Exhibit (h)(35)
PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
And
OCC DISTRIBUTORS LLC
And
OPCAP ADVISORS LLC
THIS AGREEMENT, made and entered into this____day of _________ 2002 by
and among EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a ________
Corporation (hereinafter the "Company"), on its own behalf and on behalf of each
separate account of the Company named in Schedule 1 to this Agreement, as may be
amended from time to time (each account referred to as the "Account"), OCC
ACCUMULATION TRUST, an open-end diversified management investment company
organized under the laws of the State of Massachusetts (hereinafter the "Fund"),
OPCAP ADVISORS LLC, a Delaware limited liability company (hereinafter the
"Adviser") and OCC DISTRIBUTORS LLC, a Delaware limited liability company
(hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially
identical to this Agreement (the Company and such other insurance companies
being hereinafter "Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities & Exchange
Commission (alternatively referred to as the "SEC" or the "Commission"), dated
February 22, 1995 (File No. 812-9290), granting Participating Insurance
Companies and variable annuity separate accounts and variable life insurance
separate accounts relief 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 separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and qualified
pension and retirement plans (hereinafter the "Mixed and 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 Company has registered or will register interests in the
Account funding certain variable life contracts (the "Contracts") under the 1933
Act; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of NEW YORK to set aside and
invest assets attributable to, among others, the Contracts; and
WHEREAS, the Company has registered the Account as a unit investment
trust under the 1940 Act; and
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WHEREAS, the Underwriter is registered as a broker-dealer with 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. (hereinafter "NASD"); and
WHEREAS, the Adviser is registered as an investment adviser the SEC
under the Invetment Advisers Act of 1940, as amended (hereinafter the
"Investment Advisers Act"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios named in
Schedule 2 on behalf of the Account to fund the Contracts and the Underwriter is
authorized to sell such shares to unit investment trusts such as the Account at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, Adviser and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund and the Underwriter agree to sell to the Company those
shares of the Fund which the Company orders on behalf of the Account, executing
such orders on a daily basis at the net asset value next computed after receipt
and acceptance by the Fund or its agent of the order for the shares of the Fund.
For purposes of this Section 1.1, the Company shall be the designee of the Fund
for receipt of such orders from the 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. Eastern Time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the SEC.
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1.2. The Company shall pay for Fund shares on the next Business Day
after it places an order to purchase Fund shares in accordance with Section 1.1
hereof. Payment shall be in federal funds transmitted by wire. Upon receipt by
the Fund or its designee of federal funds so wired such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.3. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by Participating Insurance
Companies and their separate accounts on those days on which the Fund calculates
its net asset value pursuant to rules of the SEC; provided, however, that the
Board of Trustees of the Fund (hereinafter the "Fund Board") may refuse 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 Fund 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 any Portfolio. If the Board refuses to sell shares to the Company, the
Company shall have the right to terminate this Agreement in accordance with
section 10.1(b) of this Agreement.
1.4. The Fund, Adviser and the Underwriter agree that shares of the
Fund will be sold only to (i) Participating Insurance Companies and their
separate accounts; and (ii) qualified pension and retirement plans or such other
persons as are permitted under applicable provisions of the Internal Revenue
Code of 1986, as amended, (the "Internal Revenue Code"), and regulations
promulgated thereunder, the sale to which will not impair the tax treatment
currently afforded the contracts Prior to the commencement of sales to any such
entity referred to in clause (ii) above (other than a sale to the Adviser or its
affiliate in compliance with Treasury Regulation 1.875-5(f)(3)(ii) under the
Internal Revenue Code), the Underwriter or the Adviser
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agrees to perform a review of such entity appropriate under the circumstances.
Such review may include seeking certifications from the entity regarding the tax
status of the plan and any other relevant information. No shares of any
Portfolio will be sold to the general public.
1.5. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as ArticleVII, Sections 1.6, 2.1, 2.2, 3.1, 4.1, 4.2,
4.7, 5.1, 8.1, and 8.3 of this Agreement are in effect to govern such sales. The
Fund shall make available upon written request from the Company (i) a list of
all other Participating Insurance Companies and (ii) a copy of the Participation
Agreement executed by any other Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, upon 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 and
acceptance by the Fund or its agent of the request for redemption. For purposes
of this Section 1.6, 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 the Fund receives notice of request for
redemption by 10:00 a.m. Eastern Time on the next following Business Day.
Payment shall be in federal funds transmitted by wire to the Company's account
as designated by the Company in writing from time to time, on the same Business
Day the Fund receives notice of the redemption order from the Company, except
that the Fund reserves the right to delay payment of redemption proceeds, but in
no event may such payment be delayed longer than the period permitted under
Section 22(e) of the 1940 Act. The Fund agrees to notify the Company if it
intends to delay payment of redemption proceeds in accordance with its rights
under Section 22(e),. After redemption proceeds are received by the Company,
neither the Fund nor the Underwriter shall bear any responsibility whatsoever
for the proper disbursement or crediting of redemption
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proceeds; the Company alone shall be responsible for such action. If
notification of redemption is received after 10:00 a.m. Eastern Time, payment
for redeemed shares will be made on the next following Business Day.
1.7. The Company agrees to purchase and redeem the shares of the
portfolios of the Fund named in Schedule 2 (hereinafter "Portfolio" or
"Portfolios") offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus, provided that such provisions are also
consistent with the terms of this Agreement. One net order for the Portfolio
shall be submitted by the Company to the Trust or its designee. With respect to
payment of the purchase price by the Company and of redemption proceeds by the
Trust, the Company and the Trust, as appropriate, shall net purchase and
redemption orders with respect to each Portfolio and shall transmit one net
payment for all of the Portfolios.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for the Account or the appropriate subaccount of the Account.
The Fund shall notify the Company by 4:00 p.m. on the each business day of the
number of Shares of the Portfolio that are held under the Contracts.
1.9. The Fund shall furnish notice to the Company as soon as
reasonably practicable, but no later than two business days prior to any
described action, of any income, dividends or capital gain distributions payable
on the Fund's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such dividends and distributions in cash. The
Fund shall notify the Company of the dividend rate per share promptly (but no
later than 4:00 p.m. on the same business day that such dividend or distribution
is made).
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1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:50 p.m.,
Eastern Time, each business day. In the event that the Fund is unable to meet
the 5:50 time stated herein, it shall provide additional time for the Company to
place orders fro the purchase and redemption of shares. Such additional time
shall be equal fo the additional time which the Fund takes to make the net asset
value available to the Company. In the event of an error in a Portfolio's net
asset value per share which, in accordance with procedures adopted by the Fund's
Board of Trustees consistent with views expressed by the staff of the Securities
and Exchange Commission regarding appropriate error correction standards, as
shall be in effect or amended from time to time, requires adjustment to
transactions previously effected on behalf of the Account (a "Pricing Error"),
the Adviser shall notify the Company as soon as possible after discovery of the
Pricing Error. Such notification may be oral, but shall be confirmed promptly in
writing within two business days. In such event, the Fund shall recompute all
Account share transactions that were based on the Pricing Error and credit or
debit the Account's account such that the Account has the same number of the
Portfolio's shares as if all those transactions had been correctly priced. The
Adviser shall reimburse the Fund for (a) any loss resulting from that fact that
any Participating Insurance Company or other owner of the Portfolio's shares has
an insufficient number or amount of shares remaining in its account to make a
correcting adjustment for any over payment to such owner by the Portfolio due to
the Pricing Error, unless the Fund is able to collect any such deficiency from
such owner and (b) any other material liabilities and expenses that a Portfolio
incurs as a result of the Pricing Error. If, as a result of the Pricing Error,
the Company has paid out to a Contract owner or beneficiary, or a Contract owner
has transferred to a different option under the Contract, an amount in excess of
what that person should have
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received, the Adviser shall reimburse the Company for the excess amount upon
receipt from the Company of an invoice or other statement documenting such
excess payments. In addition, in the event that the Pricing Error causes the
Company to incur any costs for re-processing values under Contracts, such as
preparing and mailing revised statements to Contract owners, the Adviser shall
reimburse the Company for all such reasonable costs and expenses upon receipt
from the Company of an invoice or other statement documenting such costs and
expenses. Notwithstanding anything else in this Section 1.10, neither the Fund,
any Portfolio, the Adviser, the Underwriter, nor any of their affiliates shall
be liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company to
the Fund or the Underwriter.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that interests in the
Account funding the Contracts are or will be registered under the 1933 Act and
that the Contracts will be issued and sold in compliance with all applicable
federal and state laws. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established the Account as a segregated
asset account under applicable state law and has registered the Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as segregated investment accounts for the Contracts, and that it will maintain
such registration for so long as any Contracts are outstanding. The Company
shall amend the registration statement under the 1933 Act for the interests in
the Account and the registration statement under the 1940 Act for the Account
from time to time as required in order to affect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company shall
register and qualify the Contracts
8
for sale in accordance with the securities laws of the various states only if
and to the extent deemed necessary by the Company.
2.2. The Company represents that it believes that the Contracts are
currently and at the time of issuance will be treated as variable life insurance
contracts under applicable provisions of the Internal Revenue Code and that it
will make every effort to maintain such treatment and that it will notify the
Fund and the Underwriter immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.3. The Fund and the Adviser each represents and warrants that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and duly authorized for issuance in accordance with applicable law and that the
Fund is and shall remain registered under the 1940 Act for as long as the Fund
shares are sold. 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, the Adviser or the
Underwriter.
2.4 The Fund and the Adviser each represents and warrants that each
Portfolio is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it might
not so qualify in the future. In the event that a Portfolio fails to so qualify,
the Company shall have the right to terminate this arrangement in accordance
with Section 10.1 (b), which right shall be in addition to any other rights that
the Company has.
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2.5. The Fund and the Adviser each represents and warrants that each
Portfolio's investment objectives, policies and restrictions comply and will
continue to comply with applicable state and federal investment laws as they may
apply to the Fund. 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 and regulations of any state. The
Company alone shall be responsible for informing the Fund of any insurance
restrictions imposed by state insurance laws which are applicable to the
Portfolio. The Fund and the Adviser will use reasonable efforts to comply with
the state insurance laws that apply to them as a result of the availability of
the Portfolio to Contract owners pursuant to this Agreement, provided that the
Company shall inform them in writing of any such state insurance laws. To the
extent feasible and consistent with market conditions, the Portfolio will adjust
investments practices to comply with the aforementioned state insurance laws
upon written notice from the Company of such requirements and proposed
adjustments, it being agreed and understood that in any such case the Fund shall
be allowed a reasonable period of time under the circumstances after receipt of
such notice to make any such adjustment.
2.6. The Fund represents and warrants that it currently does not
intend to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or otherwise, although it may make such payments in the
future. To the extent that it decides to finance distribution expenses pursuant
to Rule 12b-1, the Fund undertakes to have its Board of Trustees, a majority of
whom are not interested persons of the Fund, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the National Association of Securities Dealers, Inc., ("NASD")
and is registered as a broker-dealer with the SEC. The Underwriter further
represents and warrants that it will sell and
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distribute the Fund shares in accordance with all applicable federal and state
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 0000 Xxx.
2.8. The Fund and Adviser each represents and warrants that the Fund
is lawfully organized and is and will continue to be validly existing under the
laws of Massachusetts and that it does and will comply with all applicable
provisions of the 0000 Xxx.
2.9. The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
the Adviser will perform its obligations to the Fund in accordance with the laws
of Massachusetts and any applicable state and federal securities laws.
2.10. The Fund, Adviser and Underwriter each represents and warrants
that all of their directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
2.11. The Company represents and warrants that all of its directors,
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. The Company further represents and warrants that said
fidelity bond. The aforesaid includes coverage for larceny and embezzlement and
is issued by a reputable bonding company in an amount not less than $5 million.
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.
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2.12 The Adviser represents and warrants that, to the best of its
knowledge, the investment management fees paid by the Portfolio do not
constitute a breach of fiduciary duty under the 1940 Act.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Underwriter shall provide the Company, at the Company's
expense, with as many copies of the Fund's current prospectus (which term as
used in this Agreement shall also include any supplements thereto) as the
Company may reasonably request for use with prospective contractowners and
applicants. The Underwriter shall print and distribute, at the Fund's or
Underwriter's expense, as many copies of said prospectus as necessary for
distribution to existing contractowners or participants and provide same to
Company on a timely basis such that Company can satisfy its obligation to
provide the prospectus to existing contractowners or participants, as required
by law. If requested by the Company in lieu thereof, the Fund shall provide such
documentation including a final copy of a current prospectus set in type or at
the request of the Company, as a diskette in the form sent to the financial
printer, at the Fund's expense and other assistance as is reasonably necessary
in order for the Company at least annually (or more frequently if the Fund
prospectus is amended more frequently) to have the new prospectus for the
Contracts and the Fund's new prospectus printed together in one document. In
such case the Fund shall bear its share of expenses as described above.
3.2 The Fund's prospectus shall state that the Statement of
Additional Information ("SAI", which term, as used in this Agreement shall
include any supplement thereto) for the Fund is available from the Underwriter
(or, in the Fund's discretion, the prospectus shall state that such SAI is
available from the Fund), and the Underwriter (or the Fund) shall provide
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such SAI, at its expense, to the Company and to any owner of or participant
under a Contract who requests such SAI or, at the Company's expense, to any
prospective contractowner or applicant who requests such SAI.
3.3 The Fund shall provide the Company with information regarding
the Fund's expenses, (including information that is legally required to be
included in the prospectus for the Account) which information may include a
table of fees and related narrative disclosure for use in any prospectus or
other descriptive document relating to a Contract. The Company agrees that it
will use such information in the form provided, (which in the case of the
prospectus fee table, will be in a form requested by the Company of the Fund and
shall be provided to the Company no later than March 1 of each calendar year for
the prior calendar year). The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
the manner in which the Company proposes to modify the information, and agrees
that it may not modify such information in any way without the prior consent of
the Fund, except to the extent such modification is required by law, regulation
or form upon which the Account is registered with the SEC.
3.4. The Fund, at its expense, shall provide the Company with copies
of its voting instructions, proxy material, if any, reports to shareholders and
other communications to shareholders in such quantity as the Company shall
reasonably require and the Fund shall bear the costs of distributing them to
existing contractowners or participants.
3.5. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or
participants;
(ii) vote the Fund shares held in the Account in accordance
with instructions received from contractowners or
participants; and
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(iii) vote Fund shares held in the Account for which no timely
instructions have been received, in the same proportion
as Fund shares of such Portfolio for which instructions
have been received from the Company's contractowners or
participants;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require "pass-through" voting privileges for variable contractowners. The
Company reserves the right to vote Fund 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 participating in the Fund calculates voting privileges in a
manner consistent with other Participating Insurance Companies as those
procedures are provided to the Company by the Adviser.
3.6. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular as required, the Fund will
either provide for annual 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 SEC 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 IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Fund's adviser or the Underwriter is named, at
least fifteen days prior to its use. No such material shall be used if the Fund
or the Underwriter reasonably objects in writing to such use within fifteen days
after receipt of such material.
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4.2. The Company shall not 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 prospectus or SAI for
the Fund shares, as such registration statement, prospectus and SAI may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or by the Underwriter, except with the permission of the Fund or the
Underwriter. The Fund and the Underwriter agree to respond to any request for
approval within 15 days of receipt of the request
4.3. The Fund, the Adviser and the Underwriter 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 or its the Account
is named, at least fifteen days prior to its use. No such material shall be used
if the Company reasonably objects in writing to such use within fifteen days
after receipt of such material.
4.4 The Fund. the Adviser and the Underwriter shall not 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, prospectus or SAI for the
Contracts, as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in published reports for each Account which
are in the public domain or approved by the Company for distribution to
contractowners or participants, or in sales literature or other promotional
material approved by the Company, except with the permission of the Company. The
Company agrees to respond to any request for approval within 15 days of receipt
of the request.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other
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promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Portfolio or
its shares, contemporaneously with the filing of such document with the SEC 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
Contracts, contemporaneously with the filing of such document with the SEC 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, 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
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ARTICLE V. FEES AND EXPENSES
5.1. 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,
subject to obtaining any required exemptive orders or other regulatory
approvals, 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. Currently, no such payments are contemplated.
5.2. All expenses incidental to performance by the Fund of this
Agreement shall be paid by the Fund to the extent permitted by law. All Fund
shares will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to sale. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement, Fund
voting instructions, proxy materials and reports, setting in type, printing and
distributing the prospectuses, the voting instructions, proxy materials and
reports to existing shareholders and contractowners, the preparation of all
statements and notices required by any federal or state law, all taxes on the
issuance or transfer of the Fund's shares, and any expenses permitted to be paid
or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act.
5.3. In accordance with the Letter Agreement between the Company and
the Adviser, the Adviser will pay to the Company certain amounts to
appropriately recognize the relative rights and responsibilities of the parties
hereto.
ARTICLE VI. DIVERSIFICATION
6.1. The Adviser and Fund each represents and warrants that the
Portfolio will at all times invest its assets in such a manner as to ensure that
the Contracts will be treated as
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variable contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Adviser and the
Fund each represents and warrants that the Portfolio will comply with Section
817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5(b) and (f),
relating to the diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other modifications to such
Section or Regulations (and any revenue rulings, revenue procedures, notices and
other published announcements of the Internal Revenue Service interpreting these
sections) as if those requirements applied separately to the Portfolio. In the
event of a breach of this Article VI by the Fund, and in addition to other
remedies and actions set forth in this Agreement, the Fund will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance with the grace period afforded by
Treasury Regulation 1.817-5.
6.2. Without limiting their obligations under Section 6.1 above, the
Fund and Adviser each represent and warrant that the Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code, that
they will operate each such Regulated Investment Company in such a way as to
avoid the imposition of any federal taxes, and that they will maintain such
qualification (under Subchapter M or any successor or similar provision).
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Fund Board will monitor the Fund for the existence of any
material irreconcilable conflict among the interests of the contractowners of
all separate 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
18
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 Participating Insurance Companies or by variable annuity contract and
variable life insurance contractowners; or (f) a decision by an insurer to
disregard the voting instructions of contractowners. The Fund Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of the Fund Board shall
consist of persons who are not "interested" persons of the Fund.
7.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. As set forth in the Mixed and Shared Funding Exemptive
Order, the Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities under the Mixed and Shared Funding Exemptive
Order, by providing the Fund Board with all information reasonably necessary for
the Fund Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Fund Board whenever contractowner
voting instructions are disregarded. The Fund Board shall record in its minutes
or other appropriate records, all reports received by it and all action with
regard to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a
majority of its disinterested Directors, that an irreconcilable material
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 Directors), 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 rein-
19
vesting 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
contractowners and, as appropriate, segregating the assets of any appropriate
group (I.E., variable annuity contractowners or variable life insurance
contractowners, of one or more Participating Insurance Companies) that votes
in favor of such segregation, or offering to the affected contractowners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict
with the majority of contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement with respect to such
Account. Any such withdrawal and termination must take place within 60 days
after the Fund gives written notice to the Company that this provision is being
implemented. Until the end of such 60 day period the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a particular state insurance regulator's decision applicable
to the Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Account's investment in the Fund and
terminate this Agreement with respect to such Account. Any such withdrawal and
termination must take place within 60 days after the Fund gives written notice
to the Company that this provision is being implemented. Until the end of such
60 day period the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board shall determine whether
any proposed action
20
adequately remedies any irreconcilable material conflict, but in no event will
the Fund or the Adviser be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of contractowners materially adversely affected by the
irreconcilable material conflict.
7.7. The Company shall at least annually submit to the Fund Board
such reports, materials or data as the Fund Board may reasonably request so that
the Fund Board may fully carry out the duties imposed upon it as delineated in
the Mixed and Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if deemed appropriate by the Fund Board.
7.8. 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 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 and Shared
Funding Exemptive Order, (a) 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; 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.
21
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser and the Underwriter, and each of their directors, officers, employees or
agents and each person, if any, who controls, is controlled by, or is under
common control with, the Fund, the Adviser or the Underwriter within the meaning
of such terms under the federal securities laws (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 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
that are related to the sale, holding, acquisition or distribution of the Shares
or the Contracts and :
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the Account registration statement, Account
prospectus or Account SAI or contained in the Account's
or Contract's sales literature or other promotional
material (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 in light
of the circumstances in which they were made; provided
that this agreement to indemnify and hold harmless 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 any
indemnified party, or approved for use by or on behalf
of any indemnified party for use in the Account
registration statement, Account prospectus or Account
SAI or in the Contract's or Account's sales literature
or other promotional material (or any amendment or
supplement to any of the foregoing) or otherwise for use
in connection with the sale, holding, acquisition or
distribution of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations wrongful conduct of the Company or
persons under its control, with respect
22
to the sale, holding, acquisition or distribution of the
Contracts or Fund shares, provided that this agreement
to indemnify and hold harmless 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 any indemnified party, or
approved for use by or on behalf of any indemnified
party for use in the Account registration statement,
Account prospectus or Account SAI or in the Contract's
or Account's sales literature or other promotional
material (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the
sale, holding, acquisition or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, Fund prospectus, Fund SAI or
sales literature or other promotional material 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 statements therein not misleading in light
of the circumstances in which they were made, if such
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or
on behalf of the Company or persons under its control
reasonably believed by the Fund, the Adviser or the
Underwriter to be authorized to act on its behalf under
this Agreement; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials or to
make any payments under the terms of this Agreement; or
(v) arise out of any material breach of any covenant,
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b) No indemnified party shall be entitled to indemnification if
such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification or due to the breach of any representation,
warranty, and/or covenant made by the indemnified party.
23
(c) The indemnified parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance, sale, holding, acquisition or distribution of the Fund shares, the
Account or the Contracts or the operation of the Fund for which indemnification
may be sought under this section 8.1.
8.2. INDEMNIFICATION BY THE ADVISER
(a) The Adviser, agrees to indemnify and hold harmless the Company,
its directors, officers, employees or agents and each person, if any, who
controls, is controlled by, or is under common control with, the Company within
the meaning of such terms under the federal securities laws (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 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 that are related to the sale, holding , acquisition or distribution
of the Shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the Fund registration statement, Fund prospectus or
Fund SAI or sales literature or other promotional
material for the Fund, the Adviser or the Underwriter
(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 in light
of the circumstances in which they were made; provided
that this agreement to indemnify and hold harmless 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, Underwriter or Fund by or on
behalf of the Company for use in the Fund registration
statement, Fund prospectus or Fund SAI or in sales
literature or other promotional material of the Fund,
Underwriter or Adviser (or any amendment or supplement
thereto)
24
or otherwise for use in connection with the sale,
acquisition, holding or distribution of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations or wrongful conduct by or on behalf of
the Adviser, the Underwriter or the Fund or persons
under their control authorized to act on their behalf
with regard to this Agreement with respect to the sale,
acquisition, holding or distribution of the Contracts or
Fund shares, provided that this agreement to indemnify
and hold harmless 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 or
the Fund by or on behalf of any indemnified party, or
approved for use by or on behalf of any indemnified
party for use in the Fund registration statement, Fund
prospectus or Fund SAI or in the Fund's or Adviser's
sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale, holding,
acquisition or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in an Account
registration statement Account prospectus, or Account
SAI or sales literature or other promotional material
covering the Account or the Contract (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 in light
of the circumstances in which they were made, 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 Adviser, the Underwriter or the Fund
or persons under their control and reasonably believed
by the Company to be authorized to act on their behalf
under this Agreement; or
(iv) arise as a result of any failure by the Fund, the
Underwriter or the Adviser to provide the services and
furnish the materials or to make any payments under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the requirements and procedures related thereto
specified in Section 1.4 and/or Article VI of this
Agreement in which case, (1) the damages recoverable
under this indemnity shall, without limitation include
any cost the Company reasonably incurs in working out
any settlement or closing agreement with the Internal
Revenue Service (IRS) in order that holders of the
Contracts not be taxed currently on gains thereunder,
together with any related settlement payments or
penalties required of the
25
Company by the IRS, and (2) any such penalties or
settlement payments shall not be subject to approval by
the Adviser, the Fund or the Underwriter under this
Section ); or
(v) arise out of or result from any material breach of any
covenant, representation and/or warranty made by the
Adviser, the Underwriter or the Fund in this Agreement
or arise out of or result from any other material breach
of this Agreement by the Adviser, the Underwriter or the
Fund;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Adviser may
otherwise have. If a Portfolio's net asset value is materially and adversely
affected by any losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) that are incurred by or charged against the
Fund and that arise out of are based on any of the circumstances set forth in
sub-paragraphs (i)-(v) of this Section 8.2(a), and if the Company elects to give
credits or make payments to its customers to reasonably offset the negative
impact thereof on their Contract values, the amount of such credits and payments
shall be reimbursable to the Company under this Section 8.2, and such credits
and payments shall not be deemed to be a "settlement" for purposes of this
Section 8.2(a).
(b) No indemnified party shall be entitled to indemnification if
such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification, or due to the breach of any representation,
warranty, and/or covenant made by the indemnified party.
(c) The indemnified parties will promptly notify the Adviser of the
commencement of any litigation or proceedings against them in connection with
the issuance, holding, acquisition or sale of the for which indemnification may
be sought pursuant to this Section 8.2.
26
8.3 INDEMNIFICATION BY THE UNDERWRITER
(a) To the extent that the Adviser does not or is not required to
indemnify the Company or the Fund, pursuant to Section 8.3, the Underwriter, on
its own behalf and on behalf of the Fund, agrees to indemnify and hold harmless
the Company and each of its directors, officers, employees or agents and each
person, if any, who controls, is controlled by, or is under common control with,
the Company within the meaning of such terms under the federal securities laws
(collectively, the "indemnified parties" 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 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 that are related to the sale, holding,
acquisition or distribution or the Shares or the Contracts and :
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the Fund registration statement, Fund
prospectus or Fund SAI or sales literature or other
promotional material of the Fund, or the Underwriter
(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 in light of the circumstances in which they
were made; provided that this agreement to indemnify
and hold harmless 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 Underwriter, Adviser or Fund by or on
behalf of the Company for use in the Fund registration
statement, Fund prospectus or Fund SAI or in sales
literature or other promotional material of the Fund
or the Underwriter (or any amendment or supplement
thereto) or otherwise for use in connection with the
sale, acquisition, holding or distribution of the
Contracts or Fund shares; or
27
(ii) arise out of or as a result of statements or
representations or wrongful conduct of the Underwriter
or the Fund, with respect to the sale, acquisition,
holding or distribution of the Contracts or Fund
shares, provided that this agreement to indemnify and
hold harmless 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
Underwriter by or in the Underwriter's sales
literature or other promotional material (or any
amendment or supplement to same) or on behalf of any
indemnified party for use in connection with the sale,
holding, acquisition or distribution of the Contracts
or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in an Account
registration statement, Account prospectus, Account,
SAI or Contract or Account sales literature or other
promotional material (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 in light of the
circumstances in which they were made, 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 Underwriter or the Fund or
persons under their control and reasonably believed by
the Company to be authorized to act on their behalf
under this Agreement
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the
materials or to make payments under the terms of this
Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
requirements and procedures related thereto specified
in Section 1.4 and/or Article VI of this in which
case, (1) the damages recoverable under this indemnity
shall, without limitation include any cost the Company
reasonably incurs in working out any settlement or
closing agreement with the Internal Revenue Service
(IRS) in order that holders of the Contracts not be
taxed currently on gains thereunder, together with any
related settlement payments or penalties required of
the Company by the IRS, and (2) any such penalties or
settlement payments shall not be subject to approval
by the Underwriter under this Section )or
(v) arise out of or result from any material breach of any
convenant, representation and/or warranty made by the
Underwriter or the Fund in this Agreement or arise out
of or result from any other material breach of this
Agreement by the Underwriter or the Fund;
28
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
(b) No indemnified party shall be entitled to indemnification if
such loss, claim, damage, liability or litigation is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
(c) The indemnified parties will promptly notify the Underwriter of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Contracts or the operation of the Account for
which indemnification may be sought under this section..
8.4. INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article
VIII ("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article VIII with respect to
any claim made against a party entitled to indemnification under this Article
VIII ("indemnified party" for the purpose of this Section 8.4) unless such
indemnified party shall have notified the indemnifying party 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 party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
29
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action (which approval shall not be unreasonably withheld). After
notice from the indemnifying party to the indemnified party of the indemnifying
party'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
indemnifying party 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, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
A successor by law of a party 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 State of New York.
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
30
those statutes, rules and regulations as the SEC may grant (including, but not
limited to the Mixed and Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate as to any Portfolio:
(a) at the option of any party upon 90 days' advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company if shares of the Portfolio are
not reasonably available to meet the requirements of the Contracts as determined
by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the administration of
the Contracts, the operation of the Account, or the purchase of the Fund shares,
which would have a material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body, which
would have a material adverse effect on the Fund's or the Underwriter's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund , and if so
required, upon receipt of any necessary regulatory approvals and/or the vote of
the contractowners having an interest in the Account (or any subaccount) to
substitute the shares of another investment company for the corresponding
Portfolio shares of the Fund in accordance with the terms of the Contracts for
which those Portfolio shares had been selected to serve as the underlying
31
investment media. The Company will give at least 90 days prior written notice to
the Fund of the date of any proposed vote or other action taken to replace a
Portfolio's shares; The Fund will give at least 90 days prior written notice to
the Company of the date of any proposed vote or other action taken to replace a
Portfolio's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) all contractowners of variable insurance
products of all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund as delineated in Article VII of this
Agreement; or
(g) at the option of the Company if a Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar provision, or if the Company
reasonably believes that the Portfolio may fail to so qualify; or
(h) at the option of the Company if the Portfolio fails to meet
the requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company as it relates to the selling,
administration or maintenance of the Contracts; or
32
(k) at the option of the Fund, Adviser or Underwriter, if the
Fund, Adviser or Underwriter respectively, shall determine in its sole judgment
exercised in good faith, that the Company has suffered a material adverse change
in its business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the Fund,
Adviser or Underwriter; or
(l) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal and/or state law in
all material respects. In case of termination under this sub-paragraph, the Fund
shall provide the Company with 120 days' notice of termination of this
Agreement, unless the Fund, the Adviser or the Underwriter determines, in good
faith, that the continued offering of shares to the Company will increase the
potential liability of any party, in which case the Fund shall provide the
Company with 90 days' notice.
10.2. NOTICE REQUIREMENT
(a) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice shall be given in
advance of the effective date of termination as required by such provisions.
(b) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), 10.1(l) prompt
written notice of the election to terminate for cause shall be furnished by the
terminating party the Agreement to the non-terminating parties, with said
termination to be effective upon receipt of such notice by the non-terminating
parties.
(c) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice of the
election to terminate this Agreement for cause shall be furnished by the
terminating party to the non-terminating parties.
33
Such prior written notice shall be given by the terminating party this Agreement
to the non-terminating parties at least 30 days before the effective date of
termination, provided that such termination will not be effective if the
circumstances giving rise to the notice are cured prior to the termination date.
It shall be in the discretion of the party otherwise entitled to terminate this
Agreement to determine whether any such circumstance has been sufficiently
cured.
10.3. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, and subject to Section 1.3 of this Agreement,
the Company may require the Fund and the Underwriter to, continue to make
available additional shares of the Fund for so long after the termination of
this Agreement as the Company desires pursuant to the terms and conditions of
this Agreement as provided in paragraph (b) below, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter referred to
as "Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Portfolio, redeem investments in the Portfolio and/or invest in the Portfolio
upon the making of additional purchase payments under the Existing Contracts.
The parties agree that this Section 10.4 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.
(b) If shares of a Portfolio continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10.1(a) and thereafter
the Fund, the Underwriter, the Adviser or the Company may terminate the
Agreement, as so continued pursuant to this Section 10.4, upon
34
written notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Fund, the Adviser or
Underwriter, must be at least 120 days.
10.5. Except as necessary to implement contractowner initiated or
approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
90 days after the Company shall have notified the Fund or Underwriter of its
intention to do so. Nothing in this paragraph 10.5 is intended to restrict the
Company's ability to deduct fees and charges associated with the Contracts.
ARTICLE XI. NOTICES
Any notice shall be deemed duly given only if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, 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.
35
If to the Fund:
Xxxxxxx X. Xxxxxxxx
Chairman
OCC Accumulation Trust
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Cc: Legal Department
Xxxxxxx X. Xxxx, Esq.
OpCap Advisors LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
If to the Adviser:
Xxxxxxx Xxxxxxxxx, Esq.
Vice President
OpCap Advisors LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxxx Xxxxx
Senior Vice President
Funds Management Group
Equitable Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 000000
cc: Xxxxxxxxx Xxxxxxxx
Vice President
Controllers
Equitable Life Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 000000
If to the Underwriter:
Xxxxxxx X. Xxxx.
Executive Vice President
OCC Distributors LLC
36
1345 Avenue of the Americas
Xxx Xxxx, XX 00000
ARTICLE XII. MISCELLANEOUS
12.1. 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 Fund Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party hereto shall
treat as confidential all information reasonably identified as such in writing
by any other party hereto (including without limitation the names and addresses
of the owners of the Contracts) and, except as contemplated by this Agreement,
shall not disclose, disseminate or utilize such confidential information until
such time as it may come into the public domain without the express prior
written consent of the affected party.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. 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.
12.6. This Agreement shall not be assigned by any party hereto without
the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance
37
regulators) and shall permit each other and 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.
12.8. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
12.9. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund.
38
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative as of the date and year first written above.
COMPANY:
EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
SEAL By:
--------------------------------
FUND:
OCC ACCUMULATION TRUST
By:
--------------------------------
UNDERWRITER:
OCC DISTRIBUTORS LLC
By:
--------------------------------
Adviser:
OPCAP ADVISORS LLC
By:
--------------------------------
39
SCHEDULE 1
Participation Agreement
Among
OCC Accumulation Trust, OCC Distributors LLC, OpCap Advisors LLC
and Equitable Life Assurance Society of the United States
The following separate accounts of Equitable Life Assurance Society of
the United States are permitted in accordance with the provisions of this
Agreement to invest in Portfolios of the Fund shown in Schedule 2:
Separate Account FP
June 27, 2002
SCHEDULE 2
Participation Agreement
Among
OCC Accumulation Trust, OCC Distributors LLC, OpCap Advisors LLC
and Equitable Life Assurance Society of the United States
The Separate Account(s) shown on Schedule 1 may invest in the
following Portfolios of the OCC Accumulation Trust:
PIMCO Renaissance Portfolio
