PARTICIPATION AGREEMENT
AMONG
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
AND
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
DATED AS OF
, 2002
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TABLE OF CONTENTS
FUND SHARES 3
REPRESENTATIONS AND WARRANTIES 5
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING 7
SALES MATERIAL AND INFORMATION 9
DISTRIBUTION AND SERVICE PLANS 10
DIVERSIFICATION 11
POTENTIAL CONFLICTS 11
INDEMNIFICATION 13
APPLICABLE LAW 20
TERMINATION 20
NOTICES 23
FOREIGN TAX CREDITS 24
MISCELLANEOUS 24
SCHEDULE A SEPARATE ACCOUNTS AND CONTRACTS 28
SCHEDULE B PARTICIPATING LIFE INVESTMENT TRUST PORTFOLIOS 29
SCHEDULE C PROXY VOTING PROCEDURES 30
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PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
and
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the [ ] day of March,
2002 by and among THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
(hereinafter the "Company"), a New York life insurance company, on its own
behalf and on behalf of each separate account of the Company set forth on
Schedule A hereto as may be amended from time to time (each such account
hereinafter referred to as the "Account"), and XXX XXXXXX LIFE INVESTMENT
TRUST (hereinafter the "Fund"), a Delaware business trust, XXX XXXXXX FUNDS
INC. (hereinafter the "Underwriter"), a Delaware corporation, and XXX XXXXXX
ASSET MANAGEMENT INC. (hereinafter the "Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation
and/or payout provisions (hereinafter referred to individually and/or
collectively as "Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products are required to
enter into participation agreements with the Fund and the Underwriter (the
"Participating Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
for Variable Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may
be amended from time to time by mutual agreement of the parties hereto, under
this Agreement to the Accounts of
the Company; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 19, 1990 (File No. 812-7552), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (hereinafter the
"1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder to the extent
necessary to permit shares of the Fund to be sold to and held by Variable
Annuity Product separate accounts of both affiliated and unaffiliated life
insurance companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and any applicable
state securities laws; and
WHEREAS, the Adviser is the investment adviser of the Portfolios of
the Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is
a member in good standing of the National Association of Securities Dealers,
Inc. (hereinafter "NASD") and serves as principal underwriter of the shares
of the Fund; and
WHEREAS, the Company has registered or will register certain
Variable Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution or under authority of the
Board of Directors of the Company, on the date shown for such Account on
Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Variable Insurance Products; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid Variable Insurance
Products and the Underwriter is authorized to sell such shares to each such
Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, the Underwriter and the Adviser agree as follows:
ARTICLE 1
FUND SHARES
1.1 The Fund and the Underwriter agree to make available
for purchase by the Company shares of the Portfolios and shall execute orders
placed for each Account on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of such order. For purposes of this
Section 1.1, the Company shall be the designee of the Fund and the
Underwriter for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such order by 10:00 a.m. Houston time on the next
following Business Day. Notwithstanding the foregoing, the Company shall use
its best efforts to provide the Fund with notice of such orders by 9:15 a.m.
Houston time on the next following Business Day. "Business Day" shall mean
any day on which New York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of the Securities
and Exchange Commission, as set forth in the Fund's prospectus and statement
of additional information. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to permit the Fund
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
1.2 The Fund and the Underwriter agree that shares of the
Fund will be sold only to Participating Insurance Companies for their
Variable Insurance Products. No shares of any Portfolio will be sold to the
general public.
1.3 The Fund will not make its shares available for
purchase by any insurance company or separate account unless an agreement
containing provisions which afford the Company substantially the same
protections currently provided by Sections 2.1, 2.4, 2.9, 3.4 and Article VII
of this Agreement is in effect to govern such sales.
1.4 The Fund and the Underwriter agree to redeem for cash,
on the Company's request, any full or fractional shares of the Fund held by
the Company, executing such requests on a daily basis at the net asset value
next computed after receipt by the Fund or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the
designee of the Fund for receipt of requests for redemption from each Account
and receipt by such designee shall constitute receipt by the Fund; provided
that the Underwriter receives notice of such request for redemption on the
next following Business Day in accordance with the timing rules described in
Section 1.1.
1.5 The Company agrees that purchases and redemptions of
Portfolio
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shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Accounts of the
Company, under which amounts may be invested in the Fund are listed on
Schedule A attached hereto and incorporated herein by reference, as such
Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto. The Company will give the Fund and the Underwriter
sixty (60) days written notice of its intention to make available in the
future, as a funding vehicle under the Contracts, any other investment
company.
1.6 The Company will place separate orders to purchase or
redeem shares of each Portfolio. Each order shall describe the net amount of
shares and dollar amount of each Portfolio to be purchased or redeemed. In
the event of net purchases, the Company shall pay for Portfolio shares on the
next Business Day after an order to purchase Portfolio shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire. In the event of net redemptions, the
Portfolio shall pay the redemption proceeds in federal funds transmitted by
wire on the next Business Day after an order to redeem Portfolio shares is
made in accordance with the provisions of Section 1.4 hereof.
Notwithstanding the foregoing, if the payment of redemption proceeds on the
next Business Day would require the Portfolio to dispose of Portfolio
securities or otherwise incur substantial additional costs, and if the
Portfolio has determined to settle redemption transactions for all
shareholders on a delayed basis, proceeds shall be wired to the Company
within seven (7) days and the Portfolio shall notify in writing the person
designated by the Company as the recipient for such notice of such delay by
3:00 p.m. Houston time on the same Business Day that the Company transmits
the redemption order to the Portfolio.
1.7 Issuance and transfer of the Fund's shares will be by
book entry only. Share certificates will not be issued to the Company or any
Account. Shares ordered from the Fund will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.8 The Underwriter shall use its best efforts to furnish
same day notice by 6:00 p.m. Houston time (by wire or telephone, followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to
receive all such dividends and capital gain distributions as are payable on
the Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and distributions.
1.9 The Underwriter shall make the net asset value per share
of each Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net
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asset value per share available by 6:00 p.m. Houston time. In the event that
Underwriter is unable to meet the 6:00 p.m. time stated immediately above,
then Underwriter shall provide the Company with additional time to notify
Underwriter of purchase or redemption orders pursuant to Sections 1.1 and
1.4, respectively above. Such additional time shall be equal to the
additional time that Underwriter takes to make the net asset values available
to the Company provided, however, that notification must be made by 10:00
a.m. Houston time on the Business Day such order is to be executed,
regardless of when net asset value is made available.
1.10 If Underwriter provides materially incorrect share net
asset value information through no fault of the Company, the Company shall be
entitled to an adjustment with respect to the Fund shares purchased or
redeemed to reflect the correct net asset value per share. The determination
of the materiality of any net asset value pricing error shall be based on the
SEC's recommended guidelines regarding such errors. The correction of any
such errors shall be made at the Company level pursuant to the SEC's
recommended guidelines. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to the Company.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the interests
of Accounts (the "Contracts") are or will be registered and will maintain the
registration under the 1933 Act and the regulations thereunder to the extent
required by the 1933 Act; that the Contracts will be issued and sold in
compliance with all applicable federal and state laws and regulations. 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 each Account prior to any issuance or sale thereof as
a segregated asset account under the New York Insurance Code and the
regulations thereunder and has registered or, prior to any issuance or sale
of the Contracts, will register and will maintain the registration of each
Account as a unit investment trust in accordance with and to the extent
required by the provisions of the 1940 Act and the regulations thereunder to
serve as a segregated investment account for the Contracts. The Company shall
amend its registration statement for its contracts under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its Contracts.
2.2 The Fund and the Underwriter represent and warrant that
Fund shares sold pursuant to this Agreement shall be registered under the
1933 Act and the regulations thereunder to the extent required by the 1933
Act, duly authorized for issuance in accordance with the laws of the State of
Delaware and sold in compliance with all applicable federal and state
securities laws and regulations and that the Fund is and shall remain
registered under the 1940 Act and the regulations thereunder to the
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extent required by the 0000 Xxx. The Fund 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 Fund shall register and qualify the shares for sale in accordance with
the laws of the various states only if and to the extent deemed advisable by
the Fund.
2.3 The Fund and the Adviser represent that the Fund is
currently qualified as a Regulated Investment Company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") and that each will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision and that each will notify the Company
immediately upon having a reasonable basis for believing that the Fund has
ceased to so qualify or that the Fund might not so qualify in the future.
2.4 The Company represents that each Account is and will
continue to be a "segregated account" under applicable provisions of the Code
and that each Contract is and will be treated as a "variable contract" under
applicable provisions of the Code and that it will make every effort to
maintain such treatment and that it will notify the Fund immediately upon
having a reasonable basis for believing that the Account or Contract has
ceased to be so treated or that they might not be so treated in the future.
2.5 The Fund represents that to the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act,
the Fund undertakes to have a board of directors, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.6 The Fund 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.
2.7 The Fund and the Adviser represent that the Fund is
duly organized and validly existing under the laws of the State of Delaware
and that the Fund does and will comply in all material respects with the 1940
Act.
2.8 The Underwriter represents and warrants that it is and
shall remain duly registered under all applicable federal and state laws and
regulations and that it will perform its obligations for the Fund and the
Company in compliance with the laws and regulations of its state of domicile
and any applicable state and federal laws and regulations.
2.9 The Company represents and warrants that all of its
trustees, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage, in an amount equal to
the greater of $5 million or any amount required by applicable federal or
state law or regulation. The aforesaid includes coverage for larceny
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and embezzlement and is issued by a reputable bonding company. The Company
agrees to make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and the Underwriter in the event that such coverage no longer applies.
ARTICLE 3
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1 The Fund shall provide the Company with as many printed
copies of the Fund's current prospectus and statement of additional
information as the Company may reasonably request, in addition to providing
such documents electronically in .pdf format. If requested by the Company in
lieu of providing printed copies the Fund shall provide camera-ready film or
computer diskettes containing the Fund's prospectus and statement of
additional information, and such other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
and/or statement of additional information for the Fund is amended during the
year) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document or separately. The Company may elect to
print the Fund's prospectus and/or its statement of additional information in
combination with other fund companies' prospectuses and statements of
additional information.
3.2(a) Except as otherwise provided in this Section 3.2.,
all expenses of preparing, setting in type and printing and distributing Fund
prospectuses and statements of additional information shall be the expense of
the Company. For prospectuses and statements of additional information
provided by the Company to its existing owners of Contracts in order to
update disclosure as required by the 1933 Act and/or the 1940 Act, the cost
of setting in type, printing and distributing shall be borne by the Fund. If
the Company chooses to receive camera-ready film or computer diskettes in
lieu of receiving printed copies of the Fund's prospectus and/or statement of
additional information, the Fund shall bear the cost of typesetting to
provide the Fund's prospectus and/or statement of additional information to
the Company in the format in which the Fund is accustomed to formatting
prospectuses and statements of additional information, respectively, and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses and/or statements of additional information. In
such event, the Fund will reimburse the Company in an amount equal to the
product of x and y where x is the number of such prospectuses distributed to
owners of the Contracts, and y is the Fund's per unit cost of printing the
Fund's prospectuses. The same procedures shall be followed with respect to
the Fund's statement of additional information. The Fund shall not pay any
costs of typesetting, printing and distributing the Fund's prospectus and/or
statement of additional information to prospective Contract owners.
3.2(b) The Fund, at its expense, shall provide the Company
with copies of its proxy statements, reports to shareholders, and other
communications (except for
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prospectuses and statements of additional information, which are covered in
Section 3.2(a) above) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. The Fund shall not
pay any costs of distributing such proxy related material, reports to
shareholders, and other communications to prospective Contract owners.
3.2(c) The Company agrees to provide the Fund or its
designee with such information as may be reasonably requested by the Fund to
assure that the Fund's expenses do not include the cost of typesetting,
printing or distributing any of the foregoing documents other than those
actually distributed to existing Contract owners.
3.2(d) The Fund shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter
in writing.
3.2(e) All expenses, including expenses to be borne by the
Fund pursuant to Section 3.2 hereof, incident to performance by the Fund
under this Agreement shall be paid by the Fund. The Fund shall see to it that
all its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares.
3.3 The Fund's statement of additional information shall be
obtainable from the Fund, the Underwriter, the Company or such other person
as the Fund may designate.
3.4 If and to the extent required by law the Company shall
distribute all proxy material furnished by the Fund to Contract Owners to
whom voting privileges are required to be extended and shall:
(1) solicit voting instructions from Contract owners;
(2) vote the Fund shares in accordance with instructions
received from Contract owners; and
(3) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such Portfolio for which instructions have been
received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require passthrough voting privileges for
variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated
8
asset account in its own right, to the extent permitted by law. The Fund and
the Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule C attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible
for ensuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set
forth on Schedule C, which standards will also be provided to the other
Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940
Act requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings (except insofar as the Securities and Exchange
Commission may interpret Section 16 not to require such meetings) or comply
with Section 16(c) of the 1940 Act (although the Fund is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Fund will act in accordance
with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.
ARTICLE 4
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished,
to the Fund, the Underwriter or their designee, each piece of sales literature
or other promotional material prepared by the Company or any person contracting
with the Company in which the Fund, the Adviser or the Underwriter is named, at
least ten Business Days prior to its use. No such material shall be used if the
Fund, the Adviser, the Underwriter or their designee reasonably objects to such
use within ten Business Days after receipt of such material.
4.2 Neither the Company nor any person contracting with the
Company shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Fund prospectus, as such registration statement or
Fund prospectus may be amended or supplemented from time to time, or in reports
to shareholders or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3 The Fund shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material prepared by the Fund in which the Company or its Accounts, are named at
least ten Business Days prior to its use. No such material shall be used if the
Company or its designee reasonably objects to such use within ten Business Days
after receipt of such material.
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4.4 Neither the Fund nor the Underwriter shall give any
information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts, other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement or prospectus
may be amended or supplemented from time to time, or in published reports or
solicitations for voting instruction for each Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company 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 Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6 The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, solicitations for voting instructions, 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 investment in an Account or Contract, contemporaneously with
the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
any of the following: advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures, or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, 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, and registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials.
ARTICLE 5
DISTRIBUTION AND SERVICE PLANS
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5.1 The Fund is subject to a plan adopted under Rule 18f-3
under the 1940 Act pursuant to which, as described in the current prospectus of
each Portfolio, the Fund may sell multiple classes of its shares of each
Portfolio with a varying combination of distribution fees, service fees,
exchange features, conversion rights, voting rights, expense allocations and
investment requirements.
5.2 Should the Company wish to participate in the Fund's
distribution plan with respect to a class of shares of a Portfolio of the Fund
pursuant to Rule 12b-1 (the "Rule 12b-1 Plan") under the 1940 Act, or the Fund's
service plan (the "Service Plan"), each as described in the current prospectus
of each Portfolio, with respect to a class of shares of a Portfolio of the Fund,
it is understood that the Company must be approved by the Board of Trustees of
the Fund. Pursuant to the Rule 12b-1 Plan and the Service Plan, the Underwriter
is authorized to remit payments at rates specified in the respective plans with
respect to the net asset value of shares maintained by the Company for
distribution-related services and/or personal services to Contract owners
accounts provided. If the Company wishes to participate in these plans and
receive the aforementioned remittance, the Company must enter into a separate
agreement specifically regarding these plans.
5.3 The Company's acceptance of this Agreement constitutes a
representation that it will adopt policies and procedures to comply with Rule
18f-3 under the 1940 Act, with respect to when the Company may appropriately
make available the various classes of shares of the Portfolios of the Fund and
that it will make available such shares only in accordance therewith.
ARTICLE 6
DIVERSIFICATION
6.1 The Fund will use its best efforts to at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event the Fund ceases to so qualify, it will take all
reasonable steps (a) to notify Company of such event and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 817-5.
ARTICLE 7
POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate
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accounts investing in the Fund. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2 The Company will report any potential or existing
material irreconcilable conflict of which it is aware to the Board. The
Company will assist the Board in carrying out its responsibilities under the
Shared Funding Exemptive Order, by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Board whenever contract owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Accounts investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); provided, however that such withdrawal
and termination shall be limited to the extent
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required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. No charge or penalty will
be imposed as a result of such withdrawal. The Company agrees that it bears
the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view
only to the interests of Contract owners.
7.5 For purposes of Sections 7.3 through 7.4 of this
Agreement, a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3
through 7.4 to establish a new funding medium for the Contracts if an offer to
do so has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.
7.6 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
7.7 Each of the Company and the Adviser shall at least
annually submit to the Board such reports, materials or data as the Board may
reasonably request so that the Board may fully carry out the obligations imposed
upon them by the provisions hereof and in the Shared Funding Exemptive Order,
and said reports, materials and data shall be submitted more frequently if
deemed appropriate by the Board. All reports received by the Board of potential
or existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made available
to the Securities and Exchange Commission upon request.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a) The Company agrees to indemnify and hold harmless the
Fund, the Underwriter and each member of their respective Board and officers and
each person, if any, who controls the Fund within the meaning of Section 15 of
the 1933 Act (collectively,
13
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 litigation (including
reasonable legal and other expenses), to which the Indemnified Parties 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 Fund's shares or the Contracts and:
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of
any material fact contained in the
registration statement or prospectus for the
Contracts or contained in the Contracts or
sales literature for the Contracts (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
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 reliance
upon and in conformity with information
furnished to the Company by or on behalf of
the Fund for use in the registration
statement or prospectus for the Contracts or
in the Contracts or sales literature (or any
amendment or supplement) or otherwise for
use in connection with the sale of the
Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus or sales
literature of the Fund not supplied by the
Company, or persons under its control and
other than statements or representations
authorized by the Fund or the Underwriter)
or unlawful conduct of the Company or
persons under its control, with respect to
the sale or distribution of the Contracts or
Fund shares; or
(3) arise out of or as a result of any untrue
statement or alleged untrue statement of a
material fact contained in a registration
statement, prospectus, or sales literature
of the Fund 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 a
statement or omission was made in reliance
upon and in conformity with information
furnished to the Fund by or on behalf of the
14
Company; or
(4) arise as a result of any failure by the
Company to provide the services and furnish
the materials under the terms of this
Agreement; or
(5) 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; as limited by, and in accordance
with the provisions of Section 8.1(b) and
8.1(c) hereof.
8.1(b) The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may 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 obligations or duties
under this Agreement.
8.1(c) The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense thereof. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Company will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d) The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with this Agreement, the issuance or sale of the Fund shares or the
Contracts, or the operation of the Fund.
8.2 INDEMNIFICATION BY UNDERWRITER
15
8.2(a) The Underwriter agrees, with respect to each Portfolio
that it distributes, 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 (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 Underwriter) or litigation (including reasonable legal and other
expenses), to which the Indemnified Parties 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 Fund's shares that it distributes
or the Contracts and:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement or prospectus or sales literature
of the Fund (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 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 reliance upon and in
conformity with information furnished to the
Fund or the Underwriter by or on behalf of
the Company for use in the registration
statement or prospectus for the Fund or in
sales literature (or any amendment or
supplement) or otherwise for use in
connection with the sale of the Contracts or
Portfolio shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus or sales
literature for the Contracts not supplied by
the Fund, the Underwriter or persons under
their respective control and other than
statements or representations authorized by
the Company) or unlawful conduct of the Fund
or Underwriter or persons under their
control, with respect to the sale or
distribution of the Contracts or Portfolio
shares; or
(3) arise out of or as a result of any untrue
statement or alleged untrue statement of a
material fact contained in a registration
statement, prospectus, or sales literature
covering the Contracts, or any amendment
thereof or supplement thereto, or the
omission or alleged omission to state
therein a material
16
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 and in conformity with
information furnished to the Company by
or on behalf of the Fund or the
Underwriter; or
(4) arise as a result of any failure by the Fund
or the Underwriter to provide the services
and furnish the materials under the terms of
this Agreement; or
(5) arise out of or result from any material
breach of any representation and/or warranty
made by the Underwriter in this Agreement or
arise out of or result from any other
material breach of this Agreement by the
Underwriter; as limited by and in accordance
with the provisions of Section 8.2(b) and
8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may 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 obligations or duties
under this Agreement.
8.2(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Company agrees promptly to notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or
17
directors in connection with this Agreement, the issuance or sale of the
Contracts or the operation of each Account.
8.3 INDEMNIFICATION BY THE ADVISER
8.3(a) The Adviser agrees to indemnify and hold harmless the
Company and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser) or litigation (including reasonable legal and other expenses), to
which the Indemnified Parties 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
operations of the Adviser or the Fund and:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement or prospectus or sales literature
of the Fund (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 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 reliance upon and in
conformity with information furnished to the
Adviser, the Fund or the Underwriter by or
on behalf of the Company for use in the
registration statement or prospectus for the
Fund or in sales literature (or any
amendment or supplement) or otherwise for
use in connection with the sale of the
Contracts or Portfolio shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus or sales
literature for the Contracts not supplied by
the Fund, the Adviser or persons under its
control and other than statements or
representations authorized by the Company)
or unlawful conduct of the Fund, the Adviser
or persons under their control, with respect
to the sale or distribution of the Contracts
or Portfolio shares; or
(3) arise out of or as a result of any untrue
statement or alleged
18
untrue statement of a material fact
contained in a registration statement,
prospectus, or sales literature
covering the Contracts, 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 to
the Company by or on behalf of the Fund
or the Adviser; or
(4) arise as a result of any failure by the
Adviser to provide the services and furnish
the materials under the terms of this
Agreement; or
(5) arise out of or result from any material
breach of any representation and/or warranty
made by the Fund or the Adviser in this
Agreement or arise out of or result from any
other material breach of this Agreement by
the Fund or the Adviser, including without
limitation any failure by the Fund to comply
with the conditions of Article VI hereof; as
limited by, and in accordance with the
provisions of Section 8.3(b) and 8.3(c).
8.3(b) The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
may 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 obligations or duties under this
Agreement.
8.3(c) The Adviser shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such party under this Agreement for any legal or other expenses
19
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company agrees to promptly notify the Adviser of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Adviser.
ARTICLE 9
APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Illinois.
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
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE 10
TERMINATION
10.1 This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party for any reason upon six
months advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to
the Fund, the Adviser and the Underwriter with
respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts. Reasonable advance notice of election to
terminate shall be furnished by the Company, said
termination to be effective ten (10) days after
receipt of notice unless the fund makes available a
sufficient number of shares to reasonably meet the
requirements of the Account within said ten (10) day
period; or
(c) termination by the Company by written notice to
the Fund, the Adviser and the Underwriter with
respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold
20
in accordance with applicable state and/or federal
law or such law precludes the use of such shares as
the underlying investment medium of the Contracts
issued or to be issued by the Company. The
terminating party shall give prompt notice to the
other parties of its decision to terminate; or
(d) termination by the Company by written notice to
the Fund, the Adviser and the Underwriter with
respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any
successor or similar provision; or
(e) termination by the Company by written notice to
the Fund and the Underwriter with respect to any
Portfolio in the event that such Portfolio fails to
meet the diversification requirements specified in
Article VI hereof, or
(f) termination by either the Fund, the Adviser or
the Underwriter by written notice to the Company, if
either one or more of the Fund, the Adviser or the
Underwriter, shall determine, in its or their sole
judgment exercised in good faith, that the Company
and/or their affiliated companies 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, provided that the Fund, the Adviser or the
Underwriter will give the Company sixty (60) days'
advance written notice of such determination of its
intent to terminate this Agreement, and provided
further that after consideration of the actions taken
by the Company and any other changes in circumstances
since the giving of such notice, the determination of
the Fund, the Adviser or the Underwriter shall
continue to apply on the 60th day since giving of
such notice, then such 60th day shall be the
effective date of termination, or
(g) termination by the Company by written notice to
the Fund, the Adviser and the Underwriter, if the
Company shall determine, in its sole judgment
exercised in good faith, that either the Fund, the
Adviser or the Underwriter 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, provided that the Company will give the
Fund, the Adviser and the Underwriter sixty (60)
days' advance written notice of such determination of
its intent to terminate this Agreement, and provided
further that after consideration of the actions taken
by the Fund, the Adviser or the Underwriter and any
other changes in
21
circumstances since the giving of such notice,
the determination of the Company shall continue
to apply on the 60th day since giving of such
notice, then such 60th day shall be the
effective date of termination; or
(h) termination by the Fund, the Adviser or the
Underwriter by written notice to the Company, if the
Company gives the Fund, the Adviser and the
Underwriter the written notice specified in Section
1.5 hereof and at the time such notice was given
there was no notice of termination outstanding under
any other provision of this Agreement; provided,
however any termination under this Section 10.1(h)
shall be effective sixty (60) days after the notice
specified in Section 1.5 was given; or
(i) termination by any party upon the other party's
breach of any representation in Section 2 or any
material provision of this Agreement which breach has
not been cured to the satisfaction of the terminating
party within ten (10) days after written notice of
such breach is delivered to the Fund or the Company,
as the case may be; or
(j) termination by the Fund, Adviser or Underwriter
by written notice to the Company in the event an
Account or Contract is not registered or sold in
accordance with applicable federal or state law or
regulation, or the Company fails to provide
passthrough voting privileges as specified in Section
3.4.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of
this Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts") unless such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or
22
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption") or (iii) as permitted by an order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will
promptly furnish to the Fund and the Underwriter the opinion of counsel for
the Company (which counsel shall be reasonably satisfactory to the Fund and
the Underwriter) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, the Company shall not prevent
Contract Owners from allocating payments to a Portfolio that was otherwise
available under the Contracts without first giving the Fund or the Adviser 90
days notice of its intention to do so.
ARTICLE 11
NOTICES
11.1 Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
Xxx Xxxxxx Life Investment Trust
0 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to Underwriter:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to Adviser:
Xxx Xxxxxx Asset Management Inc.
0 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: A. Xxxxxx Xxxxx III
If to the Company:
23
The American Life Insurance Company of New York
000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
ARTICLE 12
FOREIGN TAX CREDITS
12.1 The Fund and Adviser agree to consult in advance with the
Company concerning whether any series of the Fund qualifies to provide a foreign
tax credit pursuant to Section 853 of the Code.
ARTICLE 13
MISCELLANEOUS
13.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund. Each of the
Company, Adviser and Underwriter acknowledges and agrees that, as provided by
Article 8, Section 8.1, of the Fund's Agreement and Declaration of Trust, the
shareholders, trustees, officers, employees and other agents of the Fund and its
Portfolios shall not personally be bound by or liable for matters set forth
hereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder. A Certificate of Trust
referring to the Fund's Agreement and Declaration of Trust is on file with the
Secretary of State of Delaware.
13.2 Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information until such time as it may
come into the public domain without the express written consent of the affected
party.
13.3 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.
13.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
13.5 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
24
affected thereby.
13.6 Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby
13.7 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 This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Adviser may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Adviser if such assignee is duly licensed and
registered to perform the obligations of the Adviser under this Agreement.
13.9 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical
and in any event within 90 days after the end of each
fiscal year;
(b) the Company's June 30th quarterly statements
(statutory), as soon as practical and in any event
within 45 days following such period;
(c) any financial statement proxy statement, notice
or report of the Company sent to stockholders and/or
policyholders, as soon as practical after the
delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after the
filing thereof,
(e) any other public report submitted to the Company
by independent accountants in connection with any
annual, interim or special audit made by them of the
books of the Company, as soon as practical after the
receipt thereof.
25
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 as of the date specified above.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK on behalf of itself and each of
its Accounts named in Schedule A hereto, as amended from time to time
By:
--------------------------------
XXX XXXXXX LIFE INVESTMENT TRUST
By:
--------------------------------
XXX XXXXXX FUNDS INC.
By:
--------------------------------
XXX XXXXXX ASSET MANAGEMENT INC.
By:
--------------------------------
26
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
NAME OF SEPARATE ACCOUNT AND FORM NUMBERS AND NAMES OF CONTRACTS
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
-------------------------------------- -----------------------------------
The American Separate Account 5 3805-FPA-AX
May 4, 2001 Flexible Premium Deferred
Annuity Policy
27
SCHEDULE B
PARTICIPATING XXX XXXXXX LIFE INVESTMENT TRUST PORTFOLIOS
[ ] Portfolio - Class II Shares
28
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding
responsibilities for the handling of proxies and voting instructions relating to
the Fund. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Company to perform the steps
delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run,"
or other activity, which will generate the names, address and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting
instruction solicitation material. The Fund will provide the last
Annual Report to the Company pursuant to the terms of Section 3.4 of
the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
a) name (legal name as found on account registration)
b) address
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c) fund or account number
d) coding to state number of units (or equivalent shares)
e) individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
This and related steps may occur later in the chronological process due
to possible uncertainties relating to the proposals.
5. During this time, the Fund will develop, produce, and the Fund will pay
for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid
for by the Company). Contents of envelope sent to Customers by the
Company will include:
a) Voting Instruction Card(s)
b) One proxy notice and statement (one document)
c) Return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d) "Urge buckslip" optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e) Cover letter optional, supplied by Company and reviewed and
approved in advance by the Fund.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15 day solicitation time to the
Company as the shareowner. (A 5week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
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9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g.,
mutilated, illegible) of the procedure are "hand verified," (i.e.,
examined as to why they did not complete the system). Any questions on
those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive, into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units (or equivalent shares)
which is then converted to shares. (It is very important that the fund
receives the tabulations stated in terms of a percentage and the number
of shares.) The Fund must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the meeting not later than 10:00 A.M. Houston time.
The Fund may request an earlier deadline if reasonable and if required
to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote. Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
16. All approvals and "signing off' may be done orally, but must always be
followed up in writing.
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