instructions.
6.4 If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists
with regard to contract owner investments in the Fund, the Board shall
give prompt notice of the conflict and the implications thereof to all
Participating Companies and Plans. If the Board or its disinterested
members determine that Insurance Company is a relevant Participating
Company or Plan with respect to said conflict, Insurance Company shall
at its sole cost and expense, and to the extent reasonably practicable
(as determined by a majority of the disinterested Board members), take
such action as is necessary to remedy or eliminate the irreconcilable
material conflict. Such necessary action may include but shall not be
limited to: (a) withdrawing the assets allocable
11
to some or all of the Separate Accounts from Fund or any portfolio
thereof and reinvesting those assets in a different investment medium,
which may include another portfolio of Fund, or another investment
company; (b) submitting the question as to whether such segregation
should be implemented to a vote of all affected Contractholders and as
appropriate, segregating the assets of any appropriate group (i.e
variable annuity or variable life insurance contract owners of one or
more Participating Companies) that votes in favor of such segregation,
or offering to the affected Contractholders the option of making such
a change; and (c) establishing a new registered management investment
company (or series thereof) or managed separate account. If a material
irreconcilable conflict arises because of the Insurance Company's
decision to disregard Contractholder voting instructions, and that
decision represents a minority position or would preclude a majority
vote, the Insurance Company may be required, at the election of Fund
to withdraw the affected Separate Account's investment in Fund, and
terminate this Agreement, provided however, that such withdrawal or
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Board members. Any such withdrawal and termination must
take place within six months after the Fund gives written notice that
this provision is being implemented, and until the end of that six
month period Fund, the Distributor and the Adviser shall continue to
accept and implement orders by the Insurance Company for the purchase
and redemption of shares of the Fund. No charge or penalty will be
imposed as a result of such withdrawal. The responsibility to take
such remedial action shall be carried out with a view only to the
interests of the Contractholders.
For the purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict but in
no event will Fund or its investment adviser (or any other investment
adviser of Fund) be required to establish a new funding medium for any
Contract. Further, the Insurance Company shall not be required by this
Article to establish a new funding medium for any Contracts if any
offer to do so has been declined by a vote of a majority of
Contractholders materially and adversely affected by the
irreconcilable material conflict.
6.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly
and in writing to the Insurance Company.
6.6 No less than annually, the Insurance Company shall submit to the Board
such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out its obligations. Such reports,
materials, and data shall be submitted more frequently if deemed
appropriate by the Board.
6.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules thereunder with respect to mixed and shared
funding on terms and conditions materially different from any
exemptions granted in the Mixed and Shared Funding Exemptive Order,
then Fund, and/or the Participating Companies, as appropriate, shall
take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
Rules are applicable.
12
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall, in accordance with Section 4.2 of this
Agreement, provide Insurance Company with copies, at no cost to
Insurance Company, of the Participating Fund's proxy material, reports
to shareholders and other communications to shareholders in such
quantity as Insurance Company shall reasonably require for
distribution to Contractholders or Participants.
If and to the extent required by law or any applicable order
referenced to in Section 6.1 above, Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with
applicable law;
(b) vote the Participating Fund Shares attributable to
Contractholders or Participants in accordance with
instructions received from them, or if no instructions
have been received, in the same proportion as
Participating Fund Shares in the same Separate Account
for which instructions have been received; and
(c) vote Participating Fund Shares in the Insurance Company
General Account in the same proportion as voting
instructions are received for such Shares in all of
Insurance Company's Separate Accounts.
Insurance Company agrees to be responsible for assuring that voting
the Participating Fund Shares for the Separate Account is conducted in
a manner consistent with other Participating Companies.
7.2 The Fund will comply with all provisions of the Act requiring voting
by shareholders, and in particular, the Fund will either provide for
annual meetings or comply with Section 16(c) of the Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act)
as well as with Section 16(a) and if and when applicable Section
16(b). Further, the Fund will act in accordance with the Commission's
interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the Commission
may promulgate with respect thereto.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its designee shall periodically furnish
Insurance Company with the following documents, in quantities as
Insurance Company may reasonably request:
(a) Current Prospectus and any supplements thereto; and
13
(b) Other marketing materials.
Expenses for the production of such documents shall be borne by
Insurance Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall comply with all applicable federal and state laws in connection
with the marketing of the Contracts.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to
each applicable Participating Fund or its designee, each piece of
sales literature or other promotional material in which the
Participating Fund or its investment adviser, distributor or any
affiliate thereof, the identity of which has been communicated in
writing to Insurance Company, is named, at least fifteen Business Days
prior to its use. No such material shall be used unless the
Participating Fund or its designee approves such material. Such
approval (if given) must be in writing and shall be presumed not given
if not received within ten Business Days after receipt of such
material. Each applicable Participating Fund or its designee, as the
case may be, shall use all reasonable efforts to respond within ten
days of receipt. The Participating Fund or its designee reserves the
right to reasonably object to the continued use of any such sales
literature or other promotional material in which the Participating
Fund or the Adviser is named and no such material shall be used if the
Participating Fund or its designee so objects. As used in this
Agreement, the term "affiliate" shall have the same meaning as
"affiliated person" as defined in Section 2(a)(3) of the 0000 Xxx.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in
the registration statement or Prospectus of, or in reports or proxy
statements for, the applicable Participating Fund, or in sales
literature or other promotional material approved under Section 8.3 of
this Agreement. Insurance Company shall not give such information or
make such representations or statements in a context that causes the
information, representations or statements to be false or misleading.
8.5 Each Participating Fund, the Adviser, the Distributor or their
respective designees shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales
literature or other promotional material in which Insurance Company,
the Separate Account or any Contract is named, at least fifteen
Business Days prior to its use. No such material shall be used unless
Insurance Company approves such material. Such approval (if given)
must be in writing and shall be presumed not given if not received
within ten Business Days after receipt of such material. Insurance
Company shall use all reasonable efforts to respond within ten days of
receipt. The Insurance Company reserves the right to reasonably object
to the continued use of any such sales literature or other promotional
material in which the Insurance Company is named and no such material
shall be used if the Insurance Company or its designee so objects.
14
8.6 Each Participating Fund, the Adviser, and the Distributor shall not,
in connection with the sale of Participating Fund Shares, give any
information or make any representations on behalf of Insurance Company
or concerning Insurance Company, the Separate Account, or the
Contracts other than the information or representations contained in a
registration statement or prospectus for the Contracts, or in
published reports for the Separate Account that are in the public
domain or approved by Insurance Company for distribution to
Contractholders or Participants, or in sales literature or other
promotional material approved under Section 8.5 of this Agreement.
Each Participating Fund, the Adviser, and the Distributor shall not
give such information or make such representations or statements in a
context that causes the information, representations or statements to
be false or misleading. The Fund and the Adviser and Distributor shall
comply with all applicable federal and state laws in connection with
any efforts they make, directly or indirectly, to promote sales of the
Fund's Shares.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" includes, without limitation, 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 (such as any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, or reprints or excerpts of any
other advertisement, sales literature, or published article),
educational or training materials or other communications distributed
or made generally available to some or all agents or employees,
prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities
Dealers, Inc. rules, the Act or the 1933 Act.
8.8 The Participating Fund will provide the Insurance Company with as much
notice as is reasonably practicable of any proxy solicitation, and of
any material change in the Fund's registration statement, particularly
any change that could result in a change to the registration statement
or Prospectus for any Separate Account or Contract. The Participating
Fund will work with the Company so as to enable the Insurance Company
to solicit proxies from Contractholders and Participants, or to make
changes to its Prospectus or registration statement, in an orderly
manner. The Participating Fund will make reasonable efforts to
attempt to have changes affecting Contract Prospectuses become
effective simultaneously with the annual updates for such
prospectuses.
ARTICLE IX
INDEMNIFICATION
9.1 Notwithstanding anything in this Agreement to the contrary, Insurance
Company agrees to indemnify and hold harmless each Participating Fund,
the Adviser, the Distributor and each of their respective directors,
trustees, officers, employees, agents and each person, if any, who
controls the Adviser or Distributor within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of Section 9.1 of this Agreement),
15
against any and all losses, claims, damages or liabilities,
investigations or litigation (including reasonable legal and other
expenses reasonably incurred in connection with, and any amounts paid
in settlement of, any action, suit, proceeding or asserted claim) to
which the Indemnified Parties may become subject, under the 1933 Act
or otherwise (collectively, a "Loss"), insofar as such Loss is related
to the sale, distribution or acquisition of the Contracts, the
purchase, distribution or redemption of Participating Fund Shares in
connection with the Contracts, or the actions or operations of the
Insurance Company or the Separate Account in connection with the
performance of this Agreement, and:
(i) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, Prospectus, sales
literature or other promotional material with respect to
the Contracts or the Separate Account;
(ii) arises out of or is based upon any omission or alleged
omission to state in the registration statement,
Prospectus, sales literature or other promotional
material with respect to the Contracts or the Separate
Account a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(iii) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in information furnished in writing by Insurance Company
for use in the registration statement, Prospectus or
sales literature or other promotional material of the
Participating Fund or arises out of or is based upon the
omission or the alleged omission to state in such
information a material fact required to be stated
therein or necessary to make the statements therein, in
the context in which they are published in such
documents, not misleading;
(iv) arises out of or as a result of wrongful conduct,
statements or representations (other than statements or
representations referred to in clauses (i), (ii) or
(iii) of this Section 9.1) of Insurance Company or its
agents, with respect to the sale and distribution of
Contracts for which the respective Participating Fund's
Shares are an underlying investment;
(v) arises out of or results from any material breach by
Insurance Company of a representation or warranty made
by the Insurance Company in this Agreement; or
(vi) arises out of or results from any other material breach
of this Agreement, by Insurance Company.
Insurance Company will reimburse any legal or other expenses
reasonably incurred by any Indemnified Party in connection with
investigating or defending any such Loss; provided, however, that
notwithstanding anything else in this Section 9.1, Insurance Company
will not be liable under this Section 9.1 to the extent that any Loss
arises out of or is based upon any untrue statement or omission or
alleged untrue statement or omission made in conformity
16
with written information furnished to Insurance Company by the
Participating Fund, the Adviser, or the Distributor for use in one or
more of the documents referred to in clause (i) of this Section 9.1 or
approved under Section 8.3 of this Agreement.
9.2 Notwithstanding anything in this Agreement to the contrary, each
Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls the Insurance Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 9.2 of this Agreement)
against any losses, claims, damages, liabilities, investigations or
litigation (including reasonable legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit, proceeding or asserted claim) to which the
Indemnified Parties become subject, under the 1933 Act or otherwise
(collectively a "Loss"), insofar as such Loss is related to the sale,
distribution or acquisition of the Contracts, the purchase,
distribution or redemption of Participating Fund Shares in connection
with the Contracts, or the actions or operations of the Participating
Fund in connection with the performance of this Agreement, and:
(i) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, Prospectus, sales
literature or other promotional material of the
Participating Fund;
(ii) arises out of or is based upon the omission or alleged
omission to state in the registration statement,
Prospectus, sales literature or other promotional
material of the Participating Fund any material fact
required to be stated therein or necessary to make the
statements therein not misleading;
(iii) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in information furnished in writing by the Participating
Fund for use in the registration statement, Prospectus,
sales literature or other promotional material with
respect to the Separate Account or the Contracts or
arises out of or is based upon the omission or the
alleged omission to state in such information a material
fact required to be stated therein or necessary to make
the statements therein, in the context in which they are
published in such documents, not misleading;
(iv) arises out of or results from any material breach by the
Participating Fund of a representation or warranty made
by the Participating Fund in this Agreement;
(v) arises out of or results from the absence of, or the
Fund's failure to obtain, the Mixed and Shared Funding
Exemptive Order; or
(vi) arises out of or results from any other material breach
of this Agreement by the Participating Fund.
17
The Participating Fund will reimburse any legal or other expenses
reasonably incurred by any Indemnified Party in connection with
investigating or defending any such Loss; provided, however, that,
notwithstanding anything else in this Section 9.2, the Participating
Fund will not be liable under this Section 9.2 to the extent that any
such Loss arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission made in conformity
with written information furnished to the Participating Fund or its
affiliates by Insurance Company for use in one or more of the
documents referred to in clause (i) of this Section 9.2.
9.3 Notwithstanding anything in this Agreement to the contrary, the
Adviser agrees to indemnify and hold harmless the Insurance Company
and each of its directors, officers, employees, agents, and each
person, if any, who controls the Insurance Company within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 9.3) against any losses, claims, damages,
liabilities, investigations, or litigation (including reasonable legal
and other expenses reasonably incurred in connection with, and any
amounts paid in settlement of, any action, suit, proceeding or
asserted claim) to which the Indemnified Parties become subject, under
the 1933 Act or otherwise (collectively a "Loss"), insofar as such
Loss is related to the sale, distribution or acquisition of the
Contracts, the purchase, distribution or redemption of Participating
Fund Shares in connection with the Contracts, or the actions or
operations of a Participating Fund in connection with the performance
of this Agreement, and:
(i) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, Prospectus, sales
literature or other promotional materials of a
Participating Fund;
(ii) arises out of or is based upon the omission or alleged
omission to state in the registration statement,
Prospectus, sales literature or other promotional
materials of the Participating Fund any material fact
required to be stated therein or necessary to make the
statements therein not misleading;
(iii) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in information furnished in writing by the Adviser
(whether on behalf of the Participating Fund or
otherwise) for use in the registration statement,
Prospectus, sales literature or other promotional
materials with respect to the Separate Account or the
Contracts or arises out of or is based upon the omission
or the alleged omission to state in such information a
material fact required to be stated therein or necessary
to make the statements made therein, in the context in
which they are published in such documents, not
misleading;
(iv) arises out of or results from any material breach by the
Adviser of a representation or warranty made by the
Adviser in this Agreement; or
(v) arises out of or results from any other material breach
of this Agreement by the Adviser.
18
The Adviser will reimburse any legal or other expenses reasonably
incurred by any Indemnified Party in connection with investigating or
defending any such Loss; provided, however, that, notwithstanding
anything else in this Section 9.3, the Adviser will not be liable
under this Section 9.3 to the extent that any such Loss arises out of
or is based upon any untrue statement or omission or alleged untrue
statement or omission made in conformity with written information
furnished to a Participating Fund, the Adviser, or the Distributor by
the Insurance Company for use in one or more of the documents referred
to in clause (i) of this Section 9.3.
9.4 Notwithstanding anything in this Agreement to the contrary, the
Distributor agrees to indemnify and hold harmless the Insurance
Company and each of its directors, officers, employees, agents, and
each person, if any, who controls the Insurance Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.4) against any losses, claims,
damages, liabilities, investigations, or litigation (including
reasonable legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit,
proceeding or asserted claim) to which the Indemnified Parties become
subject, under the 1933 Act or otherwise (collectively a "Loss"),
insofar as such Loss is related to the sale, distribution or
acquisition of the Contracts, the purchase, distribution or redemption
of Participating Fund Shares in connection with the Contracts, or the
actions or operations of a Participating Fund in connection with the
performance of this Agreement, and:
(i) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained
in information furnished in writing by the Distributor
(whether on behalf of the Participating Fund or
otherwise) for use in the registration statement,
Prospectus, sales literature or other promotional
materials with respect to the Separate Account or the
Contracts or arises out of or is based upon the omission
or the alleged omission to state in such information a
material fact required to be stated therein or necessary
to make the statements made therein, in the context in
which they are published in such documents, not
misleading;
(ii) arises out of or results from any material breach by the
Distributor of a representation or warranty made by the
Distributor in this Agreement; or
(iii) arises out of or results from any other material breach
of this Agreement by the Distributor.
The Distributor will reimburse any legal or other expenses reasonably
incurred by any Indemnified Party in connection with investigating or
defending any such Loss; provided, however, that, notwithstanding
anything else in this Section 9.4, the Distributor will not be liable
under this Section 9.4 to the extent that any such Loss arises out of
or is based upon any untrue statement or omission or alleged untrue
statement or omission made in conformity with written information
furnished to a Participating Fund, the Adviser, or the
19
Distributor by the Insurance Company for use in one or more of the
documents referred to in clause (i) of this Section 9.4.
9.5 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any investigation, litigation or
proceedings against the indemnified party or its officers or directors
in connection with this Agreement, the issuance or sale of the Fund
Shares, the Contracts or the operation of the Separate Account, or
operation of the Fund Shares, such indemnified party will notify the
indemnifying party of the commencement thereof. The omission to so
notify the indemnifying party will not relieve the indemnifying party
from any liability under this Article IX, except to the extent that
the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the
failure to give such notice. In case any such action is brought
against any indemnified party, and it notified the indemnifying party
of the commencement thereof, the indemnifying party will be entitled
to participate therein and assume the defense thereof, with counsel
satisfactory to such indemnified party, and to the extent that the
indemnifying party has given notice to such effect to the indemnified
party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
The provisions of this Article IX shall survive termination of this
Agreement.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty as provided for by any
of the following:
(a) As to any Participating Fund, at the option of any party to
this Agreement, at any time upon 90 days' notice to the other
parties to this Agreement, unless a shorter time is agreed to
by all of the parties.
20
(b) As to any Participating Fund, at the option of Insurance
Company, if Shares of that Participating Fund are not
reasonably available to meet the requirements of the Contracts
as determined by Insurance Company. Prompt notice of election
to terminate shall be furnished by Insurance Company. Said
termination to be effective ten days after receipt of notice
unless Participating Fund makes available a sufficient number
of Shares to reasonably meet the requirements of the Contracts
within said ten-day period; provided however, upon the second
or any subsequent such occurrence said termination shall be
effective ten days after receipt of notice.
(c) As to a Participating Fund, at the option of any party to this
Agreement, upon the institution of formal proceedings against
any other party to this Agreement by the Commission, National
Association of Securities Dealers, Inc. or any other regulatory
body, the expected or anticipated ruling, judgment or outcome
of which would, in the terminating party's reasonable judgment,
materially impair that other party's ability to meet and
perform its obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by the terminating
party to all other parties, with said termination to be
effective upon receipt of notice by all such parties.
(d) As to a Participating Fund, at the option of any party to this
Agreement, if that party shall determine, in its sole judgment
reasonably exercised in good faith, that any other party to
this Agreement (or any affiliate of such party) has suffered a
material adverse change in its business or financial condition
or is the subject of material adverse publicity and such
material adverse change or material adverse publicity is likely
to have a material adverse impact upon the business and
operation of the terminating party, such terminating party
shall notify each other party in writing of such determination
and its intent to terminate this Agreement, and, if, after
considering the actions taken by the entity suffering the
adverse change or adverse publicity and any other changes in
circumstances since the giving of such notice, such
determination of the terminating party shall continue to apply
on the sixtieth (60th) day after such notice has been received
by all other parties, such, sixtieth day shall be the effective
date of termination.
(e) As to a Participating Fund, upon termination of the Investment
Advisory Agreement between that Participating Fund and Adviser
or its successors unless each other party to this Agreement
specifically approves the selection of a new Participating
Fund's investment adviser. The terminating party shall give
notice of such termination to all other parties, and the
termination shall be effective as of a date specified in the
notice, which shall be not more than 90 days after such notice
has been received by all such other parties. Such
Participating Fund shall promptly furnish notice of termination
of the Adviser to each other party to this Agreement.
(f) As to a Participating Fund, at the option of any other party to
this Agreement, in the event that (i) Participating Fund ceases
to qualify as a regulated investment company under subchapter M
or any successor provision or fails to comply with the Section
817(h) diversification requirements specified in Sections 2.8
and 2.9 hereof, or if such other party reasonably believes that
the Participating Fund may fail to so qualify or comply; or
(ii) the Participating Fund's Shares are not registered, issued
or
21
sold in accordance with applicable federal law, or such law
precludes the use of such Shares as the underlying investment
medium of Contracts issued or to be issued by Insurance
Company. The terminating party shall deliver notice to all
other parties to this Agreement. The notice shall specify the
effective date of the termination, which shall in no event be
earlier than when all of such notices have been received by all
other parties.
(g) At the option of a Participating Fund upon a determination by
its Board in good faith and in light of its fiduciary duties
under federal and any applicable state laws to Participating
Fund's shareholders, including Insurance Company and the
Separate Account, that such termination is necessary and in the
best interests of shareholders of that Participating Fund.
Termination pursuant to this Subsection (g) shall be effective
upon a date specified in a notice by such Participating Fund to
Insurance Company of such termination. Such date, however,
shall be no earlier than when such notice has been received by
all other parties.
(h) At the option of a Participating Fund if the Contracts cease to
qualify as annuity contracts, endowments or life insurance
policies, as applicable, under the Code, or if such
Participating Fund reasonably believes that the Contracts may
fail to so qualify. The terminating party shall deliver notice
to all other parties to this Agreement. The notice shall
specify the effective date of the termination, which shall in
no event be earlier than when all of such notices have been
received by all other parties.
(i) At the option of any party to this Agreement, upon another
party's breach of any material provision of this Agreement. The
terminating party shall deliver notice of such breach to all
other parties to this Agreement. The termination shall be
effective thirty days after the notice has been received by all
such parties, but only if the breaching party shall not have
cured the breach, in all material respects, by the end of that
30-day period.
(j) At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law.
(k) At the option of the Insurance Company, upon any substitution
of the shares of another investment company or series thereof
for Shares of the Fund. The Insurance Company shall promptly
notify Participating Fund of any scheduled substitution.
(l) Termination by mutual written agreement of the parties to this
Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, each Participating Fund and the Distributor shall, at the
option of the Insurance Company, continue to make available additional
Shares of that Participating Fund pursuant to the terms and conditions
of this Agreement as provided below, for all Contracts in effect on
the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to
22
reallocate investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that Participating Fund
upon the making of additional purchase payments under the Existing
Contracts. If such Participating Fund Shares continue to be made
available after such termination, the provisions of this Agreement
shall remain in effect, and thereafter either the Participating Fund
or Insurance Company may terminate the Agreement as to that
Participating Fund, as so continued pursuant to this Section 10.3,
upon prior written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but, if given by the
Participating Fund, need not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall
not be deemed a termination as to any other Participating Fund.
10.5 The parties agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose
of ensuring that a Separate Account owns no Shares of a Participating
Fund after the effective date of this Agreement's termination with
respect to such Shares or, if such ownership following termination
cannot be avoided, that the duration thereof is as brief as reasonably
practicable. Such steps may include, for example, combining the
affected Separate Account with another Separate Account, substituting
other fund shares for those of the affected Participating Fund, or
otherwise terminating participation by the Contracts in such
Participating Fund.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the
addition or deletion of any Participating Fund or Contract or Separate
Account as specified in Schedule A, shall be made by agreement in
writing among all parties to this Agreement.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, or next day delivery to the
appropriate parties at the following addresses, or such other address
as a party may from time to time specify in writing to the other
parties:
Insurance Company: New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Rock, Senior Vice President
23
Participating Funds/Adviser/Distributor:
Lord Xxxxxx Series Fund, Inc./ Lord, Xxxxxx & Co./Lord Xxxxxx
Distributor LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
Notice shall be deemed to be given on the date of receipt by the
addressees as evidenced by the mailing receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
director, trustee, officer or shareholder of the Fund individually, it
being understood that this provision does not excuse or otherwise
relieve any person from any obligations or responsibility that such
person may have acting in another capacity (e.g., Adviser,
Distributor, etc.). It is agreed that the obligations of the Funds are
several and not joint, that no Fund shall be liable for any amount
owing by another Fund and that the Funds have executed one instrument
for convenience only.
13.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13.3 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.
13.4 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the National Association of Security Dealers, Inc., and
state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
13.5 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies,
obligations, at law or in equity, which the parties are entitled under
federal and state laws.
13.6 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party (and any such assignment shall be null and
void) without the prior consent of all parties.
24
13.7 The schedules to this Agreement (each, a "Schedule," collectively, the
"Schedules") form an integral part hereof and are incorporated herein
by reference. The Parties may agree in writing to amend the Schedules
from time to time. References herein to any Schedule are to the
Schedule then in effect, taking into account any amendments thereto.
13.8 (a) Except as may otherwise be provided in a license agreement
among the parties, neither the Fund, Adviser, Distributor, nor any of
their respective affiliates shall use any trademark, trade name,
service xxxx or logo of Insurance Company or any of its affiliates, or
any variation of any such trademark, trade name, service xxxx or logo,
without Insurance Company's prior written consent, the granting of
which shall be at Insurance Company's sole option.
(b) Except as otherwise expressly provided in a license agreement
among the parties, neither Insurance Company nor any of its affiliates
shall use any trademark, trade name, service xxxx or logo of the Fund,
Adviser, or Distributor, or any of their respective affiliates, or any
variation of any such trademark, trade name, service xxxx or logo,
without the Fund's, Adviser's or Distributor's prior written consent,
the granting of which shall be at the Fund's, Adviser's, or
Distributor's sole option.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed and provisions hereof interpreted
under and in accordance with the internal laws of the State of New
York, without giving effect to principles of conflict of laws.
ARTICLE XV
FOREIGN TAX CREDITS
15.1 Each Participating Fund agrees to consult in advance with Insurance
Company concerning any decision to elect or not to pass through the
benefit of any foreign tax credits to the Participating Fund's
shareholders pursuant to Section 853 of the Code.
-----------------
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and attested as of the date first above written.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By: _____________________________
Name:
Title:
Attest:_____________________________
LORD XXXXXX SERIES FUND, INC.
By: _____________________________
Name:
Title:
Attest:_____________________________
LORD XXXXXX & CO.
By: _____________________________
Name:___________________________
Title:____________________________
Attest: _________________________________
LORD XXXXXX DISTRIBUTOR LLC
By: Lord, Xxxxxx & Co., it's Managing Member
By: _____________________________
Name:
Title:
Attest:_____________________________
26
SCHEDULE A
Separate Accounts, Contracts and Participating Funds Subject to the
Participation Agreement
Separate Accounts and Associated Contracts
Names of Contracts Funded by Separate Account
Name of Separate Account and Date ---------------------------------------------
Established by Board of Directors and Form Numbers Thereof
--------------------------------- ------------------------
NYLIAC Variable Universal Life Separate Variable Universal Life #793-90
Account-I Survivorship Variable Universal Life #797-150
June 4, 1993 Variable Universal Life 2000 #799-90
Single Premium Variable Universal Life #301-95
Pinnacle Variable Universal Life #300-80 and
#300-82
Pinnacle Survivorship Variable Universal Life
#300-81 and #300-83
NYLIAC Corporate Sponsored Variable Corporate Sponsored Variable Universal Life
Universal Life #796-40
Separate Account-I Corporate Executive Series Variable Universal
May 24, 1996 Life #300-40
NYLIAC Variable Annuity LifeStages Flexible Premium Variable
Separate Account-I Annuity (The Original) #993-190
October 15, 1992
NYLIAC Variable Annuity LifeStages Flexible Premium Variable
Separate Account-II Annuity (The Original) #993-190
October 15, 1992
NYLIAC Variable Annuity LifeStages Variable Annuity #995-190
Separate Account-III MainStay Plus Variable Annuity #999-190
November 30, 1994 (Supersedes (998-190)
New LifeStages Flexible Premium Variable
Annuity #000-190
LifeStages Premium Plus Variable Annuity
#200-195
LifeStages Access Variable Annuity #200-090
MainStay Access Variable Annuity #200-090
MainStay Premium Plus Variable Annuity
#200-190
Participating Funds (and class, if applicable) Offered by Participating Fund
To The Insurance Company
Mid-Cap Value Portfolio
SCHEDULE B
Insurance Company Participating Fund ("Fund")
---------------------------------------------------------------------------------------------------
Preparing and filing the Separate Account's Preparing and filing the Fund's registration
("Accounts") registration statement statement
---------------------------------------------------------------------------------------------------
Text composition for Fund prospectuses and
Text composition for Account prospectuses and supplements and Account supplements affecting the
supplements Fund
---------------------------------------------------------------------------------------------------
Text alterations of Fund prospectuses and Fund
Text alterations of Account prospectuses and supplements and Account supplements affecting the
Account supplements Fund
---------------------------------------------------------------------------------------------------
Printing Account prospectuses and supplements
and Fund prospectuses and supplements for A camera or web ready Fund prospectus and
prospective Contractholders and Participants printing of Fund prospectuses for existing
("Contract Owners") Contract Owners that invest in the Fund
---------------------------------------------------------------------------------------------------
Text composition and printing Account Text composition and printing Fund SAIs
statements of additional information ("SAIs")
---------------------------------------------------------------------------------------------------
Mailing and distributing Account SAIs to Mailing and distributing Fund SAIs to
Contract Owners upon request by Contract existing Contract Owners upon request by Contract
Owners Owners
---------------------------------------------------------------------------------------------------
Mailing and distributing Account prospectuses Text composition and printing of annual and
and Account supplements to Contract Owners of prospectuses semi-annual reports for the Fund to
record as required by federal securities laws existing Contract Owners that invest in the Funds
and mailing and distributing Account and Fund
and supplements to prospective purchasers
---------------------------------------------------------------------------------------------------
Text composition, printing, mailing, and Text composition and printing of proxy statements
distributing annual and semi-annual reports and voting instruction solicitation materials to
for Account Contract Owners with respect to proxies related to
the Fund up to the maximum amount provided for by
applicable law or regulation, if any
---------------------------------------------------------------------------------------------------
Mailing and distributing annual and Mailing, distributing, and tabulation of proxy
semi-annual reports for the Fund to existing statements and voting instruction solicitation
Contract Owners that invest in the Funds materials to Contract Owners with respect to
proxies related to the Fund, up to the maximum
amount provided for by applicable law or
regulation, if any
---------------------------------------------------------------------------------------------------
Text composition, printing, mailing,
distributing and tabulation of proxy statements
and voting instruction solicitation materials to
Contract Owners with respect to proxies related
to the Account
---------------------------------------------------------------------------------------------------
Preparation, printing and distributing sales
material and advertising relating to the Funds
contained in Contract advertising and sales
materials and filing such materials with and
obtaining approval from, the Commission, the
National Association of Securities Dealers,
Inc., any state insurance regulatory authority
and any other appropriate regulatory authority,
to the extent required
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