Exhibit 8(k)
PARTICIPATION AGREEMENT
Among
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
VARIABLE INSURANCE FUNDS,
HSBC ASSET MANAGEMENT AMERICAS INC.
and
BISYS FUND SERVICES
THIS AGREEMENT, dated as of the ___ day of , 2000 by and among Allstate
Life Insurance Company of New York (the "Company"), a New York life insurance
company, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time (each
account hereinafter referred to as the "Account"), Variable Insurance Funds (the
"Fund"), a Massachusetts business trust, HSBC Asset Management Americas Inc.
(the "Adviser"), a New York corporation and BISYS Fund Services (the
"Underwriter"), a [INSERT STATE]corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance and variable annuity contracts (the
"Variable Insurance Products") to be offered by insurance companies which have
entered into participation agreements with the Fund and the Adviser
("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC") dated December 10, 1998 (Variable Insurance Funds, et
al., File No. 812-10694, Investment Company Act Rel. No. 23594) 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 Investment Company Act of 1940, as amended (the
"1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the
extent necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies, qualified pension and retirement plans
outside of the separate account context, the manager of a Fund or certain
related corporations, and the general account of a life insurance company, or
certain related corporations, whose separate account holds, or will hold, shares
of the Fund (the "Mixed and Shared Funding Exemptive Order"), and the Fund
hereby provides notice to the Company that appropriate prospectus disclosure
regarding potential risks of mixed and shared funding may be appropriate;
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Adviser, which serves as investment adviser to certain
Portfolios of the Fund, is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by an
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, each Account is duly established and maintained as a segregated
asset account, duly established by the Company, to set aside and invest assets
attributable to the aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to distribute
the Fund's shares, and has agreed to instruct, and has so instructed, the
Underwriter to make available to the Company, for purchase on behalf of the
Account, Fund shares of those Designated Portfolios selected by the Adviser.
Pursuant to such authority and instructions, and subject to Article X hereof,
the Underwriter shall make available to the Company for purchase on behalf of
the Account, shares of those Designated Portfolios listed on Schedule A to this
agreement, such purchases to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Fund series
(other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the Fund
and the Adviser may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, suspension or termination is necessary in the best
interests of the shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or fractional
Designated Portfolio shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Fund shares attributable to Contract owners except in the circumstances
permitted in Section 10.3 of this Agreement, and (ii) the Fund may delay
redemption of Fund shares of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving purchase and redemption requests on behalf of the
Account (but not with respect to any Fund shares that may be held in the general
account of the Company) for shares of those Designated Portfolios made available
hereunder, based on allocations of amounts to the Account or subaccounts thereof
under the Contracts and other transactions relating to the Contracts or the
Account. Receipt of any such request (or relevant transactional information
therefor) on any day the New York Stock Exchange is open for trading and on
which a Designated Portfolio calculates its net asset value pursuant to the
rules of the SEC (a "Business Day") by the Company as such limited agent of the
Fund prior to the time that the Designated Portfolio ordinarily calculates its
net asset value as described from time to time in the Fund's prospectus, shall
constitute receipt by the Fund on that same Business Day, provided that the Fund
receives notice of such request by 9:30 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated Portfolio on the
same day that it notifies the Fund of a purchase request for such shares.
Payment for Designated Portfolio shares shall be made in federal funds
transmitted to the Fund by wire to be received by the Fund by noon (s) available
to the Company on a daily basis as soon as reasonably practicable after the net
asset value per share is calculated but shall use its best efforts to make such
net asset value available by 6:30 p.m, Eastern time. In the event that the Fund
is unable to meet the 6:30 pm. Time stated herein, it shall provide additional
time for the Company to place orders for the purchase and redemption of shares.
Such additional time shall be equal to the additional time which fund takes to
make the net asset value available to the Company. If the Fund provides the
Company with materially incorrect share net asset value information through no
fault of the Company, the Company on behalf of the separate accounts, shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of net asset value per share, divided or capital gain information shall be
reported promptly upon discovery to the Company. At the end of each Business
Day, the Company shall use the information described in herein to calculate
separate account unit values for the day.
Using these unit values, the Company shall process each such Business Day's
separate account transactions based on requests and premiums received by it by
the close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m., Eastern time) to determine the net dollar amount of Fund shares which
shall be purchased or redeemed at that day's closing net asset value per share.
The net purchase or redemption orders so determined shall be transmitted to Fund
by the Company by 9:00 a.m., Eastern time on the Business Day next following the
Company's receipt of such requests and premiums in accordance with the terms of
this agreement. If the company's order requests the purchase of Fund shares, the
Company shall pay for such purchase by wiring federal funds to Fund or its
designated custodial account on the day the order is transmitted by the Company.
If the Company's order requests a net redemption resulting in a payment of
redemption proceeds to the Company, Fund shall use it best efforts to wire the
redemption proceeds to the Company by the next Business Day, unless doing so
would require Fund to dispose of Designated Portfolio securities or otherwise
incur additional costs. In any event, proceeds shall be wired to the Company
within three Business Days or such longer period permitted by the '40 Act or the
rules, orders or regulations thereunder and Fund shall notify the person
designated in writing by the Company as the recipient for such notice of such
delay by 3:00 p.m., Eastern time the same Business Day that the Company
transmits the redemption order to Fund. If the Company's order requests the
application of redemption proceeds from the redemption of shares to the purchase
of shares of another Designated Portfolio as shown on Schedule A, Fund shall so
apply such proceeds on the same Business Day that the Company transmits such
order to the Fund.
1.5. The Fund shall furnish notice (by wire or telephone followed by written
confirmation) to the Company, as soon as reasonably practicable, of any income
dividends or capital gain distributions payable on any Designated Portfolio
shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any Designated
Portfolio shares in the form of additional shares of that Designated Portfolio.
The Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash. The Fund shall notify the Company promptly of the number
of Designated Portfolio shares so issued as payment of such dividends and
distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only. Share
certificates will not be issued to the Company or the Account. Purchase and
redemption orders for Fund shares shall be recorded in an appropriate ledger for
the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.8 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however, that
until this Agreement is terminated pursuant to Article X, the Company shall
promote the Designated Portfolios on the same basis as other funding vehicles
available under the Contracts. Funding vehicles other than those listed on
Schedule A to this Agreement may be available for the investment of the cash
value of the Contracts, provided, however, (i) any such vehicle or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of the Designated Portfolios
available hereunder; (ii) the Company gives the Fund and the Underwriter 45 days
written notice of its intention to make such other investment vehicle available
as a funding vehicle for the Contracts; and (iii) unless such other investment
company was available as a Funding vehicle for the Contracts prior to the date
of this Agreement and the Company has so informed the Fund and the Underwriter
prior to the Fund's signing of this Agreement, the Fund or Adviser consents in
writing to the use of such other vehicle, such consent not to be unreasonably
withheld.
1.8. The Fund shall sell Fund shares only to Participating Insurance Companies
and their separate accounts and to persons or plans "Qualified Persons") that
communicate to the Fund (or its designees) that they qualify to purchase shares
of the Fund under Section 817(h) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder without impairing the
ability of the Account to consider the portfolio investments of the Fund as
constituting investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h). The Fund shall not sell Fund
shares to any insurance company or separate account unless an agreement
substantially complying with Article VI of this Agreement is in effect to govern
such sales, to the extent required. The Company hereby represents and warrants
that it and the Account are Qualified persons. The Fund reserves the right to
cease offering shares of any Designated Portfolio in the discretion of the Fund.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or prior to
issuance will be, registered under the 1933 Act, or (b) are not registered
because they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 1933 Act. The Company further represents and warrants that the
Contracts will be issued and sold in compliance in all material respects with
all applicable federal securities and state securities and insurance laws and
that the sale of the Contracts shall comply in all material respects with state
insurance suitability requirements. The Company further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law, that it has legally and validly established the Account prior to
any issuance or sale thereof as a segregated asset account under New York
insurance laws, and that it (a) has registered or, prior to any issuance or sale
of the Contracts, will register the Account as a unit investment trust in
accordance with the provisions of the 1940 Act and will cause each Account to
remain so registered and to serve as a segregated investment account for the
Contracts, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act. The Company
shall register and qualify the Contracts or interests therein as securities in
accordance with the laws of the various states only if and to the extent
required by applicable law.
2.2. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with applicable state and federal securities laws and
that the Fund is and shall remain registered under the 0000 Xxx. The Fund shall
amend the registration statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.3. The Fund may make payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act. Prior to financing distribution expenses pursuant
to Rule 12b-1, the Fund will have the Board, a majority of whom are not
interested persons of the Fund, formulate and approve a plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund makes no representations as to whether any aspect of its
operations, including, but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states.
2.5. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply in
all material respects with the 1940 Act.
2.6. Adviser represents and warrants that it is and will remain duly registered
and licensed in all material respects under all applicable federal and state
laws and shall perform its obligations hereunder in compliance in all material
respects with any applicable state and federal laws.
2.7. The Fund and the Adviser represent and warrant that all of their
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall 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
minimum coverage as required currently by Rule 17g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.8. The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed or controlled by the Company
dealing with the money and/or securities of the Account are covered by a blanket
fidelity bond or similar coverage for the benefit of the Account, in an amount
not less than $5 million. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company agrees to
hold for the benefit of the Fund and to pay to the Fund any amounts lost from
larceny, embezzlement or other events covered by the aforesaid bond to the
extent such amounts properly belong to the Fund pursuant to the terms of this
Agreement. 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.
2.9 Underwriter represents and warrants that it is and will be a member in good
standing of the NASD and is and will be registered as a broker-dealer with the
SEC. Underwriter further represents that it will sell and distribute the
Variable Contracts in accordance with all applicable state and federal laws and
regulations, including without limitation the '33 Act, the '34 Act and the '40
Act.
Underwriter represents that its operations are and shall at all times remain in
material compliance with the laws of the State of New York to the intent
required to perform this Agreement.
2.10 Underwriter represents and warrants that it is and will remain dully
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund or its designee shall provide the Company with as many copies of
the Fund's current prospectus (describing only the Designated Portfolios listed
on Schedule A) or, to the extent permitted, the Fund's profiles as the Company
may reasonably request. The Company shall bear the expense of printing copies of
the current prospectus and profiles for the Contracts that will be distributed
to existing Contract owners, and the Fund shall bear the expense of printing
copies of the Fund's prospectus and profiles that are used in connection with
offering the Contracts issued by the Company. If requested by the Company in
lieu thereof, the Fund shall provide such documentation (including a final copy
of the new prospectus on diskette at the Fund's expense) and other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the prospectus for
the Contracts and the Fund's prospectus or profile printed together in one
document (such printing to be at the Fund's expense).
3.2. The Fund's prospectus shall state that the current statement of additional
information ("SAI") for the Fund is available, and the Underwriter (or the
Fund), at its expense, shall provide a reasonable number of copies of such SAI
free of charge to the Company for itself and for any owner of a Contract who
requests such SAI.
3.3. The Fund shall provide the Company with information regarding the Fund's
expenses, 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. 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.
3.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners;
(iii)vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such portfolio for which instructions have
been received; and
(iv) vote Fund shares it owns in the same proportion as those shares for
which it has received voting instructions, so long as and to the extent that the
SEC continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners or to the extent otherwise required by
law. The Company will vote Fund shares held in any segregated asset account in
the same proportion as Fund shares of such portfolio for which voting
instructions have been received from Contract owners, to the extent permitted by
law.
3.6. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Mixed and Shared Funding
Exemptive Order and consistent with any reasonable standards that the Fund may
adopt and provide in writing.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material that
the Company develops and in which the Fund (or a Designated Portfolio thereof)
or the Adviser or the Underwriter is named. No such material shall be used until
approved by the Fund or its designee, and the Fund will use its best efforts for
it or its designee to review such sales literature or promotional material
within five Business Days after receipt of such material. The Fund or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named, and no
such material shall be used if the Fund or its designee so object.
4.2. The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund or the Adviser or the
Underwriter 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 and
prospectus or 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 its designee, except with the
permission of the Fund or its designee.
4.3. The Fund or its designee shall furnish, or cause to be furnished, to the
Company, each piece of sales literature or other promotional material that it
develops and in which the Company, and/or its Account, is named. No such
material shall be used until approved by the Company, and the Company will use
its best efforts to review such sales literature or promotional material within
five Business Days after receipt of such material. The
Company reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Company and/or
its Account s named, and no such material shall be used if the Company so
objects.
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, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, promptly after the filing of such document(s)
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 (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments or supplements to
any of the above, that relate to the Contracts or the Account, promptly after
the filing of such document(s) with the SEC or other regulatory authorities. The
Company shall provide to the Fund or its designee any complaints received from
the Contract owners pertaining to the Fund or the Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Designated Portfolio, and of any
material change in the Fund's registration statement, particularly any change
resulting in a change to the registration statement or prospectus for any
Account. The Fund 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 Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature and other
promotional materials" includes, but is not limited to, any of the following
that refer to the Fund or any affiliate of the Fund: 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, reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
dstributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to the
Company under this Agreement. If the Fund or any Portfolio adopts and implements
a plan pursuant to Rule 12b-1 to finance distribution expenses, or a plan to
finance Contract owner services, then the Fund or 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.
5.2. All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall see to it that all its shares are registered
and authorized for issuance in accordance with applicable ederal law and, if and
to the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
typesetting and printing the prospectus, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's prospectus
to owners of Contracts issued by the Company and of distributing the Fund's
proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Fund will invest its assets in such a manner as to ensure that the
Contracts will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, each
Designated Portfolio has complied and will continue to comply with Section
817(h) of the Code and Treasury Regulation ss.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 or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Fund, it 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 within the grace period afforded
by Regulation 1.817-5.
6.2. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provisions) 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.
6.3. The Company represents that the Contracts are currently, and at the time of
issuance shall be, treated as life insurance, endowment, or annuity insurance
contracts, under applicable provisions of the Code, and that it will make every
effort to maintain such treatment, and that it will notify the Fund, the
Adviser, and the Underwriter 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. The Company agrees that any prospectus offering a
contract that is a "modified endowment contract" as that term is defined in
Section 7702A of the Code (or any successor or similar provision), shall
identify such contract as a modified endowment contract.
ARTICLE VII.
Potential Conflicts
The following provisions shall apply only upon the sale of shares of the Fund to
variable annuity and variable life insurance separate accounts, and then only to
the extent required under the 0000 Xxx.
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Fund and all other persons investing in the
Fund. A material irreconcilable conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; (f) a decision by
an insurer to disregard the voting instructions of contract owners; or (g) if
applicable, a decision by a qualified pension or retirement plan to disregard
the voting instructions of its participants. The Board shall promptly inform the
Company if it determines that a material irreconcilable conflict exists and the
implications thereof.
7.2. The Company, with a view only to the interests of Contract owners, will
report any potential or existing conflicts of which it is aware to the Board.
The Company, with a view only to the interests of Contract owners, will assist
the Board in carrying out its responsibilities under the Mixed and Shared
Funding Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever Contract
owner voting instructions are disregarded. No less than annually, the Company
shall submit to the Board such reports, materials, or data as the Board
reasonably requests so that the Board may carry out its obligations under the
Mixed and Shared Funding Exemptive Order. Such reports, materials and data shall
be submitted more frequently if deemed appropriate by the Board.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question as to whether such segregation should be implemented to
a vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement with respect to each Account (at the
Company's expense); provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six (6) months after
the Fund gives written notice that this provision is being implemented, and
until the end of that six month period the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund. No charge or penalty will be imposed as a result of such withdrawal.
The responsibility to take such remedial action shall be carried out with a view
only to the interest of the contract owners.
7.5. 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
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense) within six months after the Board
informs the Company in writing that it and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
The responsibilty to take such action shall be carried out with a view only to
the interest of the contract owners.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contract if an offer to do so has been declined by vote of a
majority of Contract owners materially and adversely affected by the material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable conflict,
then the Company will withdraw the Account's investment in the Fund and
terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemptive Order or any
amendment thereto contains terms and conditions different from Sections 3.5,
3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with the Mixed and Shared Funding Exemptive Order, and
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 the Mixed and Shared Funding Exemptive Order
or any amendment thereto. If and to the extent that Rule 6e-2 and Rule 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 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, then (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.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Adviser and the trustees/directors and officers of each, and each person, if
any, who controls the Fund or the Adviser within the meaning of Section 15 of
the 1933 Act or who is under common control with the Fund or the Adviser
(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
legal and other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities, expenses (or actions in respect thereof),
or settlements are related to the sale or acquisition of the fund's shares or
the contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statements of any material Underwriter to provide the services and furnish the
materials under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company or the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by the
Company or the Underwriter; as limited by and in accordance with the provisions
of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Fund
8.2(a). The Fund shall indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation (including legal and other expenses) to which
the Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) or settlements are related to the operations of
the Fund and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or SAI or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to the Fund
or its designee by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus, SAI or sales literature for the Contracts not supplied by the Fund
or its designees) or wrongful conduct of the Fund or its designees, with respect
to the sale 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 a registration statement, prospectus, SAI or sales
literature covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund or its designees to
provide the services and furnish the materials under the terms of this Agreement
(including a failure of the Fund, whether unintentional or in good faith or
otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or result
from any other material breach of this Agreement by the Fund; as limited by and
in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Fund shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
or such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company or the Account, whichever is applicable.
8.2(c). The Fund shall not be liable under this indemnification provision with
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
8.3(a). The Adviser agrees to indemnify and hold harmless the Company and the
Underwriter and each of their respective directors and officers and each person,
if any, who controls the Company or the Underwriter within the meaning of
Section 15 of the 1933 Act (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 Adviser)
or litigation (including legal and other expenses) to which the Indemnified
Parties may be required to pay or may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) or settlements
are related to the sale or acquisition of Fund shares or the Contracts and:
(i) Arise out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or sales
literature of Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to indemnify
shall not apply as to any Adviser; as limited by and in accordance with the
provisions of Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Adviser or the Account, whichever is applicable.
8.3(c). The Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure to
notify the Adviser of any such claim shall not relieve the Adviser from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The Adviser
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Adviser to such party of
the Adviser's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Adviser will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company and the Fund shall promptly notify the Adviser of the
commencement of any litigation or proceeding against it or any of its respective
officers or directors in connection with the Agreement, the issuance or sale of
the Contracts, the operation of the Account, or the sale or acquisition of
shares of the Fund.
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 Federal Securities
Laws and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may gran
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
If, in the future, the Mixed and Shared Funding Exemptive Order should no longer
be necessary under applicable law, then Article VII shall no longer apply.
ARTICLE X. Termination
10.1.This Agreement shall be effective as of the date hereof and shall continue
in full force and effect until the first to occur of:
(a) termination by any party, for any reason with respect to some or all
Designated Portfolios, by three (3) months advance written notice delivered to
the other parties; or
(b) termination by the Company by written notice to the Fund, Adviser and
the Underwriter based upon the Company's determination that shares of the Fund
are not reasonably available to meet the requirements of the Contracts; said
termination to be effective ten days after receipt of notice unless Fund makes
available a sufficient number of shares to reasonably meet the requirements of
the Contracts within said ten-day period; or
(c) termination by the Company by written notice to the Fund, Adviser and
the Underwriter in the event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; said termination
to be effective ten days after receipt of notice unless Fund makes available a
sufficient number of share to reasonably meet the requirements of the Contracts
within the said ten-day period; or
(d) termination by the Fund or Adviser in the event that formal
administrative proceedings are instituted against the Company or Underwriter by
the NASD, the SEC, the Insurance Commissioner or like official 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 operation of any Account, or the
purchase of the Fund's shares; provided, however, that the Fund or Adviser
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the ability
of the Company to perform its obligations under this Agreement. Prompt notice of
election to terminate shall be furnished by the Fund with said termination to be
effective upon receipt of notice; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body; provided,
however, that the Company determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Fund or Adviser to perform its obligations under
this Agreement. Prompt notice of election to terminate shall be furnished by the
Company with said termination to be effective upon receipt of notice; or
(f) termination by the Company by written notice to the Fund, the Adviser
and the Underwriter with respect to any Designated Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M or fails to comply with the Section 817(h) diversification
requirements specified in Article VI hereof, or if the Company reasonably
believes that such Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Adviser by written notice to the Company in
the event that the Contracts fail to meet the qualifications specified in
Article VI hereof; or
(h) termination by the Fund by written notice to the Company, if the
Company gives the Fund and the Underwriter the written notice specified in
Section 1.7(a)(ii) hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of this Agreement;
provided, however, any termination under this Section 10.1(j) shall be effective
45 days after the notice specified in Section 1.7(a)(ii) was given; or
(i) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares terms of the Contracts,
provided that the Company has given at least 45 days prior written notice to the
Fund, Adviser and Underwriter of the date of substitution; or
(j) termination by any party in the event that the Board determines that a
material irreconcilable conflict exists as provided in Article VII.
10.2.Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Fund or its designee requests that the Company seek an order pursuant to Section
26(b) of the 1940 Act to permit the party may from time to time specify in
writing
to the other party.
If to the Fund: Variable Insurance Funds
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
If to the Company: Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
If to the Adviser: HSBC Asset Management Americas Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Underwriter: BISYS Fund Services
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
ARTICLE XII. Miscellaneous
12.1.All persons dealing with the Fund must look solely to the property of the
respective Designated Portfolios listed on Schedule A hereto as though each such
Designated Portfolio had separately contracted with the Company and the Adviser
for the enforcement of any claims against the Fund. The parties agree that
neither the Board, officers, agents or shareholders of the Fund assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Fund.
12.2.Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names owners of the Contracts and
all information reasonably identified as confidential in writing by any other
party hereto and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until such
time as such information has come into the public domain, except regulators.
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.Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD, and
state insurance regulators) and shall permit such authorities reasonable access
to its books and investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the New York
Superintendant with any information or reports in connection with services
provided under this Agreement which such Superintendant may request in order to
ascertain whether the variable contract operations of the Company are being
conducted in a manner consistent with the New York insurance laws and
regulations and any other applicable law or regulations.
12.7.The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8.This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By its authorized officer
By:
Title:
Date:
VARIABLE INSURANCE FUNDS
By its authorized officer
By:
Title:
Date:
HSBC ASSET MANAGEMENT AMERICAS INC.
By its authorized officer
By:
Title:
Date:
BISYS FUND SERVICES
By its authorized officer
By:
Title:
Date:
Schedule A
Contract Account Designated Portfolio(s)
1. NYLU446 Allstate Life of HSBC Variable Growth and
New York Separate Income Fund
Account A
2. NYLU446 Allstate Life of HSBC Variable Fixed Income
New York Separate Fund
Account A
3. NYLU446 Allstate Life of HSBC Variable Cash
New York Separate Management Fund
Account A
Exhibit 8(l)
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 12th day of July, 2002
("Agreement"), by and among Delaware Group Premium Fund, a Delaware business
trust ("PREMIUM FUND"); Delaware Distributors, L.P., a Delaware limited
partnership ("DISTRIBUTOR"), Allstate Life Insurance Company of New York, a New
York corporation ("LIFE COMPANY"), on behalf of itself and its segregated asset
accounts listed in Schedule A hereto, as the parties hereto may amend from time
to time (each, an "Account," and collectively, the "Accounts"); and ALFS, Inc.,
an affiliate of LIFE COMPANY and the principal underwriter of the Contracts
("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, PREMIUM FUND is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, PREMIUM FUND currently consists of 18 separate series
("Series"), shares ("Shares") of each of which are registered under the
Securities Act of 1933, as amended (the "1933 Act") and are currently sold to
one or more separate accounts of life insurance companies to fund benefits under
variable annuity contracts and variable life insurance contracts; and
WHEREAS, PREMIUM FUND will make Shares of each Series listed on
Schedule A hereto, as the Parties hereto may amend from time to time (each a
"Fund"; reference herein to "PREMIUM FUND" includes reference to each Fund, to
the extent the context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, interests
under which Contracts, if required by applicable law, will be registered under
the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts,
each of which may be divided into two or more subaccounts ("Subaccounts";
reference herein to an "Account" includes reference to each Subaccount thereof
to the extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Contracts will be registered as securities under the
1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, DISTRIBUTOR is duly registered as a broker-dealer under
Securities Exchange Act of 1934, as amended, and any applicable state securities
laws; and
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
PREMIUM FUND will make full and fractional Shares of each Fund
available to LIFE COMPANY for purchase and redemption at net asset value and
with no sales charges, subject to the terms and conditions of this Agreement.
The Board of Directors of PREMIUM FUND may refuse 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 or
if, in the sole discretion of the Directors acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, such action
is necessary in the best interests of the shareholders of such Fund, including
owners, annuitants and beneficiaries under Contracts (collectively "Contract
owners"), as defined herein.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete existing Funds,
by amending Schedule A hereto. Upon such amendment to Schedule A, any applicable
reference to a Fund, PREMIUM FUND, or its Shares herein shall include a
reference to any such additional Fund. Schedule A, as amended from time to time,
is incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public.
PREMIUM FUND represents and warrants that no Shares of any Fund have
been or will be sold to the general public or to any one else for any purpose or
under any circumstances that would preclude LIFE COMPANY from offering, selling,
or administering any Contract as a tax-deferred annuity or life insurance
policy.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) PREMIUM FUND or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 5:30
p.m. Central Time on each Business Day. As used herein, "Business Day" shall
mean any day on which (i) the New York Stock Exchange is open for regular
trading, and (ii) PREMIUM FUND calculates the Fund's net asset value, pursuant
to the rules of the SEC and in accordance with its prospectus. In the event the
PREMIUM FUND is unable to meet the 5:30 p.m. time stated herein, the LIFE
COMPANY agrees to use its best efforts to include the NAV when received in its
next business cycle for purposes of calculating purchase orders and requests for
redemption. However, if the net asset value is not made available for inclusion
in that day's business cycle and purchase / redemption orders are not able to be
calculated and available within the timeframe identified in section 2.1(b), the
PREMIUM FUND shall make an adjustment to the number of shares purchased or
redeemed for the Accounts to reflect the correct net asset value per share once
it is received and processed through the next business cycle.
(b) LIFE COMPANY will use the data provided by PREMIUM FUND each
Business Day pursuant to paragraph (a) immediately above to calculate Account
unit values and to process transactions that receive that same Business Day's
Account unit values. LIFE COMPANY will place corresponding orders to purchase or
redeem Shares received in accordance with Section 2.3(a) hereof with PREMIUM
FUND by 10:00 a.m. Central Time the following Business Day.
(c) With respect to payment of the purchase price by LIFE COMPANY and
of redemption proceeds by PREMIUM FUND, LIFE COMPANY and PREMIUM FUND shall net
purchase and redemption orders for each Account with respect to each Fund and
shall transmit one net payment per Fund per Account in accordance with Section
2.2, below.
(d) If PREMIUM FUND provides materially incorrect Share net asset value
information, LIFE COMPANY shall be entitled to an adjustment to the number of
Shares purchased or redeemed to reflect the correct net asset value per Share.
Further, PREMIUM FUND and DISTRIBUTOR will take such other steps as may be
necessary to reimburse and make LIFE COMPANY, its Accounts, and its Contract
owners whole for any loss due to such pricing error. In addition, DISTRIBUTOR
shall reimburse LIFE COMPANY for any material LIFE COMPANY reprocessing costs.
To the extent that an overstatement of net asset value per share is detected
quickly and LIFE COMPANY has not mailed redemption checks to Contract owners,
LIFE COMPANY and DISTRIBUTOR agree to examine the extent of the error to
determine the feasibility of reprocessing such redemption transaction (for
purposes of reimbursing the Fund to the extent of any such overpayment). Any
material error in the calculation or reporting of net asset value per Share,
dividend or capital gain information shall be reported promptly upon discovery
to LIFE COMPANY.
2.2 Timely Payments.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by PREMIUM FUND by 2:00 p.m. Central Time on the same day as the
order for Shares is placed. PREMIUM FUND will wire payment for net redemptions
to an account designated by LIFE COMPANY by 2:00 p.m. Central Time on the same
day as the Order is placed.
2.3 Applicable Price.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by PREMIUM FUND or its designated agent of the
orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the
designated agent of PREMIUM FUND for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by PREMIUM FUND; provided that PREMIUM FUND receives notice
of such orders by 10:00 a.m. Central Time on the next following Business Day or
such later time as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will
be effected at the net asset values of the appropriate Funds next computed after
receipt by PREMIUM FUND or its designated agent of the order therefor.
2.4 Dividends and Distributions.
PREMIUM FUND will furnish notice by wire or telephone (followed by
written confirmation) on or prior to the payment date to LIFE COMPANY of any
income dividends or capital gain distributions payable on the Shares of any
Fund. LIFE COMPANY hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the payment date
net asset values until LIFE COMPANY otherwise notifies PREMIUM FUND in writing.
LIFE COMPANY reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash.
2.5 Book Entry.
Issuance and transfer of PREMIUM FUND Shares will be by book entry
only. Stock certificates will not be issued to LIFE COMPANY. Shares ordered from
PREMIUM FUND will be recorded in an appropriate title for LIFE COMPANY, on
behalf of its Account.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided in Schedule B, attached
hereto and made a part hereof, each Party will bear, or arrange for others to
bear, all expenses incident to its performance under this Agreement.
3.2 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of PREMIUM FUND and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) PREMIUM FUND and DISTRIBUTOR each represent and warrant that each
Fund has elected to be qualified as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
that each Fund will qualify and maintain its qualification as a RIC. PREMIUM
FUND or DISTRIBUTOR will notify LIFE COMPANY immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or that it
might not so qualify in the future.
(b) PREMIUM FUND and DISTRIBUTOR represent and warrant that each Fund of PREMIUM
FUND does and will meet the diversification requirements of Section 817 (h)(1)
of the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts, as
they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal Revenue
Service interpreting these sections), as if those requirements applied directly
to each such Fund. The PREMIUM FUND shall furnish or cause to be furnished at
least annually to LIFE COMPANY a statement signed by the Treasurer or Controller
certifying that each Fund has continuously met the diversification requirements
of Section 817(h) for the preceding year. PREMIUM FUND and DISTRIBUTOR each
represent and warrant that no other life insurance companies utilizing PREMIUM
FUND ("Participating Insurance Company") will purchase shares in any Fund for
any purpose or under any circumstances that would preclude LIFE COMPANY from
"looking through" to the investments of each Fund in which it invests, pursuant
to the "look through" rules found in Treasury Regulation 1.817-5. PREMIUM FUND
will notify LIFE COMPANY immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund might not so comply
in the future. In the event of a breach of this Section 4.1(b) by PREMIUM FUND,
it will take all reasonable steps to adequately diversify each Fund so as to
achieve compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) LIFE COMPANY represents and warrants that the Contracts currently
are and will be annuity contracts or life insurance contracts under applicable
provisions of the Code and that it will use its best efforts to maintain such
status; LIFE COMPANY will notify PREMIUM FUND immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be treated as such in the future.
4.2 Insurance and Certain Other Laws.
(a) PREMIUM FUND will use its best efforts to comply with any
applicable state insurance laws or regulations, to the extent specifically
requested in writing by LIFE COMPANY, including, the furnishing of information
not otherwise available to LIFE COMPANY that is required by state insurance law
to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in
any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws of
its state of organization and has full corporate power, authority and legal
right to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established each Account
as a segregated asset account under the insurance laws of its state of
organization, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) PREMIUM FUND represents and warrants that it is a business trust
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
(d) DISTRIBUTOR represents and warrants that it is a Delaware limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.
(e) DISTRIBUTOR represents and warrants that, as PREMIUM FUND's
principal underwriter it is a member in good standing of the NASD and is
registered as a broker-dealer with the SEC. The DISTRIBUTOR represents that it
and PREMIUM FUND will sell and distribute the Shares in accordance in all
material respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
4.3 Securities Laws.
(a) LIFE COMPANY represents and warrants that (i) interests under each
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and the
law(s) of LIFE COMPANY's state of organization and domicile, (iii) each Account
is and will remain registered under the 1940 Act, to the extent required by the
1940 Act, (iv) each Account does and will comply in all material respects with
the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) LIFE COMPANY will amend the registration statements for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required to effect the continuous offering of its Contracts or as may
otherwise be required by applicable law, and (vii) each prospectus, statement of
additional information, and supplements thereto (collectively "Prospectus")
describing the Contract and prepared by LIFE COMPANY ("Contract Prospectus")
will at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(b) PREMIUM FUND represents and warrants that (i) Shares sold pursuant
to this Agreement will be registered under the 1933 Act to the extent required
by the 1933 Act and duly authorized for issuance and sold in compliance with
Delaware law and all applicable federal and state laws, (ii) PREMIUM FUND is and
will remain registered under the 1940 Act to the extent required by the 1940
Act, (iii) PREMIUM FUND will amend the registration statement for its Shares
under the 1933 Act and itself under the 1940 Act from time to time as required
to effect the continuous offering of its Shares, (iv) PREMIUM FUND does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, (v) PREMIUM FUND's 1933 Act registration statement, together
with any amendments thereto, will at all times comply in all material respects
with the requirements of the 1933 Act and rules thereunder, and (vi) each
Prospectus describing a Fund and prepared by PREMIUM FUND or DISTRIBUTOR ("Fund
Prospectus") will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) PREMIUM FUND will at its expense register and qualify the Shares
for sale in accordance with the laws of any state or other jurisdiction if and
to the extent reasonably deemed advisable by PREMIUM FUND.
(d) PREMIUM FUND 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 reserves the right to make such payments in the future.
To the extent that it decides to finance distribution expenses pursuant to Rule
12b-1, PREMIUM FUND undertakes to have its Board of Directors, a majority of
whom are not "interested" persons of the Fund, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses.
(e) PREMIUM FUND represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of a Fund are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
a 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.
(f) DISTRIBUTOR represents and warrants that the investment advisory or
management fees paid by PREMIUM FUND are and will be legitimate and not
excessive and are derived from an advisory contract which does not result in a
breach of fiduciary duty. DISTRIBUTOR further represents and warrants that it
shall perform its obligations for PREMIUM FUND in compliance with applicable
federal and state laws.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) PREMIUM FUND or DISTRIBUTOR will immediately notify LIFE COMPANY of
(i) the issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order with respect to PREMIUM FUND's registration
statement under the 1933 Act or Fund Prospectus, (ii) any request by the SEC for
any amendment to such registration statement or Fund Prospectus that may affect
the offering of Shares of PREMIUM FUND, (iii) the initiation of any proceedings
for that purpose or for any other purpose relating to the registration or
offering of PREMIUM FUND's Shares, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Shares of any Fund in any state or
jurisdiction, including, without limitation, any circumstances in which (a) such
Shares are not registered and, in all material respects, issued and sold in
accordance with applicable federal and state law, or (b) such law precludes the
use of such Shares as an underlying investment medium of the Contracts issued or
to be issued by LIFE COMPANY. PREMIUM FUND and DISTRIBUTOR will make every
reasonable effort to prevent the issuance, with respect to any Fund, of any such
stop order, cease and desist order or similar order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify PREMIUM FUND of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each Contract
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Contract Prospectus that may affect the offering of Shares of
PREMIUM FUND, (iii) the initiation of any proceedings for that purpose or for
any other purpose relating to the registration or offering of each Account's
interests pursuant to the Contracts, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of said interests in any state or
jurisdiction, including, without limitation, any circumstances in which said
interests are not registered and, in all material respects, issued and sold in
accordance with applicable federal and state law. LIFE COMPANY and UNDERWRITER
will make every reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(c) The LIFE COMPANY, UNDERWRITER, PREMIUM FUND AND DISTRIBUTOR shall
also each promptly inform the other of the results of any examination by the SEC
(or other regulatory authorities) that relates to the Contracts, the PREMIUM
FUND or its Shares, and the party that was the subject of the examination shall
provide the other party with a copy of relevant portions of any "deficiency
letter" or other correspondence or written report regarding any such
examination.
4.5 LIFE COMPANY To Provide Documents; Information About PREMIUM FUND.
-----------------------------------------------------------------
(a) LIFE COMPANY will provide to PREMIUM FUND or its designated agent
at least one (1) complete copy of all SEC registration statements, Contract
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account and the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to PREMIUM FUND or its designated agent
at least one (1) complete copy of each piece of sales literature or other
promotional material in which PREMIUM FUND or any of its affiliates is named, at
least ten (10) Business Days prior to its dissemination, or such shorter period
as the Parties hereto may, from time to time, agree upon. Such material may be
used unless PREMIUM FUND or DISTRIBUTOR objects within five (5) Business Days.
PREMIUM FUND hereby designates ADVISER as the entity to receive such sales
literature, until such time as PREMIUM FUND appoints another designated agent by
giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Except with the express written permission of PREMIUM FUND or
DISTRIBUTOR, neither LIFE COMPANY nor UNDERWRITER will give any information or
make any representations or statements on behalf of or concerning PREMIUM FUND,
DISTRIBUTOR, or their affiliates in connection with the sale of the Contracts
other than (i) the information or representations contained in the registration
statement, including the Fund Prospectuses contained therein, relating to
Shares, as such registration statement and Fund Prospectuses may be amended from
time to time; or (ii) in reports or proxy materials for PREMIUM FUND. PREMIUM
FUND and ADVISER each agrees to respond or cause its designees to respond, to
any request for approval on a prompt and timely basis.
(d) LIFE COMPANY shall adopt and implement procedures reasonably
designed to ensure that information concerning PREMIUM FUND, DISTRIBUTOR and
their affiliates that is intended for use only by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to Contract
owners) ("broker only materials") is so used, and neither PREMIUM FUND,
DISTRIBUTOR, nor any of their affiliates shall be liable for any losses, damages
or expenses relating to the improper use of such broker only materials except as
otherwise provided herein.
(e) For the purposes of this Section 4.5, 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, e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the 0000 Xxx.
4.6 PREMIUM FUND To Provide Documents; Information About LIFE COMPANY.
-----------------------------------------------------------------
(a) PREMIUM FUND will provide to LIFE COMPANY at least one (1) complete
copy of all SEC registration statements, Fund Prospectuses, reports, any
preliminary and final voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to PREMIUM FUND and the Shares of a Fund, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
(b) At least annually (or in the case of a Prospectus supplement, when
that supplement is issued) PREMIUM FUND will provide to LIFE COMPANY free of
charge with as many copies of the current Fund Prospectuses as LIFE COMPANY
shall reasonably require for distribution to current and prospective Contract
owners. PREMIUM FUND will provide such copies to LIFE COMPANY in a timely manner
so as to enable LIFE COMPANY or UNDERWRITER, as the case may be, to print and
distribute such materials within the time required by law to be furnished to
Contract owners. If requested by LIFE COMPANY in lieu thereof, PREMIUM FUND or
its designee shall provide such documentation (including a "camera ready" copy
of the Fund Prospectus as set in type or, at the request of LIFE COMPANY, as a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the Parties hereto once each year (or more
frequently if a Fund Prospectus is supplemented or amended) to have the Contract
Prospectus and the Fund Prospectuses printed together in one document; the
expenses of such printing to be apportioned between (a) LIFE COMPANY and (b)
PREMIUM FUND or its designee in proportion to the number of pages of the
Contract and Fund Prospectuses, taking account of other relevant factors
affecting the expense of printing, such as covers, columns, graphs and charts.
The Fund Prospectus shall state that the statement of additional
information ("SAI") for the Shares is available from PREMIUM FUND or its
designee. PREMIUM FUND or its designee, at its expense, shall print and provide
such SAI to LIFE COMPANY for distribution to any current or prospective Contract
owner.
PREMIUM FUND or its designee shall provide LIFE COMPANY free of charge
copies of PREMIUM FUND's proxy materials, reports to shareholders and other
communications to shareholders in such quantity as LIFE COMPANY shall reasonably
require for distribution to Contract owners.
(c) PREMIUM FUND or DISTRIBUTOR will provide to LIFE COMPANY or its
designated agent at least one (1) complete copy of each piece of sales
literature or other promotional material in which LIFE COMPANY, or any of its
respective affiliates is named, or that refers to the Contracts, at least five
(5) Business Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. Such material may be used unless LIFE
COMPANY objects within five (5)Business Days. LIFE COMPANY shall receive all
such sales literature until such time as it appoints a designated agent by
giving notice to PREMIUM FUND in the manner required by Section 9 hereof.
(d) Neither PREMIUM FUND nor DISTRIBUTOR, nor any of their affiliates
will give any information or make any representations or statements on behalf of
or concerning LIFE COMPANY, any Account, or the Contracts other than (i) the
information or representations contained in the registration statement,
including the Contract Prospectus contained therein, as such registration
statement and Contract Prospectus may be amended or supplemented from time to
time; or (ii) in published reports for the Account or the Contracts that are in
the public domain and approved by LIFE COMPANY for distribution; or (iii) in
sales literature or other promotional material approved by LIFE COMPANY or its
affiliates, except with the express written permission of LIFE COMPANY,
UNDERWRITER, or their respective designees. LIFE COMPANY and UNDERWRITER each
agrees to respond or cause their respective designees to respond, to any request
for approval on a prompt and timely basis.
(e) DISTRIBUTOR shall adopt and implement procedures reasonably
designed to ensure that information concerning LIFE COMPANY, and its respective
affiliates that is intended for use only by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to Contract
owners) ("broker only materials") is so used, and neither LIFE COMPANY, nor any
of its respective affiliates shall be liable for any losses, damages or expenses
relating to the improper use of such broker only materials except as otherwise
provided herein.
(f) PREMIUM FUND and DISTRIBUTOR will provide LIFE COMPANY with as much
notice as is reasonably practicable of any proxy solicitation for any Fund, and
of any material change in PREMIUM FUND's registration statement, particularly
any change that would result in a change to an Account's registration statement
or to a Contract Prospectus. PREMIUM FUND and DISTRIBUTOR will cooperate with
LIFE COMPANY so as to enable LIFE COMPANY to solicit proxies from Contract
owners or to make changes to any Contract Prospectus or registration statement,
in an orderly manner. PREMIUM FUND and DISTRIBUTOR will make reasonable efforts
to attempt to have changes affecting Contract prospectuses become effective
simultaneously with the annual updates for such Prospectuses.
(g) For purposes of this Section 4.6, 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, e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and any other material
constituting sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to PREMIUM FUND exempting it from certain
provisions of the 1940 Act and rules thereunder so that PREMIUM FUND may be
available for investment by certain other entities, including, without
limitation, separate accounts funding variable annuity contracts or variable
life insurance contracts, separate accounts of insurance companies unaffiliated
with LIFE COMPANY, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC
has imposed terms and conditions for such orders that are substantially
identical to many of the provisions of this Section 5. Sections 5.2 through 5.8
below shall apply pursuant to such an exemptive order granted to PREMIUM FUND.
PREMIUM FUND hereby notifies LIFE COMPANY that, in the event that PREMIUM FUND
implements Mixed and Shared Funding, it may be appropriate to include in the
prospectus pursuant to which a Contract is offered disclosure regarding the
potential risks of Mixed and Shared Funding.
5.2 Disinterested Directors.
PREMIUM FUND agrees that its Board of Trustees shall at all times
consist of directors a majority of whom (the "Disinterested Trustees") are not
interested persons of PREMIUM FUND within the meaning of Section 2(a)(19) of the
1940 Act and the rules thereunder and as modified by any applicable orders of
the SEC, except that if this condition is not met by reason of the death,
disqualification, or bona fide resignation of any trustee, then the operation of
this condition shall be suspended (a) for a period of forty-five (45) days if
the vacancy or vacancies may be filled by the Board; (b) for a period of sixty
(60) days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the SEC may prescribe by order upon
application.
5.3 Monitoring for Material Irreconcilable Conflicts.
PREMIUM FUND agrees that its Board of Trustees, constituted with a
majority of disinterested trustees, will monitor for the existence of any
material irreconcilable conflict between the interests of the Contract owners in
all separate accounts of life insurance companies utilizing PREMIUM FUND
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in PREMIUM FUND
("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees of
PREMIUM FUND of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The Board shall have the sole
authority to determine if a material irreconcilable conflict exists, and such
determination shall be binding on LIFE COMPANY only if approved in the form of a
resolution by a majority of the Board, or a majority of the disinterested
trustees of the Board. The Board will give prompt notice of any such
determination to LIFE COMPANY. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an action by any state insurance or other 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 contract owners or by contract owners
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company, all separate
accounts of life insurance companies utilizing PREMIUM FUND, to disregard
the voting instructions of contract owners; or
(g) a decision by a Participating Plan, participants in all qualified
retirement and pension plans, to disregard the voting instructions of Plan
participants ("Participants").
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist
the Board of Trustees in carrying out its responsibilities by providing the
Board of Trustees with all information reasonably necessary for the Board of
Trustees to consider any issue raised, including information as to a decision by
LIFE COMPANY to disregard voting instructions of Contract owners. LIFE COMPANY's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Contract owners.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Trustees or a majority of the Disinterested Trustees that a
material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Trustees), take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of
the Accounts from PREMIUM FUND or any Fund and
reinvesting such assets in a different investment
medium, including another Fund of PREMIUM FUND, or
submitting the question whether such segregation
should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the
assets of any particular group (e.g., annuity
Contract owners, life insurance Contract owners or
all Contract owners) that votes in favor of such
segregation, or offering to the affected Contract
owners the option of making such a change; and
(ii) establishing a new registered investment company of
the type defined as a "management company" in Section
4(3) of the 1940 Act or a new separate account that
is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at PREMIUM FUND's election, to withdraw each Account's
investment in PREMIUM FUND or any Fund. No charge or penalty will be imposed as
a result of such withdrawal. Any such withdrawal must take place within six (6)
months after PREMIUM FUND gives notice to LIFE COMPANY that this provision is
being implemented, or such longer time as may be necessary to obtain appropriate
regulatory approvals to make such withdrawal, and until such withdrawal PREMIUM
FUND shall continue to accept and implement orders by LIFE COMPANY for the
purchase and redemption of Shares of PREMIUM FUND.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to LIFE COMPANY conflicts with
the majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in PREMIUM FUND within six (6) months after PREMIUM FUND's
Board of Trustees informs LIFE COMPANY that it has determined that such decision
has created a material irreconcilable conflict, or such longer time as may be
necessary to obtain appropriate regulatory approvals to make such withdrawal,
and until such withdrawal PREMIUM FUND shall continue to accept and implement
orders by LIFE COMPANY for the purchase and redemption of Shares of PREMIUM
FUND. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Contract owners.
(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will PREMIUM FUND or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to LIFE COMPANY.
----------------------
PREMIUM FUND will promptly make known in writing to LIFE COMPANY the
Board of Trustees' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 Information Requested by Board of Trustees.
LIFE COMPANY and PREMIUM FUND (or DISTRIBUTOR) will, as necessary,
submit to the Board of Trustees of PREMIUM FUND such reports, materials or data
as the Board of Trustees may reasonably request so that the Board of Trustees
may fully carry out the obligations imposed upon it by the provisions hereof or
any exemptive order granted by the SEC to permit Mixed and Shared Funding, and
said reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Trustees. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Trustees actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in appropriate records, and such records will be made available to the
SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which PREMIUM FUND is serving as an investment
medium for variable life insurance contracts, 1940 Act Rules 6e-3(T) or, if
applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief
with respect to Mixed and Shared Funding, PREMIUM FUND agrees that it will
comply with the terms and conditions thereof and that the terms of this Section
5 shall be deemed modified if and only to the extent required in order also to
comply with the terms and conditions of such exemptive relief that is afforded
by any of said rules that are applicable.
5.8 Other Requirements.
PREMIUM FUND will require that each Participating Insurance Company and
Participating Plan enter into an agreement with PREMIUM FUND that contains in
substance the same provisions as are set forth in Sections 4.1(a), 4.1(b),
4.1(c), 4.3(a), 5, and 10 of this Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
(a) at the option of any Party, with or without cause with respect to the
Fund, upon 90 days' advance written notice to the other Parties, or, if later,
upon receipt of any required exemptive relief from the SEC, unless otherwise
agreed to in writing by the Parties; or
(b) at the option of Life Company or UNDERWRITER as to any Fund upon
written notice to the other Parties, to the extent that the Shares of that Fund
are not reasonably available to meet the requirements of the Contracts or are
not appropriate funding vehicles for the Contracts, as determined by Life
Company. Prompt notice of the election to terminate for such cause and an
explanation of such cause shall be furnished to PREMIUM FUND by Life Company; or
(c) at the option of PREMIUM FUND or DISTRIBUTOR upon written notice to the
other Parties upon institution of formal proceedings against LIFE COMPANY or
UNDERWRITER by the NASD, the SEC, any state insurance regulator or any other
regulatory body regarding LIFE COMPANY's obligations under this Agreement or
related to the sale of the Contracts, the operation of each Account, or the
purchase of Shares, if, in each case, PREMIUM FUND reasonably determines that
such proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(d) at the option of LIFE COMPANY upon written notice to the other Parties
upon institution of formal proceedings against PREMIUM FUND or DISTRIBUTOR by
the NASD, the SEC, or any state insurance regulator or any other regulatory body
regarding PREMIUM FUND's or DISTRIBUTOR's obligations under this Agreement or
related to the operation or management of PREMIUM FUND or the purchase of
PREMIUM FUND Shares, if, in each case, LIFE COMPANY reasonably determines that
such proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on LIFE COMPANY,
or the Subaccount corresponding to the Fund with respect to which the Agreement
is to be terminated; or
(e) at the option of LIFE COMPANY upon written notice to the other Parties
following receipt of any necessary regulatory approvals and/or the vote of the
Contract owners having an interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company for the corresponding Fund's
Shares in accordance with the terms of the Contracts for which those Fund Shares
had been selected to serve as the underlying investment media.
(f) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY; or
(g) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(h) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(i) at the option of LIFE COMPANY if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY
reasonably believes that the Fund may fail to so comply; or
(j) by either PREMIUM FUND or DISTRIBUTOR by written notice to LIFE
COMPANY, if either one or both of PREMIUM FUND or DISTRIBUTOR respectively,
shall determine, in their sole judgment exercised in good faith, that LIFE
COMPANY has suffered a material adverse change in its business, operations,
financial condition, or prospects since the date of this Agreement or is the
subject of material adverse publicity, if such change or publicity poses a
material risk of damage to any Fund; or
(k) by LIFE COMPANY or UNDERWRITER by written notice to PREMIUM FUND and
DISTRIBUTOR, if LIFE COMPANY or UNDERWRITER shall determine, in its sole
judgment exercised in good faith, that PREMIUM FUND or DISTRIBUTOR has suffered
a material adverse change in this business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material adverse
publicity, if such change or publicity poses a material risk of damage to LIFE
COMPANY or UNDERWRITER or any Contract owners; or
(l) upon another Party's repeated material breach of any provision of this
Agreement by a Party not affiliated with the terminating party or isolated
material breach that is not cured within a reasonable time after notice thereof.
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives written notice to the other Parties to
this Agreement of its intent to terminate, and such notice shall set forth the
Fund(s), Contracts and, if applicable, the Account(s) as to which the Agreement
is to be terminated and the basis for such termination. Furthermore in the event
that any termination is based upon any provision of Sections 6.1 other than
Section 6.1(a), such written notice shall be given as soon as reasonably
possible, but in any event within ten days after the terminating Party learns of
the event causing termination to be required.
6.3 Funds To Remain Available.
Notwithstanding any termination of this Agreement, PREMIUM FUND will,
at the option of LIFE COMPANY, continue to make available additional Shares of
the Fund pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in the Fund (as in effect on such date), redeem investments in the
Fund and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. The Parties agree that this Section 6.3 will not
apply to any terminations under Section 5 and the effect of such terminations
will be governed by Section 5 of this Agreement. This Section 6.3, however, is
qualified and limited by Sections 6.5 and 7 below.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of
this Agreement.
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Termination
Date"). This continuation shall extend to the date as of which an Account owns
no Shares of the affected Fund.
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund six (6) months after the
Termination Date with respect thereto, or such later date as may be necessary to
obtain any required regulatory approval to effect such result. Such steps may
include combining the affected Account with another Account, substituting other
mutual fund shares for those of the affected Fund, or otherwise terminating
participation by the Contracts in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the
written consent of each other Party, or except as a result of the merger, asset
transfer or other reorganization with an affiliate of the assigning party.
Section 9. Notices
Notices and communications required or permitted will be given by means
mutually acceptable to the Parties concerned. Each other notice or communication
required or permitted by this Agreement will be given to the following persons
at the following addresses and facsimile numbers, or such other persons,
addresses or facsimile numbers as the Party receiving such notices or
communications may subsequently direct in writing:
Delaware Group Premium Fund
Delaware Distributors, L.P.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx, Assistant Product Manager
Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx, Xxxxx X0X
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx Ps, Assistant Vice President
ALFS, Inc.
0000 Xxxxxxx Xxxx, Xxxxx X0X
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, President
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3
hereof, LIFE COMPANY will distribute all proxy material furnished by PREMIUM
FUND to Contract owners to whom pass-through voting privileges are required to
be extended and will solicit voting instructions from Contract owners. LIFE
COMPANY will vote Shares in accordance with timely instructions received from
Contract owners. LIFE COMPANY will vote Shares that are (a) not attributable to
Contract owners to whom pass-through voting privileges are extended, or (b)
attributable to Contract owners, but for which no timely instructions have been
received, in the same proportion as Shares for which said instructions have been
received from Contract owners, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass through voting privileges
for Contract owners. Neither LIFE COMPANY nor any of its affiliates will in any
way recommend action in connection with or oppose or interfere with the
solicitation of proxies by PREMIUM FUND for the Shares held for such Contract
owners. For this purpose, LIFE COMPANY'S making its own proxy solicitation with
respect to the same matter is not considered to be a recommendation for action
in connection with, or opposition to or interference with, PREMIUM FUND's
solicitation, if LIFE COMPANY does not delay or otherwise impede or interfere
with PREMIUM FUND's solicitation. LIFE COMPANY reserves the right to vote shares
held in any Account in its own right to the extent permitted by law. LIFE
COMPANY shall be responsible for assuring that each of its Accounts holding
Shares calculates voting privileges on matters relating to the Fund in a manner
consistent with that of other Participating Insurance Companies or in the manner
required by the Mixed and Shared Funding exemptive order obtained by PREMIUM
FUND; provided, however, that PREMIUM FUND or ADVISER shall provide LIFE COMPANY
and each other Participating Insurance Company with a written copy of the voting
privilege requirements under the Mixed and Shared Funding Exemptive Order and
such other assistance as may be necessary to facilitate coordination between
LIFE COMPANY and each other Participating Insurance Company in complying with
such standards, and provided further that LIFE COMPANY shall be free to vote
Fund shares attributable to any Account in any manner permitted by applicable
law, to the extent the Mixed and Shared Funding Exemptive Order is superseded by
SEC regulation or administrative practice (including no-action relief). PREMIUM
FUND will notify LIFE COMPANY of any changes of interpretations or amendments to
Mixed and Shared Funding exemptive order it has obtained. PREMIUM FUND will
comply with all provisions of the 1940 Act requiring voting by shareholders, and
in particular, PREMIUM FUND either will provide for annual meetings (except
insofar as the SEC may interpret Section 16 of the 1940 Act not to require such
meetings) or will comply with Section 16(c) of the 1940 Act (although PREMIUM
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, PREMIUM FUND
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors and with whatever
rules the SEC may promulgate with respect thereto.
Section 11.
PREMIUM FUND agrees to notify LIFE COMPANY concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
Section 12. Indemnification
12.1 Of PREMIUM FUND and DISTRIBUTOR by LIFE COMPANY and UNDERWRITER.
---------------------------------------------------------------
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless PREMIUM
FUND, DISTRIBUTOR, their affiliates, and each person, if any, who controls
PREMIUM FUND, DISTRIBUTOR, or their affiliates within the meaning of Section 15
of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of LIFE COMPANY and UNDERWRITER which
consent shall not be unreasonably withheld) or actions in respect thereof
(including, to the extent 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
actions are related to the sale, holding, or acquisition of PREMIUM FUND Shares
or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Contract
Prospectus, the Contracts, or sales literature or
advertising for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity with information furnished to LIFE
COMPANY, UNDERWRITER, or an affiliate or designee thereof,
by or on behalf of PREMIUM FUND or DISTRIBUTOR, or any of
their respective affiliates, for use in any Account's 1933
Act registration statement, any Contract Prospectus, the
Contracts, or sales literature or advertising (or any
amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of Contracts
or Shares; or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in PREMIUM FUND's 1933 Act registration statement,
any Fund Prospectus, sales literature or advertising, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates) made by, or the
negligent, illegal or fraudulent conduct of, LIFE COMPANY,
UNDERWRITER or their respective affiliates or persons under
their control in connection with the sale or distribution of
the Contracts or Shares; or
(iii)arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
PREMIUM FUND's 1933 Act registration statement, Fund
Prospectus, sales literature or advertising of PREMIUM FUND,
or any amendment or supplement to any of the foregoing, 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 a statement or
omission was made in reliance upon and in conformity with
information furnished to PREMIUM FUND, DISTRIBUTOR or their
affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or
their respective affiliates; or
(iv) arise as a result of any failure by LIFE COMPANY or
UNDERWRITER to perform the obligations, provide the services
and furnish the materials required of them under the terms
of this Agreement, or any material breach of any
representation and/or warranty made by LIFE COMPANY or
UNDERWRITER in this Agreement or arise out of or result from
any other material breach of this Agreement by LIFE COMPANY
or UNDERWRITER.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
DISTRIBUTOR, PREMIUM FUND, or PREMIUM FUND shareholders (including, without
limitation, Contract owners that beneficially own Shares of any Fund).
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless
PREMIUM FUND or DISTRIBUTOR shall have notified LIFE COMPANY and UNDERWRITER in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to
participate, at their own expense, in the defense of such action. Unless the
Indemnified Party releases LIFE COMPANY and UNDERWRITER from any further
obligation to it under this Section 12.1, LIFE COMPANY and UNDERWRITER also
shall be entitled to assume the defense thereof, with counsel approved by each
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 Of LIFE COMPANY and UNDERWRITER by PREMIUM FUND and ADVISER.
-----------------------------------------------------------
(a) Except to the extent provided in Sections 12.2(c) and 12.2(d),
below, PREMIUM FUND and DISTRIBUTOR agree to indemnify and hold harmless LIFE
COMPANY, UNDERWRITER, their respective affiliates, and each person, if any, who
controls LIFE COMPANY, UNDERWRITER or their respective affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of PREMIUM FUND or
DISTRIBUTOR which consent shall not be unreasonably withheld) or actions in
respect thereof (including, to the extent reasonable, legal and other expenses),
to which the Indemnified Parties or Contract owners may become subject under any
statute, regulation, at common law, or otherwise, insofar as such losses,
claims, damages, liabilities or actions are related to the sale, holding or
acquisition of the Shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
PREMIUM FUND's 1933 Act registration statement, any Fund
Prospectus or sales literature or advertising of PREMIUM
FUND (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; provided, that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to PREMIUM FUND or its
affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or
their respective affiliates for use in PREMIUM FUND's 1933
Act registration statement, any Fund Prospectus, or in sales
literature or advertising or otherwise for use in connection
with the sale of Contracts or Shares, or any amendment or
supplement to any of the foregoing; or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement,
any Contract Prospectus, sales literature or advertising for
the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
PREMIUM FUND, DISTRIBUTOR or their affiliates) made by, or
the negligent, illegal or fraudulent conduct of, PREMIUM
FUND, DISTRIBUTOR or their respective affiliates or persons
under their control in connection with the sale or
distribution of Contracts or Shares; or
(iii)arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Contract
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, 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 in
conformity with information furnished to LIFE COMPANY,
UNDERWRITER or their respective affiliates by or on behalf
of PREMIUM FUND or DISTRIBUTOR or their respective
affiliates; or
(iv) arise as a result of any failure by PREMIUM FUND or
DISTRIBUTOR to perform the obligations, provide the services
and furnish the materials required of each under the terms
of this Agreement, or any material breach of any
representation and/or warranty made by PREMIUM FUND or
DISTRIBUTOR in this Agreement or arise out of or result from
any other material breach of this Agreement by PREMIUM FUND
or DISTRIBUTOR.
(b) Except to the extent provided in Sections 12.2(c) and 12.2(d)
hereof, PREMIUM FUND and DISTRIBUTOR each agree to indemnify and hold harmless
the Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of PREMIUM FUND and/or DISTRIBUTOR) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses) to which the
Indemnified Parties may become subject directly or indirectly under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or actions directly or indirectly result from or arise out of the failure of any
Fund to operate as a regulated investment company in compliance with (i)
Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of
the Code and regulations thereunder, including, without limitation, any income
taxes and related penalties, rescission charges, liability under state law to
Contract owners asserting liability against LIFE COMPANY pursuant to the
Contracts, and the costs of any ruling and closing agreement or other settlement
with the IRS.
(c) Neither PREMIUM FUND nor DISTRIBUTOR shall be liable under this
Section 12.2 with respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to LIFE COMPANY, UNDERWRITER, each Account or Contract owners.
(d) Neither PREMIUM FUND nor DISTRIBUTOR shall be liable under this
Section 12.2 with respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified PREMIUM FUND and/or DISTRIBUTOR in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify PREMIUM FUND or
DISTRIBUTOR of any such action shall not relieve PREMIUM FUND or DISTRIBUTOR
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, PREMIUM FUND and/or DISTRIBUTOR will be entitled to
participate, at its own expense, in the defense of such action. Unless the
Indemnified Party releases DISTRIBUTOR and PREMIUM FUND from any further
obligation to it under this Section 12.2, PREMIUM FUND and/or DISTRIBUTOR also
shall be entitled to assume the defense thereof, with counsel approved by each
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from PREMIUM FUND and/or DISTRIBUTOR to such Indemnified
Party of PREMIUM FUND's or DISTRIBUTOR's election to assume the defense thereof,
the Indemnified Party will cooperate fully with PREMIUM FUND and DISTRIBUTOR and
shall bear the fees and expenses of any additional counsel retained by it, and
PREMIUM FUND and DISTRIBUTOR will not be liable to such Indemnified Party under
this Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with New York law.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
Section 15. Severability
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
Section 17. Headings
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
Section 18. Confidentiality
PREMIUM FUND and DISTRIBUTOR acknowledge that the identities of the
customers of LIFE COMPANY or any of its affiliates (collectively, the "LIFE
COMPANY Protected Parties" for purposes of this Section 18), information
maintained regarding those customers, and all computer programs and procedures
or other information developed by the LIFE COMPANY Protected Parties or any of
their respective employees or agents in connection with LIFE COMPANY's
performance of its duties under this Agreement are the valuable property of the
LIFE COMPANY Protected Parties. PREMIUM FUND and DISTRIBUTOR agree that if they
come into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by PREMIUM FUND or
DISTRIBUTOR from information supplied to them by the LIFE COMPANY Protected
Parties' customers who also maintain accounts directly with PREMIUM FUND,
PREMIUM FUND and/or DISTRIBUTOR will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY and
UNDERWRITER acknowledge that the identities of the customers of PREMIUM FUND or
any of its affiliates (collectively, the "PREMIUM FUND Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
PREMIUM FUND Protected Parties or any of their respective employees or agents in
connection with PREMIUM FUND's performance of its duties under this Agreement
are the valuable property of the PREMIUM FUND Protected Parties. LIFE COMPANY
and UNDERWRITER agree that if they come into possession of any list or
compilation of the identities of or other information about the PREMIUM FUND
Protected Parties' customers or any other information or property of the PREMIUM
FUND Protected Parties, other than such information as may be independently
developed or compiled by LIFE COMPANY or UNDERWRITER from information supplied
to them by the PREMIUM FUND Protected Parties' customers who also maintain
accounts directly with LIFE COMPANY or UNDERWRITER, LIFE COMPANY and UNDERWRITER
will hold such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property except: (a)
with PREMIUM FUND's prior written consent; or (b) as required by law or judicial
process. Each party acknowledges that any breach of the agreements in this
Section 18 would result in immediate and irreparable harm to the other parties
for which there would be no adequate remedy at law and agree that in the event
of such a breach, the other parties will be entitled to equitable relief by way
of temporary and permanent injunctions, as well as such other relief as any
court of competent jurisdiction deems appropriate.
Section 19. Collateral Agreements
PREMIUM FUND and DISTRIBUTOR agree that if PREMIUM FUND or DISTRIBUTOR
(or any of their affiliates) enters into any arrangement whereby another
Participating Insurance Company, as compared with LIFE COMPANY under this
Agreement and any collateral agreements and understandings, (a) bears materially
fewer expenses, (b) has materially fewer obligations, (c) receives materially
higher rates of revenues or fees from PREMIUM FUND, the Fund Underwriter and/or
DISTRIBUTOR, or any of their affiliates, or (d) otherwise is treated materially
more favorably in any respect, to provide the same to LIFE COMPANY, Underwriter,
and their respective affiliates.
Section 20. Trademarks and Names
(a) Neither LIFE COMPANY nor UNDERWRITER or any of their respective
affiliates, shall use any designation consistency in whole or in part of the
names or marks [Delaware, Delaware Group, Delaware Investments, and/or Premium
Fund]or any trademark, trade name, service xxxx or logo of PREMIUM FUND,
DISTRIBUTOR or any of their respective affiliates, or any variation of any such
trademark, trade name, service xxxx or logo, without PREMIUM FUND's or
DISTRIBUTOR's prior written consent. Upon termination of this Agreement for any
reason, LIFE COMPANY and UNDERWRITER shall cease all use of any such name or
xxxx as soon as reasonably practicable.
(b) Neither PREMIUM FUND nor DISTRIBUTOR, nor any of their affiliates,
shall use any designation consistency in whole or in part of the names or marks
"Allstate Life Insurance Company of New York" or any trademark, trade name,
service xxxx or logo relating to LIFE COMPANY, UNDERWRITER or any of their
respective affiliates or any variation of any such trademark, trade name,
service xxxx or logo without the prior written consent of LIFE COMPANY or
UNDERWRITER. Upon termination of this Agreement for any reason, PREMIUM FUND and
DISTRIBUTOR shall cease all use of any such name or xxxx as soon as reasonably
practicable.
Section 21. Parties to Cooperate
Each Party to this Agreement will cooperate with each other Party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
Section 22. Amendments
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all Parties hereto.
Section 23. Waivers
No waiver of, or failure to enforce, any provision of this Agreement by
any Party shall result in any a waiver of any other violation of that or any
other provision of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
DELAWARE GROUP PREMIUM FUND
Attest: ________________________ By: ______________________________________
Name: _______________ Name: ________________
Title _______________ Title: __________
DELAWARE DISTRIBUTORS, L.P.
By Delaware Distributors, Inc. (General Partner)
Attest: ________________________ By: ______________________________________
Name: _______________ Name: ________________
Title _______________ Title: __________
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, on behalf of itself
and its separate accounts
Attest: ________________________ By: ______________________________________
Name: ________________________ Name: Xxxxxxx X. Xxxxxx Pas
Title: ________________________ Title: Assistant Vice President
ALFS, INC.
Attest: ________________________ By: ______________________________________
Name: ________________________ Name: Xxxx X. Xxxxxx
Title: ________________________ Title: President
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
Delaware GP Small Cap Value Series
Delaware GP Trend Series
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Allstate Life of New York Separate Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Allstate Custom Portfolio (NYLU445)
Allstate Provider NY (NYLU409)
Allstate Custom Portfolio Plus/Allstate Provider Ultra NY (NYLU515)
Schedule B
EXPENSE ALLOCATIONS
=========================================================== ========================================================
Life Company PREMIUM FUND / DISTRIBUTOR
preparing and filing the Account's registration statement preparing and filing the Fund's registration statement
text composition, printing, and mailing of Contract text composition, printing, and mailing of Fund
Prospectuses and supplements Prospectuses and supplements (DISTRIBUTOR or its
affiliates to bear
costs related to
materials sent to
prospective Contract
owners or existing
Contract owners that
do not own Fund
Shares)
text composition and printing Contract SAIs text composition and printing Fund
SAIs mailing and distributing Contract SAIs to Contract mailing and distributing
Fund SAIs to Contract owners owners upon request by Contract owners upon request
by Contract owners
text composition, printing, mailing, and distributing text composition, printing, mailing, and distributing
annual and semi-annual reports for Accounts annual and semi-annual reports for Funds (DISTRIBUTOR
or its affiliates to
bear costs related
to materials sent to
prospective Contract
owners or existing
Contract owners that
do not own Fund
Shares)
text composition, printing, mailing, distributing, and text composition,
printing, mailing, distributing and tabulation of proxy statements and voting
instruction tabulation of proxy statements and voting instruction solicitation
materials to participants with respect to solicitation materials to participants
with respect to proxies solicited by LIFE COMPANY proxies solicited by PREMIUM
FUND
preparation, printing and distributing sales material and advertising relating
to the Funds (but not including any Fund Prospectus, SAI, or report), insofar as
such materials relate to the Contracts and filing such materials with and
obtaining approval from, the SEC, the NASD, any state insurance regulatory
authority, and any other appropriate regulatory authority, to the extent
required
=========================================================== ========================================================
Exhibit 8(m)
PARTICIPATION AGREEMENT
By and Among
XXXXX FARGO VARIABLE TRUST
And
-----------------------------
And
XXXXXXXX INC.
THIS AGREEMENT, made and entered into this th day of , 1999, by and among,
a corporation (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Exhibit A to this Agreement, as may be amended
from time to time (each separate account, a "Separate Account"), and Xxxxx Fargo
Variable Trust, an open-end diversified management investment company organized
under the laws of the State of Delaware (the "Trust"), and Xxxxxxxx Inc., an
Arkansas corporation (the "Underwriter").
WHEREAS, the Trust 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 similar
to this Agreement ('Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund"); and
WHEREAS, an order from the U.S. Securities and Exchange Commission (the
"SEC" or "Commission"), dated September 28, 1998 (File No. 812-11158), grants
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
(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 Trust 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 ("Mixed and Shared Funding Order"), and
WHEREAS, the Trust 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 I (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable
annuity and variable life insurance contracts under the 1933 Act and named in
Exhibit A to this Agreement, as it may be amended from time to time (the
"Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company under the insurance laws of the State of , to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered the Separate Accounts as unit
investment trusts under the 1940 Act; and
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"); WHEREAS, to the extent permitted
by applicable insurance laws and regulations, the Company intends to purchase
shares in the Funds named in Exhibit B on behalf of the Separate Accounts to
fund the Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Separate Accounts at net asset value; NOW,
THEREFORF,, in consideration of their mutual promises, the Company, the Trust,
and the Underwriter agree as follows:
ARTICLE I Sale of Trust Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Trust
which the Company orders on behalf of the Separate Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt
and acceptance by the Trust or its designee of the order for the shares of
the Trust. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from each Separate Account
and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order by 98:30 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
relevant Fund calculates its net asset value.
1.2 The Trust 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 Trust
calculates its net asset value pursuant to rules of the SEC; provided,
however, that the Board of Trustees of the Trust (hereinafter the
"Trustees") may refuse 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, or is, in the sole
discretion of the Trustees, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of any Fund.
1.3. The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts, and
to qualified pension and retirement plans. No shares of the Trust will be
sold to the general public.
1.4. The Trust and the Underwriter will not sell Trust shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII, and Section 2.8 of
Article II of this Agreement are in effect to goven1 such sales.
1.5. The Trust will not accept a purchase order from qualified pension or
retirement plan if such purchase would make the plan shareholder an owner
of 10 percent or more of the assets of a Fund unless such plan executes an
agreement with the Trust governing participation in such Fund that includes
the conditions set forth herein to the extent applicable. A qualified
pension or retirement plan will execute an application containing an
acknowledgment of this condition at the time of its initial purchase of
shares of any Fund.
1.6. The Trust agrees to redeem for cash, upon the Company's request, any full
or fractional shares of the Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt and acceptance by the Trust or its designee of the request for
redemption. For purposes of this Section 1.6, the Company shall be the
designee of the Trust for receipt of requests for redemption from each
Separate Account and receipt by such designee shall constitute receipt by
the Trust; provided the Trust receives notice of request for redemption by
9:30 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.
1.7. Each purchase, redemption, and exchange order placed by the Company shall
be placed separately for each Fund and shall not be netted-with respect to
any Fund. However, with respect to payment of the purchase price by the
Company and of redemption proceeds by the Trust, the Company and the Trust
shall not net purchase and redemption orders with respect to each Fund. The
trust will send one wire for all redemptions and the Company will transmit
one payment for all purchases and shall transmit one net payment forfor all
Funds in accordance with Section 1.8.
1.8. The Company agrees that purchases and redemptions of Fund shares offered by
the then current prospectus of the Fund shall be made in accordance with
the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life insurance contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to
time hereafter by mutual written agreement of all the parties hereto (the
"Contracts") shall be invested in the Funds, in such other Funds managed by
Xxxxx Fargo Bank as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may
also be invested in an investment company other than the Trust if (a) such
other investment company, or series thereof, has investment objectives or
policies that are substantially different from the investment objectives
and policies of all the Funds of the Trust which are actually used by the
Company to fund the Contracts; or (b) the Company gives the Fund and the
Underwriter 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contacts; or (c)
such other investment company was available as a funding vehicle for the
Contracts prior to the date of this Agreement and the Company so informs
the Fund and Underwriter prior to their signing this Agreement (a list of
such funds appearing on Schedule C to this Agreement); or (d) the Fund or
Underwriter consents to the use of such other investment company.
1.9. In the event of net purchases, the Company shall pay for shares by 2:00
p.m. Eastern Time on the next Business Day after an order to purchase the
Shares is deemed to be received in accordance with the provisions of
Section 1.1 hereof. In the event of redemptions, the Trust shall pay the
redemption proceeds in accordance with the terms of the then-current
prospectus for the Trust. All such payments shall be in federal funds
transmitted by wire. For purposes of Section 2.4 and Section 2.11, 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 Fund.
1.10.Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Separate
Account. Purchase and redemption orders for Trust shares will be recorded
in an appropriate title for each Separate Account or the appropriate
subaccount of each Separate Account.
1.1l.The Trust shall furnish notice as soon as reasonably practical]e to the
Company of any income, dividends, or capital gain distributions payable on
the Trust's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Fund shares in the form of
additional shares of that Fund. The Company reserves the right to revoke
this election and to receive all such dividends and distributions in cash.
The Trust shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.12.The Trust shall make the net asset value per share for each Fund 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 5:307:00 p.m.
PacificEastern Time, each business day.
ARTICLE II Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, unless exempt therefrom, and that the
Contracts will be issued and sold in compliance with all applicable federal
and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The
Company further represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it
has legally and validly established each Separate Account as a segregated
asset account under applicable state law and has registered each Separate
Account as a unit investment trust in accordance with the provisions of the
1940 Act, unless exempt therefrom, to serve as segregated investment
accounts for the Contracts; and (iii) it will maintain such registration,
if required, for so long as any Contracts are outstanding. The Company
shall amend any registration statement under the 1933 Act for the Contracts
and any registration statement under the 1940 Act for the Separate 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. 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.
2.2. Subject to Article VI hereof, the Company represents that the Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment, or annuity contracts under applicable provisions of the Internal
Revenue Code and that it will maintain such treatment and that it will
notify the Trust 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 Company represents that any prospectus offering a Contract that is a
life insurance contract where it is reasonably probable that such Contract
would be a "modified endowment contract," as that term is defined in
Section 7702A of the Internal Revenue Code will identify such Contract as a
modified endowment contract (or policy).
2.4. 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 Trust are covered by a blanket fidelity
bond or similar coverage in an amount not less than $5 million. The
aforesaid includes coverage for larceny and embezzlement and is issued by a
reputable bonding company. The Company agrees that any amounts received
under such bond in connection with claims that derive from arrangements
described in this Agreement will be held by the Company for the benefit of
the Trust. The Company agrees to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Trust and the Underwriter in the event that such coverage no longer
applies.
2.5. The Company represents and warrants that it has taken all necessary steps
to ensure that it has addressed all Year 2000 transition issues, and that
neither the Trust nor the Underwriter and their affiliates, nor the owners
of the Contracts will experience any material negative effect as a result
of the Company's Year 2000 transition.
2.6. The Trust represents and wan-ants that Trust 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 Trust is and shall
remain registered under the 1940 Act for as long as the Trust shares are
sold. The Trust shall amend the registration statement for its shares under
the 1933 and the 1940 Acts from time to time as required in order to effect
the continuous offering of its shares. The Trust shall register and qualify
the shares for sale in accordance with the laws of the various states only
if, and to the extent, deemed advisable by the Trust or the Underwriter.
2.7. The Trust represents that it 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).
2.8. The Trust makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states, except that the Trust represents that it is shall at all
times remain in compliance with the laws of the state of Delaware to the
extent required to perform this Agreement.
2.9. The Trust represents and warrants that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act,
the Trust undertakes to have its Board of Trustees, a majority of whom are
not interested persons of the Trust, formulate and approve any plan under
Rule 12b-1 ("Rule 12b-1 Plan") to finance distribution expenses. The Trust
shall notify the Company immediately upon determining to finance
distribution expenses pursuant to Rule 12b-1.
2.10.The Trust represents that it is lawfully organized and validly existing
under the laws of Delaware and that it does and will comply with applicable
provisions of the 1940 Act.
2.11.The Trust represents and warrants that it and all of its trustees,
officers, employees and other individuals/entities having access to the
funds and/or securities of the Trust are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust 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
pro1nulgated from time to time. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company.
2.12.The Trust represents and warrants that it has taken all necessary steps to
ensure that it has addressed all Year 2000 transition issues.
2.13.The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust's
shares in accordance with all applicable federal and state securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.14.The Underwriter represents and warrants that the Trust's investment
manager, Xxxxx Fargo Bank, is exempt from registration as an investn1ent
adviser under all applicable federal and state securities laws and that the
investment manager will perform its obligations to the Trust in accordance
with any applicable state and federal securities laws.
2.15.The Underwriter represents and warrants that it has taken all necessary
steps to ensure that it has addressed all Year 2000 transition issues.
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 Trust's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Trust
shall provide such documentation including a final copy of a current
prospectus set in type at the Trust's expense and other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Trust's prospectus is amended more frequently) to have
the new prospectus for the Contracts and the Trust's new prospectus printed
together in one document; in such case at the Company's expense.
3.2. The Trust's prospectus shall state that the statement of additional
information for the Trust is available fron1 the Underwriter (or, in the
Trust's discretion, the Prospectus shall state that such statement is
available from the Trust).
3.3. The Trust7 at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders iU1 such quantity as the Company shall reasonably require and
the Company shall bear the costs of distributing them to existing Contract
owners or participants.
3.4. The Trust hereby notifies the Company that it is appropriate to include in
the prospectuses pursuant to which the Contracts are offered disclosure
regarding the potential risks of mixed and shared funding.
3.5. To the extent required by law the Company shall:
(l) solicit voting instructions from Contract owners or participants;
(2) vote the Trust shares held in each Separate Account in accordance with
instructions received from Contract owners or participants; and
(3) vote Trust shares held in each Separate Account for which no timely
instructions have been received, in the same proportion as Trust
shares of such Fund for which instructions have been received fron1
the Con1pany's Contract owners or participants; for so long as and to
the extent that the 1940 Act requires pass-through voting privileges
for variable contract owners. The Company reserves the right to vote
Trust 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 Trust calculates voting privileges in a manner
consistent with other Participating Insurance Companies and as
required by the Mixed and Shared Funding Order. The Trust will notify
the Company of any changes of interpretation or amendment to the Mixed
and Shared Funding Order.
3.6. The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Trust will either provide for
annual meetings (except to the extent that the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or comply with
Section l 6(c) of the 1940 Act (although the Trust is not one of the trusts
described in Section 1 6(c) of that Act) as well as with Sections l 6(a)
and, if and when applicable, l 6(b) of the 1940 Act. Further, the Trust
will act in accordance with the Commission's interpretation of the
requirements of Section 1 6(a) with respect to periodic elections of
Trustees 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 Trust or
the Underwriter, each piece of sales literature or other promotional
material in which the Trust or the Trust's investment manager, sub-advisers
or Underwriter is named, at least five business days prior to its use. No
such material shall be used if the Trust or the Underwriter reasonably
objects in writing to such use within five business days after receipt of
such material.
4.2. The Company represents and agrees that sales literature for the Contracts
prepared by the Company or its affiliates will be consistent with every
law, rule, and regulation of any regulatory agency or self-regulatory
agency that applies to the Contracts or to the sale of the Contracts,
including, but not limited to, NASD Conduct Rule 2210 and IM-2210-2
thereunder.
4.3. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Trust shares as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust or by the Underwriter, except with the
permission of the Trust or the Underwriter. The Trust and the Underwriter
agree to respond to any request for approval on a prompt and timely basis.
The Company shall adopt and implement procedures reasonably designed to
ensure that information concerning the Trust, the Underwriter, or any of
their affiliates which is intended for use by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to
Contract owners or prospective Contract owners) is so used, and neither the
Trust, the Underwriter, nor any of their affiliates shall be liable for any
losses, damages, or expenses relating to the improper use of such broker
only materials by agents of the Company or its affiliates who are
unaffiliated with the Trust or the Underwriter. The parties hereto agree
that this Section 4.3 is not intended to designate nor otherwise imply that
the Company is an underwriter or distributor of the Trust's shares.
4.4. The Trust or 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, its Separate Account, or the
Contracts are named, at least five business days prior to its use. No such
material shall be used if the Company reasonably objects in writing to such
use within five business days after receipt of such material.
4.5. The Trust represents and agrees that sales literature for the Trust
prepared by the Trust or its affiliates in connection with the sale of the
Contracts will be consistent with every law, rule, and Regulation of any
regulatory agency or self regulatory agency that applies to the Trust or to
the sale of Trust shares, including, but not limited to, NASD Conduct Rule
2210 and IM-22 10-2 thereunder.
4.6. The Trust and the Underwriter shall not give any information or make any
representations on behalf of the Con1pany or concerning the Company, each
Separate Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Separate
Account which are in the public domain or approved by the Company for
distribution to Contract owners 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 on a prompt and timely basis. The Trust and the Underwriter shall
xxxx information produced by or on behalf of the Trust "FOR BROKER USE
ONLY" which is intended for use by brokers or agents selling the Contracts
(i.e., information that is not intended for distribution to Contract owners
or prospective Contract owners) is so used, and neither the Company nor any
of its affiliates shall be liable for any losses, damages, or expenses
arising on account of the use by brokers of such information with third
parties in the event that is not so marked.
4.7. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Trust
or its shares, contemporaneously with the fling of such document with the
SEC or other regulatory authorities.
4.8. The Company will provide to the Trust 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 or each Separate Account, contemporaneously
with the filing of such document with the SEC or other regulatory
authorities. The Company shall promptly inform the Trust of the results of
any examination by the SEC (or other regulatory authorities) that relates
to the Contracts, and the Company shall provide the Trust with a copy of
relevant portions of any "deficiency letter" or other correspondence or
written report regarding any such examination.
4.9. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes7 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
Conduct Rules, the 1940 Act or the 1933 Act.
ARTICLE V Fees and Expenses
5. l . The Trust and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except subject a Rule 12b-1 Plan to finance
distribution expenses, in which case, 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. Each party, however,
shall, in accordance with the allocation of expenses specified in this
Agreement, reimburse other parties for expenses initially paid by one party
but allocated to another party. In addition, nothing herein shall prevent
the parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust and/or
to the Separate Accounts.
5.2. All expenses incident to performance by the Trust of this Agreement shall
be paid by the Trust to the extent permitted by law. All Trust shares will
be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Trust, in
accordance with applicable state law, prior to sale. The Trust shall bear
the expenses for the cost of registration and qualification of the Trust's
shares, preparation and filing of the Trust's prospectus and registration
statement, Trust proxy materials and reports, printing proxy materials and
annual reports for existing Contract owners, setting in type the Trust's
prospectuses, the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Trust's
shares, and any expenses permitted to be paid or assumed by the Trust
pursuant to any Rule 12b-1 Plan under the 1940 Act duly adopted by the
Trust.
5.3. The Company shall bear the expenses of printing and distributing the Trust
prospectuses and proxy statements and shareholder reports. The Company
shall bear all expenses associated with the registration, qualification,
and filing of the Contracts under applicable federal securities and state
insurance laws; the cost of preparing, printing, and distributing the
Contracts' prospectuses and statements of additional information; and the
cost of printing and distributing annual individual account statements for
Contract owners as required by state insurance laws.
ARTICLE VI Diversification
6.1. The Trust 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 Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Trust will
comply with Section 81 7(h) of the Internal Revenue Code and Treasury
Regulation 1. 817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments
or other modifications to such Section or Regulations or successors
thereto.
ARTICLE VII Potential Conflicts
7.1. If and to the extent that the Trust engages in mixed and shared funding as
contemplated by exemptive relief provided by the SEC and applicable to the
Trust, this Article VII shall apply.
7.2. The Board of Trustees of the Trust (the "Trust Board") will monitor the
Trust for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all separate accounts investing in the
Trust. A material irreconcilable conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract owners, variable life
insurance contract owners, and trustees of qualified pension or retirement
plans; (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Contract owners; or (g) if applicable, a decision by
a qualified pension or retirement plan to disregard the voting instructions
of plan participants. The Trust Board shall promptly inform the Company if
it determines that a material irreconcilable conflict exists and the
implications thereof. A majority of the Trust Board shall consist of
Trustees who are not "interested persons" of the Trust.
7.3. The Company has reviewed a copy of the Mixed and Shared Funding Order, and
in particular, has reviewed the conditions to the requested relief set
forth therein. The Company agrees to assist the Trust Board in carrying out
its responsibilities under the Mixed and Shared Funding Order, by providing
the Trust Board with all information reasonably necessary for the Trust
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Trust Board whenever Contract
owner voting instructions are disregarded. The Trust Board shall record in
its minutes or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4. If it is determined by a majority of the Trust Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take whatever
steps are necessary to remedy or eliminate the material irreconcilable
conflict, up to and including: (a) withdrawing the assets allocable to some
or all of the Separate Accounts from the relevant Fund and reinvesting such
assets in a different investment medium, including another Fund, or in the
case of insurance company participants submitting; the question as to
whether such segregation should be implemented by a vote of all affected
Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity Contract owners or life insurance Contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.5. If the Company's disregard of voting instructions could conflict with the
majority of Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote? the
Company may be required, at the Trust's election, to withdraw the Separate
Account's investment in the Trust and terminate this Agreement with respect
to such Separate Account, and no charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal and termination shall take
place within 30 days after written notice is given that this provision is
being implemented, subject to applicable law but in any event consistent
with the terms of the Mixed and Shared Funding Order. Until such withdrawal
and termination is implemented, the Underwriter and the Trust shall
continue to accept and implement orders by the Company for the purchase and
redemption of shares of the Trust. Such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of disinterested Trustees.
7.6. 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 Separate Account's investment in the
Trust and terminate this Agreement with respect to such Separate Account
within 30 days after the Trust informs the Company of a material
irreconcilable conflict, subject to applicable law but in any event
consistent with the terms of the Mixed and Shared Funding Order. Until such
withdrawal and termination is implemented, the Underwriter and the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust. Such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of
disinterested Trustees.
7.7. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Trust Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict,
but in no event will the Trust or the Underwriter 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 Contract owners
materially adversely affected by the material irreconcilable conflict.
7.8. The Trust Board's determination of the existence of a material
irreconcilable conflict and its implication will be made known in writing
to the Company.
7.9. The Company shall at least annually submit to the Trust Board such reports,
materials, or data as the Trust Board may reasonably request so that the
Trustees may fully carry out the duties imposed upon the Trust Board by the
Mixed and Shared Funding Order, and said reports, materials and data shall
be submitted more frequently if deemed appropriate by the Trust Board.
7.10.If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3(T) is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Mixed and Shared Funding Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Order, the Trust and/or the Company, as appropriate. shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE VIII Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Trust, the
Underwriter, and each of the Trust's or the Underwriter's directors,
officers, employees, or agents and each person, if any, who controls the
Trust 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 are related to the sale or acquisition of the Trust's shares or
the Contracts and:
(4) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statements, prospectuses or statements of additional
information for the Contracts or contained in the Contracts, or
sales literature or other promotional material for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this agreement to indemnify shall not apply as to
any indemnified party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Trust for use in the registration statement,
prospectus or statement of information for the Contracts, or in
the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(5) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Trust registration statement,
Trust prospectus or sales literature or other promotional
material of the Trust not supplied by the Company or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Trust shares; or
6) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Trust's registration statement,
prospectus, statement of additional information, or sales
literature or other promotional material of the Trust or any
amendment thereof, or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made,
if such a statement or omission was made in reliance upon and in
conformity with information furnished to the Trust by or on
behalf of the Company or persons under its control; or
7) 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
(8) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other material breach 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) o party shall be entitled to indemnification by the
Company 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 Company
of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the
Contracts or the operation of the Trust.
8.2. Indemnification By the Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers, employees, or agents and each person,
if any, who controls 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 Underwriter), or litigation (including reasonable legal and other
expenses) to which the indemnified parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts and:
(9) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, or statement of additional
information for the Trust, or sales literature or other
promotional material of the Trust (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made; provided that this agreement to indemnify shall
not apply as to any indemnified party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the
Underwriter or the Trust by or on behalf of the Company for use
in the registration statement, prospectus, or statement of
additional information for the Trust or in sales literature of
the Trust (or any amendment or supplement thereto) or otherwise
for use in connection with the sale of the Contracts or Trust
shares; or
(10) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Trust registration statement, the
Contract or Trust prospectus, statement of additional
information, or sales literature or other promotional material
for the Contracts or of the Trust not supplied by the Underwriter
or persons under the control of the Underwriter) or wrongful
conduct of the Underwriter or persons under the control of the
Underwriter, with respect to the sale or distribution of the
Contracts or Trust shares; or
(11) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, statement of additional information, or sales
literature or other promotional material covering the Contracts
(or any amendment thereof or supplement thereto), or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements therein not misleading in light of the circumstances
in which they were made, if such statement or omission was made
in reliance upon and in conformity with infom1ation furnished to
the Company by or on behalf of the Underwriter or persons under
the control of the Underwriter; or
(12) arise as a result of any failure by the Underwriter to provide
the services and furnish the materials under the terms of this
Agreement (il1cluding a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements and procedures related thereto specified in Article
VI of this Agreement); or
(13) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter;
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
Underwriter may otherwise have.
(b) No party shall be entitled to indemnification by the
Underwriter 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 each Separate Account.
8.3 Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and
each of its directors, officers, employees, or agents and each person, if
any, who controls 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 Trust), or litigation (including reasonable legal and other
expenses) to which the indemnified parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the operations of the Trust and:
(14) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements and
procedures related thereto specified in Article VI of
this Agreement); or
(15) 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;
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 Trust
may otherwise have.
(b) No party shall be entitled to indemnification by the Trust 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 Trust of the
commencement of any litigation or proceedings against it in connection with
the issuance or sale of the Contracts or the operation of each Separate
Account.
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 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. 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 thereof other than reasonable costs of
investigation, 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 the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII.
The indemnification provisions contained in this Article VIII shall
survive any termination of this Agreement.
ARTICLE IX Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware without
giving effect to conflicts of laws provisions thereof.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules, regulations, and rulings thereunder,
including such exemptions from those statutes rules and regulations as
the SEC may grant (including, but not limited to, the Mixed and Shared
Funding Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE X Termination
10.1. This Agreement shall terminate automatically in the event of its
assignment, unless made with written consent of each party; or:
(a) at the option of any party upon six months advance written
notice to the other parties; or
(b) at the option of the Company if shares of the Funds
delineated in Exhibit B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
(c) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body, 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 Trust 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
Underwriter's or the Trust's ability to perform its obligations under
this Agreement; or
(e) at the option of the Trust or the Underwriter by written
notice to the Company, if the Company gives the Trust and the
Underwriter the written notice specified in Section 1.8(b) hereof and
at the time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; provided,
however, any termination under this Section l0.1(e) shall be effective
sixty (60) days after the notice specified in Section 1.8(b) was
given; or
(f) at the option of the Company or the Trust upon a
determination by a majority of the Trust Board, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
among the interests of (i) all contract owners of variable insurance
products of all separate a accounts, or (ii) the interests of the
Participating Insurance Companies investing in the Trust as delineated
in Article VII of this Agreement; or
(g) at the option of the Company if the Trust 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 Trust may fail to so qualify; or
(h) at the option of the Company if the Trust fails to meet the
diversification requirements specified in Article VI hereof or if the
Company reasonably believes that the Trust will fail to meet such
requirements; 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 Trust or
the Underwriter has suffered a n1aterial 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 or the Contracts (including the sale
thereof); or
(k) at the option of the Trust or Underwriter, if the Trust 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 in1pact upon the
business and operations of the Trust or Underwriter; or
(1) subject to the Trusts compliance with Article VI hereof, at
the option of the Trust in the event any of the Contracts are not
issued or sold in accordance with applicable requirements of federal
and/or state law. Tern1ination shall be effective immediately upon
such occurrence without 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 l0.1(b) -
(d) or l 0.l (g) - (i), prompt written notice of the election
to terminate this Agreement for cause shall be furnished by
the party terminating 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(~) or
10. 1(k), prior written notice of the election to terminate
this Agreement for cause shall be furnished by the party
terminating this Agreement to the nonterminating parties. Such
prior written notice shall be given by the party terminating
this Agreement to the non-terminating parties at least 30 days
before the effective date of termination.
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 tenni11ation of this Agreement
pursuant to Section 10.] of this Agreement and subject to Section 1.3
of this Agreement, the Company may require the Trust and the
Underwriter to continue to make available additional shares of the
Trust 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 lin1itation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Trust, redeem investments in the Trust and/or invest
in the Trust upon the making of additional purchase payments under the
Existing Contracts. The 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 the Trust 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 Trust, the Underwriter, or the Company may
terminate the Agreement, as so continued pursuant to this Section 10.4,
upon written notice to the other party, such notice to be for a period
that is reasonable under the circumstances but need not be for more
than 90 days.
10.5 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) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of
general application (hereinafter referred to as a "Legally Required
Redemption"). Upon request, the Company will promptly furnish to the
Trust and the Underwriter the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Trust and the
Underwriter) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases
where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Fund that was
otherwise available under the Contracts without first giving the Trust
or the Underwriter 90 days notice of its intention to do so.
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. All notices shall be deemed given three business days
after the date received or rejected by the addressee.
If to the Trust: Xxxxx Fargo Variable Trust
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Secretary
Copy: C. Xxxxx Xxxxxxx, Esq.
Vice President & Senior Counsel
Xxxxx Fargo Bank
Legal Department
000 Xxxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
If to the Company:
If to the Underwriter: Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx,
Vice President
ARTICLE XII Miscellaneous
11.1.All persons dealing with the Trust must look solely to the property of the
Trust for the enforcement of any claims against the Trust as neither the
Trustees. officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Trust.
11.2.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.
11.3.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.
11.4.This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.5.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.
11.6.This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties.
11.7.Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance 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.
11.8.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 delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its
terms.
11.9.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
Separate Accounts or the Funds of the Trust.
11.10. The Trust has filed a Certificate of Trust with the Secretary of State of
The State of Delaware. The Company acknowledges that the obligations of or
arising out of the Trust's Declaration of Trust are not binding upon any of
the Trust's Trustees, officers, employees, agents or shareholders
individually, but are binding solely upon the assets and property of the
Trust in accordance with its proportionate interest hereunder. The Company
further acknowledges that the assets and liabilities of each Fund are
separate and distinct and that the obligations of or arising out of this
instrument are binding solely upon the assets or property of the Fund on
whose behalf the Trust has executed this instrument. The Company also
agrees that the obligations of each Fund hereunder shall be several and not
joint, in accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Fund for the obligations of
another Fund.
11.11. Except as otherwise expressly provided in this Agreement, neither the
Trust nor the underwriter nor any affiliate thereof shall use any
trademark, trade name, service xxxx or logo of the Company or any of its
affiliates, or any variation of any such trademark, trade name service xxxx
or logo, without the Company's prior consent, the granting of which shall
be at the Company's sole option. Except as otherwise expressly provided in
this Agreement, neither the Company nor any affiliate thereof shall use any
trademark, trade name, service xxxx or logo of the Trust or of the
Underwriter, or any variation of any such trademark, trade name, service
xxxx or logo, without the prior consent of either the Trust or of the
Underwriter, as appropriate, the granting of which shall be at the sole
option of the Trust or of the Underwriter, as applicable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Xxxxx Fargo Variable Trust
By:
Name: Xxxxxxx X. Xxxxx Xxxxx Xxxxxxx
Title: Secretary
By:
--------------------------------------------
Name:
Title:
Xxxxxxxx Inc.
By:
Name: Xxxxxxx X. Xxxxx
Title: Vice President
EXHIBIT A
Separate Accounts and Contracts
Subject to the Participation Agreement
EXH IBIT B
Funds Subject to the Participation Agreement
