Exhibit 99.A4
Exhibit 24(b)(3)(b)
Master Agreement
MASTER AGREEMENT
AMONG
AUSA LIFE INSURANCE COMPANY, INC.
AFSG SECURITIES CORPORATION
AND
JANUS CAPITAL CORPORATION
DATED
AS OF
NOVEMBER 1, 2001
TABLE OF CONTENTS
SECTION I. ADDITIONAL DEFINITIONS ................................................................... 2
1.1 Contracts ................................................................................ 2
1.2 General Account........................................................................... 2
1.3 Separate Account.......................................................................... 2
1.4 Related Agreements........................................................................ 2
1.5 Subaccounts............................................................................... 2
SECTION 2. TERRITORY................................................................................. 3
SECTION 3. DISTRIBUTING AND SERVICING THE CONTRACTS.................................................. 3
3.1 The Contracts............................................................................. 3
3.2 Establishment of Separate Account and the Trust........................................... 4
(a) Separate Account................................................................. 4
(b) The Trust........................................................................ 5
(c) Participation Agreement.......................................................... 5
(d) Seed Money for the Trust......................................................... 5
3.3 General Account Option.................................................................... 6
3.4 Trademarks................................................................................ 6
3.5 Sales and Advertising Material............................................................ 11
3.6 Licensing................................................................................. 12
3.7 Transfers................................................................................. 12
3.8 AUSA Functions............................................................................ 13
3.9 Janus Capital Functions.................................................................. 14
3.10 JDI Functions............................................................................. 14
3.11 Ownership of Prospects; Replacements...................................................... 15
3.12 Public Announcements...................................................................... 15
3.13 State Availability........................................................................ 15
3.14 Preparation and Filing of Various Documents............................................... 16
3.15 Changes in the Contracts or the Separate Account.......................................... 16
SECTION 4. COMPENSATION AND EXPENSES................................................................. 16
4.1 Compensation and Expenses................................................................. 16
SECTION 5. GENERAL PROVISIONS........................................................................ 18
5.1 Effective Date............................................................................ 18
5.2 Term...................................................................................... 18
5.3 Termination for Cause..................................................................... 18
5.4 Automatic Default......................................................................... 19
5.5 Elective Termination...................................................................... 20
5.6 Other Default............................................................................. 21
5.7 Confidentiality........................................................................... 21
5.8 Indemnification........................................................................... 22
(a) Indemnification by AUSA......................................................... 22
(b) Indemnification by Janus Capital................................................ 23
(c) Indemnification by AFSG......................................................... 23
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(d) General......................................................................... 24
5.9 Inspection................................................................................ 26
5.10 Organization and Good Standing; Authorization............................................. 26
5.11 Independent Contractor.................................................................... 26
5.12 Assignment and Transfer................................................................... 26
5.13 Rights, Remedies, Etc. are Cumulative..................................................... 27
5.14 Notices................................................................................... 27
5.15 Interpretation, Jurisdiction, Etc......................................................... 27
5.16 Arbitration............................................................................... 27
5.17 Headings.................................................................................. 28
5.18 Counterparts.............................................................................. 28
5.19 Severability.............................................................................. 28
5.20 Survival of Certain Provisions............................................................ 28
5.21 Successors................................................................................ 28
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SCHEDULES AND EXHIBITS
Schedule
1 Variable Contracts Subject to Master Agreement
2 Separate Accounts and Subaccounts Available Under the Contracts
3 Responsibilities for Document Preparation and Filings
Exhibit
A Participation Agreement
B Principal Underwriting Agreement
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AGREEMENT
THIS AGREEMENT is made as of November 1, 2001, by and among AUSA LIFE
INSURANCE COMPANY, INC. ("AUSA"), a New York insurance corporation with its
administrative office at 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000,
AFSG SECURITIES CORPORATION ("AFSG"), a Pennsylvania corporation with its
administrative office at 0000 Xxxxxxxx Xxxx X.X., Xxxxx Xxxxxx, Xxxx 00000, and
JANUS CAPITAL CORPORATION ("Janus Capital"), a Colorado corporation with
principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000.
WITNESSETH:
WHEREAS, AUSA is a life insurance company authorized to conduct an
insurance business in the Territory, as hereinafter defined in Section 2, and
has used and shall continue to use its best efforts to file, secure and maintain
all necessary approvals for sale of the Contracts, as hereinafter defined; and
WHEREAS, AUSA and Janus Capital desire that AUSA issue to the public
variable annuity contracts and variable life insurance policies whose underlying
investment media will be managed by Janus Capital; and
WHEREAS, Janus Capital has established and serves as investment adviser
to Janus Aspen Series (the "Trust"), an open-end investment company designed to
serve as an underlying investment medium for variable annuity contracts and
variable life insurance policies; and
WHEREAS, AFSG is an affiliate of AUSA, and a broker-dealer registered
with the Securities and Exchange Commission ("SEC"), National Association of
Securities Dealers, Inc.
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("NASD") and with New York, and will serve as principal underwriter of the
Contracts, as hereinafter defined.
NOW, THEREFORE, it is agreed as follows:
SECTION 1
ADDITIONAL DEFINITIONS
1.1 CONTRACTS. "Contracts" shall mean the variable annuity contracts
set forth in SCHEDULE 1 to this Agreement as in effect at the time this
Agreement is executed and such other variable annuity contracts and variable
life insurance policies which may be added to Schedule 1 from time to time in
accordance with Section 3.15 of this Agreement.
1.2 GENERAL ACCOUNT. "General Account" shall mean the general account
of AUSA.
1.3 SEPARATE ACCOUNT. "Separate Account" shall mean the separate
account named in SCHEDULE 2 to this Agreement as in effect at the time this
Agreement is executed and such other separate accounts which may be added to
Schedule 2 from time to time in accordance with Section 3.15 of this Agreement.
1.4 RELATED AGREEMENTS. "Related Agreements" shall mean the agreements,
as executed, forms of which are attached to this Agreement as exhibits.
1.5 SUBACCOUNTS. "Subaccounts" shall mean the subaccounts of the
Separate Account available under the Contracts.
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SECTION 2
TERRITORY
The "Territory" shall mean the State of New York.
SECTION 3
DISTRIBUTING AND SERVICING THE CONTRACTS
3.1 THE CONTRACTS. AUSA shall develop, design, prepare and file all
necessary Contract forms, including any applications and other documents in the
usual form, and shall use its best efforts: (1) to obtain authorization, on its
own behalf or on behalf of an affiliate, to conduct a variable insurance
business in the State of New York; (2) to effect the registration of the
Contracts with the SEC and the New York State Securities Commission; (3) to gain
approval of the Contract forms under the insurance laws and regulations of the
State of New York; and (4) to keep such registration and approval in effect
thereafter for so long as the Contracts are outstanding, notwithstanding any
termination of this Agreement. In particular, but not by way of limitation, AUSA
agrees to use its best efforts to keep the registration statement for such
Contracts current for purposes of Section 10 of the Securities Act of 1933 (the
"1933 Act") for so long as the Contracts are outstanding and any of the
Subaccounts invests in a corresponding portfolio of the Trust, unless AUSA has
obtained a no-action letter from the SEC to the effect that such registration
statement need no longer be maintained, or AUSA has supplied Janus Capital with
an opinion of counsel satisfactory to Janus Capital's counsel that maintaining a
current registration statement is no longer required. The material terms,
conditions and provisions of the Contracts and the Separate Account, other than
material changes made to comply with applicable laws, rules, regulations and
orders, may not be changed by AUSA in any
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manner without the prior written consent of Janus Capital, such consent not to
be unreasonably withheld.
3.2 ESTABLISHMENT OF SEPARATE ACCOUNT AND THE TRUST.
(a) Separate Account. AUSA has established the Separate
Account and Subaccounts of the Separate Account for the Contracts and
registered the Separate Account as a unit investment trust with the SEC
and shall use its best efforts to keep such registration in effect for
so long as the Contracts are outstanding, notwithstanding any
termination of this Agreement. The Subaccounts for the Contracts shall
invest in a corresponding portfolio of the Trust. Janus Capital shall
have the right to determine the continued availability of each
Subaccount and the offering of any and all new Subaccounts under the
Contracts, subject to the prior consent of AUSA, which consent shall
not be unreasonably withheld. As the depositor of the Separate Account,
AUSA has the right, in its sole discretion, to issue to the public
variable annuity contracts and variable life insurance policies through
additional subaccounts of the Separate Account, other than the
Subaccounts, and through other separate accounts, whose underlying
investment media will be managed by investment advisers or managers
other than Janus Capital, provided that AUSA shall not use any Xxxxx
Xxxx (as defined in Section 3.4) in connection with such other
products. However, the parties understand that the Subaccounts which
invest in the Trust may not be made available under any variable
annuity contracts or variable life insurance policies other than the
Contracts specified in Schedule 1 to this Agreement without the prior
written consent of Janus Capital.
(b) The Trust. Janus Capital, or an affiliate, has established
the Trust and registered the Trust as an open-end management investment
company with the SEC.
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Janus Capital, or an affiliate, shall use its best efforts to have the
Trust kept in good standing and the registration of Trust shares with
the SEC kept current for purposes of Section 10 of the 1933 Act for so
long as such shares are outstanding and any of the Subaccounts invests
in a corresponding portfolio of the Trust, unless Janus Capital and/or
the Trust has obtained a no-action letter from the SEC to the effect
that such registration need no longer be maintained, or Janus Capital
and/or the Trust has supplied AUSA with an opinion of counsel
satisfactory to AUSA's counsel that maintaining a current registration
statement is no longer required. Janus Capital or the Trust has the
right, in its sole discretion, to market the Trust as an investment
medium for and sell Trust shares to other separate accounts, whether or
not established by AUSA or its affiliates, as well as certain qualified
retirement plans.
(c) Participation Agreement. AUSA and the Trust shall enter
into a Participation Agreement substantially in the form attached
hereto as EXHIBIT A.
(d) Seed Money for the Trust. Each Portfolio of the Trust will
be seeded by Janus Capital or an affiliate; provided, however, that, in
the event AUSA proposes to issue variable annuity contracts and
variable life insurance policies through a Separate Account which would
invest in the Trust at a time when Janus Capital or an affiliate still
owns Trust shares purchased to seed a Portfolio of the Trust, prior to
any such Separate Account investment, AUSA shall have first obtained
necessary exemptive relief from the SEC or no-action assurances from
the SEC staff allowing Trust shares to be held by Janus Capital or an
affiliate, as applicable, or, alternatively an opinion of counsel
satisfactory to Janus Capital's counsel that such exemptive relief or
no-action assurances are not required.
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3.3 GENERAL ACCOUNT OPTION. The Contracts may allow the owner of a
Contract ("Contract Owner") the option to make allocations to the General
Account subject to any reasonable operating conditions that AUSA may impose. Any
general account option under the Contracts shall be offered in compliance with
applicable law and, to the extent it is offered in reliance on an exemption from
the registration requirements of the 1933 Act, such offer shall be made in
compliance with the conditions of such exemption and any further conditions set
forth in the Principal Underwriting Agreement for the Contracts, as described in
Section 4.1(b), in effect at the time of execution of this Agreement, or as
subsequently amended.
3.4 TRADEMARKS.
(a) Janus Capital owns all rights, title and interest in and
to the name and xxxx "XXXXX," and any designation comprised in whole or
in part of JANUS, any logo design used by Janus Capital and any other
xxxx for which Janus Capital has obtained or is seeking registration
rights (the "Janus Marks").
(b) Janus Capital hereby grants to AUSA and AFSG a
nonexclusive license to use the Janus Marks solely for the purposes of
i) identifying the underlying investment medium for the Contracts; ii)
identifying the Contracts; or iii) otherwise performing their
obligations under this Agreement.
i) Term. Janus Capital may immediately terminate this
license upon the occurrence of the following events: (A) the
name of the Trust or the Contract is changed to a name that
does not include the term JANUS; or (B) any Contract shall
cease to be invested solely in Portfolios of the Trust or the
General Account. Subject to the preceding sentence, the grant
of license as specified herein shall survive the termination
of this Agreement for so long as existing Contract owners
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own shares of any Portfolio, but only to the extent necessary
to service such Contracts. To the extent of any termination of
the grant of license, AUSA shall immediately cease to issue
new variable annuity contracts or variable life insurance
policies or service existing Contracts under any Xxxxx Xxxx
and shall likewise cease any activity which suggests that it
has any right under any Xxxxx Xxxx or that it has any
association with Janus Capital in connection with any such
contracts or policies.
ii) Pre-Release Approval of Trademark-Bearing
Materials. AUSA and AFSG shall obtain the prior written
consent of Janus Capital for the public release of any
materials bearing the Janus Marks. Such material shall
include, but not be limited to, samples of each proposed
standard Contract form and application, form correspondence
with Contract Owners, reports to Contract Owners and any other
operating materials that bear any Xxxxx Xxxx.
During the term of this grant of license, Janus
Capital may, in its reasonable discretion, request that AUSA
or AFSG modify or cease distribution of any materials bearing
any Xxxxx Xxxx which were previously approved by Janus
Capital, but that Janus Capital may wish to reconsider. AUSA
shall immediately cease distributing the previously approved
materials as soon as reasonably practical and, if applicable,
shall make the requested modification. AUSA shall obtain the
prior written consent of Janus Capital for the use of any new
materials developed to replace the disapproved materials, in
the manner set forth above.
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iii) Acknowledgment of Ownership. AUSA and AFSG: (1)
acknowledge and stipulate that the Janus Marks are valid and
enforceable trademarks owned exclusively by Janus Capital and
that, pursuant to such ownership, Janus Capital has the
exclusive right to use, and license others to use, the Janus
Marks as indications of source, origin, sponsorship,
affiliation or endorsement; (2) agree never to contend
otherwise in legal proceedings or in other circumstances; and
(3) acknowledge and agree that the use of the Janus Marks
pursuant to this grant of license shall inure to the benefit
of Janus Capital and shall not create any right of ownership
in the Janus Marks for AUSA, AFSG or any of their affiliates.
(c) AUSA owns all rights, title and interest in and to the
name and marks AUSA LIFE and AUSA, and any designation comprised in
whole or in part of AUSA LIFE or AUSA, that is (i) used to identify
AUSA; (ii) used to identify the Contracts; and (iii) any logo design
used by AUSA and any other xxxx for which AUSA has obtained or is
seeking registration rights (the "AUSA Marks").
(d) AUSA hereby grants to Janus Capital a nonexclusive license
to use the AUSA Marks in connection with the performance of its
obligations under this Agreement.
(i) Term. The grant of license as specified herein
shall survive the termination of this Agreement for so long as
existing Contract Owners own shares of any Portfolio, but only
to the extent necessary to service such Contracts. Upon
termination of the grant of license, Janus Capital shall
immediately cease using the AUSA Marks and shall likewise
cease any activity which suggests that it has
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any right under the AUSA Marks or that it has any association
with AUSA in connection with any such contracts or policies.
ii) Pre-Release Approval of Trademark-Bearing
Materials. Janus Capital shall obtain the prior written
consent of AUSA for the public release of any materials
bearing the AUSA Marks. Such material shall include, but not
be limited to, promotional, sales or advertising material, and
any other operating materials that bear the AUSA Marks.
During the term of this grant of license, AUSA may,
in its discretion, request that Janus Capital modify or cease
distribution of any materials bearing the AUSA Marks which
were previously approved by AUSA, but that AUSA may wish to
reconsider. Janus Capital shall immediately cease distributing
the previously approved materials, as soon as reasonably
practical and, if applicable, shall make the requested
modifications. Janus Capital shall obtain the prior written
consent of AUSA for the use of any new materials developed to
replace the disapproved materials, in the manner set forth
above.
iii) Acknowledgment of Ownership. Janus Capital: (1)
acknowledges and stipulates that the AUSA Marks are valid and
enforceable trademarks owned exclusively by AUSA and that,
pursuant to such ownership, AUSA has the exclusive right to
use, and license others to use, the AUSA Marks as indications
of source, origin, sponsorship, affiliation or endorsement;
(2) agrees never to contend otherwise in legal proceedings or
in other circumstances; and (3) acknowledges and agrees that
the use of the AUSA Marks pursuant to this grant
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of license shall inure to the benefit of AUSA and shall not
create any right of ownership in the AUSA Marks for Janus
Capital.
(e) ASFG owns all rights, title and interest in and to the
name and marks ASFG SECURITIES CORPORATION and ASFG and any designation
comprised in whole or in part of AFSG and that is (i) used to identify
AFSG; (ii) used to identify the Contracts; and (iii) any logo design
used by AFSG and any other xxxx for which AFSG has obtained or is
seeking registration rights (the "AFSG Marks").
(f) AFSG hereby grants to Janus Capital a nonexclusive license
to use the AFSG Marks in connection with the performance of its
obligations under this Agreement.
(i) Term. The grant of license as specified herein
shall survive the termination of this Agreement for so long as
Contract Owners own shares of any Portfolios, but only to the
extent necessary to service the Contracts. Upon termination of
the grant of license, Janus Capital shall immediately cease
using the AFSG Marks and shall likewise cease any activity
which suggests that it has any right under the AFSG Marks or
that it has any association with AFSG in connection with any
such contracts or policies.
(ii) Pre-Release Approval of Trademark-Bearing
Materials. Janus Capital shall obtain the prior written
consent of AFSG for the public release of any materials
bearing the AFSG Marks. Such material shall include, but not
be limited to, promotional, sales or advertising material, and
any other operating materials that bear the AFSG Marks.
During the term of this grant of license, AFSG may,
in its discretion, request that Janus Capital modify or cease
distribution of any materials bearing
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the AFSG Marks which were previously approved by AFSG, but
that AFSG may wish to reconsider. Janus Capital shall
immediately cease distributing the previously approved
materials as soon as reasonably practical and, if applicable,
shall make the requested modifications. Janus Capital shall
obtain the prior written consent of AFSG for the use of any
new materials developed to replace the disapproved materials,
in the manner set forth above.
iii) Acknowledgement of Ownership. Janus
Capital: (1) acknowledges and stipulates that the
AFSG Marks are valid and enforceable trademarks owned
exclusively by AFSG and that, pursuant to such
ownership, AFSG has the exclusive right to use, and
license others to use, the AFSG Marks as indications
of source, origin, sponsorship, affiliation or
endorsement; (2) agrees never to contend otherwise in
legal proceedings or in other circumstances; and (3)
acknowledges and agrees that the use of the AFSG
Marks pursuant to this grant of license shall inure
to the benefit of AFSG and shall not create any right
of ownership in the AFSG Marks for Janus Capital.
3.5 SALES AND ADVERTISING MATERIAL. Prior to any use with any member of
the public of any sales or advertising material ("Material") prepared or
developed by AUSA, or Janus Capital to the extent not created by the Trust, the
party preparing such Material shall first provide copies of such Material to the
other party for the other party's review and written approval. The party in
receipt of such Material shall review such Material on a prompt and timely
basis, but in no event later than five business days after receipt. All such
material shall be approved in writing by the
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other party prior to its use. Upon approval of such material, AUSA shall file
such sales and advertising material with state insurance regulatory agencies, as
required, and AFSG shall file such sales and advertising material, as required,
with the SEC, or with the NASD, as applicable, in accordance with the rules and
regulations of the SEC and NASD. Janus Capital shall reimburse AFSG for any
expense incurred by AFSG for such filing with the SEC and/or NASD. The party
which has developed and printed the Material shall provide the other party with
at least 50 complete, printed copies within five business days of completion of
printing.
3.6 LICENSING. To the extent required by law, AUSA shall appoint and
license with the New York state insurance regulators qualified agents to
distribute the Contracts. To the extent required by law, AFSG shall appoint and
license with the NASD and New York registered representatives to distribute the
Contracts. Such registered representatives shall be selected from employees of
Janus Distributors, Inc. ("JDI") and shall be licensed as life insurance agents
of AUSA in accordance with the Coordination and Supervisory Agreement between
World Financial Group Insurance Agency, Inc. and JDI.
3.7 TRANSFERS. AUSA shall be responsible for verifying the accuracy and
adequacy of instructions from Contract Owners to transfer monies from any Janus
mutual fund other than the Trust or from the Cash Equivalent Fund (collectively,
the "Janus Funds") to fund a purchase payment for any Contract. Janus Capital
shall use its best efforts to ensure that the Janus Funds provide AUSA with
access to the account information of Janus Fund shareholders for this purpose.
AUSA shall notify Janus Funds of such transfers on a daily basis (in accordance
with procedures mutually agreed upon by the parties). If there is an inaccuracy
in AUSA's statement of a customer's instruction, AUSA undertakes to cooperate
with the funds' transfer agent to rectify any error. The indemnification set
forth in Section 5.8 of this Agreement shall extend to
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the affected Janus Fund, its transfer agent and distributor, and their
trustees/directors, officers and employees and other agents with respect to any
Loss (as defined in Section 5.8) resulting from any inaccuracy in AUSA's
statement of a customer's instruction.
3.8 AUSA FUNCTIONS. AUSA shall be responsible, at AUSA's expense, for
the functions of:
(a) Receiving, processing and underwriting Contract
applications;
(b) Issuing Contracts;
(c) Delivering newly-issued Contracts to the Contract Owners;
(d) Billing and receiving Contract premiums and
considerations;
(e) Contract Owner servicing, including changes of ownership,
addresses, coverage, beneficiary designations, premium
modes, settlement options and the like;
(f) Receiving, processing and responding to incoming general
written correspondence concerning Contract matters from
Contract Owners or beneficiaries;
(g) Evaluating and paying Contract benefit claims;
(h) Preparing and forwarding confirmation and tax notices
regarding Contract transactions and other reports to
Contract Owners;
(i) Administering the Separate Account and the Subaccounts;
(j) Calculating performance information for the Subaccounts
for use by Janus Capital in preparing advertisements and
sales literature and in responding to questions from
Contract Owners;
(k) Purchasing and redeeming shares of the Trust on behalf of
the Separate Account; and
(l) Providing the full-time services of an AUSA employee to
supervise the insurance activities of agents licensed
pursuant to Section 3.6.
3.9 JANUS CAPITAL FUNCTIONS. Unless assumed by the Trust, Janus Capital
shall be responsible, at Janus Capital's expense, for the functions of:
(a) Preparing and printing promotional, sales and advertising
material for the Contracts and preparing a mailing list
for such material, provided that such list shall not
include current owners of AUSA variable annuity
contracts. For this purpose, AUSA will supply Janus
Capital with a listing of current owners of AUSA variable
annuity contracts. The parties understand that this
paragraph shall not apply to newsletters or similar
shareholder reports mailed to Janus Funds shareholders.
(b) Printing and mailing of fulfillment kits and related
material to persons who have expressed an interest in
receiving information concerning the Contracts ("Janus
Capital Customers"); and
(c) Forwarding AUSA any written and telephonic correspondence
received by Janus Capital requiring Contract Owner
servicing or other functions of AUSA described in Section
3.7 above.
3.10 JDI FUNCTIONS. JDI shall be responsible for the functions of:
(a) Mailing promotional, sales and advertising material for
the Contracts;
(b) Receiving and responding to questions from Janus Capital
Customers who have received promotional, sales and
advertising material or fulfillment
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kits and are either in the process of completing
application forms for the Contracts, or have general
questions concerning the Contracts and/or the
advisability of investing in variable annuities;
(c) Receiving and responding to questions from Contract
Owners relating to performance information and their
Contracts; and
(d) Providing the full-time services of a JDI employee to
supervise the securities activities of representatives
registered pursuant to Section 3.6.
3.11 OWNERSHIP OF PROSPECTS; REPLACEMENTS.
During the term of this Agreement, no party to this Agreement nor any
of their affiliates, and after the termination of this Agreement, no party nor
any of their affiliates, shall knowingly induce or cause, or attempt to induce
or cause, directly or indirectly, any Contract Owner to lapse, terminate,
surrender, exchange or cancel his or her Contract, or to cease or discontinue
making premium payments thereunder except to the extent required by any
governmental authority with lawful jurisdiction or applicable law or regulation.
This section shall not apply to Janus Capital in the event that AFSG applies for
an order to substitute shares of another mutual fund for shares of the Trust
without the written consent of Janus Capital.
3.12 PUBLIC ANNOUNCEMENTS. The parties hereto agree that they will, to
the extent reasonably feasible, confer with each other prior to the issuance of
any reports, statements or releases pertaining to this Agreement, the Contracts
and the transactions contemplated hereby, except that a party will in any event
have the right to issue any such reports, statements or releases upon advice of
its counsel that such issuance is required in order to comply with the
requirements of any applicable Federal, state or local laws and regulations.
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3.13 STATE AVAILABILITY. The Contracts can lawfully be offered in the
State of New York only. AUSA agrees to promptly notify Janus Capital of any
change in the Territory.
3.14 PREPARATION AND FILING OF VARIOUS DOCUMENTS. The parties to this
Agreement shall be responsible for the prompt and timely preparation and filing
of the documents relating to the Trust, Contracts and Separate Account as set
forth on SCHEDULE 3 to this Agreement. Except as may otherwise be provided in
the Related Agreements, each party shall not file any document listed on
SCHEDULE 3 with a regulatory agency without providing a copy of such document to
the other party.
3.15 CHANGES IN THE CONTRACTS OR THE SEPARATE ACCOUNT. Subject to the
provisions of Sections 3.1 and 3.2, the parties to this Agreement may by mutual
consent amend the Schedules to this Agreement from time to time to reflect
changes in or relating to the Contracts and to add new classes of variable
annuity contracts and variable life insurance policies to be issued by AUSA
through a separate account and to be distributed by AFSG to Janus Capital
Customers. The provisions of this Agreement shall be equally applicable to each
such class of contracts and policies and to each such separate account, unless
the context otherwise requires.
SECTION 4
COMPENSATION AND EXPENSES
4.1 COMPENSATION AND EXPENSES.
(a) Janus Capital will receive the management fees provided
for under the current Investment Advisory Agreements between Janus
Capital and the Trust on behalf of each Portfolio, as such agreements
may be amended from time to time in accordance with applicable law.
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(b) AUSA has executed a Principal Underwriting Agreement for
the Contracts with AFSG, substantially in the form attached hereto as
EXHIBIT B, subject to any amendment to such agreement mutually agreed
to by the parties thereto.
(c) Each party shall bear its own expenses in performing the
functions ascribed to it in Sections 3.8, 3.9 and 3.10.
(d) Unless assumed by the Trust, Janus Capital shall bear all
expenses associated with the preparation, printing, mailing, and
distribution to prospective applicants for the Contracts and to
existing Contract Owners of: (i) the Prospectus and Statement of
Additional Information for the Trust, and supplements, amendments, or
stickers thereto; and (ii) annual and semi-annual reports of the Trust.
(e) AUSA shall bear all expenses allocable to the preparation,
printing, mailing and distribution of the Contracts. AUSA shall bear
all costs associated with the preparation of masters in all electronic
format mutually agreed upon by the parties of (i) the application forms
for the Contracts; (ii) the Contract Prospectus and its Statement of
Additional Information, and any supplements, amendments or stickers
thereto; and (iii) the annual and semi-annual reports of the Separate
Account, and Janus Capital shall bear the costs of printing and postage
or other delivery of such material to a Contract Owner or to a
prospective applicant for the Contract.
(f) As reimbursement for expenses incurred by Janus Capital in
bearing certain expenses, which would normally be assumed by and
properly allocated to and borne by AUSA, such as:
(1) the printing, mailing and distribution of
Prospectuses for the Separate Account and
Contracts to prospective applicants; and
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(2) the printing, mailing and distribution of
Statements of Additional Information for the
Separate Account and the Contracts to
prospective applicants; and
(3) the printing, mailing and distribution of the
application forms and sales material for the
Contracts to prospective applicants; and
(4) the printing and distribution of the annual and
semi-annual reports of the Separate Account to
Contract Owners; and
(5) the receipt and disposition of prospective
applicant and Contract Owner inquiries, and
other Contract-level service-related matters;
AUSA agrees to reimburse Janus Capital in an amount equal to an annual rate of
0.05% of the average daily net assets of the Separate Account, such amounts, as
due, to be payable monthly to Janus Capital.
(g) Janus Capital acknowledges that the insurance regulators of New
York require AUSA to refund an amount equal to the total purchase payments made
to the Contract by the Contract Owner if the Contract owner cancels the Contract
within the number of days indicated under the "Right to Examine Contract"
provision of the variable annuity contract(s) listed on Schedule 1 of this
Agreement. Janus Capital further acknowledges that, under the terms of the
Contract, the Contract Owners' money is invested during the free-look period and
that AUSA bears the risk of market loss with respect to monies refunded during
the free-look period. Accordingly, Janus Capital hereby agrees to reimburse AUSA
to the extent of 50% of such losses. Such reimbursement shall be effected in a
manner that is mutually agreeable to Janus Capital and AUSA.
SECTION 5
GENERAL PROVISIONS
18
5.1 EFFECTIVE DATE. This Agreement shall become effective as of the day
and year first above written.
5.2 TERM. Unless otherwise terminated pursuant to paragraph 5.3, 5.4,
5.5 or 5.6, this Agreement shall continue unless terminated upon six months
prior written notice by the terminating party to the other parties.
5.3 TERMINATION FOR CAUSE. This Agreement may be terminated at any time
for default as provided in Paragraph 5.4 or upon election as provided in
Paragraph 5.5 or 5.6, or where required by any governmental authority with
lawful jurisdiction or applicable law or regulation.
5.4 AUTOMATIC DEFAULT. In the event that:
(a) any party shall elect to, or be wound up and dissolved;
(b) any party shall become insolvent or admit in writing its
inability to pay its debts as they mature;
(c) any party shall make an assignment for the benefit of
creditors;
(d) any party shall file a voluntary petition in bankruptcy or
for reorganization or be adjudicated as bankrupt or
insolvent;
(e) any party shall have a liquidator or trustee appointed
over its affairs;
(f) in the case of AUSA, AUSA shall become insolvent or its
surplus shall become impaired as such terms are defined
under applicable New York insurance law; or
(g) in the case of AUSA, the insurance commissioner of its
state of domicile shall commence a delinquency proceeding
or apply for a court order of rehabilitation or
liquidation, or the insurance commissioner
19
of any other state or jurisdiction shall commence a
delinquency proceeding or apply for a court order of
conservation or receivership or take other action of a similar
nature;
then such party shall be in default and the other party to this Agreement may
elect to terminate this Agreement immediately upon written notice to the other
parties.
5.5 ELECTIVE TERMINATION. In the event that:
(a) at the option of Janus Capital, if the Participation
Agreement between the Trust and AUSA is terminated; or
(b) at the option of Janus Capital, if, in its good faith
judgment, any event, occurrence or circumstance (including the
enactment of Federal or state legislation, court decision or a change
in circumstances) makes the Contracts or insurance contracts of that
type (e.g., variable annuity contracts or variable life insurance
policies) an unsuitable investment for prospective applicants;
(c) at the option of any party if such party shall determine,
in its good faith judgment, that any other party or their affiliates
has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement, or is the subject
of material adverse publicity, that substantially undermines such
party's ability to meet and perform its obligations under this
Agreement or the reputation and goodwill of the terminating party; or
(d) at the option of any party upon conclusion of formal
proceedings against any other party by the NASD, the SEC, or any state
securities or insurance commission or any other regulatory body, where
the outcome of such proceedings materially impairs such party's ability
to meet and perform its obligations under this Agreement;
20
then, within a reasonable period of time after receiving notice of such event,
the party with the option of making the determination or judgment may, upon
written notice to the other parties, immediately terminate this Agreement.
5.6 OTHER DEFAULT. Any party may terminate this Agreement if any other
party fails to perform any of its material obligations under this Agreement. Any
non-defaulting party shall provide 30 days' written notice of its intention to
terminate this Agreement and the reason for termination. If the breaching party
remedies the default during the 30-day period, or if such default cannot be
remedied within the 30-day period and the breaching party begins immediately to
take steps to do so and proceeds without delay to do so, then in either event
this Agreement shall remain in effect. Otherwise, the party giving the notice
may terminate this Agreement at the end of the 30-day period.
5.7 CONFIDENTIALITY. Each party to this Agreement shall keep
confidential (except as required to be disclosed by law or regulation) the other
parties' respective methods of doing business and the names, addresses and other
personal information relating to customers or prospective customers for the
Contracts, the names, addresses and other personal information relating to
Contract Owners, and any other information proprietary to any party to this
Agreement, and shall not reproduce, disseminate or otherwise publish the same to
any person not a party to this Agreement, without the prior written approval of
the other parties to this Agreement. In particular, without limiting the
generality of the foregoing, (1) AUSA and AFSG agree that the names and
addresses of all customers and prospective customers for the Contracts which may
come to the attention of AUSA and AFSG or any company or person affiliated with
AUSA or AFSG as a result of their relationship with Janus Capital or any
affiliated company of Janus Capital and not from any independent source, are
confidential and shall not be used by
21
AUSA, AFSG, their agents, registered representatives or any company or person
affiliated with AUSA or AFSG for any purpose whatsoever except as may be
necessary to perform their obligations under this Agreement. In no event shall
the names and addresses of such customers and prospective customers be furnished
by AUSA or AFSG to any other company, agent or person for any purpose without
the prior written consent of Janus Capital, including, without limitation, the
provision of lists, or other accountings, of Janus Capital Customers who have
purchased the Contracts to AUSA agents for the purposes of soliciting other
products and services offered by AUSA. In addition, AUSA represents that it will
not include sales or other promotional materials for other AUSA products or
services in regular mailing to Janus Capital Customers, and (2) Janus Capital
agrees that the names and addresses of all AUSA Owners (as such term is defined
in Section 3.9(a)) which may come to the attention of Janus Capital or any
company or person affiliated with Janus Capital as a result of their
relationship with AUSA or any affiliated company of AUSA and not from any
independent source, are confidential and shall not be used by Janus Capital for
any purpose whatsoever except as may be necessary to perform their obligations
under this Agreement. In no event shall the names and addresses of such
customers and prospective customers be furnished by Janus Capital to any other
company, agent or person for any purpose without the prior written consent of
AUSA, including, without limitation, the provision of lists, or other
accountings, of AUSA Owners who have purchased the Contracts to any company or
person affiliated with Janus Capital for the purposes of soliciting other
products and services offered by Janus Capital.
5.8 INDEMNIFICATION.
(a) Indemnification by AUSA. AUSA agrees to indemnify and hold
harmless Janus Capital and each person who controls Janus Capital with
the meaning of such terms
22
under the Federal securities laws and any officer, director, employee
or agent of the foregoing, against any and all losses, claims, damages
or liabilities (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted)
(collectively, the "Losses"), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise,
insofar as such Losses: (i) result from a breach by AUSA of any
provision of this Agreement; or (ii) result because of the terms of any
Contract, or breach of any terms of any Contract, sold under the
Related Agreements; (iii) proximately result from any activities of
AUSA or its officers, directors, employees, or agents, or their failure
to take action, that is not authorized by this Agreement or is
inconsistent with the Agreement, including, but not limited to any
violation of any Federal or state statute or regulation, or (iv) result
from any authorized use of an AUSA Xxxx.
(b) Indemnification by Janus Capital. Janus Capital agrees to
indemnify and hold harmless AUSA and AFSG and each person who controls
AUSA and AFSG within the meaning of such terms under the Federal
securities laws and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted) (collectively, the
"Losses"), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such
Losses: (i) result from a breach by Janus Capital of any provision of
this Agreement; (ii) proximately result from any activities of Janus
Capital's officers,
23
directors, employees, or agents, or their failure to take action, that
is not authorized by this Agreement or is inconsistent with the
Agreement, including, but not limited to any violation of any Federal
or state statute or regulation, or (iii) result from any authorized use
of a Xxxxx Xxxx.
(c) Indemnification by AFSG. AFSG agrees to indemnify and hold
harmless Janus Capital and each person who controls Janus Capital
within the meaning of such terms under the Federal securities laws and
any officer, director, employee or agent of the foregoing, against any
and all losses, claims, damages or liabilities (including any
investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted) (collectively, the "Losses"),
to which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such Losses: (i)
result from a breach by AFSG of any provision of this Agreement; (ii)
result because of the terms of any Contract, or breach of any terms of
any Contract, sold under the Related Agreements; (iii) proximately
result from any activities of AFSG or its officers, directors,
employees, or agents, or their failure to take action, that is not
authorized by this Agreement or is inconsistent with this Agreement,
including, but not limited to any violation of any Federal or state
statute or regulation, or (iv) result from any authorized use of an
AFSG Xxxx.
(d) General. After receipt by a party entitled to
indemnification ("indemnified party") under this Paragraph 5.8 of the
commencement of any action, if a claim in respect thereof is to be made
against any person obligated to provide indemnification under this
Paragraph 5.8 ("indemnifying party"), such indemnified party will
notify the
24
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission is to so notify the
indemnifying party will not relieve it from any liability under this
Paragraph 5.8, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give
such notice. The indemnifying party shall be entitled to participate,
at its own expense, in the defense of any action brought against an
indemnified party. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified party. Upon such election by the indemnifying party to
assume the defense, the indemnified party shall bear the fees and
expenses of any additional counsel retained by it 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. If the indemnifying party
does not elect to assume the defense of any action, then it will
reimburse the indemnified party for the reasonable fees of any legal
counsel retained by such indemnified party. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Neither AUSA, AFSG nor Janus Capital shall be liable under these
indemnification provisions as applicable, with respect to any Losses incurred or
assessed against such
25
indemnified party that arise 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 its
obligations or duties under this Agreement.
5.9 INSPECTION. Any party hereto shall at any time during normal
business hours upon reasonable written notice (depending on the books and
records to be inspected) and at its sole cost, have the right to inspect the
other parties' books and records that pertain to the subject matter of this
Agreement and the transactions contemplated hereunder. Such inspected party
shall cooperate with the requesting party in all reasonable respects during any
such inspection in making records, files, books and backup materials available.
5.10 ORGANIZATION AND GOOD STANDING; AUTHORIZATION. Each party hereto
represents that it is a corporation duly organized, validly existing and in good
standing under the laws of that jurisdiction set forth on page one of this
Agreement; has all requisite corporate power to carry on its businesses as it is
now being conducted and is qualified to do business in each jurisdiction in
which it is required to be so qualified; and is in good standing in each
jurisdiction in which such qualification is necessary under applicable law. Each
party further represents that the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action by such party and when so executed
and delivered this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
5.11 INDEPENDENT CONTRACTOR. Nothing contained in this Agreement
creates the relationship of employer-employee, joint venture, partnership or
association between any or all of Janus Capital, AUSA, or AFSG.
26
5.12 ASSIGNMENT AND TRANSFER. This Agreement may not be assigned or
transferred by any party without the prior written consent of the other parties
hereto.
5.13 RIGHTS, REMEDIES, ETC. ARE CUMULATIVE. The rights, remedies and
obligations contained in this Agreement are cumulative and are in addition to
any and all rights, remedies and obligations, at law or in equity, which the
parties hereto are entitled to under state and Federal laws. Waiver by one party
to this Agreement of any obligation of another party to this Agreement does not
constitute a waiver of any further or other obligation of such party.
5.14 NOTICES. All notices hereunder are to be made in writing and shall
be given:
if to AUSA or AFSG, to: Xxxx X. Xxxxxx, Esq.
AUSA Life Insurance Company, Inc.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
if to Janus Capital, to: General Counsel
Janus Capital Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or such other address as such party may hereafter specify in writing. Each such
notice to a party shall be either hand delivered or transmitted by registered or
certified United States mail with return receipt requested, and shall be
effective upon delivery.
5.15 INTERPRETATION, JURISDICTION, ETC. This Agreement constitutes the
whole agreement between the parties hereto and supersedes all prior oral or
written negotiations between the parties with respect to the subject matter
hereof. This Agreement shall be construed and its provisions interpreted under
and in accordance with the internal laws of the State of Colorado without giving
effect to principles of conflict of laws.
5.16 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof, shall be settled by arbitration in
accordance with the
27
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
5.17 HEADINGS. The headings 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.
5.18 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which taken together shall be deemed to be one and the
same instrument.
5.19 SEVERABILITY. This is a severable Agreement and in the event that
any part or parts of this Agreement shall be held to be unenforceable to its or
their full extent, then it is the intention of the parties hereto that such part
or parts shall be enforced to the extent permitted under the law, and, in any
event, that all other parts of this Agreement shall remain valid and duly
enforceable as if the unenforceable part or parts had never been a part hereof.
5.20 SURVIVAL OF CERTAIN PROVISIONS. Notwithstanding any termination of
this Agreement, Paragraphs 5.7 and 5.8 shall survive indefinitely and, to the
extent necessary to fulfill the intent of this Agreement, Sections 3 and 4 shall
remain in full force and effect for so long as Contract Owners continue to own
shares of the Trust pursuant to the Participation Agreement attached hereto as
EXHIBIT A.
5.21 SUCCESSORS. The terms of this Agreement shall inure to the benefit
of and be binding upon any successor by law of Janus Capital, AFSG or AUSA, as
the case may be.
28
IN WITNESS WHEREOF, each party hereto represents that the officer
signing this Agreement on the party's behalf is duly authorized to execute this
Agreement; and the parties hereto have caused this Agreement to be duly executed
by such authorized officers on the date specified below.
AUSA LIFE INSURANCE
COMPANY, INC.
By: /s/ Xxx X. Xxxxxxxxxxx
Name: Xxx X. Xxxxxxxxxxx
Title: Chairman of the Board and President
JANUS CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President
AFSG SECURITIES CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
29
SCHEDULE 1
VARIABLE CONTRACTS SUBJECT TO MASTER AGREEMENT
EFFECTIVE NOVEMBER 1, 2001
SEC
NAME OF CONTRACT CONTRACT FORM NO. REGISTRATION NO.
---------------- ----------------- ----------------
Janus Annuity - New York VA14 NY 333-64650/811-10437
Flexible Payment
Variable Accumulation
Deferred Annuity
SCHEDULE 2
SEPARATE ACCOUNTS
AVAILABLE UNDER THE CONTRACTS
EFFECTIVE NOVEMBER 1, 2001
NAME OF NAME DATE
CONTRACT OF ACCOUNT ESTABLISHED
-------- ---------- -----------
Janus Annuity - New York AUSA Series October 24, 1994
Flexible Payment Annuity
Variable Accumulation Account B
Deferred Annuity,
Contract Form No.
VA14 NY
SCHEDULE 3
RESPONSIBILITIES FOR DOCUMENT PREPARATION AND FILINGS
EFFECTIVE NOVEMBER 1, 2001
AUSA = AUSA LIFE INSURANCE COMPANY, INC.
JCC = JANUS CAPITAL CORPORATION
ASFG = AFSG SECURITIES CORPORATION
JDI = JANUS DISTRIBUTORS, INC.
FILINGS WITH
-------------------------------
State
Securities Copies for
Departments State Insurance Distribution to
Document Preparation SEC NASD (if required) Departments Investors
-------- ----------- --- ---- ------------- ----------- ---------
Contract Forms AUSA AUSA AUSA
Contract Application AUSA AUSA JCC
Separate AUSA AUSA
Account
Registration AUSA AUSA AUSA AUSA
Statement for
the Contracts
(including all
required exhibits)
Registration AUSA AUSA AUSA AUSA
Statement
for the
Separate Account
(including all
required exhibits)
Final AUSA AUSA AUSA AUSA JCC
Prospectuses
and any Supplements
for the
Contracts
State
Securities Copies for
Departments State Insurance Distribution to
Document Preparation SEC NASD (if required) Departments Investors
-------- ----------- --- ---- ------------- ----------- ---------
Registration Statement JCC JCC AUSA
for the Trust
(including all required
exhibits)
Final Prospectuses and JCC JCC AUSA JCC
any supplements for the
Trust
Distribution Agreement AUSA AUSA
for the Contracts
JDI or JDI or JDI or
Advertising and Sales JCC ASFG* AFSG* ASFG* AUSA JCC
Materials
Participation Agreement AUSA AUSA
Investment Advisory JCC AUSA
Agreement
* To be filed by ASFG, if published by and on behalf of ASFG; to be filed by
JDI if published by and on behalf of JDI.
EXHIBIT A
PARTICIPATION AGREEMENT
BETWEEN
JANUS ASPEN SERIES
AND
AUSA LIFE INSURANCE COMPANY, INC.
DATED
AS OF
NOVEMBER 1, 2001
TABLE OF CONTENTS
ARTICLE I. SALE AND REDEMPTION OF TRUST SHARES .......................................... 3
1.1 General ................................................................ 3
1.2 Sale ................................................................... 3
1.3 Redemption ............................................................. 3
1.4 Company As Agent of Trust............................................... 3
1.5 Payment for Purchases and Redemptions................................... 4
1.6 Business Day............................................................ 4
1.7 Book Entry.............................................................. 4
1.8 Dividends and Distributions............................................. 4
1.9 Net Asset Value Availability............................................ 5
1.10 Trust as Sole Investment Vehicle of Account ............................. 5
1.11 Availability of Trust Shares to Others................................... 5
1.12 Pricing Errors........................................................... 6
ARTICLE II. REPRESENTATIONS AND WARRANTIES................................................ 6
2.1 By the Company.......................................................... 6
2.2 By the Trust............................................................ 7
ARTICLE II. VOTING........................................................................ 9
3.1 By the Company.......................................................... 9
3.2 1940 Act Compliance...................................................... 9
ARTICLE IV. SALES AND ADVERTISING MATERIAL AND INFORMATION................................ 9
4.1 Approval Prior to Use................................................... 9
4.2 Representations and Statements By Company............................... 11
4.3 Representations and Statements By Trust................................. 11
4.4 Copies to Company....................................................... 12
4.5 Copies to Trust......................................................... 12
4.6 Copies of Drafts........................................................ 12
4.7 Sales Material Defined.................................................. 13
ARTICLE V. OBLIGATIONS OF THE PARTIES.................................................... 13
5.1 No Fees Payable to Company.............................................. 13
5.2 Trust Filing Obligations................................................ 13
5.3 Company Filing Obligations.............................................. 14
5.4 Prospectus and Application Form Printing and Distribution............... 14
5.5 Statement of Additional Information Printing and Distribution........... 14
5.6 Annual and Semi-Annual Report Printing and Distribution................. 15
5.7 Proxy Printing and Distribution......................................... 15
5.8 Confirmations, Contract Annual Statements and 1099 Forms................ 15
ARTICLE VI. DIVERSIFICATION............................................................... 15
6.1 Code Section 817(h)..................................................... 15
ARTICLE VII. POTENTIAL CONFLICTS........................................................... 16
7.1 Trust Exemptive Application............................................. 16
i
7.2 Material Irreconcilable Conflict (Trustees)............................. 16
7.3 Material Irreconcilable Conflict (Company).............................. 16
7.4 Material Irreconcilable Conflict (Resolution)........................... 17
ARTICLE VIII. INDEMNIFICATION............................................................... 17
8.1 Indemnification by The Company.......................................... 17
8.2 Indemnification by the Trust............................................ 19
8.3 Indemnification Procedures.............................................. 20
8.4 Willful Misfeasance, Bad Faith, Gross Negligence........................ 21
8.5 Successors and Survival................................................. 22
ARTICLE IX. APPLICABLE LAW................................................................ 22
9.1 State Law Applicable.................................................... 22
9.2 Securities Laws Applicable.............................................. 22
ARTICLE X. TERMINATION................................................................... 22
10.1 Events Creating Termination............................................. 22
10.2 Notice Requirement...................................................... 24
10.3 Effect of Termination................................................... 25
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS............................... 25
11.1 When Applicable......................................................... 25
ARTICLE XII. NOTICES....................................................................... 26
12.1 General.................................................................. 26
ARTICLE XIII. MISCELLANEOUS................................................................. 26
13.1 Trust Liability......................................................... 26
13.2 Captions................................................................ 26
13.3 Counterparts............................................................ 26
13.4 Severability............................................................ 26
13.5 Inspection.............................................................. 26
13.6 Binding Obligation...................................................... 27
ii
SCHEDULES
1 Separate Accounts Available Under the Contracts
2 Variable Contracts Subject to Participation Agreement
iii
AGREEMENT
THIS AGREEMENT is made as of this 1st day of November, 2001, by and
between JANUS ASPEN SERIES, an open-end management investment company organized
as a Delaware business trust (the "Trust"), and AUSA LIFE INSURANCE COMPANY,
INC., a New York corporation (the "Company"), on its own behalf and on behalf of
each separate account and subaccount thereof of the Company named in SCHEDULE 1
to this Agreement as in effect at the time this Agreement is executed and such
other separate accounts that may be added to SCHEDULE 1 from time to time in
accordance with the provisions of Article XI of this Agreement (each such
separate account referred to as the "Account").
WHEREAS, the Trust desires to engage in business as an open-end
management investment company and to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts (collectively referred to as "Variable Insurance Products," the owners
of such products being referred to as "Contract Owners") to be offered by
insurance companies which have entered into participation agreements with the
Trust ("Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into numerous
series of shares, each designated a "Portfolio" and each series of shares
representing an interest in a particular managed portfolio of securities and
other assets; and
WHEREAS, each Portfolio issues its shares in one or more classes,
including Institutional Shares which are the subject of this Agreement
("Portfolio shares"); and
WHEREAS, the Trust has filed a registration statement (the "Trust
Registration Statement") with the Securities and Exchange Commission (the "SEC")
on Form N-1A 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 Portfolio shares under the Securities Act of
1933, as amended (the "1933 Act"); and
1
WHEREAS, the Trust has received an order from the SEC granting
Participating Insurance Companies and their variable life insurance 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 Portfolio shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and qualified pension and retirement plans
outside of the separate account context (the "Shared Trust Exemptive Order");
and
WHEREAS, the Company has filed a registration statement with the SEC to
register under the 1933 Act certain variable annuity contracts described in
SCHEDULE 2 to this Agreement as in effect at the time this Agreement is executed
and such other variable annuity contracts and variable life insurance policies
which may be added to SCHEDULE 2 from time to time in accordance with Article XI
of this Agreement (the "Contracts," each such registration statement for a class
or classes of Contracts listed on SCHEDULE 2 being referred to as the "Contracts
Registration Statement"); and
WHEREAS, the Account, a validly existing segregated asset account, duly
authorized by resolution of the Board of Directors of the Company on the date
set forth on SCHEDULE 1, sets aside and invests assets attributable to the
Contracts; and
WHEREAS, the Company has registered or will have registered the Account
with the SEC as a unit investment trust under the 1940 Act before any Contracts
are issued by the Account; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Portfolio shares on behalf of the
Account to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company
and the Trust agree as follows:
2
ARTICLE I SALE AND REDEMPTION OF TRUST SHARES
1.1 General. The Trust agrees to sell to the Company Portfolio shares
which the Company orders on behalf of the Account, executing such orders on a
daily basis in accordance with Section 1.4 of this Agreement.
1.2. Sale. The Trust agrees to make Portfolio shares available for
purchase by the Company on behalf of the Account at the net asset value per
share next computed after receipt of such purchase order by the Trust (or its
agent) on Business Days as defined in Section 1.6 of this Agreement, and the
Trust shall use best efforts to calculate such net asset value on each such
Business Day. Notwithstanding any other provision in this Agreement to the
contrary, the Trustees of the Trust (the "Trustees") may suspend or terminate
the offering of shares of any Portfolio, if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Trustees acting in good faith and in light of their fiduciary duties under
Federal and any applicable state laws, suspension or termination is necessary
and in the best interests of the shareholders of any Portfolio.
1.3.Redemption. The Trust agrees to redeem, at the Company's request,
any full or fractional shares of any Portfolio of the Trust held by the Account
or the Company, executing such requests at the net asset value per share next
computed after receipt of such redemption order by the Trust (or its agent) on
Business Days as defined in Section 1.4 of this Agreement. Notwithstanding the
foregoing, the Trust may delay redemption of Portfolio shares to the extent
permitted by the 1940 Act.
1.4 Company As Agent of Trust. For purposes of Sections 1.1, 1.2 and
1.3, the Company shall be the agent of the Trust for the limited purpose of
receiving and accepting purchase and redemption orders resulting from investment
in and payments under the Contracts. Receipt by the Company shall constitute
receipt by the Trust provided that (i) such orders are received by the Company
in good order prior to the time the net asset value per share of each Portfolio
is computed in accordance with its prospectus, and (ii) the Trust receives
3
notice of such purchase or redemption order by 12:00 noon, Eastern Time on such
next Business Day.
A purchase or redemption order for any Portfolio share that does not
satisfy the conditions specified above will be effected at the net asset value
per share next computed after the conditions specified above have been
satisfied.
Payment For Purchases and Redemptions. Purchase orders that are
transmitted to the Trust in accordance with this Section 1.4 shall be paid for
on the same Business Day that the Trust has received notice of the order.
Payment shall be made in Federal funds transmitted by wire. The Company shall
use its best efforts to ensure that funds are received by the Trust by 12:00
noon Eastern Time, provided that the parties acknowledge that the Trust may,
from time to time, accept funds received thereafter so long as the wire was
originated by the Company by 12:00 noon Eastern Time. Redemption orders that are
transmitted to the Trust in accordance with this Section 1.4 shall be paid for
on the same Business Day that the Trust has received notice of the redemption
order (to the extent such payment can be transmitted by wire at the time the
redemption order is processed by the Trust; it being understood that, if such
payment cannot be so transmitted, such payment will be transmitted on the
following Business Day). Payment for redemption orders shall be made in Federal
funds transmitted by wire.
1.6 Business Day. For the purposes of this Article I, "Business Day"
shall mean any day for which the Trust calculates net asset value per share as
described in the Trust's then currently effective prospectus.
1.7 Book Entry. Issuance and transfer of Portfolio shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Purchase and redemption orders for Portfolio shares will be recorded in
an appropriate ledger for the Account or the appropriate subaccount of the
Account.
1.8 Dividends and Distributions. The Trust shall furnish notice (by
wire or telephone) to the Company of any income dividends or capital gain
distributions payable on Portfolio
4
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on any Portfolio shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of Portfolio
shares so issued as payment of such dividends and distributions.
1.9 Net Asset Value Availability. The Trust or its custodian shall make
the net asset value per share for each Portfolio available to the Company on a
daily basis as soon as reasonably practicable after the net asset value per
share for such Portfolio is calculated and shall calculate such net asset value
in accordance with the Trust's then currently effective prospectus. If, on a
given Business Day, the Trust is unable to make the net asset value per share
for a Portfolio for such Business Day available to the Company by 6:00 p.m.,
Eastern Time, the Trust shall so notify the Company before 6:00 p.m.
1.10 Trust as Sole Investment Vehicle of Account. The Company agrees to
purchase and redeem Portfolio shares offered by the then currently effective
prospectus of the Trust in accordance with the provisions of such prospectus.
While this Agreement is in effect, the Company agrees that all net amounts
available under the Contracts shall be invested only in the Trust and/or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Trust if: (a) such other investment company is
advised by the Trust's investment adviser and the Trust, in its sole discretion,
consents to the use of such other investment company, or (b) there is a
substitution of the Trust made in accordance with Section 10.1 (e) of this
Agreement. The Company also agrees that it will not take action to operate the
Account as a management investment company under the 1940 Act without the
Trust's prior written consent.
1.11 Availability of Trust Shares to Others. The Trust agrees that
Portfolio shares will be sold only to Participating Insurance Companies and
their separate accounts, and also to qualified pension and retirement plans
outside of the separate account context. The Trust will not sell Portfolio
shares to any insurance company or separate account unless an agreement
5
containing provisions substantially the same as Section 3.1 and Article VII of
this Agreement is in effect to govern such sales. No shares of any Portfolio
will be sold to the general public. The Company agrees to purchase Portfolio
shares only for the purpose of funding the Contracts listed in SCHEDULE 2, as
amended from time to time.
1.12 Pricing Errors. In the event adjustments are required to correct
any material error in the computation of the net asset value of a Portfolio's
shares, the Trust shall notify the Company as soon as practicable after
discovering the need for those adjustments which result in a reimbursement to an
Account in accordance with the Trust's then current policies on reimbursement,
which the Trust represents are consistent with applicable SEC standards. If an
adjustment is to be made in accordance with such policies to correct an error
which has caused an Account to receive an amount different than that to which it
is entitled, the Trust shall make all necessary adjustments to the number of
shares owned in the Account and distribute to the Account the amount of such
underpayment for credit to the Contract owners.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 By the Company.
(a) The Company represents and warrants that the Contracts are
registered under the 1933 Act and that the Contracts will be
issued and sold in compliance in all material respects with
applicable Federal and state laws. The Company further
represents and warrants that it is an insurance company duly
organized and in good standing under applicable law, that it
has legally and validly authorized the Account as a separate
account under the New York Insurance Code, and that it has
registered the 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 shall amend
the Contracts Registration Statement under the
6
1933 Act, and the Account's Registration Statement under the
1940 Act, from time to time as required in order to effect the
continuous offering of the Contracts, as described in the then
currently effective prospectus for the Contracts and the
Account. The Company shall register and qualify the Contract
for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the
Company.
(b) The Company represents that the Contracts are currently
and at the time of issuance will be treated as annuity
contracts, endowment contracts or life insurance policies,
whichever is appropriate, under applicable provisions of the
Code, and agrees that it will make every effort to maintain
such treatment, and that it will notify the Trust 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.
(c) The Company represents that its operations and
the operations of the Account shall at all times remain in
material compliance with the applicable laws of the State of
New York to the extent required to perform this Agreement.
2.2 By the Trust.
(a) The Trust represents and warrants that the offer and sale of Portfolio
shares sold pursuant to this Agreement are registered under the 1933 Act and are
duly authorized for issuance in accordance with applicable law, and that the
Trust is and shall remain registered under the 1940 Act for so long as the
Portfolio shares are sold. The Trust further represents and warrants that it is
an unincorporated business trust duly organized and in good standing under the
laws of Delaware. The Trust shall amend the Trust Registration Statement under
the 1933 Act and the
7
1940 Act from time to time as required in order to effect, for
so long as Portfolio shares are sold, the continuous offering
of Portfolio shares as described in the Trust's then currently
effective prospectus. The Trust shall register and qualify
Portfolio shares for sale in accordance with the securities
laws of the various states only if and to the extent deemed
necessary by the Trust.
(b) The Trust represents that it will make best efforts to
qualify as a Regulated Investment Company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"),
and to maintain such qualification (under Subchapter M or any
successor or similar provision), and that it will notify the
Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might
not so qualify in the future.
(c) The Trust's Portfolio shares currently do not intend to
make any payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act, or in contravention of such
rule, although to the extent permitted and in conformity with
the requirements under the 1940 Act it may make such payments
in the future.
(d) The Trust makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and
expenses and investment policies) complies with the insurance
laws or regulations of the various states, except that the
Trust represents that its operations are and shall at all
times remain in material compliance with the applicable
corporation and trust laws of the State of Delaware to the
extent required to perform this Agreement.
8
ARTICLE III. VOTING.
3.1 By the Company. Subject to applicable law, the Company shall:
(a) solicit voting instructions from Contract Owners;
(b) calculate voting privileges in a manner consistent with
other Participating Insurance Companies;
(c) vote Portfolio shares of each Portfolio attributable to
Contract Owners in a manner consistent with voting
instructions timely received from such Contract Owners; and
(d) vote Portfolio shares of each Portfolio attributable to
Contract Owners for which no voting instructions have been
received, as well as shares attributable to the Company in
the same proportion as the Company votes Portfolio shares of
such Portfolio for which the Company has received
instructions;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable insurance products contract
owners. The Company reserves the right to disregard Contract Owner voting
instructions and vote the Portfolio shares held in the Account in its own right,
to the extent permitted by law. The Company shall be responsible for assuring
that voting privileges for the Account are calculated in a manner consistent
with the provisions set forth above. The Company shall not oppose or interfere
with the solicitation of proxies for Portfolio shares attributable to Contract
Owners without the Trust's prior written consent, which consent may be withheld
in the Trust's sole discretion. The Company shall not initiate, or solicit
Contract Owners to initiate, any proxy solicitation.
3.2 1940 Act Compliance. The Trust will comply with applicable
provisions of the 1940 Act pertaining to voting by shareholders.
ARTICLE IV. SALES AND ADVERTISING MATERIAL AND INFORMATION
4.1 Approval Prior to Use.
(a) All sales literature, advertising or other promotional
material for the Account and the Contracts, and each piece of sales
literature,
9
advertising or other promotional material in which the Company or the
Account is or should be named (all such material, as further defined in
Section 4.7, collectively, "Material" for purposes of this Article IV)
created by the Trust, if any, shall be approved by the Company or its
designee in writing prior to its use. The Company agrees to respond to
a request by the Trust for approval of Material on a prompt and timely
basis, but in no event later than five business days after receipt of
Material from the Trust by the Company or its designee. No Material
shall be used unless so approved by the Company or its designee. The
Company or its designee shall file all Material with the NASD and state
insurance regulators in accordance with the filing requirements of such
regulators. To the extent not assumed or reimbursed by the Trust's
investment adviser ("Adviser") or its affiliates, the Trust shall bear
all expenses attributable to the preparation, filing, mailing and
distribution of all Material created by the Trust. The Trust will
provide to the Company at least fifty complete copies of all Material
as printed and distributed for public or Contract Owner use within five
business days of first use.
(b) All Material created by the Company, in which the Trust or
its Adviser is or should be named if any, shall be approved by the
Trust or its designee in writing prior to its use. The Trust agrees to
reply to a request for approval on a prompt and timely basis, but in no
event later than five business days after receipt of Material from the
Company by the Trust or its designee. No Material shall be used unless
so approved by the Trust or its designee. The Company or its designee
shall file all Material with the NASD and state insurance regulators in
accordance with the filing requirements of such regulators. The Company
shall bear all expenses
11
attributable to the preparation, filing, mailing and distribution of
all Material created by the Company. The Company will provide to the
Trust at least fifty complete copies of all Material as printed and
distributed for public or Contract Owner use within five business days
of first use.
4.2 Representations and Statements By Company. The Company shall not
give any information or make any representations or statements on behalf of or
concerning the Trust or its Adviser, in connection with the sale of the
Contracts, other than the information or representations contained in and
accurately derived from: (1) the Registration Statements for the Contracts and
the Account filed with the SEC by the Company, as such Registration Statements
may be amended or supplemented from time to time; (2) the Trust Registration
Statement, as such Registration Statement may be amended or supplemented from
time to time; (3) published shareholder reports of the Trust; (4)
Trust-sponsored proxy materials; or, (5) Material developed by the Trust or its
designee and approved by the Company, except as required by legal process or
regulatory authorities, or with the written permission of the Trust or its
designee.
4.3 Representations and Statements By Trust. The Trust shall not give
any information or make any representations on behalf of or concerning the
Company, the Account or the Contracts other than the information or
representations contained in and accurately derived from: (1) the Registration
Statements for the Contracts and the Account filed with the SEC by the Company,
as such Registration Statements may be amended or supplemented from time to
time; (2) the Trust Registration Statement, as such Registration Statement may
be amended or supplemented from time to time; (3) published reports of the
Company, the Account or the Contracts which are in the public domain or approved
in writing by the Company for distribution to Contract Owners; or, (4) Material
developed by the Company or its designee and approved in writing by the Trust or
its designee, except as required by legal process or regulatory authorities, or
with the written permission of the Company or its designee.
11
4.4 Copies to Company. The Trust will provide to the Company at least
one complete copy of all Trust Registration Statements, prospectuses, Statements
of Additional Information, reports, proxy statements, applications for
exemptions, requests for no-action letters, and all amendments or supplements to
any of the above, that relate to the Trust or Trust shares, promptly after the
filing of such document with the SEC or other regulatory authorities, except
that at least one complete copy of a draft of any prospectus or Statement of
Additional Information for the Trust, and all amendments or supplements thereto,
shall be furnished to the Company at least 10 business days prior to the filing
of such documents with the SEC.
4.5 Copies to Trust. The Company will provide the Trust with at least
one complete copy of a draft of all Registration Statements for the Contracts
and the Account, and all amendments and supplements thereto, at least 10
business days prior to the filing of such documents with the SEC. The Company
will provide to the Trust at least one complete copy of all reports,
solicitations for voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Contracts or the Account, promptly after the filing of such
document with the SEC or other regulatory authorities.
4.6 Copies of Drafts. Each party will make best efforts under the
circumstances to provide to the other party copies of draft versions of any
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, solicitations for voting instructions, applications
for exemptions, requests for no-action letters, and all amendments or
supplements to any of the above, to the extent that the other party reasonably
needs any information contained in such draft version for purposes of preparing
a report or other filing to be filed with or submitted to a regulatory agency.
If a party requests any such draft version before such a report or other filing
has been filed, the other party will provide the requested information if then
available and in the draft version then available at the time of such request.
12
4.7 Sales Material Defined. For purposes of this Article IV, the phrase
"Material" includes, but is not limited to, advertisements (such as material
published, or designed for use, in a newspaper, magazine or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, or reprints or excerpts 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.
ARTICLE V. OBLIGATIONS OF THE PARTIES
5.1 No Fees Payable to Company. The Trust shall pay no fee or other
compensation to the Company under this Agreement, except that if the Portfolio
shares of the Trust adopt and implement a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then the Trust may make payments to
the Company in amounts agreed to by the Trust and the Company in writing.
Currently, implementation of a plan by the Portfolio shares pursuant to Rule
12b-1 is not contemplated.
5.2 Trust Filing Obligations. The Trust 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 Trust. The Trust
shall bear the costs of registration and qualification of its shares,
preparation and filing of the documents listed in this Section 5.2 and all taxes
to which an issuer is subject on the issuance and transfer of its shares. The
Company shall be responsible for and shall bear the costs of filing such
documents with any state insurance regulators requiring such filing. The Trust
shall
13
prepare and file on a timely basis with the appropriate regulatory authorities,
at the Trust's expense, all required tax returns pertaining to Trust matters.
5.3 Company Filing Obligations. The Company shall prepare and be
responsible for filing with the SEC, and any state regulators requiring such
filing, all Contract forms and applications, registration statements for the
Account and the Contracts, and prospectuses and Statements of Additional
Information for the Contracts. The Company shall bear the costs of registration
and qualification of its Contracts, preparation and filing of the documents
listed in this Section 5.3 and all taxes applicable to the Account and
Contracts. The Company shall prepare and file on a timely basis with the
appropriate regulatory authorities, at the Company's expense, all required tax
returns pertaining to the Account.
5.4 Prospectus and Application Form Printing and Distribution. The
Company shall provide the Trust (at the Company's expense) with versions of the
current prospectus for the Contracts and the Account, and the application forms
for the Contracts, in an electronic format mutually agreed upon by the parties.
Unless otherwise agreed by the parties, the Trust shall be responsible for
printing the prospectus for the Contracts and the Account, and the prospectus
for the Trust, in a "combined" fashion under a common cover with a common
binder. Unless otherwise agreed, the Company shall not bear the expense of
printing and distribution of the combined prospectuses and the application
forms.
5.5 Statement of Additional Information Printing and Distribution. The
Company shall provide the Trust (at the Company's expense) with a version of the
current Statement of Additional Information for the Contracts and the Account in
an electronic format mutually agreed upon by the parties. At the Trust's option,
the Trust may produce such Statement of Additional Information either in
combination with the Statement of Additional Information for the Trust or under
its own separate cover. Unless otherwise agreed, the Company shall not bear the
expense of duplication and distribution of the Statement of Additional
Information for the Contracts and the Account.
14
5.6 Annual and Semi-Annual Report Printing and Distribution. The
Company shall provide the Trust (at the Company's expense) with versions of the
annual and semi-annual reports for the Account in an electronic format mutually
agreed upon by the parties. The Trust shall be responsible for printing the
annual and semi-annual reports for the Account, and the annual and semi-annual
reports for the Trust, in a "combined" fashion under a common cover with a
common binder. Unless otherwise agreed, the Company shall not bear the expense
of printing and distribution of the combined annual and semi-annual reports.
5.7 Proxy Printing and Distribution. The Trust (at the Trust's expense)
shall provide the Company with copies of any Trust-sponsored proxy materials in
such quantity as the Company shall require in a form suitable for distribution
to Contract Owners. The Trust shall bear the expense of printing such proxy
materials and the expense of printing any other voting materials for a proxy
solicitation to Contract Owners. The Company shall bear the expenses of
distributing such materials. The Company assumes sole responsibility for
ensuring that all required proxy solicitation materials are delivered to
Contract Owners in accordance with Federal and any applicable state securities
laws.
5.8 Confirmations, Contract Annual Statements and 1099 Forms. The
Company shall be responsible for and bear the expense of producing and
distributing confirmations of each transaction in a Contract, annual statements
for each Contract which summarize transactions which have occurred in each
Contract during the previous Contract year, and individual 1099 Federal tax
forms for each Contract.
ARTICLE VI. DIVERSIFICATION
6.1 Code Section 817(h). The Trust will at all times comply with
Section 817(h) of the Code, and all regulations issued thereunder.
15
ARTICLE VII. POTENTIAL CONFLICTS
7.1 Trust Exemptive Application. The Company has reviewed a copy of an
application for exemptive relief, originally filed by the Trust on May 20, 1993
with the SEC, and any amendments thereto, and has reviewed the conditions to the
requested relief set forth therein. As set forth in such application, the
Company agrees to report any potential or existing conflicts promptly to the
Trustees, including any decision by the Company to disregard Contract owner
voting instructions, and recognizes that it will be responsible for assisting
the Trustees in carrying out their responsibilities under such application and
order. The Company agrees to carry out such responsibilities in the interests of
existing Contract Owners.
7.2 Material Irreconcilable Conflict (Trustees). If a majority of the
Trustees, or a majority of disinterested Trustees, determines that a material
irreconcilable conflict exists with regard to Contract Owner investments in the
Trust, the Trustees shall give prompt notice to all Participating Insurance
Companies. The Company shall, in cooperation with other Participating Insurance
Companies whose contract owners are also affected, at its sole cost and expense,
and to the extent reasonably practicable (as determined by a majority of the
disinterested Trustees), 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 to the Account
from the Trust or any Portfolio of the Trust and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Trust, or submitting the question of whether such segregation should be
implemented to a vote of all affected Contract Owners; and/or (b) establishing a
new registered management investment company.
7.3 Material Irreconcilable Conflict (Company). If a material
irreconcilable conflict arises as a result of a decision by the Company to
disregard Contract Owner voting instructions and such decision represents a
minority position or would preclude a majority vote by all Contract Owners
having an interest in the Trust, the Company may be required, at the
16
Trustees' election, to withdraw the Account's investment in the Trust 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 Trustees. Any such withdrawal and termination must take place
within six (6) months after the Trust gives written notice that this provision
is being implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Trust.
7.4 Material Irreconcilable Conflict (Resolution). For the purpose of
this Article, a majority of the disinterested Trustees shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Trust be required to bear the expense of establishing a
new funding medium for any Variable Insurance Product. The Company shall not be
required by this Article to establish a new funding medium for any Contract if
an offer to do so has been declined by vote of a majority of the Contract Owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company shall withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees 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 Trustees.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification by The Company. The Company agrees to indemnify and
hold harmless the Trust, and each person who controls the Trust within the
meaning of such terms under the Federal securities laws and any officer,
trustee, director, employee or agent of
17
the foregoing, against any and all losses, claims, damages or liabilities
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted) (collectively, "Losses" for purposes of this
Article VIII), to which they or any of them may become subject under any statute
or regulation, at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, prospectus for the Contracts (or any amendment
or supplement thereto) or sales literature for the Contracts or the
Contracts themselves (collectively, "Company Documents" for purposes of
this Article VIII), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or such alleged statement or alleged omission was
made in reliance upon and was accurately derived from written
information furnished to the Company by or on behalf of the Trust for
use in Company Documents, or otherwise for use in connection with the
sale of the Contracts or Portfolio shares; or
(b) arise out of or result from statements or representations by or on
behalf of the Company (other than statements or representations
contained in and accurately derived from Trust Documents as defined in
Section 8.2(a)) or wrongful conduct of the Company, or persons under
its control, with respect to the sale or distribution of the Contracts
or Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents (as defined
in 8.2(a)) or the omission or alleged omission to state therein a
material fact required to be
18
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made, if
such statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Trust 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 under the terms of this
Agreement; or
(e) arise out of or result from any material breach by the Company of
this Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Portfolio shares on a timely
basis in accordance with the procedures set forth in Article I.
This indemnification will be in addition to any liability which the Company may
otherwise have.
8.2 Indemnification by the Trust. The Trust agrees to indemnify and
hold harmless the Company, and each person who controls the Company within the
meaning of such terms under the Federal securities laws and any officer,
director, employee or agent of the foregoing, against any and all Losses, to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Trust
Registration Statement or prospectus for the Trust (or any amendment or
supplement thereto) or sales literature for the Trust (collectively,
"Trust Documents" for purposes of this Article VIII), or arise out of
or are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission or alleged statement or alleged
omission was made in reliance upon and accurately derived from
19
information furnished to the Trust by or on behalf of the Company for
use in Trust Documents or otherwise for use in connection with the sale
of the Contracts or Portfolio 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 the Trust or the Trust's
investment adviser, or persons under their control, with respect to the
sale or distribution of the Contracts or Portfolio 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 in light of the circumstances in which they were made, if
such statement or omission was made in reliance upon and accurately
derived from written information furnished by the Trust to the Company;
or
(d) arise out of or result from any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified in
Article VI of this Agreement); or
(e) arise out of or result from any material breach by the Trust of
this Agreement.
This indemnification will be in addition to any liability which the
Trust may otherwise have.
8.3 Indemnification Procedures. After receipt by a party entitled to
indemnification ("Indemnified Party") under this Article VIII of notice of the
commencement of any action, if a claim in respect thereof is to be made against
any person obligated to provide indemnification under this Article VIII
("Indemnifying Party"), such Indemnified Party will notify
20
the Indemnifying Party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the Indemnifying
Party will not relieve it from any liability under this Article VIII, except to
the extent that the omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged solely as a result of
the failure to give such notice. The Indemnifying Party shall be entitled to
participate, at its own expense, in the defense of any action brought against an
Indemnified Party. The Indemnifying Party also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Party.
Upon such election by the Indemnified Party to assume the defense, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it 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) conclude 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. If the Indemnifying Party does not elect to assume the
defense of any action, then it will reimburse the Indemnified Party for the
reasonable fees of any legal counsel retained by such Indemnified Party. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement.
8.4 Willful Misfeasance, Bad Faith, Gross Negligence. Neither the
Company nor the Trust shall be liable under the indemnification provisions of
Sections 8.1 or 8.2, as applicable, with respect to any losses incurred or
assessed against such Indemnified Party that arise 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 its obligations or duties under this Agreement.
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8.5 Successors and Survival. A successor by law of the parties to this
Agreement shall be entitled to the benefits of the indemnification contained in
this Article VIII. The indemnification provisions contained in this Article VIII
shall survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1 State Law Applicable. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Colorado, without giving effect to the principles of conflicts of laws.
9.2 Securities Laws Applicable. This Agreement shall be subject to the
provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and
rulings thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1 Events Creating Termination. This Agreement shall terminate:
(a) at the option of either party upon six months' advance
written notice to the other party, such termination to be effective no earlier
than five years following the date on which the first Contract is issued to the
public, or
(b) at the option of the Company it no shares of any Portfolio
are reasonably available to meet the requirements of the Contracts. Prompt
notice of the election to terminate for such cause shall be furnished by the
Company, said termination to be effective ten days after receipt of notice
unless the Trust makes available a sufficient number of Portfolio shares to meet
the requirements of the Contracts within said ten day period; or
22
(c) upon requisite vote of the Contract Owners having an
interest in the affected Portfolio, to substitute the shares of another
investment company for the affected Portfolio shares of the Trust in accordance
with the terms of the Contracts and subject to the Company's right to disregard
Contract Owner voting instructions in accordance with applicable law. The
Company shall give 60 days' prior written notice to the Trust of the date of any
proposed vote to replace the affected Portfolio shares;
(d) at the option of the Company or the Trust upon conclusion
of formal proceedings against the other party by the NASD, the SEC, the
insurance commission of any state or any other regulatory body where the outcome
of such proceedings materially impairs such other party's ability to meet and
perform its obligations and duties under this Agreement; or
(e) at the option of the Company or the Trust if either party
shall determine, in its sole judgment exercised in good faith, that the other
party or its affiliates has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement, or such
party is the subject of material adverse publicity, that substantially
undermines such party's ability to meet and perform its obligations under this
Agreement or the reputation and goodwill of the terminating party; or
(f) at the option of the Company if the Trust ceases to
qualify as a Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company reasonably believes
based on an opinion of counsel satisfactory to the Trust that the Trust may fail
to so qualify; or
(g) at the option of the Company if the Trust fails to meet
the diversification requirements specified in Article VI hereof; or
(h) at the option of the Trust if the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code; or
23
(i) at the option of the Company or the Trust if the Master
Agreement between the Company and the Adviser is terminated; or
(j) upon the assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another insurance
company pursuant to an assumption reinsurance agreement) unless the
non-assigning party consents thereto; or
(k) at the option of the Company or the Trust upon the other
party's breach of any material provision of this Agreement other than a breach
set forth in Section 10.1(f)-(h).
10.2 Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to the other party to this Agreement of its intent to terminate.
Such notice shall set forth the basis for such termination and comply with the
following provisions, as applicable:
(a) In the event that any termination is based upon the
provisions of Section 10.1(a)-(c) of this Agreement, such prior written notice
shall be given in accordance with such provisions;
(b) In the event that any termination is based upon Section
10.1(d)-(j) of this Agreement, such termination shall become effective upon
receipt of written notice by the non-terminating party; and
(c) In the event that any termination is based upon Section
10.1(k) of this Agreement, the terminating party shall provide 30 days' written
notice of its intention to terminate this Agreement. It the breaching party
remedies the default during the 30-day period, or if such default cannot be
remedied within the 30-day period and the breaching party begins immediately to
take the steps to do so and diligently proceeds toward the remedy, then in
either event this Agreement shall remain in effect. Otherwise, the party giving
notice may terminate this Agreement at the end of the 30-day period.
24
10.3 Effect of Termination.
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, the Trust may at its option continue to make
available additional Portfolio shares pursuant to the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement (the "Existing Contracts"). Specifically, without limitation,
for so long as the Trust makes additional Portfolio shares available, the owners
of Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in the Trust, redeem
investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The Trust shall
provide the Company with at least ninety (90) days' written notice prior to
discontinuing its exercise of this option.
(b) The parties agree that this Section 10.3 shall not apply
to any termination under Article VII and the effect of such termination shall be
governed by Article VII of this Agreement.
(c) Except as necessary to implement Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Portfolio shares attributable to the Contracts (as opposed to
Portfolio shares attributable to the Company's assets held in the Account).
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
11.1 When Applicable. The parties to this Agreement may amend the
schedules to this Agreement from time to time to reflect changes in or relating
to the Contracts and to add new classes of variable annuity contracts and
variable life insurance policies to be issued by the Company through an Account
investing in the Trust. The provisions of this Agreement shall be equally
applicable to each such new classes of contracts or policies, unless the context
otherwise requires.
25
ARTICLE XII. NOTICES
12.1 General. 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 Trust:
Janus Aspen Series
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
If to the Company:
Xxxx X. Xxxxxx, Esq.
AUSA Life Insurance Company, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
ARTICLE XIII. MISCELLANEOUS
13.l Trust Liability. The obligations of this Agreement shall only be
binding upon the assets and property of the Trust and shall not be binding upon
any Trustee, officer or shareholder of the Trust individually.
13.2 Captions. 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.
13.3 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which together shall constitute one and the same
instrument.
13.4 Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, this remainder of
this Agreement shall not be affected thereby.
13.5 Inspection. Each party hereto shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, the NASD and
26
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.
13.6 Binding Obligation. Each party represents that the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate or trust action, as
applicable, by such party and when so executed and delivered this Agreement will
be the valid and binding obligation of such party enforceable in accordance with
its terms.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer.
AUSA LIFE INSURANCE COMPANY, INC.
(Company)
By: /s/ Xxx X. Xxxxxxxxxxx
-----------------------------------
Name: Xxx X. Xxxxxxxxxxx
Title: Chairman of the Board and President
JANUS ASPEN SERIES
(Trust)
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
27
SCHEDULE 1
SEPARATE ACCOUNTS
AVAILABLE UNDER THE CONTRACTS
EFFECTIVE NOVEMBER 1, 2001
NAME OF NAME DATE
CONTRACT OF ACCOUNT ESTABLISHED
-------- ---------- -----------
Janus Annuity - New York AUSA Series October 24, 1994
Flexible Payment Annuity
Variable Accumulation Account B
Deferred Annuity
Contract Form No.
VA14 NY
28
SCHEDULE 2
VARIABLE CONTRACTS SUBJECT TO PARTICIPATION AGREEMENT
EFFECTIVE NOVEMBER 1, 2001
SEC
NAME OF CONTRACT CONTRACT FORM NO. REGISTRATION NO.
---------------- ----------------- ----------------
Janus Annuity - New York VA14 NY 333-64650/811-10437
Flexible Payment
Variable Accumulation
Deferred Annuity
29
EXHIBIT B
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT made and effective as of the 1st
day of April, 1999, by and between AFSG SECURITIES CORPORATION ("AFSG"), a
Pennsylvania corporation, and AUSA LIFE INSURANCE COMPANY, INC. ("AUSA"), a New
York corporation, on its own behalf and on behalf the separate investment
accounts of AUSA set forth in Exhibit A attached hereto and made a part hereof
(collectively, the "Account").
WITNESSETH:
WHEREAS, the Account was established or acquired by AUSA under the laws
of the State of New York, pursuant to a resolution of AUSA's Board of Directors
in order to set aside the investment assets attributable to certain flexible
premium, multi-funded annuity contracts ("Contracts") issued by AUSA;
WHEREAS, AUSA has registered or will register the Account with the
Securities and Exchange Commission ("SEC") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, AUSA has registered or will register the Contracts under the
Securities Act of 1933 (the "1933 Act");
WHEREAS, AFSG is and will continue to be registered as a broker-dealer
with the SEC under the Securities Exchange Act of 1934 (the "1934 Act"), and a
member of the National Association of Securities Dealers, Inc. (the "NASD")
prior to the offer and sale of the Contracts; and
WHEREAS, AUSA proposes to have the Contracts sold and distributed
through AFSG, and AFSG is willing to sell and distribute such Contracts under
the terms stated herein;
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
1. Appointment as Distributor/Principal Underwriter. AUSA grants to
AFSG the exclusive right to be, and AFSG agrees to serve as, distributor and
principal underwriter of the Contracts during the
1
term of this Agreement. AFSG agrees to use its best efforts to solicit
applications for the Contracts and otherwise perform all duties and functions
which are necessary and proper for the distribution of the Contracts.
2. Prospectus. AFSG agrees to offer the Contracts for sale in
accordance with the registration statements and prospectus therefor then in
effect. AFSG is not authorized to give any information or to make any
representations concerning the Contracts other than those contained in the
current prospectus therefor filed with the SEC or in such sales literature as
may be authorized by AUSA.
3. Considerations. All premiums, purchase payments or other moneys
payable under the Contracts shall be remitted promptly in full together with
such application, forms and any other required documentation to AUSA or its
designated servicing agent and shall become the exclusive property of AUSA.
Checks or money orders in payment under the Contracts shall be drawn to the
order of "AUSA Life Insurance Company, Inc." and funds may be remitted by wire
if prior written approval is obtained from AUSA.
4. Copies of Information. On behalf of the Account, AUSA shall furnish
AFSG with copies of all prospectuses, financial statements and other documents
which AFSG reasonably requests for use in connection with the distribution of
the Contracts.
5. Representations. AFSG represents that it is (a) duly registered as a
broker-dealer under the 1934 Act, (b) a member in good standing of the NASD and
(c) to the extent necessary to offer the Contracts, duly registered or otherwise
qualified under the securities laws of any state or other jurisdiction. AFSG
shall be responsible for carrying out its sales and underwriting obligations
hereunder in continued compliance with the NASD Rules and federal and state
securities and insurance laws and regulations. Further, AFSG represents and
warrants that it will adopt, abide by and enforce the principles set forth in
the Principles and Code of Ethical Market Conduct of the Insurance Marketplace
Standards Association as adopted by the Company.
6. Other Broker-Dealer Agreements. AFSG is hereby authorized to enter
into written sales agreements with other independent broker-dealers for the sale
of the Contracts. All such sales agreements
2
entered into by AFSG shall provide that each independent broker-dealer will
assume full responsibility for continued compliance by itself and by its
associated persons with the NASD Rules and applicable federal and state
securities and insurance laws, shall provide that each independent broker-dealer
will adopt, abide by and enforce the principles set forth in the Principles and
Code of Ethical Market Conduct of the Insurance Marketplace Standards
Association as adopted by the Company, and shall be in such form and contain
such other provisions as AUSA may from time to time require. All associated
persons of such independent broker-dealers soliciting applications for the
Contracts shall be duly and appropriately registered by the NASD and licensed
and appointed by AUSA for the sale of Contracts under the insurance laws of the
applicable states or jurisdictions in which such Contracts may be lawfully sold.
All applications for Contracts solicited by such broker-dealers through their
representatives, together with any other required documentation and premiums,
purchase payments and other moneys, shall be handled as set forth in paragraph 3
above.
7. Insurance Licensing and Appointments. AUSA shall apply for the
proper insurance licenses and appointments in appropriate states or
jurisdictions for the designated persons associated with AFSG or with other
independent broker-dealers that have entered into sales agreements with AFSG for
the sale of Contracts, provided that AUSA reserves the right to refuse to
appoint any proposed registered representative as an agent or broker, and to
terminate an agent or broker once appointed.
8. Recordkeeping. AUSA and AFSG shall cause to be maintained and
preserved for the periods prescribed such accounts, books, and other documents
as are required of them by the 1940 Act, and 1934 Act, and any other applicable
laws and regulations. The books, accounts and records of AUSA, of the Account,
and of AFSG as to all transactions hereunder shall be maintained so as to
disclose clearly and accurately the nature and details of the transactions. AUSA
(or such other entity engaged by AUSA for this purpose), on behalf of and as
agent for AFSG, shall maintain AFSG's books and records pertaining to the sale
of Contracts to the extent as mutually agreed upon from time to time by AUSA and
AFSG; provided that such books and records shall be the property of AFSG, and
shall at all times be subject to such reasonable periodic, special or other
audit or examination by the SEC, NASD, any state
3
insurance commissioner and/or all other regulatory bodies having jurisdiction.
AUSA shall be responsible for sending on behalf of and as agent for AFSG all
required confirmations on customer transactions in compliance with applicable
regulations, as modified by an exemption or other relief obtained by AUSA. AFSG
shall cause AUSA to be furnished with such reports as AUSA may reasonably
request for the purpose of meeting its reporting and recordkeeping requirements
under the insurance laws of the State of New York and any other applicable
states or jurisdictions. AUSA agrees that its records relating to the sale of
Contracts shall be subject to such reasonable periodic, special or other audit
or examination by the SEC, NASD, and any state insurance commissioner and/or all
other regulatory bodies having jurisdiction.
9. Commissions. AUSA shall have the responsibility for paying on behalf
of AFSG (a) any compensation to other independent broker-dealers and their
associated persons due under the terms of any sales agreements entered into
pursuant to paragraph 6 above, between AFSG and such broker-dealers as agreed to
by AUSA and (b) all commissions or other fees to associated persons of AFSG
which are due for the sale of the Contracts in the amounts and on such terms and
conditions as AUSA and AFSG determine. Notwithstanding the preceding sentence,
no broker-dealer, associated person or other individual or entity shall have an
interest in any deductions or other fees payable to AFSG as set forth herein.
10. Expense Reimbursement. AUSA shall reimburse AFSG for all costs and
expenses incurred by AFSG in furnishing the services, materials, and supplies
required by the terms of this Agreement.
11. Indemnification. AUSA agrees to indemnify AFSG for any losses
incurred as a result of any action taken or omitted by AFSG, or any of its
officers, agents or employees, in performing their responsibilities under this
Agreement in good faith and without willful misfeasance, gross negligence, or
reckless disregard of such obligations.
12. Regulatory Investigations. AFSG and AUSA agree to cooperate fully
in any insurance or judicial regulatory investigation or proceeding arising in
connection with Contracts distributed under this
4
Agreement. AFSG and AUSA further agree to cooperate fully in any securities
regulatory inspection, inquiry, investigation or proceeding or any judicial
proceeding with respect to AUSA, AFSG, their affiliates and their
representatives to the extent that such inspection, inquiry, investigation or
proceeding or judicial proceeding is in connection with Contracts distributed
under this Agreement. Without limiting the foregoing:
(a) AFSG will be notified promptly of any customer complaint or notice
of any regulatory inspection, inquiry investigation or proceeding or judicial
proceeding received by AUSA with respect to AFSG or any representative or which
may affect AUSA's issuance of any Contracts marketed under this Agreement; and
(b) AFSG will promptly notify AUSA of any customer complaint or notice
of any regulatory inspection, inquiry, investigation or judicial proceeding
received by AFSG or any representative with respect to AUSA or its affiliates in
connection with any Contracts distributed under this Agreement.
In the case of a customer complaint, AFSG and AUSA will cooperate in
investigating such complaint and shall arrive at a mutually satisfactory
response.
13. Termination.
(a) This Agreement may be terminated by either party hereto upon 60
days' prior written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party
to the other party hereto in the event of bankruptcy or insolvency of such party
to which notice is given.
(c) This Agreement may be terminated at any time upon the mutual
written consent of the parties hereto.
(d) AFSG shall not assign or delegate its responsibilities under this
Agreement without the written consent of AUSA.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including payments or premiums or contributions
5
subsequently received for Contracts in effect at the time of termination or
issued pursuant to applications received by AUSA prior to termination.
14. Regulatory Impact. This Agreement shall be subject to, among other
laws, the provisions of the 1940 Act and the 1934 Act and the rules,
regulations, and rulings thereunder and of the NASD, from time to time in
effect, including such exemptions from the 1940 Act as the SEC may grant, and
the terms hereof shall be interpreted and construed in accordance therewith.
AFSG shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Account, present or future; and will
provide any information, reports or other material which any such body by reason
of this Agreement may request or require pursuant to applicable laws or
regulations.
15. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. Choice of Law. This Agreement shall be construed, enforced and
governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officials as of the day and year
first above written.
AFSG SECURITIES CORPORATION AUSA LIFE INSURANCE COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------- ----------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
Title: President Title: Vice President
6
EXHIBIT A
1. AUSA Endeavor Variable Annuity Account
2. AUSA Endeavor Target Account
3. AUSA Series Life Account
4. AUSA Series Annuity Account
5. AUSA Series Annuity Account B
7
