EXHIBIT 8(f)
PARTICIPATION AGREEMENT
AMONG
VARIABLE ANNUITY PORTFOLIOS
AND
CITICORP LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this day of 1996, by and
between VARIABLE ANNUITY PORTFOLIOS, an open-end management investment company
organized as a Massachusetts business trust (the "Trust") and Citicorp Life
Insurance Company, an Arizona corporation (the "Company"), on its own behalf and
on behalf of the Citicorp Life Variable Annuity Separate Account (the "Account")
and other segregated asset accounts of the Company (the "Accounts").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") , and its shares are registered or will be registered under the
Securities Act of 1933, as amended (the "1933 Act") ;
WHEREAS, shares of beneficial interest of the Trust are divided
into several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to
the Company and the Accounts are set forth on Schedule A attached hereto (each,
a "Portfolio," and, collectively, the "Portfolios");
WHEREAS, the Company will issue certain variable annuity and/or
variable life insurance contracts (individually, the "Policy" or, collectively,
the "Policies") which, if required by applicable law, will be registered under
the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the aforesaid
variable annuity and/or variable life insurance contracts that are allocated to
the Accounts (the Policies and the Accounts covered by this Agreement, and each
corresponding Portfolio covered by this Agreement in which the Accounts invest,
is specified in Schedule A attached hereto as may be modified from time to
time);
WHEREAS, the Company has registered or will register the Accounts
as unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, the Landmark Funds Broker-Dealer Services, Inc. (the
"Underwriter" or "LFBDS") is registered as a broker-dealer with the Securities
and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934,
as amended (hereinafter the "1934 Act") , and is a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, the Underwriter also serves as the underwriter for the
individual variable annuity and the variable life policies;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Trust and the Company agree as follows:
ARTICLE I. Sale of Trust Shares
1.1. The Trust agrees to sell to the Company (through the Underwriter as agent
for the Trust) those Shares which the Accounts order (based on orders placed by
Policy holders on that Business Day, as defined below) and which are available
for purchase by such Accounts, executing such orders on a daily basis at the net
asset value next computed after receipt by the Trust or its designee of the
order for the Shares. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from Policy owners and receipt
by such designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such orders by 9:00 a.m. New York time on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for purchase at
the applicable net asset value per share by the Company and the Accounts on
those days on which the Trust calculates its net asset value pursuant to rules
of the SEC and the Trust shall calculate such net asset value on each day which
the NYSE is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Trust (the "Board") may refuse to sell any Shares to the Company
and the Accounts, or suspend or terminate the offering of the Shares if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary in the
best interest of the Shareholders of such Portfolio.
1.3. The Trust agrees that the Shares will be sold only to insurance companies
which have entered into participation agreements with the Trust (the
"Participating Insurance Companies")
and their separate accounts, qualified pension and retirement plans and Citibank
or its affiliates. The Company agrees that the Trust shall be permitted (subject
to the other terms of this Agreement) to make its Shares available to any other
insurance company which offers variable annuity and/or variable life products to
the public and which has entered into an agreement with the Trust for the
purpose of making Trust Shares available to serve as the underlying investment
medium for such policies and any individual or entity who owns such a policy.
The Company will not resell the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy holders
on that Business Day) , executing such requests on a daily basis at the net
asset value next computed after receipt by the Trust or its designee of the
request for redemption. For purposes of this Section 1.4, the Company shall be
the designee of the Trust for receipt of requests for redemption from Policy
owners and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption by 9:00
a.m. New York time on the next following Business Day.
1.5. Purchase, redemption and exchange orders placed by the Company shall be
placed separately for each Portfolio and shall not be netted. However, with
respect to payment of the purchase price by the Company and of redemption
proceeds by the Trust, the Company and the Trust shall net purchase and
redemption orders with respect to each Portfolio and shall transmit one net
payment per Portfolio in accordance with Section 1.6.
1.6. In the event of net purchases, the Company shall transmit payment for the
Shares by 2:30 p.m. New York time on the next Business Day after an order to
purchase the Shares is made in accordance with the provisions of Section 1.1.
hereof. In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:30 p.m. New York time on the next Business Day after an order to
redeem the shares is made in accordance with the provisions of section 1.4.
hereof, unless doing so would require the Trust to dispose of portfolio
securities or otherwise incur additional costs, within seven days upon notice by
the Trust. All such payments shall be in federal funds transmitted by wire and
shall be deemed made when such funds are received by the appropriate party.
Notwithstanding the foregoing, in the event that the Federal Reserve System is
closed for wire transfers on any day on which a payment is otherwise required to
be made hereunder, such payment shall be made on the next succeeding day on
which the Federal Reserve System is open for such wire transfers.
1.7. The Company shall use its best efforts to notify the Trust in advance of
any unusually large purchase or redemption order.
1.8. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.9. The Trust shall furnish same day notice (by fax, or by telephone followed
by written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive all
such dividends and distributions as are payable on a Portfolios Shares in
additional Shares of that Portfolio. The Trust shall notify the Company of the
number of Shares so issued as payment of such dividends and distributions.
1.10. The Trust or its custodian shall use their best efforts to make the net
asset value per share for each Portfolio available to the Company on each
Business Day as soon as reasonably practical after the net asset value per share
is calculated and shall use its best efforts to make such net asset value per
share available by 6:30 p.m. New York time. In the event that the Trust is
unable to meet the 6:30 p.m. time stated herein, it shall provide additional
time for the Company to place orders for the purchase and redemption of Shares.
Such additional time shall be equal to the additional time which the Trust takes
to make the net asset value available to the Company. If the Trust provides
materially incorrect share net asset value information, the Company shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital gains
information shall be reported promptly upon discovery to the Company.
ARTICLE II. Certain Representations, Warranties and Covenants
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to registration
thereunder, and that the Policies will be issued, sold, and distributed in
compliance in all material respects with all applicable state and federal laws,
including without limitation the 1933 Act, the Securities Exchange Act of 1934,
as amended (the 1934 act"), and the 1940 Act. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the Account
as a segregated asset account under applicable law and has registered or, prior
to any issuance or sale of the Policies, will register the Accounts as unit
investment trusts in accordance with the provisions of the 1940 Act (unless
exempt therefrom) to serve as segregated investment accounts for the Policies,
and that it will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements under the 1933
Act for the Policies and the registration statements under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Policies or as may otherwise be required by applicable law. The
Company shall register and qualify the Policies for sales accordance with the
securities laws of the various states only if and to the extent deemed necessary
by the Company.
2.2. Subject to Article VI, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contract under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), 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 policies have ceased to be so
treated or that they might not be so treated in the future.
2.3. The Company represents and warrants that The Landmark Funds Broker-Dealer
Services, Inc., the underwriter for the individual variable annuity and the
variable life policies, is a member in good standing of the NASD and is a
registered broker-dealer with the SEC. The Company represents and warrants that
the Company and The Landmark Funds Broker-Dealer Services,, Inc. will sell and
distribute such policies in accordance in all material respects with all
applicable state and federal laws, including without limitation the 1933 Act,
the 1934 Act, and the 0000 Xxx.
2.4. The Trust represents and warrants that the Shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of The Commonwealth of Massachusetts and
all applicable federal and state securities laws and that the Trust is and shall
remain registered under the 1940 Act. The Trust shall amend the registration
statement for its Shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its Shares. The Trust
shall register and qualify the Shares for sale in accordance with the laws of
the various states only if and to the extent deemed necessary by the Trust.
2.5. The Trust represents that it is lawfully organized and validly existing
under the laws of The Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act and any applicable regulations
thereunder.
2.6. No less frequently than annually, the Company shall submit to the Board
such reports, material or data as the Board may reasonably request so that it
may carry out fully the obligations imposed upon it by the conditions contained
in the exemptive application pursuant to which the SEC has granted or may grant
exemptive relief to permit mixed and shared funding (the "Mixed and Shared
Funding Exemptive Order").
2.7. The Company will promptly notify the Trust of the applicable requirements
(and any changes to the requirements) as to diversification and other matters
under applicable state insurance and other laws and regulations to which the
Company, the Trust and the Policies are subject. The Trust will use reasonable
efforts to comply in all material respects with such requirements of which it
has been so advised by the Company.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1. At least annually, the Trust or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing only
the Portfolios listed in Schedule A hereto) for the Shares as the Company may
reasonably request for distribution to existing Policy owners whose Policies are
funded by such Shares. The Trust or its designee shall provide the Company, at
the Company's expense, with as many copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof, the Trust
or its designee shall provide such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company, as
a diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to have
the prospectus for the Policies and the prospectus for the Shares printed
together in one document; the expenses of such printing to be apportioned
between (a) the Company and (b) the Trust or its designee in proportion to the
number of pages of the Policy and Shares' prospectuses, taking account of other
relevant factors affecting the expense of printing, such as covers, columns,
graphs and charts; the Trust or its designee to bear the cost of printing the
Shares' prospectus portion of such document for distribution to owners of
existing Policies funded by the Shares and the Company to bear the expenses of
printing the portion of such document relating to the Accounts; provided,
however, that the Company shall bear all printing expenses of such combined
documents where used for distribution to prospective purchasers or to owners of
existing Policies not funded by the Shares. In the event that the Company
requests that the Trust or its designee provides the Trust's prospectus in a
"camera ready" or diskette format, the Trust shall be responsible for providing
the prospectus in the format in which it is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g., typesetting expenses), and the Company shall bear the expense of
adjusting or changing the format to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of additional
information for the Shares is available from the Trust or its designee. The
Trust or its designee, at its expense, shall print (or otherwise reproduce) and
provide such statement of additional information to the Company (or a master of
such statement suitable for duplication by the Company) for distribution to any
owner of a Policy funded by the Shares. The Trust or its designee, at the
Company's expense, shall print (or otherwise reproduce) and provide such
statement to the Company (or a master of such statement suitable for duplication
by the Company) for distribution to a prospective purchaser who requests such
statement or to an owner of a Policy not funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Trust's proxy materials,
reports to Shareholders and other communications to Shareholders in such
quantity as the Company shall reasonably require for distribution to Policy
owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or of
Article V below, the Company shall pay the expense of printing or providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not limited
to, the printing of the Shares' prospectus or prospectuses for distribution to
prospective purchasers or to owners of existing Policies not funded by such
Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to include
in the prospectus pursuant to which a Policy is offered disclosure regarding the
potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from Policy
owners; and
(c) vote the Shares for which no instructions have been received in the
same proportion as the Shares of such Portfolio for which instructions have
been received from Policy owners; so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass through voting
privileges for variable contract owners. The Company will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Shares held for such Policyowners. The
Company reserves the right to vote shares held in any segregated asset
account in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of their
separate accounts holding Shares calculates voting privileges in the manner
required by the Mixed and Shared Funding Exemptive Order (upon receipt of
such Order). The Trust and Citibank will notify the Company of any changes
of interpretations or amendments to the Mixed and Shared Funding Exemptive
Order.
3.7. Except to the extent otherwise prohibited or required by applicable federal
or state law, the Company agrees that it shall not, without the prior written
consent of the Trust, solicit, induce or encourage policy owners to (a) change
or supplement the Trust's current investment adviser or (b) change, or modify
the fundamental policies and investment strategies of the Trust, or delete the
Trust as an investment option by way of a vote of policyholders.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material in
which the Trust, Citibank, any other investment adviser to the Trust, or any
affiliate of Citibank are named, at least five (5) Business Days prior to its
use. No such material shall be used if the Trust, Citibank, or their respective
designees reasonably objects to such use within five (5) Business Days after
receipt of such material. Notwithstanding any failure to object by the Trust,
the Company shall be solely responsible for compliance with any applicable
Federal or State laws or regulations or rules of the NASD governing the content
of sales literature or other promotional materials, or the use thereof.
4.2. The Company shall not give any information or make any representations or
statement on behalf of the Trust, Citibank, any other investment adviser to the
Trust, or any affiliate of
Citibank or concerning the Trust or any other such entity in connection with the
sale of the Policies other than the information or representations contained in
the registration statement, prospectus or statement of additional information
for the Shares, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales literature or other
promotional material approved by the Trust, Citibank or their respective
designees, except with the permission of the Trust, Citibank or their respective
designees. The Trust, Citibank or their respective designees each agrees to
respond to any request for approval on a prompt and timely basis. The Company
shall adopt and implement procedures reasonably designed to ensure that
information concerning the Trust, Citibank or any of their affiliates which is
intended for use only by brokers or agents selling the Policies (i.e.,
information that is not intended for distribution to Policy holders or
prospective Policyholders) is so used, and neither the Trust, Citibank nor any
of their affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material in which the Company and/or the Accounts is named, at least five (5)
Business Days prior to its use. No such material shall be used if the Company or
its designee reasonably objects to such use within five (5) Business Days after
receipt of such material.
4.4. The Trust shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Accounts, or the Policies
in connection with the sale of the Policies other than the information or
representations contained in a registration statement, prospectus, or statement
of additional information for the Policies, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports for the Accounts, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company or its designee
agrees to respond to any request for approval on a prompt and timely basis. The
parties hereto agree that this Section 4.4. is neither intended to designate nor
otherwise imply that Citibank is an underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or the
Trust, as appropriate) will each provide to the other at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Policies, or to the Trust or
its Shares, prior to or contemporaneously with the filing of such document with
the SEC or other regulatory authorities. The Company and the Trust shall also
each promptly inform the other of the results of any examination by the SEC (or
other regulatory authorities) that relates to the Policies, the Trust or its
Shares, and the party that was the subject of the examination shall provide the
other party with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.6. The Trust will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Portfolio, and of any material
change in the Trust's registration statement, particularly any change resulting
in change to the registration statement or prospectus or statement of additional
information for any Account. The Trust will cooperate with the Company so as to
enable the Company to solicit proxies from Policy owners or to make changes to
its prospectus, statement of additional information or registration statement,
in an orderly manner. The Trust will make reasonable efforts to attempt to have
changes affecting Policy prospectuses become effective simultaneously with the
annual updates for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
and sales literature (such as brochures, circulars, reprints or excerpts or any
other advertisement, sales literature, or published articles), distributed or
made generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. Fees and Expenses
5.1. The Trust shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Trust,
except that if the Trust or any Portfolio adopts and implements a plan pursuant
to Rule 12b-1 under the 1940 Act to finance distribution and Shareholder
servicing expenses, then, subject to obtaining any required exemptive orders or
regulatory approvals, the Trust may make payments to the Company or to the
underwriter for the Policies if and in amounts agreed to by the Trust in
writing. Each party, however, shall, in accordance with the allocation of
expenses specified in Articles III and V hereof, reimburse other parties for
expense initially paid by one party but allocated to another party. In addition,
nothing herein shall prevent the parties hereto from otherwise agreeing to
perform, and arranging for appropriate compensation for, other services relating
to the Trust and/or to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of the Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of the Trust's proxy materials and reports to Shareholders; setting in
type and printing its prospectus and statement of additional information (to the
extent provided by and as determined in accordance with Article III above);
setting in type and printing the proxy materials and reports to Shareholders (to
the extent provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by any
federal or state law with respect to its Shares; all taxes on the issuance or
transfer of the Shares; and (subject to Section 5.3) the costs of distributing
the Trust's prospectuses and proxy materials to owners of Policies funded by the
Shares and any expenses permitted to be paid or assumed by
the Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. The
Trust shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares' prospectus
or prospectuses in connection with new sales of the Policies and of distributing
the Trust's Shareholder reports and proxy materials to Policy owners. The
Company shall bear all expenses associated with the registration, qualification,
and filing of the Policies under applicable federal securities and state
insurance laws; the cost of preparing, printing and distributing the Policy
prospectus and statement of additional information; and the cost of preparing,
printing and distributing annual individual account statements for Policy owners
as required by state insurance laws.
5.4 In addition to any responsibilities and obligations specified in this
Article V, and without otherwise limiting the responsibilities and obligations
of the Company specified in this Agreement, the Company shall be solely
responsible for the functions of:
a. Receiving and processing Policy applications;
b. Issuing Policies;
c. Delivering Policies to Policyholders;
d. Billing and receiving Policy premiums and considerations;
e. Servicing Policyholders, including changes of ownership, addresses,
coverage, beneficiary designations, premium modes, settlement options
and the like;
f. Receiving, processing and responding to incoming general written and
telephonic correspondence concerning Policy matters from Policyholders
or beneficiaries;
g. Evaluating and paying Policy benefit claims;
h. Preparing and forwarding acknowledgments regarding Policy transactions
and other reports to Policyholders;
i. Administering the Accounts; and
j. Calculating performance information for the Accounts in accordance with
applicable legal requirements for use by the Trust in preparing
advertisements and sales literature and in responding to questions from
third party distributors and Policyholders.
ARTICLE VI. Diversification and Related Limitations
6.1. The Trust represents and warrants that it will use every effort to ensure
that each Portfolio of the Trust will meet the diversification requirements of
Section 817(h)(1) of the Code and Treas. Reg. 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, as they may be amended from time to time (and any revenue rulings,
revenue procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these sections) as if those requirements applied
directly to each such Portfolio. In the event that any Portfolio is not so
diversified at the end of any applicable quarter, the Trust will make every
effort to (a) adequately diversify the Portfolio so as to achieve compliance
within the grace period afforded by Treas. Reg. 1.817.5 and (b) notify the
Company.
6.2. The Trust represents that each Portfolio of the Trust will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code and
that every effort will be made to maintain such qualification (under Subchapter
M or any successor or similar provision) and that the Trust or its designee will
notify the Company promptly upon having a reasonable basis for believing that
any Portfolio of the Trust has ceased to so qualify or that any Portfolio might
not so qualify in the future.
ARTICLE VII. Potential Material Conflicts
7.1. The Trust agrees that its Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable annuity contract owners and the variable life insurance policy owners
of the Company and/or affiliated companies ("contract owners") investing in the
Trust. The Board shall have the sole authority to determine if a material
irreconcilable conflict exists, and such determination shall be binding on the
Company only if approved in the form of a resolution by a majority of the Board,
or a majority of the disinterested trustees of the Board. The Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in
carrying out its responsibilities under the conditions set forth in the Trust's
exemptive application pursuant to which the SEC has granted the Mixed and Shared
Funding Exemptive Order by providing the Board, as it may reasonably request,
with all information necessary for the Board of the Trust to consider any issues
raised and agrees that it will be responsible for promptly reporting any
potential or existing conflicts of which it is aware to the Board including, but
not limited to, an obligation by the Company to inform the Board whenever
contract owner voting instructions are disregarded. The Company also agrees
that, if a material irreconcilable conflict arises, it will at its own cost
remedy such conflict up to and including (a) withdrawing the assets allocable to
some or all of the Accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to) another
Portfolio of the Trust, or submitting to a vote of all affected contract owners
whether to withdraw assets from the Trust or any Portfolio and reinvesting such
assets in a different investment medium and, as appropriate, segregating the
assets attributable to any appropriate group of contract owners that votes in
favor
of such segregation, or offering to any of the affected contract owners the
option of segregating the assets attributable to their contracts or policies,
and (b) establishing a new registered management investment company and
segregating the assets underlying the Policies.
7.3. A majority of the disinterested trustees of the Board of the Trust shall
determine whether any proposed action by the Company adequately remedies any
material irreconcilable conflict. In the event that the Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of the
Accounts designated by the disinterested trustees and terminate this Agreement
within six (6) months after the Board informs the Company in writing of the
foregoing determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by a majority of the disinterested
trustees of the Board.
7.4. If and to the extent that rule 6e-2 and Rule 6e-3(T) are amended, or
proposed Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed Shared
Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5
of this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust, Citibank,
any affiliates of Citibank, and each of their respective directors/trustees,
officers and each person, if any, who controls the Trust or Citibank within the
meaning of Section 15 of the 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or expenses (including reasonable counsel fees) to which
an Indemnified Party may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus or statement of additional information for the Policies or contained
in the Policies or sales literature or other promotional material for the
Policies (or any amendment or supplement to any of the foregoing), or arise out
of
or are based upon the commission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reasonable reliance upon and in conformity
with information furnished in writing to the Company or its designee by or on
behalf of the Trust for use in the registration statement, prospectus or
statement of additional information for the Policies or in the Policies or sales
literature or other promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the Trust not supplied by the Company, LFBDS as
underwriter of the Policies or any of their respective designees, or persons
under their respective control and on which such entity has reasonably relied)
or wrongful conduct of the Company, LFBDS as underwriter of the Policies or
persons under any of their respective control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, statement of
additional information, or sales literature or other promotional literature of
the Trust, or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished in writing
to the Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement; as limited by and in
accordance with the provisions of this Article VIII.
(f) arise out of the wrongful conduct of the Company or persons under its
control with respect to the sale or distribution of the Policies or Trust
Shares; or
(g) arise out of the Company's incorrect calculation and/or untimely reporting
of net purchase or redemption orders.
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of
the 1933 Act, and any agents or employees of the foregoing (each an "Indemnified
Party," or collectively, the "Indemnified Parties" for purposes of this Section
8.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished to the
Trust, Citibank, the Underwriter or their respective designees by or on behalf
of the Company for use in the registration statement, prospectus or statement of
additional information for the Trust or in sales literature or other promotional
material for the Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statement or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material for the Policies not supplied by the Trust, Citibank, the
Underwriter or any of their respective designees or persons under their
respective control and on which any such entity has reasonably relied) or
wrongful conduct of the Trust or persons under its control, with respect to the
sale or distribution of the Shares; or
(c) arise out of or result from any material breach of any representation and/or
warranty made by the Trust in 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 arise out of or
result from any other material breach of this Agreement by the Trust; or
(d) arise out of or result from the materially incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend or capital gain
distribution rate; or
(e) arise as a result of any failure by the Trust to provide the services and
furnish the materials under the terms of the Agreement; as limited by and in
accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, the Company, or any Participating Insurance Company or any Policy
holder, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result from (i) a breach
of any representation, warranty, and/or covenant made by the Company hereunder
or by any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain its
segregated asset account (which invests in any Portfolio) as a legally and
validly established segregated asset account under applicable state law and as a
duly registered unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom) ; or (iii) the failure by the Company or any
Participating Insurance Company to maintain its variable annuity and/or variable
life insurance contracts (with respect to which any Portfolio serves as an
underlying funding vehicle) as life insurance, endowment or annuity contracts
under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which a party claiming indemnification
hereunder ("Indemnified Party") would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, willful misconduct, or gross negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
notice of actual or threatened commencement of action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any Indemnified Party otherwise than under
this section except to the extent that such party shall have been prejudiced by
the failure to give such notice. In case any such action is brought against any
Indemnified Party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the indemnifying party
of its intention to assume the defense of an action, the Indemnified Party shall
bear the expenses of any additional counsel obtained by it, and the indemnifying
party shall not be liable to such Indemnified Party under this section for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation.
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its respective
officers, directors, trustees, employees or 1933 Act control persons in
connection with the Agreement, the issuance or sale of the Policies, the
operation of the Accounts, or the sale or acquisition of Shares.
8.7. 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. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts,
without giving effect to principles of conflict of laws.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant and
the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Notice of Formal Proceedings
The Trust and the Company agree that each such party shall promptly notify the
other parties to this Agreement, in writing, of the institution of any formal
proceedings brought against such party or its designees by the NASD, the SEC, or
any insurance department or any other regulatory body regarding such party's
duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. Termination
11.1. This Agreement shall terminate with respect to the Accounts, or one, some,
or all Portfolios:
(a) at the option of any party upon 180 days advance written notice to the other
parties, unless a shorter time is agreed to by the parties; or
(b) at the option of the Company to the extent that the Shares of Portfolios are
not reasonably available to meet the requirements of the Policies or are not
"appropriate funding vehicles" for the Policies, as reasonably determined by the
Company. Without limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for example, such
Shares did not meet the diversification or other requirements referred to in
Article VI hereof; or if the Company would be permitted to disregard Policy
owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act.
Prompt notice of the election to terminate for such cause and an explanation of
such cause shall be furnished to the Trust by the Company, in writing, and the
Trust shall have ten (10) days to cure any deficiency prior to the effectiveness
of such termination; or
(c) at the option of the Trust upon institution of formal proceedings against
the Company by the NASD, the SEC, or any insurance department or any other
regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Policies,
the operation of the Accounts, or the purchase of the Shares; or
(d) at the option of the Company upon institution of formal proceedings against
the Trust by the NASD, the SEC, or any state securities or insurance department
or any other regulatory body regarding the Trust's duties under this Agreement
or related to the sale of the shares; or
(e) at the option of the Company or the Trust upon receipt of any necessary
regulatory approvals and/or the vote of the Policy owners having an interest in
the Accounts (or any subaccounts) to substitute the shares of another investment
company for the corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30) day's prior
written notice to the Trust of the date of any proposed vote or other action
taken to replace the Shares; or
(f) termination by the Trust by written notice to the Company, if the Trust,
shall determine, in its sole judgment exercised in good faith, that the Company
has suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(g) termination by the Company by written notice to the Trust if the Company
shall determine, in its sole judgment exercised in good faith, that the Trust
has suffered a material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(h) at the option of any party to this Agreement, upon another party's material
breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written consent of
the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for cause
or for no cause.
11.4. Except as necessary to implement Policy owner initiated transactions, or
as required by state insurance laws or regulations, the Company shall not redeem
the Shares attributable to the Policies (as opposed to the Shares attributable
to the Company's assets held in the Accounts), and the Company shall not prevent
Policy owners from allocating payments to a Portfolio that was otherwise
available under the Policies, until thirty (30) days after the Company shall
have notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust shall, at the
option of the Company, continue to make available additional shares of the
Portfolios pursuant to the terms and conditions of this Agreement, for all
Policies in effect on the effective date of termination of this Agreement (the
"Existing Policies") , except as otherwise provided under Article VII of this
Agreement. Specifically, without limitation, the owners of the Existing Policies
shall be permitted to transfer or reallocate investment under the Policies,
redeem investments in any Portfolio and/or invest in the Trust upon the making
of additional purchase payments under the Existing Policies.
ARTICLE XII. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Variable Annuity Portfolios
0 Xx. Xxxxx Xxxxxx Xxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxxxx
With a copy to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxxx
If to the Company:
Citicorp Insurance Group
Citibank, N.A.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxxxxxx, Senior Vice President and Secretary
ARTICLE XIII. Miscellaneous
13.1. Subject to the requirement of applicable laws, agreements, legal process
and regulatory authority, each party hereto shall treat as confidential the
names and addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement or as otherwise required by applicable law or
regulation, shall not disclose, disseminate or utilize such names and addresses
and other
confidential information without the express written consent of the affected
party until such time as it may come into the public domain.
13.2. 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. This Agreement may be executed simultaneously in one or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in connection with
inquiries by appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) relating to this Agreement or
the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the Secretary
of State of The Commonwealth of Massachusetts. The Company acknowledges that the
obligations of or arising out of this instrument are not binding upon any of the
Trust's trustees, officers, employees, agents or shareholders individually, but
are binding solely upon the assets and property of the Trust in accordance with
its proportionate interest hereunder. The Company further acknowledges that the
assets and liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon the
assets or property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, to the extent (and only to the extent)
that such obligations relate to such portfolio, and the Company agrees not to
proceed against any Portfolio for the obligations of another Portfolio.
As of November 8, 1996
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
VARIABLE ANNUITY PORTFOLIOS, on behalf of the Portfolios
By its authorized officer,
By:
Title:
CITICORP LIFE INSURANCE COMPANY
By its authorized officer,
By:
Title:
As of November 8, 1996
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
Name of Separate
Account and Date
Established by Policies Funded Portfolios
Board of Directors by Separate Account Applicable to policies
------------------ ------------------- ----------------------
Citicorp Life Variable 63-1103(05-94) Variable Annuity Portfolios -
Separate Account Small Cap Equity VIP Fund
(July 6, 1994)
Variable Annuity Portfolios -
CitiSelect VIP Folio 200
Variable Annuity Portfolios -
CitiSelect VIP Folio 300
Variable Annuity Portfolios -
CitiSelect VIP Folio 400
Variable Annuity Portfolios -
CitiSelect VIP Folio 500
