Exhibit (h)(29)
PARTICIPATION AGREEMENT
AMONG
OPPENHEIMERFUNDS, INC.,
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS,
AND
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
TABLE OF CONTENTS
Page
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ARTICLE I. Trust Shares 2
ARTICLE II. Representations and Warranties 5
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy
Statements; Voting 9
ARTICLE IV. Sales Material and Information 11
ARTICLE V. Expenses 12
ARTICLE VI. Potential Conflicts 12
ARTICLE VII. Indemnification 15
ARTICLE VIII. Applicable Law 21
ARTICLE IX. Termination 21
ARTICLE X. Notices 23
ARTICLE XI. Miscellaneous 25
SCHEDULE A Separate Accounts and Contracts 28
SCHEDULE B Participating Funds 29
SCHEDULE C Cost Allocation 30
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT ("AGREEMENT"), made as of this 1st day of May,
2007 by and among New York Life Insurance and Annuity Corporation (the
"Company"), a life insurance company organized under the laws of the State of
Delaware, on its behalf and on behalf of each segregated asset account set forth
on Schedule A attached hereto as it may be amended from time to time by mutual
written agreement of the Parties hereto (the "Separate Accounts"); Xxxxxxxxxxx
Variable Account Funds a trust organized under the laws of Massachusetts (the
"Trust"), on behalf of each series, individually and not jointly, set forth on
Schedule B attached hereto as may be amended from time to time by mutual written
agreement of the Parties hereto (each a "Fund" and collectively, the "Funds");
and OppenheimerFunds, Inc., a Colorado corporation, (the "Adviser") (each a
"Party," and collectively, the "Parties").
WHEREAS, the Trust engages in business as an open-end management investment
company, is registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"), and is
available to act as the investment vehicle for separate accounts established by
insurance companies for life insurance policies and annuity contracts; and
WHEREAS, the Trust intends to make available shares of the Funds to the
Separate Accounts of the Company; and
WHEREAS, the shares of the Trust are divided into several Funds, and each
Fund represents the interest in a particular managed portfolio of securities and
other assets; and
WHEREAS, the shares of the Fund are registered under the Securities Act of
1933, as amended (the "1933 Act") to the extent required thereby; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act") and serves as the
investment adviser to the Funds; and
WHEREAS, the Company is an insurance company that has established or will
establish one or more Separate Accounts to offer variable annuities and/or
variable life insurance policies listed in Schedule A attached hereto as the
Parties may amend from time to time by mutual written agreement (the
"Contracts") issued by the Company and, to the extent permitted by applicable
insurance laws and regulations, the Company intends to purchase, on behalf of
the Separate Accounts, shares of the Trust to fund certain Contracts, and the
Trust is authorized to sell such shares at net asset value. Persons that are
parties to a Contract with Company (or other persons who may exercise rights
under the Contracts) are Contract owners ("Contract owners"); and
WHEREAS, the Trust has obtained an order from the SEC, dated July 16, 1986,
(File No. 812-6324), granting participating insurance companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
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necessary to permit shares of the Funds to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Order").
NOW, THEREFORE, in consideration of their mutual promises, Company, the
Trust, and the Adviser agree as follows:
ARTICLE I. TRUST SHARES
Section 1.1. Subject to Article IX and the terms set forth in the Trust's
registration statement, as may be amended from time to time, the Trust agrees to
make shares of the Funds available for purchase by the Company and the Separate
Accounts at the applicable net asset value per share ("NAV") by the Company and
the Separate Accounts on each Business Day pursuant to the rules of the SEC. The
Trust will execute purchase orders placed for each Separate Account on a daily
basis at the NAV of each Fund computed after receipt by the Trust or its
designee of such order. At Company's request, the Trust agrees to redeem for
cash any full or fractional shares of the Fund held by the Company and Separate
Accounts, on a daily basis at the NAV computed after receipt by the Trust or its
designee of the request for redemption.
However, if one or more Funds has determined to settle redemption
transactions for all of its shareholders on a delayed basis (more than one
Business Day, but in no event more than seven days, after the date on which the
redemption order is received, and consistent with Section 22(e) of the 1940 Act
and any rules or orders of the SEC thereunder), the Trust shall be permitted to
delay sending redemption proceeds to Company by the same number of days that the
Trust is delaying sending redemption proceeds to the other shareholders of the
Funds.
For purposes of this Section 1.1, Company shall be the agent of the Trust
for receipt of purchase orders and redemption requests from each Separate
Account and receipt by Company by the earlier of 4:00 p.m. (Eastern time) or the
close of regular trading on the New York Stock Exchange (or such other time that
the Trust determines the NAV as set forth in the prospectuses for the Funds)
constitutes receipt by the Trust on that day, provided the Trust or the Trust's
agent receives notice of net purchase orders or net redemption requests by 9:30
a.m. (Eastern time) on the next following Business Day or such later time as
permitted by Section 1.1. Upon the request of the Trust, Company shall provide
to the Trust, copies of records of purchase orders and redemption requests
placed with Company, including records indicating the time at which such orders
or requests were received by Company.
Company will place net orders to purchase or redeem shares of each Fund.
Each order shall describe the net amount of shares and dollar amount of each
Fund to be purchased or redeemed. In the event of net purchases, Company will
pay for shares before 3:00 p.m. (Eastern time) on the same day it places the
order to purchase shares with the Fund as set forth in this Section 1.1. Payment
shall be in federal funds transmitted to the Trust by wire to an account
designated by the Trust. Upon receipt by the Trust of the federal funds so
wired, such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Trust. In the event of net redemptions, the
Trust shall pay and transmit proceeds of redemptions to the Company before 3:00
p.m. (Eastern time) on the same day the Company places the order to
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redeem Fund shares with the Fund unless settlement of redemption transactions is
delayed as provided in this Section 1.1. Payment shall be in federal funds
transmitted to the Company or its designee by wire to an account designated by
the Company. Upon receipt by the Company of the federal funds so wired, such
funds shall cease to be the responsibility of the Trust and shall become the
responsibility of the Company.
For purposes of this Agreement, "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates the net asset value of each Fund pursuant to the rules of the SEC, as
set forth in each Fund's prospectus.
Section 1.2. The Board of Trustees of the Trust ("Board"), acting in good
faith and in the exercise of its fiduciary responsibilities to Fund shareholders
(including the Company and its Separate Accounts), may refuse to permit the
Trust to sell shares of any Fund to any person, or suspend or terminate the
offering of shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction over the sale of shares, or is
determined by the Board to be in the best interests of the Fund's shareholders
(including without limitation purchase orders that individually or together with
other contemporaneous orders represent large transactions in shares of any
Portfolio held for a relatively brief period of time). Without limiting the
foregoing, the Fund and the Fund's transfer agent may take such other action
(including, without limitation, rejecting specific purchase orders) as they deem
necessary to reduce, discourage or eliminate market timing activity.
Section 1.3. The Trust represents and warrants that shares of each Fund
have been and will be sold only to life insurance companies and their separate
accounts and to persons or plans (collectively, "Qualified Persons") that
represent and warrant to the Trust that they qualify to purchase shares of the
Fund under Section 817(h) of the Internal Revenue Code of 1986 ("Code"), and the
regulations thereunder without impairing the ability of the Separate Account to
consider the portfolio investments of the Fund as constituting investments of
the Separate Account for the purpose of satisfying diversification requirements
of Section 817(h). The Trust represents and warrants that no shares of any Fund
have been or will be sold to the general public. The Trust shall not sell Fund
shares to any insurance company or separate account unless an agreement
substantially complying with Articles VI and VII and Sections 1.3, 2.1, 2.4, and
3.2 of this Agreement is in effect to govern such sales, to the extent required.
Company hereby represents and warrants that it and the Separate Accounts are
Qualified Persons and that it will notify the Trust and the Adviser immediately
upon having a reasonable basis for believing that either it or the Separate
Accounts are no longer Qualified Persons or may cease to be Qualified Persons.
Section 1.4. Issuance and transfer of Fund shares will be by book entry
only. Share certificates will not be issued to Company or any Separate Account.
Shares purchased from the Trust will be recorded in an appropriate title for
each Separate Account or the appropriate sub-account of each Separate Account.
The Trust shall furnish to Company the CUSIP number assigned to each Fund.
Section 1.5. The Trust shall provide monthly statements of account as of
the end of each month for all Company's accounts by the fifteenth (15) Business
Day of the following month.
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Section 1.6. The Trust or its designee shall notify Company (by wire or
telephone, followed by written confirmation) in advance of any dividends or
capital gain distributions payable on the Funds' shares, but in no case later
than 7:00 p.m. Eastern time on the payable date. Company hereby elects to
reinvest all such dividends and capital gain distributions as are payable on a
Fund's shares in additional shares of that Fund. The Trust shall notify Company
by the end of the next Business Day following the date any dividends or capital
gain distributions are paid of the number of shares issued as payment of such
dividends and distributions. Company reserves the right to revoke this election
and to receive all such dividends and capital gain distributions in cash.
Section 1.7. The Trust or its agent shall make the NAV of each Fund
available to Company on a daily basis as soon as reasonably practical after the
NAV is calculated and reported in a manner required or permitted by applicable
law. The Trust shall use reasonable efforts to make such NAV available by 7:00
p.m. Eastern time on each Business Day. In the event that the Trust is unable to
meet the 7:00 p.m. time stated herein, the Trust shall provide additional time
for the Company to place orders for the purchase and redemption of shares equal
to the additional time it takes the Trust to make the NAVs available to the
Company.
In the event of an error in the computation of a Fund's NAV or any dividend
or capital gain distribution (each, a "pricing error"), the Trust shall notify
the Company as soon as possible after discovery of the error. Such notification
may be verbal, but shall be confirmed promptly in writing in accordance with
Section 10.1 of this Agreement. A pricing error shall be corrected as follows:
(a) if the pricing error results in a difference between the erroneous NAV and
the correct NAV of less than $0.01 per share, then no corrective action need be
taken; (b) if the pricing error results in a difference between the erroneous
NAV and the correct NAV equal to or greater than $0.01 per share, but less than
1/2 of 1% of the designated Fund's NAV at the time of the error, then the Trust
shall take all steps necessary to obtain reimbursement for any loss from any
party responsible for the pricing error ("Responsible Party"), after taking into
consideration any positive effect of such error; however, no adjustments to
Contract owner accounts need be made; and (c) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than 1/2 of 1% of the Fund's NAV at the time of the error, then the Trust shall
take all steps necessary to obtain reimbursement for any loss from any
Responsible Party (without taking into consideration any positive effect of such
error) and shall reimburse the Company for reasonable administrative and/or
systems costs of adjustments made to correct Contract owner accounts. For any
money market fund, the correction of pricing errors shall be determined in a
manner consistent with Rule 2a-7 under the 1940 Act. With respect to (c) above,
if an adjustment to Contract owner accounts is necessary to correct a pricing
error that has caused Contract owners to receive less than the amount to which
they are entitled, the number of shares of the appropriate designated Fund(s)
attributable to the accounts of the Contract owners will be adjusted and the
amount of any underpayments shall be credited by the Trust to the Company for
crediting of such amounts to the applicable Contract owner accounts. Upon
notification by the Trust of any overpayment due to a pricing error, the Company
shall promptly remit to the Trust any overpayment that has not been paid to
Contract owners; however, the Trust acknowledges that the Company does not
intend to seek additional payments from any Contract owner who, because of a
pricing error, may have underpaid for units of interest credited to his/her
account. In no event shall the Company be liable to Contract owners for any such
adjustments or underpayment amounts.
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The standards set forth in this Section 1.7 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
With respect to the pricing errors described above, this Section shall
control over other indemnification provisions in this Agreement.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
Section 2.1. Company represents and warrants that:
A. It is an insurance company duly organized and in good standing under the
laws of Delaware and that it has legally and validly established each Separate
Account as a segregated asset account under such laws,
B. It has registered or, prior to any issuance or sale of the Contracts,
will register each Separate Account as a unit investment trust in accordance
with the provisions of the 1940 Act unless exempt therefrom and cause each
Separate Account to remain so registered to the extent required thereby to serve
as a segregated asset account for the Contracts.
C. The interests under the Contracts are or will be registered under the
1933 Act to the extent required prior to any issuance or sale of the Contracts
and that the Contracts will be issued, offered and sold in compliance in all
material respects with all applicable federal and state laws and regulations,
including without limitation state insurance suitability requirements and
National Association of Securities Dealers, Inc. ("NASD") conduct rules.
D. The Contracts are currently, and at the time of issuance shall be,
treated as annuity contracts or life insurance contracts, under applicable
provisions of the Code, and Company will maintain such treatment, and will
notify the Trust immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
E. The Company shall amend the registration statement under the 1933 Act
for the Contracts and the registration statement under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law.
F. The Company shall register and qualify the Contracts for sale in
accordance with the securities laws of the various states only if and to the
extent deemed necessary by the Company.
G. It will not purchase Fund shares with assets derived from tax-qualified
retirement plans except indirectly, through Contracts purchased in connection
with such plans.
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H. The Company, its subsidiaries, and their respective directors, officers,
and employees dealing with the money and/or securities of any Fund in which a
Separate Account invests are, and shall continue to be at all times, covered by
one or more blanket fidelity bonds or similar coverage in an amount not less
than the equivalent of $10 million. The aforesaid bonds shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding company.
The Company agrees that any amount received under such bond in connection with
claims that derive from arrangements described in this Agreement will be paid by
the Company for the benefit of the Fund. 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 Adviser in
the event that such coverage no longer applies.
I. The Company shall maintain and enforce policies and procedures
reasonably designed to ensure that Portfolio share orders transmitted to the
Fund are segregated by time of receipt in order to prevent Share orders from
being executed at a price based on a previously determined net asset value.
J. The Company shall facilitate and cooperate with document requests by the
Fund or the Adviser relating to the effectiveness of its compliance controls.
K. The Company shall provide the Fund's chief compliance officer with
direct access to the Company's chief compliance officer.
Section 2.2. The Trust, on behalf of each Fund, separately and not jointly,
represents and warrants that:
A. The shares of the Funds sold pursuant to this Agreement are registered
under the 1933 Act and the regulations thereunder to the extent required.
B. The shares of the Funds are duly authorized for issuance in accordance
with the laws of each jurisdiction in which shares will be offered, to the
extent required by applicable laws.
C. The shares of the Funds shall be sold in material compliance with this
Agreement and with all applicable federal and state laws and regulations.
D. The Trust is and shall remain lawfully organized and validly existing
under the laws of Massachusetts, that it is registered and shall remain
registered with the SEC under the 1940 Act and the regulations thereunder to the
extent required.
E. Subject to Section 1.2, the Trust shall amend its registration statement
under the 1933 Act and the 1940 Act, from time to time, as required in order to
effect the continuous offering of the Funds' shares.
F. Each Fund is lawfully organized and validly existing in accordance with
the Trust's organization document.
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G. The Trust complies and will operate in compliance in all material
respects with all applicable law, including without limitation the 1940 Act and
the regulations thereunder.
H. The Trust has disclosed or made available, in writing, all information
relating to the Trust operations requested by the Company and such information
is true and accurate in all material respects as of the effective date of this
Agreement.
I. Each Fund is and at all times since its inception has been qualified as
a regulated investment company under Subchapter M of the Code, and will at times
invest money from the Contracts in such a manner and take such other actions as
necessary to qualify as a regulated investment company under Subchapter M or any
successor or similar provision) and that the Fund will make every effort to
maintain such qualification and will notify the Company immediately in writing
upon having a reasonable basis for believing that the Fund has ceased to so
qualify or that it might not so qualify in the future.
J. Each Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder (or any successor
provisions) and at all times since its inception, each Fund has complied, and
will continue to comply, with Section 817 of the Code and Treasury Regulation
1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
regulations. The Trust will notify Company immediately upon having a reasonable
basis for believing any Fund has ceased to comply or might not so comply, and
will take all steps necessary to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
K. All of its respective directors, officers, employees, investment
advisers, and other individuals or entities dealing with the money and/or
securities of any Fund in which a Separate Account invests are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. The Adviser 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 Company in the event that such coverage no longer applies.
Section 2.3. The Adviser represents and warrants that:
A. It is duly organized, validly existing and in good standing under the
laws of Colorado, is and will remain duly registered as an investment adviser
under the Advisers Act, as amended, and that it will perform its obligations for
the Funds and under this Agreement in material compliance with applicable
federal and state laws and regulations.
B. Each Fund is and at all times since its inception has been qualified as
a regulated investment company under Subchapter M of the Code, and will at times
invest money from the Contracts in such a manner and take such other actions as
necessary to qualify as a regulated investment company under Subchapter M or any
successor or similar provision) and that the
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Fund will make every effort to maintain such qualification and will notify the
Company immediately in writing upon having a reasonable basis for believing that
the Fund has ceased to so qualify or that it might not so qualify in the future.
C. Each Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder (or any successor
provisions) and at all times since its inception, each Fund has complied, and
will continue to comply, with Section 817 of the Code and Treasury Regulation
1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
regulations. The Adviser will notify Company immediately upon having a
reasonable basis for believing any Fund has ceased to comply or might not so
comply, and will take all steps necessary to adequately diversify the Fund so as
to achieve compliance within the grace period afforded by Treasury Regulation
1.817-5.
D. All of its respective directors, officers, employees, investment
advisers, and other individuals or entities dealing with the money and/or
securities of any Fund in which a Separate Account invests are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. The Adviser 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 Company in the event that such coverage no longer applies.
E. It shall not, either through action or inaction, cause the Trust to
breach any of its representations or warranties set out in Section 2.2 hereof.
Section 2.4. Each Party represents and warrants that:
A. It shall comply with anti-money laundering laws and regulations
applicable to it, including the relevant provisions of the USA PATRIOT Act (Pub.
L. No. 107-56 (2001) (the "Patriot Act") and the regulations issued thereunder.
The Company agrees as a condition precedent to any transaction taking place or
continuing to be in effect under this Agreement, to comply with any and all
applicable anti-money laundering laws, regulations, orders or requirements, and
without prejudice to the generality of the above, to provide regulatory
authorities, the Fund or its duly appointed agents, with all necessary reports
and information for the Fund or its agents to fulfill their obligations, if any,
under the Patriot Act for the purposes of the Fund or other third parties
complying with any and all anti-money laundering requirements imposed by the
Patriot Act, including, without limitation, enhanced due diligence obligations,
the filing of Currency Transaction Reports and/or of Suspicious Activity Reports
obligations, and/or the sharing of information requirements. In the event
reports and information deemed satisfactory by the Fund are not received within
a reasonable time period from the date of the request, the Fund reserve the
right to reject any transaction and/or cease to transact with the Company and/or
the Accounts. Further, the Company represents that the Company has not received
notice of, and to the Company's knowledge, there is no basis for, any claim,
action, suit, investigation or proceeding that might result in a finding that
the Company is not or has not been
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in compliance with the applicable sections of the USA PATRIOT Act, and the rules
and regulations promulgated thereunder.
B. It shall comply with privacy and notice provisions of 15 U.S.C. Sections
6801-6827 and any regulations promulgated thereunder (including but not limited
to 17 C.F.R. Part 248) applicable to it as they may be amended from time to
time.
C. It has full power and authority to enter into and perform its
obligations under this Agreement; it has duly taken all necessary steps to
authorize the person signing this Agreement on its behalf to do so and to
authorize the performance of its obligations under this Agreement and assuming
the accuracy of and compliance with this representation and warranty by all
other Parties, this Agreement will be valid, binding on, and enforceable against
such Party in accordance with its terms, subject only to such limitations as
apply generally to the rights of creditors, such as, but not limited to,
bankruptcy laws, laws governing the insolvency of insurance companies and other
entities, and principles of equity.
D. It shall comply with the requirements of Rule 38a-1 of the 1940 Act.
E. It shall notify the other parties immediately upon having a reasonable
basis for believing that any of these representations and warranties are no
longer true or accurate to a material extent.
ARTICLE III. PROSPECTUSES; REPORTS TO SHAREHOLDERS
AND PROXY STATEMENTS; VOTING
Section 3.1. The Trust shall, or, as appropriate, shall cause its agent to,
print and provide Company with as many printed copies of the Funds' current
prospectus(es) and statement of additional information, proxy materials,
notices, periodic reports, and other materials (that the Funds' provide to its
shareholders) in quantities as Company may reasonably request for delivery by
Company to existing or prospective Contract owners.
Company may elect to print the Funds' prospectus(es) and/or its statement
of additional information in combination with other fund companies' prospectuses
and statements of additional information. At Company's request, the Trust will
provide such documents (including a "camera-ready" copy of such documents as set
in type, a diskette in the form sent to the financial printer, or an electronic
copy of the documents in a format suitable for posting on the Company's website,
all as Company may reasonably request) and such other assistance as is
reasonably necessary in order for Company to have prospectuses, statements of
additional information, supplements, proxy statements, and annual and
semi-annual reports for the Contracts and the Funds printed together in a single
document or posted on Company's website. The Trust will provide to the Company
Fund annual prospectus updates no later than April 15 of each year, Fund annual
reports by February 15 of each year, and Fund semi-annual reports by August 15
each year.
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Each Party shall bear, or cause its agents to bear, the costs associated
with its obligations with regard to the foregoing and other materials as
described in, and in accordance with, Schedule C attached hereto and
incorporated herein by reference, as the Parties may mutually agree in writing
to amend from time to time ("Schedule C").
Section 3.2. Voting
A. Company shall provide pass-through voting privileges to all Contract
owners with respect to shares of Trust owned by Company's Separate Accounts that
are registered as investment companies under the 1940 Act so long as and to the
extent the SEC continues to interpret the 1940 Act as requiring pass-through
voting privileges or to the extent otherwise required by law. Accordingly,
Company, where applicable, shall vote shares of a Fund held in each Separate
Account in a manner consistent with voting instructions timely received from its
Contract owners.
B. Company shall be responsible for assuring that the Separate Account
determines voting privileges on matters relating to the Fund in a manner
consistent with other insurance companies that offer variable annuity and/or
variable life insurance contracts and that has entered into an agreement with
Trust for the purpose of making Fund shares available to serve as the underlying
investment medium for such contracts ("Participating Companies") as required by
the Shared Fund Order and consistent with any reasonable standards that the Fund
may adopt and provide in writing. The obligation to calculate voting privileges
as required by the Shared Fund Order and consistent with any reasonable
standards that the Fund may adopt and provide in writing will be a contractual
obligation of all Participating Companies under the agreements governing
participation in Trust. Participating Companies shall vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as it votes those shares for which it has received voting
instructions.
C. The Trust shall provide the Company and each Participating Company with
a written copy of the conditions set forth in the notice related to the Shared
Funding Order and such other assistance as may be necessary to facilitate
coordination between Company and other Participating Companies in complying with
such conditions and provided further that Company shall be free to vote Trust
shares attributable to any Separate Account in any manner permitted by
applicable law, to the extent the Shared Funding Order is superseded by SEC or
administrative practice (including no-action relief). Company reserves the right
to vote Trust shares held in its general account and any segregated asset
account in its own right, to the extent permitted by law.
D. If and to the extent Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are
amended, or if Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules thereunder with respect to mixed and
shared funding on terms and conditions materially different from any exemptions
granted in the Shared Funding Order, then Trust, and/or the Participating
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such Rules are applicable and Sections 3.2(B), 3.2(C), 3.3, and 6.1-6.7
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.
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E. The Trust will comply with all provisions of the 1940 Act, the
regulations thereunder, and applicable SEC staff interpretations regarding
pass-through voting.
Section 3.3. Each Fund will comply with all the provisions of the 1940 Act
requiring voting by shareholders.
Section 3.4. Notwithstanding anything herein to the contrary, the Adviser
or their designee shall reimburse the Company for the reasonable costs
associated with substituting one or more different portfolios of a registered
investment company for one or more Funds where due to the acts of the Trust or
the Adviser the Fund either offers its shares at public sale, ceases to qualify
as a regulated investment company under Subchapter M of the Code (or any
successor or similar provision), or fails to comply with the diversification
requirements of Section 817(h) of the Code (or any successor or similar
provision), and as a result the Fund no longer qualifies to serve as a funding
vehicle for the Contracts. The costs of such substitution shall include, without
limitation, reasonable legal fees for obtaining any required SEC order approving
such substitution, and expenses for printing and distributing any Separate
Account prospectus or SAI supplement or other disclosure of the substitution or
elimination of the Fund as an investment vehicle under the Contracts.
ARTICLE IV. SALES MATERIAL AND INFORMATION
Section 4.1. Company shall furnish, or shall cause to be furnished, to the
Fund or its designee prior to use, each piece of sales literature or advertising
prepared by Company in which the Trust or the Funds or the Adviser is named or
described. No sales literature or advertising will be used if the Trust or the
Adviser reasonably objects to its use within ten (10) Business Days following
receipt by the Adviser.
Section 4.2. Company will not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the advertising or sale of the Contracts, other than information
or representations contained in: (a) the registration statement or Funds'
prospectus(es), as may be amended from time to time, (b) reports to
shareholders, (c) proxy statements for the Funds or, (d) sales literature or
other promotional material approved by the Adviser. Company shall comply with
all applicable federal and state laws and regulations in connection with any
efforts they make, directly, or indirectly, to promote sales of the Contracts.
Section 4.3. Each Fund shall furnish, or shall cause to be furnished, to
Company prior to use, each piece of sales literature or advertising prepared by
or for the Trust in which Company, the Contracts or Separate Accounts, are named
or described. No sales literature or advertising will be used if Company
reasonably objects to its use within ten (10) Business Days following receipt by
Company.
Section 4.4. Neither the Trust nor the Adviser will give any information or
make any representations or statements on behalf of Company, the Contracts, or
the Separate Accounts or concerning Company, the Contracts or the Separate
Accounts, in connection with the advertising or sale of the Contracts or Fund
shares, other than the information or representations contained
11
in: (a) the registration statement or prospectus for the Contracts, as may be
amended from time to time (b) reports to shareholders, or (c) in sales
literature or other promotional material approved by Company under Section 4.3.
The Fund and the Adviser shall comply with all applicable federal and state laws
and regulations in connection with any efforts they make, directly, or
indirectly, to promote sales of the Fund's shares.
Section 4.5. The Trust will provide to Company, upon Company's request, at
least one complete copy of all registration statements, prospectuses, statements
of additional information, reports to shareholders, proxy statements, sales
literature and other promotional materials, applications for exemptions and
requests for no-action letters, and all amendments, that relate to the Funds
contemporaneously with the filing of such document with the SEC or other
regulatory authority.
Section 4.6. Company will provide to the Trust, upon the Trust's request,
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, and requests for no action letters, and all amendments, that relate
to the Company or the Contracts contemporaneously with the filing of such
document with the SEC or other regulatory authority.
Section 4.7. For purposes of this Section, the terms, "sales literature,"
"advertising," or "other promotional material" includes, but is not limited to:
advertisements (such as material published, or designed for use in, newspapers,
magazines, other periodicals, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, electronic
publications, websites, or other public media) (i.e., any written communication
distributed or generally made available to customers or the public including
electronic and website materials, brochures, circulars, research reports, market
letters, e-mail messages, form letters, newsletters, 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 1933 Act, or the 1940 Act, including
electronic and website materials.
ARTICLE V. EXPENSES
Section 5.1. Except as otherwise expressly provided in this Agreement,
including as delineated in Schedule C to this Agreement, each Party agrees to
bear all expenses incident to performance by the Party under this Agreement.
ARTICLE VI. POTENTIAL CONFLICTS
Section 6.1. The Trust represents that the Board will monitor the Funds for
the existence of any material irreconcilable conflict between the interests of
the Contract owners of all separate accounts investing in the Funds. An
irreconcilable material conflict may arise for a
12
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 Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract and variable life insurance policy owners; or (f) a decision by an
insurer to disregard the voting instructions of Contract owners. The Board shall
promptly inform Company in writing if it determines that an irreconcilable
material conflict exists and the implications thereof.
Section 6.2. 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 relevant
provisions of the federal securities laws, including Rule 6e-3(T)(b)(15), and
the conditions set forth in the Shared Funding Order, by providing the Board in
a timely manner with all information reasonably necessary for it 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 by the Company and to confirm in writing, at the Fund's request,
that the Company is unaware of any such potential or existing material
irreconcilable conflicts. These responsibilities will be carried out with a view
only to the interests of the Contract owners.
Section 6.3. If it is determined by a majority of the Board, or a majority
of its independent Trustees, that a material irreconcilable conflict exists,
affecting the Company, then the Company will, at its expense and to the extent
reasonably practicable, take whatever steps it can that are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Trust or any Fund thereof and reinvesting those assets in a different
investment medium, which may include another Fund of the Trust or another
investment company, or submitting the question as to whether such withdrawal
should be implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group or class (i.e.,
Contract owners of one or more participating insurance companies) that votes in
favor of such withdrawal; or (b) establishing a new registered management
investment company or managed separate account. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Contract owners.
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 Trust's election, to withdraw the affected Separate
Account's investment in the Trust and terminate this Agreement with respect to
such Separate Account; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the independent Trustees of the Board.
Any such withdrawal and termination must take place within 6 months after the
Trust gives written notice that this provision is being implemented, and until
the end of that 6 month period, the Trust shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Funds.
No charge or penalty will be imposed as a result of such withdrawal.
13
If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Separate Account's investment in the Fund and terminate this Agreement with
respect to such Fund within 6 months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the independent trustees of the Board.
Until the end of the foregoing 6 month period, the Fund shall continue to accept
and implement orders by the Company for the purchase (and redemption) of shares
of the Funds.
Section 6.4. For the purposes of this Section 6.4, a majority of the
independent Trustees shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Trust be required to establish a new funding medium for any Contract.
Further, the Company shall not be required by this Section 6.4 to establish a
new funding medium for any Contract if an offer to do so has been declined by a
vote of a majority of Contract owners affected in a materially adverse manner by
the irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the affected Separate Account's
investment in the Fund and terminate this Agreement with respect to the Fund
within 6 months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the independent Trustees.
Section 6.5. Company, at the request of the Board will, 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.
All reports received by the Board of potential or existing conflicts, and all
Board action with regard to determining the existence 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 SEC upon request.
Section 6.6. If and to the extent any mixed and shared funding order or any
amendment thereto contains terms and conditions different from Article VI of
this Agreement, then the Fund and/or the Company, as appropriate, shall take
such steps as may be necessary to comply with the mixed and shared funding
exemptive order, and this Article VI shall be deemed to incorporate such new
terms and conditions, and any term or condition of this Article VI that is
inconsistent therewith shall be deemed to be succeeded thereby. If and to the
extent that Rule 6e-2 and 6e-3(T) are amended, or Rule 6e-3 under the 1940 Act
is adopted, to provide exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed and shared funding on
terms and conditions materially different from those contained in the Shared
Funding Order, then (a) the Fund and/or the Company 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) this Article VI shall be deemed to incorporate such new terms and
conditions, and any term or condition of this Article VI that is inconsistent
therewith, shall be deemed to be succeeded thereby.
14
Section 6.7. The Trust will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation, and of any material change in
the Trust's registration statement, particularly any change that could result in
a change to the registration statement or prospectus for any Separate Account or
a Contract. The Trust will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Trust will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual update for such prospectuses.
ARTICLE VII. INDEMNIFICATION
Section 7.1. Indemnification by Company
A. Company agrees to indemnify and hold harmless the Adviser, the Trust and
each of their directors, Trustees or (if applicable), officers, employees and
agents and each person, if any, who controls the Adviser, or the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the "Fund Indemnified
Parties" and individually, a "Fund Indemnified Party") against any and all
losses, claims, damages, liabilities, investigations or litigation (including
amounts paid in settlement with the written consent of Company, which consent
shall not be unreasonably withheld) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which any of the Fund Indemnified Parties may
become subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the Contracts
or the purchase or redemption of Fund shares in connection with the Contracts
and:
1. Arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a registration statement for
the Contracts or in the Contracts themselves or in sales literature relating to
the Contracts or Separate Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents", or arise out of or are based upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply to a Fund Indemnified Party to the
extent that any Loss arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission that was made in reliance upon
and was accurately derived from written information furnished to Company by or
on behalf of such Fund Indemnified Party for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or shares of the
Funds; or
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section 7.3A.1) or
wrongful conduct of Company or persons under its control, with respect to the
sale or acquisition of the Contracts or shares of the Funds, provided any such
statement or representation or such wrongful conduct was not made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of the Adviser or the Fund; or
15
3. Arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in information furnished in writing by
Company for use in Trust Documents as defined in Section 7.3A.1 or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Trust, or the Adviser by or on behalf of
Company; or
4. Arise out of or result from any failure by Company to provide the
services or furnish the materials required under the terms of this Agreement; or
5. Arise out of or result from any material breach by the Company of
any representation and/or warranty made by Company in this Agreement or arise
out of or result from any other material breach of this Agreement by Company; as
limited by and in accordance with, Sections 7.1B and 7.1C hereof.
6. Arise out of or result from a Contract failing to be considered a
life insurance policy or an annuity Contract, whichever is appropriate, under
applicable provisions of the Code thereby depriving the Fund of its compliance
with Section 817(h) of the Code, unless such failure is due to the failure of
the Fund or any of the other investment companies currently available as funding
vehicles for the Contracts to invest the assets of any portfolio in such a
manner as to ensure that the Contracts will be treated as annuity, endowment, or
life insurance contracts, whichever is appropriate, under the Code and the
regulations issued thereunder (or any successor provisions).
B. Company shall not be liable to a Fund Indemnified Party under this
indemnification provision with respect to any Losses that are due to such Fund
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Fund Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Trust, or the Adviser, whichever is applicable.
C. Company shall not be liable under this indemnification provision with
respect to any claim made against a Fund Indemnified Party unless a Fund
Indemnified Party shall have notified 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 Fund Indemnified Party (or
after such Fund Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Company of any such claim shall not
relieve Company from any liability that it may have to the Fund Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against any of the
Fund Indemnified Parties, Company shall be entitled to participate, at its own
expense, in the defense of such action. Company also shall be entitled to assume
the defense thereof, with counsel satisfactory to the Party named in the action.
After notice from Company to such Party of Company's election to assume the
defense thereof, as long as Company is performing its obligations under this
Article, the Fund Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Company will not be liable to such Party
under this Agreement for any legal or other expenses subsequently incurred
16
by such Party independently in connection with the defense thereof other than
reasonable costs of investigation.
D. Each Fund Indemnified Party will promptly notify Company of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the shares of the Funds
or the Contracts or the operation of the Trust.
Section 7.2. Indemnification by the Adviser
A. The Adviser agrees to indemnify and hold harmless the Company
Indemnified Parties against any and all losses, claims, damages, liabilities,
investigations or litigation (including amounts paid in settlement with the
written consent of the Adviser, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith) (collectively, "Losses"),
to which the Company Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses are related to
the sale or acquisition of the shares of the Funds or the Contracts and;
1. Arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact in any registration statement, prospectus,
statement of additional information or sales literature of the Trust applicable
to the Funds (or any amendment or supplement to any of the foregoing)
(collectively, "Trust Documents") or omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (i) if such statement or omission was made in
reliance upon and accurately derived from written information furnished by the
Adviser or (ii) if such Trust Document (other than information contained therein
provided by any person other than the Adviser) was prepared by the Adviser,
provided that in either of the foregoing cases, this indemnity shall not apply
as to any Company Indemnified Party to the extent that any Loss arises out of or
is based upon any untrue statement or omission or alleged untrue statement or
omission that was made in reliance upon and was accurately derived from written
information furnished to the Trust or the Adviser by or on behalf of Company for
use in Trust Documents or otherwise for use in connection with the sale of the
Contracts or shares of the Funds; or
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Company Documents) or wrongful conduct of the Adviser or
persons under its control, with respect to the sale or distribution of the
Contracts or shares of the Funds, provided any such statement or representation
or such wrongful conduct was not made in reliance upon and in conformity with
information furnished in writing to the Adviser or the Fund by or on behalf of
the Company; or
3. Arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in information furnished in writing by
the Adviser for use in Company Documents, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such
17
statement or omission was made in reliance upon and accurately derived from
written information (including information about the Trust or the Funds)
furnished to Company by or on behalf of the Adviser; or
4. Arise out of or result from any failure by the Adviser to provide
the services or furnish the materials required 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 Adviser in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Adviser; as limited by, and in accordance with, Sections 7.2B and 7.2C hereof.
B. The Adviser shall not be liable under this indemnification provision
with respect to any Losses that are due to a Company Indemnified Party's willful
misfeasance, bad faith, or negligence in the performance of such Company
Indemnified Party's duties or by reason of such Company Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to Company
or the Separate Account, whichever is applicable.
C. The Adviser shall not be liable under this indemnification provision
with respect to any claim made against a Company Indemnified Party unless such
Company 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 Company
Indemnified Party (or after such Company 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 that
it may have to the Company 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 Company Indemnified Parties, the Adviser shall 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 Company Indemnified Party named in the action. After notice from the
Adviser to such Company Indemnified Party of its election to assume the defense
thereof, as long as the Adviser is performing its obligations under this
Article, the Company Indemnified Party shall bear the 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 subsequently incurred by such
Party independently in connection with the defense thereof other than reasonable
costs of investigation.
D. The Company Indemnified Parties shall promptly notify the Adviser of the
commencement of any litigation or proceedings against them or any of their
officers or directors in connection with the issuance or sale of the Contracts
or the operation of a Separate Account.
Section 7.3. Indemnification by the Trust
A. The Trust agrees to indemnify and hold harmless the Company Indemnified
Parties against any and all losses, claims, damages, liabilities, investigations
or litigation (including amounts paid in settlement with the written consent of
the Trust, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees
18
incurred in connection therewith) (collectively, "Losses"), to which the Company
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses are related to the sale or
acquisition of the shares of the Funds 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 any Trust Documents generated
or approved by the Trust or arise out of or are based upon the Trust's omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that this indemnity shall not apply as to any Company Indemnified Party to the
extent that any Loss arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission that was made in reliance upon
and was accurately derived from written information furnished to the Trust or
the Adviser by or on behalf of Company for use in Trust Documents or otherwise
for use in connection with the sale of the Contracts or shares of the Funds; or
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or distribution of the
Contracts or shares of the Funds, provided any such statement or representation
or such wrongful conduct was not made in reliance upon and in conformity with
information furnished in writing to the Adviser or the Fund by or on behalf of
the Company; or
3. Arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in information furnished in writing by
the Company for use in Company Documents, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished to
Company by or on behalf of the Trust or the Funds; or
4. Arise out of or result from any failure by the Trust to provide the
services or furnish the materials required 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 Trust in this Agreement or arise out
of or result from any other material breach of this Agreement by the Trust; as
limited by, and in accordance with, Sections 7.3B and 7.3C hereof.
B. The Trust shall not be liable under this indemnification provision with
respect to any Losses that are due to a Company Indemnified Party's willful
misfeasance, bad faith, or negligence in the performance of such Company
Indemnified Party's duties or by reason of such Company Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to Company
or the Separate Account, whichever is applicable.
C. The Trust shall not be liable under this indemnification provision with
respect to any claim made against a Company Indemnified Party unless such
Company Indemnified Party
19
shall have notified the Trust 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 Company Indemnified Party (or after such
Company Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve the Trust from any liability that it may have to the Company 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 Company
Indemnified Parties, the Trust shall be entitled to participate, at its own
expense, in the defense thereof. The Trust also shall be entitled to assume the
defense thereof, with counsel satisfactory to the Company Indemnified Party
named in the action. After notice from the Trust to such Company Indemnified
Party of its election to assume the defense thereof, as long as the Trust is
performing its obligations under this Article, the Company Indemnified Party
shall bear the expenses of any additional counsel retained by it, and the Trust
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.
D. The Company Indemnified Parties shall promptly notify the Trust of the
commencement of any litigation or proceedings against them or any of their
officers or directors in connection with the issuance or sale of the Contracts
or the operation of a Separate Account.
E. Company acknowledges and agrees that the obligations of the Trust under
this Section 7.4 are to be construed as the obligation individually of each
Fund, and under no circumstances shall any right or remedy of Company with
respect to indemnification by a Fund be deemed an obligation or responsibility
of any other Fund.
Section 7.5. With respect to any claim, the Parties each shall give the
others reasonable access during normal business hours to its books, records, and
employees and those books, records, and employees within its control pertaining
to such claim, and shall otherwise cooperate with one another in the defense of
any claim. Regardless of which Party defends a particular claim, the defending
Party shall give the other Parties written notice of any significant development
in the case as soon as practicable,
Section 7.6. If a Party is defending a claim and indemnifying another Party
hereto, and: (i) a settlement proposal is made by the claimant, or (ii) the
defending Party presents a settlement proposal to the claimant that is accepted
by the claimant (subject to acceptance by the indemnified Party), then the
defending Party promptly shall provide written notice to the indemnified Party
of such settlement proposal together with its counsel's recommendation. If the
defending Party desires to enter into the settlement and the indemnified Party
fails to consent to such settlement within thirty (30) business days after
receipt of such notice (unless such period is extended, in writing, by mutual
agreement of such Parties), then the indemnified Party, commencing on the
earlier of the date the indemnified Party declined to accept the settlement or
the expiration of the thirty (30) day period, shall defend the claim (at the
defending Party's expense) and shall relieve the defending Party of any
obligation hereunder to indemnify it and hold it harmless for all Losses
associated with the claim that are in excess of the proposed settlement amount.
The defending Party, however, shall remain obligated hereunder to indemnify and
hold harmless the indemnified Party for any Losses up to and including the
amount of the proposed settlement.
20
Regardless of which Party is defending the claim: (i) if a settlement
requires an admission of liability by the non-defending Party or (ii) would
require the non-defending Party to either take action (other than purely
ministerial action) or refrain from taking action (due to an injunction or
otherwise) (a "Specific Performance Settlement"), the defending Party may agree
to such settlement only after obtaining the express, written consent of the
non-defending Party. If a non-defending Party fails to consent to a Specific
Performance Settlement, the consequences described in the last sentence of the
first paragraph of Section 7.6 shall not apply.
Section 7.7. The Parties shall use good faith efforts to resolve any
dispute concerning this indemnification obligation. Should those efforts fail to
resolve the dispute, the ultimate resolution shall be determined in a de novo
proceeding, separate and apart from the underlying matter complained of, before
a court of competent jurisdiction. Either Party may initiate such proceedings
with a court of competent jurisdiction at any time following the termination of
the efforts by such Parties to resolve the dispute (termination of such efforts
shall be deemed to have occurred thirty (30) days from the commencement of the
same unless such time period is extended by the written agreement of the
Parties). The prevailing Party in such a proceeding shall be entitled to recover
reasonable attorneys' fees, costs, and expenses.
Section 7.8. A successor by law of the Parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VII.
The provisions of this Article VII shall survive termination of this Agreement.
ARTICLE VIII. APPLICABLE LAW
Section 8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
Section 8.2. This Agreement, its terms and definitions, shall be subject to
the provisions of the 1933 Act, the 1934 Act, and the 1940 Act, and the rules
and regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant.
Section 8.3. For purposes of this Agreement, a Party's obligations
hereunder to comply with "applicable federal and state laws and regulations"
shall be limited to complying with only those federal and state laws and
regulations that apply to it.
ARTICLE IX. TERMINATION
Section 9.1. This Agreement shall continue in full force and effect until
terminated in accordance with the provisions herein. This Agreement shall
terminate in its entirety or with respect to a particular Fund, as specified
below, without penalty upon the first to occur of:
21
A. Termination as to any Fund by any Party for any reason upon ninety (90)
days advance written notice delivered to the other Parties, unless a shorter
time is agreed to by all the Parties; or
B. Termination by Company by written notice to the Trust and the Adviser
with respect to any Fund in the event (i) any of the shares of the Fund are not
registered, issued or sold in accordance with applicable federal and/or state
law, or such law precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by Company or (ii) shares of that
Fund are not reasonably available to meet the requirements of the Contracts as
determined by Company reasonably and in good faith; or
C. Termination by Company upon written notice to the Trust and the Adviser
with respect to any Fund in the event that such Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision; or
D. Termination by Company upon written notice to the Trust with respect to
any Fund in the event that such Fund fails to meet the diversification
requirements specified in Sections 1.3 and 2.2 of this Agreement; or
E. Termination by the Trust upon written notice to Company in the event
that the Contracts fail to meet the qualifications specified in Section 2.1B
hereof; or
F. Termination by any Party in the event that the Trust's Board of Trustees
determines that a material irreconcilable conflict exists as provided in Article
VI hereof; or
G. Termination by the Company, upon any substitution of the shares of
another investment company or series thereof for shares of the Fund in
accordance with the terms of the Contracts, provided that the Company has given
at least forty-five (45) days prior written notice to the Fund and the Adviser
of the date of substitution;
H. Termination by any Party, upon another Party's breach of any material
provision of this Agreement. The terminating Party shall deliver notice of such
breach to all other Parties to this Agreement. The termination shall be
effective thirty (30) days after the notice has been received by all such
Parties, but only if the breaching Party shall not have cured the breach, in all
material respects, by the end of the thirty (30) day period;
I. Termination by any Party to this Agreement, if that Party shall
determine, in its sole judgment reasonably exercised in good faith, that any
other Party to this Agreement (or any affiliate of such Party) has suffered a
material adverse change in its business or financial condition or is the subject
of material adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact upon the business
and operation of the terminating Party, such terminating Party shall notify each
other Party in writing of such determination and its intent to terminate this
Agreement, and, if, after considering the actions taken by the entity suffering
the adverse change or adverse publicity and any other changes in circumstances
since the giving of such notice, such determination of the terminating Party
shall continue to apply on the thirtieth (30th) day after such notice has been
received by all other Parties, such thirtieth (30th) day shall be the effective
date of termination;
22
J. As to a Fund, at the option of any Party to this Agreement, upon the
institution of formal proceedings against any other Party to this Agreement by
the SEC, NASD or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the terminating Party's reasonable
judgment, materially impair that other Party's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate shall
be furnished by the terminating Party to all other Parties, with said
termination to be effective upon receipt of notice by all such Parties;
K. Termination upon mutual written agreement of the Parties to this
Agreement.
Section 9.2. Effect of Termination.
Notwithstanding any termination of this Agreement pursuant to Section 9.1,
the Trust shall, at the option of 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
(the "Existing Contracts") unless such further sale of any Fund's shares is
proscribed by law, regulation or applicable regulatory body, or unless the Trust
requests that Company seek an order pursuant to Section 26(c) of the 1940 Act to
permit the substitution of other securities for the shares of the Fund. The
Trust shall bear the cost of any such substitution in the above described event.
Specifically, without limitation, the owners of the Existing Contracts or
Company, whichever shall have legal authority to do so, will be permitted to
direct allocation and reallocation of investments in the Trust, redeem
investments in the Fund and invest in the Fund through additional purchase
payments. If such Fund shares continue to be made available after such
termination, the provision of this Agreement shall remain in effect.
Section 9.3. Articles I, II, III, IV, V, VI, and VII shall survive any
termination of this Agreement to the extent necessary to carry out the
provisions of Section 9.2. Articles II and VII shall survive any termination of
this Agreement.
Section 9.4. The Parties agree to cooperate and give reasonable assistance
to one another in taking all necessary and appropriate steps for the purpose of
ensuring that the Separate Account owns no shares of a Fund after the effective
date of this Agreement's termination with respect to such shares, or, if such
ownership following termination cannot be avoided, that the duration thereof is
as brief as reasonably practicable.
ARTICLE X. NOTICES
Section 10.1. 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.
23
If to the Trust:
Xxxxxxxxxxx Variable Account Funds
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
with a copy to:
Xxxxxxxxxxx Variable Account Funds
Two World Financial Center
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Director of Variable Accounts
If to the Adviser:
OppenheimerFunds, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
with a copy to:
Xxxxxxxxxxx Variable Account Funds
Two World Financial Center
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Director of Variable Accounts
If to the Company:
New York Life Insurance and
Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President
with a copy to:
New York Life Insurance Company
Office of the General Counsel
Attention: Variable Products Attorney
00 Xxxxxxx Xxxxxx, Xxxx 00XX
Xxx Xxxx, Xxx Xxxx 00000
24
ARTICLE XI. MISCELLANEOUS
Section 11.1. Subject to the requirements of legal process and regulatory
authority, each Party will 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 Parties and, except as permitted by this
Agreement or as required by any governmental agency, regulator or other
authority, shall not without the express written consent of the affected Party
disclose, disseminate or utilize such names and addresses and other confidential
information until such time as it may come into the public domain.
Section 11.2. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
Section 11.3. This Agreement may be executed in counterparts, each of which
taken together shall constitute one and the same instrument.
Section 11.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
Section 11.5. Each Party shall:
A. Cooperate with each other Party and all governmental authorities having
jurisdiction over such other Party (including, without limitation, the Federal
Reserve Board, the SEC, the NASD, and state insurance regulators) and shall
permit such authorities (and other Parties) reasonable access to its relevant
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
B. At the request of any Party to this Agreement, make available to the
requesting Party's independent auditors and/or representatives of the
appropriate regulatory agencies, all records, data, and access to operating
procedures that may be reasonably requested in connection with compliance and
regulatory requirements related to this Agreement or any Party's obligations
under this Agreement.
C. Notify the other Parties in writing of reasonable concerns or issues it
may have from time to time concerning market-timing, excessive trading, or other
potentially detrimental trading activities that affect or may affect a Separate
Account or a Fund, and shall consult with each other Party and work
cooperatively to reach a mutually satisfactory solution or action plan to
address such Party's concerns or issues.
Section 11.6. The rights, remedies, and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies,
and obligations at law or in equity, to which the Parties hereto are entitled
under state and federal laws.
Section 11.7. 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.
25
Section 11.8. This Agreement may not be amended or modified except by
written agreement executed by each of the Parties.
Section 11.9. Acknowledgements:
A. Company acknowledges that the identity of the Trust's and the Adviser's
(and their affiliates' and/or subsidiaries') customers and all information
maintained about those customers constitute the valuable property of the Trust
and Adviser respectively. Company agrees that, should it come into contact or
possession of any such information (including, but not limited to, lists or
compilations of the identity of such customers), Company shall hold such
information or property in confidence and shall not use, disclose or distribute
any such information or property except with prior written consent of the Trust
and Adviser, or as required by law or judicial process or to perform its
obligations under this Agreement.
B. The Trust and Adviser acknowledge that the identity of Company's (and
its affiliates' and/or subsidiaries') customers and all information maintained
about those customers constitute the valuable property of Company. The Trust and
Adviser agree that, should they come into contact or possession of any such
information (including, but not limited to, lists or compilations of the
identity of such customers), they shall hold such information or property in
confidence and shall not use, disclose or distribute any such information or
property except with Company's prior written consent, or as required by law or
judicial process or to perform its obligations under this Agreement.
This Section 11.9 shall survive the expiration or termination of this
Agreement.
Section 11.10. It is understood and expressly stipulated that neither the
shareholders of shares of any Fund nor the Trustees or officers of the Trust
shall be personally liable hereunder solely as a result of their capacities as
such. No Fund shall be liable for the obligations or liabilities of any other
Fund. All persons dealing with a particular Fund must look solely to the
property of that Fund for enforcement of any claims against that Fund. It is
also understood that each Fund shall be deemed to be entering into a separate
Agreement with Company so that it is as if each of Fund had signed a separate
Agreement with Company and that a single document is being signed simply to
facilitate the execution and administration of the Agreement.
26
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed in as name and on its behalf by its duly authorized representative as
of the date specified above.
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
On its behalf and each Separate Account named
in Schedule A, as may be amended from time to
time
By:
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS
on behalf of each Fund set forth on Exhibit B
hereto individually and not jointly
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
OPPENHEIMERFUNDS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
27
SCHEDULE A
SEPARATE ACCOUNTS
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED CONTRACT FORM NUMBERS
--------------------------------------------- ---------------------
NYLIAC Corporate Sponsored Variable Universal Life CorpExe Variable Universal Life
Separate Account-I #300-40 and CorpExec VUL
May 24, 1996 #301-43
NYLIAC Private Placement Variable CorpExec Private Placement
Universal Life Insurance Variable Universal Life - #304-47
Separate Account-I (Individual policies), #304-46 C
December 10, 2001 (Group policies).
NYLIAC Private Placement Variable CorpExec Private Placement
Universal Life Insurance Variable Universal Life - #304-47
Separate Account-II (Individual policies), #304-46 C
December 10, 2001 (Group policies).
28
SCHEDULE B
PARTICIPATING FUNDS
Xxxxxxxxxxx Capital Appreciate Fund/VA--Nonservice Shares
29
SCHEDULE C
COST ALLOCATION
The COMPANY The TRUST or its Agent (as appropriate)
----------- ---------------------------------------
Preparing and filing the Separate Account Preparing and filing the Trust registration
registration statements. statement.
Text composition and alterations for the Text composition and alterations for the Trust
Separate Account prospectuses, SAIs and any prospectuses, SAIs and any supplements thereto,
supplements thereto. including versions of these documents to
accommodate various combinations of Funds
offered under Separate Account prospectuses.
Printing of the Trust prospectuses, SAIs and Supplying typeset, camera and/or web-ready
supplements thereto for prospective Contract Trust prospectuses, SAIs and supplements.
owners. Printing Separate Account Printing of the Trust prospectuses, SAIs and
prospectuses, SAIs and supplements thereto. supplements thereto for existing Contract
owners that invest in the Trust.
Mailing and distributing the Trust All or the Trust's pro-rata portion (if
prospectuses, SAIs and supplements thereto to combined with documents of other funds) of
prospective Contract owners. Mailing and mailing and distributing the Trust
distributing Separate Account prospectuses, prospectuses, SAIs and supplements thereto to
SAIs and supplements to prospective and existing Contract owners. (SAIs are
existing Contract owners. (SAIs are distributed only upon request of the Contract
distributed only upon request of the Contract owner.)
owner.)
Text composition and alterations of the Text composition and alterations of the Trust
Separate Account portion of the annual and proxy statements and voting instructions
semi-annual reports. solicitation materials to Contract owners
with respect to proxies related to the Trust,
annual and semi-annual reports for the Trust
and other communications to shareholders.
Printing, mailing and distributing annual and Supplying typeset, camera and/or web-ready
semi-annual reports for prospective Contract Trust proxy statements and voting
owners. instructions solicitation materials, annual
and semi-annual reports and other
communications to shareholders. Printing and
mailing for copies of such materials
distributed to Contract owners.
Text composition, alterations, printing, All or the Trust's pro-rata portion (if
mailing and distributing, and tabulation of combined with documents of other funds) of
proxy statements and voting instruction mailing and distributing annual and
solicitation materials to Contract owners semi-annual reports for the Trust to existing
with respect to proxies related to the Contract owners that invest in the Trust.
Separate Account(s).
Preparation, printing and distributing sales Mailing and distributing and tabulation of
material and advertising related to the Trust proxy statements and voting instruction
and contained in Separate Account advertising solicitation materials to Contract owners
and sales materials; and filing such with respect to proxies related to the Trust.
materials with and obtaining approval from,
the SEC, the National Association of
Securities Dealers, Inc., any state insurance
regulatory authority and any other
appropriate regulatory authority, to the
extent required.
Additional printing costs incurred by Company
when the Trust fails to timely provide Trust
prospectuses and Annual and Semi-Annual
required under Section 3.1 of this Agreement.
30
