FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this day of , 2008, by and among BLACKROCK
VARIABLE SERIES FUNDS, INC., an open-end management investment company organized
as a Maryland corporation (the "Fund"), BLACKROCK DISTRIBUTORS, INC., a
broker-dealer registered as such under the Securities Exchange Act of 1934, as
amended (the "Underwriter"), ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK, a life
insurance company organized under the laws of the state of New York ("Company"),
on its own behalf and on behalf of each separate account of the Company set
forth on Schedule A, as may be amended from time to time (the "Accounts") and
ALLIANZ LIFE FINANCIAL SERVICES, LLC, ("Allianz").
W I T N E S S E T H:
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 (the "Participating Insurance
Companies"); and
WHEREAS, Allianz 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 Company; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the 1934 Act, is a member in good standing of FINRA and acts as principal
underwriter of the shares of the Fund; and
WHEREAS, the capital stock of the Fund is divided into several series
of shares, each series representing an interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the several series of shares of the Fund offered by the Fund
to the Company and the Accounts are set forth on Schedule B attached hereto
(each, a "Portfolio," and, collectively, the "Portfolios"); 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 Fund 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 Fund Exemptive Order");
WHEREAS, BlackRock Advisors, LLC. ("BAL") is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, and is
the Funds' investment adviser; and
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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
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 (the "Shares") 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 Subject to Section 1.3, the Fund shall make Shares available to the
Accounts at the most recent net asset value provided to the Company prior to
receipt of such purchase order by the Fund (or the Fund's transfer agent), 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. 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 or is, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.2 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 holders after close of the New York Stock Exchange (generally, 4:00
p.m. Eastern Time) ("Market Close") with orders received before Market Close,
and warrants that its internal control structure concerning the processing and
transmission of orders is reasonably designed to prevent or detect on a timely
basis orders received after Market Close from being aggregated with orders
received before Market Close and to minimize errors that could result in late
transmission of orders. Orders received by Company before Market Close will
receive that day's net asset value and Orders received by Company after Market
Close will receive the next day's net asset value.
(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.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the SEC. Purchase and redemption orders shall be provided by the
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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 or statement of additional information. 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 with the Fund that any communication sent by
the Company was in fact received by the Fund in proper form and in accordance
with the terms of this Agreement. The Fund and its agents 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 Purchase orders that are transmitted to the Fund in accordance with
Section 1.3 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 Company shall fail to pay in a timely
manner for any purchase order validly received by the Fund pursuant to Section
1.3 , the Company shall hold the Fund harmless from any losses reasonably
sustained by the Fund as the result of acting in reliance on such purchase
order. Redemption orders that are transmitted to the Fund in accordance with
Section 1.3 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 shall fail to pay in a timely
manner for any redemption order pursuant to Section 1.3, the Fund 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 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 subaccount of each Account.
1.6 The Fund 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 shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7:00 p.m.
Eastern Time. If the Fund provides materially incorrect share net asset value
information, it shall make an adjustment to the number of shares purchased or
redeemed for any affected Account to reflect the correct net asset value per
share. Any material error in the calculation or reporting of net asset value per
share, dividend or capital gains information shall be reported promptly in
writing upon discovery to the Company. In addition, the Fund or its designee
shall pay the reasonable out-of-pocket expenses of the Company incurred in
connection with any such error, provided that the Fund or its designee shall not
be liable for any such out-of-pocket expense of the Company that exceed $1,000
per day and $5,000 per pricing error occurrence.
1.8 The Company agrees that it will not take any action to operate an
Account as a management investment company under the 1940 Act without the Fund's
and the Underwriter's prior written consent.
1.9 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
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used only for the purposes of funding the Contracts and Accounts listed in
Schedule A, as amended from time to time.
1.10 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.
1.11 So long as it shall be the intention of the Fund to maintain the
net asset value per share of any Portfolio at $1.00, on any day on which (a) the
net asset value per share of the Shares is determined, (b) the Fund determines,
in the manner described in the then-current prospectus of the Fund, that the net
income of such Portfolio on such day is negative, and (c) the Fund delivers a
certificate to the Company setting forth the reduction in the number of
outstanding Shares to be effected as described in the then-current prospectus of
the Fund in connection with such determination, the Company, on behalf of itself
and the Accounts, agrees to return to the Fund its pro rata share of the number
of Shares to be reduced and agrees that, upon delivery by the Fund to the
Company of such certificate, (a) the Company's ownership interest in the Shares
so to be returned shall immediately cease, (b) such Shares shall be deemed to
have been canceled and to be no longer outstanding, and (c) all rights in
respect of such Shares shall cease.
1.12 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 holder(s) is 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 holders, to provide such relevant information about Market Timers to
the Fund as it may reasonably request, including but not limited to such
Contract holder's identity, and to prevent Market Timing from occurring by or
because of Contract holders. 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 has entered into a Shareholder Information
Agreement with the Company dated ___.
ARTICLE 2
OBLIGATIONS OF THE PARTIES
2.1 The Fund shall prepare and be responsible for filing with the SEC
and any state securities regulators requiring such filing, all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of additional
information of the Fund required to be so filed. The Fund shall bear the costs
of registration and qualification of its Shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its Shares.
2.2 At least annually, the Fund or its designee shall provide the
Company, free of charge, with such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company, a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to have
the prospectus for the Shares conform to the Company's Contract prospectuses or
related materials. The Fund shall be responsible solely for providing the
prospectus in the format in which it is accustomed to formatting prospectuses
and shall bear the expense of providing the prospectus in such format, and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its Contract prospectuses or related materials. The Funds shall pay
that portion of the Company's costs of printing the Contract prospectus,
prospectus supplement or shareholder report that concerns solely the Funds and
no other investment vehicle funding the Accounts, that are sent to existing
Contract owners.
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2.3 The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Fund or its
designee. The Fund or its designee, at its expense, shall print and provide such
statement of additional information to the Company (or a master of such
statement suitable for duplication by the Company) for distribution to any owner
of a Contract funded by the Shares. The Fund or its designee, at the Company's
expense, shall print and provide such statement to the Company (or a master of
such statement suitable for duplication by the Company) for distribution to a
prospective purchaser who requests such statement.
2.4 The Fund or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Fund's proxy
materials, reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.5 With respect to any prospectus, shareholder report or proxy
solicitation materials that concern solely the Fund and no other investment
vehicle funding the Accounts, the Fund shall pay for the Company's postage costs
in connection with mailing such materials to existing Contract owners. With
respect to any prospectus, shareholder report or proxy solicitation materials
that concern the Fund together with other investment vehicles funding the
Accounts, the Fund shall pay a proportionate amount of the Company's postage
costs, based on the percentage of such Account's overall assets that are
invested in the Fund, in connection with mailing such materials to existing
Contract owners.
2.6 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 statement of additional information for the Contracts in which the
Fund, the Underwriter or BAL ("Fund Parties") is named prior to the filing of
such document with the SEC. Upon request, 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, the Underwriter or
BAL is named, at least ten Business Days prior to its use. No such prospectus,
statement of additional information or material shall be used if any of the Fund
Parties reasonably objects to such use.
2.7 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;
(c) any financial statement, proxy statement, notice or report of
the Company sent to policyholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with any state insurance
regulator.
2.8 The Company shall not give any information or make any
representations or statements on behalf of the Fund or Underwriter or concerning
the Fund, the Underwriter or BAL in connection with the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Shares (as such registration
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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, except with the
written permission of the Fund or Underwriter.
2.9 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 and accurately derived from 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.
2.10 The Company shall register and qualify the Contracts for sale to
the extent required by applicable law. The Company shall amend the registration
statement of the Contracts under the 1933 Act and registration statement for
each Account under the 1940 Act from time to time as required in order to effect
the continuous offering of the Contracts or as may otherwise be required by
applicable law. The Company shall register and qualify the Contracts for sale to
the extent required by applicable securities laws and insurance laws of the
various states.
2.11 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 holders: (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; (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
holders 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; and (d) the Company and its agents will in no way
recommend or oppose or interfere with the solicitation of proxies for Fund
Shares held by Contract owners without the prior written consent of the Fund,
which consent may be withheld in the Fund's sole discretion.
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 MInnesota,
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 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 shall
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make every effort 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.
3.4 The Fund represents and warrants that it is duly organized and
validly existing under the laws of the State of Maryland.
3.5 The Fund represents and warrants that the Fund Shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and 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.
3.6 The Fund represents that it will 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 3.6
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.
3.7 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 qualification 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.
3.8 The Company hereby certifies that it has established and maintains
an anti-money laundering ("AML") program that includes written policies,
procedures and internal controls reasonably designed to identify its Contract
holders and has undertaken appropriate due diligence efforts to "know its
customers" in accordance with all applicable anti-money laundering regulations
in its jurisdiction including, where applicable, the USA PATRIOT Act of 0000
(xxx "Xxxxxxx Xxx"). The Company further confirms that it will monitor for
suspicious activity in accordance with the requirements of the Patriot Act. The
Company agrees to provide the Fund with such information as it may reasonably
request, including but not limited to the filling out of questionnaires,
attestations and other documents, to enable the Fund to fulfill its obligations
under the Patriot Act, and, upon its request, to file a notice pursuant to
Section 314 of the Patriot Act and the implementing regulations related thereto
to permit the voluntary sharing of information between the parties hereto. Upon
filing such a notice the Company agrees to forward a copy to the Fund, and
further agrees to comply with all requirements under the Patriot Act and
implementing regulations concerning the use, disclosure, and security of any
information that is shared.
3.9 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
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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.
3.10 The Company represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. The Company will use its best efforts to continue to
meet such definitional requirements, and it will notify the Fund immediately
upon having a reasonable basis for believing that such requirements have ceased
to be met or that they might not be met in the future.
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 Contracts 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.
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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.
ARTICLE 5
INDEMNIFICATION
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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 alleged 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 or
alleged untrue statements of any material fact contained in the
prospectuses for the Contracts or in the Contracts themselves or in
sales literature 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 or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived from
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 and accurately
derived from 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 or
alleged untrue statement of a material fact contained in Fund Documents
as defined in Section 5.2(a) or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from 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
alleged loss, claim, damage liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
10
Indemnified Parties may become subject under any statute or regulation, or at
common law or other wise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statement of any material fact contained in the
registration statement or prospectus 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 or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived from
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 and accurately
derived from Company Documents) or wrongful conduct of a Fund Party or
persons under its 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 or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Fund Parties; 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; 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.
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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 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 the 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 Account, the
administration of the Contracts or the purchase of the Shares, or an expected or
anticipated ruling, judgment or outcome 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 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.
6.4 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.
6.5 This Agreement may be terminated at the option of the Company if
(A) the Internal Revenue Service determines that any Portfolio fails to qualify
as a RIC under the Code or fails to comply with the diversification requirements
of Section 817(h) of the Code and the Fund, upon written request fails to
provide reasonable assurance that it will take action to cure such failure, or
(B) the Company shall determine, in its sole judgment exercised in good faith,
that either (1) the Fund or the Underwriter shall have been the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company, or (2) the Fund or Underwriter
breaches any obligation under this Agreement in a material respect and such
breach shall continue unremedied for thirty (30) days after receipt of notice in
writing to the Fund or the Underwriter from the Company of such breach.
12
6.6 Notwithstanding any termination of this Agreement, the Fund will,
upon the mutual agreement of the parties hereto, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all existing 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.
6.7 In the event of a termination of this Agreement pursuant to this
Article 6, the Fund and the Underwriter shall promptly notify the Company in
writing whether the Underwriter and the Fund will continue to make Shares
available after such termination; if the Underwriter and the Fund will continue
to make Shares so available, the provisions of this Agreement shall remain in
effect except for Section 6.1 and thereafter either the Fund, Underwriter or the
Company may terminate the Agreement as so continued pursuant to this Section 6.7
upon prior written notice to the other parties, such notice to be for a period
that is reasonable under the circumstances but need not be greater than six
months.
6.8 The provisions of Article 5 shall survive the termination of this
Agreement, and the provisions of Articles 2 and 4 shall survive the termination
of this Agreement as long as shares of the Fund are held on behalf of Contract
owners in accordance with Section 6.7.
ARTICLE 7
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
BlackRock Variable Series Funds, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
If to the Underwriter:
BlackRock Distributors, Inc.
000 Xxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxx Xx Xxxxxxx
If to the Company:
xxxxx
xxxxx
xxxxx
xxxxxx
ARTICLE 8
MISCELLANEOUS
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8.1 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.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York
without reference to the conflict of laws provisions thereof, and shall, to the
extent applicable, be subject to the provisions of the 1933, 1934, and 1940
Acts, and the rules, regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant and
the terms hereof shall be interpreted and construed in accordance therewith.
8.5 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.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
FINRA 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.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, to which the parties hereto are entitled under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
parties.
8.10 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.
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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.
ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK
By:
--------------------------------------------------------
Name:
---------------------------------------------
Title:
-----------------------------------------------------
BLACKROCK VARIABLE SERIES FUNDS, INC.
By:
--------------------------------------------------------
Name:
---------------------------------------------
Title:
-----------------------------------------------------
BLACKROCK DISTRIBUTORS, INC.
By:______________________________________
Name:____________________________________
Title:_____________________________________
ALLIANZ LIFE FINANCIAL SERVICES, LLC
By:
--------------------------------------------------------
Name:
---------------------------------------------
Title:
-----------------------------------------------------
15
SCHEDULE A
Separate Accounts of xxxxxx Participating in Portfolios of BlackRock Variable
Series Funds, Inc.
SCHEDULE B
PORTFOLIOS AND CLASSES OF BLACKROCK VARIABLE SERIES FUNDS, INC.
OFFERED TO SEPARATE ACCOUNTS OF XXXXXXX
All Share classes of:
BlackRock American Balanced V.I. Fund
BlackRock Basic Value V.I. Fund
BlackRock Core Bond V.I. Fund
BlackRock Domestic Money Market V.I. Fund
BlackRock Fundamental Growth V.I. Fund
BlackRock Global Growth V.I. Fund
BlackRock Global Allocation V.I. Fund
BlackRock Government Bond V.I. Fund
BlackRock High Current Income V.I. Fund
BlackRock Index 500 V.I. Fund
BlackRock International Value V.I. Fund
BlackRock Large Cap Core V.I. Fund
BlackRock Large Cap Growth V.I. Fund
BlackRock Large Cap Value V.I. Fund
BlackRock Value Opportunities V.I. Fund
BlackRock Utilities & Telecommunications V.I. Fund
Underwriter agrees to pay to Allianz Life Financial Services LLC the relevant
Rule 12b-1 fee for the applicable class of shares as described in the Fund's
prospectus and Rule 12b-1 Plan. Allianz acknowledges that Distributor has no
obligation to pay such fees unless Underwriter has received such 12b-1 fees from
the applicable fund and further agrees to waive payment of any such 12b-1 fees
unless and until Underwriter has received such fees from the applicable fund.
